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Home My WebLink AboutPACKET AUG 14 2012 sign •ITn OFFOiTOnITT K" T • S Z • A 8 REGULAR MEETING OF THE CITY COUNCIL COUNCIL CHAMBERS AUGUST 14,2012 1:30 P.M. CONSENT AGENDA * Approval of minutes—August 7,2012 * Approval of minutes for the redistricting presentation/public hearing—July 17, 2012 (No Change) * Confirmation of committee appointments Mary Jowers would be reappointed to the Board of Adjustment(Zoning). The current term would expire July 22, 2014. (Mayor Becky Ames) Bob Harris would be reappointed to the Board of Adjustment(Zoning). The current term would expire July 22, 2014. (Mayor Becky Ames) Charles Watts would be reappointed to the Convention and Tourism Advisory Board. The current term would expire June 17, 2014. (Mayor Becky Ames) Marty Craig would be reappointed to the Historic Landmark Commission. The current term would expire April 7, 2014. (Mayor Becky Ames) Lynda Kay Makin would be reappointed to the Planning and Zoning Commission. The current term would expire April 14, 2015. (Mayor Becky Ames) Ransom"Duce"Jones would be reappointed to the Planning and Zoning Commission. The current term would expire July 10, 2015. (Councilmember At Large Gethrel Williams-Wright) Pam Wise would be reappointed to the Small Business Revolving Loan Fund Board. The current term would expire February 25,2014. (Mayor Becky Ames) A) Approve a resolution amending Resolution 10-274, authorizing the City Manager to enter into an amended 2010 HOME fund contract with Jehovah Jireh Village Community Development Center, Inc. B) Approve a resolution approving a bid to replace the wheels on a compactor used at the City Landfill C) Approve a resolution approving the engagement of Orgain, Bell,and Tucker, LLP, as bond counsel relating to the proposed issuance of General Obligation Refunding Bonds, Series 2012 for a minimum fee of$17,500 or.15%of the face amount of the Bonds issued D) Approve a resolution approving a change order to the contract with Brystar Contracting, Inc. related to the Sanitary Sewer Rehabilitation of Small Diameter Mains Contact XXI E) Approve a resolution authorizing the City Manager to execute all documents necessary for an agreement between the East Texas Gulf Coast Regional Trauma Advisory Council and the Beaumont Public Health Department EMS Division RESOLUTION NO. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the following reappointments be made: RMR2Wdm2n t Commission Beginning FUL11ration of Term of Ter in Mary Jowers Board of Adjustment(Zoning) 08/14/12 07/22/14 Bob Harris Board of Adjustment(Zoning) 08/14/12 07/22/14 Charles Watts Convention and Tourism Advisory Board 08/14/12 06/17/14 Marty Craig Historic Landmark Commission 08/14112 04/07/14 Lynda Kay Makin Planning and Zoning Commission 08/14/12 04/14/15 Ransom"Duce"Jones Planning and Zoning Commission 08/14/12 07/10/15 Pamela Wise Small Business Revolving Loan Fund Board 08/14/12 02/25/14 PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames - A RICH WITH OPPORTUNITY BEAU 01 * T . E X 9 A . s City Council A ender Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Chris Boone, Community Development Director MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider a resolution amending Resolution 10-274, authorizing the City Manager to enter into an amended 2010 HOME fund contract with Jehovah Jireh Village Community Development Center, Inc. BACKGROUND The City of Beaumont receives an annual allocation of HOME Investments Partnerships funds from the U. S. Department of Housing and Urban Development(HUD)and awards contracts for acquisition,rehabilitation and construction of housing to be leased or sold to eligible low/moderate income families. On October 19, 2010, City Council approved Resolution Number 10-274, authorizing the City Manager to enter into a contract with Jehovah Jireh Community Development Center(CDC)to use 2010 HOME Program funds for site development costs and developer fees associated with the construction of thirteen(13)new homes on Rohi Street. Jehoveh Jireh is requesting that the original contract be amended to reduce the number of homes from thirteen(13)to eight(8)and also to have the ability to offer up to $14,999 in down payment assistance. These amendments would make the homes much more affordable and allow Jehovah Jireh to successfully complete their contract. Any and all income received by Jehovah Jireh CDC must be used toward the organization's affordable housing activities. Community Development staff will be responsible for monitoring Jehovah Jireh CDC for HOME Program compliance. FUNDING SOURCE Funding is available from the 2010 HOME Program. RECOMMENDATION The Administration recommends approval. DORY Fide in Someone Else's Boat... Weir ar►Waterll! Jeftowah,7ireh 149W Community owsk meat Center, Inc. July 23,2012 Johnny Beatty,Housing Manager City of Beaumont 801 Main.Street Beaumont,Texas 77701 RE:Contract Amendment Dear Mr.Beatty, Per our phone conversatwn held on July 23, I was informed that the existing contract referenced as Resolution No.10-274 dries not:include down payment assistance. Therefore,this letter is written to.request an amendment to the current contract between JJN and the City of Beaumont in the amount of$260,000 with approval of Resolution No.10-274 by Council on October 119,2010 to include down payment assistance. In order to include down payment assistance of$14,999 for each home,it would reduce the original-number of homes JJV can-develflp-from thirteen(13)affordable homes-to-only eight(8)homes. (See attached Exhibit W) Additionally, you.are aware that Rahi Street was funded by CDBG funds which required a majority(51%)of the lots must be developed for low-to-moderate income families which.-we are in compliance with. (See attached Inhibit"B") We seek a favorable;approval upon our requests to fulfill our contractual options and succeed in our efforts to-develop Rohl Street. Should you have any questions,feel free to contact meat 409-46"038 or ourfaithwalk@yahoo.com. Thank you in advance, Felicia Young Executive Director P.O.Box 20214 Beaurriorit,TX 77720 (409)659-S937 (409)842-5006-FAX ourfalthwalkLIbyahoo.com Jehovah Jireh Village Community Development Center, Inc. P.O. Box 20214; Beaumont,TX 77720;409-659-5937,409-842-5006(Fax) Res. #10-274 Dater 07-20-2012 Site Prep Amount Down Payment Previously Pro Address Requested Amount Per House Assistance Developer's Fee. Requested Remaining Balance Prop" 4 4355 Rohl 15,000.00 14,999.00 5,000.00 34,999.00 4230 Rohl 15,000.00 14,999.00 5,000.00 34,999.00 i TBD Rohl 15,000.00 14,999.00 5,0100.00 34j999.00 , I TBD Rohl 15,000.00 14,999.00 51000M 34,999.00 TBD Rohl 15,000.00 14,999.00 5,000.00 34,999.00 TBD Rohl 15,000.00 14,999.00 5,000.00 34,999.00 TBD Rohl 15,000.00 _ 14,999,00 5,000.00 34,999.00 TBD Rohl 8.001 14,999.00 15,007.00 � I Requested Amount 0.00 ! II, Contract Total 260,000.00 i Balance of Contract 260,000.O0 i i r i i i EXHIBIT"B" HUD 51YO Majority Rule(CDRG) I Rohl Street(18 lots) Item Buyor Location status I Tiffahle thlbsaux 4310 Rghl Funded/Closed-Res#10-118-$107,000 Therese Sebile 4264 Kohl Funded/Closed—Res#10118-$107,000 Item BU Y& Location Status Total 3 Anissa VVII111ams 4230 Rani HO C+erwed—Res#10-274 B34 li al0 Michael&Attella Kelly 4#$A6111 H8 Certjfl d: Res#10-274 34,"2.00 Titt'd >tohi _ HS not yet ldari Iffed $M09". 6 TOD Rohl HO not yet identlfled $940".00 TB!) Rohl HB not yet Iden f6d $x.80 Teo Rohl HlI<not yet lderttified $31,1 l9,nn .' TBD Rohl HB notyet iderMed $34,910.00 TBD Rohl He not yet identified $150007.00 Res#10-274 $260,000.00 HUD REQUIRED MAJORITY 819E RULE Rohl Street designed for 18 lots—a1%Is 9.18 units; 10 homes qualify to meet this rule. i P.O.Box 20214 Beaumont,TX 77720 (409)659-5937 (409)842-5006-FAX ourfaRhwalk @yahoo.com I RESOLUTION NO. WHEREAS, Resolution No. 10-274, dated October 19, 2010, authorized the City Manager to enter into a contract with Jehovah Jireh Village Community Development Center, Inc. in the amount of$260,000 for the construction assistance and development fee for thirteen (13) new homes located within Jehovah Jireh Village, which would be funded from the 2010 HOME Program; and, WHEREAS, Jehovah Jireh Village Community Development Center, Inc., has requested that the contract be amended to reduce the number of homes from thirteen (13) to eight(8) and also to have the ability to offer up to $14,999 in down payment assistance; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the statements and findings set out in the preamble to this resolution are hereby, in all things, approved and adopted; and, THAT Resolution No.10-274 be amended to reduce the number of homes from thirteen (13)to eight(8)and also to have the ability to offer up to$14,999 in down payment assistance; and, BE IT FURTHER RESOLVED THAT the City Manager be and he is hereby authorized to execute an amended 2010 HOME fund contract with Jehovah Jireh Village Community Development Center, Inc. for the purposes described herein. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames - B RICH WITS OPPORTUNITY R E A U Mu"'N T • 1 • X • A • s City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Laura Clark, Chief Financial Officer MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider a resolution approving a bid from Caron Compactor Company of Escalon, California, in the amount of$78,750 to replace the wheels on a compactor used at the City landfill. BACKGROUND The compactor is used at the City landfill to compact waste in order to save space. The wheels on the compactor are worn past usable condition. Caron Compactor is the sole source manufacturer of the 7"MegaMax pin-on teeth for the compactor wheels. Cost is the same for replacement of the wheels as for reconditioning the existing wheels. Replacement offers the advantage of only one (1)day out of service for the compactor as opposed to approximately two (2)weeks for reconditioning. Quoted cost for the replacement wheels includes a trade-in allowance of$9,500 for the existing wheels. FUNDING SOURCE Fleet Fund. RECOMMENDATION Approval of the resolution. RESOLUTION NO. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Council hereby approves the purchase of replacement wheels for a 2007 Caterpillar compactor from Caron Compactor Company, of Escalon, California, the sole source manufacturer of 7" MegaMax pin-on teeth for the compactor wheels, in the amount of$78,750 for use by the Solid Waste Division. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames - c RICH WITH OPPORTUNITY BEAUMON* T • E • X • A • S City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Laura Clark, Chief Financial Officer MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider a resolution approving the engagement of Orgain,Bell, and Tucker, LLP, as bond counsel relating to the proposed issuance of General Obligation Refunding Bonds, Series 2012 for a minimum fee of$17,500 or .15% of the face amount of the Bonds issued. BACKGROUND On July 10,2012, Council approved a resolution to engage Orgain, Bell, and Tucker, LLP as bond counsel relating to the proposed issuances of Series 2012 Certificates of Obligation and Water and Sewer Revenue Bonds. At the time that item was brought forth it was not known if refunding bonds would be issued. Refunding bonds have been issued and Orgain, Bell, and Tucker, LLP has served as bond counsel. This resolution is to provide formal approval of the engagement and related fee. FUNDING SOURCE Debt Service Fund. RECOMMENDATION Approval of resolution. RESOLUTION NO. WHEREAS, the City of Beaumont, Texas (the "City") proposes to issue General Obligation Refunding Bonds, Series 2012 (the "Bond"); and, WHEREAS, in order to proceed with the issuance of the Bond, the City desires to authorize the employment of bond counsel; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT, TEXAS: THAT the statements and findings set out in the preamble to this resolution are hereby, in all things, approved and adopted; and, THAT the City is authorized to and hereby employs Orgain, Bell & Tucker, LLP, Beaumont, Texas, as bond counsel for the issuance of the Bond, pursuant to the terms of the engagement letter dated July 11, 2012, presented by Orgain, Bell & Tucker, LLP, to the City, attached hereto as Exhibit "A;" and, BE IT FURTHER RESOLVED THAT the City and its bond counsel are authorized to proceed with taking all action appropriate for the issuance of the Bond; provided, however, that the Bond shall be issued only if the final terms and provisions thereof are hereinafter approved by the City Council. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames - ORGk N BELL&'TUCKER,LLP ATTORNEYS AT LAW BeeanaN I The Wood Skbee Benny H.Hughes 470 044 a Street I P.O.Box 1751 Beawriont Texas 777041751 409.8*6412,ext.365 1 Direct 409.951.7465 Fax 409.951.7365 Emd:bhhOdUom or BmWHughesemsn.com OVW ores n H&A*n—The Wooftr►ds and SAsbee I ovine at www.obt.com July 11, 2012 City of Beaumont Attention: Kyle Hayes,City Manager 801 Main Street Beaumont,Texas 77701 Re: General Obligation Refunding Bonds,Series 2012 Dear Mr. Hayes: This letter will confirm the terms of our engagement as bond counsel to the City of Beaumont,Texas (the"City")relating to the City's proposed issuance of its General Obligation Refunding Bonds, Series 2012,in the principal amount yet to be determined(herein referred to as the "Refunding Bonds"). As bond counsel, the services to be provided by our firm will include(1)preparation and drafting of all documents customarily prepared by bond counsel in order to issue the Refunding Bonds, (2)preparation and delivery of our firm's opinions relative to the tax-exempt status of the Refunding Bonds and the absence of registration requirements, (3)review of any official statements used to market the Refunding Bonds, (4)review of the disclosures made by the City, (5)preparation and filing of documents necessary to obtain approval of the Attorney General of the State of Texas and registration of the Refunding Bonds with the Comptroller of Public Accounts, (6) review and examination of bond insurance agreements, if applicable, and(7) review of any Bond purchase agreement proposed by the underwriters for the Refunding Bonds. We will provide these services to the City for a fee equal to 15 basis points (i.e. 0.15%) of the face amount of the Refunding Bonds issued, but subject to a minimum fee of$17,500.00 per series. The fee will be payable only at the time of delivery of the Refunding Bonds. This fee does not include any fee for co-bond counsel, should the City elect to employ one. In addition to payment of the fees set forth above, the City will reimburse our firm for the reasonable and actual out-of-pocket expenses incurred in each financing transaction. Such expenses typically average approximately$2-3,000 per transaction. These expenses are in addition to the expenses the City will incur for publication costs and the fee payable to the Texas Attorney General's Office for its examination and approval of the Refunding Bonds. EXHIBIT "A" City of Beaumont July 11, 2012 Page 2of2 We very much appreciate the opportunity to serve the City in this matter. Sincerely yours, OR E &TUCKER,LLP Benny ghes , BHffAr cc: Ms. Laura Clark Chief Financial Officer City of Beaumont 801 Main Street Beaumont,Texas 77701 D RICH WITH OPPORTUNITY BEAUMON* T • a • X • A • s City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Dr. Hani J. Tohme,P.E., Water Utilities Director MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider a resolution approving a change order to the contract with Brystar Contracting, Inc.,related to the Sanitary Sewer Rehabilitation of Small Diameter Mains Contract XXI. BACKGROUND The City Council approved a contract with Brystar Contracting, Inc., on October 18, 2011, in the amount of$1,644,323.00. The contract will rehabilitate approximately 17,856 linear feet of 6-inch, 12,601 linear feet of 8-inch, and 1,335 linear feet of 10-inch sanitary sewer lines; stabilize approximately 9(nine)vertical feet of existing manhole;furnish and install approximately 10(ten) manholes;remove and replace approximately 108 manholes;furnish and install 16(sixteen)end of line cleanouts;replace approximately 581 short side and 1 (one)long side service line connections; clean and televise 31,792 linear feet of existing and newly burst sanitary sewer lines; and televise approximately 582 existing sanitary sewer service lines. The proposed change order in the amount of$25,153.75 will furnish all necessary labor,materials, and equipment to pipeburst approximately 2,140 linear feet of 6-inch sanitary sewer lines with 8-inch DR-17 HDPE, delete 1,675 linear feet of 6-inch sanitary sewer lines, remove and replace one existing sanitary sewer manhole, furnish and install one end-of-line cleanout,replace two 4-inch short side service connections,replace one 4-inch long side service connection,pre televise three existing services, clean and televise approximately 465 linear feet of deteriorated lines, and post televise 465 linear feet of rehabilitated sanitary sewer lines. The work area is located east of Highland Avenue and west of M.L. King Jr Parkway between Alma Street and Adams Street. FUNDING SOURCE Capital Program. RECOMMENDATION Approval of resolution APPROVAL OF CONTRACT CHANGE CHANGE ORDER No.One DATE:August 14,2012 PROJECT: City of Beaumont,Texas Sanitary Sewer Rehabilitation of Small Diameter Mains Contract XXI OWNER: City of Beaumont,Texas 801 Main Street Beaumont,Texas 77704 CONTRACTOR: Brystar Contracting,Inc. 8385 Chemical Road Beaumont,Texas 77705 TO THE OWNER: Approval of the following contract change is requested. Reason for Change: To famish all necessary labor,materials,and equipment to pipeburst approximately 2,140 linear feet of 6-inch sanitary sewer lines with 8-inch DR-17 HDPE,delete 1,675 linear feet of 6-inch sanitary sewer lines,remove and replace one existing sanitary sewer manhole,fiunish and install one end-of-linecleenout,replace two 4-inch short side service connections,replace one 4-inch long side service connection,pre televise three existing services,clean and televise approximately465 linear feet of deteriorated tines,and post televise 465 linear feet of rehabilitated sanitary sewer lines. ORIGINAL CONTRACT AMOUNT: $ 1,644,323.00 THIS CHANGE ORDER Description: Net Change Delete 1,675 linear feet of 6-inch sanitary sewer lines to be famished and installed. $ (41,875.00) Furnish all necessary labor,materials,and equipment to pipeburst approximately 2,140 linear feet of 8-inch sanitary sewer lines with 8-inch DR-17 HDPE. $ 59,920.00 Remove and replace one existing sanitary sewer manhole. $ 2,150.00 Furnish and install one end of line cleanout. $ 370.00 Replace two 4-inch short side service connections. $ 1,120.00 Replace one 4-inch long side service connection. $ 1,500.00 Televise three existing services. $ 225.00 Clean and Televise approximately 465 linear feet of existing deteriorated lines. $ 930.00 Post televise 465 linear feet of rehabilitated sanitary sewer lines. $ 813.75 TOTAL AMOUNT OF THIS CHANGE ORDER S 25.153.75 TOTAL REVISED CONTRACT AMOUNT INCLUDING THIS CHANGE ORDER: S 1,669,476.75 CONTRACT TIME Original Contract Time: 270 Calendar Days Additional Time Requested: 84 Calendar Days Revised Contract Time per this Change Order: 354 Calendar Days CONDITION OF CHANGE: "Contractor acknowledges and agrees that the adjustments in contract price and contract time stipulated in this Change Order represents frill compensation for all increases and decreases in the cost o£and the time required to perform the entire work under the Contract arising directlyor indirectlyhrom this Change Order and all previous Change Orders.Acceptance of this waiver constitutes an agreement between Owner and Contractor that the Change Order represents an all inclusive,mutually agreed upon adjustment to the Contract,and that Contractor will waive all rights to file a claim on this Change Order after it is properly executed." Recommended by: Approved by: Accepted by: Dr.Hand Tolune,P.E. City of Beaumont Brystar Contracting,Inc. Water Utilities Director City Manager Contractor Date: Date: Date: � RICH W1T1i Q4AL17Y BEAUMON* T - _ - _ - A . g (4Mft"= W(4MN6IM - tae y i DOE I WoumM w-mll 2 owwe OR=M.I awn 0 A o _ RICH W1T1i Q4AL17Y BEAUMON* T - _ - _ - A . g (4Mft"= W(4MN6IM (i! I I FED �` SANITARY SEWER REHAB OF SMALL DIAMETER MAINS CONTRACTXXI Na I6.=N7R DOE I WoumM w-mll 2 owwe OR=M.I awn RESOLUTION NO. WHEREAS, on October 18, 2011, the City Council of the City of Beaumont, Texas, passed Resolution No. 11-303 awarding a contract in the amount of $1,644,323 with Brystar Contracting, Inc., of Beaumont, Texas, for the Sanitary Sewer Rehabilitation of Small Diameter Mains Contract XXI Project; and, WHEREAS, Change Order No. 1, in the amount of$25,153.75, is required to furnish all necessary labor, materials, and equipment to pipeburst approximately 2,140 linear feet of 6-inch sanitary sewer lines with 8-inch DR-17 HDPE; delete 1,675 linear feet of 6-inch sanitary sewer lines; remove and replace one existing sanitary sewer manhole;furnish and install one end-of-line cleanout; replace two 4-inch short side service connections; replace one 4-inch long side service connection; pre televise three existing services; clean and televise approximately 465 linearfeet of deteriorated lines;and post televise 465 linear feet of rehabilitated sanitary sewer lines; thereby increasing the contract amount to $1,669,476.75; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the statements and findings set out in the preamble to this resolution are hereby, in all things, approved and adopted; THAT the City Manager be and he is hereby authorized to execute Change Order No. 1 in the amount of $25,153.75, thereby increasing the contract amount to $1,669,476.75,for the Sanitary Sewer Rehabilitation of Small Diameter Mains ContractXXI Project. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames - E RICH WITH OPPORTUNITY BEA-U, ,MUff'* T - E - x A • S City ConncH Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Sherry Ulmer, Public Health Director MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider a resolution authorizing the City Manager to execute all documents necessary for an agreement between the East Texas Gulf Coast Regional Trauma Advisory Council and the Beaumont Public Health Department EMS Division. BACKGROUND The agreement between the East Texas Gulf Coast Regional Trauma Advisory Council and the Beaumont Public Health Department EMS Division specifies participating agencies and hospitals to conduct, document and report an operations-based exercise (drill, functional or full scale) that validates the overarching requirements and sub-capabilities listed below: 1. Interoperable communications and Emergency system for Advance registration of volunteer health professionals. 2. Any two of the following: a. fatality management b. medical evacuation/shelter-in-place c. tracking bed availability The contract would be effective on 08/01/12 and end on 06/30/13. FUNDING SOURCE Not Applicable. RECOMMENDATION Approval of the resolution. RESOLUTION NO. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Manager be and he is hereby authorized to execute all documents necessary to enter into a Participating Agency Agreement between the City of Beaumont EMS Division and East Texas Gulf Coast Regional Trauma Advisory Council to conduct, document and report an operations-based exercise that validates overarching requirements and sub-capabilities as specified by the agreement to be effective August 1, 2012 through June 30, 2013. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames - slow WITZ orrolk.:wMITT -B UK T * Z * X * A * S REGULAR MEETING OF THE CITY COUNCIL COUNCIL CHAMBERS AUGUST 14,2012 1:30 P.M. AGENDA CALL TO ORDER * Invocation Pledge Roll Call * Presentations and Recognition * Public Comment: Persons may speak on scheduled agenda items 1-9/Consent Agenda * Consent Agenda GENERAL BUSINESS 1. Consider an ordinance authorizing the issuance and sale of City of Beaumont, Texas, Certificates of Obligation, Series 2012 in an estimated amount not to exceed$24 Million; levying taxes to provide for payment thereof, and containing other matters related thereto 2. Consider an ordinance authorizing the issuance and sale of City of Beaumont,Texas, General Obligation Refunding Bonds, Series 2012 in an estimated amount not to exceed$26 Million; levying taxes to provide for payment thereof; and containing other matters related thereto 3. Consider an ordinance authorizing the issuance and sale of City of Beaumont, Texas,Waterworks and Sewer System Revenue Bonds,Series 2012,in an estimated amount not to exceed $21 Million and containing other matters related thereto 4. Consider a resolution to receive the proposed FY 2013 Budget and schedule a public hearing 5. Consider a resolution to receive the proposed 2013 Capital Program and schedule a public hearing 6. Consider a resolution establishing and taking a record vote on the proposed 2012 tax rate (FY 2013)and schedule public hearings 7. Consider a resolution approving the purchase of a fire truck 8. Consider a resolution authorizing the City Manager to execute all documents necessary to accept funding from The Texas Department of State Health Services 9. Consider a resolution approving a change order to the contract with Allco, Ltd. related to the Main Street Utility Relocation Project WORK SESSION * Review and discuss final draft maps and authorization for drafting of ordinance on final electoral wards redistricting map COMMENTS * Councilmembers/City Manager comment on various matters * Public Comment(Persons are limited to 3 minutes) Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services are requested to contact Mitchell Normand at 880-3777 three days prior to the meeting. 1 August 14,2012 Consider an ordinance authorizing the issuance and sale of City of Beaumont,Texas,Certificates of Obligation, Series 2012 in an estimated amount not to exceed$24 Million; levying taxes to provide for payment thereof; and containing other matters related thereto RICH WITH OPPORTUNITY [I r A U 3 M 0 unT'Y'ko" T • E • % • A • S City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager / PREPARED BY: Laura Clark, Chief Financial Office��-"' MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider an ordinance authorizing the issuance and sale of City of Beaumont, Texas, Certificates of Obligation, Series 2012 in an estimated amount not to exceed $24 Million; levying taxes to provide for payment thereof; and containing other matters related thereto. BACKGROUND Results of the sale will be presented by the City's Financial Advisors,Dustin Traylor and Clarence Grier of RBC Capital Markets. A recommendation will be made to award the bonds to the underwriters. Interest is payable semiannually in March and September beginning March 1, 2013. The Bank of New York Mellon Trust Company,N.A. Dallas, Texas, will serve as paying agent/registrar. Delivery and receipt of the proceeds by the City are scheduled for September 13, 2012. FUNDING SOURCE Principal and interest is paid from the Debt Service Fund which is supported by property taxes. RECOMMENDATION Approval of ordinance. A.8.a ORDINANCE NO. ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF THE CITY OF BEAUMONT,TEXAS,CERTIFICATES OF OBLIGATION,SERIES 2012; LEVYING TAXES TO PROVIDE FOR PAYMENT THEREOF; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, the City of Beaumont, Texas (the "City") is authorized to issue certificates of obligation under Subchapter C of Chapter 271 of the Texas Local Government Code, as amended, and under Sections 1 and 2 of Article H of the Charter of the City of Beaumont, Texas, most recently amended on September 16,2003; and WHEREAS, the City Council of the City has heretofore authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on August 14, 2012, the date tentatively set for passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable from City ad valorem taxes and a pledge of certain revenues of the City's waterworks and sewer system, or as soon thereafter as may be practicable,for the purpose of evidencing the indebtedness of the City for the cost of(1) City street improvements, including street construction, extension, reconstruction, widening, replacement, resurfacing, and rehabilitation, and the constriction of related sidewalks, curbs, gutters, ditches, drainage improvements, lighting, and landscape improvements; (2) installation of sidewalks on City property or City right-of-way for access to schools under Sidewalk Program; (3) construction of laterals, improvements to inlets, manholes, and pipe on Campus Avenue, Zavalla Drive, East Woodrow Street, Kenneth Avenue, Saxe Street, and Florida Avenue; (4) construction of drainage improvements on City property or City right-of-way in the Caldwood Addition including installation or replacement of inlets and laterals on Bristol, Sunbury, Medford, Canterbury, Cross, North Caldwood, Central Caldwood, South Caldwood and West Caldwood Streets; (5) construction or improvements on City property or City right-of-way for two remaining phases of the High School Ditch Project including drainage improvements in area bounded by IH- 10 on the north, South Street on the south, First Street on the east and Eleventh Street on the west; (6)improvements to City Athletic Complex Tennis Center open for public use; (7)improvements to City Civic Center owned by the City for public use, including warehouse, dock, and foyer; (8) improvements to and expansion of City Communications Building, including addition, electrical equipment and standby generator; (9)relocation of Fire Station No. 2 from Ironton Street to Helbig Street (10) construction of mechanic shop facility at the Lafin Road Fleet Service Center owned by the City; (11) construction of hike and bike trails on easement owned by City between Major Drive and Dowlen Road for public use; (12) construction of Transportation Operations Shop on City's Fair Park site; (13)construction of community center, shelters,playground,trails, and restrooms for public use at City's Tyrrell Park and refurbishment of existing building; (14) construction on City A.8.a property of downtown library for public use on Crockett Street near new park and event center; (15) relocation of Fire Station No. 1 and divisions of Fire Headquarters and Fire Training in one facility to vicinity of Gulf and Caldwell Streets; (16) reconstruction of parking lot at City's Fleet Service Center; (17) construction of new Public Health Complex (on a City owned site not yet identified), and furnishings and equipment; (18) construction of new Senior Center to be owned by the City for public use to replace existing Best Years Center; (19) relocation of Fire Station No. 11 to the vicinity of Royal and Neches Streets; (20) the cost of professional services incurred in connection with the respective projects;and(21)costs of issuance of debt and related fees; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and the laws of the State of Texas and the United States of America, respectively, particularly Chapter 271,Texas Local Government Code,as amended;and WHEREAS, no petition signed by at least five percent (5%) of the qualified voters of the City has been received by the City Clerk prior to the date of this Ordinance protesting the issuance of the certificates of obligation;and WHEREAS, the City Council of the City has determined to authorize such certificates of obligation for the purposes set out in this Ordinance;and WHEREAS, the City is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to make a limited, junior and subordinate pledge of not more than $10,000 of the net revenues of the City's waterworks and sewer system as security for the certificates of obligation authorized herein;and WHEREAS,the City is a home-rule municipality that: (i) adopted its charter under Section 5,Article XI,Texas Constitution; (ii)has a population of more than 50,000 and(iii)has outstanding long-term indebtedness that is razed by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for a long-term obligation. NOW,THEREFORE,BE IT ORDAINED BY THE CITY OF BEAUMONT,TEXAS: 1. Preamble. The matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 2. Definitions. Throughout this Ordinance, the following terms and expressions as used herein shall have the meanings set forth below: The term 'Business Day" shall mean any day which is not a Saturday, Sunday, a legal holiday,or a day on which the Registrar is authorized by law or executive order to close. The term "Certificates" or "Series 2012 Certificates" shall mean the Certificates of Obligation, Series 2012, authorized in this Ordinance,unless the context clearly indicates otherwise, as hereinafter authorized and provided. The term"City" shall mean The City of Beaumont,Texas. - 2 - A.8.a The term"Code" shall mean the Internal Revenue Code of 1986,as amended. The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Construction Fund" shall mean the construction fund established by the City pursuant to Section 19 of this Ordinance. The term "DTC" shall mean The Depository Trust Company of New York, New York, or any successor securities depository. The term "DTC Participant" shall mean brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among the DTC Participants. