Loading...
HomeMy WebLinkAboutORD 2010-40 - 2010A General Obligation BondsTHE STATE OF TEXAS COUNTY OF CITY OF !' ! We, the undersigned officers and members of the City of Georgetown, Texas (the "City"), hereby certify as follows: 1. The City Council of the City convened in REGULAR MEETING ON THE 12TH DAY OF OCTOBER, 2010, at Council Chambers, 101 E. 7th Street, Georgetown, Texas (the "Meeting"), and the roll was called of the duly constituted officers and members of the City, to -wit: George Garver, Mayor Patty Eason, Councilmember District 1 Gabe Sansing, Councilmember District 2 Danny Meigs, Councilmember District 3 Bill Sattler, Mayor Pro Tem, Councilmember District 4 Pat Berryman, Councilmember District 5 Dale Ross, Mayor Pro Tem, Councilmember District 6 TooAmy GorZOLJCZ, , Councilmember District 7 and all of the persons were present, except the following absentees: rj [ c , , thus constituting a quorum. Whereupon, among other business, the following was transacted at the Meeting: a written . ! • ! • r31 • [4 81Wok 19Lem 9 1 n Sol ! J0I' .. was duly introduced for the consideration of the City Council_ It was then duly moved and seconded that the Ordinance be passed on first reading; and, after due discussion, said motion carrying with it the passage of the Ordinance, prevailed and carried by the following vote: AYES: NOES: 2. A true, full and correct copy of the Ordinance passed at the Meeting described in the above and foregoing paragraphs is attached to and follows this Certificate; that the Ordinance has been duly recorded in the City Council's minutes of the Meeting; that the above and foregoing paragraphs are a true, full and correct excerpt from the City Council's minutes of the Meeting pertaining to the passage of the Ordinance; that the persons named in the above and foregoing paragraphs are the duly chosen, qualified and acting officers and members of the City Council as indicated therein; that each of the officers and members of the City Council was duly and sufficiently GTO WMGO12010A: OrdCert notified officially and personally, in advance, of the time, place and purpose of the Meeting, and that the Ordinance would be introduced and considered for passage at the Meeting, and each of the officers and members consented, in advance, to the holding of the Meetings for such purpose, and that the Meeting was open to the public and public notice of the time, place and purpose of the meeting was given, all as required by Chapter 551, Texas Government Code. 3. The Mayor of the City has approved and hereby approves the Ordinance; that the Mayor and the City Secretary of the City have duly signed the Ordinance; and that the Mayor and the City Secretary of the City hereby declare that their signing of this Certificate shall constitute the signing of the attached and following copy of the Ordinance for all purposes. GTOWN\GO\20I Ok OrdCer[ SIGNED AND SEALED the 12th day of October, 2010. [CITY SEAL] Mayor i''11 i• 1 is i• i , •' i i i i i 1 • � j. 1 i� , •1eLmsmalMILAMINIM ii 1 r,9, WIN i • t i3 1110110' i Paye Preamble..................................................................I Section 1. RECITALS, AMOUNT AND PURPOSE OF THE BONDS AND VISION STATEMENT ........................................... 2 Section 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS AND MATURITIES OF BONDS ........................................ 3 Section 3. INTEREST....................................................... 3 Section 4. CHARACTERISTICS OF THE BONDS ................................. 4 Section 5. FORM OF BOND .................................................. 7 Section 6. TAX LEVY ...................................................... 15 Section 7. DEFEASANCE OF BONDS ......................................... 16 Section 8. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS ..... 17 Section 9. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S OPINION; CUSIP NUMBERS AND CONTINGENT INSURANCE PROVISION, IF OBTAINED ............. 18 Section 10. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE BONDS..................................................19 Section 11. SALE OF BONDS ................................................ 22 Section 12. APPROVAL OF OFFICIAL STATEMENT ............................ 22 Section 13. APPROVAL OF A PAYING AGENT/REGISTRAR AGREEMENT ......... 22 Section 14. CONTINUING DISCLOSURE UNDERTAKING ........................ 22 Section 15. AMENDMENT OF ORDINANCE ................................... 25 Section 16. DEFAULT AND REMEDIES ....................................... 26 Section 17. NO RECOURSE AGAINST CITY OFFICIALS ......................... 28 I Section 18. ADDITIONAL BOND INSURANCE PROVISIONS ...................... 28 Section 19. FURTHER ACTIONS ............................................. 28 Section 20. INTERPRETATIONS ............................................. 28 Section 21. INCONSISTENT PROVISIONS ..................................... 28 Section 22. INTERESTED PARTIES .......................................... 28 Section 23. SEVERABILITY ................................................. 29 Section 24. PAYMENT OF ATTORNEY GENERAL FEE .......................... 29 EXHIBIT A PAYING AGENT/REGISTRAR AGREEMENT ....................... A-1 EXHIBIT B DESCRIPTION OF ANNUAL FINANCIAL INFORMATION ............ B-1 ii THE OF TEXAS § COUNTIES OF WILLIAMSON AND TRAVIS § CITY OF i' ! WHEREAS, at an election held within the City of Georgetown, Texas (the "City") on November 4, 2008 the voters of the City authorized the City Council of the City to issue in one or more series the bonds set forth in the propositions set forth below: Proposition No. 1 Shall the City Council of the City of Georgetown, Texas, be authorized to issue the bonds of the City, in one or more series or issues, in the aggregate principal amount of $46,000,000 with the bonds of each such series or issues, respectively, to mature serially within not to exceed forty years from their date, and to be sold at such prices and bear interest at such rates, as shall be determined within the discretion of the City Council, in accordance with law at the time of issuance, for the purpose of constructing, improving, extending, expanding, upgrading and/or developing streets, roads, bridges and intersections, to wit: FM 971, Southeast Arterial 1, Northwest Inner Loop/DB Wood Road, FM 1460 and Berry Creek Drive and a routing study for SH 29, and related utility relocation, sidewalks, traffic safety and operational improvements, purchase of any necessary rights-of-way, drainage and other related costs; and shall said City Council be authorized to levy and cause to be assessed and collected annual ad valorem taxes on all taxable property in the City in an amount sufficient to pay the annual interest on said bonds and provide a sinking fund to pay the bonds at maturity? Proposition No. 2 Shall the City Council of the City of Georgetown, Texas, be authorized to issue the bonds of the City, in one or more series or issues, in the aggregate principal amount of $35,500,000 with the bonds of each such series or issues, respectively, to mature serially within not to exceed forty years from their date, and to be sold at such prices and bear interest at such rates, as shall be determined within the discretion of the City Council, in accordance with law at the time of issuance, for the purpose of GTO W N\GO\ I OA: Ordinance constructing, acquiring, improving, renovating, developing and/or equipping, land, buildings and facilities for park and recreational purposes, to wit: acquisition of parkland and open space/preserve land, constructing pedestrian and bike trail improvements, improvements to Garey Park, renovations to San Gabriel Park including an amphitheater and related infrastructure and other costs; and shall said City Council be authorized to levy and cause to be assessed and collected annual ad valorem taxes on all taxable property in the City in an amount sufficient to pay the annual interest on said bonds and provide a sinking fund to pay the bonds at maturity? WHEREAS, the City Council has previously issued its General Obligation Bonds, Series 2009 in the aggregate principal amount of $1,175,000 to construct, improve, extend, expand, upgrade and/or develop City streets, roads, bridges and intersections and paying the costs associated with the issuance of the Bonds; and WHEREAS, the City Council has previously issued its General Obligation Bonds, Series 2010 in the aggregate principal amount of $1,370,000 to construct, improve, extend, expand, upgrade and/or develop City streets, roads, bridges and intersections and paying the costs associated with the issuance of the Bonds; and WHEREAS, the City Council deems it to be in the best interest of the City to issue an additional $9,430,000 of the Proposition No. 1 authorization, reserving the right to issue the remaining $34,025,000 of bonds authorized but unissued from Proposition No. 1; and WHEREAS, the City Council deems it to be in the best interest of the City to issue $2,500,000 of the Proposition No. 2 authorization, reserving the right to issue the remaining $33,000,000 of bonds authorized but unissued from Proposition No. 2, and WHEREAS, it is hereby officially found and determined that the meeting at which this Ordinance was passed was open to the public, and public notice of the time, place and purpose of the meeting was given, all as required by Chapter 551, Texas Government Code. THEREFORE,ORDAINED BY THE CITY COUNCILOF GEORGETOWN, Section 1. RECITALS, AMOUNT AND PURPOSE OF THE BONDS AND VISION STATEMENT. (a) Recitals, Amount and Purpose. The recitals set forth in the preamble hereof are incorporated herein and shall have the same force and effect as if set forth in this section. The bond or bonds of the City are hereby authorized to be issued pursuant to Chapter 1331, Texas Government Code, as amended and delivered in the aggregate principal amount of $11,930,000 which is comprised of (A) $9,430,000 to construct, improve, extend, expand, upgrade and/or develop City streets, roads, bridges and intersections in accordance with Proposition No. 1, (B) $2,500,000 to construct, acquire, improve, renovate, develop and/or equip, land, buildings and GT0WN\G0\10A: Ordinance 2 facilities for park and recreational purposes in accordance with Proposition No. 2 and (C) pay the costs associated with the issuance of the Bonds as further set forth in the preamble to this Ordinance. (b) Vision Statement. The City Council hereby finds that the enactment of this Ordinance and issuance of the Bonds complies with the Vision Statement of the City. Section 2. DESIGNATION DATE DENOMINATIONS NUMBERS AND MATURITIES OF BONDS. Each bond issued pursuant to this Ordinance shall be designated: "CITY OF GEORGETOWN, TEXAS GENERAL, OBLIGATION BONDS, SERIES 2010AP1 and initially there shall be issued, sold, and delivered hereunder fully registered bonds, without interest coupons, dated October 1, 2010, in the respective denominations and principal amounts hereinafter stated, numbered consecutively from R-1 upward (except the Initial Bond submitted to the Attorney General of the State of Texas which will be numbered T-1), payable to the respective initial registered owners thereof (as designated in Section 11 hereof), or to the registered assignee or assignees of the Bonds or any portion or portions thereof (in each case, the "Registered Owner"), and the Bonds shall mature and be payable serially on August 15 in each of the years and in the principal amounts, respectively, as set forth in the following schedule: YEARS AMOUNTS YEARS AMOUNTS 2012 $ 1157000 2022 $ 655,000 2013 480,000 2023 680,000 2014 500,000 2024 7051000 2015 5157000 2025 7307000 2016 535,000 2026 755,000 2017 5557000 2027 780,000 2018 5757000 2028 810,000 2019 595,000 2029 835,000 2020 6151000 2030 860,000 2021 635,000 The term "Bonds" as used in this Ordinance shall mean and include collectively the bonds initially issued and delivered pursuant to this Ordinance and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term "Bond" shall mean any of the Bonds. Section 3. INTEREST. The Bonds scheduled to mature during the years, respectively, set forth below shall bear interest from the dates specified in the FORM OF BOND set forth in this Ordinance to their respective dates of maturity at the following rates per annum: GTOWN\GOUDA: Ordinance 3 YEARS RATES YEARS RATES 2012 2.000% 2022 3.000% 2013 2.000 2023 3.000 2014 2.000 2024 3.125 2015 2.000 2025 3.375 2016 2.000 2026 3.500 2017 2.250 2027 3.500 2018 2.250 2028 3.500 2019 2.500 2029 3.500 2020 2.500 2030 3.500 2021 3.000 Interest shall be payable in the manner provided and on the dates stated in the FORM OF BOND set forth in this Ordinance. Section 4. CHARACTERISTICS OF THE BONDS. (a) Registration, Transfer, Conversion and Exchange, Authentication. The City shall keep or cause to be kept at The Bank of New York Mellon Trust Company, National Association in Dallas, Texas (the "Paying Agent/Registrar") books or records for the registration of the transfer, conversion and exchange of the Bonds (the "Registration Books"), and the City hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such registrations of transfers, conversions and exchanges under such reasonable regulations as the City and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such registrations, transfers, conversions and exchanges as herein provided within three days of presentation in due and proper form. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the Registered Owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each Registered Owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. The City shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. The Paying Agent/Registrar shall make a copy of the Registration Books available in the State of Texas. The City shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, conversion, exchange and delivery of a substitute Bond or Bonds. Registration of assignments, transfers, conversions and exchanges of Bonds shall be made in the manner provided and with the effect stated in the FORM OF BOND set forth in this Ordinance. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. Except as provided in Section 4(c) hereof, an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the Bond, and no such Bond shall be deemed to be issued or outstanding unless such Bond is so executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered for conversion and exchange. No additional orders, orders, or resolutions need be passed or adopted by the govern- GTOWN\GO\I OA: Ordinance 4 ing body of the City or any other body or person so as to accomplish the foregoing conversion and exchange of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and the Bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength. Pursuant to Chapter 1206, Texas Government Code, as amended, and particularly Subchapter B thereof, the duty of conversion and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the Bond, the converted and exchanged Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which initially were issued and delivered pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. (b) Payment of Bonds and Interest. The City hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the City and the Paying Agent/Registrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date, and for thirty (3 0) days thereaf- ter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first-class postage prepaid, to the address of each Registered Owner appearing on the Registration Books at the close of business on the last business day next preceding the date of mailing of such notice. (c) In General. The Bonds (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the Registered Owners thereof, (ii) may be transferred and assigned, (iii) may be converted and exchanged for other Bonds, (iv) shall have the characteristics, (v) shall be signed, sealed, executed and authenticated, (vi) the principal of and interest on the Bonds shall be payable, and (vii) shall be administered and the Paying Agent/Registrar and the City shall have certain duties and responsibilities with respect to the Bonds, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF BOND set forth in this Ordinance. The Bonds initially issued and delivered pursuant to this Ordinance are not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in conversion of and exchange for any Bond or Bonds issued under this Ordinance the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF BOND. (d) Substitute Paving_ Agent/Registrar. The City covenants with the Registered Owners of the Bonds that at all times while the Bonds are outstanding the City will provide a competent and legally qualified bank, trust company, financial institution, or other agency to act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity. The City reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 30 days written notice to the Paying Agent/Registrar, to GTOWN\GOUDA: Ordinance 5 be effective at such time which will not disrupt or delay payment on the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the City covenants that promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the City. Upon any change in the Paying Agent/Registrar, the City promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each Registered Owner of the Bonds, by United States mail, first-class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. (e) Book -Entry -Only System. The Bonds issued in exchange for the Bonds initially issued as provided in Section 4(h) shall be issued in the form of a separate single fully registered Bond for each of the maturities thereof registered in the name of Cede & Co., as nominee of The Depository Trust Company of New York ("DTC") and except as provided in subsection (f) hereof, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the City and the Paying Agent/Registrar shall have no responsibility or obligation to any securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among DTC participants (the "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 Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a Registered Owner, as shown on the Registration Books, of any notice with respect to the Bonds, or (iii) the payment to any DTC Participant or any person, other than a Registered Owner, as shown on the Registration Books of any amount with respect to principal of or interest on the Bonds. Notwithstanding any other provision of this Ordinance to the contrary, but to the extent permitted by law, the City and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Registration Books as the absolute owner of such Bond for the purpose of payment of principal of and interest, with respect to such Bond, for the purposes of registering transfers with respect to such Bond, and for all other purposes of registering transfers with respect to such Bonds, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on the Bonds only to or upon the order of the respective Registered Owners, as shown in the Registration Books as provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than a Registered Owner, as shown in the GT0RN\G0\10A: Ordinance 6 Registration Books, shall receive a Bond evidencing the obligation of the City to make payments of principal, and interest pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Ordinance with respect to interest checks being mailed to the registered owner at the close of business on the Record Date the word "Cede & Co." in this Ordinance shall refer to such new nominee of DTC. (f) Successor Securities Depository; Transfer Outside Book -Entry -Only System. In the event that the City determines to discontinue the book -entry system through DTC or a successor or DTC determines to discontinue providing its services with respect to the Bond, the City shall either (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the Registration Books 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 the Registered Owner transferring or exchanging Bond shall designate, in accordance with the provisions of this Ordinance. (g) Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Letter of Representations of the City to DTC. (h) DTC Blanket Letter of Representations. The City confirms execution of a Blanket Issuer Letter of Representations with DTC establishing the Book -Entry -Only System which will be utilized with respect to the Bonds. (i) Cancellation of Initial Bond. On the closing date, one Initial Bond representing the entire principal amount of the Bonds, payable in stated installments to the order of the purchaser of the Bonds or its designee set forth in Section 11 of this Ordinance, executed by manual or facsimile signature of the Mayor or Mayor Pro -tem and City Secretary, approved by the Attorney General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the State of Texas, will be delivered to such purchaser set forth in Section 11 of this Ordinance or its designee. Upon payment for the Initial Bond, the Paying Agent/Registrar shall cancel the Initial Bond and deliver to DTC on behalf of such purchaser one registered definitive Bond for each year of maturity of the Bonds, in the aggregate principal amount of all the Bonds for such maturity. Section 5. FORM OF BOAT. The form of the Bond, including the form of Paying Agent/Registrar's Authentication Certificate, the form of Assignment, the form of initial Bond and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to GT0WN\G0\10A: Ordinance 7 be attached to the Bonds initially issued and delivered pursuant to this Ordinance, shall be, respec- tively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance including any reproduction of an opinion of counsel and information regarding the issuance of any bond insurance policy. NO. R2 UNITED STATES OF AMERICA PRINCIPAL STATE OF TEXAS AMOUNT WILLIAlMSON COUNT' $ 11121131 .tLl; r - L" 010101 'r !: October 1, 2010 ON THE MATURITY DATE specified above, GEORGETOWN, TEXAS (the "city 1% being a political subdivision of the State of Texas, hereby promises to pay to the Registered Owner set forth above, or registered assigns (hereinafter called the "Registered Owner") the principal amount set forth above, and to pay interest thereon from October 1, 2010, on February 15, 2012 and semiannually thereafter on each February 15 and August 15 to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above calculated on the basis of a 360 -day year of twelve 30 -day months; except that if this Bond is required to be authenticated and the date of its authentication is later than the first Record Date (hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date; provided, however, that if on the date of authentication hereofthe interest on the Bond or Bonds, if any, for which this Bond is being exchanged or converted from is due but has not been paid, then this Bond shall bear interest from the date to which such interest has been paid in full. Notwithstanding the foregoing, during any period in which ownership of the Bonds is determined only by a book entry at a securities depository for the Bonds, any payment to the securities depository, or its nominee or registered assigns, shall be made in accordance with existing arrangements between the City and the securities depository. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Bond shall GT0WN\G0\10A: Ordinance g be paid to the Registered Owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its redemption prior to maturity, at The Bank of New York Mellon Trust Company, N.A., (the "Paying Agent/Registrar") at their office for payment in Dallas, Texas (the "Designated Payment/Transfer Office"). The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the Registered Owner hereof on each interest payment date by check or draft, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the City required by the ordinance authorizing the issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check or draft shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such interest payment date, to the Registered Owner hereof, at its address as it appeared on the close of business on the last day of the month next preceding each such date (the "Record Date") on the registration books kept by the Paying Agent/Registrar (the "Registration Books"). In addition, interest may be paid by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Registered Owner. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first-class postage prepaid, to the address of each owner of a Bond appearing on the Registration Books at the close of business on the last business day next preceding the date of mailing of such notice. DURING ANY PERIOD in which ownership of the Bonds is determined only by a book entry at a securities depository for the Bonds, if fewer than all of the Bonds of the same maturity and bearing the same interest rate are to be redeemed, the particular Bonds of such maturity and bearing such interest rate shall be selected in accordance with the arrangements between the City and the securities depository. ANY ACCRUED INTEREST due at maturity as provided herein shall be paid to the Registered Owner upon presentation and surrender of this Bond for payment at the Designated Payment/Transfer Office of the Paying Agent/Registrar. The City covenants with the Registered Owner of this Bond that on or before each payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the principal corporate trust office of the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. GTOWN\GO\1 OA: Ordinance 9 THIS BOND is one of a series of Bonds dated October 1. 2010, authorized in accordance WIT ! • • ! '• • •. • ! '' 1 1t1 • !