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ORD 14-031
ORDINANCE NO. 14 -031 ORDINANCE AUTHORIZING THE ISSUANCE OF THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE AND REFUNDING BONDS, SERIES 2014A IN ONE OR MORE SERIES OR SUBSERIES AS MAY BE FURTHER DESIGNATED; AUTHORIZING THE ISSUANCE OF THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REFUNDING BONDS, TAXABLE SERIES 2014B IN ONE OR MORE SERIES OR SUBSERIES AS MAY BE FURTHER DESIGNATED; AUTHORIZING THE MAYOR OR THE CITY MANAGER AND THE CITY CHIEF FINANCIAL OFFICER TO APPROVE THE AMOUNTS, INTEREST RATES, PRICES, AND TERMS THEREOF AND CERTAIN OTHER MATTERS RELATING THERETO; PROVIDING FOR THE PAYMENT THEREOF; MAKING OTHER PROVISIONS REGARDING SUCH BONDS INCLUDING AUTHORIZING THE PREPARATION AND DISTRIBUTION OF ONE OR MORE PRELIMINARY OFFICIAL STATEMENTS AND AUTHORIZING THE PREPARATION AND DISTRIBUTION OF ONE OR MORE OFFICIAL STATEMENTS AND MATTERS INCIDENT THERETO; AWARDING THE SALE OF THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF ONE OR MORE BOND PURCHASE AGREEMENTS; AUTHORIZING THE DEFEASANCE, FINAL PAYMENT, AND DISCHARGE OF CERTAIN OUTSTANDING WATERWORKS AND SEWER SYSTEM REVENUE BONDS AND REVENUE REFUNDING BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF ONE OR MORE ESCROW AGREEMENTS; AUTHORIZING THE PURCHASE OF AND SUBSCRIPTION FOR CERTAIN ESCROWED SECURITIES; AUTHORIZING ESCROW VERIFICATION AND ENGAGEMENT OF AN ESCROW AGENT; AUTHORIZING BOND INSURANCE; AUTHORIZING THE EXECUTION AND DELIVERY OF A PAYING AGENT /REGISTRAR AGREEMENT AND OTHER RELATED DOCUMENTS; AND MAKING OTHER PROVISIONS REGARDING SUCH BONDS THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, The City of Beaumont, Texas (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, #4573136.6 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; and, WHEREAS, the City Council (the "Council ") of the City has previously issued, sold, and delivered, and there is currently outstanding, obligations identified in Schedule I, attached hereto (the "Refunded Bonds "); and, WHEREAS, pursuant to the provisions of Texas Government Code, Chapter 1207, as amended, the City is authorized to issue refunding bonds and deposit the proceeds of sale directly with any place of payment for the Refunded Bonds, or other authorized depository, and such deposit, when made in accordance with said statute, shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Refunded Bonds; and, WHEREAS, the City shall by this Ordinance, in accordance with the provisions of Sections 1207.007, 1371 and 1502, Texas Government Code, as amended, delegate to a Pricing Officer (hereinafter designated) the authority to determine the principal amount of Bonds to be issued and negotiate the terms of sale thereof and to select the specific maturities, in whole or in part, of the Refunded Bonds to be refunded; and, WHEREAS, the Council hereby finds and determines that it is a public purpose and in the best interests of the City to (1) issue the Bonds with such terms to be included in a pricing certificate (the "Officer's Pricing Certificate ") to be executed by the Pricing Officer, and (2) refund the Refunded Bonds in order to achieve a net present value debt service savings and that such benefit is sufficient consideration for the refunding of the Refunded Bonds, with such savings, among other information and terms to be included in the Officer's Pricing Certificate, all in accordance with the provisions of Sections 1207, 1371 and 1502, Texas Government Code, as amended; and. WHEREAS, the Council hereby finds that it may purchase a credit agreement in the form of a municipal bond insurance policy or policies with respect to the Bonds if it deems such purchase is cost effective; and, WHEREAS, the City hereby finds and determines that the manner in which the refunding is being executed does not make it practicable to make the determination described by Section 1207.008(a)(2) of Chapter 1207; and, WHEREAS, the bonds to be issued pursuant to the terms and provisions of this Ordinance will be secured by a pledge of and lien on the Net Revenues (as hereinafter defined) which is subordinate only to the pledge of and lien on such Net Revenues associated with the Prior Lien Bonds (as hereinafter defined); 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 -tern 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; 2 #4573136.6 NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: 1. Findings and Determinations. It is hereby found and determined that the matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 2. Definitions. Throughout this ordinance the following terms and expressions as used herein shall have the meanings set forth below: The term "Additional Parity Bonds" shall mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 22(b) of this Ordinance. The term "Blanket Issuer Letter of Representations" means the Blanket Issuer Letter of Representations between the City and DTC. The term `Bond Insurer" shall mean, if any, a third party financial institution that provides a credit agreement in the form of a municipal bond insurance policy, as determined in the Officer's Pricing Certificate. 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" shall mean the Series 2014A Bonds and Series 2014B Bonds. 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 or Bond Insurer, if any, 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 3 #4573136.6 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. 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 September 1, 2014 and each March 1 and September 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 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 pursuant to any Ordinance authorized in connection with the issuance of any Prior Lien Bonds, 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 Prior Lien Bonds. The term "Officer's Pricing Certificates" shall mean a certificate or certificates to be signed by the Mayor or the City Manager and the City Chief Financial Officer pursuant to Section 5 hereof and delivered to the City Clerk, in substantially the forms attached hereto as Exhibit D. 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 any Additional Parity Bonds. The term "Prior Lien Bonds" shall mean 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 4 #4573136.6 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 the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2012, but only to the extent such Prior Lien Bonds remain outstanding within the meaning of this Ordinance. The term "Paving 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 "Report" shall mean the verification report provided by Grant Thornton LLP, certified public accountants, with respect to the Bonds and the adequacy of the amounts deposited pursuant to the Escrow Agreement to pay, when due, the principal of, and interest on the Refunded Bonds and certain other calculations. The term "Reserve Fund Requirement" shall mean an amount equal to the average annual principal and interest requirement on the Parity Bonds, which may be determined and redetermined each year by the City but in no event less frequently than upon the issuance of each series of Parity Bonds. The term "Rule" shall mean SEC Rule 15c -12, as amended from time to time. The term "SEC" shall mean the United States Securities and Exchange Commission. The term "Series 2014A Bonds" shall mean The City of Beaumont, Texas Waterworks and Sewer System Revenue and Refunding Bonds, Series 2014A. The term "Series 2014B Bonds" shall mean The City of Beaumont, Texas Waterworks and Sewer System Refunding Bonds, Taxable Series 2014B. 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 5 #4573136.6 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, Wells Fargo Bank, National Association, as senior underwriter, Estrada Hinojosa & Co., Inc. as co- senior underwriter, Robert W. Baird & Co., BOSC, Inc., and Coastal Securities, Inc. as co- managers. 3. Authorization. The Series 2014A Bonds shall be issued in fully registered form in the total authorized aggregate principal amount not to exceed SEVENTY -FIVE MILLION AND NO /100 DOLLARS (575,000,000) 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 (the "Project "), (ii) discharge and make final payment of certain obligations of the City, as set forth in Schedule I, attached hereto (the "Refunded Bonds "), and (iii) paying costs of issuance of the Bonds and refunding the Refunded Bonds. The Series 2014B Bonds shall be issued in fully registered form in the total authorized aggregate principal amount of TEN MILLION AND NO/ 100 DOLLARS ($10,000,000) for the purpose of providing funds to (i) discharge and make final payment of certain of the Refunded Bonds not refunded by the Series 2014A Bonds, and (ii) paying costs of issuance of the Bonds and refunding the Refunded Bonds. 4. Designation, Date, and Interest Payment Dates. The Series 2014A Bonds shall be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE AND REFUNDING BONDS, SERIES 2014A." The Series 2014B Bonds shall be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REFUNDING BONDS, TAXABLE SERIES 2014B." The Bonds shall be dated, mature, bear interest from the dates and at the rates per annum, and be payable on the dates and in the principal amounts as set forth in the Officer's Pricing Certificate. 5. Sale of Bonds. As authorized by Chapters 1207, 1371 and 1.502, Texas Government Code, as amended, the Mayor or the City Manager and the Chief Financial Officer are hereby authorized to act on behalf of the City in selling and delivering the Bonds and carrying out the other procedures specified in this Ordinance, including any additional designation or title by which the Bonds shall be known, the number of subseries of :Bonds to be issued and the principal amount of each subseries, the price at which each series of the Bonds will be sold, the date or dates (which may be different dates for each series of the Bonds) on which the Bonds shall be sold, the form in which the Bonds shall be issued whether as current interest bonds, as compound interest bonds, or as a combination of current interest bonds and compound interest bonds, any additional designation or title by which the Bonds shall be known, the year or years in which each series of the Bonds will mature, the principal amount to mature in each of such years, the aggregate principal amount of each series of the Bonds., the rate of 6 #4573136.6 interest to be borne by each such maturity, the first interest payment date or compounding date, as the case may be, the dates, prices, and terms, if any, upon and at which each series of the Bonds shall be subject to redemption prior to maturity at the option of the City, as well as any mandatory sinking fund redemption provisions, or make -whole provisions, and such officers are also hereby authorized to act on behalf of the City in approving all other matters relating to the issuance, sale and delivery of the Bonds, including the refunding of the Refunded Bonds and the purchase of a bond insurance policy or policies for all or any portion of the Bonds, all of which shall be specified in one or more bond purchase agreements (the "Bond Purchase Agreement ") for the Bonds substantially in the form attached hereto as Exhibit C, in accordance with the terms of the Officer's Pricing Certificate for the Bonds and this Ordinance, provided that: (a) the price to be paid for each series of the Bonds shall not be less than 90% of the aggregate original principal amount of the current interest bonds plus accrued interest, if any, thereon from their date to their delivery, (b) none of the Bonds shall bear interest at a rate greater than 6% per annum or in excess of the maximum rate allowed by Chapter 1204, Texas Government Code, (c) the aggregate principal amount of each subseries of the Bonds shall not exceed the maximum amount authorized in Section 3, and the sum of the principal amount of each series, plus net premium generated, plus any available funds of the City, if any, shall equal an amount sufficient to provide for the redemption of the Refunded Bonds as identified on the Officer's Pricing Certificate, to pay costs of issuance of the Bonds, and (if necessary) a deposit to the reserve fund, (d) each series of the Bonds to be issued, prior to delivery, must have been rated by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for long -term obligations, and (e) the refunding of the Refunded Bonds shall produce a net present value debt service savings of at least 3 %, as shown by a calculation prepared by the Municipal Advisors (defined herein), and attached to the Officer's Pricing Certificate. Any finding by the Mayor, City Manager or the Chief Financial Officer relating to the sale and delivery of the Bonds and the purchase of bond insurance shall have the same force and effect as a finding or determination made by the City Council. 6. Bond Numbers and Denominations. Each series of Bonds shall be numbered from R -1 and upward (except the Initial Bond, which shall each be numbered T -1), and may be transferred and exchanged as set out in this Ordinance. Such Bonds shall mature on September 1 in each of the years and in the amounts set forth in such schedule. The Bonds delivered in transfer of or in exchange for ocher 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 Bonds or Bonds in lieu of which they are delivered. 7. Execution of Bonds; Seal. The Bonds shall be signed by the Mayor or Mayor Pro 7 #4573136.6 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. 8. Approval by Attorney General; Registration by Comptroller. The Bonds to be initially issued shall be delivered to the Attorney General of Texas for approval and shall be registered by the Comptroller of Public Accounts of the State of Texas. The manually executed registration 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. 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 19 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. 10. Pa lent of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Bonds. The principal of and premium, if any, on the Bonds shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they respectively become due and payable, whether at maturity or by prior redemption, at the principal corporate trust office of the Registrar. The interest on each Bond shall be payable by check on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Bond Register. Any accrued interest payable at maturity on 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. 11. 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 M #4573136.6 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. 12. Special Record Date. If interest on any Bond is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. 13. 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 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. 14. Registration, Transfer, and Exchange. So long as any Bonds remain outstanding, the Registrar shall keep the Bond Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Bonds in accordance with the terms of this Ordinance. If the Registrar does not maintain its principal offices in the State of Texas, the City agrees to keep a Bond Register at its offices which is identical to the Bond Register maintained by the Registrar and the Registrar will notify the City as to any changes in the Bond Register within 1 business day. Each Bond shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Bond in proper form for transfer, the we Fiii.OISIMM 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. 15. 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 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 10 #4573136.6 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. 16. 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. 17. 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 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 11 #4573136.6 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. (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. 18. Redemption and Defeasance. (a) Optional Redemption. The Series 2014A Bonds shall be subject to redemption prior to the Stated Maturity, at the option of the City at such times, in such amounts, in such manner and at such redemption prices as may be designated and provided for in the Officer's Pricing Certificate. The Series 2014B Bonds shall be not be subject to optional redemption prior to the Stated Maturity. (b) Mandatory Redemption. The Series 2014A Bonds designated as "Term 12 #4573136.6 Bonds" in the Officer's Pricing Certificate ( "Term Bonds "), if any, are subject to scheduled mandatory redemption and will be redeemed by the City, in part, at a price equal to the principal amount thereof, without premium, plus accrued interest to the redemption date, out of moneys available for such purpose in the interest and sinking fund, on the dates and in the respective principal amounts as set forth in the Officer's Pricing Certificate. Prior to each scheduled mandatory redemption date, the Paying Agent /Registrar shall select for redemption by lot, or by any other customary method that results in a 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 such scheduled mandatory redemption date, and shall give notice of such redemption, as provided in this Section. The principal amount of the Term Bonds required to be redeemed on any redemption date pursuant to subparagraph (a) of this Section shall be reduced, at the option of the City, by the principal amount of any Term Bonds which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Term Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent /Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Series 2014A Bonds may be redeemed only in integral multiples of $5,000. If a Series 2014A Bond subject to redemption is in a denomination larger than $5,000, a portion of such Series 2014A Bond may be redeemed, but only in integral multiples of $5,000. Upon surrender of any Series 2014A Bond for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Series 2014A Bond or Series 2014A Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Series 2014A Bond so surrendered The City, at least 45 days before the redemption date, unless a shorter period shall be satisfactory to the Paying Agent /Registrar, shall notify the Paying Agent /Registrar of such redemption date and of the principal amount of Series 2014A Bonds to be redeemed. Not less than thirty (30) days prior to a redemption date for the Series 2014A 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 Series 2014A 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 Series 2014A Bonds are to be surrendered for payment and, if less, than all the Series 2014A Bonds are to be redeemed, the numbers of the Series 2014A 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 Series 2014A Bonds or portions thereof to be redeemed. When Series 2014A Bonds have been called for redemption in whole or in part and due provision made to redeem the same as herein provided, the Series 2014A 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 13 #4573136.6 any Series 2014A Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. With respect to any optional redemption of the Series 2014A Bonds, unless moneys sufficient to pay the principal of and premium, if any, and interest on the Series 2014A Bonds to be redeemed shall have been received by the Paying Agent /Registrar prior to the giving of such notice of redemption, such notice may state that said redemption is conditional upon the receipt of such moneys by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon the satisfaction of any prerequisites set forth in such notice of redemption; and, if sufficient moneys are not received, such notice shall be of no force and effect, the City shall not redeem such Series 2014A Bonds and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, to the effect that the Series 2014A Bonds have not been redeemed. (c) 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 Series 2014A 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 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. 19. Form. The Form of Bond as set forth in Exhibit A to the Officer's Pricing Certificate is hereby approved. The form of the Bonds, including the fornh 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 set forth in Exhibit A to the Officer's Pricing Certificate, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance. 20. L_ egal Opinion; CUSIP Numbers. The approving opinion of Bracewell & Giuliani LLP, Houston, 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. 14 #4573136.6 21. (a) Pledge and Source of Payment. The City hereby covenants and agrees that, subject only to the prior lien on and pledge of the Net Revenues of the System to the payment and security of the Prior Lien Bonds (including the establishment and maintenance of the special funds created for the payment and security thereof) under the terms and conditions of the ordinances and proceedings pertaining to their authorization, 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 Bonds, and all expenses of paying, securing and insuring; the same. The Bonds are special obligations of the City payable solely from and secured by a lien on and pledge of the Net Revenues of the System, such lien and pledge, however, being junior and subordinate only to the lien on and pledge of such Net Revenues to the payment and security of the Prior Lien Bonds, which Net Revenues shall, in the manner hereafter provided, be set aside for and are hereby pledged by the City to the payment of the Bonds and any Parity Bonds. The Bonds do not constitute a legal or equitable pledge, charge, lien or encumbrance upon any property of the City or the System, except with respect to the Net Revenues. THE HOLDER OF THIS OBLIGATION IS NOT ENTITLED TO DEMAND PAYMENT OF THIS OBLIGATION Our OF ANY MONEY RAISED BY TAXATION. IT IS ORDERED AND DIRECTED that this Ordinance pledging Net Revenues 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, 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 and Refunding Bonds, Series 2014A, Construction Fund ". Immediately after the sale and delivery of the Series 2014A Bonds, that portion of the proceeds of the Series 2014A Bonds to be used for the cost of the Project and the cost of issuance of the Series 2014A 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 15 #4573136.6 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: (1) 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 Prior Lien Bonds (including the Reserve Fund Requirement) and Parity Bonds then outstanding, but in no event less than the amount required to establish and maintain the Interest and Sinking Fund, 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 (the "Interest and Sinking Fund "); (iii) Waterworks and Sewer System Bond Reserve Fund (the "Reserve Fund"), and (iv) Waterworks and Sewer System Prior Lien Bond Reserve Fund (the "Prior Lien Reserve Fund "). The Revenue Fund shall be maintained as a separate account on the books of the City. The Interest and Sinking; Fund, the Reserve Fund and the Prior Lien 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: (1) First, to pay Maintenance and Operation Expenses and to provide by encumbrance for the payment of all obligations incurred by the City for 16 #4573136.6 Maintenance and Operation Expenses which may include an operating reserve equal to one month's estimated Maintenance and Operation Expenses. (ii) Second, To the payment of the amounts required to be deposited in the Prior Lien Reserve Fund, Special Funds or accounts created and established for the payment and security of the Prior Lien Bonds in accordance with the ordinances authorizing the issuance thereof. Third, 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. (iv) Fourt h, 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. (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, Reserve Fund and the Prior Lien 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, Reserve Fund and the Prior Lien Reserve Fund.. (f) Interest and Sinking Fund. On or before the last Business Day of each month so long as any Parity Bonds remain outstanding, after making all required payments and provision for payment of Maintenance and Operation Expenses, there shall be transferred into the Interest and Sinking Fund from the Revenue Fund the following amounts: (i) Such amounts, in approximately equal monthly installments, as will be sufficient to pay the interest scheduled to become due on the Parity Bonds on the next interest payment date; and (ii) Such amounts, in approximately equal monthly installments, as will be sufficient to pay the next maturing principal of the Parity Bonds, including the principal amounts of, and any redemption premiums on, any Parity Bonds payable as a result of the exercise or operation of any redemption provision contained in this Ordinance or in any ordinance authorizing the issuance of Parity Bonds. Moneys deposited to the credit of the Interest and Sinking Fund (except for interest income, 17 #4573136.6 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 (1 /60'x') 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 /601h) of the average annual principal and interest requirements on the Parity Bonds until the Reserve Fund has been restored to such amount; provided however, if a Reserve Fund Surety Policy has been obtained by the City pursuant to the next paragraph below, then the provisions of such next paragraph shall govern and control with respect to replenishment of amounts drawn under the Reserve Fund Surety Policy. The Reserve Fund shall be used to pay the principal of and interest on the Parity Bonds at any time when there is not sufficient money available in the Interest and Sinking Fund for such purpose and it may be used finally to pay and retire the last Parity Bonds to mature or be redeemed. To the extent permitted by law, the City expressly reserves the right at any time to satisfy all or any part of the amounts required to be on deposit in the Reserve Fund (the "Reserve Fund Requirement ") by obtaining for the benefit of the Reserve Fund one or more Reserve Fund Surety Policies (a "Reserve Fund Surety Policy "). 