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 19 of this Ordinance. The term"Interest Payment Date",when used in connection with any Certificate, shall mean March 1,2013 and each September 1 and March 1 thereafter until maturity or earlier redemption. The term"Issuer"shall mean the City. The term "Net Revenues" shall mean the revenues of the System remaining after deduction of the reasonable and necessary expenses of operation and maintenance of the System. The term"Obligations"shall mean the Certificates. The term "Ordinance" as used herein and in the Certificates shall mean this Ordinance authorizing the Certificates. The term "Owner" or "Registered Owner", when used with respect to any Certificate, shall mean the person or entity in whose name such Certificate is registered in the Register. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the 15th day of the month next preceding such Interest Payment Date. The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of and the principal amounts registered to each Owner. The term "Registrar" shall mean THE BANK OF NEW YORK MELLON TRUST COMPANY,N.A.,Dallas,Texas,and its successors in that capacity. - 3 - A.8.a The term "SEC" shall mean the United States Securities and Exchange Commission and its successors. The term"System" shall mean the City's waterworks and sewer system. The term "Underwriter" shall mean, collectively, Wells Fargo Securities, Estrada Hincjosa and Company, Inc., First Southwest Company and Coastal Securities, Inc. 3. Authorization. The Certificates shall be issued in fully registered form,without coupons, in the total authorized aggregate amount of TWENTY-THREE MILLION AND NO/100 DOLLARS ($23,000,000.00), for the purpose of evidencing the indebtedness of the City for the cost of (1) City street improvements, including street construction, extension, reconstruction, widening, replacement, resurfacing, and rehabilitation, and the construction of related sidewalks, curbs, gutters, ditches, drainage improvements, lighting, and landscape improvements; (2) installation of sidewalks on City property or City right-of-way for access to schools under Sidewalk Program; (3) construction of laterals, improvements to inlets, manholes, and pipe on Campus Avenue, Zavalla Drive, East Woodrow Street, Kenneth Avenue, Saxe Street, and Florida Avenue; (4) construction of drainage improvements on City property or City right-of-way in the Caldwood Addition including installation or replacement of inlets and laterals on Bristol, Sunbury, Medford, Canterbury, Cross, North Caldwood, Central Caldwood, South Caldwood and West Caldwood Streets; (5) construction or improvements on City property or City right-of-way for two remaining phases of the High School Ditch Project including drainage improvements in area bounded by IH- 10 on the north, South Street on the south, First Street on the east and Eleventh Street on the west; (6)improvements to City Athletic Complex Tennis Center open for public use; (7)improvements to City Civic Center owned by the City for public use, including warehouse, dock, and foyer; (8) improvements to and expansion of City Communications Building, including addition, electrical equipment and standby generator; (9)relocation of Fire Station No. 2 from Ironton Street to Helbig Street (10) construction of mechanic shop facility at the Lafin Road Fleet Service Center owned by the City; (11) construction of hike and bike trails on easement owned by City between Major Drive and Dowlen Road for public use; (12) construction of Transportation Operations Shop on City's Fair Park site; (13)construction of community center, shelters,playground,trails, and restrooms for public use at City's Tyrrell Park and refurbishment of existing building; (14) construction on City property of downtown library for public use on Crockett Street near new park and event center; (15) relocation of Fire Station No. 1 and divisions of Fire Headquarters and Fire Training in one facility to vicinity of Gulf and Caldwell Streets; (16) reconstruction of parking lot at City's Fleet Service Center; (17) construction of new Public Health Complex (on a City owned site not yet identified), and furnishings and equipment; (18) construction of new Senior Center to be owned by the City for public use to replace existing Best Years Center; (19) relocation of Fire Station No. 11 to the vicinity of Royal and Neches Streets; (20) the cost of professional services incurred in connection with the respective projects; and(21)costs of issuance of debt and related fees,which projects shall be financed with the proceeds of the Certificates in such order of priority as determined by the City Council of the City. 4. Designation, Date, and Interest Payment Dates. The Certificates shall be designated as the "THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES -4 - A.8.a 2012,"and shall be dated August 1,2012. The Certificates shall bear interest at the rates set forth in the schedule in Section 5 below, from the later of August 1, 2012, 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, which interest shall be payable on March 1, 2013, and semiannually thereafter on September 1 and March 1 of each year until maturity or earlier redemption. 5. Certificates,Numbers and Denominations. The Certificates shall be in the total aggregate principal amount of$23,00 JW and shall be issued in the principal amounts, and bearing interest at the rates set forth in the following schedule, shall be numbered from CR-1 and upward, and may be transferred and exchanged as set out in this Order. The Certificates shall mature on March 1 in each of the years and in the amounts set out in such schedule. Certificates delivered in transfer of or in exchange for other Certificates shall be numbered in order of their authentication by the Registrar, shall be in the denomination of$5,000 or integral multiples thereof,and shall mature on the same date and bear interest at the same rate as the Certificate or Certificates in lieu of which they are delivered. Certificate Year Principal Interest Number of Maturity Amount Rate CR-1 20 CR-2 20 CR-3 20 CR-4 20 SEE F— HIBITA CR-5 20 CR-6 20 CR-7 20 CR-8 20 CR-9 20 CR-10 20 CR-11 20 CR-12 20 CR-13 20 CR-14 20 CR-15 20 CR-16 20 CR-17 20 CR-18 20 6. Execution of Certificates, Seal. The Certificates shall be signed by the Mayor or Mayor Pro Tern of the City and countersigned by the City Clerk or Deputy City Clerk of the City, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the 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 - 5 - A.8.a of the City had been manually impressed upon each of the Certificates. If any officer of the City whose manual or facsimile signature shall appear on the Certificates shall cease to be such officer before the authentication of such Certificates or before the delivery of such Certificates, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. 7. Approval by Attorney General: Registration by Comptroller. The Certificates to be initially issued shall be issued in the name of the Underwriter or Cede & Co., as instructed by the Underwriter and delivered to the Attorney General of the State of Texas for approval and shall be registered by the Comptroller of Public Accounts of the State of Texas. The manually executed registration certificate of the Comptroller of Public Accounts substantially in the form provided in Section 17 of this Ordinance shall be attached or affixed to the initial Certificates. 8. Authentication. Except for the Certificates to be initially issued, which need not be authenticated by the Registrar, only Certificates which bear thereon a certificate of authentication, substantially in the form provided in Section 17 of this Ordinance, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the Certificates so authenticated were delivered by the Registrar hereunder. 9. Payment of Principal and Intere st. The Registrar is hereby appointed as the paying agent for the Certificates. The principal of the Certificates shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they become due and payable, at the designated corporate trust office of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date,to the address of such Owner as shown on the Register. If the date for payment of the principal of or interest on any Certificate is not a Business Day, then the date for such payment shall be the next succeeding Business Day, and payment on such date shall have the same force and effect as if made on the original date payment was due. 10. Successor Rem. The City covenants that at all times while any Certificates are outstanding it will provide a bank, trust company, financial institution or other entity duly qualified and duly authorized to act as Registrar for the Certificates. The City reserves the right to change the Registrar on not less than sixty(60)days'written notice to the Registrar, so long as any such notice is effective not less than sixty (60) days prior to the next succeeding principal or interest payment date on the Certificates. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 11. Special Record Date. If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a - 6 - A.8.a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen(15)days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) business days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. 12. Ownershib: Unclaimed Principal and Intere st. The City,the Registrar and any other person may treat the person in whose name any Certificate is registered as the absolute Owner of such Certificate for the purpose of making payment of principal or interest on such Certificate, and for all other purposes, whether or not such Certificate is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Owner of any Certificate in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three (3) years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the provisions of Texas law, including to the extent applicable,Title 6 of the Texas Property Code,as amended. 13. Registration. Transfer, and Exchange_Special Election for Uncertificated Certificates. So long as any Certificates remain outstanding,the Registrar shall keep the Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe,the Registrar shall provide for the registration and transfer of Certificates in accordance with the terms of this Ordinance. Each Certificate shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Certificate for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days after such presentation,a new Certificate or Certificates,registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Certificate or Certificates so presented. All Certificates shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Certificate or Certificates of the same maturity and interest rate in any authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of the Certificate or Certificates presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section 13. Each Certificate delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such Certificate is delivered. - 7 - A.8.a The City or the Registrar may require the Owner of any Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Certificate. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. Neither the City nor the Registrar shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. Notwithstanding any other provision hereof, upon initial issuance of the Certificates, the ownership of the Certificates shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Certificates shall be initially issued in the form of a single separate certificate for each of the maturities thereof. With respect to Certificates registered in the name of Cede & Co., as nominee of DTC, the City and the Registrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Certificates. Without limiting the immediately preceding sentence,the City and the Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Certificates, (ii) the delivery to any DTC Participant or any other person, other than an Owner of a Certificate, as shown on the Register, of any notice with respect to the Certificates, including any notice of redemption, or(iii)the payment to any DTC Participant or any other person, other than an Owner of a Certificate, as shown in the Register, of any amount with respect to principal of,premium, if any, or interest on the Certificates. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar shall be entitled to treat and consider the person in whose name each Certificate is registered in the Register as the absolute Owner of such Certificate for the purpose of payment of principal of, premium, if any, and interest on the Certificates, for the purpose of all matters with respect to such Certificates, for the purpose of registering transfers with respect to such Certificates, and for all other purposes whatsoever. The Registrar shall pay all principal of,premium,if any,and interest on the Certificates only to or upon the order of the respective Owners, as shown in the Register as provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, and interest on the Certificates to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a certificate for a Certificate evidencing the obligation of the City to make payments of amounts due pursuant to this Ordinance. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the word "Cede & Co." in this Ordinance shall refer to such new nominee of DTC. In the event that the City or the Registrar determines that DTC is incapable of discharging its responsibilities described herein and in a letter of representation 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 if DTC Participants owning at least 50% of the Certificates outstanding based on - 8 - A.8.a current records of the DTC determine that continuation of the system of book-entry transfers through the DTC (or a successor securities depository) is not in the best interest of such beneficial Owners of the Certificates, or in the event DTC discontinues the services described herein,the City or the Registrar shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, and notify DTC of the appointment of such successor securities depository and transfer one or more separate Certificates to such successor securities depository or (ii) notify DTC of the availability through DTC of Certificates and transfer one or more separate Certificates to DTC Participants having Certificates credited to their DTC accounts. In such event,the Certificates shall no longer be restricted to being registered in the Register in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Owners transferring or exchanging Certificates shall designate, in accordance with the provisions of this Ordinance. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Certificates are registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on the Certificates, and all notices with respect thereto, shall be made and given in the manner provided in a letter of representation from the City to the DTC. 14. Mutilated, Lost, or Stolen Certificates. Upon the presentation and surrender to the Registrar of a mutilated Certificate,the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Certificate is lost, apparently destroyed, or wrongfully taken,the City,pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Certificate has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Certificate of like amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other associated expenses,including the fees and expenses of the Registrar. The City or the Registrar may require the Owner of a lost, apparently destroyed or wrongfully taken Certificate,before any replacement Certificate is issued,to: (1) furnish to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss,destruction or theft of such Certificate; (2) famish 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 - 9 - A.8.a (4) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Registrar shall be entitled to recover such replacement Certificate from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or the Registrar in connection therewith. If any such mutilated, lost,apparently destroyed or wrongfully taken Certificate has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Certificate,authorize the Registrar to pay such Certificate. Each replacement Certificate delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered. 15. Cancellation of Certificates. All Certificates paid in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Certificates. 16. Optional and Mandatory Redemption:Defeasance. (a) The City reserves the right, at its option, to redeem Certificates having stated maturities on and after March 1, 2023, in whole or in part, on March 1,2022, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the Certificates, or portions thereof, to be redeemed. [The Certificates maturing in the years (the "Term Certificates") are also subject to mandatory redemption prior to scheduled maturity, in the amount, on the date, and on the terms set out in the form of Certificates in this Ordinance, at a price of par plus accrued interest to the date fixed for redemption.] Certificates may be redeemed only in integral multiples of$5,000. If a Certificate subject to redemption is in a denomination larger that$5,000, a portion of such Certificate may be redeemed, but only in integral multiples of$5,000. Upon surrender of any Certificate for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Certificate or Certificates of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered. Not less than thirty (30) days prior to a redemption date for the Certificates, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to each - 10 - A.8.a Owner of each Certificate to be redeemed in whole or in part,at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date,the redemption price,the place at which Certificates are to be surrendered for payment and, if less than all the Certificates are to be redeemed, the numbers of the Certificates or portions thereof to be redeemed. Any notice of redemption so mailed shall be conclusively presumed to have been duly given whether or not the Owner receives such notice. By the date fixed for redemption,due provision shall be made with the Registrar for payment of the redemption price of the Certificates or portions thereof to be redeemed. When Certificates have been called for redemption in whole or in part and due provision made to redeem the same as herein provided,the Certificates or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of being paid solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Certificate or portion thereof called for redemption shall terminate on the date fixed for redemption. (b) The City may defease the provisions of this Ordinance and discharge its obligation to the Owners of any or all of the Certificates to pay principal, interest and redemption premium, if any, thereon in any manner permitted by law, including by depositing with the Paying Agent/Registrar, or if authorized by Texas law, with any national or state bank having mast powers and having combined capital and surplus of at least $50 million, or with the State Treasurer of the State of Texas either: (a)cash in an amount equal to the principal amount and redemption premium, if any,of such Series 2012 Certificates plus interest thereon to the date of maturity or redemption;or (b) pursuant to an escrow or trust agreement, cash and/or direct obligations of, or obligations the principal of and interest on which are guaranteed by or secured by the pledge of direct obligations of the United States of America, in principal amounts and maturities and bearing interest at rates sufficient to provide for the timely payment of the principal amount and redemption premium, if any, of such Certificates plus interest thereon to the date of maturity or redemption; provided, however, that if any of such Series 2012 Certificates are to be redeemed prior to their respective dates of maturity, provision shall have been made for giving notice of redemption as provided in this Ordinance. Upon such deposit, such Certificates shall no longer be regarded to be Outstanding or unpaid. Any surplus amounts not required to accomplish such defeasance shall be returned to the City. 17. Forms. The form of the Certificates, including the form of the Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Certificates initially issued shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: FORM OF CERTIFICATE UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON - 11 - A.8.a NUMBER DENOMINATION CR- $ REGISTERED REGISTERED THE CITY OF BEAUMONT,TEXAS CERTIFICATE OF OBLIGATION SERIES 2012 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS THE CITY OF BEAUMONT,TEXAS (the "City"),promises to pay to the registered owner identified above, or registered assigns, on the date specified above,upon presentation and surrender of this certificate at the designated corporate trust office of THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., Dallas, Texas (the "Registrar"), or at its principal payment office in Dallas,Texas,the principal amount identified above,payable in any coin or currency of the United States of America which on the date of payment of such principal is legal tender for the payment of debts due the United States of America, and to pay interest thereon at the rate shown above, calculated on the basis of a 360-day year of twelve 30-day months, from the later of the Dated Date specified above, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Certificate is payable by check on March 1, 2013, and semiannually thereafter on each September 1 and March 1,mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th day of the month next preceding each interest payment date. THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $23,0®0,000 (the "Certificates"), issued in accordance with the Constitution and the laws of the State of Texas, particularly Chapter 271, Texas Local Government Code, as amended, and Sections 1 and 2 of Article H of the Charter of the City, most recently amended September 16, 2003, for the cost of construction of authorized street, drainage, building, park and other capital improvements,the purchase of equipment and the cost of issuance of the Certificates,pursuant to an ordinance duly adopted by the City Council of the City on August 14, 2012 (the "Ordinance"), which Ordinance is of record in the official minutes of the City Council. THE CITY RESERVES THE RIGHT,at its option,to redeem the Certificates having stated maturities on or after March 1, 2023, in whole or in part, on March 1, 2022, or any date thereafter, in integral multiples of $5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Certificates. - 12 - A.8.a [THE CERTIFICATES maturing in the years (the "Term Certificates") are also subject to mandatory redemption prior to maturity in the amounts and on the dates set out below, at a price equal to the principal amount to be redeemed plus accrued interest to the redemption date: TERM CERTIFICATES DUE Date Amount TERM CERTIFICATES DUE MARCH 1,2040 Date Amount 1 The Paying Agent shall select for redemption by lot,or by any other customary method that results in random selection, a principal amount of Term Certificates equal to the aggregate principal amount of such Term Certificates to be redeemed, shall call such Term Certificates for redemption on the scheduled mandatory redemption date, and shall give notice of such redemption in accordance with the Ordinance authorizing the Certificates. The principal amount of Term Certificates required to be mandatorily redeemed shall be reduced by the principal amount of Term Certificates which, at least 45 days prior to the mandatory redemption date, shall have been delivered to the Registrar for cancellation or shall have been optionally redeemed and not previously credited against a mandatory redemption requirement. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior the date fixed for redemption by first class mail, addressed to the registered owner of each Certificate to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Certificates or portions thereof have been called for redemption and due provision has been made to redeem the same,the principal amounts so redeemed shall be payable solely from the funds provided for redemption and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. The Certificates may be defeased as provided in the Ordinance authorizing the Certificates. - 13 - A.8.a THIS CERTIFICATE is transferable only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. THE CERTIFICATES are exchangeable at the principal corporate trust office of the Registrar for Certificates in the principal amount of$5,000 or any integral multiple thereof, subject to the terms and conditions of this Ordinance. NEITHER THE CITY NOR THE REGISTRAR shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Certificate either (i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, by acceptance hereof, acknowledges and agrees to be bound by all the terns and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Certificates and will cause notice of any change of registrar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Certificate has been duly and validly issued and delivered;that all acts, conditions and things required or proper to be performed, to exist and to be done precedent to or in the issuance and delivery of this Certificate have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate, as such interest comes due and such principal matures, have been levied, within the limits prescribed by law,against all taxable property in the City,and have been pledged irrevocably for such payment. IT IS FURTHER certified, recited and represented that the net revenues (the "Net Revenues") to be derived from the operation of the City's waterworks and sewer system (the "System"), but only to the extent of and in an amount not to exceed Ten Thousand Dollars ($10,000.00)in the aggregate,are also pledged to the payment of the principal of and interest on this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be insufficient or unavailable for said purpose, all as set forth in the Ordinance to which reference is made for all particulars; provided,however,that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of such Net Revenues to the payment of any obligation of the City,whether authorized heretofore or hereafter,which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of this Certificate and that series of Certificates of which it is a part, and the City also reserves the right to issue, for any lawful purpose - 14 - A.8.a at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System, secured by a pledge of the Net Revenues of the System that may be prior and superior in right to,on a parity with,or junior and subordinate to the pledge of Net Revenues securing this Certificate and the series of Certificates of which it is a part. IN WITNESS WHEREOF, this Certificate has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Clerk of the City and the official seal of the City has been duly impressed, or placed in facsimile,on this Certificate. THE CITY OF BEAUMONT,TEXAS Mayor (SEAL) City Clerk FORM OF REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this certificate has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this certificate has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this day of ,201_. xxxxxxxx Comptroller of Public Accounts (Seal) of the State of Texas FORM OF REGISTRAR'S AUTHENTICATION CERTIFICATE REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate. The Bank of New York Mellon Trust Company,N.A. Dallas,Texas,as Registrar - 15 - A.8.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 certificate and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said certificate on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: The signature above must correspond to the name of the registered NOTICE: Signature must be owner as shown on the face guaranteed by a member firm of this Certificate in of the New York Stock Exchange every particular,without or a commercial bank or trust any alteration,enlargement company. or change whatsoever. END OF FORM OF CERTIFICATE 18. Legal Opinion; Cusiu Numbers. The approving opinion of Orgain Bell&Tucker, LLP, Beaumont, Texas, Bond Counsel, and CUSIP Numbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Certificates. 19. Interest and Sinking Fund, Levy. Pledge of Revenues, Fund The proceeds from all taxes levied, assessed and collected for and on account of the Certificates - 16 - A.8.a authorized by this Ordinance are hereby irrevocably pledged and shall be deposited, as collected, in a special fund to be designated "City of Beaumont, Texas, Certificates of Obligation, Series 2012, Interest and Sinking Fund". While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner within the limits prescribed by law, and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax upon all taxable property in the City sufficient to pay the interest on the Certificates as the same becomes due, and to provide and maintain a sinking fund adequate to pay each installment of the principal or maturity amount of the Certificates as the same matures but in each year never less than 2% of the original principal of the Certificates, full allowance being made for delinquencies and costs of collection, and said taxes when collected shall be applied to the payment of the interest on and principal of the Certificates and to no other purpose. There is hereby appropriated from current funds on hand, which are certified to be on hand and available for such purpose, an amount sufficient to pay debt service coming due on the Certificates on March 1,2013 and September 1,2013, and such amount shall not be used for any other purpose. A tax rate has not been determined for 2013, but the City certifies that such rate,when determined,will take into account the Certificates being issued. The Net Revenues of the System, but only to the extent of and in an amount not to exceed $10,000 in the aggregate, are hereby irrevocably pledged to the payment of the principal of and interest on the Certificates as the same come due; provided, however, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of the Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of the Certificates; and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this series of Certificates. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Certificates of Obligation, Series 2012, Construction Fund". Immediately after the sale and delivery of the Certificates, that portion of the proceeds of the Certificates to be used for the cost of construction of authorized projects and the cost of issuance of the Certificates shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of such projects, interest earned on such proceeds may be used, at the City's discretion, for such projects and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1201.043, Texas Government Code Annotated, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of such projects, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. IT IS ORDERED AND DIRECTED that this Ordinance pledging ad valorem tax revenue of the City and limited net revenues of the System for the payment of the Certificates to the extent provided herein be filed and recorded in the records of the City as necessary to cause the pledge to - 17 - A.8.a be valid under Section 1201.044 of the Government Code of Texas. At any time while any of the Certificates are outstanding, it is determined by the City or demanded by the holder of any Certificates that further action by the City is required to make the pledge valid or maintain the validity of the pledge, the City covenants and hereby directs the officers of the City to make such filings, including but not limited to appropriate filings under Chapter 9 of the Business and Commerce Code of Texas as are necessary to make the pledge valid or continue its validity. 