•1• �•!�! ! !, l ; ! ! i TO THIS ORDINANCE. ON AUGUST 15, 2019, or on any date thereafter, the Bonds of this Series maturing on and after August 15, 2020 may be redeemed prior to their scheduled maturities, at the option of the City, with funds derived from any available and lawful source, at par plus accrued interest to the date fixed for redemption as a whole, or from time to time in part, and, if in part, the particular maturities to be redeemed shall be selected and designated by the City and if less than all of a maturity is to be redeemed, the Paying Agent/Registrar shall determine by lot the Bonds, or a portion thereof, within such maturity to be redeemed (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000). NO LESS THAN 30 days prior to the date fixed for any such redemption, the City shall cause the Paying Agent/Registrar to send notice by United States mail, first-class postage prepaid to the Registered Owner of each Bond to be redeemed at its address as it appeared on the Registration Books of the Paying Agent/Registrar at the close of business on the 45th day prior to the redemption date and to major securities depositories, national bond rating agencies and bond information services, provided, however, that the failure to send, mail or receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Bonds. By the date fixed for any such redemption due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof which are to be so redeemed. If due provision for such payment is made, all as provided above, the Bonds or portions thereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the Registered Owner to receive the redemption price from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of any Bonds shall be redeemed a substitute Bonds or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request of the Registered Owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the Registered Owner upon the surrender thereof for cancellation, at the expense of the City, all as provided in the Bond Ordinance. GTOWN\GO\I OA: Ordinance 10 WITH RESPECT TO any optional redemption of the Bonds, unless certain prerequisites to such redemption required by the Bond Ordinance have been met and 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 shall state that said redemption may, at the option of the City, be conditional upon the satisfaction of such prerequisites and receipt of such moneys by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon any prerequisite set forth in such notice of redemption. If a conditional notice of redemption is given and such prerequisites to the redemption and 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. ALL BONDS OF THIS SERIES are issuable solely as fully registered Bonds, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Bond Ordinance, this Bond, or any unredeemed portion hereof, may, at the request of the Registered Owner or the assignee or assignees hereof, be assigned, transferred, converted into and exchanged for a like aggregate principal amount of fully registered Bonds, without interest coupons, payable to the appropriate Registered Owner, assignee or assignees, as the case may be, having the same denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate Registered Owner, assignee or assignees, as the case may be, upon surrender ofthis Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be registered. The form of Assignment printed or endorsed on this Bond may be executed by the Registered Owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any portion or portions hereof from time to time by the Registered Owner. The Paying Agent/Registrar's reasonable standard or customary fees and charges for assigning, transferring, converting and exchanging any Bond or portion thereof will be paid by the City. In any circumstance, any taxes or governmental charges required to be paid with respect thereto shall be paid by the one requesting such assignment, transfer, conversion or exchange, as a condition precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be required to make any such transfer, conversion, or exchange during the period commencing on the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date. WHENEVER the beneficial ownership of this Bond is determined by a book entry at a securities depository for the Bonds, the foregoing requirements of holding, delivering or transferring this Bond shall be modified to require the appropriate person or entity to meet the requirements of the securities depository as to registering or transferring the book entry to produce the same effect. GTOWN\GO\tOA: Ordinance 11 IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the City, resigns, or otherwise ceases to act as such, the City has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and cause written notice thereof to be mailed to the Registered Owners of the Bonds. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law, and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due, and as such principal matures, have been levied and ordered to be levied against all taxable property in the City, and have been pledged for such payment, within the limit prescribed by law. BY BECOMING the Registered Owner of this Bond, the Registered Owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the City, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between each Registered Owner hereof and the City. IN WITNESS WHEREOF, the City has caused this Bond to be signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Secretary and has caused the official seal of the City to be duly impressed, or placed in facsimile, on this Bond. [CITY SEAL] PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Bond is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in the text of this Bond; and that this Bond has been issued in conversion or replacement of, or in exchange for, a Bond, Bonds, or a portion of a Bond or Bonds of a Series which GT0V✓N\G0\10A:Ordinance 12 originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated THE BALK OF NEW YORK MELLON NATIONAL!; . ! Paying Agent/Registrar By Authorized Representative For value received, the undersigned hereby sells, assigns and transfers unto Please insert Social Security or Taxpayer Identification Number of Transferee (Please print or typewrite name and address, including zip code, of Transferee) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints , attorney, to register the transfer ofthe within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: GT0WN\G0\10A: Ordinance 13 NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. NOTICE: The signature above must correspond with the name of the Registered Owner as it appears upon the front of this Bond in every particular, with- out alteration or enlargement or any change whatsoever. ! . ! ! !, Intl INampik I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this Comptroller of Public Accounts of the State of Texas The Initial Bond shall be in the form set forth in this Section, except that: A. immediately under the name of the Bond, the headings "INTEREST RATE" and "MATURITY DATE" shall both be completed with the words "As shown below" and "CUSIP NO." shall be deleted. B. the first paragraph shall be deleted and the following will be inserted: "ON THE MATURITY DATE SPECIFIED BELOW, the City of Georgetown; Texas (the "City"), being a political subdivision, hereby promises to pay to the Registered Owner specified above, or registered assigns (hereinafter called the "Registered Owner"), on August 15 in each of the years, in the principal installments and bearing interest at the per annum rates set forth in the following schedule: GTO4Wi \GO\I OA: Ordinance 14 Years Amounts Rates (Information from Sections 2 and 3 to be inserted) The City promises to pay interest on the unpaid principal amount hereof (calculated on the basis of a 360 -day year of twelve 30 -day months) from October 1, 2010 at the respective Interest Rate per annum specified above. Interest is payable on February 15, 2012 and semiannually on each February 15 and August 15 thereafter to the date of payment of the principal installment specified above; except, that if this Bond is required to be authenticated and the date of its authentication is later than the first Record Date (hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date; provided, however, that if on the date of authentication hereof the interest on the Bond or Bonds, if any, for which this Bond is being exchanged is due but has not been paid, then this Bond shall bear interest from the date to which such interest has been paid in full." C. The initial Bond shall be numbered "T -l." Section 6. TAX LEVY. (a) Payment of the Bonds. A special Interest and Sinking Fund (the "Interest and Sinking Fund") is hereby created solely for the benefit of the Bonds, and the Interest and Sinking Fund shall be established and maintained by the City at an official depository bank of the City. The Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the City, and shall be used only for paying the interest on and principal of the Bonds. All ad valorem taxes levied and collected for and on account of the Bonds shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year while any of the Bonds or interest thereon are outstanding and unpaid, the governing body of the City shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to pay the interest on the Bonds as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of the Bonds as such principal matures (but never less than 2% of the original principal amount of the Bonds as a sinking fund each year); and the tax shall be based on the latest approved tax rolls of the City, with full allowance being made for tax delinquencies and the cost of tax collection. The rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in the City for each year while any of the Bonds or interest thereon are outstanding and unpaid; and the tax shall be assessed and collected each such year and deposited to the credit of the Interest and Sinking Fund. The ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Bonds, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed bylaw. Accrued interest on the Bonds shall be deposited in the Interest and Sinking Fund. (b) Perfection. Chapter 1208, Texas Government Code, applies to the issuance of the Bonds and the pledge of the ad valorem taxes granted by the City under this Section, and is therefore valid, effective, and perfected. If Texas law is amended at any time while the Bonds are outstanding and GTOWN\GO\1OA: Ordinance 15 unpaid such that the pledge of the ad valorem taxes granted by the City under this Section is to be subject to the filing requirements of Chapter 9, Business & Commerce Code, then in order to preserve to the Owners of the Bonds the perfection of the security interest in said pledge, the City agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Business & Commerce Code and enable a filing to perfect the security interest in said pledge to occur. Section 7. DEFEASANCE OF BONDS (a) Any Bond and the interest thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Bond") within the meaning of this Ordinance, except to the extent provided in subsections (c) and (e) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date or dates (whether such due date or dates be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption or the establishment of irrevokable provisions for the giving of such notice) or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar or an eligible trust company or commercial bank for such payment (1) lawful money of the United States of America sufficient to make such payment, (2) Defeasance Securities, certified by an independent public accounting firm of national reputation to mature as to principal and interest in such amounts and at such times as will ensure the availability, without reinvestment, of sufficient money to provide for such payment and when proper arrangements have been made by the City with the Paying Agent/Registrar or an eligible trust company or commercial bank for the payment of its services until all Defeased Bonds shall have become due and payable or (3) any combination of (1) and (2). At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Defeasance Securities. (b) The deposit under clause (ii) of subsection (a) shall be deemed a payment of a Bond as aforesaid when proper notice of redemption of such Bonds shall have been given or upon the establishment of irrevokable provisions for the giving of such notice, in accordance with this Ordinance. Any money so deposited with the Paying Agent/Registrar or an eligible trust company or commercial bank as provided in this Section may at the discretion of the City also be invested in Defeasance Securities, maturing in the amounts and at the times as