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 W #4573136.6 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, n amounts sufficient to restore the cash balance in the Reserve Fund and reimburse the amount drawn under such policy within twelve (12) months, with reimbursement to be made for all amounts drawn under such policy before any cash deposits are made into the Reserve Fund. Any reimbursement of amounts drawn against a Reserve Fund Surety Policy shall be limited to the amounts actually paid under such policy, and the City shall have no obligation to make any reimbursement payment with respect to any such policy except as provided herein. Notwithstanding anything to the contrary contained herein, the requirement set forth above in this subsection to maintain the Reserve Fund Requirement in the Reserve Fund shall be suspended for such time as the Net Revenues for each Fiscal Year are equal to at least 1.30 times the Average Annual Debt Service Requirements. In the event that the Net Revenues for any Fiscal Year are less than 1.30 times the Average Annual Debt Service Requirements, the City will be required to commence making Required Reserve Fund Deposits, as provided above, and to continue such Required Reserve Fund Deposits until the earlier of (i) such time as the Reserve Fund contains the Reserve Fund Requirement or 19 #4573136.6 (ii) the Net Revenues in each of two consecutive years have been equal to not less than 1.30 times the Average Annual Debt Service Requirements. During such time as the Reserve Fund contains the Reserve Fund Requirement or the obligation to maintain the Reserve Fund Requirement has been suspended pursuant to the paragraph above, the City may, at its option, withdraw all surplus funds in the Reserve Fund and deposit such surplus in the Interest and Sinking Fund or otherwise use such amount in any manner permitted by law. (h) Prior Lien Reserve Fund. The City shall fully fund the reserve fund as provided in the ordinances in connection with the Prior Lien Bonds. (i) Deficiencies in Funds. If in any month there shall not be deposited into any Fund maintained pursuant to this Section 21 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. 0) 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. Any obligation in which money is so invested shall be kept and held in the Fund from which the investment was made. All such investments shall be promptly sold when necessary to prevent any default in connection with the Parity Bonds. All interest and income derived from such deposits and investments shall be transferred or credited as received to the Revenue Fund, and shall constitute Gross Revenues of the System; provided, however, to the extent such interest and income is derived from bond proceeds, such interest and income shall not constitute Gross Revenues of the System and shall only be used for the purposes for which the bond proceeds may be used. 22. Additional Bonds. (a) Additional Obligations to be Issued on a Parity with the Prior Lien Bonds - Obligations of Inferior Lien and Pledge. The City may hereafter issue any additional obligations on a parity with the Prior Lien Bonds or create or issue evidences of indebtedness for any purpose possessing a lien on the Net Revenues of the System superior to that to be possessed by the Parity Bonds. (b) Additional Parity Bonds. In addition to the right to issue bonds of inferior lien as authorized by law, the City reserves the right to issue, for any lawful purpose, including the refunding of any previously issued Prior Lien Bonds, 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 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; 20 #4573136.6 provided, however, that no Additional Parity Bonds may be issued unless: (i) The Interest and Sinking Fund contain the amount of money then required to be on deposit therein; (ii) 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 Prior Lien Bonds and Parity Bonds that will be outstanding after the issuance of the series of Additional Parity Bonds then proposed to be issued, as certified by the City's Finance Officer or by an independent certified public accountant or firm of independent certified public accountants; or (iii) If the City cannot meet the test described in (ii) 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. (c) 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 Tien 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. (d) 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. 23. Covenants and Provisions Relating to all Parity Bonds. (a) Punctual Payment of Parity Bonds. The City will punctually pay or cause to be paid the interest on and principal of all Parity Bonds according to the terms thereof and will faithfully do and perform, and at all times fully observe, any and all covenants, undertakings, stipulations and provisions contained in this Ordinance and in any ordinance authorizing the issuance of Additional Parity Bonds. (b) Maintenance of System. So long as any Parity Bonds remain outstanding, the City covenants that it will at all times maintain the System, or within the limits of its authority cause the same to be maintained, in good condition and working order and will operate the same, or cause the same to be operated, in an efficient and economical manner at a reasonable cost and in accordance with sound business principles. In operating and maintaining the System, the City will comply with all contractual provisions and agreements entered into by 21 #4573136.6 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 System. So long as any Parity Bond remain outstanding, the City will not sell, dispose of or, except as permitted in this Ordinance, further encumber the System; provided, however, that this provision shall not prevent the; City from disposing of any portion of the System which is being replaced or is deemed by the City to be obsolete, worn out, surplus or no longer needed for the proper operation of the System. Any agreement pursuant to which the City contracts with a person, corporation, municipal corporation or political subdivision to operate the System or to lease and /or operate all or part of the System shall not be considered as an encumbrance of the System. (d) Insurance. The City further covenants and agrees that it will keep the System insured with insurers of good standing against risks, accidents or casualties against which and to the extent insurance is customarily carried by political subdivisions of the State of Texas operating similar properties, to the extent that such insurance is available. The cost of all such insurance, together with any additional insurance, shall be a part of the Maintenance and Operation Expenses. All net proceeds of such insurance shall be applied to repair or replace the insured property that is damaged or destroyed, or to make other capital improvements to the System, or to redeem Parity Bonds. (e) Accounts, Records and Audits. So long as any Parity Bonds remain outstanding, the City covenants and agrees that it will maintain a proper and complete system of records and accounts pertaining to the operation of the System in which full, true and proper entries will be made of all dealings, transactions, business and affairs which in any way affect or pertain to the System or the Gross Revenues or the Net Revenues thereof. The City shall after the close of each of its Fiscal Years cause an audit report of such records and accounts to be prepared by an independent certified public accountant or independent firm of certified public accountants. Each year promptly after such audit report is prepared, the City shall furnish a copy thereof without cost to the Municipal Advisory Council of Texas and any holders of Parity Bonds who shall request same. All expenses incurred in preparing such audits shall be Maintenance and Operation Expenses. (f) Competition. To the extent it legally may, the City will not grant any franchise or allow for the acquisition, construction or operation of any competing facilities which might be used as a substitute for the System and will prohibit the operation of any such competing facilities. (g) Pledge and Encumbrance of Net Revenues. The City covenants and represents that it has the lawful power to pledge the Net Revenues to the payment of the Parity Bonds and has lawfully exercised such power under the Constitution and laws of the State of Texas. The City further covenants and represents that, other than to the payment of the Parity Bonds, the Net Revenues are not and will not be pledged to the payment of any debt or obligation of the City, or in any other manner encumbered unless such pledge or encumbrance is junior and subordinate to the lien and pledge securing payment of the Parity Bonds. 22 #4573136.6 (h) Remedies. This Ordinance shall constitute a contract between the City and the holders of the Parity Bonds from time to time outstanding, and shall remain in effect until the Parity Bonds and the interest thereon 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, the holder or holders of any of the Parity Bonds, as appropriate, may pursue all legal remedies afforded by the Constitution and laws of the State of Texas to compel the City to remedy such default and to prevent further default or defaults. Without in any way limiting the generality of the foregoing, it is expressly provided that any holder of any of the Parity Bonds 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. (1) 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. (j) 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. 24. 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 Pubhe Accounts of the State of Texas for registration. Upon registration of the Bonds to be initially issued, the Comptroller of Public Accounts (or the Comptroller's bond clerk or an assistant bond clerk lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein and the seal of said Comptroller shall be impressed or placed in facsimile, thereon. 23 #4573136.6 25. Tax Exemption. (a) The City intends that the interest on the Series 2014A Bonds shall be excludable from gross; income for federal income tax purposes pursuant to Sections 103 and 141 through 150 of the Code, and the applicable Treasury Regulations promulgated thereunder (the "Regulations "). The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would (i) cause the interest on the Series 2014A Bonds to be includable in gross income, as defined in Section 61 of the Code, for federal income tax purposes or (ii) result in the violation or failure to satisfy any provision of Section 103 and 141 through 150 of the Code and the applicable Regulations. In particular, the City covenants and agrees to comply with each requirement of this 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 (i) such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Series 2014A Bonds or (ii) compliance with some other requirement set forth in this Section 25 will satisfy the applicable requirements of the Code and the Regulations, in which case compliance with such other requirement specified in such Counsel's Opinion 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 covenants and agrees that it will make such use of the proceeds of the Series 2014A Bonds, including interest or other investment income derived from Series 2014A 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 Series 2014A Bonds will not be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. Moreover. 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 Series 2014A Bonds are delivered, that the proceeds of the outstanding Parity Bonds have not been and the proceeds of the Series 2014A Bonds will not be used in a manner that would cause the Series 2014A Bonds to be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. (c) No Federal Guaranty. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Series 2014A Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code and the applicable Regulations thereunder, except as permitted by Section 149(b)(3) of the Code and such Regulations. (d) No Hedge Bonds. The City covenants and agrees not to take! any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the Series 2014A Bonds to be "hedge bonds" within the meaning of section 149(g) of the Code and the applicable Regulations thereunder. Moreover, the City will certify, through an authorized officer, employee or agent, based upon all facts and estimates known or reasonably expected to be in existence on the date the Series 2014A Bonds are delivered, that the proceeds of the Refunded Bonds have not been used in a manner that would cause the Refunded Bonds or the Series 2014A Bonds to be "hedge bonds" within the meaning of section 149(8) of the Code 24 #4573136.6 and the Regulations promulgated thereunder. (e) No- Arbitrage. The City covenants and agrees that it will make such use of the proceeds of the Series 2014A 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 Series 2014A Bonds will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and the applicable Regulations promulgated thereunder. Moreover, 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 Series 2014A Bonds are delivered, that the proceeds of the Series 2014A Bonds will not be used in a manner that would cause the Series 2014A Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable Regulations promulgated thereunder. (f) Arbitrage Rebate. If the City does not qualify for an exception to the requirements of Section 148(f) of the Code relating to 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 oiI the "gross proceeds" of the Series 2014A 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 Series 2014A 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) determine at such times as are required by applicable regulations, the amount earned from the investment of the gross proceeds of the Series 2014A 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 Series 2014A Bonds, or on such other date as may be permitted under applicable Regulations, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than. the federal government by entering into an investment arrangement with respect to the gross proceeds of the Series 2014A 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. (g) Information Reporting. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Series 2014A Bonds are issued, an information statement concerning the Series 2014A Bonds, all under and in accordance with Section 149(e) of the Code and applicable Regulations promulgated thereunder. (h) Record Retention. The City will retain all pertinent and material records relating to the use and expenditure of the proceeds of the Refunded Bonds and the Series 2014A Bonds until three years after the last Series 2014A Bond is redeemed, or such shorter period as authorized by subsequent guidance issued by the Department of Treasury, if applicable. All records will be kept in a manner that ensures their complete access throughout the retention period. For this purpose, it is acceptable that such records are kept either as hardcopy books and 25 #4573136.6 records or in an electronic storage and retrieval system, provided that such electronic system includes reasonable controls and quality assurance programs that assure the ability of the City to retrieve and reproduce such books and records in the event of an examination of' the Series 2014A Bonds by the Internal Revenue Service. (1) Registration. The Series 2014A Bonds will be issued in registered form. 0) Deliberate Actions. The City will not take a deliberate action (as defined in section 1.141- 2(d)(3) of the Regulations) that causes the Series 2014A Bonds to fail to meet any requirement of section 141 of the Code after the issue date of the Series 2014A Bonds unless an appropriate remedial action is permitted by section 1.141 -12 of the Regulations and an opinion of Bond Counsel is obtained that such remedial action cures any failure t:o meet the requirements of section 141 of the Code. (k) Continuing Obligation. tion. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants and provisions of this Section shall survive the defeasance and discharge of the Series 2014A Bonds for so long as such matters ,are relevant to the exclusion from gross income of interest on the Series 2014A Bonds for federal income tax purposes. 26. Escrow Agreements. The form of the escrow agreements (both the "Escrow Agreement ") by and between the City and The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (the "Escrow Agent "), attached hereto as Exhibit B and incorporated herein by reference as a part of this Ordinance for all purposes, is hereby approved as to form and content, and such Escrow Agreement in substantially the form and substance attached hereto, together with such changes or revisions as may be necessary to accomplish the refunding or benefit the City, is hereby authorized to be executed by the Mayor or Mayor Pro Tern and City Clerk for and on behalf of the City. Furthermore, appropriate officials of the City in cooperation with the Escrow Agent are hereby authorized and directed to make the necessary arrangements for the purchase of the escrowed securities referenced in the Escrow Agreement, if any, and the delivery thereof to the Escrow Agent on the day of delivery of the Bonds to the Underwriter for deposit to the credit of the "2014 CITY OF BEAUMONT, TEXAS, WATER AND SEWER SYSTEM REVENUE REFUNDING BOND ESCROW FUND" (the "Escrow Fund "); all as contemplated and provided in Texas Government Code, Chapter 1207, as amended, this Ordinance and the Escrow Agreement. 27. Refunded Bonds. (a) hi order to provide for the refunding, discharge and retirement of the Refunded Bonds, the Refunded Bonds are called for redemption on September 1 of 2014, 2015 and 2016 at the price of par plus accrued interest to the redemption date, and notice of such redemption shall be given in accordance with the applicable provisions of the ordinance adopted by the Council, which authorized the issuance of the Refunded Bonds. The City Clerk is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to bondholders, with The Bank of New York Mellon Trust Company, N.A., Dallas, Texas, in accordance with the redemption provisions applicable to the Refunded Bonds. 26 #4573136.6 (b) The redemption of the Refunded Bonds described above being associated with the refunding of such Refunded Bonds, the approval, authorization and arrangements herein given and provided for the redemption of such Refunded Bonds on the redemption date designated therefor and in the manner provided shall be irrevocable upon the issuance and delivery of the Bonds; and the City Clerk is hereby authorized and directed to make all arrangements necessary to notify the holders of such Refunded Bonds of the City's decision to redeem such Refunded Bonds on the date and in the manner herein provided and in accordance with the ordinance authorizing the issuance of the Refunded Bonds and this Ordinance. 28. Engagement of Professionals. The City Council hereby confirms the engagement of (1) RBC Capital Markets, LLC, as Municipal Advisor, to the City and (ii) Wells Fargo Bank, National Association, as the senior underwriter, Estrada Hinojosa & Co., Inc. as co- senior underwriter, R.W. Baird, Inc., BOSC, Inc., and Coastal Securities, Inc. as co- managers (together, the "Underwriter ") in connection with the issuance and sale of the Bonds. 29. Proceeds of Sale. Proceeds from the sale of the Bonds, together with other funds of the City, if any, shall, promptly upon receipt by the City, be applied as set forth in the Officer's Pricing Certificate. Any proceeds remaining after the accomplishment of such purposes, including interest earnings on the investment of such proceeds, shall be deposited to the Interest and Sinking Fund. 30. Bond Insurance. In order to obtain the lowest attainable interest rates on the Bonds, the Mayor, the City Manager or the Chief Financial Officer are authorized to enter into a credit agreement with one or more Bond Insurers to obtain one or more bond insurance policies with respect to all or a portion of the Bonds. The Mayor, the City Manager or the Director of Finance are authorized to execute and the City Secretary is authorized to attest and affix the City's seal to any documents required in connection with the purchase of any such policy or policies. 31. Paying�Agent /Registrar Agreement. The paying agent /registrar agreement (the "Paying Agent Agreement ") by and between the City and Paying Agent, a form of which is attached hereto as Exhibit B and incorporated herein by reference as a part of this Ordinance for all purposes, is hereby approved, together with such changes or revisions as may be necessary to accomplish the refunding or benefit the City, is hereby authorized to be executed by the Mayor or Mayor Pro Tern and City Clerk for and on behalf of the City. 32. 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. 33. 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. 27 #4573136.6 34. 