20. Further Proceedings. After the Certificates shall have been executed, it shall be the duty of the Mayor of the City to deliver the Certificates to be initially issued and all pertinent records and proceedings to the Attorney General of the State of Texas for examination and approval. After the Certificates to be initially issued shall have been approved by the Attorney General of the State of Texas, the Certificates shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Certificates to be initially issued,the Comptroller of Public Accounts(or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein to be affixed or attached to the Certificates to be initially issued, and the seal of the Comptroller shall be impressed, or placed in facsimile, thereon. In addition, the Mayor, the Mayor Pro Tem, the City Clerk, the City Manager and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or convenient to carry out the purposes of this Ordinance, and each of such persons are authorized, acting alone and without the joinder of the others, to execute any and all closing certificates, instruments and such other documents as may be necessary or appropriate to carry out the purposes of this Ordinance. 21. Sale of Certificates. The Certificates are hereby sold and shall be delivered to the Underwriter at a price of$ , which represents the par amount of the Certificates of $23,000,000.00, less a net original issue discount of $ , plus a premium of $ ' and less an underwriting discount of $ , plus any accrued interest thereon from the dated date of the Certificates to the date of issuance, all in accordance with the terms of a certificate of obligation purchase agreement of even date herewith, presented to and hereby approved by the City Council, which price and terms are hereby found and determined to be the most advantageous reasonably obtainable by the City. Each of the Mayor and the Mayor Pro Tem and other appropriate officials of the City are hereby authorized and directed to execute such certificates of obligation purchase agreement on behalf of the City, and each of the Mayor and Mayor Pro Tem 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 set out therein and to provide for the issuance and delivery of the Certificates, and, if deemed by the acting officer to be in the best interests of the City, to terminate the agreement as permitted by the terms thereof. The City finds that the net effective interest of the Certificates is %. The premium received for the Certificates shall be counted against the noticed amount of $24,000,000 authorized by and published as required by law pursuant to the Resolution adopted by the City Council on July 10, 2012. 22. Tax Exemption. (a) The City intends that the interest on the Certificates shall be - 18 - A.8.a excludable from gross income for purposes of federal income taxation pursuant to Sections 103 and 141 through 150 of the Code,and applicable regulations. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the interest on the Certificates to be includable in gross income, as defined in Section 61 of the Code, of the holders thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Section 22; provided, however, that the City shall not be required to comply with any particular requirement of this Section 22 if the City has received an opinion of nationally recognized bond counsel (a "Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Certificates or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 22 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 22. (b) The City covenants and agrees that its use of Net Proceeds(as defined below)of the Certificates will at all times satisfy the following requirements: (i) The City will use all of the Net Proceeds of the Certificates for the cost of construction of authorized street, drainage, building, park, and other capital improvements, equipment purchases and the cost of issuance of the Certificates. The City has limited and will limit with respect to the Certificates the amount of original or investment proceeds thereof to be used(other than use as a member of the general public)in the trade or business of any person other than a governmental unit to an amount aggregating no more than 10%of the Net Proceeds of the Certificates ("private-use proceeds"). For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Certificates in any manner contrary to the guidelines set forth in Revenue Procedure 93-19, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (ii) The City has not permitted and will not permit more than 5% of the Net Proceeds of the Certificates to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Certificates. Further, the amount of private-use proceeds of the Certificates in excess of 5% of the Net Proceeds thereof("excess private-use proceeds")did not and will not exceed the proceeds of the Certificates expended for the governmental purpose of the Certificates to which such excess private-use proceeds relate; (iii) Principal of and interest on the Certificates shall be paid solely from ad valorem tax receipts collected by the City and from the Net Revenues of the System to the extent pledged hereunder. Further, no person using more than 101/o of the Net Proceeds of the Certificates in a trade or business, other than a governmental unit, has made or shall - 19 - A.8.a make payments (other than as a member of the general public), directly or indirectly, accounting for more than 10%of such receipts; (iv) The City has not permitted and will not permit with respect to the Certificates an amount of proceeds thereof exceeding the lesser of(a) $5,000,000 or (b) 5% of the Net Proceeds of the Certificates to be used, directly or indirectly, to finance loans to persons other than a governmental unit; and (v) The City will use $ of the Net Proceeds of the Certificates to pay the costs of issuance of the Certificates. When used in this Section,the term "Net Proceeds" of the Certificates shall mean the proceeds from the sale thereof to the Underwriter, including investment earnings on such proceeds, less accrued interest with respect to such issue. (c) The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Certificates to be "federally guaranteed" within the meaning of Section 149(b)of the Code and applicable regulations thereunder, except as permitted by Section 149(b)(3) of the Code and such regulations or as permitted by laws hereinafter enacted. (d) The City shall certify, through an authorized officer, employee or agent, that based upon all facts and estimates known or reasonably expected to be in existence on the date the Certificates are delivered, the City will reasonably expect that the proceeds of the Certificates will not be used in a manner that would cause the Certificates to be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Certificates, including interest or other investment income derived from the proceeds of the Certificates, regulate investments of such proceeds and amounts, and take such other and further action as may be required so that the Certificates will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. (e) The City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Certificates(within the meaning of Section 148(f)(6)(B) of the Code), be rebated to the federal government. Specifically, the City will (i) maintain records regarding the investment of the gross proceeds of the Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Certificates separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, (ii) calculate at such times as are required by applicable regulations, the amount earned from the investment of the gross proceeds of the Certificates which is required to be rebated to the federal government, and (iii) pay, not less often than every 5th anniversary date of the delivery of the Certificates, and within sixty (60) days after retirement of the Certificates, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with -20 - A.8.a respect to the gross proceeds of the Certificates that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. The City covenants and agrees to comply with, among other things, the requirements of section 148(f)of the Code and, if required,the City will satisfy the requirements out of funds other than the proceeds of the Certificates and those in the Interest and Sinking Fund. (f) The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury of the United States, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Certificates are issued, an information statement concerning the Certificates, all under and in accordance with Section 149(e) of the Code and applicable regulations thereunder. (g) The City covenants that any dispositions of personal property components of the Project funded by the Certificates will occur in the ordinary course of an established governmental program and will satisfy the following requirements: i. The weighted average maturity of the portion of the Certificates financing personal property is not greater than 120 percent of the reasonably expected actual use of such personal property for governmental purposes; ii. The reasonably expected fair market value of such personal property on the date of disposition will be not greater than 25 percent of its cost; iii. Such personal property will no longer be suitable for its governmental purposes on the date of disposition; and iv. The City is required to deposit amounts received from such disposition in a commingled fund with substantial tax or other governmental revenues and the Issuer reasonably expect to spend such amounts on governmental programs within 6 months from the date of commingling. (h) 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 smaller profit or a larger loss than would have resulted if such arrangement had been at arm's length and had the yield on the issue not been relevant to either party. 0) The City will not issue or use the Certificates as part of an "abusive arbitrage device" (as defined in Section 1.148-10(a) of the Regulations). Without limiting the foregoing, the Certificates are not and will not be a part of a transaction or series of transactions that attempts to circumvent the provisions of Section 148 of the Code and the Regulations, by (i)enabling the City to exploit the difference between tax-exempt and taxable interest rates to -21 - A.8.a gain a material financial advantage, or (ii) increasing the burden on the market for tax-exempt obligations. 23. ASulication of Proceeds. Proceeds from the sale of the Certificates shall, promptly upon receipt by the City,be applied as follows: (a) Accrued interest received from the sale of the Certificates shall be deposited into the Series 2012 Certificates of Obligation Interest and Sinking Fund; (b) The sum of$ will be used to pay the premium for the Certificates Insurance Policy; (c) The sum of $ shall be used to pay costs of issuance of the Certificates, with any amount left over to be transferred to the 2012 Certificates of Obligation Construction Fund; and (d) The remaining proceeds from the sale of the Certificates, together with investment earnings thereof, shall be deposited into the Series 2012 Certificates of Obligation Construction Fund and shall be used for the purposes set out in Section 3 of this Ordinance, with any remainder to be deposited into the Series 2012 Certificates of Obligation Interest and Sinking Fund. 24. Open Meeting. The meeting at which this Ordinance was adopted was open to the public, and public notice of the time, place and purpose of said meeting, was given, all as required by Chapter 551 of the Texas Government Code Annotated, Vernon's 1994, as amended, and such notice as given is hereby authorized, approved,adopted and ratified. 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. Official Statement. The Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Certificates have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Certificates by the Underwriter is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein,dated as of the date of payment for and delivery of the Certificates. 27. 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. 28. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance,the Mayor,the City Clerk, the City Treasurer, and all other appropriate officers and agents of the City are hereby authorized and directed to take all other actions that are reasonably -22 - A.8.a necessary to provide for issuance of the Certificates, including, without limitation, executing and delivering on behalf of the City all certificates, consents, receipts, requests and other documents as may be reasonably necessary to satisfy the City's obligations under this Ordinance and to direct the application of funds of the City consistent with the provisions hereof. 29. No Personal Liability. No recourse shall be had for payment of the principal of or premium, if any, or interest on Certificate, or for any claim based thereon, or under this Ordinance, against any official or employee of the City or any person executing any Certificate. 30. Additional Obligations. The City undertakes and agrees for the benefit of the holders of the Certificates to provide the following to the Municipal Securities Rulemaking Board ("MSRB"), in electronic format as prescribed by the MSRB, directly or through a designated agent, on or before six months after the end of the City's fiscal year, which fiscal year presently ends on September 30, a. annual financial information(which may be unaudited)and operating data regarding the City for fiscal years ending on or after September 30, 2012 which annual financial information and operating data shall be of the type included in the following listed sections contained in the Final Official Statement: INVESTMENT AUTHORITY AND INVESTMENT OBJECTIVES OF THE CITY DEBT STATEMENT TAX DATA SELECTED FINANCIAL DATA ADMINISTRATION OF THE CITY Appendix«B» b. audited financial statements for the City for fiscal years ending on or after September 30, 2012, when available, if the City commissions an audit and it is completed by the required time; provided that if audited statements are not commissioned or are not available by the required time, the City will provide unaudited statements when and if they become available. C. in a timely manner, not in excess of ten (10) business days after the occurrence of the event,notice of any of the following events with respect to the Certificates: i. Principal and interest payment delinquencies; ii. Non-payment related defaults,if material; iii. Unscheduled draws on debt service reserves reflecting financial difficulties; -23 - A.8.a iv. Unscheduled draws on credit enhancements reflecting financial difficulties; V. Substitution of credit or liquidity providers,or their failure to perform; vi. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Certificates, or other material events affecting the tax status of the Certificates ; vii. Modifications to rights of Certificate holders,if material; viii. Certificate calls,if material,and tender offers; ix. Defeasances; X. Release, substitution or sale of property securing repayment of the Certificates,if material; xi. Rating changes; xii. Bankruptcy, insolvency, receivership, or similar event 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; and xiv. Appointment of a successor or additional trustee or the change of name of a trustee,if material. d. in a timely manner, notice of a failure of the City to provide required annual financial information and operating data,on or before six months after the end of the City's fiscal year. e. all documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. These undertakings and agreements are subject to appropriation of necessary funds and to applicable legal restrictions,if any. The accounting principles pursuant to which the City's financial statements are currently prepared are generally accepted accounting principles set out by the Government Accounting Standards Board, and, subject to changes in applicable law or regulations, such principles will be applied in the future. If the City changes its fiscal year, it will notify the MSRB of the change (and of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide annual financial information. - 24 - A.8.a The City's obligation to update information and to provide notices of material events shall be limited to the agreements herein. The City shall not be obligated to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition,or prospects and shall not be obligated to update any information that is provided, except as described herein. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Certificates at any future date. THE CITY DISCLAIMS ANY CONTRACTUAL OR TORT LIABILITY FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ITS CONTINUING DISCLOSURE AGREEMENT OR FROM ANY STATEMENT MADE PURSUANT TO ITS AGREEMENT. HOLDERS OR BENEFICIAL OWNERS OF CERTIFICATES MAY SEEK AS THEIR SOLE REMEDY A WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH THIS AGREEMENT. No default by the City with respect to its continuing disclosure agreement shall constitute a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this paragraph is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The City may amend its continuing disclosure obligations and agreement in this Section 30 to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status or type of operations of the City, if the agreement, as amended, would have permitted the Underwriter to purchase or sell the Certificates in compliance with SEC Rule 15c2-12, taking into account any amendments or interpretations of such Rule to the date of such amendment, as well as such changed circumstances, and either the holders of a majority in aggregate principal amount of the outstanding Certificates consent or any person unaffiliated with the City (such as nationally recognized bond counsel) determines the amendment will not materially impair the interests of the holders and beneficial owners of the Certificates. The City may also amend or repeal the obligations and agreement in this Section 30 if the SEC amends or repeals the applicable provisions of Rule 15c2-12 or a court of final jurisdiction determines that such provisions are invalid, and the City may amend the agreement in its discretion in any other circumstance or manner,but in either case only to the extent that its right to do so would not prevent the Underwriter from lawfully purchasing or reselling the Certificates in the primary offering of the Certificates in compliance with Rule 15c2-12. If the City amends its agreement, it must include with the next financial information and operating data provided in accordance with its agreement an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of information and operating data so provided. The City's continuing obligation to provide annual financial information and operating data and notices of events will terminate if and when the City no longer remains an "obligated person" (as such term is defined in SEC Rule 15C2-12)with respect to the Certificates. 31. &elngl er. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. 32. Effective Date. This Ordinance shall be in force and effect from and after its final passage,and it is so ordered. I -25 - A.8.a 33. Amendment of Ordinance. (a) If and to the extent permitted by this Ordinance,the owners of the Series 2012 Certificates aggregating in the principal amount of 51% of the aggregate principal amount of the outstanding Series 2012 Certificates shall have the right from time to time to approve any amendment to this Ordinance which may be deemed necessary or desirable by the City provided, however, that without the consent of the owners of all of the Series 2012 Certificates at the time outstanding, nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in this Ordinance or in the Certificates so as to: (1) Make any change in the maturity of the outstanding Series 2012 Certificates; (2) Reduce the rate of interest borne by any of the outstanding Series 2012 Certificates; (3) Reduce the amount of the principal payable on the outstanding Series 2012 Certificates; (4) Modify the terms of payment of principal of or interest on the outstanding Series 2012 Certificates, or impose any conditions with respect to such payment; (5) Affect the owners of less than all of the outstanding Series 2012 Certificates then outstanding; (6) Change the percentage of the principal amount of outstanding Series 2012 Certificates, necessary for consent to such amendment. (b) If at any time the City shall desire to amend this Ordinance under this Section, the City shall cause notice of the proposed amendment to be published in a financial newspaper or journal published in The City of New York, New York, once during each calendar week for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Paying Agent for inspection by all owners of Series 2012 Certificates. Such publication is not required, however, if notice in writing is given to each owner of the outstanding Series 2012 Certificates. Not less than thirty (30) days' notice of the proposed amendment shall also be given by the City to the Underwriter. (c) Whenever at any time not less than thirty (30) days, and within one (1) year, from the date of the publication of said notice or other service of written notice the City shall receive an instrument or instruments executed by the owners of at least 51% in aggregate principal amount of Series 2012 Certificates then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the Paying Agent, the City Council may adopt the - 26 - A.8.a amendatory resolution in substantially the same form. (d) Upon adoption of any amendatory resolution pursuant to the provision of this Section, this Ordinance shall be deemed to be amended in accordance with such amendatory resolution, and the respective rights, duties and obligations under this Ordinance of the City and all the owners of then outstanding Series 2012 Certificates shall thereafter be determined, exercised and enforced hereunder, subject in all respect to such amendments. (e) Any consent given by the owner of outstanding Series 2012 Certificates, pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future owners of the same Series 2012 Certificates during such period. Such consent may be revoked at any time after six months from the date of the first publication of such notice by the owner who gave such consent, or by a successor in title, by filing notice thereof with the Paying Agent and the City, but such revocation shall not be effective if the owners of 51% in aggregate principal amount of the then outstanding Series 2012 Certificates as in this Section defined have, prior to the attempted revocation, consented to and approved the amendment. (f) For the purpose of this Section, the fact of the owning of Series 2012 Certificates by any owner of Series 2012 Certificates and the amount and number of such Series 2012 Certificates and the date of their owning same shall be determined by the Registration Books of the Paying Agent/Registrar. (g) The foregoing provisions of this Section notwithstanding, the City by action of the City Council (or as to item (2) by the City Council or by the Mayor or Mayor Pro-Tem and the City Clerk as to changes prior to issuance to comply with requirements by the Attorney General of Texas or Underwriter) may amend this Ordinance for any one or more of the following purposes: (1) To add to the covenants and agreements of the City in this Ordinance contained, other covenants and agreements thereafter to be observed, grant additional rights or remedies to the owners of Certificates or to surrender, restrict or limit any right or power herein reserved to or conferred upon the City. (2) To make such provisions for the purpose of clarifying matters or questions arising under this Ordinance, as are required by the Attorney General of Texas to obtain the Attorney General's approval of the issuance of the Series 2012 Certificates or required by the Underwriter before their issuance or for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained in this Ordinance, or at any time before or after issuance as are necessary or desirable and not contrary to or inconsistent with this Ordinance, and in all events which shall not adversely affect the interests of the owners of the Series 2012 Certificates. -27 - A.8.a (3) To modify any of the provisions of this Ordinance in any other respect whatever, provided that: (i) such modification shall be, and be expressed to be, effective only after all Series 2012 Certificates outstanding at the date of the adoption of such modification shall cease to be outstanding, and (ii) such modification shall be specifically referred to in the text of all Series 2012 Certificates issued after the date of the adoption of such modification. [The remainder of this page has intentionally been left blank] -28 - A.8.a PASSED AND APPROVED this 14''day of August,2012. MAYOR THE CITY OF BEAUMONT, TEXAS ATTEST: CITY CLERK THE CITY OF BEAUMONT,TEXAS (SEAL) - 29 - A.8.a EXHIBIT A The City of Beaumont,Texas Certificates of Obligation, Series 2012 $23,000,000 - 30 - 2 August 14,2012 Consider an ordinance authorizing the issuance and sale of City of Beaumont, Texas, General Obligation Refunding Bonds, Series 2012 in an estimated amount not to exceed $26 Million; levying taxes to provide for payment thereof; and containing other matters related thereto RICH WITH OPPORTUNITY BEAUMON* T • E • x • A • S City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager / PREPARED BY: Laura Clark, Chief Financial Officertl MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider an ordinance authorizing the issuance and sale of City of Beaumont, Texas, General Obligation Refunding Bonds, Series 2012 in an estimated amount not to exceed $26 Million; levying taxes to provide for payment thereof; and containing other matters related thereto. BACKGROUND Results of the sale will be presented by the City's Financial Advisors, Dustin Traylor and Clarence Grier of RBC Capital Markets. A recommendation will be made to award the bonds to the underwriters. Interest is payable semiannually in March and September beginning March 1, 2013. The Bank of New York Mellon Trust Company,N.A. Dallas, Texas, will serve as paying agent/registrar. Delivery and receipt of the proceeds by the City are scheduled for September 13, 2012. Proceeds will be used to refund certain General Obligation Refunding Bonds, Series 2004 and certain Certificates of Obligation, Series 2005 and Series 2006. FUNDING SOURCE Principal and interest is paid from the Debt Service Fund which is supported by property taxes. RECOMMENDATION Approval of ordinance. A.8.b ORDINANCE NO. ORDINANCE AUTHORIZING THE ISSUANCE OF THE CITY OF BEAUMONT, TEXAS,GENERAL OBLIGATION REFUNDING BONDS,SERIES 2812;LEVYING TADS TO PROVIDE FOR PAYMENT THEREOF;AUTHORIZING THE CALL AND ADVANCE REFUNDING OF CERTAIN BONDS AND OBLIGATIONS AND THE EXECUTION AND DELIVERY OF AN ESCROW AGREEMENT AND THE SUBSCRIPTION FOR AND PURCHASE OF CERTAIN ESCROWED SECURITES; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, The City of Beaumont, Texas (the "City") has heretofore issued its City of Beaumont, Texas, General Obligation Refunding Bonds, Series 2004, its City of Beaumont, Texas, Certificates of Obligation, Series 2005, and its City of Beaumont, Texas, Certificates of Obligation, Series 2006 (collectively the "Refunded Obligations"), and now desires to refund certain maturities of the Refunded Obligations in advance of their maturities in order to restructure the City's firture debt service, whether or not there is an overall savings in debt service, as permitted by Section 1207.008 of the Government Code of Texas;and WHEREAS, Chapter 1207,Texas Government Code, as amended(formerly Article 717k of Vernon's Annotated Texas Civil Statutes, as amended), and Sections 1 and 2 of Article II of the Charter of the City, most recently amended on September 16, 2003, authorize the City to issue refunding bonds for the purpose of refunding the Refunded Obligations in advance of their maturities, and to accomplish such refunding by depositing directly with any paying agent for any of the Refunded Obligations or an escrow agent permitted by law the proceeds of such refunding bonds, together with other available funds, in an amount sufficient to provide for the payment or redemption of the Refunded Obligations, and provides that such deposit shall constitute the making of firm banking and financial arrangements for the discharge and final payment or redemption of the Refunded Obligations;and WHEREAS, the City now desires to call certain of the Callable Refunded Obligations for redemption prior to their maturities and desires to deposit sufficient funds to pay in full at maturity the respective Non-Callable Refunded Obligations;and WHEREAS, the City also desires to authorize the execution of an escrow agreement in order to provide for the deposit of proceeds of the refunding bonds to pay Non-Callable Refunded Obligations and to redeem the Callable Refunded Obligations on the first date they are subject to call;and WHEREAS, upon issuance of the refunding bonds herein authorized and the deposit of funds referred to above,the Non-Callable Refunded Obligations shall be considered discharged and A.8.b the Callable Refunded Obligations shall no longer be regarded as being outstanding, except for the purpose of being paid pursuant to such deposits, and the pledges, liens, trusts and all other covenants, provisions, terms and conditions of the ordinances authorizing the issuance of the Callable Refunded Obligations shall be discharged,terminated and defeased; NOW,THEREFORE,BE IT ORDAINED BY THE CITY OF BEAUMONT: 1. Consideration and Finclinss. The matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. Pursuant to Section 1207.008 of the Government Code of Texas, the City Council as the governing body of the City of Beaumont, Texas, in these proceedings authorizing the issuance of the Bonds, hereby finds that the issuance of the Bonds is in the best interest of the City by helping the City manage its tax rates to pay future debt service. The dollar amount of the gross debt service loss is $ and the present value of such debt service loss is$ . The City Council specifies and authorizes that the maximum amount by which the aggregate amount of payments to be made under the refunding bonds exceeds the aggregate amount of payments that would have been made under the terms of the obligations being refunded is $ . The City Council finds that the restructuring of the City's future debt service is in the best interest of the City even though the aggregate amount of payment to be made under the refunding bonds exceeds the aggregate amount of payments that would have been made under the terns of the obligations being refunded. The benefit so found is sufficient consideration for the refunding of the Refunded Obligations. 2. Definitions. Throughout this Ordinance, the following terms and expressions as used herein shall have the meanings set forth below: The term "Bonds" or "Series 2012 Bonds" shall mean The City of Beaumont, Texas, General Obligation Refunding Bonds, Series 2012 authorized in this Ordinance, unless the context clearly indicates otherwise. The term "City" shall mean The City of Beaumont,Texas. The term"Code" shall mean the Internal Revenue Code of 1986,as amended. The term "DTC" shall mean The Depository Trust Company of New York, New York, or any successor securities depository. The term "DTC Participant" shall mean brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among DTC Participants. The term "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 March 1,2013,and each September 1 and March 1 thereafter until maturity of such Bond. -2- A.8.b The term"Obligations"shall mean the Bonds. The term "Ordinance" as used herein and in the Bonds shall mean this ordinance authorizing the Bonds. The term "Owner" shall mean any person or entity who shall be the registered owner of any outstanding Bonds. The term"Paying Agent" shall mean the Registrar. The term"Paying Agent of the Refunded Obligations" shall mean Wells Fargo Bank,N.A., Minneapolis, MN, as to the General Obligation Refunding Bonds, 2004, and The Bank of New York Mellon Trust Company,N.A., Dallas, Texas, successor to JP Morgan Chase Bank,N.A. as to the City's Certificates of Obligation Series 2005, and The Bank of New York Mellon Trust Company,N.A., Dallas, Texas, successor to the Bank of New York Trust Company,N.A. as to the City's Certificates of Obligation, Series 2006. The tern "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 "Refunded Obligations" shall mean: (a) the City's outstanding General Obligation Refunding Bonds, Series 2004, maturing on March 1 in the years 2015-2017 and in the amounts of$370,000; $390,000; and$410,000, respectively; (b)the City's Outstanding Certificates of Obligation, Series 2005, maturing on March 1 in the years 2015-2025, in the amounts of $1,150,000; $1,220,000; $1,305,004; $1,360,000; $1,775,000; $1,810,000; $1,855,000; $1,900,000; $1,960,000; $2,020,000;and$2,095,000,respectively; and(c)the City's Outstanding Certificates of Obligation, Series 2006, maturing on March 1 in the years 2015-2018, in the amounts of $1,070,000; $1,125,000; $1,180,000; and $1,240,000, respectively. The Series 2004 Bonds (maturing on March 1, 2015 through 2017); the Series 2005 Bonds (maturing on March 1, 2016 through 2025); and the Series 2006 Bonds (maturing on March 1, 2017 and March 1, 2018) which constitute a portion of the Refunded Obligations which shall be referred to as the "Callable Refunded Obligations". The Series 2005 Bonds (maturing on March 1, 2015), and the Series 2006 Bonds (maturing on March 1, 2015 and March 1, 2016)which constitute a portion of the Refunded Obligations which shall be referred to as the"Non-Callable Refunded Obligations." The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of and the principal amounts registered to each Owner. The term "Registrar" shall mean The Bank of New York Mellon Trust Company, N.A., Dallas,Texas,and its successors in that capacity. The term "Report" shall mean the report of Grant Thornton, L.L.P., Certified Public Accountants, certifying as to the mathematical accuracy of the program designed by RBC Capital Markets for the City with respect to the defeasance of the Refunded Obligations. The term "SEC" shall mean the United States Securities and Exchange Commission, and its successors. -3- A.8.b The term "Underwriters" shall mean Wells Fargo Securities, LLC, Estrada Hinojosa and Company, Inc., First Southwest Company, and Coastal Securities, Inc. 3. Authorization and Findings. The Bonds shall be issued in fully registered form, without coupons, in the total authorized aggregate amount of TWENTY FOUR MILLION THREE HUNDRED SIXTY THOUSAND and NO/100 Dollars ($24,360,000.00) for the purpose of (i) refunding certain of the outstanding Refunded Obligations, and (ii) paying all costs of issuance of the Bonds. 