hereinbefore set forth, and all income from all Defeasance Securities in possession of the Paying Agent/Registrar or an eligible trust company or commercial bank pursuant to this Section which is not required for the payment of such Bond and premium, if any, and interest thereon with respect to which such money has been so deposited, shall be remitted to the City. (c) Notwithstanding any provision of any other Section of this Ordinance which may be contrary to the provisions of this Section, all money or Defeasance Securities set aside and held in trust pursuant to the provisions of this Section for the payment of principal of the Bonds and premium, if any, and interest thereon, shall be applied to and used solely for the payment of the particular Bonds and premium, if any, and interest thereon, with respect to which such money or Defeasance Securities have been so set aside in trust. Until all Defeased Bonds shall have become GTOWN\GO\10A: Ordinance 16 due and payable, the Paying Agent/Registrar shall perform the services ofPaying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the City shall make proper arrangements to provide and pay for such services as required by this Ordinance. (d) Notwithstanding anything elsewhere in this Ordinance, if money or Defeasance Securities have been deposited or set aside with the Paying Agent/Registrar or an eligible trust company or commercial bank pursuant to this Section for the payment of Bonds and such Bonds shall not have in fact been actually paid in full, no amendment of the provisions ofthis Section shall be made without the consent of the registered owner of each Bond affected thereby. (e) Notwithstanding the provisions of subsection (a) immediately above, to the extent that, upon the defeasance of any Defeased Bond to be paid at its maturity, the City retains the right under Texas law to later call that Defeased Bond for redemption in accordance with the provisions of this Ordinance, the City may call such Defeased Bond for redemption upon complying with the provisions of Texas law and upon the satisfaction of the provisions of subsection (a) immediately above with respect to such Defeased Bond as though it was being defeased at the time of the exercise of the option to redeem the Defeased Bond and the effect of the redemption is taken into account in determining the sufficiency of the provisions made for the payment of the Defeased Bond. As used herein, "Defeasance Securities" means (i) Federal Securities, (ii) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the City adopts or approves proceedings authorizing the issuance of refunding bonds or otherwise provide for the funding of an escrow to effect the defeasance of the Bonds are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent, (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the City adopts or approves proceedings authorizing the issuance of refunding bonds or otherwise provide for the funding of an escrow to effect the defeasance of the Bonds, are rated as to investment quality by a nationally recognized investment rating firm no less than "AAA" or its equivalent and (iv) any other then authorized securities or obligations under applicable State law that may be used to defease obligations such as the Bonds. "Federal Securities" as used herein means direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America (including Interest Strips of the Resolution Funding Corporation). (a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new Bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. GTOWN\GO\10A: Ordinance 17 (b) Application for Replacement Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the Registered Owner thereof to the Paying Agent/Registrar, In every case of loss, theft, or destruction of a Bond, the Registered Owner applying for a replacement bond shall furnish to the City and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the Registered Owner shall furnish to the City and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the Registered Owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the City may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement Bond, the Paying Agent/Registrar shall charge the Registered Owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement Bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the City whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance. (e) Authority for Issuing Replacement Bonds. In accordance with Subchapter B of Texas Government Code, Chapter 1206, this Section of this Ordinance shall constitute authority for the issuance of any such replacement Bond without necessity of further action by the governing body of the City or any other body or person, and the duty of the replacement of such Bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 4(a) of this Ordinance for Bonds issued in conversion and exchange for other Bonds. Section 9. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S OPINION• CUSIP NUMBERS AND CONTINGENT INSURANCE PROVISION, IF OBTAINED. The Mayor of the City is hereby authorized to have control of the Bonds initially issued and delivered hereunder and all necessary records and proceedings pertaining to the Bonds pending their delivery and their investigation, examination, and approval by the Attorney General of the State of Texas, and their registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Bonds the Comptroller of Public Accounts (or a deputy designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such Bonds, and the seal of the Comptroller shall be impressed, or placed in facsimile, on such Certificate. The approving legal opinion of the City's Bond Counsel and the GT0WN\G0\10A: Ordinance 18 assigned CUSIP numbers may, at the option of the City, be printed on the Bonds issued and delivered under this Ordinance, but neither shall have any legal effect, and shall be solely for the convenience and information of the Registered Owners of the Bonds. In addition, if bond insurance or other credit enhancement is obtained, the Bonds may bear an appropriate legend. Section 10. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE BONUS. (a) Covenants. The City covenants to take any action necessary to assure, or refrain from any action which would adversely affect, the treatment of the Bonds as obligations described in section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the City covenants as follows: (1) to take any action to assure that no more than 10 percent of the proceeds of the Bonds or the Refunded Obligations or the projects financed or refinanced therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds of the Bonds or the Refunded Obligations or the projects financed or refinanced therewith are so used, such amounts, whether or not received by the City, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code; (2) to take any action to assure that in the event that the "private business use" described in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the Refunded Obligations or the projects financed or refinanced therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which is "related" and not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental use; (3) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (4) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (5) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (6) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) ofthe Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with -- GTOWNT \GO\IOA: Ordinance 19 (A) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less or, in the case of a refunding bond, for a period of 90 days, (B) amounts invested in a bona fide debt service fund, within the meaning of section 1.148-1(b) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Bonds; (7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(4) of the Code (relating to advance refundings); and (8) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code; and (9) to assure that the proceeds of the Bonds will be used solely for new money projects (b) Rebate Fund. In order to facilitate compliance with the above covenant (8), a "Rebate Fund" is hereby established by the City for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any other person, including without limitation the bondholders. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (c) Proceeds. The City understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the City that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the City will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the City agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of such intention, the City hereby authorizes and directs the City Manager or Chief Financial Officer to execute any GTOWN\GOU OA: Ordinance 20 documents, certificates or reports required by the Code and to make such elections, on behalf of the City, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. This Ordinance is intended to satisfy the official intent requirements set forth in Section 1.150-2 of the Treasury Regulations. (d) Allocation Of, and Limitation On, Expenditures for the Project. The City covenants to account for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section 1 of this Ordinance (the "Project") on its books and records in accordance with the requirements of the Internal Revenue Code. The City recognizes that in order for the proceeds to be considered used for the reimbursement of costs, the proceeds must be allocated to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed; but in no event later than three years after the date on which the original expenditure is paid. The foregoing notwithstanding, the City recognizes that in order for proceeds to be expended under the Internal Revenue Code, the sale proceeds or investment earnings must be expended no more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds are retired. The City agrees to obtain the advice of nationally -recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Bonds. For purposes hereof, the City shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (e). Disposition of Project. The City covenants that the property constituting the projects financed or refinanced with the proceeds of the Bonds will not be sold or otherwise disposed in a transaction resulting in the receipt by the City of cash or other compensation, unless the City obtains an opinion of nationally -recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the City shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (f) Designation as Qualified Tax -Exempt Obligations. The City hereby designates the Bonds as "qualified tax-exempt bonds" as defined in section 265(b)(3) of the Code. In furtherance of such designation, the City represents, covenants and warrants the following: (a) that during the calendar year in which the Bonds are issued, the City (including any subordinate entities) has not designated nor will designate bonds, which when aggregated with the Bonds, will result in more than $10,000,000 ($30,000,000 for taxable years beginning after December 31, 2008 and ending prior to January 1, 2011) of "qualified tax-exempt bonds" being issued; (b) that the City reasonably anticipates that the amount of tax-exempt obligations issued, during the calendar year in which the Bonds are issued, by the City (or any subordinate entities) will not exceed $10,000,000 ($30,000,000 for taxable years beginning after December 31, 2008 and ending prior to January 1, 2011); and (c) that the City will take such action or refrain from such action as necessary, and as more particularly set forth in this Section, in order that the Bonds will not be considered "private activity bonds" within the meaning of section 141 of the Code. GTOWN\GO\I OA: Ordinance 21 Section 11. SALE OF BONDS. The Bonds are hereby awarded and sold to the bidder whose bid produced the lowest true interest cost, pursuant to the taking of public bids therefor, on this date, and shall be delivered to Raymond James & Associates, Inc. (the "Purchaser") at a price of $11,956,999.68 (representing the par amount of the Bonds of $11,930,000 plus a premium of $1,068.90 and plus accrued interest of $25,930.78). The Bonds shall initially be registered in the name of Cede & Co. Section 12. APPROVAL OF OFFICIAL STATEMENT. The City hereby approves the form and content of the Notice of Sale and Preliminary Official Statement and Official Statement relating to the Bonds and any addenda, supplement or amendment thereto, and approves the distribution of such Official Statement in the reoffering of the Bonds by the Purchaser in final form, with such changes therein or additions thereto as the officer executing the same may deem advisable, such determination to be conclusively evidenced by his execution thereof. The distribution and use of the