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 (1) under the headings "CITY WATERWORKS AND SEWER SYSTEM REVENUE DEBT ", "ADMINISTRATION OF THE 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 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; ill. 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; im #4573136.6 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 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, 29 #4573136.6 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 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. 35. 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. 36. 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 30 #4573136.6 Parity Bonds and the validity of the lien on and pledge of the Net Revenues to secure the payment of the Parity Bonds. 37. Repealer. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. 38. Effective Date. This Ordinance shall be in force and effect from and after its final passage, and it is so ordered. 39. 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 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 31 #4573136.6 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 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 Tern, 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. 32 #4573136.6 12) 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 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. 40. 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. 41. 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. 42. 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. [The remainder of this page has intentionally been left blank.] 33 #4573136.6 PASSED BY THE CITY COUNCIL of the City of Beaumont this the 22nd day of July, 2014. ATTEST: w� City Clerk The City of Beaumont (SEAL) #4573136.6 34 SCHEDULEI REFUNDED BONDS 35 #4573136.6 SCHEDULEI SCHEDULE OF SERIES 2014A REFUNDED BONDS* Maturity Interest Par Call Date Rate Amount Call Date Price Waterworks and Sewer System Revenue 09/01/2015 6.250% $ 250,000 09/01/2014 100.00 Bonds, Series 2004 09 /01 /2016 6.000 255,000 09/01/2014 100.00 09/012017 6.000 260,000 09/01/2014 100.00 09/01/2018 5.000 270.000 09/01 /2014 100.00 09/01/2019 4.500 275,000 09/01/2014 100.00 09/01/2020 4.500 280,000 09/01/2014 100.00 09/01/2021 4.500 285,000 09/01/2014 100.00 09/01/2022 4.500 290,000 09/01/2014 100.00 09/01/2023 4.625 300,000 09/01/2014 100.00 09/01/2024 4.700 2,315,000 09/01/2014 100.00 09/01/2025(') 4.750 2,435,000 09/01/2014 100.00 09/01/20261 �1 4.750 2,555,000 09/01/2014 100.00 09/012027 4.750 2,680,000 09/01/2014 100.00 09/01/2028 4.750 2.805,000 09/01/2014 100.00 $157255,000 Waterworks and Sewer System Revenue 09/01/2016 4.000% $ 250,000 09/01/2015 100.00 Bonds, Series 2005 09/01/2017 4.000 235,000 09/01/2015 100.00 09/01/2018 4.000 215,000 09/01/2015 100.00 09/01/2019 4.000 135,000 09/01 /2015 100.00 09/01/2020 4.000 120,000 09/01/2015 100.00 09/01/2021 5.000 1,190,000 09/01/2015 100.00 09/012022 4.000 1,415,000 09/01/2015 100.00 09/01/2023 5.000 1,645,000 09/01/2015 100.00 09/01/2024 5.000 1,495,000 09/01/2015 100.00 09/01/2025 5.000 1,510,000 09/01/2015 100.00 09/01/2026 5.000 1,540,000 09 /01 /2015 100.00 09/01/2027(2) 4.000 1,580,000 09/01/2015 100.00 09/01/2028( �) 4.000 1,625,000 09/01/2015 100.00 $12,955,000 Waterworks and Sewer System Revenue 09/01/2017 4.250% S1,585,000 09/01/2016 100.00 Refunding Bonds, Series 2006 09/01/2018 4.250 1,675,000 09/01/2016 100.00 09/01/2019 4.250 1,765,000 09/01/2016 100.00 09/01/2020 4.375 1,835,000 09/01/2016 100.00 09/01/2021 5.000 4,635,000 09/01/2016 100.00 09/01/2022 5.000 4,725,000 09/01/2016 100.00 09/01/2023 5.000 4,800,000 09/01/2016 100.00 $21,020,000 Waterworks and Sewer System Revenue 09/01/2017 4.100% $ 200,000 09/01/2016 100.00 Bonds, Series 2006A 09/01/2018 4.100 200,000 09/01/2016 100.00 09/01/2019 4.100 200,000 09/01/2016 100.00 09/01/2020 4.100 225,000 09/01/2016 100.00 09/01/2021 4.150 225,000 09/01/2016 100.00 09/01/2022 4.150 225,000 09/01 /2016 100.00 09/01/2023 4.150 225,000 09/01/2016 100.00 09/012024 5.000 2,075,000 09/01/2016 100.00 09/012025 5.000 2,180,000 09/01/2016 100.00 $ 4,255,000 *Preliminary, subject to change (1) Denotes Tenn Bond maturing on September 1, 2026. (2� Denotes Tenn Bond maturing on September 1, 2028. SCHEDULE 11 SCHEDULE OF SERIES 2014B REFUNDED BONDS* Maturity Interest Par Call Date Rate Amount Call Date Price Waterworks and Sewer System Revenue 09/01/2016 5.250% $ 2,800,000 09/01/2015 100.00 Bonds, Series 2005 09/01/2017 5.250 2,965,000 09/01/2015 100.00 09/01/2018 5.250 3,140.000 09/01/2015 100.00 $8,905,000 38 EXHIBIT "A" ESCROW AGREEMENT 36 #4573136.6 BOND ESCROW AGREEMENT (Series 2014A) THIS BOND ESCROW AGREEMENT (this "Bond Escrow Agreement "), dated as of _ , 2014, between City of Beaumont, Texas (hereinafter called the "Issuer"), and The Bank of New York Mellon Trust Company, N.A.. as Escrow Agent (hereinafter together with any successor to its duties hereinunder referred to as the "Escrow Agent', a banking corporation organized and existing under the laws of the United States of America, WITNESSETH: WHEREAS, the Issuer has previously issued its certain obligations of which the names, series and maturities are designated in Exhibit A hereto presently remain outstanding in the principal amounts set forth in Exhibit A (such obligations hereinafter referred to as the "Refunded Obligations'); WHEREAS, payments of principal of and interest on the Refunded Obligations are due on the dates and in the amounts shown under in Exhibit A hereto upon publication or mailing of the notice of redemption described herein; WHEREAS, under the provisions of Chapter 1207, Texas Government Code, as amended (the "Act's, the Issuer is authorized to sell refunding bonds in an amount sufficient, together with other available funds or resources, to provide for the payment of obligations which are to be refunded, deposit the proceeds of such refunding bonds with a paying agent for the obligations being refunded, and enter into an escrow or similar agreement with such paying agent for the safekeeping, investment, reinvestment, administration, and disposition of such deposit of proceeds, upon such terms and conditions as the parties may agree, provided such deposit may be invested only in direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and which may be in book entry form and which shall mature and /or bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment of such Refunded Obligations; WHEREAS, the Issuer desires so to provide for payment of the principal of and interest on the Refunded Obligations in order to achieve a debt service savings on its outstanding debt, and to such end the issuer has sold and intends to issue certain of its "Waterworks and Sewer System Revenue and Refunding Bonds, Series 2014A" (hereinafter referred to as the "Refunding Bonds') in an amount: sufficient, together with other legally available funds on hand, to make the deposit required hereby, WHEREAS, the Issuer has determined that the scheduled payments of principal of and interest on such obligations are in such amounts and to become due at such times, so as to provide, together with the initial cash balance herein provided, sufficient funds to pay all principal of and interest on the Refunding Bonds when due, whether or not the reinvestments herein provided for are made; WHEREAS, the Escrow Agent is the paying agent for all of the Refunded Obligations; and #4618940.1 WHEREAS, the Issuer has duly authorized the execution and delivery of this Bond Escrow Agreement by adopting the ordinance authorizing issuance of the Bonds (the "Ordinance "), and all things have been done which are necessary to constitute this Bond Escrow Agreement a valid escrow, security, and trust agreement and contract for the security of the Refunded Obligations; NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter contained, and subject to the conditions herein set forth, the parties hereto covenant, agree, and bind themselves as follows: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01. Definitions. For all purposes of this Bond Escrow Agreement, except as otherwise expressly provided or unless the context otherwise requires: A. The terms defined in this Article have the meanings assigned to them in this Article, the terms defined in the recitals hereto have the meanings assigned to them in such recitals, and all such terms include the plural as well as the singular. B. All references in this instrument to designated "Articles, " "Sections, " "Exhibits, " and other provisions are to the designated Articles, Sections, Exhibits, and other provisions of this instrument as originally executed. C. The words "herein," "hereof," and "hereunder" and other words of similar import refer to this Bond Escrow Agreement as a whole and not to any particular Article, Section, or other subdivision. "Accountant" means an independent public accounting firm of national reputation. "Agency Obligations" means direct obligations of, or obligations the timely payment of the principal of and interest on which are fully and unconditionally guaranteed by, an agency or instrumentality of the United States and, on the date of adoption of the Ordinance by the Issuer, are rated as to investment quality by a nationally- recognized investment rating firm of not less than "AAA" or its equivalent, which may not be called for redemption prior to maturity. "Escrow" means the segregated escrow fund to be held by the Escrow Agent pursuant hereto. "Escrow Agent" means the bank named as the Escrow Agent in the first paragraph of this instrument, or its duly authorized agent, until a successor Escrow Agent shall have become such pursuant to the applicable provisions hereof, and, thereafter, "Escrow Agent" shall mean such successor Escrow Agent. -2- #4618940.1 "Issue Date " means 2014. "Opinion of Counsel" means a written opinion of counsel who shall be acceptable to the Escrow Agent, and shall be of nationally recognized standing in the field of municipal bond law. "United States Obligations" means direct obligations of, or obligations the timely payment of principal of and interest on which are fully and unconditionally guaranteed by, the United States of America which may not be called for redemption prior to maturity. SECTION 1.02. Notices, etc. Any request, authorization, direction, notice, consent, waiver, report, or other document provided or permitted by this Bond Escrow Agreement to be made upon, given or furnished to, or filed with, A. the Issuer by the Escrow Agent shall be sufficient for every purpose hereunder if in writing and mailed, first - class, postage prepaid, to the Issuer addressed to it care of the City Manager, , Beaumont, Texas , or at any other address previously furnished in writing to the Escrow Agent by the Issuer, or B. the Escrow Agent by the Issuer shall be sufficient for every purpose hereunder if in writing and mailed, first - class, postage prepaid, to the Escrow Agent _ Attention: or at any other address previously furnished in writing to the Issuer by the Escrow Agent. SF,CTION 1.03. Effect of Headings and Table of Contents. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. SECTION 1.04. Successors and .Assigns. All covenants and agreements in this Bond Escrow Agreement by the Issuer, and the Escrow Agent shall bind their respective successors and assigns, whether so expressed or not. SECTION 1.05. S'everabilily. In case any provision of this Bond Escrow Agreement or any application hereof shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions and applications shall not in any way be affected or impaired thereby. SECTION 1.06. Benefits of Bond Escrow Agreement; Assignment. Nothing in this Bond Escrow Agreement, expressed or implied, shall give any benefit or any legal or equitable right, remedy, or claim under this Bond Escrow Agreement to any person or entity, other than the parties hereto and their successors hereunder and, as third party beneficiaries, the holders or owners of the Refunded Obligations and any coupons appertaining thereto. -3- #4618940.1 No party hereto may assign its rights or obligations hereunder to any other person or entity without the written consent of the other party hereto, except as otherwise provided in Section 5.08 or by operation of law. SECTION 1.07. Governing Law. This Bond Escrow Agreement shall be construed in accordance with and governed by the laws of the State of Texas and the federal laws of the United States of America. SECTION 1.08. Amendment of'Bond Escrow Agreement. The parties hereto may from time to time enter into one or more amendments or supplements hereto, fir any of the following purposes: A. to correct or amplify the description of any United States Obligations or Agency Obligations in which the Escrow may be invested hereunder; or B. to evidence the succession of another entity to the Escrow Agent and the assumption by such successor of the covenants of the Escrow Agent herein; or C. to cure any ambiguities or to correct or supplement any provision herein which may be inconsistent with any other provision herein with respect to the matters or questions arising under this Bond Escrow Agreement, which shall not adversely affect the interests of the holders or owners of the Refunded Obligations and any appurtenant coupons or of the owners of the Refunded Obligations, and this Bond Escrow Agreement may not otherwise be amended or supplemented. The Escrow Agent may in its discretion determine whether or not any Refunded Obligations or Bonds would be affected by any amendment or supplement described in Subsection C and any such determination shall be conclusive upon every holder or owner of Refunded Obligations and any appurtenant coupons and every owner of the Bonds. The Escrow Agent shall not be liable for any such determination made in good faith. In executing or accepting any supplement or amendment hereto, the Escrow Agent shall be entitled to receive and shall be fully protected in relying upon an Opinion of Counsel stating that the execution of such supplement or amendment is authorized or permitted by this Bond Escrow Agreement. The Escrow Agent may, but shall not be obligated to, enter into any such supplement or amendment which affects the rights, duties, or immunities of the Escrow Agent under this Bond Escrow Agreement or otherwise. SECTION 1.09. Term and Termination. The term of this Bond Escrow Agreement shall commence on the date and at the time the Bonds are first authenticated and delivered and shall terminate on the second business day following the final payment set forth in Exhibit A, unless terminated sooner pursuant to the provisions hereof. -4- #4618940.1 SECTION 1. 10. Holiday. If the date for the payment or performance of any obligation hereunder shall be a Saturday, a Sunday, a legal holiday, or a day on which the banking institutions in the City of New York, New York, are authorized or required by law or executive order to close and on which the principal corporate trust office of the Escrow Agent is closed, then the date for such payment or performance shall be the next succeeding day which is not such a day, and such payment and performance shall have the same force and effect as if made or done on the original date therefor. SECTION 1.11. Time of Essence. Time shall be of the essence in the payment or performance of the obligations from time to time imposed upon the parties hereto by this Bond Escrow Agreement. SECTION 1.12. Cumulative Rights. All of the rights of the Escrow Agent hereunder are cumulative of any other rights it may have by law or otherwise. ARTICLE II ESCROW SECTION 2.01. L)eposit by Issuer. The Issuer shall cause to be irrevocably deposited with the Escrow Agent at or before 12:00 noon, Houston, Texas time, on the Issue Date (i) the sum of $9,023,650.70 in immediately available funds from proceeds of sale of the Bonds, contingent upon the authentication and delivery of the Bonds against payment therefor; such amount to be applied upon receipt by the Escrow Agent pursuant. to Section 3.01. The Issuer hereby represents to the Escrow Agent that the funds specified to be deposited pursuant to this Section are sufficient to pay the principal of and interest on the Refunded Obligations, as the same shall become due and payable upon stated maturity or redemption, and that the Refunded Obligations and the interest thereon are to be paid at the times and in the amounts set forth and identified in Exhibit A. SECTION 2.02. L)eposit of Earnings. All amounts received from the investment of funds held for the credit of the Escrow, including all interest paid on any such investments and all proceeds of any redemption or sale of such investments, shall be retained in the Escrow and invested and applied solely as provided herein. -5- #4618940.1 SECTION 2.03. Escrow Held in Trust. All amounts deposited with the Escrow Agent hereunder shall be the property of the Issuer but shall be irrevocably held in a trust account by the Escrow Agent for the benefit of the holders or owners of, and as security for the payment when due of, the Refunded Obligations and any appurtenant coupons and, to the extent of any surplus after payment thereof in full, for the benefit of the Issuer. If the Escrow Agent shall fail to account for any funds held, or required by this Bond Escrow Agreement to be held, for the credit of the Escrow, such funds shall be and remain the property of the Issuer, and the Issuer shall, for the account of the holders or owners of the Refunded Obligations and any appurtenant coupons, be entitled to the preferred claim upon such funds enjoyed by the beneficiary of an express trust. The Escrow Agent shall irrevocably hold all funds and securities deposited, or required hereby to be deposited, to the Escrow in a separate custodial fund and shall have no right or title with respect thereto. No such fund shall be considered a banking deposit with the Escrow Agent or be subject to checks or drafts drawn by the Issuer. The Escrow Agent shall have no liability for interest on any funds deposited to the Escrow. Nothing herein contained shall be construed as requiring the Escrow Agent to keep the identical money, or any part thereof, in the Escrow, if it is impractical to do so, but money of an equal amount must always be maintained on deposit in the Escrow by the Escrow Agent. The Escrow Agent shall hold, invest, secure, and apply all funds deposited, or required by this Bond Escrow Agreement to be deposited, with it hereunder solely as provided herein. SECTION 2.04. Grant of Security Interest. In order to secure payment when due of the principal of and interest on the Refunded Obligations, the Issuer hereby pledges and grants to the Escrow Agent, for the account of the holders or owners of the Refunded Obligations and of any appurtenant coupons, a security interest in all of its right, title, and interest, if any, in and to all funds held hereunder and all investments thereof and agrees that the Escrow Agent shall have and may exercise all of the rights of a secured party granted by the Texas Uniform Commercial Code in respect thereof to the same extent as if such Code applied to such security interest. ARTICLE III APPLICATION OF ESCROW SECTION SECTION 3.01. Payment of Principal and Interest. The Escrow Agent shall during the term hereof, set aside or deposit in trust with the paying agent for the Refunded Obligations from cash or other immediately available funds held for the credit of the Escrow sufficient money to pay the redemption price of the Refunding Bonds on their redemption date, which amounts shall be as set forth in Exhibit A. -6- #4618940.1 SECTION 3.02. Payment ofSurplus. A. From time to time during the term of this Bond Escrow Agreement, the Escrow Agent shall withdraw from the Escrow and pay to the Issuer (and shall, at the written request of the Issuer, redeem or sell obligations held for the credit of the Escrow to the extent required to pay) any amounts requested by the Issuer in writing, but only upon receipt of. (1) a- certificate of an Accountant stating that, after giving effect to such request, the United States Obligations held for the credit of the Escrow are of such maturities and interest payment dates and bear such interest as will, without further investment or reinvestment of either the principal amount thereof or the interest earnings therefrom, be sufficient, together with all cash and other immediately available uninvested funds held for the credit of the Escrow, to pay the principal of and. interest on the Outstanding Bonds when due, and (2) an unqualified Opinion of Counsel stating that compliance with such request will not adversely affect the excludability from gross income for federal income tax purposes of interest on any Refunded Bond or any Bond. B. On the last day of the term of this Bond Escrow Agreement, after setting aside or paying in full all amounts required by Section 3.01 and satisfaction of the obligations of the Issuer provided in Section 5.05, the Escrow Agent shall disburse all remaining funds held for the credit of the Escrow to or on the order of the Issuer. ARTICLE IV INVESTMENTS AND SECURITY SECTION 4.01. Investments. On or after the Issue Date, the Escrow Agent shall invest the funds deposited by the Issuer pursuant to Section 2.01 in United States Obligations and /or Agency Obligations, as an investment of such funds held for the credit of the Escrow. The Escrow Agent is hereby authorized to execute such subscriptions and other documents supplemental thereto as may be required to consummate such investment. No other funds deposited to the Escrow, including deposits made pursuant to Sections 2.02 and 2.03, shall be invested by the Escrow Agent, except as instructed in United States Obligations and /or Agency Obligations by the Issuer. SECTION 4.02. Annual Reports. The Escrow Agent shall, upon the written request of the Issuer, provide the authority with such information in the possession of the Escrow Agent as may be necessary to determine or substantiate any amounts payable by the Issuer to the United States of America pursuant to the Bond Ordinance authorizing the issuance of the Bonds. -7- #4618940.1 SECTION 4.03. Security for Uninvested Funds. Unless invested in United States Obligations, all money held for the credit of the Escrow in excess of the amount insured by the Federal Deposit Insurance Corporation or other federal agency shall be continuously secured by the Escrow Agent, for the benefit of the Issuer and the holders or owners of the Outstanding Bonds and any appurtenant coupons, by lodging with a bank or trust company as collateral security United States Obligations having a market value at all times, exclusive of accrued interest, not less than the amount of such excess amount, or in such other manner as may hereafter be required by applicable state or federal laws and regulations regarding the security for, and the granting of a preference in case of, the deposit of trust money. ARTICLE V THE ESCROW AGENT SECTION 5.01. Certain Responsibilities. A. The Escrow Agent undertakes to perform such duties and only such duties as are specifically set forth in this Bond Escrow Agreement, and no implied covenants or obligations shall be read into this Bond Escrow Agreement against the Escrow Agent. B. In the absence of bad faith on its part, the Escrow Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Escrow Agent and conforming to the requirements of this Bond Escrow Agreement; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Escrow Agent, the Escrow Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Bond