4. Degggg on, Date and Interest Payment Date. The Bonds shall be designated as the "THE CITY OF BEAUMONT, TEXAS, GENERAL OBLIGATION REFUNDING BONDS, SERIES 2012", and shall be dated August 1, 2012. The Bonds shall bear interest from the later of August 1, 2012, 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, with interest payable on March 1, 2013, and semiannually thereafter on September 1 and March 1 of each year until maturity or earlier redemption. 5. Initial Bonds,Numbers and Denominations. The Bonds shall be issued bearing the numbers, in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance. The Bonds shall mature, in accordance with this Ordinance, on March 1 in each of the years and in the amounts set out in such schedule. Bonds delivered in transfer of or in exchange for other Bonds shall be numbered in order of their authentication by the Registrar, shall be in the denomination of$5,000 or integral multiples thereof,and shall mature on the same date and bear interest at the same rate as the Bond or Bonds in lieu of which they are delivered. Bond Year of Principal Interest Number Maturity Amount Rate [SEE EXHIBIT A] 6. Optional Viand Mandatory] Redemption: Defeasance. The City reserves the right, at its option,to redeem Bonds having stated maturities on and after March 1,2023, in whole or in part, on March 1, 2022, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed,the City shall determine the Bonds,or portions thereof,to be redeemed. [The Bonds maturing in the years (the "Term Bonds") are also subject to mandatory redemption prior to scheduled maturity, in the amount, on the date, and on the terms set out in the form of Bonds in this Ordinance, at a price of par plus accrued interest to the date fixed for redemption.] Bonds may be redeemed only in integral multiples of $5,000. If a Bond subject to redemption is in a denomination larger that $5,000, a portion of such Bond may be redeemed, but -4- A.8.b 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. Not less than thirty(30)days prior to a redemption date for the Bonds,the City shall cause a notice of redemption to be sent by United States mail,first class,postage prepaid,to each Owner of each Bond to be redeemed in whole or in part,at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date,the redemption price,the place at which Bonds are to be surrendered for payment and, if less than all the Bonds are to be redeemed, the numbers of the Bonds or portions thereof to be redeemed. Any notice of redemption so mailed shall be conclusively presumed to have been duly given whether or not the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Bonds or portions thereof to be redeemed. When Bonds have been called for redemption in whole or in part and due provision made to redeem the same as herein provided, the Bonds or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of being paid solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. The City may defease the provisions of this Ordinance and discharge its obligation to the Owners of any or all of the Bonds to pay principal,interest and redemption premium,if any,thereon in any manner permitted by law, including by depositing with the Paying Agent/Registrar, or if authorized by Texas law, with any national or state bank having trust powers and having combined capital and surplus of at least $50 million, or with the State Treasurer of the State of Texas either: (a)cash in an amount equal to the principal amount and redemption premium, if any, of such Series 2012 Bonds plus interest thereon to the date of maturity or redemption; or(b)pursuant to an escrow or trust agreement, cash and/or direct obligations of, or obligations the principal of and interest on which are guaranteed by or secured by the pledge of direct obligations of the United States of America, in principal amounts and maturities and bearing interest at rates sufficient to provide for the timely payment of the principal amount and redemption premium, if any, of such Bonds plus interest thereon to the date of maturity or redemption; provided, however,that if any of such Series 2012 Bonds are to be redeemed prior to their respective dates of maturity,provision shall have been made for giving notice of redemption as provided in this Ordinance. Upon such deposit, such Bonds shall no longer be regarded to be Outstanding or unpaid. Any surplus amounts not required to accomplish such defeasance shall be returned to the City. 7. Execution of Bonds, Seal. The Bonds shall be signed by the Mayor or Mayor Pro Tern of the City and countersigned by the City Clerk or Deputy City Clerk of the City, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the 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 -5- A.8.b be valid and sufficient for all purposes as if such officer had remained in such office. 8. Auuroval by Attorney General, Registration by Comptroller. The Bonds to be initially issued shall be delivered to the Attorney General of Texas for approval and shall be registered by the Comptroller of Public Accounts of the State of Texas. The manually executed registration certificate of the Comptroller of Public Accounts substantially in the form provided in Section 16 of this Ordinance shall be attached or affixed to the Bonds to be initially issued. 9. 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 officer of the Registrar,shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificates of authentication shall be conclusive evidence that the Bonds so authenticated were delivered by the Registrar hereunder. 10. Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Bonds. The principal of the Bonds shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America,upon their presentation and surrender as they become due and payable, at the principal corporate trust office of the Registrar. The interest on each Bond shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date,to the address of such Owner as shown on the Register. 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) business days prior to the Special Record Date,to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. If the date for payment of the principal of or interest on any Bond is not a Business Day, then the date for such payment shall be the next succeeding Business Day, and payment on such date shall have the same force and effect as if made on the original date payment was due. 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 the principal thereof and for the further purpose of making and receiving payment of the interest thereon, and for all other purposes, whether or not such Bond is overdue, 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. -6- A.8.b Amounts held by the Registrar which represent principal of and interest on the Bonds remaining unclaimed by the Owner after the expiration of 3 years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the provisions of Texas law, including to the extent applicable, Title 6 of the Texas Property Code, as amended. 12. Registration, Transfer and Exchange. So long as any Bonds remain outstanding,the Registrar shall keep the Register at its principal corporate trust office in which, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Bonds in accordance with the terms of this Ordinance. Each Bond shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Bond for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three business days after such presentation, a new Bond or Bonds, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Bond or Bonds so presented. All Bonds shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Bond or Bonds of the same maturity and interest rate and in any authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of the Bond or Bonds presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Bonds in accordance with the provisions of this Section 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. 13. 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 finish the City with appropriate certificates of destruction of such Bonds. 14. Mutilated, Lost or Stolen Bonds. Upon the presentation and surrender to the Registrar of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of such Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in -7- A.8.b connection therewith and any other expenses connected therewith, including the fees and expenses of the Registrar. If any Bond is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding,provided that the Owner thereof shall have: (1) furnished to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss,destruction or theft of such Bond; (2) furnished such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) paid all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed;and (4) met any other reasonable requirements of the City and the Registrar. If,after the delivery of such replacement Bond,a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond,the City and the Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or the Registrar in connection therewith. If any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Bond,authorize the Registrar to pay such Bond. Each replacement Bond delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. 15. Special Election for Uncertificated Bonds. Notwithstanding any other provision hereof, upon initial issuance of the Bonds, the ownership of the Bonds shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Bonds shall be initially issued in the form of a single separate certificate for each of the maturities thereof. With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the City and the Registrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the -8- A.8.b immediately preceding sentence, the City and the Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than an Owner of a Bond, as shown on the Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than an Owner of a Bond, as shown in the Register, of any amount with respect to principal of,premium,if any,or interest on the Bonds. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Register as the absolute Owner of such Bond for the purpose of payment of principal of,premium,if any,and interest on the Bonds, for the purpose of all matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owners, as shown in the Register as provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of,premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a Bond certificate evidencing the obligation of the City to make payments of amounts due pursuant to this Ordinance. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede &Co.,the word"Cede&Co." in this Ordinance shall refer to such new nominee of DTC. In the event that the City or the Registrar determines that DTC is incapable of discharging its responsibilities described herein and in a letter of representations of the City to DTC, and that it is in the best interest of the beneficial Owners of the Bonds that they be able to obtain certificated Bonds, or if DTC Participants owning at least 50% of the Bonds outstanding based on current records of the DTC determine that continuation of the system of book-entry transfers through the DTC (or a successor securities depository) is not in the best interest of the beneficial Owners of the Bonds, or in the event DTC discontinues the services described herein, the City or the Registrar shall(i) appoint a successor securities depository, qualified to act as such under Section 17(a)of the Securities and Exchange Act of 1934, as amended, and notify DTC of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or (ii) notify DTC of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the Register in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Bondholders transferring or exchanging Bonds shall designate,in accordance with the provisions of this Ordinance. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bonds are registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on the Bonds, and all notices with respect to the Bonds, shall be made and given,respectively, in the manner provided in a letter of representations from the City to DTC. 16. Form. The Bonds shall be in substantially the following form,including the form of -9- A.8.b Registrar's Certificate of Authentication, the form of Assignment, the form of Statement of Insurance, and the form of Registration Statement of the Comptroller of Public Accounts,with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: FORM OF BOND UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON NUMBER DENOMINATION R- $ REGISTERED REGISTERED THE CITY OF BEAUMONT,TEXAS GENERAL OBLIGATION REFUNDING BOND SERIES 2012 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS The City of Beaumont, in the County of Jefferson, State of Texas (the "City"), promises to pay to the Registered Owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this bond at the principal corporate trust office of The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (the "Registrar"), the principal amount identified above,payable in any coin or currency of the United States of America which on the date of payment of such principal is legal tender for the payment of debts due the United States of America, and to pay 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 August 1, 2012, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this bond shall be paid by check payable on March 1 and September 1, beginning on March 1, 2013, mailed to the registered owner of record as of the previous February 15 and August 15,respectively, as shown on the books of registration kept by the Registrar. THIS BOND is one of a duly authorized issue of Bonds, aggregating $24,360,000 (the "Bonds"), issued pursuant to an ordinance adopted by the City Council on August 14, 2012 (the "Ordinance")for the purpose of refunding the following: (a) the City's outstanding General Obligation Refunding Bonds, Series 2004, maturing on March 1 in the years 2015 through 2017, in the amounts of$370,000; $390,000; -10- A.8.b and$410,000,respectively. (b) the City's outstanding Certificates of Obligation, Series 2005 maturing on March 1 in the years 2015 through 2025, in the amounts of $1,150,000; $1,220,000; $1,305,000; $1,360,000; $1,775,000; $1,810,000; $1,855,000; $1,900,000; $1,960,000; $2,020,000;and$2,095,000,respectively; and (c) the City's outstanding Certificates of Obligation, Series 2006, maturing on March 1 in the years 2015 through 2018, in the amounts of $1,070,000, $1,125,000, $1,180,000,and$1,240,000,respectively. THE CITY RESERVES THE RIGHT, at its option, to redeem the Bonds having stated maturities on or after March 1, 2023, in whole or in part, on March 1, 2022, or any date thereafter, in integral multiples of $5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. [THE BONDS maturing in the years (the "Term Bonds") are also subject to mandatory redemption prior to maturity in the amounts and on the dates set out below, at a price equal to the principal amount to be redeemed plus accrued interest to the redemption date: TERM BONDS DUE Date Amount TERM BONDS DUE Date Amount 1 The Paying Agent shall select for redemption by lot, or by any other customary method that results in random selection, a principal amount of Term Bonds equal to the aggregate principal amount of such Term Bonds to be redeemed, shall call such Term Bonds for redemption on the scheduled mandatory redemption date, and shall give notice of such redemption in accordance with the Ordinance authorizing the Bonds. The principal amount of Term Bonds required to be -11- A.8.b mandatorily redeemed shall be reduced by the principal amount of Term Bonds which, at least 45 days prior to the mandatory redemption date, shall have been delivered to the Registrar for cancellation or shall have been optionally redeemed and not previously credited against a mandatory redemption requirement. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior the date fixed for redemption by first class mail, addressed to the registered owner of each 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. The Certificates may be defeased as provided in the Ordinance authorizing the Certificates. THIS BOND is transferable only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. THE BONDS are exchangeable at the principal corporate trust office of the Registrar for bonds in the principal amount of$5,000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. NEITHER THE CITY NOR THE REGISTRAR shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. THIS BOND shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Bond either(i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate endorsed hereon or (ii) is authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Certificates and will cause notice of any change of registrar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this 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, -12- A.8.b as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the City and have been pledged irrevocably for such payment. IN WITNESS WHEREOF, this 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. THE CITY OF BEAUMONT,TEXAS Mayor (SEAL) City Clerk FORM OF COMPTROLLER'S REGISTRATION CERTIFICATE COMPTROLLER'S REGISTRATION BOND REGISTER NO. I hereby certify that this bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this bond has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this ,201_. xxxxxxxxxxx Comptroller of Public Accounts (SEAL) of the State of Texas FORM OF REGISTRAR'S AUTHENTICATION CERTIFICATE REGISTRAR'S AUTHENTICATION CERTIFICATE This bond is one of the bonds described in and delivered pursuant to the within-mentioned Ordinance. The Bank of New York Mellon Trust Company,N.A., as Registrar By: Authorized Signature Date of Authentication: -13- A.8.b 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 hereby irrevocably constitutes and appoints attorney to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: Registered Owner NOTICE: The signature above must correspond to the name of the registered owner as shown NOTICE: Signature must be on the face of this Bond in every guaranteed by a member firm particular,without any of the New York Stock Exchange alteration,enlargement or change or a commercial bank or trust whatsoever. company. END OF FORM OF BOND 17. Legal Opinions: CUSIP. The approving opinion of Orgain Bell & Tucker, LLP, Beaumont, Texas, Bond Counsel, and CUSIP Numbers may be printed on the Bonds, but errors or omissions in the printing of such opinions or such numbers shall have no effect on the validity of the Bonds. 18. Interest and Sinking Fund; Lew. Assessment and Collection of Taxes. There is hereby established a separate fund of the City to be known as the "Series 2012 General Obligation Refunding Bonds Interest and Sinking Fund" which shall be kept separate and apart from all other funds of the City. The proceeds from all taxes levied, assessed and collected for and on account of the Bonds authorized by this Ordinance shall be deposited, as collected, in the Interest and Sinking Fund. While the Bonds or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually assessed and collected in due time, form and manner, and at the same time other City taxes are assessed, levied and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax upon all taxable property in said City sufficient to pay the current interest on said Bonds as the same becomes due, and to create and provide a sinking fund of not less than two percent (2%) of the original principal amount of the Bonds or of not less than the amount required to pay each installment of the principal -14- A.8.b of said Bonds as the same matures, whichever is greater, full allowance being made for delinquencies and costs of collection, and said taxes when collected shall be applied to the payment of the interest on and principal of said Bonds and to no other purpose. In addition, interest accrued from the date of the Bonds until their delivery is to be deposited in such fund. There is hereby appropriated from current funds on hand, which are certified to be on hand and available for such purpose, an amount sufficient to pay debt service coming due on the Bonds on March 1, 2013 and September 1, 2013, and such amount shall not be used for any other purpose. A tax rate has not been determined for 2013, but the City certifies that such rate, when determined, will take into account the Bonds being issued. IT IS ORDERED AND DIRECTED that this Ordinance pledging ad valorem tax revenue of the City for the payment of the Bonds to the extent provided herein be filed and recorded in the records of the City as necessary to cause the pledge to be valid under Section 1201.44 of the Government Code of Texas. At any time while any of the Bonds are outstanding, it is determined by the City or demanded by the holder of any Bonds that further action by the City is required to make the pledge valid or maintain the validity of the pledge, the City covenants and hereby directs the officers of the City to make such filings, including but not limited to appropriate filings under Chapter 9 of the Business and Commerce Code of Texas as are necessary to make the pledge valid or continue its validity. 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 to deliver the Bonds to be initially issued and all pertinent records and proceedings to the Attorney General of the State of Texas, for examination and approval by the Attorney General. After the Bonds to be initially issued shall have been approved by the Attorney General,they shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Bonds to be initially issued, the Comptroller of Public Accounts (or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein to be printed and endorsed on the Bonds to be initially issued, and the seal of said Comptroller shall be impressed, or placed in facsimile, thereon. In addition, the Mayor, the Mayor Pro Tem, the City Clerk, the City Manager and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or convenient to cant'out the purposes of this Ordinance, and each of such persons are authorized, acting alone and without the joinder of the others, to execute any and all closing certificates, instruments and such other documents as may be necessary or appropriate to carry out the purposes of this Ordinance. 20. Sale of Bonds. The Bonds are hereby sold and shall be delivered to the Underwriters at a price of$ , representing the principal amount of Bonds of$24,30,000, plus a net premium of$ , and less an underwriter's discount of$ , plus any accrued interest on the Bonds from their dated date to the date of closing,all in accordance with the terms of the Purchase Contract presented to and hereby approved by the City Council, which price and terms are hereby found and determined to be the most advantageous reasonably obtainable by the City. Each of the Mayor and the Mayor Pro Tem and other appropriate officials of the City are hereby authorized and directed to execute such Purchase Contract on behalf of the City, and the Mayor and the Mayor Pro Tem and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or desirable to satisfy the conditions set out herein and to -15- A.8.b provide for the issuance and delivery of the Bonds, and, if deemed by the acting officer to be in the best interests of the City,to terminate the Contract as permitted by the terms thereof. The City funds that the net effective interest of the Bonds is %. 21. Tax Exemption. The City intends that the interest on the Bonds shall be excludable from gross income of the owners thereof 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 all applicable temporary, proposed and final regulations (the "Regulations") and procedures promulgated thereunder and applicable to the Bonds. For this purpose, the City covenants that it will monitor and control the receipt, investment, expenditure and use of all gross proceeds of the Bonds and take or omit to take such other and further actions as may be required by Sections 103 and 141 through 150 of the Code and the Regulations to cause the interest on the Bonds to be and remain excludable from the gross income, as defined in Section 61 of the Code, of the owners of the Bonds for federal income tax purposes. 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 (a "Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or cause the Bonds or any refimded,prior,or original bonds to be arbitrage or hedge 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. Without limiting the generality of the foregoing, the City shall comply with each of the following covenants: (a) The City will use all of the proceeds of the Bonds to (i)acquire non- callable obligations of the United States of America (the "Escrowed Securities") or to deposit cash sufficient to pay the principal of,premium, if any, and interest on the Refunded Obligations and (ii)to pay the costs of issuing the Bonds except for amounts, if any, described in the Report (as defined in the Escrow Agreement) as the rounding amount and the ending cash balance in the Escrow Fund(as defined in the Escrow Agreement). The City will cause the proceeds which are to be escrowed to be irrevocably deposited upon the closing of the sale of the Bonds and reasonably expects to pay the costs of issuing the Bonds within thirty days after issuance. (b) The City will not directly or indirectly take any action or omit to take any action, which action or omission would cause the Bonds or the Refunded Obligations to constitute"private activity bonds"within the meaning of Section 141(a)of the Code. (c) Principal of and interest on the Bonds will be paid solely from ad valorem taxes collected by the City, investment earnings on such collections, and as available, proceeds of the Bonds. -16- A.8.b (d) Based upon all facts and estimates now known or reasonably expected to be in existence on the date the Bonds are delivered,the City reasonably expects that the proceeds of the Bonds and the Refunded Obligations (to the extent any of such proceeds remain unexpended, if any) will not be used in a manner that would cause the Bonds or the Refunded Obligations or any portion thereof to be "arbitrage bonds" within the meaning of Section 148 of the Code or as"hedge bonds"within the meaning of Section 149 of the Code. (e) At all times while the Bonds are outstanding, the City will identify and properly account for all amounts constituting gross proceeds of the Bonds in accordance with the Regulations. The City will monitor the yield on the investments of the proceeds of the Bonds and, to the extent required by the Code and the Regulations, will restrict the yield on such investments to a yield which is not materially higher than the yield on the Bonds. To the extent necessary to prevent the Bonds from constituting "arbitrage bonds" or "hedge bonds", the City will make such payments as are necessary to cause the yield on all yield-restricted nonpurpose investments allocable to the Bonds to be less than the yield that is materially higher than the yield on the Bonds. (f) The City will not take any action or knowingly omit to take any action, if taken or omitted, would cause the Bonds to be treated as "federally guaranteed" obligations for purposes of Section 149(b)of the Code. (g) The City represents that not more than fifty percent (50%) of the proceeds of any new money portion of the Bonds or any new money issue refunded by the Refunded Obligations was invested in nonpurpose investments (as defined in Section 148(f)(b)(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 expected at the time each issue of the Bonds and Refunded Obligations was issued that at least eighty-five percent (85%) of the spendable proceeds of the Bonds or the Refunded Obligations would be used to carry out the governmental purpose of such Bonds or Refunded Obligations within the corresponding three- year period beginning on the respective dates of the Bonds or the Refunded Obligations, and that as to the Refunded Obligations it was so used. (h) The City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the gross proceeds of the Bonds, if any, be rebated to the federal government. Specifically, the City will (i)maintain records regarding the receipt, investment and expenditure of the gross proceeds of the Bonds as may be required to calculate such excess arbitrage profits separately from records of amounts on deposit in the funds and accounts of the City allocable to other obligations of the City or moneys which do not represent gross proceeds of any obligations of the City and retain such records for at least six years after the day on which the last outstanding Bond is discharged, (ii) account for all gross proceeds under a reasonable, consistently applied method of accounting, not employed as an artifice or device to avoid, in whole or in part, the requirements of Section 148 of the Code, including any specified method of accounting required by applicable Regulations to be used for all or a portion of the gross proceeds, (iii) calculate, at such times as are required by applicable Regulations, the amount of excess arbitrage profits, if any, earned from the investment of the gross proceeds of the Bonds and (iv)timely pay, as required by applicable Regulations, all amounts required to be rebated to the federal government. In addition, the City will exercise -17- A.8.b reasonable diligence to assure that no errors are made in the calculations required by the preceding sentence and, if such an error is made, to discover and promptly correct such error within a reasonable amount of time thereafter, including payment to the federal government of any delinquent amounts owed to it, including interest thereon and penalty. In addition, the City agrees to pay timely to the United States all amounts required, including but not limited to payments required by Section 149(f) of the Code, necessary to keep the Bonds and Refunded Bonds from being treated as not being, and as never having been,tax exempt bonds. (i) 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 smaller profit or a larger loss than would have resulted if such arrangement had been at arm's length and had the yield on the issue not been relevant to either party. 