Preliminary Official Statement dated September 27, 2010 prior to the date hereof is confirmed, approved and ratified. The City Council hereby finds and determines that the Preliminary Official Statement and final Official Statement were "deemed final" (as that term is defined in 17 CFR Section 240.15c(2)-12) as of their respective dates. Section 13. APPROVAL OF PAYING AGENT/REGISTRARAGREEMENT.Attached hereto as Exhibit "A" is a substantially final form of Paying Agent/Registrar Agreement. The Mayor or Mayor Pro -tem is hereby authorized to amend, complete or modify such agreement as necessary and are further authorized to execute such agreement and the City Secretary is hereby authorized to attest such agreement. Section 14. CONTINUING DISCLOSURE UNDERTAKING. (a)Annual Reports. The City shall provide annually to the MSRB, in an electronic format as prescribed by the MSRB, within six months after the end of any fiscal year, financial information and operating data with respect to the City of the general type included in the final Official Statement authorized by Section 13 of this Ordinance, being the information described in Exhibit "B" hereto. Any financial statements to be so provided shall be (1) prepared in accordance with the accounting principles described in Exhibit "B" hereto, or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation, and (2) audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the City shall provide unaudited financial statements within such period, and audited financial statements for the applicable fiscal year to the MSRB, when and if the audit report on such statements become 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 GTOWN\GO\10A: Ordinance 22 that is available to the public on the MSRB's internet web site or filed with the SEC. All documents provided to the MSRB pursuant to this Section shall be accompanied by identifying information as prescribed by the MSRB. (b) Material Event Notices. The City shall notify the MSRB, in an electronic format as prescribed by 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: A. Principal and interest payment delinquencies; B. Non-payment related defaults; C. Unscheduled draws on debt service reserves reflecting financial difficulties; D. Unscheduled draws on credit enhancements reflecting financial difficulties; E. Substitution of credit or liquidity providers, or their failure to perform; F. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; G. Modifications to rights of holders of the Bonds; H. Certificate calls; I. Defeasances; J. Release, substitution, or sale of property securing repayment ofthe Bonds; and K. Rating changes. The City shall notify the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with subsection (a) ofthis Section by the time required by such subsection. All documents provided to the MSRB pursuant to this Section 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 Section 8 of this Ordinance that causes the Certificates 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 GTOWN\GO\I OA: Ordinance 23 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. UNDERNO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. No default by the City in observing or performing its obligations under this Section shall comprise a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Should the Rule be amended to obligate the City to make filings with or provide notices to entities other than the MSRB, the City hereby agrees to undertake such obligation with respect to the Bonds in accordance with the Rule as amended. 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, but only if (1) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and (2) either (a) the holders of a majority in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the outstanding Bonds consents to such amendment or (b) a person that is unaffiliated with the City (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interest of the holders and beneficial owners of the Bonds. If the City so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with paragraph (a) of this Section an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of financial information or operating data so provided. The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment GTOWNi \GOUOA:Ordinance 24 that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds. (d) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: WSRB" means the Municipal Securities Rulemaking Board. "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. Section 15. AMENDMENT OF ORDINANCE. The City hereby reserves the right to amend this Ordinance subject to the following terms and conditions, to -wit: (a) The City may from time to time, without the consent of any holder, except as otherwise required by paragraph (b) below, amend or supplement this Ordinance in order to (i) cure any ambiguity, defect or omission in this Ordinance that does not materially adversely affect the interests of the holders, (ii) grant additional rights or security for the benefit of the holders, (iii) add events of default as shall not be inconsistent with the provisions of this Ordinance and that shall not materially adversely affect the interests of the holders, (iv) qualify this Ordinance under the Trust Indenture Act of 1939, as amended, or corresponding provisions of federal laws from time to time in effect, (v) obtain insurance or ratings on the Bonds, (vi) obtain the approval of the Attorney General of the State Texas, or (vii) make such other provisions in regard to matters or questions arising under this Ordinance as shall not be inconsistent with the provisions of this Ordinance and that shall not in the opinion of the City's Bond Counsel materially adversely affect the interests of the holders. (b) Except as provided in paragraph (a) above, the holders of Bonds aggregating in principal amount 51% of the aggregate principal amount of then outstanding Bonds that are the subject of a proposed amendment shall have the right from time to time to approve any amendment hereto that may be deemed necessary or desirable by the City; provided, however, that without the consent of 100% of the holders in aggregate principal amount of the then outstanding Bonds, nothing herein contained shall permit or be construed to permit amendment of the terms and conditions of this Ordinance or in any of the Bonds so as to: (1) Make any change in the maturity of any of the outstanding Bonds; (2) Reduce the rate of interest borne by any of the outstanding Bonds; (3) Reduce the amount of the principal of, or redemption premium, if any, payable on any outstanding Bonds; GTOWMGO\10A: Ordinance 25 (4) Modify the terms of payment of principal or of interest or redemption premium on outstanding Bonds or any of them or impose any condition with respect to such payment; or (5) Change the minimum percentage of the principal amount of any series of Bonds necessary for consent to such amendment. (c) If at any time the City shall desire to amend this Ordinance under this Section, the City shall send by U.S. mail to each registered owner of the affected Bonds a copy of the proposed amendment and cause notice of the proposed amendment to be published at least once in a financial publication published in The City of New York, New York or in the State of Texas. Such published notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the office of the City for inspection by all holders of such Bonds. (d) Whenever at any time within one year from the date of publication of such notice the City shall receive an instrument or instruments executed by the holders of at least 51% in aggregate principal amount of all of the Bonds then outstanding that are required for the amendment, which instrument or instruments shall refer to the proposed amendment and that shall specifically consent to and approve such amendment, the City may adopt the amendment in substantially the same form. (e) Upon the adoption of any amendatory Ordinance pursuant to the provisions of this Section, this Ordinance shall be deemed to be modified and amended in accordance with such amendatory Ordinance, and the respective rights, duties, and obligations of the City and all holders of such affected Bonds shall thereafter be determined, exercised, and enforced, subject in all respects to such amendment. (f) Any consent given by the holder of a Bond pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders of the same Bond during such period. Such consent may be revoked at any time after six months from the date of the publication of said notice by the holder who gave such consent, or by a successor in title, by filing notice with the City, but such revocation shall not be effective if the holders of 51% in aggregate principal amount of the affected Bonds then outstanding, have, prior to the attempted revocation, consented to and approved the amendment. Section 16. DEFAULT AND REMEDIES, (a) Events of Default. Each of the following occurrences or events for the purpose of this Ordinance is hereby declared to be an Event of Default: (i) the failure to make payment of the principal of or interest on any of the Bonds when the same becomes due and payable; or (ii) default in the performance or observance of any other covenant, agreement or obligation of the City, the failure to perform which materially, adversely affects the rights of the Registered Owners of the Bonds, including, but not limited to, their prospect or ability to GTOWN\GO\I OA: Ordinance 26 be repaid in accordance with this Ordinance, and the continuation thereof for a period of 60 days after notice of such default is given by any Registered Owner to the City. (b) Remedies for Default. (i) Upon the happening of any Event of Default, then and in every case, any Registered Owner or an authorized representative thereof, including, but not limited to, a trustee or trustees therefor, may proceed against the City, or any official, officer or employee of the City in their official capacity, for the purpose of protecting and enforcing the rights of the Registered Owners under this Ordinance, by mandamus or other suit, action or special proceeding in equity or at law, in any court of competent jurisdiction, for any relief permitted by law, including the specific performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the Registered Owners hereunder or any combination of such remedies. (ii) It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all Registered Owners of Bonds then outstanding. (c) Remedies Not Exclusive. (i) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Bonds or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by the Bonds shall not be available as a remedy under this Ordinance. (ii) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. (iii) By accepting the delivery of a Bond authorized under this Ordinance, such Registered Owner agrees that the certifications required to effectuate any covenants or representations contained in this Ordinance do not and shall never constitute or give rise to a personal or pecuniary liability or charge against the officers, employees or trustees of the City or the City Council. (iv) None of the members of the City Council, nor any other official or officer, agent, or employee of the City, shall be charged personally by the Registered Owners with any liability, or be held personally liable to the Registered Owners under any term or provision of this Ordinance, or because of any Event of Default or alleged Event of Default under this Ordinance. GT0WNMG0\10A: Ordinance 27 Section 17. NO RECOURSE AGAINST CITY OFFICIALS. No recourse shall be had for the payment of principal of or interest on the Bonds or for any claim based thereon or on this Ordinance against any official of the City or any person executing any Bonds. Section 18. ADDITIONAL BONA INSURANCE PROVISIONS. Bond Counsel is authorized to insert any necessary provisions required by the bond insurer and agreed to by the City and the City Attorney. Section 19. FURTHER ACTIONS. The officers and employees of the City are hereby authorized, empowered and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge and deliver in the name and under the corporate seal and on behalf of the City all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance, the Bonds, the initial sale and delivery ofthe Bonds, the Paying Agent/Registrar Agreement, the Bond Purchase Agreement and the Official Statement. In addition, prior to the initial delivery of the Bonds, the Mayor, is hereby authorized and directed to approve any changes or corrections to this Ordinance or to any of the instruments authorized and approved by this Ordinance necessary in order to (i) correct any ambiguity or mistake or properly or more completely document the transactions contemplated and approved by this Ordinance and as described in the Official Statement or (ii) obtain the approval of the Bonds by the Texas Attorney General's office. In case any officer of the City whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. Section 20. 