Escrow Agreement. C. No provision of this Bond Escrow Agreement shall be construed to relieve the Escrow Agent from liability for its own negligence or its own negligent failure to act, except that (1) this Subsection shall not be construed to limit the effect of Subsections A and B of this Section; (2) the Escrow Agent shall not be liable for any error of judgment made in good faith by any of its officers, unless it shall be proved that the Escrow Agent was negligent in ascertaining the pertinent facts; (3) no provision of this Bond Escrow Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties, or in the exercise of any of its rights, hereunder if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. -8- #4618940.1 D. Whether or not therein expressly so provided, every provision of' this Bond Escrow Agreement relating to the conduct or affecting the liability of or affording protection to the Escrow Agent shall be subject to the provisions of this Section. SECTION 5.02. Certain Rights of Escron) Agent. Except as otherwise provided in Section 5.01 hereof: A. The Escrow Agent may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, ordinance, order, bond, or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties; B. The Escrow Agent may consult with legal counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered, or omitted by the Escrow Agent hereunder in good faith and in reliance thereon; C. The Escrow Agent shall not be bound to make any investigation into the facts or matters stated in arty resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, ordinance, order, bond or other paper or document, but the Escrow Agent, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Escrow Agent shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records, and premises of the Issuer, personally or by agent or attorney. D. Subject to the provisions of Section 5.01 B, whenever in the administration of this Bond Escrow Agreement the Escrow Agent deems it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter may be deemed to be conclusively proved and established by any certificate signed by an authorized official of the Issuer delivered to the Escrow Agent, and the Escrow Agent may rely upon such certificate for any action taken, suffered, or omitted by it in good faith hereunder. SECTION 5.03. Not Responsible for Recitals or Investment or Application of Funds. The recitals contained herein shall be taken as the statements of the Issuer, and the Escrow Agent assumes no responsibility for their correctness, The Escrow Agent makes no representations as to, and shall have no responsibility to evaluate, the sufficiency, value, or suitability of the investments which it is directed to make hereunder, or as to the title of the Issuer thereto, or as to the security afforded thereby or hereby, or as to the sufficiency, validity, or genuineness of any securities at any time pledged and deposited with the Escrow Agent hereunder, or as to the validity or sufficiency of this Bond Escrow Agreement. The Escrow Agent shall not be accountable for the use or application by any substitute paying agents for the Outstanding Bonds or the Issuer of any money paid to them under any provision hereof. The Escrow Agent shall not be liable for any loss resulting from any purchase, sale, redemption, or substitution of any United States Obligations or Agency Obligations as directed pursuant to Article IV hereof. -9- #4618940.1 SECTION 5.04. May Hold Outstanding Bonds. The Escrow Agent, in its individual or any other capacity, may become the holder, owner or pledgee of Outstanding Bonds with the same rights it would have if it were not Escrow Agent. SECTION 5.05. Compensation and Reimbursement. The Issuer agrees: A. To pay to the Escrow Agent the amount set forth as described and detailed in Schedule I attached hereto, within 30 days of invoice as reasonable compensation for all services rendered by it hereunder or as paying agent for all Outstanding Obligations (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), such compensation being for the services of the Escrow Agent under this Bond Escrow Agreement except as otherwise described in this Section; B. Except as otherwise expressly provided herein, to reimburse the Escrow Agent upon its request for all reasonable expenses, disbursements, and advances incurred or made by the Escrow Agent in accordance with any provisions of this Bond Escrow Agreement or as paying agent for any or all of the Refunded Obligations (including the reasonable compensation, expenses, and disbursements of its agents and counsel), except any such expense, disbursement, or advance as may be determined by a court of competent jurisdiction to be attributable to the negligence or bad faith of the Escrow Agent; and C. To indemnify the Escrow Agent for, and to hold it harmless against, any loss, liability, or expense incurred by it without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the Escrow, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its rights or duties hereunder, to the extent permitted by law. The Escrow Agent shall not be secured under this Bond Escrow Agreement by any security interest in or pledge of the funds held by it hereunder except to the extent of surplus funds after payment in full of all the Refunded Obligations, and the Escrow Agent shall not have the right to use or apply any funds held by it hereunder except to that extent. The Escrow Agent agrees, in its capacity as Escrow Agent hereunder and as paying agent for the Outstanding Bonds, that the provisions of this Section adequately provide for its fees and expenses hereunder and as paying agent for the Refunded Obligations to their satisfaction. The Escrow Agent agrees to continue to serve as Paying Agent for the Issuer's obligations identified on Exhibit A, until final payment thereof and to limit its remedies for nonpayment of fees under the paying agent /registrar agreement currently in effect for such bonds, if any, to an action for amounts due and owing thereunder. SECTION 5.06. Corporate Escrow Agent Required; Eligibility. There shall at all times be an Escrow Agent hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and -10- #4618940.1 surplus of at least $50,000,000, subject to supervision or examination by Federal or State authority, and having, an office in the State of Texas. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Escrow Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 5.07. Resignation and Removal; Appointment of Successor. A. No resignation or removal of the Escrow Agent and no appointment of a successor Escrow Aggnt pursuant to this Article shall become effective until the acceptance of appointment by the successor Escrow Agent under Section 5.08. B. The Escrow Agent may resign at any time by giving written notice thereof to the Issuer. If an instrument of acceptance by a successor Escrow Agent shall not have been delivered to the Escrow Agent within 30 days after the giving of such notice of resignation, the resigning Escrow Agent may petition any court of competent jurisdiction for the appointment of, a successor Escrow Agent. C. The Escrow Agent may be removed at any time by an instrument or instruments executed by the holders or owners of a majority in principal amount of the Outstanding Bonds, delivered to the Escrow Agent, the Trustee, and the Issuer. D. If at any time: (1) the Escrow Agent shall cease to be eligible under Section 5.06 and shall fail to resign after written request therefor by the Issuer or any holder or owner of an Outstanding Bond, or (2) the Escrow Agent shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Escrow Agent or of its property shall be appointed or any public officer shall take charge or control of the Escrow Agent or of its property or affairs for the purpose of rehabilitation, conservation, or liquidation, then, in any such case, (a) the Issuer by an action of its governing body may remove the Escrow Agent, or (b) any person who has been a bona fide holder or owner of an Outstanding Bond for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Escrow Agent and the appointment of a successor Escrow Agent. E. If the Escrow Agent shall resign, be removed, or become incapable of acting, or if a vacancy shall occur in the office of Escrow Agent for any cause, the Issuer, by an action of its governing body, shall. promptly appoint a successor Escrow Agent. In case all or substantially all of the Escrow shall be in the possession of a receiver or trustee lawfully appointed, such receiver or trustee, by written instrument, may similarly appoint a successor to fill such vacancy until a new Escrow Agent shall be so appointed by the holders or owners of Outstanding Bonds. If, -11- #4618940.1 within one year after such resignation, removal, or incapability, or the occurrence of such vacancy, a successor Escrow Agent shall be appointed by one or more instruments executed by the holders or owners of a majority in principal amount of the Outstanding Bonds delivered to the Issuer and the retiring Escrow Agent, then the successor Escrow Agent so appointment shall, forthwith upon its acceptance of such appointment, become the successor Escrow Agent and supersede the successor Escrow Agent appointed by the Issuer or by such receiver or trustee. If no successor Escrow Agent shall have been so appointed by the Issuer or the holders or owners of Outstanding Bonds and accepted appointment in the manner hereinafter provided., any person who has been a bona fide holder or owner of an Outstanding Bond for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Escrow Agent. SECTION 5.08. ,4cceptance of 'Appointfnent by Successor. Every successor Escrow Agent appointed hereunder shall execute, acknowledge, and deliver to the Issuer and the retiring Escrow Agent an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Escrow Agent shall become effective and such successor Escrow Agent, without any further act, deed, or conveyance, shall become vested with all the estates, properties, rights, powers, trusts, and duties of the retiring Escrow Agent; but, on request of the Issuer or the successor Escrow Agent, such retiring Escrow Agent shall, upon payment of its charges, execute and deliver an instrument conveying and transferring to such successor Escrow Agent upon the trusts herein expressed all the estates, properties, rights, powers, and trusts of the retiring Escrow Agent, and shall duly assign, transfer, and deliver to such successor Escrow Agent all investments, money, and other property held by such retiring Escrow Agent hereunder. Upon request of any such successor Escrow Agent, the Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Escrow Agent all such estates, properties, rights, powers, and trusts. No successor Escrow Agent shall accept its appointment unless at the time of such acceptance such successor Escrow Agent shall be qualified and eligible under this Article. SECTION 5.09. Merger, Conversion, Consolidation, or Succession to Business. Any corporation into which the Escrow Agent may be merged or converted or with it may be consolidated, or any corporation resulting from any merger, conversion, or consolidation to which the Escrow Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Escrow Agent, shall be the successor of the Escrow Agent hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. -12- #4618940.1 IN WITNESS WHEREOF, the parties hereto have caused this Bond Escrow Agreement to be duly executed as of the day and year first above written. CITY OF BEAUMONT, TEXAS C CITY MANAGER ADDRESS: Beaumont, Texas ATTEST: CITY SECRETARY (SEAL) -13- #4618940.1 THE BANK OF NEW YORK MELLON RUST COMPANY, N.A., as Escrow Agent to Title: ATTEST: By Authorized Signer [BANK SEAL] -14- #461894 ©.1 SCHEDULEI #4618940.1 EXHIBIT A #4618940.! BOND ESCROW AGREEMENT (Series 2014B) THIS BOND ESCROW AGREEMENT (this "Bond Escrow Agreement "), dated as of . 2014, between City of Beaumont, Texas (hereinafter called the "Issuer"), and The Bank of New York Mellon Trust Company, N.A., as Escrow Agent (hereinafter together with any successor to its duties hereinunder referred to as the "Escrow Agent'), a banking corporation organized and existing under the laws of the United States of America, WITNESSETH: WHEREAS, the Issuer has previously issued its certain obligations of which the names, series and maturities are designated in Exhibit A hereto presently remain outstanding in the principal amounts set forth in Exhibit A (such obligations hereinafter referred to as the "Refunded Obligations'); WHEREAS, payments of principal of and interest on the Refunded Obligations are due on the dates and in the amounts shown under in Exhibit A hereto upon publication or mailing of the notice of redemption described herein; WHEREAS, under the provisions of Chapter 1207, Texas Government Code, as amended (the "Act's, the Issuer is authorized to sell refunding bonds in an amount sufficient, together with other available funds or resources, to provide for the payment of obligations which are to be refunded, deposit the proceeds of such refunding bonds with a paying agent for the obligations being refunded, and enter into an escrow or similar agreement with such paying agent for the safekeeping, investment, reinvestment, administration, and disposition of such deposit of proceeds, upon such terms and conditions as the parties may agree, provided such deposit may be invested only in direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and which may be in book entry form and which shall mature and /or bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment of such Refunded Obligations; WHEREAS, the Issuer desires so to provide for payment of the principal of and interest on the Refunded Obligations in order to achieve a debt service savings on its outstanding debt, and to such end the Issuer has sold and intends to issue certain of its "Waterworks and Sewer System Refunding Bonds, Taxable Series 201413" (hereinafter referred to as the "Refunding Bonds') in an amount sufficient, together with other legally available funds on hand, to make the deposit required hereby: WHEREAS, the Issuer has determined that the scheduled payments of principal of and interest on such obligations are in such amounts and to become due at such times, so as to provide, together with the initial cash balance herein provided, sufficient funds to pay all principal of and interest on the Refunding Bonds when due, whether or not the reinvestments herein provided for are made; WHEREAS, the Escrow Agent is the paying agent for all of the Refunded Obligations; and #4618943.1 WHEREAS, the Issuer has duly authorized the execution and delivery of this Bond Escrow Agreement by adopting the ordinance authorizing issuance of the Bonds (the "Ordinance "), and all things have been done which are necessary to constitute this Bond Escrow Agreement a valid escrow, security, and trust agreement and contract for the security of the Refunded Obligations; NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter contained, and subject to the conditions herein set forth, the parties hereto covenant, agree, and bind themselves as follows: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01. Definitions. For all purposes of this Bond Escrow Agreement, except as otherwise expressly provided or unless the context otherwise requires: A. The terms defined in this Article have the meanings assigned to them in this Article, the terms defined in the recitals hereto have the meanings assigned to them in such recitals, and all such terms include the plural as well as the singular. B. All re erences in this instrument to designated "Articles, " "Sections, " "Exhibits, " and other provisions are to the designated Articles, Sections, Exhibits, and other provisions of this instrument as originally executed. C. The words "herein," "hereof," and "hereunder" and other words of similar import refer to this Bond Escrow Agreement as a whole and not to any particular Article, Section, or other subdivision. "Accountant" means an independent public accounting firm of national reputation. "Agency Obligations" means direct obligations of, or obligations the timely payment of the principal of and interest on which are fully and unconditionally guaranteed by, an agency or instrumentality of the United States and, on the date of adoption of the Ordinance by the Issuer, are rated as to investment quality by a nationally- recognized investment rating firm of not less than "AAA" or its equivalent, which may not be called for redemption prior to maturity. "Escrow" means the segregated escrow fund to be held by the Escrow Agent pursuant hereto. "Escrow Agent" means the bank named as the Escrow Agent in the first paragraph of this instrument, or its duly authorized agent, until a successor Escrow Agent shall have become such pursuant to the applicable provisions hereof, and, thereafter, "Escrow Agent" shall mean such successor Escrow Agent. -2- 44618943.1 "Issue Date" means , 2014. "Opinion of Counsel" means a written opinion of counsel who shall be acceptable to the Escrow Agent, and shall be of nationally recognized standing in the field of municipal bond law. "United States Obligations" means direct obligations of, or obligations the timely payment of principal of and interest on which are fully and unconditionally guaranteed by, the United States of America which may not be called for redemption prior to maturity. SECTION 1.02. Notices, etc. Any request, authorization, direction, notice, consent, waiver, report, or other document provided or permitted by this Bond Escrow Agreement to be made upon, given or furnished to, or filed with, A. the Issuer by the Escrow Agent shall be sufficient for every purpose hereunder if in writing and mailed, first- class, postage prepaid, to the Issuer addressed to it care of the City Manager, , Beaumont, Texas , or at any other address previously furnished in writing to the Escrow Agent by the Issuer, or B. the Escrow Agent by the Issuer shall be sufficient for every purpose hereunder if in writing and mailed, first - class, postage prepaid, to the Escrow Agent , Attention: , or at any other address previously furnished in writing to the Issuer by the Escrow Agent. SECTION 1.03. Effect of Headings and Table of Contents. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. SECTION 1.04. Successors and Assigns. All covenants and agreements in this Bond Escrow Agreement by the Issuer, and the Escrow Agent shall b1nd their respective successors and assigns, whether so expressed or not. SECTION 1.05. Severability. In case any provision of this Bond Escrow Agreement or any application hereof shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions and applications shall not in any way be affected or impaired thereby. SECTION 1.06. Benefits of Bond Escrow Agreement; Assignment. Nothing in this Bond Escrow Agreement, expressed or implied, shall give any benefit or any legal or equitable right, remedy, or claim under this Bond Escrow Agreement to any person or entity, other than the parties hereto and their successors hereunder and, as third party beneficiaries, the holders or owners of the Refunded Obligations and any coupons appertaining thereto. -3- #4618943.1 No party hereto may assign its rights or obligations hereunder to any other person or entity without the written consent of the other party hereto, except as otherwise provided in Section 5.08 or by operation of law. SECTION 1.07. (governing Law. This Bond Escrow Agreement shall be construed in accordance with and governed by the laws of the State of Texas and the federal laws of the United States of America. SECTION 1.08. Amendment of Bond Escrow Agreement. The parties hereto may from time to time enter into one or more amendments or supplements hereto, for any of the following purposes: A. to correct or amplify the description of any United States Obligations or Agency Obligations in which the Escrow may be invested hereunder; or B. to evidence the succession of another entity to the Escrow Agent and the assumption by such successor of the covenants of the Escrow Agent herein, or C. to cure any ambiguities or to correct or supplement any provision herein which may be inconsistent with any other provision herein with respect to the matters or questions arising under this Bond Escrow Agreement, which shall not adversely affect the interests of the holders or owners of the Refunded Obligations and any appurtenant coupons or of the owners of the Refunded Obligations:. and this Bond Escrow Agreement may not otherwise be amended or supplemented. The Escrow Agent may in its discretion determine whether or not any Refunded Obligations or Bonds would be affected by any amendment or supplement described in Subsection C and any such determination shall be conclusive upon every holder or owner of Refunded Obligations and any appurtenant coupons and every owner of the Bonds. The Escrow Agent shall not be liable for any such determination made in good faith. In executing or accepting any supplement or amendment hereto, the Escrow .Agent shall be entitled to receive and shall be fully protected in relying upon an Opinion of Counsel stating that the execution of such supplement or amendment is authorized or permitted by this Bond Escrow Agreement. The Escrow Agent may, but shall not be obligated to, enter into any such supplement or amendment which affects the rights, duties, or immunities of the Escrow Agent under this Bond Escrow Agreement or otherwise. SECTION 1.09. Term and Termination. The term of this Bond Escrow Agreement shall commence on the date and at the time the Bonds are first authenticated and delivered and shall terminate on the second business day following the final payment set forth in Exhibit A, unless terminated sooner pursuant to the provisions hereof. -4- #4618943.1 SECTION 1.10. holiday. If the date for the payment or performance of any obligation hereunder shall be a Saturday, a Sunday, a legal holiday, or a day on which the banking institutions in the City of New York, New York, are authorized or required by law or executive order to close and on which the principal corporate trust office of the Escrow Agent is closed, then the date for such payment or performance shall be the next succeeding day which is not such a day, and such payment and performance shall have the same force and effect as if made or done on the original date therefor. SECTION 1.11. Time of Essence. Time shall be of the essence in the payment or performance of the obligations from time to time imposed upon the parties hereto by this Bond Escrow Agreement. SECTION 1.12. Cumulative Rights. All of the rights of the Escrow Agent hereunder are cumulative of any other rights it may have by law or otherwise. ARTICLE II ESCROW SECTION 2.01. Deposit by Issuer. The Issuer shall cause to be irrevocably deposited with the Escrow Agent at or before 12:00 noon, Houston., Texas time, on the Issue Date (i) the sum of $9,023,650.70 in immediately available funds from proceeds of sale of the Bonds, contingent upon the authentication and delivery of the Bonds against payment therefor; such amount to be applied upon receipt by the Escrow Agent pursuant to Section 3.01. The Issuer hereby represents to the Escrow Agent that the funds specified to be deposited pursuant to this Section are sufficient to pay the principal of and interest on the Refunded Obligations, as the same shall become due and payable upon stated maturity or redemption, and that the Refunded Obligations and the interest thereon are to be paid at the times and in the amounts set forth and