0) The City will timely file or cause to be filed with the Secretary of the Treasury of the United States the information required by Section 149(e) of the Code with respect to the Bonds on such form and in such place as the Secretary may prescribe. (k) The City will not issue or use the Bonds as part of an "abusive arbitrage device" (as defined in Section 1.148-10(a) of the Regulations). Without limiting the foregoing, the Bonds are not and will not be a part of a transaction or series of transactions that attempts to circumvent the provisions of Section 148 of the Code and the Regulations, by (i)enabling the City to exploit the difference between tax-exempt and taxable interest rates to gain a material financial advantage, or(ii) increasing the burden on the market for tax-exempt obligations. (1) Proper officers of the City charged with the responsibility for issuing the Bonds are hereby directed to make, execute and deliver certifications as to facts, estimates or circumstances in existence as of the Issue Date and stating whether there are facts, estimates or circumstances that would materially change the City's expectations. On or after the Issue Date, the City will take such actions as are necessary and appropriate to assure the continuous accuracy of the representations contained in such certificates. (m) The covenants and representations made or required by this Section are for the benefit of the Bond holders and any subsequent Bond holder, and may be relied upon by the Bondholder and any subsequent Bondholder and bond counsel to the City. (n) In complying with the foregoing covenants, the City may rely upon an unqualified opinion issued to the City by nationally recognized bond counsel that any action by the City or reliance upon any interpretation of the Code or Regulations contained in such opinion will not cause interest on the Bonds to be includable in gross income for federal income tax purposes under existing law. (o) Notwithstanding any other provision of this Ordinance, the City's representations and obligations under the covenants and provisions of this Section shall survive the defeasance and discharge of the Bonds for as long as such matters are relevant to the -18- A.8.b exclusion of interest on the Bonds from the gross income of the owners for federal income tax purposes. (p) The City covenants that dispositions of personal property components of the Project funded by the Refunded Obligations will occur in the ordinary course of an established governmental program and will satisfy the following requirements: i. The weighted average maturity of the portion of the Bonds financing personal property is not greater than 120 percent of the reasonably expected actual use of such personal property for governmental purposes; ii. The reasonably expected fair market value of such personal property on the date of disposition will be not greater than 25 percent of its cost; iii. Such personal property will no longer be suitable for its governmental purposes on the date of disposition; and iv. The City is required to deposit amounts received from such disposition in a commingled fund with substantial tax or other governmental revenues and the Issuer reasonably expect to spend such amounts on governmental programs within 6 months from the date of commingling. The City warrants and represents that 85% of the spendable proceeds of each series of bonds of which the Refunded Bonds were a part were used to carry out the governmental purposes of such bonds within 3 years from the date each such series was issued, and not more than 50% of the proceeds of each series of bonds of which the Refunded Bonds were a part were invested in non-purpose investments (as defined in Section 148(b)(6)(A) of the Code) having a substantially guaranteed yield of 4 years or more. The City represents and warrants that the Bonds are being issued exclusively to refund the Refunded Bonds and that (i) less than 25% of the debt service on the Refunded Bonds has been secured or derived, either directly or indirectly, by payments made with respect to property used in the trade or business of any person other than the City, and no proceeds of any such series of bonds have been used directly or indirectly to make or finance loans to any such person, (ii) the Refunded Bonds which are redeemable are being called for redemption and will be redeemed not later than the earliest date on which they may be redeemed, (iii) the Bonds are being issued solely for the purposes stated in Section 1 of this Ordinance, and in issuance of the Bonds the City has employed no "device" to obtain a material financial advantage (based on arbitrage), within the meaning of Section 149(d)(4) of the Code, apart from benefit of restructuring the City's future debt service, and (iv) any remaining unspent proceeds of the Refunded Bonds will be invested so as to produce a yield not greater than the yield on the issue of Refunded Bonds from which such proceeds were derived. The Bonds are a multi-purpose issue within the meaning of Section 1.148-9 of the Regulations. Their separate purposes are to refund certain outstanding Certificates of Obligation, Series 2005, Certificates of Obligation, Series 2006, and General Obligations Refunding Bonds, Series 2004 (the "Series 2004 Bonds"). The Series 2004 Bonds were also a multi-purpose issue. -19- A.8.b Their separate purposes were to refund certain outstanding obligations of the City, including a portion of the City's Combination Tax and Revenue Certificates of Obligation, Series 1995 (the "Series 1995 Bonds"). The City warrants and represents that it made all necessary allocations of the proceeds, investments, and relative amounts of substantially identical portions of the Series 2004 Bonds to their separate purposes including the current refunding of the Series 1995 Bonds. The City hereby allocates the portions of the proceeds, investments, and relative amounts of substantially identical portions of the Series 2012 Bonds to their separate purposes, including the relative amount necessary under applicable US Treasury Regulations to redeem the relative portion of the Series 2004 bonds which represents the portion thereof allocated to the current refunding of the Series 1995 Bonds. 22. Application of Proceeds. The proceeds from the sale of the Bonds in the amount of $ , including accrued interest, shall,promptly upon receipt by the City,be applied as follows: (a) Accrued interest shall be deposited into the Interest and Sinking Fund for the Bonds; (b) To establish the escrow fund to refund and pay the Refunded Obligations, $ from the sale of the Bonds shall be deposited with the Escrow Agent pursuant to and in compliance with Sections 24 and 25 below. (c) $ from the sale of the Bonds shall be used to pay the costs of issuing the Bonds,not later than 90 days after such issuance;and (d) The sum of $ from the sale of the Bonds shall be used as a rounding amount and shall be deposited in the Interest and Sinking Fund for the Bonds; and (e) Any proceeds from the Bonds remaining after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. 23. Transfer of Money in Interest and Sinking Funds Maintained for the Refunded Obligations. On the date of delivery of the Bonds, the sum of$ contained in the Interest and Sinking Funds for the Refunded Obligations shall be transferred to the Escrow Agent and shall be applied as herein provided. 24. Redemption of Callable Refunded Obligations. The City hereby irrevocably calls the following obligations of the City (the Callable Refunded Obligations) for redemption on the dates set forth below, and authorizes and directs notice of such redemption to be given in substantially the form of Exhibits B-1, B-2, and B-3 hereto or in such form and in such manner as the Mayor, Mayor Pro Tem, City Manager, City Clerk or any other official of the City may approve: Obligations To Be Redeemed Redemption Date The City of Beaumont,Texas,General March 1,2014 Obligation Refunding Bonds, Series 2004,maturing on March 1 in the years -20- A.8.b 2015 through 2017 in the amounts of $370,000; $390,000 and$410,000, respectively The City of Beaumont,Texas, March 1,2015 Outstanding Certificates of Obligation, Series 2005,maturing on March 1 in the years 2016 through 2025 in the principal amounts of$1,220,000; $1,305,000; $1,360,000; $1,775,000; $1,810,000; $1,855,000; $1,900,000; $1,960,000; $2,020,000;and$2,095,000, respectively;and The City of Beaumont,Texas, March 1,2016 Outstanding Certificates of Obligation, Series 2006,maturing on March 1 in the years 2017 through 2018,in the amounts of$1,180,000 and$1,240,000, respectively Pursuant to the provisions of Sections 1207.061 and 1207.062 of the Government Code of Texas,the City hereby orders the irrevocable deposit out of the proceeds of the issuance and sale of the Series 2012 Bonds with the Escrow Agent (being a paying agent for some of the obligations) pursuant to the Escrow Agreement authorized by this Ordinance of an amount of money sufficient to provide for the redemption of the Callable Refunded Obligations on the dates indicated above and the payment in full of the Non-Callable Refunded Obligations at maturity and including all principal, redemption price, and interest as and when due prior to and at the respective redemption maturity, and due dates,as applicable. The Bonds are not subordinated to the Refunded Obligations. 25. Escrow Agreement. The discharge and final payment or redemption, as applicable, of the Refunded Obligations shall be effectuated by firm banking and financial arrangements pursuant to the terms and provisions of an Escrow Agreement to be entered into by and between the City and The Bank of New York Mellon Trust Company, N.A., Dallas, Texas, as Escrow Agent, which shall be substantially in the form attached as Exhibit C hereto presented to the City Council, the terms and provisions of which are hereby approved, subject to such insertions, additions and modifications as shall be necessary(a)to carry out the redemptions and payments which have been designed by the City by RBC Capital Markets, and which shall be certified as to mathematical accuracy by Grant Thornton, L.L.P., in the Report, (b)to restructure the City's future debt service, (c) to comply with all applicable laws and regulations relating to the refunding of the Refunded Obligations and (d)to carry out the other intents and purposes of this Ordinance, and the Mayor or Mayor Pro Tern is hereby authorized to execute and deliver the Escrow Agreement on behalf of the City in such final form as approved by the signing official in multiple counterparts and the City Clerk or an Assistant City Clerk is hereby authorized to attest thereto and affix the City's seal. -21- A.8.b The deposit of $ of the proceeds of the Series 2012 Bonds with the Escrow Agent,which is hereby authorized and directed,and transfer of all funds held by the Escrow Agent to the Paying Agents of the Refunded Obligations pursuant to the Escrow Agreement, plus the funds authorized and directed to be used in Section 26 of this Ordinance, shall effect the discharge and final payment,as applicable,of the Refunded Obligations. 26. Source of Funds Used in Refunding. No money of the City other than proceeds of the Bonds and funds on hand in the Interest and Sinking Funds for the Refunded Obligations, if any (the transfer and use of which is hereby authorized and directed) shall be used to refund the Refunded Obligations. 27. Purchase of Escrowed Securities. To assure the purchase of the Escrowed Securities as described in the Report and in the Escrow Agreement, the Mayor, Mayor Pro Tern, the City's Finance Officer, and the Escrow Agent are hereby authorized to subscribe for, agree to purchase, and purchase such Escrowed Securities in such amounts and maturities and bearing interest at such rates as may be provided for in the Report,if any,and to execute any and all subscriptions,purchase agreements, commitments, letters of authorization and other documents necessary to effectuate the foregoing,and any actions heretofore taken for such purpose are hereby ratified and approved. 28. Open Meeting. It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551 of the Texas Government Code Annotated,Vemon's 1994,as amended. 29. Official Statement. The Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Bonds have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Bonds by the Underwriters is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds. 30. Registrar. The Registrar, by undertaking the performance of the duties of the Registrar and in consideration of the payment of fees or deposits of money pursuant to this Ordinance and a Paying Agent/Registrar's Agreement, accepts and agrees to abide by the terms of this Ordinance and such Agreement. The City hereby approves the form of the Paying Agent/Registrar's Agreement presented to the City Council and hereby authorizes the Mayor or any other official of the City to execute such agreement on behalf of the City, with such changes and revisions thereto as may be approved by the official executing such agreement. The City covenants that at all times while any Bonds are outstanding, it will provide a bank, trust company, financial institution or other entity duly qualified and authorized to act as Registrar for the Bonds. The City reserves the right to replace the Registrar or its successor at any time on not less than sixty (60) days' written notice to the Registrar, so long as any such notice is effective not less than sixty (60) days prior to the next succeeding principal or interest payment date on the Bonds. If the Registrar is replaced by the City, the new Registrar shall accept the previous -22- A.8.b Registrar's records and act in the same capacity as the previous Registrar, and the new Registrar shall notify each Owner, by United States Mail, first class postage prepaid, of such change and of the address of the new Registrar. Any successor Registrar shall be either a national or state banking institution and a corporation or association organized and doing business under the laws of the United States of America or any State authorized under such laws to exercise trust powers and subject to supervision or examination by Federal or State authority. Each Registrar hereunder, by acting in that capacity,shall be deemed to have agreed to the provisions of this Section. 31. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance,the Mayor,the Mayor Pro Tern,the City Manager,the City Clerk, or Assistant City Clerk, and all other appropriate officers and agents of the City are hereby authorized and directed to take all other actions that are reasonably necessary to provide for issuance of the Bonds, including, without limitation, executing and delivering on behalf of the City all certificates, consents, receipts, requests and other documents as may be reasonably necessary to satisfy the City's obligations under this Ordinance and to direct the application of funds of the City consistent with the provisions hereof. 32. No Personal Liability. No recourse shall be had for payment of the principal of or premium, if any, or interest on any Bonds, or for any claim based thereon, or on this Ordinance, against any official or employee of the City or any person executing any Bonds. 33. 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. 34. Re pealer. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. 35. The City undertakes and agrees for the benefit of the holders of the Bonds to provide the following to the Municipal Securities Rulemaking Board C MSRB'), in electronic format as prescribed by the MSRB, directly or through a designated agent, on or before six months after the end of the City's fiscal year,which fiscal year presently ends on September 30, a. annual financial information(which may be unaudited)and operating data regarding the City for fiscal years ending on or after September 30, 2012 which annual financial information and operating data shall be of the type included in the following listed sections contained in the Final Official Statement: INVESTMENT AUTHORITY AND INVESTMENT OBJECTIVES OF THE CITY DEBT STATEMENT TAX DATA SELECTED FINANCIAL DATA -23- A.8.b ADMINISTRATION OF THE CITY Appendix«B» b. audited financial statements for the City for fiscal years ending on or after September 30,2012,when available,if the City commissions an audit and it is completed by the required time; provided that if audited statements are not commissioned or are not available by the required time,the City will provide unaudited statements when and if they become available. C. in a timely manner, not in excess of ten (10) business days after the occurrence of the event,notice of any of the following events with respect to the Bonds: i. Principal and interest payment delinquencies; ii. Non-payment related defaults,if material; iii. Unscheduled draws on debt service reserves reflecting financial difficulties; iv. Unscheduled draws on credit enhancements reflecting financial difficulties; V. Substitution of credit or liquidity providers,or their failure to perform; vi. Adverse tax opinions the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; vii. Modifications to rights of Bond holders,if material; viii. Bond calls, if material,and tender offers; ix. Defeasances; X. Release, substitution or sale of property securing repayment of the Bonds, if material;and xi. Rating changes. xii. Bankruptcy, insolvency, receivership, or similar event 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; and xiv. Appointment of a successor or additional trustee or the change of name of a trustee,if material -24- A.8.b d. in a timely manner, notice of a failure of the City to provide required annual financial information and operating data,on or before six months after the end of the City's fiscal year. e. all documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. These undertakings and agreements are subject to appropriation of necessary funds and to applicable legal restrictions,if any. The accounting principles pursuant to which the City's financial statements are currently prepared are generally accepted accounting principles set out by the Government Accounting Standards Board, and, subject to changes in applicable law or regulations, such principles will be applied in the future. If the City changes its fiscal year, it will notify the MSRB of the change (and of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide annual financial information. The City's obligation to update information and to provide notices of material events shall be limited to the agreements herein. The City shall not be obligated to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects and shall not be obligated to update any information that is provided,except as described herein. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Bonds at any future date. THE CITY DISCLAIMS ANY CONTRACTUAL OR TORT LIABILITY FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART,OF ITS CONTINUING DISCLOSURE AGREEMENT OR FROM ANY STATEMENT MADE PURSUANT TO ITS AGREEMENT. HOLDERS OR BENEFICIAL OWNERS OF BONDS MAY SEEK AS THEIR SOLE REMEDY A WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH THIS AGREEMENT. No default by the City with respect to its continuing disclosure agreement shall constitute a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this paragraph is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The City may amend its continuing disclosure obligations and agreement in this Section 35 to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status or type of operations of the City, if the agreement, as amended, would have permitted the Underwriter to purchase or sell the Bonds in compliance with SEC Rule 15c2-12, taking into account any amendments or interpretations of such Rule to the date of such amendment, as well as such changed circumstances, and either the holders of a majority in aggregate principal amount of the outstanding Bonds consent or any person unaffiliated with the City (such as nationally recognized bond counsel) determines the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds. The City may also amend or repeal the obligations and agreement in this Section 35 if the SEC amends or repeals the applicable -25- A.8.b provisions of Rule 15c2-12 or a court of final jurisdiction determines that such provisions are invalid, and the City may amend the agreement in its discretion in any other circumstance or manner,but in either case only to the extent that its right to do so would not prevent the Underwriter from lawfully purchasing or reselling the Bonds in the primary offering of the Bonds in compliance with Rule 15c2-12. If the City amends its agreement, it must include with the next financial information and operating data provided in accordance with its agreement an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of information and operating data so provided. The City's continuing obligation to provide annual financial information and operating data and notices of events will terminate if and when the City no longer remains an "obligated person" (as such term is defined in SEC Rule 15C2-12)with respect to the Bonds. 36. Amendment of Ordinance. (a) If and to the extent permitted by this Ordinance,the owners of the Series 2012 Bonds aggregating in the principal amount of 51% of the aggregate principal amount of the outstanding Series 2012 Bonds shall have the right from time to time to approve any amendment to this Ordinance which may be deemed necessary or desirable by the City provided, however,that without the consent of the owners of all of the Series 2012 Bonds at the time outstanding, nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in this Ordinance or in the Bonds so as to: (1) Make any change in the maturity of the outstanding Series 2012 Bonds; (2) Reduce the rate of interest borne by any of the outstanding Series 2012 Bonds; (3) Reduce the amount of the principal payable on the outstanding Series 2012 Bonds; (4) Modify the terms of payment of principal of or interest on the outstanding Series 2012 Bonds, or impose any conditions with respect to such payment; (5) Affect the owners of less than all of the outstanding Series 2012 Bonds then outstanding; (6) Change the percentage of the principal amount of outstanding Series 2012 Bonds, necessary for consent to such amendment. (b) If at any time the City shall desire to amend this Ordinance under this Section, the City shall cause notice of the proposed amendment to be published in a financial newspaper or journal published in the City of New York, New York, once during each calendar week for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Paying Agent for inspection by all owners of Series -26- A.8.b 2012 Bonds. Such publication is not required, however, if notice in writing is given to each owner of the outstanding Series 2012 Bonds. Not less than thirty (30) days' notice of the proposed amendment shall also be given by the City to the Underwriter. (c) Whenever at any time not less than thirty (30) days, and within one (1) year, from the date of the publication of said notice or other service of written notice the City shall receive an instrument or instruments executed by the owners of at least 51%in aggregate principal amount of Series 2012 Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the Paying Agent, the City Council may adopt the amendatory resolution in substantially the same form. (d) Upon adoption of any amendatory resolution pursuant to the provision of this Section, this Ordinance shall be deemed to be amended in accordance with such amendatory resolution, and the respective rights, duties and obligations under this Ordinance of the City and all the owners of then outstanding Series 2012 Bonds shall thereafter be determined, exercised and enforced hereunder, subject in all respect to such amendments. (e) Any consent given by the owner of outstanding Series 2012 Bonds, pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future owners of the same Series 2012 Bonds during such period. Such consent may be revoked at any time after six months from the date of the first publication of such notice by the owner who gave such consent, or by a successor in title, by filing notice thereof with the Paying Agent and the City, but such revocation shall not be effective if the owners of 51% in aggregate principal amount of the then outstanding Series 2012 Bonds as in this Section defined have, prior to the attempted revocation, consented to and approved the amendment. (f) For the purpose of this Section, the fact of the owning of Series 2012 Bonds by any owner of Series 2012 Bonds and the amount and number of such Series 2012 Bonds and the date of their owning same shall be determined by the Registration Books of the Paying Agent/Registrar. (g) The foregoing provisions of this Section notwithstanding, the City by action of the City Council (or as item (2) by the City Council or by the Mayor or Mayor Pro-Tem and the City Clerk as to changes prior to issuance to comply with requirements by the Attorney General of Texas or Underwriters) may amend this Ordinance for any one or more of the following purposes: (1) To add to the covenants and agreements of the City in this Ordinance contained, other covenants and agreements thereafter to be observed, grant additional rights or remedies to the owners of bonds or to surrender, restrict or limit any right or power herein reserved to or conferred upon the City. -27- A.8.b (2) To make such provisions for the purpose of clarifying matters or questions arising under this Ordinance, as are required by the Attorney General of Texas to obtain the Attorney General's approval of the issuance of the Series 2012 Bonds or required by the Underwriters before their issuance or for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained in this Ordinance, or at any time before or after issuance as are necessary or desirable and not contrary to or inconsistent with this Ordinance, and in all events which shall not adversely affect the interests of the owners of the Series 2012 Bonds. (3) To modify any of the provisions of this Ordinance in any other respect whatever, provided that: (i) such modification shall be, and be expressed to be, effective only after all Series 2012 Bonds outstanding at the date of the adoption of such modification shall cease to be outstanding, and (ii) such modification shall be specifically referred to in the text of all Series 2012 Bonds issued after the date of the adoption of such modification. 37. [OMITTED] [The remainder of this page has intentionally been left blank Signature page follows] -28- A.8.b PASSED AND APPROVED this 14'h day of August,2012. MAYOR THE CITY OF BEAUMONT,TEXAS ATTEST: CITY CLERK THE CITY OF BEAUMONT,TEXAS (SEAL) -29- A.8.b EXHIBIT A The City of Beaumont, Texas General Obligation Refunding Bonds, Series 2012 Interest Accrues From: MATURITY SCHEDULE Maturity(March 1) Principal Amount Interest Rate Yield The Bonds maturing on or after , are subject to optional redemption, in whole or in part, on , or any date thereafter, at a price equal to the principal amount thereof,plus accrued interest to the date of redemption. -30- A.8.b EXHIBIT B.1 NOTICE OF REDEMPTION THE CITY OF BEAUMONT,TEXAS GENERAL OBLIGATION REFUNDING BONSD SERIES 2004 Dated: November 1,2004 Redemption Date: March 1,2014 Redemption Reason/Source of Funds: Optional Redemption Total Redemption Amount: $1,295,000 CUSIP Nos. Maturity Rate Amount Price 03/01/2015 3.75% $370,000 100% 03/01/2016 5.25% $390,000 100% 03/01/2017 5.25% $410,000 100% NOTICE IS HEREBY GIVEN that the securities described herein have been called for redemption at the applicable redemption price plus accrued interest, if any, to the redemption date. On the redemption date, each security shall become due and payable, and interest shall cease to accrue. In the event less than the entire principal amount of a security is to be redeemed, a new security for the unredeemed portion will be issued in your name without charge. Payment of the redemption proceeds will be made on or after the redemption date upon presentation and surrender of the securities to: Begisteredl ertifred Mail: Air Courier: In person: Wells Fargo Bank,N.A. Wells Fargo Bank,N.A. Wells Fargo Bank,N.A. Corporate Trust Operations Corporate Trust Operations Northstar East Building P. O. Box 1517 N9303-121 608 2°d Avenue So., 12'h Floor Minneapolis,MN 55480-1517 6d'&Marquette Avenue Minneapolis,MN Minneapolis,MN 55479 -31- A.8.b E"ORTANT NOTICE Under section 3406(a)(1) of the Internal Revenue Code, the Paying Agent making payment of interest or principal on securities may be obligated to withhold a percentage of the payment to a holder who has failed to furnish the Registrar with a valid taxpayer identification number, certification that the number supplied is correct, and that the holder is not subject to backup withholding. Holders of the bonds who wish to avoid the application of these provisions should submit either a completed IRS (Internal Revenue Service)Form W-9 (use only if the holder is a U.S.person, including a resident alien), or the appropriate form W-8 (use only if you are neither a U.S. person or a resident alien), when presenting the bonds for payment. See IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. Publication 515 and W-8 forms and instructions are available through the IRS via their web site at www.irs.gov. THE CITY OF BEAUMONT,TEXAS By: WELLS FARGO BANK,N.A. Publication Date: ,2014 -32- A.8.b EXHIBIT B.2 Notice of Redemption THE CITY OF BEAUMONT,TEXAS CERTIFICATES OF OBLIGATION, SERIES 2005 Dated: May 13,2005 Redemption Date: March 1,2015 Redemption Reason/Source of Funds: Optional Redemption Total Redemption Amount: $17,300,000 CUSIP Nos. Maturity Rate Amount Price 03/01/2016 5.00% $1,220,000 100.000/0 03/01/2017 5.00% $1,305,000 100.00% 03/01/2018 5,00% $1,360,000 100.00% 03/01/2019 5.00% $1,775,000 100.000/0 03/01/2020 4.25% $1,810,000 100.000/0 03/01/2021 4.25% $1,855,000 100.000/0 03/01/2022 4.25% $1,900,000 100.009/0 03/01/2023 4.25% $1,960,000 100.009/0 03/01/2024 4.125% $2,020,000 100.009/0 03/01/2025 3.00% $2,095,000 100.00% NOTICE IS HEREBY GIVEN that the securities described herein have been called for redemption at the applicable redemption price plus accrued interest, if any, to the redemption date. On the redemption date, each security shall become due and payable, and interest shall cease to accrue. In the event less than the entire principal amount of a security is to be redeemed, a new security for the unredeemed portion will be issued in your name without charge. Payment of the redemption proceeds will be made on or after the redemption date upon presentation and surrender of the securities to: Registered/Cert�ed Mail: Air Courier: In person: The Bank of New York Mellon The Bank of New York Mellon The Bank of New York Mellon Trust Company,N.A. Trust Company,N.A. Trust Company,N.A. 2001 Bryan Street, I Vb Floor 2001 Bryan Street, I Ph Floor 2001 Bryan Street, 11d`Floor Dallas,Texas 75201 Dallas,Texas 75201 Dallas,Texas 75201 -33- A.8.b E"ORTANT NOTICE Under section 3406(a)(1) of the Internal Revenue Code, the Paying Agent making payment of interest or principal on securities may be obligated to withhold a percentage of the payment to a holder who has failed to furnish the Registrar with a valid taxpayer identification number, certification that the number supplied is correct, and that the holder is not subject to backup withholding. Holders of the bonds who wish to avoid the application of these provisions should submit either a completed IRS (Internal Revenue Service)Form W-9(use only if the holder is a U.S.person, including a resident alien), or the appropriate form W-8 (use only if you are neither a U.S. person or a resident alien), when presenting the bonds for payment. See IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. Publication 515 and W-8 forms and instructions are available through the IRS via their web site at www.irs.gov. THE CITY OF BEAUMONT,TEXAS By: The Bank of New York Mellon Trust Company,N.A. Publication Date: ,2015 -34- A.8.b EXHIBIT B.3 NOTICE OF REDEMPTION THE CITY OF BEAUMONT,TEXAS GENERAL OBLIGATION REFUNDING BONSD SERIES 2006 Dated: December 1,2006 Redemption Date: March 1,2016 Redemption Reason/Source of Funds: Optional Redemption Total Redemption Amount: $2,420,000 CUSIP Nos. Maturi Rate Amount Price 03/01/2017 3.625% $1,180,000 100.000/0 03/01/2018 4.000% $1,240,000 100.000/0 NOTICE IS HEREBY GIVEN that the securities described herein have been called for redemption at the applicable redemption price plus accrued interest, if any, to the redemption date. On the redemption date, each security shall become due and payable, and interest shall cease to accrue. In the event less than the entire principal amount of a security is to be redeemed, a new security for the unredeemed portion will be issued in your name without charge. Payment of the redemption proceeds will be made on or after the redemption date upon presentation and surrender of the securities to: Registered/Certified Mail. Air Courier: In person: The Bank of New York Mellon The Bank of New York Mellon The Bank of New York Mellon Trust Company,N.A. Trust Company,N.A. Trust Company,N.A. 2001 Bryan Street, 11'h Floor 2001 Bryan Street, I Vh Floor 2001 Bryan Street, 11`h Floor Dallas,Texas 75201 Dallas,Texas 75201 Dallas,Texas 75201 -35- A.8.b EWPORTANT NOTICE Under section 3406(a)(1) of the Internal Revenue Code, the Paying Agent making payment of interest or principal on securities may be obligated to withhold a percentage of the payment to a holder who has failed to furnish the Registrar with a valid taxpayer identification number, certification that the number supplied is correct, and that the holder is not subject to backup withholding. Holders of the bonds who wish to avoid the application of these provisions should submit either a completed IRS (Internal Revenue Service)Form W-9 (use only if the holder is a U.S.person, including a resident alien), or the appropriate form W-8 (use only if you are neither a U.S. person or a resident alien), when presenting the bonds for payment. See IRS Publication SIS, Withholding of Tax on Nonresident Aliens and Foreign Entities. Publication SIS and W-8 forms and instructions are available through the IRS via their web site at www.irs.Qov. THE CITY OF BEAUMONT,TEXAS By: The Bank of New York Mellon Trust Company,N.A. Publication Date: ,2016 -36- A.8.b EXHIBIT C SEE ESCROWAGREEMENT -37- 3 August 14,2012 Consider an ordinance authorizing the issuance and sale of City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2012, in an estimated amount not to exceed$21 Million and containing other matters related thereto RICH WITH OPPORTUNITY no BEAUM0,"N* T • E • X • A • S City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager Li PREPARED BY: Laura Clark, Chief Financial Officetv`� MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider an ordinance authorizing the issuance and sale of City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2012, in an estimated amount not to exceed $21 Million and containing other matters related thereto. BACKGROUND Results of the sale will be presented by the City's Financial Advisors, Dustin Traylor and Clarence Grier of RBC Capital Markets. A recommendation will be made to award the bonds to the underwriters. Interest is payable semiannually in March and September beginning March 1, 2013. The Bank of New York Mellon Trust Company,N.A. Dallas, Texas,will serve as paying agent/registrar. Delivery and receipt of the proceeds by the City are scheduled for September 13, 2012. FUNDING SOURCE Principal and interest is paid from the Water Utilities Fund which is supported by revenues of the waterworks and sewer system. RECOMMENDATION Approval of ordinance. A.5 ORDINANCE NO. ORDINANCE AUTHORIZING; THE ISSUANCE OF THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2012; EXECUTION OF BOND PURCHASE AGREEMENT; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, the City is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to issue bonds, without election, payable from the net revenues of its waterworks and sewer system to provide money for acquisitions, purchases, expansions, extensions, construction, reconstruction,renovation, equipping, and improvement of such system; and WHEREAS, the City now desires to issue bonds in order to provide funds to finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system; WHEREAS, the City is a home-rule municipality that: (i) adopted its charter under Section 5, Article XI, Texas Constitution; (ii) has a population of more than 50,000 and (iii) has outstanding long-term indebtedness that is rated by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for a long-term obligation. Now, Therefore BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS: 1. Findings and Determinations. It is hereby found and determined that the financing of capital improvements to the waterworks and sewer system will benefit the City. In addition, the matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 2. Definitions. Throughout this ordinance the following terms and expressions as used herein shall have the meanings set forth below: The term"Act" shall mean Chapter 1502, Texas Government Code, as amended. The term "Additional Parity Bonds" shall mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 21 of this Ordinance. 