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 ofthe articles and sections of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Bonds and the validity of the lien on and pledge to secure the payment of the Bonds. Section 21. INCONSISTENT PROVISIONS. All ordinances, orders or resolutions, or parts thereof, which are in conflict or inconsistent with any provisions of this Ordinance are hereby repealed to the extent of such conflict and the provisions of this Ordinance shall be and remain controlling as to the matters contained herein. Section 22. INTERESTED PARTIES. Nothing in this Ordinance expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the City and the registered owners of the Bonds, any right, remedy or claim under or by reason of this Ordinance or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises GT0WN\G0\10A: Ordinance 28 and agreements in this Ordinance contained by and on behalf of the City shall be for the sole and exclusive benefit of the City and the registered owners of the Bonds. Section 23. SEVERABILITY. The provisions of this Ordinance are severable; and in case any one or more of the provisions of this Ordinance or the application thereof to any person or circumstance should be held to be invalid, unconstitutional, or ineffective as to any person or circumstance, the remainder of this Ordinance nevertheless shall be valid, and the application of any such invalid provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby. Section 24. PAYMENT GE ATTORNEY GENERAL FEE. The City hereby authorizes the disbursement of a fee equal to the lesser of (i) one-tenth of one percent of the principal amount of the Bonds or (ii) $9,500, provided that such fee shall not be less than $750, to the Attorney General of Texas Public Finance Division for payment of the examination fee charged by the State of Texas for the Attorney General's review and approval of public securities and credit agreements, as required by Section 1202.004 of the Texas Government Code. The appropriate member of the City's staff is hereby instructed to take the necessary measures to make this payment. The City is also authorized to reimburse the appropriate City funds for such payment from proceeds of the Bonds. GTOWN\GO\I OA: Ordinance 29 GTOWN\GO\IOA: Ordinance A-1 ko & 1111"11, 1111 THIS AGREEMENT entered into as of October 1, 2010 (this "Agreement"), by and between the City of Georgetown, Texas (the "Issuer"), and The Bank of New York Mellon Trust Company, N.A. of Dallas, Texas, a banking corporation duly organized and existing under the laws of the United States of America (the 'Bank"). WHEREAS, the Issuer has duly authorized and provided for the issuance of its General Obligation Bonds, Series 2010A in the aggregate principal amount of $11,935,000, (collectively, the "Securities"), such Securities to be issued in fully registered form only as to the payment of principal and interest thereon; and WHEREAS, the Securities are scheduled to be delivered to the initial purchasers thereof on or about October 28, 2010: and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on the Securities and with respect to the registration, transfer and exchange thereof by the registered owners thereof, and WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: III The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities. As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof, all in accordance with this Agreement and the "Ordinance" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the "Ordinance." GTOW\TGO\CO\GO\UWSysRev\2010: PARA The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. ioil 1. , I As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Bank Office" means the designated office of the Bank as indicated on the signature page hereof, except that the payment and registration duties of the Bank will be performed from the Bank's designated office located in Dallas, Texas. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Fiscal Year" means the fiscal year of the Issuer, ending September 30. "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Ordinances). GT0WNG0\C0\G0\Ud1SysRev\2010: PARA 2 "Redemption Date" when used with respect to any Bond to be redeemed means the date fixed for such redemption pursuant to the terms of the Ordinances. "Registered Owner" each means the Person in whose name a Security is registered in the Security Register. "Ordinance" means the order, ordinance or resolution of the governing body of the Issuer pursuant to which the Securities are issued, certified by the City Secretary of the Issuer or any other officer of the Issuer and delivered to the Bank. "Responsible Officer" when used with respect to the Bank means the Chairman or Vice - Chairman of the Board of Directors, the Chairman or Vice-chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfer of the Securities. "Stated Maturity" means the date specified in the Ordinances on which the principal of a Security is scheduled to be due and payable. Section 2.02. Other Definitions. The terms 'Bank," Issuer," and Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. M 11 1 0 As Paying Agent, the Bank shall, provided adequate collected 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 each Security at its Stated Maturity or Redemption Date, to the Registered Owner upon surrender of the Security to the Bank at the Bank Office. GT0M1\TG0\=G0\UtUSysRev\2010: PARA 3 As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Registered Owner and preparing and sending checks by United States Mail, first class postage prepaid, on each payment date, to the Registered Owners of the Securities (or their Predecessor Securities) on the respective Record Date, to the address appearing on the Security Register or by such other method, acceptable to the Bank, requested in writing by the Registered Ower at the Registered Owner's risk and expense. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified in the Ordinance. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register") for recording the names and addresses of the Registered Owners of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Registered Owners and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the Financial Industry Regulatory Authority, in form satisfactory to the Bank, duly executed by the Registered Owner thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re - registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Registered Owners thereof will be completed and new Securities delivered to the Registered Owner or the assignee of the Registered Owner in not more than three (3) business days after the receipt of the Securities to be canceled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Registered Owner, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. GT0WNG0\C0\G0\Uti1SysRevM10: PARA 4 The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time 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. The Bank will not release or disclose the contents of the Security Register 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 court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Return of Canceled Certificates. The Bank will, at such reasonable intervals as it determines, surrender to the Issuer, Securities in lieu of which or in exchange for which other Securities have been issued, or which have been paid. G'rOW V GO\CO\GO\Ut ISysRev\2010: PARA 5 !�M orm 1=A r The Issuer hereby instructs the Bank, subject to the applicable provisions of the Ordinance, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securi- ties as long as the same does not result in an overissuance. In case any Security shall be mutilated, or destroyed, lost or stolen, the Bank, in its discretion, may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only after (i) the filing by the Registered Owner thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Security shall be borne by the Registered Owner of the Security mutilated, or destroyed, lost or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities I t has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. (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. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. GTOWA'GO\CO\GO\UtilSysRev\2010: PARA 6 (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Registered Owner or an agent of the Registered Owner. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. (g) The Bank shall maintain a copy of the Bond Register within the State of Texas. Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Registered Owner or Registered Owners of any Security, or any other Person for any amount due on any Security from its own funds. Section 5.04. May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. GT0WNG0\C0\G0\Uti1SysRev\2010: PARA 7 The Bank shall deposit any moneys received from the Issuer into a trust account to be held in a fiduciary capacity for the payment of the Securities, with such moneys in the account that exceed the deposit insurance available to the Issuer 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 the laws of the United States of America to secure and be pledged as collateral for trust accounts until the principal and interest on such securities 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 Securities shall, at its own expense and risk, request such other medium of payment. Subject to the Unclaimed Property Law of the State of Texas, any money deposited with the Bank for the payment of the principal, premium (if any), or interest on any Security and remaining unclaimed for three years after the final maturity of the Security has become due and payable will be paid by the Bank to the Issuer if the Issuer so elects, and the Registered Owner of such Security shall hereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such monies shall thereupon cease. If the Issuer does not elect, the Bank is directed to report and dispose of the funds in compliance with Title Six of the Texas Property Code, as amended. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. 1 I 1 i I a 1'•,/• The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State Court located in the State of Texas and County where either the Bank Office or the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction in the State of Texas to determine the rights of any Person claiming any interest herein. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by GT0W14G0\C0\G0WtflSysRev\2010: PARA 8 other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements," effective August 1, 1987, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. Attached hereto is a copy of the Blanket Letter of Representations with The Depository Trust Company. hereto. other. Section6.01. This Agreement may be amended only by an agreement in writing signed by both of the parties Section 6.02. Assignment. This Agreement may not be assigned by either party without the prior written consent of the Section 6.03. 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 on the signature page of this Agreement. s The Article and Section headings herein are for convenience only and shall not affect the construction hereof. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. GT0WNG0\C0\G0\UtiJSysRev\2010: PARA 9 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. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this Agreement and the Ordinance, the Ordinance shall govern. a of 1 1' 1 1 • 1. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate (i) on the date of final payment of the principal of and interest on the Securities to the Registered Owners thereof or (ii) may be earlier terminated by either party upon thirty (30) days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice has been given to the Registered Owners of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. GT0WNG0\C0\G0\UWSysRev\2010: PARA 10 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Title Attest: PE Title GT0WNTG0\C0\G0\UfiISysRev\2010: PARA 113 East 8th Street, Georgetown, Texas 78626 GTOWNGO\CO\GO\UWSysRev\2010: PARA GTOWNGO\CO\GO\Uti1SysRev\2010: PARA N City of Georgetown, Texas General Obligation Bonds, Series 2010A I A one-time charge covering the Bank Officer's review of governing documents, communication with members of the closing party, including representatives of the issuer, investment banker(s) and attorney(s), establishment of procedures and controls, set-up of trust accounts and tickler suspense items and the receipt and disbursement/investment of bond proceeds. This fee is payable on the closing date. An annual charge covering the normal paying agent duties related to account administration and bondholder services. Our pricing is based on the assumption that the bonds are DTC-eligible/book-entry only. If the bonds are certificated or physical, then we will have to charge an additional $1000 per year as a paying agent. This fee is payable annually, in advance. The charges for performing extraordinary or other services not contemplated at the time of the execution of the transaction or not specifically covered elsewhere in this schedule will be commensurate with the service to be provided and may be charged in BNY Mellon's sole discretion. If it is contemplated that the Trustee hold and/or value collateral or enter into any investment contract, forward purchase or similar or other agreement, additional acceptance, administration and counsel review fees will be applicable to the agreement governing such services. If the bonds are converted to certificated form, additional annual fees will be charged for any applicable tender agent and/or registrar/paying agent services. Additional information will be provided at such time. Should this transaction terminate prior to closing, all out-of-pocket expenses incurred, including legal fees, will be billed at cost. If all outstanding bonds of a series are defeased or called in full prior to their maturity, a termination fee may be assessed at that time. These extraordinary services may include, but are not limited to, supplemental agreements, consent operations, unusual releases, tender processing, sinking fund redemptions, failed remarketing processing, the preparation of special or interim reports, custody of collateral, a one-time fee to be charged upon termination of an engagement. Counsel, accountants, special agents and others will be charged at the actual amount of fees and expenses billed, UCC filing fees, money market sweep fees, auditor confirmation fees, wire transfer fees, transaction fees to settle third -party trades and reconcilement fees to balance trust account balances to third - party investment provider statements Annual fees include one standard audit confirmation per year without charge. Standard audit confirmations include the final maturity date, principal paid, principal outstanding, interest cycle, interest paid, cash and asset information, interest rate, and asset statement information. Non-standard audit confirmation requests may be assessed an additional fee. Periodic tenders, sinking fund, optional or extraordinary call redemptions will be assessed at $300 per event. FDIC or other governmental charges will be passed along to you as incurred. 2001 Bryan — 11'" Floor Dallas, TX 75201 CORPORATE TRUST Terms of Proposal Final acceptance of the appointment under the Indenture is subject to approval of authorized officers of BNYM and full review and execution of all documentation related hereto. Please note that if this transaction does not close, you will be responsible for paying any expenses incurred, including Counsel Fees. We reserve the right to terminate this offer if we do not enter into final written documents within three months from the date this document is first transmitted to you. Fees may be subject to adjustment during the life of the engagement. Customer Notice Required by the USA Patriot Act To help the US government fight the funding of terrorism and money laundering activities, US Federal law requires all financial institutions to obtain, verify, and record information that identifies each person (whether an individual or organization) for which a relationship is established. What this means to you: When you establish a relationship with BNYM, we will ask you to provide certain information (and documents) that will help us to identify you. We will ask for your organization's name, physical address, tax identification or other government registration number and other information that will help us to identify you. We may also ask for a Certificate of Incorporation or similar document or other pertinent identifying documentation for your type of organization. We thank you for your assistance. 2001 Bryan — I lb Floor Dallas, TX 75201 1041 is I 1 093 N 8 0 The following information is referred to in Section 14 of this Ordinance. The financial information and operating data with respect to the City to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the headings of the Official Statement referred to) below: (1) Table 1 - Valuation, Exemptions and General Obligation Debt; (2) Table 2 - Taxable Assessed Valuations by Category; (3) Table 3 - Valuation and General Obligation Debt History; (4) Table 4 - Tax Rate, Levy and Collection History; (5) Table 5 - Ten Largest Taxpayers; (6) Table 6 - Tax Adequacy; (7) Table 8 - Pro-Froma General Obligation Debt Service Requirements; (8) Table 9 - Interest and Sinking Fund Budget Projection; (9) Table 10 - General Fund Revenues and Expenditure History; (9) Table 11 - Municipal Sales Tax History; and (10) Appendix B Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in the paragraph above. GT0NN\GO\10A: Ordinance B-1 ACCORDANCE WITH SECTION 1201.028, Texas Government Code, passed and approved on the first and final reading on the 12' day of October, 2010. George rver, Mayor City of Georgetown, Texas Secretary Mark Sokolow, City Attorney GTOWMGO\10A: Ordinance ExecutionPgOrdinance 1" 3191 N 111ALAI W0301 1 THE OF TEXAS is COUNTY, . O CITY OF GEORGETOWN We, the undersigned officers of the City, hereby certify as follows: 1. This certificate is executed for and on behalf ofthe City, for the benefit ofthe Attorney General of the State of Texas and for the benefit of the Purchasers in connection with the issuance of the Obligations. The words and terms used herein shall have the meanings whenever they are used given in Exhibit "A" attached hereto. 2. Any certificate signed by an official of the City delivered to the Purchasers or the Attorney General of the State of Texas shall be deemed a representation and warranty by the City as to the statement made therein. The Public Finance Division of the Office of the Attorney General of the State of Texas is hereby authorized to date this certificate as of the date of approval of the Obligations and is entitled to rely upon the accuracy of the information contained herein unless notified by telephone or fax to the contrary. The Comptroller of Public Accounts is further authorized to register the Obligations upon receipt of the Attorney General approval. After registration, the Obligations, opinions and registration papers shall be delivered to C. D. Polumbo at McCall, Parkhurst & Horton L.L.P. 3. A true and correct copy of the winning bid for the Obligations submitted to and accepted by the City Council of the City is attached hereto as Exhibit "B". 4. The City is a duly incorporated home rule city, operating and existing under the Texas Constitution and laws of the State of Texas, including its Charter which has not been amended since the issuance by the City of its last series of obligations. 5. No litigation of any nature has ever been filed pertaining to, affecting or contesting: (a) the Ordinances (b) the issuance, delivery, payment, security or validity of the Obligations; (c) the authority of the governing body and the officers of the City to issue, execute and deliver the Obligations; (d) the validity of the corporate existence ofthe City; (e) the current tax rolls of the City; and that no litigation is pending pertaining to, affecting, questioning or contesting the current boundaries of the City. Gtown\G0\12010A: GenNoLaCw 6. Neither the corporate existence nor boundaries of the City is being contested, no litigation has been filed or is now pending which would affect the authority of the officers of the City to issue, execute, sign and deliver the Obligations, and that no authority or proceedings for the issuance of the Obligations have been repealed, revoked or rescinded. 7. We officially executed and signed the Obligations with our manual signatures or by causing facsimiles of our manual signatures to be imprinted or copied on each ofthe Obligations, and, if appropriate, we hereby adopt such facsimile signatures as our own, respectively, and declare that such facsimile signatures constitute our signatures the same as if we had manually signed each of the Obligations. 8. The Obligations are substantially in the form, and have been duly executed and signed in the manner, prescribed in the Ordinance. 9. At the time we so executed and signed the Obligations we were, and at the time of executing this certificate we are, the duly chosen, qualified and acting officers indicated therein, and authorized to execute the same. 10. We have caused the official seal of the City to be impressed, or printed, or copied on the Obligations and such seal on the Obligations has been duly adopted as, and is hereby declared to be, the official seal of the City. 11. The City is not in default in connection with any of the covenants, conditions or obligations contained in the ordinance authorizing the issuance ofthe obligations listed in Exhibit "C", and that the Interest and Sinking Funds for the outstanding obligations contain the amount now required to be on deposit therein. 12. The currently outstanding tax debt of the City and the proposed Obligations are set forth in Exhibit "C" hereto. 13. The currently effective ad valorem Tax Rolls of said City are those for the year 2010, being the most recently approved Tax Rolls of the City; that the taxable property in the City has been assessed as required by law; that the Tax Assessor of the City has duly verified the aforesaid Tax Rolls; and that the assessed value of taxable property in the City upon which the annual ad valorem tax ofthe City has been levied (after deducting the amount of all exemptions, if any, taken or required to be given under the Constitution and laws of the State of Texas), according to the aforesaid Tax Rolls for the year, as delivered to the City Secretary, and finally approved and recorded by the City Council of the City, is $4,055,948,951. 14. To our best knowledge and belief: GtowrlGM\2010A: GmNoLACa 2 (a) the descriptions and statements of or pertaining to the City contained in its Official Notice of Sale, Bid Form and Preliminary Official Statement dated September 27, 2010, the final Official Statement dated October 12, 2010 and any addenda, supplement or amendment thereto, for the Obligations, on the date of such Preliminary Official Statement, on the date of sale of the Obligations, and the acceptance of the best bid therefor, and on the date of the delivery, were and are true and correct in all material respects; (b) insofar as the City and its affairs, including its financial affairs, are concerned, such Official Statement did not and does not contain an 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; (c) insofar as the descriptions and statements, including financial data, of or pertaining to entities other than the City and their activities contained in such Official Statement are concerned, such statements and data have been obtained from sources which the City believes to be reliable and that the City has no reason to believe that such information contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein made in light of the circumstances under which they are made not misleading; and (d) there has been no material adverse change in the financial condition of the City since the date of the last audited financial statement of the City appearing in the Official Statement. Gtow \G0\\2010A: GenNDLitCat 3 SIGNED this City Manager Mayor Before me, on this day personally appeared the foregoing individuals, known to me to be the officers whose true and genuine signatures were subscribed to the foregoing instrument in my presence. Given under my hand and seal of office this SHIRLEY J. RINN Notary Public, State of Texas My Commission Expires Jude 26, 2013 (Notary Seal) Gown\GO\\2010A: GmNoLACW Notary Public City - City of Georgetown, Texas. City Council - The City Council of the City. Closing - October 28, 2010 or at such other time agreed upon between the City and the Purchaser. Obligations - City of Georgetown, Texas General Obligation Bonds, Series 2010 dated October 1, 2010 in the aggregate principal amount of $111930,000. Official Statement - The Preliminary Official Statement dated September 27, 2010 and the Official Statement dated October 12, 2010 relating to the issuance of the Obligations. Ordinance - The Ordinance Authorizing the Issuance of City of Georgetown, Texas General Obligation Bonds, Series 2010A; Levying an Ad Valorem Tax in Support of the Bonds; Approving a Paying Agent/Registrar Agreement, an Official Statement and Other Related Documents; and Authorizing Other Matters Relating to the Bonds approved by the City Council on October 12, 2010. Purchasers - Raymond James & Associates, Inc. Gtow \CTM\2010A: GalloLi[Ce A-1 13 v 2 Gtory \GO\\2010A: GmNoUCe B-1 OFFICIAL BID FORM Honorable Mayor and City Council City of Georgetown, Texas 101 East 7`r` Street Georgetown, Texas 78627 Members of the City Council: October 12, 2010 Reference is made to your Official Statement and Notice of Sale and Bidding Instructions; dated October 1, 2010, of $11:93%000 CTTY OF GEORGETOWN, TEXAS GENERAL OBLIGATION BONDS, SERIES 2010A, both of which constitute a part hereof. For your legally issued Bonds, in the aggregate principal amount of $11,930,000, we will pay you a price of $ E$, g31,Q9_, representing jt)0.LCq% of the par value, plus accrued interest to the date of delivery to us. Such Bonds mature August 15, in each of the years and in the amounts and interest rates shown below: Maturity (August 15) 2012 2013 2014 2015 2016 2017 201 s 2019 2020 2021 Principal Amount $ 115,000 480,000 500;000 515.000 535.000 555.000 575.000 595,000 615.000 635,000 Interest Rate 01.00% 02. (DC7 % r9, 00 % eQ;00 % .off? % . 