identified in Exhibit A. SECTION 2.02. Deposit of Earnings. All amounts received from the investment of funds held for the credit of the Escrow, including all interest paid on any such investments and all proceeds of any redemption or sale of such investments, shall be retained in. the Escrow and invested and applied solely as provided herein. -5- #4618943.1 SECTION 2.03. Escrow Held in Trust. All amounts deposited with the Escrow Agent hereunder shall be the property of the Issuer but shall be irrevocably held in a trust account by the Escrow Agent for the benefit of the holders or owners of, and as security for the payment when due of, the Refunded Obligations and any appurtenant coupons and, to the extent of any surplus after payment thereof in full, for the benefit of the Issuer. If the Escrow Agent shall fail to account for any funds held, or required by this Bond Escrow Agreement to be held, for the credit of the Escrow, such funds shall be and remain the property of the Issuer, and the Issuer shall, for the account of the holders or owners of the Refunded Obligations and any appurtenant coupons, be entitled to the preferred claim upon such funds enjoyed by the beneficiary of an express trust. The Escrow Agent shall irrevocably hold all funds and securities deposited, or required hereby to be deposited, to the Escrow in a separate custodial fund and shall have no right or title with respect thereto. No such fund shall be considered a banking deposit with the Escrow Agent or be subject to checks or drafts drawn by the Issuer. The Escrow Agent shall have no liability for interest on any funds deposited to the Escrow. Nothing herein contained shall be construed as requiring the Escrow Agent to keep the identical money, or any part thereof, in the Escrow, if it is impractical to do so, but money of an equal amount must always be maintained on deposit in the Escrow by the Escrow Agent. The Escrow Agent shall hold, invest, secure, and apply all funds deposited, or required by this Bond Escrow Agreement to be deposited, with it hereunder solely as provided herein. SECTION 2.04. Grant of Security Interest. In order to secure payment when due of the principal of and interest on the Refunded Obligations, the Issuer hereby pledges and grants to the Escrow Agent, for the account of the holders or owners of the Refunded Obligations and of any appurtenant coupons, a security interest in all of its right, title, and interest, if any, in and to all funds held hereunder and all investments thereof and agrees that the Escrow Agent shall have and may exercise all of the rights of a secured party granted by the Texas Uniform Commercial Code in respect thereof to the same extent as if such Code applied to such security interest. ARTICLE III APPLICATION OF ESCROW SECTION SECTION 3.01. Payment of Principal and Interest. The Escrow Agent shall during the term hereof, set aside or deposit in trust with the paying agent for the Refunded Obligations from cash or other immediately available funds held for the credit of the Escrow sufficient money to pay the redemption price of the Refunding Bonds on their redemption date, which amounts shall be as set forth in Exhibit A. -6- #4618943.1 SECTION 3.02. payment of Surplus. A. From time to time during the term of this Bond Escrow Agreement, the Escrow Agent shall withdraw from the Escrow and pay to the Issuer (and shall, at the written request of the Issuer, redeem or sell obligations held for the credit of the Escrow to the extent required to pay) any amounts requested by the Issuer in writing, but only upon receipt of: (1) a certificate of an Accountant stating that, after giving effect to such request, the United States Obligations held for the credit of the Escrow are of such maturities and interest payment dates and bear such interest as will, without further investment or reinvestment of either the principal amount thereof or the interest earnings therefrom, be sufficient, together with all cash and other immediately available uninvested funds held for the credit of the Escrow, to pay the principal of and interest on the Outstanding Bonds when due, and (2) an unqualified Opinion of Counsel stating that compliance with such request will not adversely affect the excludability from gross income for federal income tax purposes of interest on any Refunded Bond or any Bond. B. On the last day of the term of this Bond Escrow Agreement, after setting aside or paying in full all amounts required by Section 3.01 and satisfaction of the obligations of the Issuer provided in Section 5.05, the Escrow Agent shall disburse all remaining funds held for the credit of the Escrow to or on the order of the Issuer. ARTICLE IV INVESTMENTS AND SECURITY SECTION 4.01. Investments. On or after the Issue Date, the Escrow Agent shall invest the funds deposited by the Issuer pursuant to Section 2.01 in United States Obligations and /or Agency Obligations, as an investment of such funds held for the credit of the Escrow. The Escrow Agent is hereby authorized to execute- such subscriptions and other documents supplemental thereto as may be required to consummate such investment. No other funds deposited to the Escrow, including deposits made pursuant to Sections 2.02 and 2.03, shall be invested by the Escrow Agent, except as instructed in United States Obligations and /or Agency Obligations by the Issuer. SECTION 4.02. Annual Reports. The Escrow Agent shall, upon the written request of the Issuer, provide the authority with such information in the possession of the Escrow Agent as may be necessary to determine or substantiate any amounts payable by the Issuer to the United States of America pursuant to the Bond Ordinance authorizing the issuance of the Bonds. -7- #4618943.1 SECTION 4.03. .Security for Uninvested Funds. Unless invested in United States Obligations, all money held for the credit of the Escrow in excess of the amount insured by the Federal Deposit Insurance Corporation or other federal agency shall be continuously secured by the Escrow Agent, for the benefit of the Issuer and the holders or owners of the Outstanding Bonds and any appurtenant coupons, by lodging with a bank or trust company as collateral security United States Obligations having a market value at all times, exclusive of accrued interest, not less than the amount of such excess amount, or in such other manner as may hereafter be required by applicable state or federal laws and regulations regarding the security for, and the granting of a preference in case of, the deposit of trust money. ARTICLE V THE ESCROW AGENT SECTION 5.01. Certain Responsibilities A. The Escrow Agent undertakes to perform such duties and only such duties as are specifically set forth in this Bond Escrow Agreement, and no implied covenants or obligations shall be read into this Bond Escrow Agreement against the Escrow Agent. B. In the absence of bad faith on its part, the Escrow Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Escrow Agent and conforming to the requirements of this Bond Escrow Agreement; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Escrow Agent, the Escrow Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Bond Escrow Agreement. C. No provision of this Bond Escrow Agreement shall be construed to relieve the Escrow Agent from liability for its own negligence or its own negligent failure to act, except that (1) this Subsection shall not be construed to limit the effect of Subsections A and B of this Section; (2) the Escrow Agent shall not be liable for any error of judgment made in good faith by any of its officers, unless it shall be proved that the Escrow Agent was negligent in ascertaining the pertinent facts; (3) no provision of' this Bond Escrow Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties, or in the exercise of any of its rights, hereunder if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. -8- #4618943.1 D. Whether or not therein expressly so provided, every provision of this Bond Escrow Agreement relating to the conduct or affecting the liability of or affording protection to the Escrow Agent shall be subject to the provisions of this Section. SECTION 5.02. Certain Rights of'Escrow Agent. Except as otherwise provided in Section 5.01 hereof: A. The Escrow Agent may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, ordinance, order, bond, or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties; B. The Escrow Agent may consult with legal counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered, or omitted by the Escrow Agent hereunder in good faith and in reliance thereon: C. The Escrow Agent shall not be bound to make any investigation into the facts or matters stated in arty resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, ordinance, order, bond or other paper or document, but the Escrow Agent, in its discretion. may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Escrow Agent shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records, and premises of the Issuer, personally or by agent or attorney. D. Subject -to the provisions of Section 5.01 B, whenever in the administration of this Bond Escrow Agreement the Escrow Agent deems it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter may be deemed to be conclusively proved and established by any certificate signed by an authorized official of the Issuer delivered to the Escrow Agent, and the Escrow Agent may rely upon such certificate for any action taken, suffered, or omitted by it in good faith hereunder. SECTION 5.03. Not Responsible for Recitals or Investment or Application of Funds. The recitals contained herein shall be taken as the statements of the Issuer, and the Escrow Agent assumes no responsibility for their correctness, The Escrow Agent makes no representations as to., and shall have no responsibility to evaluate, the sufficiency, value, or suitability of the investments which it is directed to make hereunder, or as to the title of the Issuer thereto, or as to the security afforded thereby or hereby, or as to the sufficiency, validity, or genuineness of arty securities at any time pledged and deposited with the Escrow Agent hereunder, or as to the validity or sufficiency of this Bond Escrow Agreement. The Escrow Agent shall not be accountable for the use or application by any substitute paying agents for the Outstanding Bonds or the Issuer of any money paid to them under any provision hereof. The Escrow Agent shall not. be liable for any loss resulting from any purchase, sale, redemption, or substitution of any United States Obligations or Agency Obligations as directed :pursuant to Article IV hereof. -9- #4618943.1 SECTION 5.04. May Hold Outstanding Bonds. The Escrow Agent, in its individual or any other capacity, may become the holder, owner or pledgee of Outstanding Bonds with the same rights it would have if it were not Escrow Agent. SECTION 5.05. Compensation and Reimbursement. The Issuer agrees: A. To pay to the Escrow Agent the amount set forth as described and detailed in Schedule I attached hereto, within 30 days of invoice as reasonable compensation for all services rendered by it hereunder or as paying agent for all Outstanding Obligations (which compensation shall riot be limited by any provision of law in regard to the compensation of a trustee of an express trust), such compensation being for the services of the Escrow Agent under this Bond Escrow Agreement except as otherwise described in this Section; B. Except as otherwise expressly provided herein, to reimburse the Escrow Agent upon its request for all reasonable expenses, disbursements, and advances incurred or made by the Escrow Agent in accordance with any provisions of this Bond Escrow Agreement or as paying agent for any or all of the Refunded Obligations (including the reasonable compensation, expenses, and disbursements of its agents and counsel), except any such expense, disbursement, or advance as may be determined by a court of competent jurisdiction to be attributable to the negligence or bad faith of the Escrow Agent; and C. To indemnify the Escrow Agent for, and to hold it harmless against, any loss, liability, or expense incurred by it without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the Escrow, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its rights or duties hereunder, to the extent permitted by law. The Escrow Agent shall not be secured under this Bond Escrow Agreement by any security interest in or pledge of the funds held by it hereunder except to the extent of surplus funds after payment in full of all the Refunded Obligations, and the Escrow Agent shall not have the right to use or apply any funds held by it hereunder except to that extent. The Escrow Agent agrees, in its capacity as Escrow Agent hereunder and as paying agent for the Outstanding Bonds, that the provisions of this Section adequately provide for its fees and expenses hereunder and as paying agent for the Refunded Obligations to their satisfaction. The Escrow Agent agrees to continue to serve as Paying Agent for the Issuer's obligations identified on Exhibit A, until final payment thereof and to limit its remedies for nonpayment of fees under the paying agent /registrar agreement currently in effect for such bonds, if any, to an action for amounts due and owing thereunder. SECTION 5.06. Corporate Escrow Agent Required; Eligibility. There shall at all times be an Escrow Agent hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and -10- #4618943.1 surplus of at least $0,000,000, subject to supervision or examination by Federal or State authority, and having an office in the State of Texas. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Escrow Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 5.07. Resignation and Removal; Appointment of Successor. A. No resignation or removal of the Escrow Agent and no appointment of a successor Escrow Agent pursuant to this Article shall become effective until the acceptance of appointment by the successor Escrow Agent under Section 5.08. B. The Escrow Agent may resign at any time by giving written notice thereof to the Issuer. If an instrument of acceptance by a successor Escrow Agent shall not have been delivered to the Escrow Agent within 30 days after the giving of such notice of resignation, the resigning Escrow Agent may petition any court of competent jurisdiction for the appointment of, a successor Escrow Agent. C. The Escrow Agent may be removed at any time by an instrument or instruments executed by the holders or owners of a majority in principal amount of the Outstanding Bonds, delivered to the Escrow Agent, the Trustee, and the Issuer. D. If at any time: (1) the Escrow Agent shall cease to be eligible under Section 5.06 and shall fail to resign after written request therefor by the Issuer or any holder or owner of an Outstanding Bond, or (2) the Escrow Agent shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Escrow Agent or of its property shall be appointed or any public officer shall take charge or control of the Escrow Agent or of its property or affairs for the purpose of rehabilitation, conservation, or liquidation, then, in any such case, (a) the Issuer by an action of its governing body may remove the Escrow Agent, or (b) any person who has been a bona fide holder or owner of an Outstanding Bond for at least six months may, on behalf of himself and all others similarly situated, petition any court of' competent jurisdiction for the removal of the Escrow Agent and the appointment of a successor Escrow Agent. E. If the Escrow Agent shall resign, be removed, or become incapable of acting, or if a vacancy shall occur in the office of Escrow Agent for any cause, the Issuer, by an action of its governing body, shall promptly appoint a successor Escrow Agent. In case all or substantially all of the Escrow shall be in the possession of a receiver or trustee lawfully appointed, such receiver or trustee, by written instrument, may similarly appoint a successor to fill such vacancy until a new Escrow Agent shall be so appointed by the holders or owners of Outstanding Bonds. If, -11- 44618943.1 within one year after such resignation, removal, or incapability, or the occurrence of such vacancy, a successor Escrow Agent shall be appointed by one or more instruments executed by the holders or owners of a majority in principal amount of the Outstanding Bonds delivered to the Issuer and the retiring Escrow Agent, then the successor Escrow Agent so appointment shall, forthwith upon its acceptance of such appointment, become the successor Escrow Agent and supersede the successor Escrow Agent appointed by the Issuer or by such receiver or trustee. If no successor Escrow Agent shall have been so appointed by the Issuer or the holders or owners of Outstanding Bonds and accepted appointment in the manner hereinafter provided, any person who has been a bona fide holder or owner of an Outstanding Bond for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Escrow Agent. SECTION 5.08. Acceptance of Appointment by Successor. Every successor Escrow Agent appointed hereunder shall execute, acknowledge, and deliver to the Issuer and the retiring Escrow Agent an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Escrow Agent shall become effective and such successor Escrow Agent, without any further act, deed, or conveyance, shall become vested with all the estates, properties, rights, powers, trusts, and duties of the retiring Escrow Agent; but, on request of the Issuer or the successor Escrow Agent, such retiring Escrow Agent shall, upon payment of its charges, execute and deliver an instrument conveying and transferring to such successor Escrow Agent upon the trusts herein expressed all the estates, properties, rights, powers, and tn>sts of the retiring Escrow Agent, and shall duly assign, transfer, and deliver to such successor Escrow Agent all investments, money, and other property held by such retiring Escrow Agent hereunder. Upon request of any such successor Escrow Agent, the Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Escrow Agent all such estates, properties, rights, powers, and trusts. No successor Escrow Agent shall accept its appointment unless at the time of such acceptance such successor Escrow Agent shall be qualified and eligible under this Article. SECTION 5.09. 11ferger, Conversion, Consolidation, or Succession to Business. Any corporation into which the Escrow Agent may be merged or converted or with it may be consolidated, or any corporation resulting from any merger, conversion, or consolidation to which the Escrow .Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Escrow Agent, shall be the successor of the Escrow Agent hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. -12- #4618943 1 IN WITNESS WHEREOF, the parties hereto have caused this Bond Escrow Agreement to be duly executed as of the day and year first above written. CITY OF BEAUMONT, TEXAS C CITY MANAGER ADDRESS: ATTEST: CITY SECRETARY (SEAL) -13- #4618943.1 Beaumont, Texas THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Escrow Agent C Title: ATTEST: i Authorized Signer [BANK SEAL] -14- #4618943.1 SCHEDULEI #4618943.1 EXHIBIT A 44618943 .1 EXHIBIT "B" ]PAYING AGENTIREGISTRAR AGREEMENT 37 #4573136.6 PA YING AGENT /REGISTRAR AGREEMENT THIS PAYING AGENT /REGISTRAR AGREEMENT (this "Agreement"), is entered into as of , 2014, by and between CITY OF BEAUMONT, TEXAS (the "Issuer "), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Paying Agent/Registrar (together with any successor in such capacity, the "Bank "), a national banking association duly organized and existing under the laws of the United States of America. RECITALS OF THE ISSUER WHEREAS, the Issuer has duly authorized and provided for the issuance of its "City of Beaumont, Texas Waterworks and Sewer System Revenue and Refunding Bonds, Series 2014A" and of "City of Beaumont, Texas Waterworks and Sewer System Refunding Bonds, Taxable Series 201413" (together, the "Bonds ") in an aggregate principal amount of S and respectively to be issued as registered securities without coupons; and WHEREAS, all things necessary to make the Bonds the valid obligations of the Issuer, in accordance with their terms, will be done upon the issuance and delivery thereof, and WHEREAS, the Issuer and the Bank wish to provide the terms under which the Bank will act as Paying Agent of the Issuer in paying the principal, redemption premium (if any) and interest on the Bonds, in accordance with the terms thereof, and under which the Bank will act as Registrar for the Bonds; and WHEREAS, the Issuer and the Bank have duly authorized the execution and delivery of this Agreement, and all things necessary to make this Agreement the valid agreement of the parties, in accordance with its terms, have been done; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE I APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR SECTION 1.01. Appointment. (a) The Issuer hereby appoints the Bank to act as Paying Agent with respect to the Bonds, to pay to the Registered Owners of the Bonds in accordance with the terms and provisions of this Agreement and the Ordinance, the principal of, redemption premium (if any), and interest, on all or any of the Bonds. (b) The Issuer hereby appoints the Bank as Registrar with respect to the Bonds. (c) The Bank hereby accepts its appointment, and agrees to act as Paying Agent and Registrar. -1- #4618931 1 SECTION 1.02. Compensation. In consideration of the fees to be paid to the Paying Agent /Registrar by the City as detailed and described in Exhibit A attached hereto, pursuant to the Bond Ordinance, the Bank agrees to abide by and accept the terms hereof and of the Bond Ordinance relating to the duties of the Paying Agent /Registrar. ARTICLE II DEFINITIONS SECTION 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Bank" means THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. duly organized and existing under the laws of the United States of America. "Bond" or 'Bonds" means any one or all of the bonds identified in the recitals. "Issuer" means the City of Beaumont, Texas. "Ordinance" means the Ordinance of the City Council of the Issuer approved on 2014, pursuant to which the Bonds are issued. "Paying Agent" means the Bank when it is performing the functions of paying agent associated with the terms in this Agreement. "Person" means any individual, corporation, partnership, joint venture, associations, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government or any entity whatsoever. "Registrar" means the Bank when it is performing the function of registrar. All other capitalized terms shall have the meanings assigned in the Ordinance. ARTICLE III DUTIES OF THE BANK SECTION 3.01. Initial Delivery of Bonds. The Bonds will be initially registered and delivered to the purchaser designated by the Issuer as set forth in the Ordinance. If such purchaser delivers a written request to the Bank not later than five business days prior to the date of initial delivery, the Bank will, on the date of initial delivery, exchange the Bonds initially delivered for Bonds of authorized denominations, registered in accordance with the instructions in such request and the Ordinance. -2- #4618931.1 SECTION 3.02. Duties of Paying Agent. (a) As Paying Agent, the Bank shall, provided adequate funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of, redemption premium., if any, and interest, on each Bond in accordance with the provisions of the Ordinance. (b) The Bank is also authorized to transfer funds relating to the closing and initial delivery of the securAies in the manner disclosed in the closing memorandum approved by the Issuer as prepared by the Issuer's financial advisor or other agent. The Bank may act on a facsimile transmission of the closing memorandum to be followed by an original of the closing memorandum signed by the financial advisor or the Issuer. SECTION 3.03. Duties of Registrar. The Bank shall provide for the proper registration of the Bonds and the exchange, replacement and registration of transfer of the Bonds, in accordance with the provisions of the Ordinance. The Bank will maintain the books of registration in accordance with the Bank's general practices and procedures in effect from time to time. SECTION 3.04. Unauthenticated Bonds. The Issuer shall provide an adequate inventory of unauthenticated Bonds to facilitate transfers. The Bank covenants that it will maintain such unauthenticated Bonds in safekeeping and will use reasonable! care in maintaining such Bonds in safekeeping, which shall be not less than the care it maintains for debt securities of other government entities or corporations for which it serves as registrar, or which it maintains for its own Bonds. SECTION 3.05. Reports. (a) The Bank will provide the Issuer reports upon request, and these reports will describe in reasonable detail all transactions pertaining to the Bonds and the books of registration. The Issuer may also inspect and make copies of the information in the books of registration at any tirne the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up -to -date listing or to convert the information into written form. (b) The Bank will not release or disclose the content of the books of registration to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a subpoena, court order or as otherwise required by law. Upon receipt of a subpoena, court order or other lawful request, the Bank will notify the Issuer immediately so that the Issuer may contest the subpoena, court order or other request. SECTION 3.015. Cancelled Bonds. All Bonds surrendered for payment, redemption, transfer, exchange, or replacement, if surrendered to the Bank, shall be promptly cancelled by it and, if surrendered to the Issuer, shall be delivered to the Bank and, if not already cancelled, shall be promptly cancelled by the Bank. -3- #4618931.1 The Issuer may at any time deliver to the Bank for cancellation any Bonds previously authenticated and delivered which the Issuer may have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the Bank. All cancelled Bonds held by the Bank shall be treated in accordance with the Bank's document retention policy. SECTION 3.07. Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank by the Issuer. (b) The Bank shall not be liable to the Issuer for actions taken under this Agreement so long as it acts in good faith and exercises due diligence, reasonableness and care, as prescribed by law, with regard to its duties hereunder. (c) This Agreement is not intended to require the Bank to expend its own funds for performance of any of its duties hereunder. (d) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys. SECTION 3.08. Money Held by Bank. (a) Money held by the Bank hereunder shall be held in trust for the benefit of the Registered Owners of the Bonds. (b) The Bank shall be under no obligation to pay interest on any money received by it hereunder. (c) All money deposited with the Bank hereunder shall be secured in the manner and to the fullest extent required by law for the security of funds of the Issuer. (d) The Bank shall deposit any moneys received from the Issuer into a trust account to be held in a paying agent capacity for the payment of the Certificates, with such moneys in the account that exceed the deposit insurance, available to the Issuer, provided by the Federal Deposit Insurance Corporation to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas and to the extent practicable under the laws of the United States of America to secure and be pledged as collateral for trust accounts until the principal and interest on the Certificates have been presented for payment and paid to the owner thereof. Payments made from such trust account shall be made by check drawn on such trust account unless the owner of such Certificates shall, at its own expense and risk, request such other medium of payment. -4- #4618931.1 ARTICLE IV MISCELLANEOUS PROVISIONS SECTION 4.01, Mav Own Bonds. The Bank, in its individual or any other capacity, may become the owner or pledgee of Bonds with the same rights it would have if it were not the Paying Agent and Registrar for the Bonds. SECTION 4.02 Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereof. SECTION 4.03. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. SECTION 4.04. Notices. Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted. hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown herein, or such other address as may have been given by one party to the other by 15 days written notice. SECTION 4.05. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. SECTION 4.06. Successors and Assigns. All covenants and agreements herein by the Issuer and the Bank shall bind their successors and assigns, whether so expressed or not. SECTION 4.07. Severability. If any provision of this Agreement shall be invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not in any way be affected or impaired. SECTION 4.08. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy or claim hereunder. -5- #4618931.1 SECTION 4.09. Ordinance Governs Conflicts. This Agreement and the Ordinance constitute the entire agreement between. the parties hereto relative to the Bank acting as Paying Agent and Registrar and if any conflict exists between this Agreement and the Ordinance, the Ordinance shall govern. SECTION 4.I0. Term and Termination. This Agreement shall be effective from and after its date and may be terminated for any reason by the Issuer or the Bank at any time upon 60 days written notice; provided, however, that no such termination shall be effective until a successor has been appointed and has accepted the duties of the Bank hereunder. In the event of early termination regardless of circumstances, the Bank shall deliver to the Issuer or its designee all funds, Bonds and all books and records pertaining to the Bank's role as Paying Agent and Registrar with respect to the Bonds. including, but not limited to, the books of registration. SECTION 4.l 1. Governing Law. This Agreement shall be construed in accordance with and shall be governed by the laws of the State of Texas. SECTION 4.12. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes, and all counterparts shall together constitute one and the same instrument. [Remainder of Page Intentionally Left Blank] -6- 84618931.1 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. CITY OF BEAUMONT, TEXAS By ATTEST: CITY SECRETARY (SEAL) 44618931.1 CITY MANAGER ADDRESS: Beaumont, Texas WELLS FARGO BANK, N.A., as Paying Agent and Registrar .0 Title: ADDRESS: #4618931 1 EXHIBIT A FEESCHEDULE BOND REGISTRAR, TRANSFER AGENT, AND PAYING AGENT [See Attachment] #4618931.1 EXHIBIT "C" BOND PURCHASE AGREEMENT 38 #4573136.6 BOND PURCHASE AGREEMENT THE CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE AND REFUNDING BONDS SERIES 2014A And THE CI "TY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REFUNDING BONDS TAXABLE SERIES, 20148 July 22, 2014 The City of Beaumont, Texas 801 Main Street Beaumont, TX 77701 Ladies and Gentlemen: The undersigned, Wells Fargo Bank, National Association (the "Representative "), acting on its own behalf and on behalf of Estrada Hinojosa & Co., Inc., Robert W. Baird & Co., BOSC, Inc. and Coastal Securities, Inc. (collectively, the "Underwriters "), and not acting as fiduciary or agent for you, offer to enter into the following Bond Purchase Agreement (the "Agreement ") with The City of Beaumont, Texas (the `°Issuer ") which, upon the Issuer's written acceptance of this offer, will be binding upon the Issuer and upon the Underwriters. This offer is made subject to the Issuer's written acceptance hereof on or before 5:30 p.m. Central Daylight Time, on July 22, 2014, and, if not so accepted, will be subject to withdrawal by the Underwriters upon notice delivered to the Issuer at any time prior to the acceptance hereof by the Issuer. Terms not otherwise defined in this Agreement shall have the same meanings set forth in the Ordinance (as defined herein) or in the Official Statement (as defined herein). 1. Purchase and Sale of the Bonds. Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriters hereby agree to purchase from the Issuer, and the Issuer hereby agrees to sell and deliver to the Underwriters, all, but riot less than all, of (i) the Issuer's $__ Waterworks and Sewer System Revenue and Refunding Bonds, Series 2014A (the "Series 2014A Bonds ") and (ii) the Issuer's $ Waterworks and Sewer System Refunding Bonds, Taxable Series 2014B (the "Series 2014B Bonds ", and together with the Series 2014A Bonds herein referred to as the `Bonds "). Inasmuch as this purchase and sale represents a negotiated transaction, the Issuer understands, and hereby confirms, that the Underwriters are not acting as a fiduciary of the Issuer, but rather are acting solely in their capacity as Underwriters for their own account. The Underwriters are authorized to execute this Agreement and to act hereunder. The primary role of the Underwriters is to purchase the Bonds for resale to investors., in an arm's - length commercial transaction between the Issuer and the Underwriters. The Underwriters have financial and other interests that differ from those of the Issuer. Inasmuch as this purchase and sale represents a negotiated transaction, the Issuer acknowledges and agrees that: (i) the transaction contemplated by this Bond Purchase Agreement is an arm's length, commercial transaction between the Issuer and the Underwriters in which the Underwriters are acting solely as principal and are not acting as a municipal advisor, financial advisor or fiduciary to the Issuer; (ii) the Underwriters have not assumed any advisory or fiduciary responsibility to the Issuer with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriters or their affiliates have provided other services or is Currently providing other services to the Issuer on other matters); (iii) the only obligations the Underwriters have to the Issuer with respect to the transaction contemplated hereby expressly are set forth in this Bond Purchase Agreement; and (iv) the Issuer has consulted its own financial and/or municipal, legal, accounting, tax, and other advisors, as applicable, to the extent it has deemed appropriate. 2. Principal Amount, Ordinance, Purchase Price and Good Faith Check. The principal amount of the Bonds to be issued, the dated date therefor, the maturities, sinking fund (if any) and optional redemption provisions and interest rates per annum are set forth in Schedule I hereto. The Bonds shall be as described in, and shall be issued and secured under and pursuant to the provisions of, an ordinance adopted by the Issuer on July 22, 2014 (the "Ordinance "). The purchase price for the Series 2014A Bonds shall be $ representing the par amount of the Bonds of $ plus a net premium of $ less an underwriting discount $ plus no accrued interest. The purchase price for the Series 2014B Bonds shall be $ representing the par amount of the Bonds of $ plus a net premium of $ less an underwriting discount $ plus no accrued interest. Delivered to the Issuer herewith is the Representative's good faith corporate check or a cashier's check or bank certified check payable to the order of the Issuer in the amount of $ (the "Check'). In the event you accept this offer, the Check shall be held un- cashed by you until the time of Closing, at which time the Check shall be returned un- cashed to the Representative. In the event that the Issuer does not accept this Agreement, the Check shall be immediately returned to the Representative. Should the Issuer fail to deliver the Bonds at the Closing, or should the Issuer be unable to satisfy the conditions to the obligations of the Underwriters to purchase, accept delivery of, and pay for the Bonds, as set forth in this Agreement (unless waived by the Representative), or should such obligations of the Underwriters be terminated for any reason permitted by this Agreement, the Check shall immediately be returned to the Representative, and, except as set forth in Section 9 hereof, no party shall have any further rights, claims, or causes of action against the other. In the event that the Underwriters fail (other than for a reason permitted hereunder) to purchase, accept delivery of, and pay for the Bonds at the Closing as herein provided, the Check shall be cashed and the amount thereof retained by the Issuer as and for fully liquidated damages for such failure of the Underwriters, and, except as set forth in Sections 8 and 10 hereof, no party shall have any further rights against the other hereunder. The Underwriters and the Issuer understand that in such event the Issuer's actual damages may be greater or may be less than such amount. Accordingly, the Underwriters hereby waive any right to claim that the Issuer's actual damages are less than such amount, and the Issuer's acceptance of this offer shall constitute a waiver of any right the Issuer may have to additional damages from the Underwriters. -2- I . Public Offering. The Underwriters agree to make a bona fide public offering of all of the Bonds at a price not to exceed the public offering price set forth on the cover of the Official Statement and may subsequently change such offering price without any requirement of prior notice. The Underwriters may offer and sell Bonds to certain dealers (including dealers depositing I3onds into investment trusts) and others at prices lower than the public offering price stated on the cover of the Official Statement. 4. The Official Statement. (a) The Issuer has prepared a Preliminary Official Statement dated July , 2014 (the "Preliminary Official Statement ") relating to the Bonds and will prepare a final official statement as of the date of this Agreement (the "Official Statement "). (b) The Preliminary Official Statement has been prepared for use in connection with the public offering, sale and distribution of the Bonds. The Issuer hereby represents and warrants that the Preliminary Official Statement was deemed final by the Issuer as of its date, except for the omission of such information which is dependent upon the final pricing of the Bonds for completion, all as permitted to be excluded by Section (b)(1) of Rule 15c2 -12 under the Securities Exchange Act of 1934 (the "Rule "). (c) The Issuer hereby authorizes the Official Statement and the information therein contained to be used by the Underwriters in connection with the public offering and the sale of the Bonds. The Issuer consents to the use by the Underwriters prior to the date hereof of the Preliminary Official Statement in connection with the public offering of the Bonds. The Issuer shall provide, or cause to be provided, to the Underwriters as soon as practicable after the date of the Issuer's acceptance of this Agreement (but, in any event, not later than within seven (7) business days after the Issuer's acceptance of this Agreement and in sufficient time to accompany any confirmation that requests payment from any customer) copies of the Official Statement which is complete as of the date of its delivery to the Underwriters in such quantity as the Underwriters shall request in order for the Underwriters to comply with Section (b)(4) of the Rule and the rules of the Municipal Securities Rulemaking Board ( "MSRB "). Without limiting the generality of the foregoing, the Official Statement shall be provided for distribution, at the expense of the Issuer, in such quantity as may be requested by the Underwriters no later than the earlier of (i) seven (7) business days after the date of this Bond Purchase Agreement or (ii) one (1) business day prior to the Closing Date, in order to permit the Underwriters to comply with Rule 15c2 -12 of the Securities and Exchange Commission ( "SEC "), and the applicable rules of the MSRB, with respect to distribution of the Official Statement. The Issuer shall prepare the Official Statement, including any amendments thereto, in word - searchable PDF format as described in the MSRB's Rule G -32 and shall provide the electronic copy of the word - searchable PDF format of the Official Statement to the Underwriters no later than one (1) business day prior to the Closing Date to enable the Underwriters to comply with MSRB Rule G -32. (d) If; after the date of this Agreement, to and including the date the Underwriters are no longer required to provide an Official Statement to potential customers who request the same pursuant to the Rule (the earlier of (i) 90 days from the "end of the underwriting period" (as defined in the Rule) and (ii) the time when the Official Statement is available to any person from a nationally recognized municipal securities information repository, but in no case less than 25 days after the "end of the underwriting period" for the Bonds), the Issuer becomes aware of any fact or event which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, not misleading, or if it is necessary to amend or supplement the Official Statement to comply with law, the Issuer will notify the Underwriters (and for the purposes of this clause provide the Underwriters with such information as it may from time to time request), and if, in the opinion of the Underwriters, such fact or event requires preparation and publication of a supplement or amendment to -3- the Official Statement, the Issuer will forthwith prepare and furnish, at the Issuer's own expense (in a form and manner approved by the Underwriters), a reasonable number of copies of either amendments or supplements to the Official Statement so that the statements in the Official Statement as so amended and supplemented will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or so that the Official Statement will comply with law. If such notification shall be subsequent to the Closing, the Issuer shall furnish such legal opinions, certificates, instruments and other documents as the Underwriters may deem necessary to evidence the truth and accuracy of such supplement or amendment to the Official Statement. (e) The Underwriters hereby agree to timely file the Official Statement with a nationally recognized municipal securities information repository. Unless otherwise notified in writing by the Underwriters, the Issuer can assume that the "end of the underwriting period" for purposes of the Rule is the date of the Closing. 5. Representations, Warranties, and Covenants of the Issuer. The Issuer hereby represents and warrants to and covenants with the Underwriters that: (a) The Issuer is a political subdivision and municipal corporation of the State as such under the Constitution and laws of the State of Texas (the "State "). The Issuer is authorized by the provisions of Chapter 1502, Texas Government Code, as amended (the "Act "), among other things, (i) to enter into, execute and deliver this Agreement, the Ordinance, and all documents required hereunder and thereunder to be executed and delivered by the Issuer (this Agreement and the Ordinance are hereinafter referred to as the "Issuer Documents "), (ii) to sell, issue and deliver the Bonds to the Underwriters as provided herein, and (iii) to carry out and consummate the transactions contemplated by the Issuer Documents and the Official Statement, and the Issuer has complied, and will at the Closing be in compliance in all respects, with the terms of the Act and the Issuer Documents as they pertain to such transactions; (b) By all necessary official action of the Issuer prior to or concurrently with the acceptance hereof, the Issuer has duly authorized all necessary action to be taken by it for (1) the adoption of the Ordinance and the issuance and sale of the Bonds, (ii) the approval, execution and delivery of, and the performance by the Issuer of the obligations on its part, contained in the Bonds and the Issuer Documents and (iii) the consummation by it of all other transactions contemplated by the Official Statement, the Issuer Documents and any and all such other agreements and documents as may be required to be executed, delivered and/or received by the Issuer in order to carry out, give effect to, and consummate the transactions contemplated herein and in the Official Statement; (c) The Issuer Documents constitute legal, valid and binding obligations of the Issuer, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws and principles of equity relating to or affecting the enforcement of creditors' rights; the Bonds, when issued, delivered and paid for, in accordance with the Ordinance and this Agreement, will constitute legal, valid and binding obligations of the Issuer entitled to the benefits of the Ordinance and enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws and principles of equity relating to or affecting the enforcement of creditors' rights; upon the issuance, authentication and delivery of the Bonds as aforesaid, the Ordinance will provide, for the benefit of the holders, from time to time, of the Bonds, the legally valid and binding pledge of and lien it purports to create as set forth in the Ordinance; M (d) The Issuer is not in breach of or default in any material respect under any applicable constitutional provision, law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Issuer is a party or to which the Issuer is otherwise subject, and no event which would have a material adverse impact upon the business or financial condition of the Issuer has occurred and is continuing which constitutes or with the passage of time or the giving of notice, or both, would constitute a default or event of default by the Issuer under any of the foregoing; and the execution and delivery of the Bonds, the Issuer Documents and the adoption of the Ordinance and compliance with the provisions on the Issuer's part contained therein, will not conflict with or constitute a breach of or default under any constitutional provision, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Issuer is a party or to which the Issuer is otherwise subject to under the terms of any such law, regulation or instrument, except as provided by the Bonds and the Ordinance; (e) Except for the approval of the Bonds by the Attorney General of the State and the registration thereof by the Comptroller of Public Accounts of the State, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization of, which would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the Issuer of its obligations under the Issuer Documents, have been duly obtained; (f) The Bonds and the Ordinance conform to the descriptions thereof contained in the Official Statement under the caption "THE BONDS ", and the proceeds of the sale of the Bonds will be applied as described in the Official Statement under the caption -THE BONDS — Use of Proceeds." (g) There is no legislation, action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or, to the best knowledge of the Issuer after due inquiry, threatened against the Issuer, affecting the existence of the Issuer or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds, or the collection of taxes pledged to the payment of principal of and interest on the Bonds pursuant to the Ordinance or in any way contesting or affecting the validity or enforceability of the Bonds, the Issuer Documents, or contesting the exclusion from gross income of