1 A.5 The term `Blanket Issuer Letter of Representations" means the Blanket Issuer Letter of Representations between the City and DTC. The term "Bond Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of, and the principal amounts of the Bonds registered to,each Owner. The terms "Bonds" and "Obligations" shall mean the Series 2012 Bonds, unless the context clearly indicates otherwise. The term "Business Day" shall mean any day which is not a Saturday, Sunday, a day on which banking institutions in the city where the principal corporate trust office of the Registrar is located are authorized by law or executive order to close,or a legal holiday. The term "City" shall mean The City of Beaumont,Texas. The term "Closing Date" means the date of the initial delivery of and payment for the Bonds. The term "Code" means the Internal Revenue Code of 1986, as heretofore and hereafter amended. The term"Comptroller" means the Comptroller of Public Accounts of the State of Texas. The term"DTC"means The Depository Trust Company of New York,New York, or any successor securities depository. The term "DTC Participant" means brokers and dealers, banks, trust companies, clearing corporations and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among DTC Participants. The term "Gross Revenues" shall mean all revenues, income and receipts of every nature derived or received by the City from the operation and ownership of the System (but excluding any utility deposits) and the interest income from the investment or deposit of money in the Revenue Fund, the Interest and Sinking Fund, and the Reserve Fund. Gross Revenues shall not include any federal credit subsidy payments received by the City as a result of the election to designate the City's Waterworks and Sewer System Revenue Bonds, Taxable Series 2010B (Build America Bonds—Direct Payment to Issuer)as Build America Bonds. The term "Interest Payment Date", when used in connection with any Bond, shall mean March 1, 2013, and each September 1 and March 1 thereafter until maturity or earlier redemption of such Bond. The term"Issuer" shall mean the City. The term "Maintenance and Operation Expenses" shall mean the reasonable and 2 A.5 necessary expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs and extensions necessary to render efficient service, and all payments under contracts, now or hereafter defined as operating expenses by the Legislature of the State of Texas. Depreciation shall never be considered as a Maintenance and Operation Expense. The term"MSRB" shall mean the Municipal Securities Rulemaking Board. The term "Net Revenues" shall mean all Gross Revenues remaining after deducting the Maintenance and Operation Expenses. For purposes of any reimbursement agreement authorized in Section 20(g) of this Ordinance, agreements to make payments out of Net Revenues, in all cases Net Revenues for such purpose, shall mean only Net Revenues available after satisfaction of obligations to holders of current and future priority liens against such Net Revenues. The term "Ordinance" as used herein and in the Bonds shall mean this ordinance authorizing the Bonds and all amendments and supplements hereto. The term "Owner" shall mean any person who shall be the registered owner of any outstanding Bonds. The term "Parity Bonds" shall mean the Bonds, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2006, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2006A, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2008, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2010, and the City's outstanding Waterworks and Sewer Revenue, Series 2010A, and the City's outstanding Waterworks and Sewer Revenue Bonds, Taxable Series 2010B (Build America Bonds—Direct Payment to Issuer), and each series of Additional Parity Bonds from time to time hereafter issued, but only to the extent such Parity Bonds remain outstanding within the meaning of this Ordinance. The term "Paying Agent" for the Bonds 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 "Registrar" shall mean The Bank of New York Mellon Trust Company, N.A., Dallas, Texas, and its successors in that capacity. The term "Reserve Fund Requirement" shall mean an amount equal to the average annual principal and interest requirement on the Parity Bonds, which may be determined and redetermined each year by the City but in no event less frequently than upon the issuance of each series of Parity Bonds. 3 A.5 The term"Rule" shall mean SEC Rule 15c-12, as amended from time to time. The term"SEC" shall mean the United States Securities and Exchange Commission. The term "Special Project" shall mean, to the extent permitted by law, any property, improvement or facility declared by the City not to be part of the System and substantially all of the costs of the acquisition, construction and installation of which is paid from proceeds of a financing transaction other than the issuance of bonds payable from ad valorem taxes or Net Revenues of the System, and for which all maintenance and operation expenses are payable from sources other than revenues of the System, but only to the extent that and for so long as all or any part of the revenues or proceeds of which are or will be pledged to secure the payment or repayment of such costs of acquisition, construction and installation under such financing transaction. The term "System" shall mean all properties, facilities, improvements, equipment, interests and rights constituting the waterworks and sewer system of the City, including all future extensions, replacements, betterments, additions, improvements, enlargements, acquisitions, purchases and repairs to the System,but excluding all Special Projects. The term "Underwriter" shall mean, collectively, Estrada Hinojosa and Company,Inc., First Southwest Company,and Coastal Securities,Inc. 3. Authorization. The Bonds shall be issued in fully registered form in the total authorized aggregate amount of TWENTY MILLION AND N01100 DOLLARS ($20,000,000.00) for the purpose of .providing funds to (i) finance capital expenditures acquisition, purchase, construction, reconstruction, improvement, renovation, expansion, or equipping of property, buildings, structures, facilities, or related infrastructure for the City's waterworks and sewer system, and(ii)paying costs of issuance of the Bonds(the"Project"). 4. Desiga on Date and interest Payment Dates. The Bonds shall be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2012" and shall be dated August 1, 2012. The Bonds shall bear interest at the rates set forth in Section 5 below from the later of August 1, 2012, or the most recent Interest Payment Date to which such interest has been paid or duly provided for, calculated on the basis of a 360 day year of twelve 30 day months, payable on March 1, 2013, and semiannually thereafter on September 1 and March 1 of each year until maturity or prior redemption. 5. Initial Bonds;Numbers and Denominations. The Bonds shall be in the total aggregate principal amount of$20,000,000.00 and shall be issued in the principal amounts, and bearing interest at the rates set forth in the following schedule, shall be numbered from CR-1 and upward, and may be transferred and exchanged as set out in this Order. Such Bonds shall mature on September 1 in each of the years and in the amounts set out in such schedule. The Bonds delivered in transfer of or in exchange for other Bonds shall be 4 A.5 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 Bonds or Bonds in lieu of which they are delivered. Bond Year Principal Interest Number of Maturity Amount Rate CR-1 20 CR-2 20 CR-3 20 CR-4 20 SEE EkWBIT A CR-5 20 CR-6 20 CR-7 20 CR-8 20 CR-9 20 CR-10 20 6. Execution of Bonds, Seal. The Bonds shall be signed by the Mayor or Mayor Pro Tern and countersigned by the City Clerk or Deputy City Clerk,by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the City had been manually impressed upon each of the Bonds. If any officer of the City whose manual or facsimile signature shall appear on the Bonds shall cease to be such officer before the authentication of such Bonds or before the delivery of such Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. 7. Ayuroval by Attorney General: Registration by Comptroller. The Bonds to be MR— initially issued shall be delivered to the Attorney General of Texas for approval and shall be registered by the Comptroller of Public Accounts of the State of Texas. The manually executed registration Bond of the Comptroller of Public Accounts substantially in the form provided in Section 18 of this Ordinance shall be attached or affixed to the Bonds to be initially issued. 8. Authentication. Except for the Bonds to be initially issued, which need not be authenticated by the Registrar, only such Bonds which bear thereon a certificate of authentication, substantially in the form provided in Section 18 of this Ordinance, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the Bonds so authenticated were delivered by the Registrar hereunder. 9. Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Bonds. The principal of and premium, if any, on the Bonds shall be 5 A.5 payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they respectively become due and payable, whether at maturity or by prior redemption, at the principal corporate trust office of the Registrar. The interest on each Bond shall be payable by check on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date,to the address of such Owner as shown on the Bond Register. Any accrued interest payable at maturity on a Bond shall be paid upon presentation and surrender of such Bond at the principal corporate trust office of the Registrar. If the date for payment of the principal of or interest on any Bond is not a Business Day, then the date for such payment shall be the next succeeding Business Day, and payment on such date shall have the same force and effect as if made on the original date such payment was due. 10. Successor Registrars.trars. The City covenants that at all times while any Bonds are outstanding it will provide a legally qualified bank, trust company, financial institution or other agency to act as Registrar for the Bonds. The City reserves the right to change the Registrar for the Bonds on not less than 60 days written notice to the Registrar, so long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Bonds. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the Bond Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 11. SMial Record Date. If interest on any Bond is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen(15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. 12. Ownership; Unclaimed Principal and Interest. The City, the Registrar and any other person may treat the person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of making and receiving payment of principal of and premium, if any, or interest on such Bond, and for all other purposes, whether or not such Bond is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the owner of any Bond in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Bond to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Bonds remaining unclaimed by the Owner after the expiration of three years from the date such 6 A.5 amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the applicable provisions of Texas law, including Title 6 of the Texas Property Code, as amended. 13. Registration. Transfer, and Exchanste. So long as any Bonds remain outstanding, the Registrar shall keep the Bond Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Bonds in accordance with the terms of this Ordinance. If the Registrar does not maintain its principal offices in the State of Texas, the City agrees to keep a Bond Register at its offices which is identical to the Bond Register maintained by the Registrar and the Registrar will notify the City as to any changes in the Bond Register within 1 business day. Each Bond shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Bond in proper form for transfer, the Registrar shall authenticate and deliver in exchange therefor, within 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 type, maturity and aggregate principal amount and bearing interest at the same rate as the Bond or Bonds so presented. All Bonds shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Bond or Bonds of the same type,maturity and interest rate and in any authorized denomination, in an aggregate amount equal to the unpaid principal amount of the Bond or Bonds presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Bonds in accordance with the provisions of this Section 13. Each Bond delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such Bond is delivered. The City or the Registrar may require the Owner of any Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Bond. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. Neither the City nor the Registrar shall be required to transfer or exchange any Bond called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Bond called for redemption in part. 14. Mutilated, Lost, or Stolen Bonds. Upon the presentation and surrender to the Registrar of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate, and principal amount, bearing a number not contemporaneously outstanding. If any Bond is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall execute and the 7 A.5 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 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. 15. Cancellation of Bonds. All Bonds paid in accordance with this Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate Bonds of destruction of such Bonds. 16. Book-Entry System. (a) Notwithstanding any other provision hereof, upon initial issuance of the Bonds but at the sole election of the Underwriter, the ownership of the Bonds shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section,all of the outstanding Bonds shall be registered in the name of Cede&Co., as nominee 8 A.5 of DTC. The definitive Bonds shall be initially issued in the form of a single separate Bond for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section,then the following provisions shall take effect with respect to the Bonds. (b) With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the City and the Registrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the City and the Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than an Owner of a Bond, as shown on the Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than an Owner of a Bond, as shown in the Register, of any amount with respect to principal of,premium, if any,or interest on the Bonds. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Register as the absolute Owner of such Bond for the purpose of payment of principal of,premium,if any, and interest on the Bonds, for the purpose of all matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owners, as shown in the Register as provided in this Order, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a Bond evidencing the obligation of the City to make payments of amounts due pursuant to this Ordinance. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the word"Cede&Co."in this Order shall refer to such new nominee of DTC. (c) In the event that the City in its sole discretion determines that the beneficial owners of the Bonds be able to obtain Bonds, or in the event DTC discontinues the services described herein, the City shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, and notify DTC and DTC Participants, as identified by DTC, of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or (ii) notify DTC and DTC Participants, as identified by DTC, of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC , as identified by DTC. In such event,the Bonds shall no longer be restricted to being registered in the Register in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Owners transferring or exchanging Bonds shall designate,in accordance with the provisions of this Ordinance. (d) The execution and delivery of the Blanket Letter of Representations is hereby ratified and approved and the Mayor is hereby authorized and directed to execute a new Blanket Letter of Representations, if required,with such changes as may be approved by the Mayor or City Manager of the City. 9 A.5 (e) Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bonds are registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Bonds, and all notices with respect to such Bonds, shall be made and given, respectively, in the manner provided in the Blanket Letter of Representations. 17. Optional and Mandatory Rede=ion;Defeasance. (a) The City reserves the right, at its option, to redeem Bonds having stated maturities on and after March 1, 2023, in whole or in part, on March 1, 2022, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed,the City shall determine the Bonds,or portions thereof,to be redeemed. [The Bonds maturing in the years (the "Term Bonds") are also subject to mandatory redemption prior to scheduled maturity, in the amount, on the date, and on the terms set out in the form of Bonds in this Ordinance, at a price of par plus accrued interest to the date fixed for redemption.] Bonds may be redeemed only in integral multiples of $5,000. If a Bond subject to redemption is in a denomination larger that $5,000, a portion of such Bond may be redeemed, but only in integral multiples of $5,000. Upon surrender of any Bond for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Bond or Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. Not less than thirty(30)days prior to a redemption date for the Bonds,the City shall cause a notice of redemption to be sent by United States mail, first class,postage prepaid,to each Owner of each Bond to be redeemed in whole or in part,at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date,the redemption price,the place at which Bonds are to be surrendered for payment and, if less than all the Bonds are to be redeemed, the numbers of the Bonds or portions thereof to be redeemed. Any notice of redemption so mailed shall be conclusively presumed to have been duly given whether or not the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Bonds or portions thereof to be redeemed. When Bonds have been called for redemption in whole or in part and due provision made to redeem the same as herein provided, the Bonds or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of being paid solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. (b) The City may defease the provisions of this Ordinance or any ordinance applicable to any Parity Bonds being defeased and discharge its obligation to the Owners of any or all of the Bonds, or any or all Parity Bonds to pay principal,interest and redemption premium, if any,thereon in any manner permitted by law, including by depositing with the Paying Agent/Registrar, or if 10 A.5 authorized by Texas law, with any national or state bank having trust powers and having combined capital and surplus of at least $50 million, or with the State Treasurer of the State of Texas either: (a) cash in an amount equal to the principal amount and redemption premium, if any, of such bonds being defeased plus interest thereon to the date of maturity or redemption; or (b) pursuant to an escrow or trust agreement, cash and/or direct bonds of, or bonds the principal of and interest on which are guaranteed by or secured by the pledge of direct bonds of the United States of America, in principal amounts and maturities and bearing interest at rates sufficient to provide for the timely payment of the principal amount and redemption premium, if any, of such bonds being defeased plus interest thereon to the date of maturity or redemption; provided, however, that if any of such bonds being defeased are to be redeemed prior to their respective dates of maturity, provision shall have been made for giving notice of redemption as provided in this Ordinance or ordinance applicable to the Parity Bonds being defeased. Upon such deposit, such bonds being defeased shall no longer be regarded to be outstanding or unpaid. Any surplus amounts not required to accomplish such defeasance shall be returned to the City. 18. Form. The form of the Bonds, including the form of the Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Bond of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Bonds initially issued shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: FORM OF BOND OF THE SERIES 2012 BONDS UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON NUMBER DENOMINATION CR- $ REGISTERED REGISTERED THE CITY OF BEAUMONT,TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2012 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: September 1, REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS 11 A.5 THE CITY OF BEAUMONT,TEXAS (the "City"),promises to pay to the registered owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this Bond at the designated corporate trust office of THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., Dallas, Texas (the "Registrar"), or at its principal payment office in Dallas, Texas, the principal amount identified above, payable in any coin or currency of the United States of America which on the date of payment of such principal is legal tender for the payment of debts due the United States of America, and to pay interest thereon at the rate shown above, calculated on the basis of a 360-day year of twelve 30-day months,from the later of August 1,2012, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Bond is payable by check on March 1, 2013, and semiannually thereafter on each September 1 and March 1,mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th day of the month next preceding each interest payment date. THIS BOND is one of a duly authorized issue of Bonds, aggregating $20,000,000.00 (the "Bonds"), issued in accordance with the Constitution and the laws of the State of Texas,particularly Chapter 1502, Texas Government Code, as amended, for the cost of acquisition, purchase, construction, reconstruction, improvement, renovation, expansion or equipping of property, buildings, structures, facilities, or related infrastructure for the City's waterworks and sewer system and the cost of issuance of the Bonds,pursuant to an ordinance duly adopted by the City Council of the City on August 14, 2012 (the "Ordinance"),which Ordinance is of record in the official minutes of the City Council. THIS BOND AND ALL OF THE BONDS OF THIS SERIES are special obligations of the City, and together with the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2006, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2006A, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2008, the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2010, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2010A, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Taxable Series 2010B (Build America Bonds—Direct Payment to Issuer) are equally and ratably payable from and secured by a first lien on the "Net Revenues" collected and received by the City from the operation and ownership of those properties, facilities, improvements, equipment, interests, rights and powers constituting the waterworks and sewer system of the City which are defined in the Ordinance as the "System", which Net Revenues are required to be set aside for and pledged to the payment of this series of bonds, the outstanding bonds and all additional bonds issued on a parity therewith, in the Interest and Sinking Fund and the Reserve Fund required to be maintained for the payment of all such bonds, all as more fully described and provided for in and subject to the restrictions and limitations imposed by the Ordinance. This Bond and the series of which it is a part, together with the interest thereon, are payable solely from such Net Revenues and do not constitute an indebtedness or general obligation of the City. THE HOLDER OF THIS OBLIGATION IS NOT ENTITLED TO DEMAND PAYMENT OF THIS OBLIGATION OUT OF ANY MONEY RAISED BY TAXATION. 12 A.5 THE CITY RESERVES THE RIGHT, at its option, to redeem the Bonds having stated maturities on or after March 1, 2023, in whole or in part, on March 1, 2022, or any date thereafter, in integral multiples of $5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. [THE BONDS maturing in the years (the "Term Bonds") are also subject to mandatory redemption prior to maturity in the amounts and on the dates set out below, at a price equal to the principal amount to be redeemed plus accrued interest to the redemption date: TERM BONDS DUE Date Amount TERM BONDS DUE The Paying Agent shall select for redemption by lot, or by any other customary method that results in random selection, a principal amount of Term Bonds equal to the aggregate principal amount of such Term Bonds to be redeemed, shall call such Term Bonds for redemption on the scheduled mandatory redemption date, and shall give notice of such redemption in accordance with the Ordinance authorizing the Bonds. The principal amount of Term Bonds required to be mandatorily redeemed shall be reduced by the principal amount of Term Bonds which, at least 45 days prior to the mandatory redemption date, shall have been delivered to the Registrar for cancellation or shall have been optionally redeemed and not previously credited against a mandatory redemption requirement. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior the date fixed for redemption by first class mail, addressed to the registered owner of each 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. The Bonds may be defeased as provided in the Ordinance authorizing the Bonds. 13 A.5 THIS BOND is transferable only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. THE BONDS are exchangeable at the principal corporate trust office of the Registrar for Bonds in the principal amount of$5,000 or any integral multiple thereof, subject to the terms and conditions of this Ordinance. NEITHER THE CITY NOR THE REGISTRAR shall be required to transfer or exchange any Bond called for redemption, in whole or in part,within forty-five(45)days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a 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 either(i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or(ii)authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Bond, by acceptance hereof, acknowledges and agrees to be bound by all the tennis and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Bonds and will cause notice of any change of registrar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly issued and delivered;that all acts,conditions and things required or proper to be performed,to exist and to be done precedent to or in the issuance and delivery of this Bond have been performed, exist and have been done in accordance with law; that the bonds of this series do not exceed any statutory limitation; and that provision has been made for the payment of principal and interest on this bond and all of the bonds of this series by the aforesaid lien on and pledge of the Net Revenues of the System. IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signature of the Mayor 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. THE CITY OF BEAUMONT,TEXAS Mayor (SEAL) City Clerk 14 A.5 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. WITNESS MY SIGNATURE AND SEAL this day of ,2012. xxxxxxxx Comptroller of Public Accounts (Seal) of the State of Texas FORM OF REGISTRAR'S AUTIENTICATION CERTIFICATE REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been delivered pursuant to the Ordinance described in the text of this Bond. The Bank of New York Mellon Trust Company,N.A. Dallas,Texas,as Registrar By: Authorized Signature Date of Authentication: FORM OF ASSIGNMENT ASSIGNMENT For value received,the undersigned hereby sells,assigns,and transfers unto (Please print or type name,address,and zip code of Transferee) 15 A.5 (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: The signature above must correspond to the name of the registered NOTICE: Signature must be owner as shown on the face guaranteed by a member firm of this bond in of the New York Stock Exchange every particular,without or a commercial bank or trust any alteration,enlargement company. or change whatsoever. END OF FORM OF BOND OF THE SERIES 2012 BONDS 19. Legal .Opinion; CUSIP Numbers. The approving opinion of Orgain Bell& Tucker, LLP, Beaumont, Texas, Bond Counsel, and CUSIP Numbers may be printed on the Bonds, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Bonds. 20. (a) Pledge and Source of Payment. The City hereby covenants and agrees that all Gross Revenues of the System shall, as collected and received by the City, be deposited and paid into the special funds established in this Ordinance, and shall be applied in the manner hereinafter set forth, in order to provide for (i) the payment of all Maintenance and Operation Expenses, and (ii) the payment of principal, interest and any redemption premiums on the Parity Bonds, and all expenses of paying, securing and insuring the same. The Parity Bonds shall constitute special obligations of the City that shall be payable solely from, and shall be equally and ratably secured by a first lien on, the Net Revenues, as collected and received by the City from the operation and ownership of the System, which Net Revenues shall, in the manner hereinafter provided, be set aside for and are hereby pledged by the City to the payment of the Parity Bonds in the Interest and Sinking Fund and the Reserve Fund as hereinafter provided, and except as otherwise expressly provided herein, the Parity Bonds shall be in all respects on a parity with and of equal dignity with one another. The holders of the Parity Bonds shall never have the right to demand payment of either the principal of or interest on the Parity Bonds out of any funds raised or to be raised by taxation. IT IS ORDERED AND DIRECTED that this Ordinance pledging Net Revenues for the 16 A.5 payment of the Bonds to the extent provided herein be filed and recorded in the records of the City as necessary to cause the pledge to be valid under Section 1201.44 of the Government Code of Texas. At any time while any of the Bonds are outstanding, if it is determined by the City or demanded by the holder of any Bonds that further action by the City is required to make the pledge valid or maintain the validity of the pledge, the City covenants and hereby directs the officers of the City to make such filings, including but not limited to appropriate filings under Chapter 9 of the Business and Commerce Code of Texas as are necessary to make the pledge valid or continue its validity. (b) Construction Fund. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2012, Construction Fund". Immediately after the sale and delivery of the Bonds,that portion of the proceeds of the Bonds to be used for the cost of the Project and the cost of issuance of the Bonds shall be deposited into such Construction Fund and disbursed for such purposes. Pending completion of construction of the Project, interest earned on such proceeds may be used,at the City's discretion,for the Project and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1201.043 of the Government Code of Texas, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of the Project, the monies, if any, remaining in such Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. (c) Rates and Charges. So long as any Parity Bonds remain outstanding,there shall be fixed, charged and collected rates and charges for the use and services of the System, which may be fully sufficient at all times: (i) to pay all Maintenance and Operation Expenses; and (ii) to produce Net Revenues in each fiscal year at least equal to 110 percent of the principal and interest requirements scheduled to occur in such fiscal year on all Parity Bonds then outstanding plus an amount equal to the sum of all deposits required to be made to the Reserve Fund in such fiscal year, but in no event less than the amount required to establish and maintain the Interest and Sinking Fund, the Reserve Fund as hereinafter provided, and, to the extent that funds for such purpose are not otherwise available, to pay all other outstanding obligations payable from the Net Revenues of the System as and when the same become due. The City covenants that it will not grant or permit any free service from the System except for public buildings and institutions operated by the City. (d) Special Funds. The following special funds shall be maintained and accounted for as hereinafter provided so long as any of the Parity Bonds remain outstanding: (i) Waterworks and Sewer System Revenue Fund(the "Revenue Fund"); (ii) Waterworks and Sewer System Revenue Bond Interest and Sinking Fund 17 A.5 (the "Interest and Sinking Fund"); and (iii) Waterworks and Sewer System Revenue Bond Reserve Fund (the "Reserve Fund"). The Revenue Fund shall be maintained as a separate account on the books of the City. The Interest and Sinking Fund and the Reserve Fund shall be maintained at an official depository bank of the City, separate and apart from all other funds and accounts of the City, and shall constitute trust funds which shall be held in trust for the benefit of the holders of the Parity Bonds, and the proceeds of which (except for interest income, which shall be transferred to the Revenue Fund) shall be and are hereby pledged to the payment of the Parity Bonds. All of the Funds named above shall be used solely as provided in this Ordinance so long as any Parity Bonds remain outstanding. (e) Flow of Funds. All Gross Revenues of the System shall be deposited as collected into the Revenue Fund. Moneys from time to time on deposit to the credit of the Revenue Fund shall be applied as follows in the following order of priority: (i) First, to pay Maintenance and Operation Expenses and to provide by encumbrance for the payment of all obligations incurred by the City for Maintenance and Operation Expenses which may include an operating reserve equal to one month's estimated Maintenance and Operation Expenses. (ii) Second, to make all deposits into the Interest and Sinking Fund required by this Ordinance and any ordinance authorizing the issuance of any outstanding Parity Bonds and any ordinance authorizing the issuance of Additional Parity Bonds. (iii) Third, to make all deposits into the Reserve Fund required by this Ordinance and any ordinance authorizing the issuance of any outstanding Parity Bonds and any ordinance authorizing the issuance of Additional Parity Bonds. (iv) Fourth, to pay any amounts due to any bond insurer of Parity Bonds not paid pursuant to subsections(ii) or(iii)above. (v) Fifth, for any lawful purpose, including transfers to the General Fund as permitted by law. Such permitted transfers to the General Fund are hereby expressly authorized by this Ordinance and the purposes for which such surplus revenues may be used shall include, but not be limited to, payment of any other debt, expense, or obligation of the City. Whenever the total amounts on deposit to the credit of the Interest and Sinking Fund and the Reserve Fund shall be equivalent to the sum of the aggregate principal amount of all outstanding Parity Bonds plus the aggregate amount of all interest accrued and to accrue thereon, no further payments need be made into the Interest and Sinking Fund or the Reserve Fund. (f) Interest and Sinking Fund. On or before the last Business Day of each 18 A.5 month so long as any Parity Bonds remain outstanding, after making all required payments and provision for payment of Maintenance and Operation Expenses, there shall be transferred into the Interest and Sinking Fund from the Revenue Fund the following amounts: (i) Such amounts, in approximately equal monthly installments, as will be sufficient to pay the interest scheduled to become due on the Parity Bonds on the next interest payment date; and (ii) Such amounts, in approximately equal monthly installments, as will be sufficient to pay the next maturing principal of the Parity Bonds, including the principal amounts of, and any redemption premiums on, any Parity Bonds payable as a result of the exercise or operation of any redemption provision contained in this Ordinance or in any ordinance authorizing the issuance of Parity Bonds. Moneys deposited to the credit of the Interest and Sinking Fund (except for interest income, which shall be transferred to the Revenue Fund) shall be used solely for the purpose of paying principal (either at maturity or prior redemption or to purchase Parity Bonds in the open market to be credited against mandatory redemption requirements), interest and redemption premiums on the Parity Bonds,plus all bank charges and other costs and expenses relating to such payment, on a pro rata basis among all series of Parity Bonds. On or before each principal and/or interest payment date for the Parity Bonds, the City shall transfer from the Interest and Sinking Fund to the paying agents for the Parity Bonds an amount equal to the principal, interest and redemption premiums payable on the Parity Bonds on such date, together with an amount equal to all bank charges and other costs and expenses relating to such payment. The paying agents for the Parity Bonds shall totally destroy all paid Parity Bonds and coupons (if any) and shall provide the City with an appropriate Bond of destruction. (g) Reserve Fund. Unless the Reserve Fund is fully funded, on or before the last Business Day of each month so long as any Parity Bonds remain outstanding, after making all required payments and provision for payment of Maintenance and Operation Expenses, and after making the transfers into the Interest and Sinking Fund required in the preceding Section, there shall be transferred into the.Reserve Fund from the Revenue Fund an amount at least equal to one-sixtieth (1160 ') of the average annual principal and interest requirements on the Parity Bonds, so that the Reserve Fund shall contain, in no more than 60 months after the issuance of each such issue of Parity Bonds, money and investments in an aggregate amount at least equal to the average annual principal and interest requirements on all Parity Bonds then outstanding. After such amount has accumulated in the Reserve Fund and so long thereafter as such Fund contains such amount, no further deposits shall be required to be made into the Reserve Fund, and any excess amounts may be transferred to the Revenue Fund. But if and whenever the balance in the Reserve Fund is reduced below such amount, monthly deposits into such Fund shall be resumed and continued in amounts at least equal to one-sixtieth (1/60th) of the average annual principal and interest requirements on the Parity Bonds until the Reserve Fund has been restored to such amount; provided however, if a Reserve Fund Surety Policy has been obtained by the City pursuant to the next paragraph below, then the provisions of such next paragraph shall govern and control with respect to replenishment of amounts drawn under the Reserve Fund Surety Policy. The Reserve Fund shall be used to pay the principal of and interest on the Parity 19 A.5 Bonds at any time when there is not sufficient money available in the Interest and Sinking Fund for such purpose and it may be used finally to pay and retire the last Parity Bonds to mature or be redeemed. To the extent permitted by law, the City expressly reserves the right at any time to satisfy all or any part of the amounts required to be on deposit in the Reserve Fund (the "Reserve Fund Requirement") by obtaining for the benefit of the Reserve Fund one or more Reserve Fund Surety Policies (a "Reserve Fund Surety Policy"). The purchase of such Reserve Fund Surety Policy is approved, and the Mayor, Mayor Pro-Tem, City Manager, Chief Financial Officer, City Clerk, Deputy City Clerk, and all other appropriate officers and agents of the City are each authorized to execute such documents, including but not limited to a reimbursement agreement, to grant a subordinated pledge and lien on the Net Revenues as security for the payment of amounts due under the reimbursement agreement (which grant if made is hereby approved), and to do any and all things necessary or desirable to obtain such a Policy if in the discretion of the acting official deems its acquisition in the best interests of the City. In the event the City elects to substitute at any time a Reserve Fund Surety Policy for any funded amounts in the Reserve Fund, it may apply any bond proceeds thereby released, to the greatest extent permitted by law, to any purposes for which the bonds were issued, and if all such purposes have been satisfied, to the payment of debt service on such bonds, and it may apply any other funds thereby released to any of the purposes for which such funds may lawfully be applied including the payment of debt service on the Parity Bonds. A Reserve Fund Surety Policy shall be an insurance policy or other similar guarantee in a principal amount equal to the portion of the Reserve Fund Requirement to be satisfied which is issued by a financial institution or insurance company with a rating for its long term unsecured debt or claims paying ability in the highest letter category by two major municipal securities evaluation sources. The premium for any such policy shall be paid from bond proceeds or other funds of the City lawfully available for such purpose. The City reserves the right to fund any increase in the Reserve Fund Requirement caused by the issuance of Additional Parity Bonds by the purchase of a Reserve Fund Surety Policy in the amount of such increase or by making transfers from the Revenue Fund to the Reserve Fund, in approximately equal monthly installments, in amounts sufficient to accumulate the increase in the Reserve Fund Requirement within sixty (60) months of the issuance of such Additional Parity Bonds. If the Reserve Fund contains only cash and the balance in the Reserve Fund is reduced below the Reserve Fund Requirement at any time, the City shall make monthly transfers from the Revenue Fund to the Reserve Fund, in approximately equal monthly installments, in amounts sufficient to restore the balance in the Reserve Fund to the Reserve Fund Requirement within twelve (12) months of the date on which the balance in the Reserve Fund was so reduced. If the Reserve Fund contains a Reserve Fund Surety Policy (and no cash) and a draw is made against such policy, the City shall make monthly transfers from the Revenue Fund, in approximately equal monthly installments, in amounts sufficient to reimburse the amount drawn under such policy within twelve (12) months. If the Reserve Fund contains a combination of cash and a Reserve Fund Surety Policy, and the balance in the Reserve Fund is reduced below the Reserve Fund Requirement by a combination of cash withdrawals and draws against the Reserve Fund Surety Policy, the City shall make monthly transfers from the Revenue Fund, in approximately equal monthly installments, in amounts sufficient to restore the cash balance in the Reserve Fund and reimburse the amount drawn under such policy within twelve (12) months, with reimbursement to be made for all amounts drawn under such policy before any cash deposits are made into the 20 I A.5 Reserve Fund. Any reimbursement of amounts drawn against a Reserve Fund Surety Policy shall be limited to the amounts actually paid under such policy, and the City shall have no obligation to make any reimbursement payment with respect to any such policy except as provided herein. (h) Deficiencies in Funds. If in any month there shall not be deposited into any Fund maintained pursuant to this Section 20 the full amounts required herein, amounts equivalent to such deficiency shall be set apart and paid into such Fund or Funds from the first available and unallocated money in the Revenue Fund, and such payment shall be in addition to the amounts otherwise required to be paid into such Funds during the succeeding month or months. To the extent necessary,the rates and charges for the System shall be increased to make up for any such deficiencies. (i) Investment of Funds; Transfer of Investment Income. Money in each Fund maintained pursuant to this Section of this Ordinance may, at the option of the City, be invested as permitted by law, provided that all such deposits and investments shall be made in such manner that the money required to be expended from any Fund will be available at the proper time or times, and provided further that in no event shall deposits or investment of money in the Reserve Fund mature later than the final maturity date of the Parity Bonds. Any obligation in which money is so invested shall be kept and held in the Fund from which the investment was made. All such investments shall be promptly sold when necessary to prevent any default in connection with the Parity Bonds. All interest and income derived from such deposits and investments shall be transferred or credited as received to the Revenue Fund, and shall constitute Gross Revenues of the System; provided, however, to the extent such interest and income is derived from bond proceeds, such interest and income shall not constitute Gross Revenues of the System and shall only be used for the purposes for which the bond proceeds may be used. 21. Additional Bonds. (a) Additional Parity Bonds. The City reserves the right to issue, for any lawful purpose, including the refunding of any previously issued Parity Bonds or any other bonds or obligations of the City issued in connection with the System, one or more series of Additional Parity Bonds payable from, and secured by a first lien on and pledge of, the Net Revenues of the System, on a parity with the Bonds and any other Additional Parity Bonds then outstanding;provided,however,that no Additional Parity Bonds may be issued unless: (i) The Additional Parity Bonds mature on September 1, and interest is payable on March 1 and September 1; (ii) The Interest and Sinking Fund and the Reserve Fund each contain the amount of money then required to be on deposit therein; (iii) For either the preceding Fiscal Year or any consecutive 12-month calendar period ending no more than 90 days prior to adoption of the ordinance authorizing such Additional Parity Bonds,Net Revenues were equal to at least 125%of the average annual principal and interest requirements on all Parity Bonds that will be outstanding after the 21 A.5 issuance of the series of Additional Parity Bonds then proposed to be issued, as certified by the City's Finance Officer or by an independent certified public accountant or firm of independent certified public accountants; or (iv) If the City cannot meet the test described in (iii) above, but a change in the rates and charges applicable to the System becomes effective at least sixty(60) days prior to the adoption of the ordinance authorizing Additional Parity Bonds and the City's Finance Officer certifies that, had such change in rates and charges been effective for the preceding fiscal year or 12 consecutive calendar month period ending no more than 90 days prior to adoption of said ordinance, the Net Revenues for such period would have met the test described in(iii)above. (b) Subordinate Lien Obligations. The City reserves the right to issue, for any lawful purpose, bonds, notes or other obligations (including but not limited to reimbursement agreements undertaken to obtain Reserve Fund Security Policies) secured in whole or in part by liens on and pledges of the Net Revenues that are junior and subordinate to the lien on and pledge of Net Revenues securing payment of the Parity Bonds. Such subordinate lien obligations may be further secured by any other source of payment lawfully available for such purposes. (c) Special Project Bonds. The City reserves the right to issue revenue bonds secured by liens on and pledges of revenues and proceeds derived from Special Projects. 22. Covenants and Provisions Relating to all Parity Bonds. (a) Punctual Payment of Parity Bonds. The City will punctually pay or cause to be paid the interest on and principal of all Parity Bonds according to the terms thereof and will faithfully do and perform, and at all times fully observe, any and all covenants, undertakings, stipulations and provisions contained in this Ordinance and in any ordinance authorizing the issuance of Additional Parity Bonds. (b) Maintenance of Ste. So long as any Parity Bonds remain outstanding, the City covenants that it will at all times maintain the System, or within the limits of its authority cause the same to be maintained, in good condition and working order and will operate the same, or cause the same to be operated, in an efficient and economical manner at a reasonable cost and in accordance with sound business principles. In operating and maintaining the System, the City will comply with all contractual provisions and agreements entered into by it and with all valid rules, regulations, directions or order of any governmental, administrative or judicial body promulgating same, noncompliance with which would materially an adversely affect the operation of the System. (c) Sale or Encumbrance of S,, sue. So long as any Parity Bond remain outstanding, the City will not sell, dispose of or, except as permitted in this Ordinance, further encumber the System; provided, however, that this provision shall not prevent the City from disposing of any portion of the System which is being replaced or is deemed by the City to be obsolete, worn out, surplus or no longer needed for the proper operation of the System. Any 22 A.5 agreement pursuant to which the City contracts with a person,corporation, municipal corporation or political subdivision to operate the System or to lease and/or operate all or part of the System shall not be considered as an encumbrance of the System. (d) Insurance. The City further covenants and agrees that it will keep the System insured with insurers of good standing against risks,accidents or casualties against which and to the extent insurance is customarily carried by political subdivisions of the State of Texas operating similar properties, to the extent that such insurance is available. The cost of all such insurance, together with any additional insurance, shall be a part of the Maintenance and Operation Expenses. All net proceeds of such insurance shall be applied to repair or replace the insured property that is damaged or destroyed, or to make other capital improvements to the System, or to redeem Parity Bonds. (e) Accounts, Records and Audits. So long as any Parity Bonds remain outstanding, the City covenants and agrees that it will maintain a proper and complete system of records and accounts pertaining to the operation of the System in which full, true and proper entries will be made of all dealings, transactions, business and affairs which in any way affect or pertain to the System or the Gross Revenues or the Net Revenues thereof. The City shall after the close of each of its Fiscal Years cause an audit report of such records and accounts to be prepared by an independent certified public accountant or independent firm of certified public accountants. Each year promptly after such audit report is prepared,the City shall furnish a copy thereof without cost to the Municipal Advisory Council of Texas and any holders of Parity Bonds who shall request same. All expenses incurred in preparing such audits shall be Maintenance and Operation Expenses. (f) Competition. To the extent it legally may, the City will not grant any franchise or allow for the acquisition, construction or operation of any competing facilities which might be used as a substitute for the System and will prohibit the operation of any such competing facilities. (g) Pledge and Encumbrance of Net Revenues. The City covenants and represents that it has the lawful power to pledge the Net Revenues to the payment of the Parity Bonds and has lawfully exercised such power under the Constitution and laws of the State of Texas. The City further covenants and represents that, other than to the payment of the Parity Bonds, the Net Revenues are not and will not be pledged to the payment of any debt or obligation of the City, or in any other manner encumbered unless such pledge or encumbrance is J unior and subordinate to the lien and pledge securin g payment of the Parity Bonds. (h) Remedies. This Ordinance shall constitute a contract between the City and the holders of the Parity Bonds from time to time outstanding, and the Bond Insurers, and shall remain in effect until the Parity Bonds and the interest thereon and all amounts owing to the Bond Insurers under any Bond Insurance Policy shall be fully paid or discharged or provision therefor shall have been made as provided herein. In the event of a default in the payment of the principal of or interest on any of the Parity Bonds or a default in the performance of any duty or covenant provided by law or in this Ordinance or a default in respect of any Bond Insurance Policy, the holder or holders of any of the Parity Bonds or any Bond Insurer, as appropriate, may 23 A.5 pursue all legal remedies afforded by the Constitution and laws of the State of Texas to compel the City to remedy such default and to prevent further default or defaults. Without in any way limiting the generality of the foregoing, it is expressly provided that any holder of any of the Parity Bonds or any Bond Insurer may at law or in equity, by suit, action, mandamus, or other proceedings, enforce and compel performance of all duties required to be performed by the City under this Ordinance, including the making and collection of reasonable and sufficient rates and charges for the use and services of the System,the deposit of the Gross Revenues thereof into the special funds as herein provided, and the application of such Gross Revenues and Net Revenues in the manner required in this Ordinance. (i) [Deleted]. (j) Legal Holidays. In any case where the date fixed for payment of interest on or principal of the Parity Bonds or the date fixed for redemption of any Parity Bonds shall be a legal holiday or a day on which a paying agent for the Parity Bonds is authorized by law to close, then payment of interest or principal by such paying agent need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date fixed for such payment and no interest shall accrue for the period from such date to the date of actual payment. (k) Unavailability of Authorized Publication. If, because of the temporary or permanent suspension of any newspaper, journal or other publication, or, for any reason, publication of notice cannot be made meeting any requirements herein established, any notice required to be published by the provisions of this Ordinance shall be given in such other manner and at such time or times as in the judgment of the City shall most effectively approximate such required publication and the giving of such notice in such manner shall for all purposes of this Ordinance be deemed to be in compliance with the requirements for publication thereof. (1) Obligations Owing to Insurers. The City stipulates and agrees that it shall make full and timely payment of all amounts owing to any Insurer under any insurance agreements insuring the Bonds, if any, and all Parity Bonds, and there shall be no termination of this Ordinance or redemption, refunding or defeasance of the Parity Bonds unless and until all of such amounts owing under any such agreements in respect of those Bonds shall have been paid in full. 23. Further Proceedings. After the Bonds to be initially issued shall have been executed, it shall be the duty of the Mayor and other appropriate officials and agents of the City to deliver the Bonds to be initially issued and all pertinent records and proceedings to the Attorney General of the State of Texas, for examination and approval. After the Bonds to be initially issued shall have been approved by the Attorney General, they shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Bonds to be initially issued, the Comptroller of Public Accounts (or the Comptroller's bond clerk or an assistant bond clerk lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein and the seal of said Comptroller shall be impressed or placed in facsimile,thereon. 24 A.5 24. Sale of Bonds. The Bonds are hereby sold and shall be delivered to the Underwriter at a price of $ , which represents the par amount of the Series 2012 Bonds of $20,000,000.00, plus a premium on the Bonds of $ , and less an underwriting discount of$ , plus any accrued interest thereon from the dated date of the Bonds to the date of issuance, all in accordance with the terms of a bond purchase agreement of even date herewith, presented to and hereby approved by the City Council, which price and terms are hereby found and determined to be the most advantageous reasonably obtainable by the City. Each of the Mayor and the Mayor Pro Tem and other appropriate officials of the City are hereby authorized and directed to execute such bond purchase agreement on behalf of the City, and each of the Mayor and Mayor Pro Tem 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 set out therein and to provide for the issuance and delivery of the Bonds. 25. Tax Exemption. (a) The City intends that the interest on the Bonds shall be excludable from gross income for purposes of federal income taxation pursuant to Sections 103 and 141 through 150 of the Code, and applicable regulations. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the interest on the Bonds to be includable in gross income, as defined in Section 61 of the Code, of the holders thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Section 25; provided, however, that the City shall not be required to comply with any particular requirement of this Section 25 if the City has received an opinion of nationally recognized bond counsel (a "Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 25 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 25. (b) No Private Use or Payment and No Private Loan Financing. The City shall certify, through an authorized officer, employee or agent that based upon all facts and circumstances known or reasonably expected to be in existence on the date the Bonds are delivered, that the proceeds of the outstanding Parity Bonds have not been used, and that proceeds of the Bonds will not be used in a manner that would cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Bonds including interest or other investment income derived from Bond proceeds,regulate the use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Bonds will not be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. (c) No Federal Guaranty. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, 25 A.5 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 or as permitted by laws hereinafter enacted. (d) No-Arbitrage Covenant. The City shall certify, through an authorized officer, employee or agent,that based upon all facts and estimates known or reasonably expected to be in existence on the date the Bonds are delivered, the City will reasonably expect that the proceeds of the Bonds 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 or as "hedge bonds" within the meaning of Section 149 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 therefrom), regulate investments of such proceeds and amounts, and take such other and further action as may be required so that the Bonds will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable Regulations thereunder or"hedge bonds"within the meaning of Section 149 of the Code and applicable regulations thereunder. (e) Arbitrage Rebate. If the City does not qualify for an exception to the requirements of Section 148(f) of the Code relating to rebate to the United States, the City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Bonds (within the meaning of Section 148(f)(6)(B) of the Code), be rebated to the federal government. Specifically, the City will (i)maintain records regarding the investment of the gross proceeds of the Bonds as may be required to calculate the amount earned on the investment of the gross proceeds of the Bonds separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, (ii)calculate at such times as are required by applicable regulations, the amount earned from the investment of the gross proceeds of the Bonds which is required to be rebated to the federal government, and (iii)pay, not less often than every fifth anniversary date of the delivery of the Bonds, and within sixty days after the retirement of the Bonds, or on such other date as may be permitted under applicable regulations with respect to "gross proceeds" in the Escrow Fund, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into an investment arrangement with respect to the gross proceeds of the Bonds that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or a larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (f) Information Reporting. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Bonds are issued, an information statement concerning the Bonds, all under and in accordance with Section 149(e) of the Code and applicable regulations thereunder. (g) Continuing Obligation. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants and provisions of this Section shall survive 26 A.5 the defeasance and discharge of the Bonds. When used in this Section, the term "Net Proceeds" of the Bonds shall mean the proceeds from the sale thereof to the Underwriter, including investment earnings on such proceeds, less accrued interest with respect to such issue. 