interest on the Bonds for federal income tax purposes, or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto, or contesting the powers of the Issuer or any authority for the issuance of the Bonds, the adoption of the Ordinance or the execution and delivery of the Issuer Documents, nor, to the best knowledge of the Issuer, is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Bonds or the Issuer Documents; (h) As of the date thereof, the Preliminary Official Statement (excluding information under the caption "THE; BONDS — Book -Entry-Only System ") did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 0) At the time of the Issuer's acceptance hereof and (unless the Official Statement is amended or supplemented pursuant to paragraph (d) of Section 4 of this Agreement) at all times subsequent thereto during the period up to and including the date of Closing, the Official Statement (excluding information under the caption "THE BONDS — Book - Entry-Only System ") does not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated -5- therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 0) If the Official Statement is supplemented or amended pursuant to paragraph (4) of Section 4 of this Agreement, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto during the period up to and including the date of Closing, the Official Statement (excluding information under the caption "THE BONDS — Book - Entry -Only System ") as so supplemented or amended will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which made, not misleading; (k) The Issuer will apply, or cause to be applied, the proceeds from the sale of the Bonds as provided in and subject to all of the terms and provisions of the Issuer Documents and will not take or omit to take any action which action or omission will adversely affect the exclusion from gross income, for federal income tax purposes, the interest on the Bonds; (1) The Issuer will furnish such information and execute such instruments and take such action in cooperation with the Underwriters as the Underwriters may reasonably request (1) to (a) qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions in the United States as the Underwriters may designate and (b) determine the eligibility of the Bondi for investment under the laws of such states and other jurisdictions and (ii) to continue such qualifications in effect so long as required for the distribution of the Bonds (provided, however, that the Issuer will not be required to qualify as a foreign corporation or to file any general or special consents to service of process under the laws of any jurisdiction) and will advise the Underwriters immediately of receipt by the Issuer of any notification with respect to the suspension of the qualification of the Bonds for sale in any jurisdiction or the initiation or threat of any proceeding for that purpose; (m) The financial statements of, and other financial information regarding, the Issuer in the Official Statement fairly present the financial position and results of the Issuer as of the dates and for the periods therein set forth. Prior to the Closing, there will be no adverse change of a material nature in such financial position, results of operations or condition, financial or otherwise, of the Issuer. The Issuer is not a party to any litigation or other proceeding pending or, to its knowledge, threatened which, if decided adversely to the Issuer, would have a materially adverse effect on the financial condition of the Issuer, (n) Prior to the Closing, the Issuer will not offer or issue any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent, payable from or secured by any of the revenues which will secure the Bonds without the prior approval of the Underwriters; and (o) Any certificate signed by any official of the Issuer authorized to do so in connection with the transactions contemplated by this Agreement shall be deemed a representation and warranty by the Issuer to the Underwriters as to the statements made therein. 6. Closing. (a) At 10:00 a.m. CST time, on or about August 2014, or at such other time and date as shall have been mutually agreed upon by the Issuer and the Underwriters (the "Closing "), the Issuer will, subject to the terms and conditions hereof, deliver the Bonds to the Underwriters duly executed and authenticated, together with the other documents hereinafter mentioned, and the Underwriters will, subject to the terms and conditions hereof, accept such delivery and pay the purchase M price of the Bonds as set forth in Section 2 of this Agreement by a certified or bank cashier's check or checks or wire transfer payable in immediately available funds to the order of the Issuer. Payment for the Bonds as aforesaid shall be made at the offices of the Paying Agent /Registrar, or such other place as shall have been mutually agreed upon by the Issuer and the Underwriters. (b) Delivery of the Bonds in definitive form shall be made to DTC, or to The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (the "Registrar ") pursuant to DTC's FAST System. The Bonds shall be typed, printed or lithographed; shall be prepared and delivered as fully registered Bonds in authorized denominations thereof; shall be registered in the name of Cede & Co., all as provided in the Ordinance, and shall be made available to the Underwriters at least one (1) business day before the Closing for the purpose of inspection. 7. Closin, Conditions. The Underwriters have entered into this Agreement in reliance upon the representations, warranties and agreements of the Issuer contained herein, and in reliance upon the representations, warranties and agreements to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Issuer of its obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly, the Underwriters' obligations under this Agreement to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the Issuer of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing, and shall also be subject to the following additional conditions, including the delivery by the Issuer of such documents as are enumerated herein, in form and substance reasonably satisfactory to the Underwriters: (a) The representations and warranties of the Issuer contained herein shall be true, complete and correct on the date hereof and on and as of the date of the Closing, as if made on the date of the Closing; (b) The Issuer shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing; (c) At the time of the Closing, (1) the Issuer Documents and the Bonds shall be in full force and effect in the form heretofore approved by the Underwriters and shall not have been amended, modified or supplemented, and the Official Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Underwriters; and (ii) all actions of the Issuer required to be taken by the Issuer shall be performed in order for Bond Counsel and Counsel to the Underwriters to deliver their respective opinions referred to hereafter; (d) At the time of the Closing, all official action of the Issuer relating to the Bonds and the Issuer Documents shall be in full force and effect and shall not have been amended, modified or supplemented; (e) At or prior to the Closing, the Issuer Documents shall have been duly executed and delivered by the Issuer and the Issuer shall have duly executed and delivered and the Registrar shall have duly authenticated the Bonds; (i) The Issuer shall not have failed to pay principal or interest when due on any of its outstanding obligations for borrowed money; -7- (g) All steps to be taken and all instruments and other documents to be executed, and all other legal matters in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in legal form and effect to the Underwriters; (h) At or prior to the Closing, the Underwriters shall have received copies of each of the following documents (1) The Official Statement, and each supplement or amendment thereto, if any, in the form approved by the City Council; (2) The Ordinance with such supplements or amendments as may have been agreed to by the Underwriters, which Ordinance will include an agreement by the Issuer to provide certain periodic information and notices of material events in accordance with the Rule as described in the Official Statement under "CONTINUING DISCLOSURE OF INFORMATION;" (3) The opinion of Bracewell & Giuliana LLP, Houston, Texas ( "Bond Counsel ") with respect to the Bonds in the form attached to the Official Statement, together with a reliance letter addressed to the Underwriters allowing them to rely on such opinion; (4) A supplemental opinion of Bond Counsel addressed to the Underwriters, substantially to the effect that: (1) the Ordinance has been duly adopted and is in full force and effect; (ii) the Bonds are exempt securities under the Securities Act of 1933, as amended (the "1933 Act "), and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act ") and it is not necessary, in connection with the offering and sale of the Bonds, to register the Bonds under the 1933 Act or to qualify the Ordinance under the Trust Indenture Act; and (iii) except to the extent noted therein, said firm has not verified and is not passing upon, and does not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Official Statement but that said firm has reviewed the statements and information appearing under captions or subcaptions "THE BONDS" (other than the information under the subcaption "Book - Entry -Only System "), "LEGAL MATTERS" and "CONTINUING DISCLOSURE OF INFORMATION" (other than the subcaption "Compliance with Prior Undertakings ") fairly summarizes the procedures and documents referred to therein and is correct as to matters of law. (S) An opinion, dated the date of the Closing and addressed to the Underwriters, of co- counsel for the Underwriters, to the effect that: (i) the Bonds are exempt securities under the 1933 Act and the Trust Indenture Act and it is not necessary, in connection with the offering and sale of the Bonds, to register the Bonds under the 1933 Act and the Ordinance need not be qualified under the Trust Indenture Act; and -8- (ii) based upon their participation in the preparation of the Official Statement as co- counsel for the Underwriters and their participation at conferences at which the Official Statement was discussed, but without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, such counsel has no reason to believe that the Official Statement (except for any financial, forecast, technical and statistical statements and data included in the Official Statement and in Appendices A and B and the information regarding DTC and its book - entry-only system as to which no view need be expressed), as of its date and as of today's date, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (6) A certificate, dated the date of Closing, of the Issuer to the effect that (i) the representations and warranties of the Issuer contained herein are true and correct in all material respects on and as of the date of Closing as if made on the date of Closing; (ii) no litigation or proceeding or tax challenge against it is pending or, to its knowledge, threatened in any court or administrative body nor is there a basis for litigation which would (a) contest the right of the members or officials of the Issuer to hold and exercise their respective positions, (b) contest the due organization and valid existence of the Issuer, or (c) contest the validity, due authorization and execution of the Bonds or the Issuer Documents; (iii) the Ordinance has been duly adopted by the Issuer, is in full force and effect and has not been modified, amended or repealed, (iv) to the best of its knowledge, no event affecting the Issuer has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein, in light of the circumstances under which made, not misleading in any material respect as of the time of Closing, and the information contained in the Official Statement (excluding information under the subcaption "THE BONDS — Book -Entry- Only System ") is correct in all material respects and, as of the date of the Official Statement did not, and as of the date of the Closing does not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, (v) there has not been any material adverse change in the financial condition of the Issuer since September 30, 2013, the latest date as of which audited financial information is available, and (vi) there has been no material adverse change to the System; (7) A certificate of the Issuer in form and substance satisfactory to Bond Counsel and counsel to the Underwriters (a) setting forth the facts, estimates and circumstances in existence on the date of the Closing, which establish that it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code "), and any applicable regulations (whether final, temporary or proposed), issued pursuant to the Code, and (b) certifying that to the best of the knowledge and belief of the Issuer there are no other facts, estimates or circumstances that would materially change the conclusions, representations and expectations contained in such certificate; (8) Any other certificates and opinions required by the Ordinance for the issuance thereunder of the Bonds; ME (9) Evidence satisfactory to the Underwriters that the Bonds have been rated [ "AA - "I by Standard and Poor's and [ "AaY ] by Moody's Investors Service, Inc. and that such ratings are in effect as of the date of Closing; (l 0) The approving opinion of the Attorney General of the State with respect to the Bonds; (l 1) The registration certificate of the Comptroller of Public Accounts of the State with respect to the Bonds; (12) A copy of a special report prepared by Grant Thornton LLP, Certified Public Accountants (the "Verification Agent "), relating to the Refunded Obligations, addressed to the Issuer, Bond Counsel and the Underwriters, verifying the arithmetical computations of the adequacy of the maturing principal and interest on the Federal Securities and uninvested cash on hand under the Escrow Agreement to pay, when due, the principal of and interest on the Refunded Obligations, and the computation of the yield with respect to such Bonds; (13) The Escrow Agreement, executed by the Issuer and the Escrow Agent; (14) Such additional legal opinions, certificates, instruments and other documents as the Underwriters or co- counsel to the Underwriters may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Closing, of the Issuer's representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Issuer on or prior to the date of the Closing of all the respective agreements then to be performed and conditions then to be satisfied by the Issuer. All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriters. If the Issuer shall be unable to satisfy the conditions to the obligations of the Underwriters to purchase, to accept delivery of and to pay for the Bonds contained in this Agreement, or if the obligations of the Underwriters to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Agreement, this Agreement shall terminate and neither the Underwriters nor the Issuer shall be under any further obligation hereunder, except that the respective obligations of the Issuer and the Underwriters set forth in Section 9 hereof shall continue in full force and effect. 8. Termination. The Underwriters shall have the right to cancel their obligation to purchase the Bonds if, between the date of this Agreement and the Closing, the market price or marketability of the Bonds shall be materially adversely affected, in the sole reasonable judgment of the Underwriters, by the occurrence of any of the following: (a) legislation shall be enacted by or introduced in the Congress of the United States or recommended to the Congress for passage by the President of the United States, or the Treasury Department of the United States or the Internal Revenue Service or any member of the Congress or the State legislature or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary or proposed), press -10- release, staterrient or other form of notice by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made or proposed, the effect of any or all of which would be to impose, directly or indirectly, federal income taxation or State income taxation upon revenues or other income of the general character to be derived by the Issuer pursuant to the Ordinance, or upon interest received on obligations of the general character of the Bonds or, with respect to State taxation, of the interest on the Bonds as described in the Official Statement, or other action or events shall have transpired which may have the purpose or effect, directly or indirectly, of changing the federal income tax consequences of any of the transactions contemplated herein; (b) legislation introduced in or enacted (or ordinance passed) by the Congress or an order, decree, or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary, or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under, or other requirements of, the 1933 Act, or that the Ordinance is not exempt from qualification under, or other requirements of, the Trust Indenture Act, or that the issuance, offering, or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation of the federal securities law as amended and then in effect: (c) any state blue sky or securities commission or other governmental agency or body in a jurisdiction in which any Bonds have been sold shall have withheld registration, exemption or clearance of the offering of the Bonds as described herein, or issued a stop order or similar ruling relating thereto; (d) a general suspension of trading in securities on the New York Stock Exchange or the American Stock Exchange, the establishment of minimum prices on either such exchange, the establishment of material restrictions (not in force as of the date hereof) upon trading securities generally by any governmental authority or any national securities exchange, a general banking moratorium declared by federal, State of New York, or State officials authorized to do so; (e) the New York Stock Exchange or other national securities exchange or any governmental authority, shall impose, as to the Bonds or as to obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriters:, (i) any amendment to the federal or state Constitution or action by any federal or state court, legislative body, regulatory body, or other authority materially adversely affecting the tax status of the Issuer, its property, income securities (or interest thereon), or the validity or enforceability of the levy of taxes to pay principal of and interest on the Bonds; (g) any event occurring, or information becoming known which, in the reasonable judgment of the Underwriters, makes untrue in any material respect any statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of material fact or omits to state a material fact required to be -11- stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; Ih) there shall have occurred since the date of this Agreement any materially adverse change in the affairs or financial condition of the Issuer; ( i ) the United States shall have become engaged in hostilities which have resulted in a declaration of war or a national emergency or there shall have occurred any other outbreak or escalation of hostilities or a national or international calamity or crisis., financial or otherwise the effect of such outbreak, emergency, calamity or crisis on the financial markets of the United States being such as, in the reasonable opinion of the Underwriters, would materially and adversely affect the ability of the Underwriters to market the Bonds; 0) any fact or event shall exist or have existed that, in the Underwriters' reasonable judgment, materially adversely affects its ability to market the Bonds and requires or has required an. amendment of or supplement to the Official Statement; (k) there shall have occurred any downgrading, or any notice shall have been given of (A) any intended or potential downgrading or (B) any review or possible change that does not indicate a possible upgrade, in the rating accorded any of the Issuer's obligations (including the ratings to be accorded the Bonds); and (1) the purchase of and payment for the Bonds by the Underwriters, or the resale of the Bonds by the Underwriters, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission, unless such prohibition is due to the action or inaction of any of the Underwriters. 9. Expenses. (a) The Underwriters shall be under no obligation to pay, and the Issuer shall pay, any expenses incident to the performance of the Issuer's obligations hereunder, including, but not limited to (i) the cost of preparation and printing of the Bonds, (ii) the fees and disbursements of Bond Counsel; (iii) the fees and disbursements of the Financial Advisor to the Issuer; and (iv) the fees and disbursements of any other engineers, accountants, and other experts, consultants or advisers retained by the Issuer. (b) The Underwriters shall pay (1) the cost of preparation and printing of this Agreement, the Blue Sky Survey and Legal Investment Memorandum, if any; (ii) all advertising expenses in connection with the public offering of the Bonds; and (iii) all other expenses incurred by them in connection with the public offering of the Bonds, including the fees and disbursements of co- counsel retained by the Underwriters. 10. Notices_. Any notice or other communication to be given to the Issuer under this Agreement may be given by delivering the same in writing at City of Beaumont, 801 Main Street, Beaumont, Texas 77701, Attention: Mayor, and any notice or other communication to be given to the Underwriters under this Agreement may be given by delivering the same in writing to Wells Fargo Bank, National Association, MAC# T5001 -060, 1000 Louisiana Street, Suite 600, Houston, TX 77002, Attention; Craig Brast. 11. Parties in Interest. This Agreement, as heretofore specified, shall constitute the entire agreement between us and is made solely for the benefit of the Issuer and the Underwriters (including successors or assigns of the Underwriters) and no other person shall acquire or have any right hereunder -12- or by virtue hereof. This Agreement may not be assigned by the Issuer. All of the Issuer's representations, warranties and agreements contained in this Agreement shall remain operative and in full force and effect, regardless of (1) any investigations made by or on behalf of the Underwriters, (ii) delivery of and payment for the Bonds pursuant to this Agreement; and (iii) any termination of this Agreement. 12. Effectiveness. This Agreement shall become effective upon the acceptance hereof by the Issuer and shall be valid and enforceable at the time of such acceptance. 13. Choice of Law. This Agreement shall be governed by and construed in accordance with the law of the State. 14. Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provisions of any Constitution, statute, rule of public policy, or any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatever. 15. Business Day. For purposes of this Agreement, "business day" means any day on which the New York Stock Exchange is open for trading. 16. Section Headings. Section headings have been inserted in this Agreement as a matter of convenience of reference only, and it is agreed that such section headings are not a part of this Agreement and will not be used in the interpretation of any provisions of this Agreement. 