26. Anolication of Proceeds. Proceeds from the sale of the Bonds (net of Underwriter's discount) shall,promptly upon receipt by the City,be applied as follows: (a) Accrued interest, if any, shall be deposited into the Interest and Sinking Fund; (b) $ from the sale of the Bonds shall be used to pay the costs of issuing the Bonds; (c) The sum of $ from the sale of the Bonds shall be used as a rounding amount and shall be deposited in the Interest and Sinking Fund for the Bonds. (d) The balance of the proceeds from the sale of the Bonds shall be deposited into the Construction Fund and used to pay the costs of the Project. 27. 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. 28. Official Statement. The Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Bonds have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Bonds by the Underwriter is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a Bond pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds. 29. No Personal Liability. No recourse shall be had for payment of the principal of or interest on any Bonds or for any claim based thereon, or on this Ordinance, against any official or employee of the City or any person executing any Bonds. 30. Continuing Disclosure Undertaking. (a) Annual Reports. The City undertakes and agrees for the benefit of the Bond holders to provide annually to the MSRB, within six months after the end of each fiscal year, financial information and operating data with respect to the City of the general type included in the final Official Statement authorized in this Ordinance (i) under the headings "CITY WATERWORKS AND SEWER SYSTEM REVENUE DEBT", "ADMINISTRATION OF TIE CITY", "THE SYSTEM-WATER AND SEWER RATES" and in APPENDIX B. The information to be provided shall include the financial statements of the City prepared in accordance with the accounting principles the City may be required to employ from time to time pursuant to State law or regulation and audited, if the audit is completed within the period during which they must be provided. If the audit of such financial statements is not 27 A.5 completed within such period, then the City shall provide unaudited financial statements for the applicable fiscal year to the MSRB within such six month period, and audited financial statements when the audit report on such statement becomes available. If the City changes its fiscal year, it will notify 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. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to the MSRB or filed with the SEC. (b) Material Event Notices. The City shall notify the MSRB,in a timely manner,of any of the following events with respect to the Bonds,if such event is material within the meaning of the federal securities laws: i. Principal and interest payment delinquencies; ii. Non-payment related defaults,if material; iii. Unscheduled draws on debt service reserves reflecting financial difficulties; iv. Unscheduled draws on credit enhancements reflecting financial difficulties; V. Substitution of credit or liquidity providers,or their failure to perform; vi. Adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determination of taxability,Notices of Proposed Issue(IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; vii. Modifications to rights of Bondholders,if material; viii. Bond calls, if material,and tender offers; ix. Defeasances; X. Release, substitution or sale of property securing repayment of the securities, if material; xi. Rating changes; xii. Bankruptcy, insolvency, or receivership, or similar event 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 or undertake such action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms,if material; and 28 A.5 xiv. Appointment of a successor or additional trustee or the change of name of a trustee,if material. 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 (a) above. All documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. (c) Limitations, Disclaimers and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the City remains an"obligated person"with respect to the Bonds within the meaning of the Rule,except that the City in any event will give notice of any deposit made in accordance with Texas law that causes Bonds no longer to be outstanding. The provisions of this Section are for the sole benefit of the holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION OR FROM ANY STATEMENT MADE PURSUANT TO THIS SECTION. HOLDERS OR BENEFICIAL OWNERS OF BONDS MAY SEEK AS THEIR SOLE REMEDY A WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH ITS AGREEMENT. No default by the City with respect to its continuing disclosure agreement shall constitute a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The provisions of this Section may be amended by the City from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status or type of operations of the City, if(i) the agreement, as amended, would have permitted the Underwriter to purchase or sell the Bonds in the initial primary offering in compliance with the Rule,taking into account any amendments or interpretations of such rule to the date of such amendment, as well as such changed circumstances, and (ii) either(a)the holders of a 29 A.5 majority in aggregate principal amount of the outstanding Bonds consent to such amendment, or(b) any person unaffiliated with the City (such as nationally recognized bond counsel) determines the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds. The City may also amend or repeal the obligations and agreement in this Section if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction determines that such provisions are invalid, and the City may amend the agreement in its discretion in any other circumstance or manner, but in either case only to the extent that its right to do so would not prevent an underwriter from lawfully purchasing or reselling the Bonds in the primary offering of the Bonds in compliance with the Rule. If the City amends its agreement, it must include with the next financial information and operating data provided in accordance with its agreement an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of information and operating data so provided. The City's continuing obligation to provide annual financial information and operating data and notices of events will terminate if and when the City no longer remains an "obligated person" (as such term is defined in SEC Rule 15C2-12)with respect to the Bonds. 31. Oren Meeting. It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551 of the Texas Government Code. 32. Interpretations. All terms defined herein and all pronouns used in this Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles and headings of the sections of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof. This Ordinance and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Parity Bonds and the validity of the lien on and pledge of the Net Revenues to secure the payment of the Parity Bonds. 33. Deleted], 34. Re er. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. 35. Effective Date. This Ordinance shall be in force and effect from and after its final passage,and it is so ordered. 36. Amendment of Ordinance. (a) If and to the extent permitted by this Ordinance, the owners of the Bonds aggregating in the principal amount of 51% of the aggregate principal amount of the outstanding Bonds shall have the right from time to time to approve any amendment to this Ordinance which may be deemed necessary or desirable by the City provided, however, that without the consent of the owners of all of the Bonds at the time 30 A.5 outstanding, nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in this Ordinance or in the Bonds so as to: (1) Make any change in the maturity of the outstanding Bonds; (2) Reduce the rate of interest borne by any of the outstanding Bonds; (3) Reduce the amount of the principal payable on the outstanding Bonds; (4) Modify the terms of payment of principal of or interest on the outstanding Bonds, or impose any conditions with respect to such payment; (5) Affect the owners of less than all of the outstanding Bonds then outstanding; (6) Change the percentage of the principal amount of outstanding Bonds,necessary for consent to such amendment. (b) If at any time the City shall desire to amend this Ordinance under this Section, the City shall cause notice of the proposed amendment to be published in a financial newspaper or journal published in The City of New York, New York, once during each calendar week for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Paying Agent for inspection by all owners of the Bonds. Such publication is not required, however, if notice in writing is given to each owner of the outstanding Bonds. Not less than thirty (30) days' notice of the proposed amendment shall also be given by the City to the Underwriter. (c) Whenever at any time not less than thirty (30) days, and within one (1) year, from the date of the publication of said notice or other service of written notice the City shall receive an instrument or instruments executed by the owners of at least 51% in aggregate principal amount of the Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the Paying Agent, the City Council may adopt the amendatory resolution in substantially the same form. (d) Upon adoption of any amendatory resolution pursuant to the provision of this Section, this Ordinance shall be deemed to be amended in accordance with such amendatory resolution, and the respective rights, duties and Bonds under this Ordinance of the City and all the owners of then outstanding Bonds, shall thereafter be determined, exercised and enforced hereunder, subject in all respect to such amendments. (e) Any consent given by the owner of the outstanding Bonds pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and 31 A.5 binding upon all future owners of the same Bonds, during such period. Such consent may be revoked at any time after six months from the date of the first publication of such notice by the owner who gave such consent, or by a successor in title, by filing notice thereof with the Paying Agent and the City, but such revocation shall not be effective if the owners of 51% in aggregate principal amount of the then outstanding Bonds, as in this Section defined have, prior to the attempted revocation, consented to and approved the amendment. (f) For the purpose of this Section, the fact of the owning of Bonds, by any owner of Bonds, and the amount and number of such Bonds, and the date of their owning same shall be determined by the Registration Books of the Paying Agent/Registrar. (g) The foregoing provisions of this Section notwithstanding, the City by action of the City Council(or as item(2)by the City Council or by the Mayor, Mayor Pro Tem, City Manager or Chief Financial Officer as to changes prior to issuance to comply with requirements by the Attorney General of Texas or Underwriter) may amend this Ordinance for any one or more of the following purposes: (1) To add to the covenants and agreements of the City in this Ordinance contained, other covenants and agreements thereafter to be observed, grant additional rights or remedies to the owners of bonds or to surrender, restrict or limit any right or power herein reserved to or conferred upon the City. (2) To make such provisions for the purpose of clarifying matters or questions arising under this Ordinance, as are required by the Attorney General of Texas to obtain the Attorney General's approval of the issuance of the Series 2012 Bonds or required by the Underwriter before their issuance or for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained in this Ordinance, or at any time before or after issuance as are necessary or desirable and not contrary to or inconsistent with this Ordinance, and in all events which shall not adversely affect the interests of the owners of the Bonds. (3) To modify any of the provisions of this Ordinance in any other respect whatever, provided that: (i) such modification shall be, and be expressed to be, effective only after all Bonds outstanding at the date of the adoption of such modification shall cease to be outstanding, and (ii) such modification shall be specifically referred to in the text of all Bonds issued after the date of the adoption of such modification. 37. [Deleted]. 38. [Deleted l. 39. eleted . 40. [Deleted]. 32 A.5 41. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance,the Mayor or Mayor Pro Tem, City Manager, Chief Financial Officer, City Clerk or any Deputy City Clerk, and all other appropriate officers and agents of the City are hereby authorized and directed to take all other actions that are reasonably necessary to provide for the issuance of the Bonds, including without limitation, executing and delivering on behalf of the City all Bonds, consents, receipts,requests, and other documents as may be reasonably necessary to satisfy the City's obligations under this Ordinance and to direct the application of funds of the City consistent with the provisions of this Ordinance. 42. ejD letedl. 43. Open Meeting. It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551 of the Texas Government Code. 44. Interpretations. All terms defined herein and all pronouns used in this Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles and headings of the sections of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof. This Ordinance and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Parity Bonds and the validity of the lien on and pledge of the Net Revenues to secure the payment of the Parity Bonds. 45. [Deleted]. [The remainder of this page has intentionally been left blank] 33 A.5 PASSED AND APPROVED this 14t`day of August, 2012. Mayor The City of Beaumont ATTEST: City Clerk The City of Beaumont (SEAL) 34 A.5 EXHIBIT "A" SCEEDULE Il SS,9$0,000 THE CITY OF BF,AUMONT,MUM WATERWOM Ate SEMM STEM REVENUE DOIM SERJES 2410A luturgot Accra Fig w Amt 1,2010 MATUMM Alum MOW icy 1 2011 0.650% 2013 SS 0.8M 2013 4.000% 1.2m 2014 2.00OWl. 1.:540', 2015 $S60,000 4.000% 1.950% 2016 $580,000 3.000% 2.270% 2017 MW 3.000% 2.540% 2018 $61S,000 3.0000A 2.7 2019 $840,000 4.000% 3.0101A 2020 $873,000 4.000% 3.2206. The Bm& Ica not subje a to OPWW won pw to matmity wd the Bow we so to fund on. 35 4 August 14,2012 Consider a resolution to receive the proposed FY 2013 Budget and schedule a public hearing RICH WITS OPPORTIISITY MA-90, * T - g • Z - A - 8 City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Laura Clark, Chief Financial Officer MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider a resolution to receive the proposed FY 2013 Budget and schedule a public hearing. BACKGROUND Article VI, Section 2 of the City Charter requires that the proposed budget be submitted to the Council at least 45 days prior to the beginning of the new fiscal year. In addition, Section 4 requires Council to schedule a public hear on the proposed budget and authorize the City Clerk to publish the notice of the public hearing FUNDING SOURCE Not applicable. RECOh9WZNDATI0N Schedule a work session on the proposed FY 2013 Budget to be held on August 28,2012. RESOLUTION NO. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the proposed FY 2013 Budget has been received and a public hearing is hereby scheduled for August 28, 2012 at 1:30 PM in the City Council Chambers, City Hall, Beaumont, Texas; and, BE IT FURTHER RESOLVED THAT the City Clerk is to publish notice of said hearing pursuant to the Charter of the City of Beaumont. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames - 5 August 14,2012 Consider a resolution to receive the proposed 2013 Capital Program and schedule a public hearing RICH WITH OPPORTIIHITT R EA*, #,, *T _ Z • A • B City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Laura Clark, Chief Financial Officer MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider a resolution to receive the proposed 2013 Capital Program and schedule a public hearing. BACKGROUND The proposed 2013 Capital Program was originally submitted to Council on May 11, 2012. Revisions have been made to the original proposed document and are attached for your review. Article VI, Section 20 of the City Charter requires Council to schedule a public hearing on the proposed Capital Program and authorize the City Clerk to publish the notice of the public hearing. FUNDING SOURCE Not applicable. RECOMMENDATION Schedule a work session on the Capital Program on August 28,2012. RESOLUTION NO. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the proposed FY 2013 Capital Program has been received and a public hearing is hereby scheduled for August 28, 2012 at 1:30 PM in the City Council Chambers, City Hall, Beaumont, Texas; and, BE IT FURTHER RESOLVED THAT the City Clerk is to publish notice of said public hearing pursuant to the Charter of the City of Beaumont. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames - 6 August 14,2012 Consider a resolution establishing and taking a record vote on the proposed 2012 tax rate (FY 2013) and schedule public hearings RICH WITH OPPORTUNITY BEAUM'OK* T • E • X • A • s City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Laura Clark, Chief Financial Officer MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider a resolution establishing and taking a record vote on the proposed 2012 tax rate (FY 2013)and schedule public hearings. BACKGROUND Chapter 26 of the Property Tax Code requires taxing units to comply with truth-in-taxation laws in adopting their tax rate. According to Senate Bill 18,governing bodies are required to hold two public hearings when the proposed tax rate exceeds the lower of the rollback rate or the effective rate. In accordance with Chapter 26 of the Property Tax Code, if the proposed rate exceeds the lower of the rollback rate of$0.687572 or the effective tax rate of$0.636401,the City Council must take a record vote to place the proposal to adopt the rate on the agenda of a future meeting. The effective tax rate is the rate that would produce the same amount of taxes in FY 2013 as was produced in FY 2012 if it was applied to the same properties taxed in both years. The proposed tax rate of$0.64,which is the current tax rate, exceeds the effective tax rate of $0.636401 by $0.003599. If the motion passes,two public hearings must be scheduled. It is recommended that the public hearings be held on August 28,2012 and September 11, 2012 at 1:30 p.m. in the Council Chambers. FUNDING SOURCE Not applicable. RECOMMENDATION Schedule public hearings on the proposed 2012 tax rate(FY 2013)to be held on August 28,2012 and September 11, 2012. RESOLUTION NO. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the tax rate of$0.64 be and it is hereby proposed; and, BE IT FURTHER RESOLVED THAT the dates of August 28, 2012 and September 11, 2012 be and the same are hereby set as the dates at which the City Council will conduct public hearings on the proposed tax rate. The meetings will be held in the City Council Chambers, City Hall, Beaumont, Texas at 1:30 PM August 28, 2012 and September 11, 2012 at which time the Council will receive public comment on the proposed tax rate of$0.64. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames - 7 August 14,2012 Consider a resolution approving the purchase of a fire truck RICH WITH OPPORTUNITY 'Aw MM BEAU-MUIR* T • 19 • X • A 9 S City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Laura Clark, Chief Financial Officer MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider a resolution approving the purchase of a fire truck from Siddons-Martin Emergency Group of Denton, Texas in the amount of$593,278. BACKGROUND The 2012 Velocity Pumper Fire Truck will be assigned to Fire Station 10 to replace Engine 10. Engine 10 will be rotated to Fire Station 14 to replace Engine 14. Engine 14 will become a reserve unit. Reserve unit 7024, a 1980 American LaFrance Pumper,will be disposed of according to the City surplus equipment disposal policy. Pricing for the equipment was obtained through the Houston-Galveston Area Council(H-GAC), a cooperative purchasing association providing cities and political subdivisions with the means to purchase specialized equipment at volume pricing. H-GAC complies with State of Texas procurement statutes. Manufacturer's warranty for the truck is two(2)years. Delivery is expected within seven(7)to eight(8)months. FUNDING SOURCE 2009 Port Security Grant(75%) $444,958.50. Capital Reserve(25%) $148,319.50. RECOMMENDATION Approval of the resolution. RESOLUTION NO. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Council hereby approves the purchase of one (1) Velocity Pumper Fire Truck from Siddons-Martin Emergency Group, of Denton, Texas, through the Houston-Galveston Area Council(H-GAC)Cooperative Purchasing Program in the amount of$593,278 for use by the Fire Department. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames - 8 August 14,2012 Consider a resolution authorizing the City Manager to execute all documents necessary to accept funding from The Texas Department of State Health Services RICH WITH OPPORTUNITY BEAUMU*'hN* T • E • % • A • s City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Sherry Ulmer,Public Health Director MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider a resolution authorizing the City Manager to execute all documents necessary to accept funding from The Texas Department of State Health Services (DSHS) in the amount of $502,281.00 awarded to the Beaumont Public Health Department. BACKGROUND The Texas Department of State Health Services has awarded the Beaumont Public Health Deapartment grant funds in the amount of$502,281.00.This contract consist of the following grants: 1. CPS - Cities Readiness Initiative 2. Preparedness and Prevention Community Preparedness Section/Bioterrorism Discretionary 3. Public Health Emergency Preparedness(PHEP) 4. Immunization Branch-Locals 5. Regional and Local Services System/Local Public Health Services (RLSS/LPHS) In the past,these funds have been awarded individually. This is the first year that the funds will be awarded together. The funding from these grants will assist the Beaumont Public Health Department activities in support of Public Health Emergency Preparedness in cooperation with the Centers of Disease Control;perform activities and services that will improve or strengthen local public health infrastructure within the State of Texas; implement and operate an immunization program for children, adolescents, and adults. This contract will begin 09/01/12 and end on 08/31/2013. FUNDING SOURCE Not Applicable. RECOMMENDATION Approval of the resolution. DEPARTMENT OF STATE HEALTH SERVICES q* This contract, number 2013-041395 (Contract), is entered into by and between the Department of State Health Services (DSHS or the Department), an agency of the State of Texas, and CITY OF BEAUMONT PUBLIC HEALTH DEPARTMENT (Contractor), a Government Entity. (collectively, the Parties). 1. Eimm of the Contract. DSHS agrees to purchase, and Contractor agrees to provide, services or goods to the eligible populations as described in the Program Attachments. 2. Total&RgRk of the Contract and PaxMW 1Mlethodfs). The total amount of this Contract is $502.281.00, and the payment method(s) shall be as specified in the Program Attachments. 3. Fuudkm Obligation. This Contract is contingent upon the continued availability of funding. If funds become unavailable through lack of appropriations, budget cuts, transfer of funds between programs or health and human services agencies, amendment to the Appropriations Act, health and human services agency consolidation, or any other disruptions of current appropriated funding for this Contract, DSHS may restrict, reduce, or terminate funding under this Contract. 4. T_erm„of the Contrack This Contract begins on 09/01/2012 and ends on 08/31/2013. DSHS has the option, in its sole discretion, to renew the Contract as provided in each Program Attachment. DSHS is not responsible for payment under this Contract before both parties have signed the Contract or before the start date of the Contract, whichever is later. 5. Auth pity. DSHS enters into this Contract under the authority of Health and Safety Code, Chapter 1001. 6. Documents Forming Contract. The Contract consists of the following: a. Core Contract(this document) b. Program Attachments: 2013-041395-001 CPS - CITIES READINESS INITIATIVE 2013-041395-002 Preparedness and Prevention Community Preparedness Section/ Bioterrorism Discre 2013-041395-003 Public Health Emergency Preparedness (PHEP) 2013-041395-004 IMMUNIZATION BRANCH- LOCALS 2013-041395-005 RLSS/LOCAL PUBLIC HEALTH SYSTEM-PnP c. General Provisions (Sub-recipient) d. Solicitation Document(s) (N/A), and 92648-1 e. Contractor's response(s)to the Solicitation Document(s)(N/A). f. Exhibits Any changes made to the Contract, whether by edit or attachment, do not form part of the Contract unless expressly agreed to in writing by DSHS and Contractor and incorporated herein. 7. QNS&Wn Tem& In the event of conflicting terms among the documents forming this Contract,the order of control is first the Core Contract, then the Program Attachment(s),then the General Provisions, then the Solicitation Document, if any, and then Contractor's response to the Solicitation Document, if any. 8. Payee, The Parties agree that the following payee is entitled to receive payment for services rendered by Contractor or goods received under this Contract: Name: CITY OF BEAUMONT Address: P.O. BOX 3827 BEAUMONT,TX 77704 Vendor Identification Number: 17460002789023 9. Entire AgglIMULta The Parties acknowledge that this Contract is the entire agreement of the Parties and that there are no agreements or understandings, written or oral, between them with respect to the subject matter of this Contract, other than as set forth in this Contract. 92648-1 n V RESOLUTION NO. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Manager be and he is hereby authorized to execute all documents necessary to accept funding from the Texas Department of State Health Services(DSHS) for the CPS-Cities Readiness Initiative Grant; Preparedness and Prevention Community Preparedness Section/Bioterrorism Discretionary Grant; Public Health Emergency Preparedness(PREP)Grant; Immunization Branch-Locals Grant;and Regional and Local Services System/Local Public Health Services (RLSS/LPHS) Grant in the amount of $502,281 effective September 1, 2012 through August 31, 2013. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames - 9 August 14,2012 Consider a resolution approving a change order to the contract with Allco, Ltd. related to the Main Street Utility Relocation Project RICH WITH OPPORTUNITY REAUVON T • Z • X • A • S City Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Dr. Hani J. Tohme,P.E., Water Utilities Director MEETING DATE: August 14, 2012 REQUESTED ACTION: Council consider a resolution approving a change order to the contract with Allco, LLC,related to the Main Street Utility Relocation Project. BACKGROUND The City Council approved a contract with Allco, LLC, on April 17,2012, in the amount of $309,795.82. The contract will furnish all labor and equipment to relocate an existing 12"PVC C-900 water main and an existing 36"OD HDPE, SDR 11 sanitary sewer main. These mains are situated along Main Street and cross the Kansas City Southern(KCS)railroad tracks near the intersection of Main Street and Gilbert Street. The proposed change order in the amount of$58,490.00 will furnish 100 linear feet of 42" epoxy-coated steel casing. This proposed change includes an increase to the allowance for securing the services of a flagger and construction observer and for the installation of E80 trench shoring as per the amended pipe line crossing contract. A request for 40 calendar days to be added to the contract time is included with this proposed change. Council had previously authorized the execution of an amended pipe line crossing contract with the Kansas City Southern Railway Company on June 26, 2012. The new pipeline crossing contract will abandon an existing 30"sewage pipeline and install a 30"carrier/42"casing sanitary sewer pipeline and to abandon an existing 12"water pipeline and install a 12.750"carrier/20" casing potable water pipeline at KCS Mile Post K 766.1 (Main Street). FUNDING SOURCE Capital Program. RECOMMENDATION Approval of resolution. APPROVAL OF CONTRACT CHANGE CHANGE ORDER No.One(1) Date: 8/7/2012 PROJECT: City of Beaumont,Texas Main Street Utility Relocation OWNER: City of Beaumont,Texas 801 Main Street Beaumont,Texas 77704 CONTRACTOR: Allco PO Box 3684 Beaumont,Texas 77704 TO THE OWNER: Approval of the following contract change is requested. Reason for Change: Furnish 42" Steel Casing and Coat per Contract Specifications; Increase Allowance for Flagging and Construction Observation and E80 Trench Shoring as required by Railroad;Additional Contract Time associated with Steel Casing ORIGINAL CONTRACT AMOUNT: $ 309,795.82 THIS CHANGE ORDER Description: Net Change Furnish 42"Steel Casing-0.90 wall Thickness-100 LF,including delivery to site $ 19,910.00 Furnish Coating of 42"Steel Casing,including all material,and prerperation $ 8,580.00 Increase Allowance for Flagging,Construction Observation,and E80 Trench Shoring as $ 30,000.00 required by Railroad TOTAL AMOUNT OF THIS CHANGE ORDER $ 58.490.00 TOTAL REVISED CONTRACT AMOUNT INCLUDING THIS CHANGE ORDER: $ 368,M22 CONTRACT TIME Original Contract Time: 90 Calendar Days Additional Time Requested: 40 Calendar Days Revised Contract Time per this Change Order: 130 Calendar Days CONDITION OF CHANGE: "Contractor acknowledges and agrees that the adjustments in contract price and contract time stipulated in this Change Order represents full compensation for all increases and decreases in the cost of,and the time required to perform the entire work under the Contract arising directly or indirectly from this Change Order and all previous Change Orders. Acceptance of this waiver constitutes an agreement between Owner and Contractor that the Change Order represents an all inclusive,mutually agreed upon adjustment to the Contract,and that Contractor will waive all rights to file a claim on this Change Order after it is properly executed." Recommended by: Approved by: Accepted by: Schaumburg&Polk,Inc. City of Beaumont Allco,Ltd. Engineer Owner Contractor Date: Date: Date: i P.O.Box 3094,Beaumont,Tom MIN Phorm.4094N O-440 Few 4004011-.M Em u&aft iico com August 6,2012 City of Beaumont 1350 Langham Road Beaumont,Texas 77707 Attn: Amalia Villarreal,P.E. Water Utilities Engineer Re: Main Street Utility Relocation City of Beaumont ALLCO Pro ject TX-689 Dear Molly, 9 Please fraud below pricing for 100 linear feet of 42"dia. x 0.900"wall steel casing for the above referenced project. Pipe shall be furnished in dead 20's. The price is delivered to the painter's yard, where it will be coated. We will pick-up the casing after coating and deliver to the jobsitc. Pricing is as follows: 42"x 0.900"Steel casing(100 LF) $ 18.100.00 $ 18,100.00 Overhead&Profit 1.810.00 $ 19,110.00 If you have any questions,please let me know. Sincerely, ALLCO, C K urrell L,no= P.0.8ox 3644,8ewn0nt,T4Xn 77704 PhOM: 866x4459 Fsx:499.66! 411 EnwN: .com August 3,2012 City of Beaumont 1350 Langham Road Beaumont,Texas 77707 Attn: Amalia Villarreal,P.E. Water Utilities Engineer Re: Main Street Utility Relocation City of Beaumont ALLCO Project TX-689 Dear Molly, Y, Please find below pricing for application of 20 mils of coal tar epoxy on the 42"steel casing for the above referenced project. This work shall be done at the painter's yard and will take 1 week to finish. Pricing is as follows: Prep&Coat Exterior of Pipe l; 7,810.,00 $ 7,800.00 Overhead&Profit 70. 00 If you have any questions,please let me know. Sincerely, ALLCO,LLC Kei B fl RESOLUTION NO. WHEREAS, on April 17, 2012, the City Council of the City of Beaumont, Texas, passed Resolution No. 12-083 awarding a contract in the amount of $309,795.82 with Allco, Ltd., of Beaumont, Texas, for the Main Street Utility Relocation Project; and, WHEREAS, Change Order No. 1, in the amount of$58,490, is required to furnish all necessary labor, materials, and equipment for100 linear feet of 42"epoxy-coated steel casing; an increase to the allowance for securing the services of a Flagger and Construction Observer; and for the installation of E80 trench shoring as per the amended pipe line crossing contract; thereby increasing the contract amount to $368,285.82; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the statements and findings set out in the preamble to this resolution are hereby, in all things, approved and adopted. THAT the City Manager be and he is hereby authorized to execute Change Order No. 1 in the amount of$58,490, thereby increasing the contract amount to $368,285.82 and an additional forty (40) calendar days for the Main Street Utility Relocation Project. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of August, 2012. - Mayor Becky Ames -