17. Status of Underwriters. It is understood and agreed that for all purposes of this Agreement and the transactions contemplated hereby the Underwriters have, in their role as underwriters, acted solely as independent contractors and have not acted as financial or investment advisors, fiduciaries or agents to or for the Issuer, whether directly or indirectly through any person. The Issuer recognizes that the Underwriters expect to profit from the acquisition and potential distribution of the Bonds. 18. Counterparts. This Agreement may be executed in several counterparts each of which shall be regarded as an original (with the same effect as if the signatures thereto and hereto were upon the same document) and all of which shall constitute one and the same document. -13- If you agree with the foregoing, please sign the enclosed counterpart of this Agreement and return it to the Underwriters. This Agreement shall become a binding agreement between you and the Underwriters when at least the counterpart of this letter shall have been signed by or on behalf of each of the parties hereto. Very truly yours, WELLS FARGO BANK, NATIONAL ASSOCIATION ESTRADA HINOJOSA & COMPANY, INC. ROBERT W. BAIRD & CO. BOSC, INC. COASTAL SECURITIES. INC. BY: WELLS FARGO BANK, NATIONAL ASSOCIATION C Accepted and agreed to this day of July, 2014, Authorized Officer at o'clock m. THE CITY OF BEAUMONT, TEXAS li Mayor Signature page for Bond Purchase Agreement SCHEDULEI THE CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS SERIES 2014A Interest Accrues From: Date of Delivery Dated Date: July 15, 2014 MATURITY SCHEDULE Maturity Principal (September 1) Amount Interest Rate Yield 2014 $ 675,000 % % 2015 $ 370,000 % % 2016 $ 710,000 % % 2017 $2,475,000 % % 2018 $2,530,000 % % 2019 $2,500,000 % % 2020 $2,580,000 % % 2021 $6,410,000 % % 2022 $6,685,000 % % 2023 $7,045,000 % % 2024 $6,540,000 % % 2025 $6,900,000 % % 2026 $4,910,000 % % 2027 $5,125,000 % % 2028 $5,360,000 % % 2029 $1,445,000 % % 2030 $1,515,000 % % 2031 $1,590,000 % % 2032 $1,655,000 % % 2033 $1,720,000 % % 2034 $1,790,000 % % The Series 2014A Bonds maturing on or after September 1, 2024, are subject to optional redemption, in whole or in part, on September 1, 2023, or any date thereafter, at a price equal to the principal amount thereof, plus accrued interest to the date of redemption. THE CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REFUNDING BONDS TAXABLE SERIES 2014B Interest Accrues From: Date of Delivery Dated Date: July 15, 2014 MATURITY SCHF,DIJLE Maturity Principal (September 1) Amount Interest Rate Yield 2014 $ 85,000 % % 2015 $ 60,000 % % 2016 $2,860,000 % % 2017 $2,960,000 % % 2018 $3,070,000 % % The Series 2014B Bonds are not subject to redemption prior to maturity. -16- EXHIBIT D OFFICER'S PRICING CERTIFICATE OM #4573136.6 OFFICER'S PRICING CERTIFICATE CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE AND REFUNDING BONDS, SERIES 2014A THIS OFFICER'S PRICING CERTIFICATE is executed as of 2014 by the City Manager, Beaumont Texas (the "City ") pursuant to the authorization contained in the Ordinance of the City Council of the City adopted on , 2014 (the "Ordinance "), authorizing the issuance of the captioned series of bonds and delegating to the undersigned the authority to agree to and stipulate certain terms and provisions thereof, all of which are set forth herein. Capitalized terms used in this Officer's Pricing Certificate shall have the meanings assigned to them in the Ordinance. 1. Principal Amount, Numbers, Interest Rates and Maturities. The Bonds shall be issued in the total authorized principal amount of $ . The Bonds shall mature on September 1 in each of the years and in the amounts set out in the following schedule: Number R -1 R -2 R -3 R -4 R -5 R -6 R -7 2. Redemption. Year of Maturity Principal Amount Interest Rate Optional Redemption. The Bonds stated to mature on and after , 20 are subject to optional redemption prior to maturity, in whole or in part, on _, 20 or any date thereafter, at a redemption price of par plus accrued interest to the date of redemption. 3. Purchase Price. The sale of the Bonds is authorized pursuant to the form of the Bond Purchase Contract approved in the Ordinance at the following price: PRINCIPAL AMOUNT $ Plus Net Original Issue Premium Less Underwriter's Discount PURCHASE PRICE $ #4523228.1 -1- 4. Form of Bond. Pursuant to Section 19 of the Ordinance, the Form of Bond as set forth in Exhibit A hereto is hereby approved and supercedes the Form of Bond set forth in the Ordinance. 5. The undersigned hereby finds, determines and declares, that in accordance with the requirements of the Ordinance, this Officer's Pricing Certificate complies with and satisfies the terms and provisions of the Ordinance in accordance with the delegation contained therein. b. Pursuant to Section 5 of the Ordinance, I hereby further find and determine that: (a) the price to be paid for each series of the Bonds shall not be less than 90% of the aggregate original principal amount of the current interest bonds plus accrued interest, if any, thereon from their date to their delivery, (b) none of the Bonds shall bear interest at a rate greater than 10% per annum or in excess ol. the maximum rate allowed by Chapter 1204, Texas Government Code, (c) the aggregate principal amount of each subseries of the Bonds shall not exceed the maximum amount authorized in Section 3 of the Ordinance, and the sum of the principal amount of each series, plus net premium generated, plus any available funds of the City, if any, shall equal an amount sufficient to provide for the redemption of the Refunded Bonds as identified herein, to pay costs of issuance of the Bonds, and (if necessary) a deposit to the reserve fund, (d) each series of the Bonds to be issued, prior to delivery, must have been rated by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for long -term obligations, and (e) the refunding of the Refunded Bonds shall produce a net present value debt service savings, as shown by a calculation prepared by the Municipal Advisors, and attached hereto. 7. Deposit of Proceeds. a. All amounts received on the Closing Date as accrued interest on the Bonds from the Bond Date to the Closing Date, shall be deposited to the Interest and Sinking Fund. b. The remaining balance shall be used to pay the costs of issuing the Bonds; provided that any amount representing a rounding or contingency amount shall be applied solely to pay costs of issuance of the Bonds. Amounts remaining after payment of costs of issuance shall be deposited to the Interest and Sinking Fund and applied to the payment of debt service on the Bonds. #4523228.1 -2- All capitalized terms used herein have the meanings set forth in the Ordinance unless otherwise defined herein. <EXECUTION PAGE FOLLOWS> #4523228.1 -3- EXECUTED as of this City Manager #4523228.1 -4- .2014. EXHIBIT A TO OFFICER'S PRICING CERTIFICATE FORM OF BOND FOR SERIES 2014A BONDS The form of the Bonds, including the form of the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, to accompany the Initial Bond, the form of Certificate of the Paying Agent /Registrar and the form of Assignment appearing on the Bonds, shall be substantially as follows: (a) Form of Bonds. REGISTERED No. 'R- United States of America State of Texas REGISTERED CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2014A 'INTEREST RATE: MATURITY DATE: BOND DATE: CUSIP NUMBER: % September 1, 12014 REGISTERED OWNER: PRINCIPAL AMOUNT: DOI-LARS '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 Initial Bond shall e numbered T -1. Omitted from Initial Bond, 3 The first paragraph of the Initial Bond shall read as follows: 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 amounts set forth in the following schedule: [Insert information regarding years of maturity, principal amounts and interest rates from Officer's Pricing Certificate], 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 1, 2014, 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 September 1, 2014, and semiannually thereafter on each March 1 and September 1, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th day of the month next preceding each interest payment date. #4523228.1 -1- 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 1, 2014, 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 September 1, 2014, and semiannually thereafter on each March I and September 1, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the l5th day of the month next preceding each interest payment date. THIS BOND is one of a duly authorized issue of Bonds, aggregating $ '(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 (i) acquisitions, purchases, expansions, extensions, construction, reconstruction, renovation, equipping, and improvement of the System, and (ii) paying costs of issuance of the Bonds, pursuant to the Ordinance, which Ordinance is of record in the official minutes of the City Council. THESE BONDS are special obligations of the City payable solely from and secured by a lien on and pledge of the Net Revenues (as defined in the Ordinance) of the City's waterworks and sewer system (the "System "), such lien and pledge, however, being junior and subordinate to the lien on and pledge of such Net Revenues to the payment and security of the Prior Lien Bonds (as defined in the Ordinance). The Bonds do not constitute a legal or equitable pledge, charge, lien or encumbrance upon any property of the City or the System, except with respect to the Net Revenues. THE HOLDER OF THIS OBLIGATION IS NOT ENTITLED TO DEMAND PAYMENT OF THIS OBLIGATION OUT OF ANY MONEY RAISED BY TAXATION. Subject to satisfying the terms and conditions prescribed therefor, the City has reserved the right to issue additional revenue obligations payable from and equally and ratably secured by a parity lien on and pledge of the Net Revenues in the same manner and to the same extent as the Bonds. As provided in the Ordinance, no additional obligations will be authorized or issued on a parity with the outstanding Prior Lien Bonds; and the Bonds, together with additional obligations hereafter issued on a parity therewith, will become obligations equally secured by a first lien on and pledge of the Net Revenues of the System at such time as the principal of and interest on the Prior Lien Bonds have been fully paid or provision for the payment of said Prior Lien Bonds has been made in accordance with applicable law. THE CITY RESERVES THE RIGHT, at its option, to redeem the Bonds having stated maturities on or after 1, 20_, in whole or in part, on 1, 20 , 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. To be completed in accordance with the Officer's Pricing Certificate. #4523228.1 -2- [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 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 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. The City, at least 45 days before the redemption date, unless a shorter period shall be satisfactory to the Paying Agent /Registrar, shall notify the Paying Agent /Registrar of such redemption date and of the principal amount of Bonds to be redeemed. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior the date fixed for redemption by first clays 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. With respect to any optional redemption of the Bonds, unless moneys sufficient. to pay the principal of and premium, if any, and interest on the Bonds to be redeemed shall have been received by the Paying Agent /Registrar prior to the giving of such notice of redemption, such notice may state that said redemption is conditional upon the receipt of such moneys by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon the satisfaction of any prerequisites set forth in such notice of redemption; and, if sufficient moneys are not received, such notice shall be of no force and effect, the City shall not redeem such Bonds and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, to the effect that the Bonds have not been redeemed. The Bonds may be defeased as provided in the Ordinance authorizing the Bonds. 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. To be completed in accordance with the Officer's Pricing Certificate. #4523228.1 -3- 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 terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Bonds and will cause notice of any change of registrar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to exist and to be done precedent to or in the issuance and delivery of this Bond have been performed, exist and have been done in accordance with law; that the bonds of this series do not exceed any statutory limitation; and that provision has been made for the payment of principal and interest on this bond and all of the bonds of this series by the aforesaid lien on and pledge of the Net Revenues of the System. IN WITNESS 'AVHEREOF, 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. Mayor City Clerk THE CITY OF BEAUMONT, TEXAS (SEAL) FORM OF REGISTRATION CERTIFICATE #4523228.1 -4- 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. xxxxxxxx WITNESS MY SIGNATURE AND SEAL this day of 7014. Comptroller of Public Accounts (Seal) of the State of Texas xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx FORM OF REGISTRAR'S AUTHENTICATION 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 i Authorized Signature #4523228.1 -rj- Date of Authentication: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx FORM OF ASSIGNMENT ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: The signature above must correspond to the name of the registered owner as shown on the face of this bond in every particular, without any alteration, enlargement or change whatsoever. NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. #4523228.1 -6- EXHIBIT D -2 OFFICER'S PRICING CERTIFICATE CITY OF BEAUMONT. TEXAS WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, TAXABLE SERIES 2014B THIS OFFICE,R'S PRICING CERTIFICATE is executed as of , 2014 by the City Manager, Beaumont Texas (the "City ") pursuant to the authorization contained in the Ordinance of the City Council of the City adopted on 2014 (the "Ordinance "), authorizing the issuance of the captioned series of bonds and delegating to the undersigned the authority to agree to and stipulate certain terms and provisions thereof, all of which are set forth herein. Capitalized terms used in this Officer's Pricing Certificate shall have the meanings assigned to them in the Ordinance. 1. Principal Amount, Numbers, Interest Rates and Maturities. The Bonds shall be issued in the total authorized principal amount of $ . The Bonds shall mature on September 1 in each of the years and in the amounts set forth in the following schedule: Number Year of Maturi Principal Amount Interest Rate R -1 _ R -2 _ R -3 R -4 - -- R -5 R -6 R -7 2. Redemption. Optional Redemption. The Bonds shall be not be subject to optional redemption prior to the Stated Maturity. 3. Purchase Price. The sale of the Bonds is authorized pursuant to the form of the Bond Purchase Contract approved in the Ordinance at the following price: PRINCIPAL AMOUNT $ Plus Net Original Issue Premium Less Underwriter's Discount PURCHASE PRICE $ 4. Form of Bond. Pursuant to Section 19 of the Ordinance, the Form of Bond as set forth in #4523228.1 -7- Exhibit A hereto is hereby approved and supercedes the Form of Bond set forth in the Ordinance. 5. The undersigned hereby finds, determines and declares, that in accordance with the requirements of the Ordinance, this Officer's Pricing Certificate complies with and satisfies the terms and provisions of the Ordinance in accordance with the delegation contained therein. Pursuant to Section 5 of the Ordinance, I hereby further find and determine that: (a) the price to be paid for each series of the Bonds shall not be less than 90% of the aggregate original principal amount of the current interest bonds plus accrued interest, if any, thereon from their date to their delivery, (b) none of the Bonds shall bear interest at a rate greater than 10% per annum or in excess of the maximum rate allowed by Chapter 1204, Texas Government Code, (c) the aggregate principal amount of each subseries of the Bonds shall not exceed the maximum amount authorized in Section 3, and the sum of the principal amount of each series, plus net premium generated, plus any available funds of the City, if any, shall equal an amount sufficient to provide for the redemption of the Refunded Bonds as identified on the Officer's Pricing Certificate and to pay costs of issuance of the Bonds, (d) each series of the Bonds to be issued, prior to delivery, must have been rated by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for long -term obligations, and (e) the refunding of the Refunded Bonds shall produce a net present value debt service savings. as shown by a calculation prepared by the Financial Advisors, and attached to the Officer's Pricing Certificate. Any finding by the Mayor, City Manager or the Chief Financial Officer relating to the sale and delivery of the Bonds shall have the same force and effect as a finding or determination made by the City Council. 7. Deposit of Proceeds. a. All amounts received on the Closing Date as accrued interest on the Bonds from the Bond Date to the Closing Date, shall be deposited to the Interest and Sinking Fund. b. The amount of $ ($ which is bond proceeds and $ which is the City's cash contribution) shall be deposited to the Escrow Fund and shall be applied as specified in the Escrow Agreement. C. The remaining balance shall be used to pay the costs of issuing the Bonds; provided that any amount representing a rounding or contingency amount shall be applied solely to pay costs of issuance of the Bonds. Amounts remaining after payment of costs of issuance shall be deposited to the Interest and Sinking Fund and applied to the payment of debt service on the Bonds. #4523228.1 -8- All capitalized terms used herein have the meanings set forth in the Ordinance unless otherwise defined herein. <EXECUTION PAGE FOLLOWS> #4523228.1 -9- EXECUTED as of this City Manager #4523228.1 -10- 2014. EXHIBIT A TO OFFICER'S PRICING CERTIFICATE FORM OF BONI) The form of the Bonds, including the form of the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, to accompany the Initial Bond, the form of Certificate of the Paying Agent/Registrar and the form of Assignment appearing on the Bonds, shall be substantially as follows: (b) Form of Bonds. REGISTERED No. 'R- United States of America State of Texas REGISTERED CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, TAXABLE SERIES 2014B `INTEREST RATE: MATURITY DATE: BOND DATE: CUSIP NUMBER: % September 1, , 2014 REGISTERED OWNER: PRINCIPAL A V10UNT: 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 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 Initial Bond s is f be cumbered T- 1. Omitted from Initial Elond. 3 The first paragraph of the Initial Bond shall read as follows: 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 amounts set forth in the following schedule: [Insert information regarding years of maturity, principal amounts and interest rates from Officer's Pricing Certificate], 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 1, 2014, 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 #4523228.1 B -1 2014, and semiannually thereafter on each March 1 and September 1, mailed to the registered o,vner as shown on the books of registration kept I y the Rcgistrar as of the 1 5th clay of the month next preceding each interest payment date_ 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 1, 2014, 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 September 1, 2014, and semiannually thereafter on each March I and September 1, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th day of the month next preceding each interest payment date. THIS BOND is one of a duly authorized issue of Bonds, aggregating $ 5(the "Bonds "), issued in accordance with the Constitution and the laws of the State of Texas. particularly Chapter 1207, Texas Government Code, as amended, for the purpose of providing funds for (1) the discharge and final payment of the Refunded Bonds and (ii) paying costs of issuance of the Bonds and costs of refunding the Refunded Bonds, pursuant to the Ordinance, which Ordinance is of record in the official minutes of the City Council. The Bonds are special obligations of the City payable solely from and secured by a lien on and pledge of the Net Revenues (as defined in the Ordinance) of the City's waterworks and sewer system (the "System "), such lien and pledge, however, being junior and subordinate to the lien on and pledge of such Net Revenues to the payment and security of the Prior Lien Bonds (as defined in the Ordinance). The Bonds do not constitute a legal or equitable pledge, charge, lien or encumbrance upon any property of the City or the System, except with respect to the Net Revenues. THE HOLDER OF THIS OBLIGATION IS NOT ENTITLED TO DEMAND PAYMENT OF THIS OBLIGATION OUT OF ANY MONEY RAISED BY TAXATION. Subject to satisfying the terms and conditions prescribed therefor, the City has reserved the right to issue additional revenue obligations payable from and equally and ratably secured by a parity lien on and pledge of the Net Revenues in the same manner and to the same extent as the Bonds. As provided in the Ordinance, no additional obligations will be authorized or issued on a parity with the outstanding Prior Lien Bonds; and the Bonds, together with additional obligations hereafter issued on a parity therewith, will become obligations equally secured by a first lien on and pledge of the Net Revenues of the System at such time as the principal of and interest on the Prior Lien Bonds have been fully paid or provision for the payment of said Prior Lien Bonds has been made in accordance with applicable law. The Series 2014I3 Bonds shall be not be subject to optional redemption prior to the Stated Maturity. The Bonds may be defeased as provided in the Ordinance authorizing the Bonds. To be completed in accordance with the Officer's Pricing Certificate. #4523228.1 B -2 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 unredee►ned 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 terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Bonds and will cause notice of any change of registrar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to exist and to be done precedent to or in the issuance and delivery of this Bond have been performed, exist and have been done in accordance with law; that the bonds of this series do not exceed any statutory limitation; and that provision has been made for the payment of principal and interest on this bond and all of the bonds of this series by the aforesaid lien on and pledge of the Net Revenues of the System. IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signature of the Mayor 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 #4523228.1 B -3 FORM OF REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certifi✓ 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. I.k'AyaM:1i`AYtY WITNESS MY SIGNATURE AND SEAL this day of , 2014. Comptroller of Public Accounts (Seal) of the State of Texas xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx FORM OF REGISTRAR'S AUTHENTICATION 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 C Authorized Signature #423228.1 B -4 Date ol'Authentication: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx FORM OF ASSIGNMENT ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: The signature above must correspond to the name of the registered owner as shown on the face of this bond in every particular, without any alteration, enlargement or change whatsoever. NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. #4523228 1 B -5