95 % a. aS % ?04j0 % C9. isO % 3.00 % Maturity (August 15) 2022 2023 2024 2025 2026 2027 2028 2029 2030 Principal Amount $ 655,000 680,000 705,000 730,000 755,000 780,000 810,000 835,00��0 860,000 Interest Rate S400 % r00 % 3. 1 % 8. x'75% 3✓�r5d % c7 s �9) % 3,`0% 3450% �}'��+ c3e,mo i/ % Of the principal maturities set forth in the table above, term bonds have been created as indicated in the following table (which may include multiple term bonds, one tern bond or no term bond if none is indicated). For those years wluch have been combined into a term bonds, the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term bond maturity date shall mature in such year. The tern bonds created are as follows: Tern Bonds Maturing August 15 Year of First Mandatory Redemption Principal Amount. Interest Rate $ $ % $ Our calculation (which is not a part of this bid) of the interest cost from the above is: TRUE INTEREST COST .3J04331 % The Initial Bonds shall be registered in the name of which will, upon payment for the Bonds, be cancelled by the Paying Agent/Registrar. The Bonds will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the book -entry -only system. A bank cashier's check or certified check of the Bank, , in the amount of $238,600, which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Notice of Sale and Bidding Instructions. We agree to accept delivery of the Bonds utilizing the book -entry -only system through DTC and make payment for the Initial Bond in immediately available funds in the Corporate Trust Division, The Bank of New York Mellon Trust Company, Dallas, Texas, not later than 9:30 AM, CDT, on October 28, 20I0, or thereafter on the date the Bonds are tendered for delivery, pursuant to the terms set forth in the Notice of Sale and Bidding Instructions, It will be the obligation of the purchaser of the Bonds to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete, execute, and deliver to the City, not later than the close of business on the business day following the award of the sale of the Bonds, a certificate relating to the "issue price" of the Bonds in the form and to the effect accompanying the Notice of Sale and Bidding Instructions, with such changes thereto as may be acceptable to the City. We agree to provide in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award, Respectfully submitted, 141 Name oTPurehaser or Manager Authoriz d Representative Syndicate Members: ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by City of Georgetown, Texas, this the Ila' day of October, 2010. ATTEST: City Secretary City of Georgetown, Texas Mayor City of Georgetown, Texas rtllu 1 i DILL rU1111 Upcoming CalendarOverview f Resuit � �E Raymond • • h • hal °'' Georgetown $11,935,000 General Obligation Bonds,SeriesOa: For the aggregate principal amount of $11,935,000.00, we will pay you $11,936,068.90, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % 08/15/2012 08/15/2013 115M 480M 2.0000 2.0000 08/15/2014 500M 2.0000 08/15/2015 515M 2.0000 08/15/2016 535M 2.0000 08/15/2017 555M 2.2500 08/15/2018 575M 2.2500 08/1512019 595M 2.5000 08/15/2020 615M 2.5000 08/15/2021 635M 3.0000 08/1512022 655M 3.0000 08/15/2023 680M 3.0000 08/15/2024 705M 3.1250 08/15/2025 730M 3.3750 08/15/2026 08/15/2027 755M 780M 3.5000 3.5000 08/15/2028 810M 3.5000 08/15/2029 835M 3.5000 08/15/2030 86f M 3.5000 Total Interest Cost: Premium: Net Interest Cost: TIC: $4,5691961.77 $1,068.90 $4t568,892,87 3.104331 Time Last Bid Received On:10/12/2010 9:10:36 CDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Raymond James & Associates, Inc., Memphis , TN Contact: Tony Marcone Title: Municipal Underwrite Telephone: 901-752-6109 Fax: 901-752-8200 4 .. FF I 1 0 1. I ._--- !71__._i_/____/..__•.__.........�F..........—.......+..,-.+S%rv�neto—v�nryicr 1r1/1O/7)i i1 FAIU l Y KeoTrermg 1 - - ;Result -1 Raymond James & Associates, Inc.'s 'Reoffering Scale RIO Georgetown ••...A• $11,935,000 General Obligation Bonds, Series 2010A Maturity Date Amount $ Coupon % Yield 0f9 Dollar Price Call Date 08/15/2012 115M 2.0000 0.7500 102.226 08/15/2013 480M 2.0000 0.9500 102,891 08/15/2014 08/15/2015 500M 515M 2.0000 2.0000 1.1500 1.4000 103.148 102.773 08/15/2016 535M 2.0000 1,7000 101.648 08/15/2017 555M 2.2500 2.0000 101.580 08/15/2018 08/15/2019 575M 595M 2.2500 2.5000 2.1500 2.3500 100.712 101.184 08/15/2020 615M 2.5000 2.5500 99.567 08/1512021 635M 3.0000 2.8000 101..547 08/15/2019 08/1512022 08115/2023 655M 680M 3.0000 3.0000 2.9500 3.0500 100.382 99.470 08/15/2019 08/15/2024 705M 3.1250 3.1500 99.719 08/15/2025 730M 3.3750 3.2500 100.946 08/15/2019 08/15/2026 755M 3.5000. 3.3500 101.131 08/15/2019 08/15/2027 780M 3.5000 3.4000 100.751 08/15/2019 08/15/2028 08/15/2029 810M 835M 3.5000 3.50003.5500 3.5000 100.000 99.314 08/1512030 865M 3.5000 3.6500 97.894 C 1981-2002 i -Deal LLC. All rights reserved, Trademarks Combination Tax and Utility System Limited Revenue Certificates of Obligation, Series 2001 $ 755,000 Combination Tax and Utility System Limited Revenue Certificates of Obligation, Series 2002 $ 2,235,000 Combination Tax and Utility System Limited Revenue Certificates of Obligation, Series 2003 $ 1,505,000 Limited Tax Notes, Series 2004 $ 65,000 Combination Tax and Utility System Limited Revenue Certificates of Obligation, Series 2005 $ 6,000,000 General Obligation and Refunding Bonds, Series 2005 $ 12,590,000 General Obligation Bonds, Series 2005A $ 6,020,000 Combination Tax and Utility System Limited Revenue Certificates of Obligation, Series 2006 $ 3,760,000 Limited Tax Refunding Bonds, Series 2006 $ 7,830,000 Combination Tax and Revenue Certificates of Obligation, Series 2007 $ 6,6001000 General Obligation and Refunding Bonds, Series 2007 $ 12,550,000 Combination Tax and Revenue Certificates of Obligation, Series 2008 $ 4,425,000 Combination Tax and Revenue Certificates of Obligation, Series 2009 $ 5,275,000 General Obligation Bonds, Series 2009 $ 11130,000 General Obligation Refunding Bonds, Series 2009 $ 2,02500 Gtown\GO\\2010At GenNoLitCa C-1 Limited Tax litotes, Series 2009 Combination Tax and Revenue Certificates of Obligation, Series 2010 General Obligation Bonds, Series 2010 General Obligation Bonds, Series 2010A In the Process of Issuance Gtow \M\2010A: GmNoUtCat C-2 $ 5,950,000 $ 61240,000 $ 1,340,000 $11,930,000 SIGNED this t City Manager Mayor 1 M % it 1 U- �- Before me, on this day personally appeared the foregoing individuals, known to me to be the officers whose true and genuine signatures were subscribed to the foregoing instrument in my presence. Given under my hand and seal of office this RINN State of Texas <, u tv"E X}Fres Notary (Notary Seal) Gtov \GO\\2010A: GwNobtCe t 01 City Manager Before me, on this day personally appeared the foregoing individuals, known to me to be the officers whose true and genuine signatures were subscribed to the foregoing instrument in my presence. Given under m hand and seal of office this Y r SHIRLEY J, RINK ;Esi€r expires June 26, 3 _ (Notary Seal) Gtow \GM2010A: GenNOUCe SIGNET) this City Manager officers Before me, on this day personally appeared the foregoing individuals, known to me to be the whose true and genuine signatures were subscribed to the foregoing instrument in my presence. Given under my hand and seal of office this SHIRLEY Jo RINN MY ,' Expires June ' j 13 (Notary Seal) Gtown\GO\\2010A: GenNoUtCe t 0 SIGNER this City Manager Before me, on this day personally appeared the foregoing individuals, known to me to be the officers whose true and genuine signatures were subscribed to the foregoing instrument in my presence. Given under my hand and seal of office this fi Camrnission Expires JUnO r ?t ,2013 (Notary Seal) Gtow \GG\\2010A: GenNoLkCe SIGNER this City Manager Mayor Before me, on this day personally appeared the foregoing individuals, known to me to be the officers whose true and genuine signatures were subscribed to the foregoing instrument in my presence. Given under my hand and seal of office this SHIRLEY J, RINN _, f Texas My Commission Expires juno 26,2013 (Notary Seal) Gtov \GO\\2010A: GalloLitCe City Manager Before me, on this day personally appeared the foregoing individuals, known to me to be the officers whose true and genuine signatures were subscribed to the foregoing instrument in my presence. Given under my hand and seal of office this r (Notary Seal) Gtow \GO\\2010A: GuNoLitCat OFFICIAL BID FORM Honorable Mayor and City Council City of Georgetown, Texas 101 East 7`h Street Georgetown, Texas 78627 Members of the City Council: October 12. 2010 Reference is made to your Official Statement and Notice of Sale and Bidding Instructions; dated October 1, 2010, of $11,930,000 CITY OF GEORGETOWN; TEXAS GENERAL OBLIGATION BONDS, SERIES 2010A, both of which constitute a part hereof. For your legally issued Bonds, in the aggregate principal amount of $11,930,000, we will pay you a price of $ It, 9,3j, 0(A#q 0 relxesenting Jf}U. % of the par value, plus accrued interest to the date of delivery to us. Such $ each of the years and in the amounts and interest rates shown below: Bonds mature August 15, in Maturity Principal Interest Maturity Principal Interest (August 15) Amount Rate (August 15) Amount Rate 2012 $ 115,000 (2,00% 2022 $ 655,000 3,00 % 2013 4807000 2023 6805000 3r 60 % x, C)o % 2014 500,000 .9,tn % 2024 705,000 3, 12.S % 2015 515,000 O() °f° 2025 730,000 c3<375% 2016 535,000 .00A % 2026 755,000 3r.50 % 2017 555;000 4oq5 % 2027 780,000 Z30 60 % 2018 575,000 0Z. 9S % 2028 810,000 -3050% 2019 595,000 2029 83500 3450% 0�, 050 % 2020 615,000 c9t 1 -Ci % 2030 860;000 3.6P % 2021 635,000 3,00% Of the principal maturities set forth in the table above, term bonds have been created as indicated in the following table (which may include multiple term bonds, one term bond or no term bond if none is indicated). For those years which have been combined into a term bonds; the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term bond maturity date shall mature in such year. The teen bonds created are as follows: Term Bonds Maturing August 15 Year of First Mandatory Redemption Principal Interest Amount. Rate $238,600, which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening $ with the $ of Sale and Bidding $ Our calculation (which is not a part of this bid) of the interest cost fi•orn the above is: TRUE INTEREST COST 3P )073.3 / % The Initial Bonds shall be registered in the name of which will, upon payment for the Bonds, be cancelled by the Paying Agent/Registrar. The Bonds will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the book -entry -only system. A bank cashier's check or certified check of the Bank, , in the amount of $238,600, which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of this bid), and is submitted in accordance with the terns as set forth in the Official Statement and Notice of Sale and Bidding Instructions. We agree to accept delivery of the Bonds utilizing the book -entry -only system through DTC and make payment for the Initial Bond in immediately available funds in the Corporate Trust Division, The Bank of New York Mellon Trust Company, Dallas, Texas, not later than 9:30 AM, CDT, on October 28, 2010, or thereafter on the date the Bonds are tendered for delivery, pursuant to the terms set forth in the Notice of Sale and Bidding Instructions, it will be the obligation of the purchaser of the Bonds to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete, execute, and deliver to the City, not later than the close of business on the business day following the award of the sale of the Bonds, a certificate relating to the "issue price" of the Bonds in the form and to the effect accompanying the Notice of Sale and Bidding Instructions, with such changes thereto as may be acceptable to the City. We agree to provide in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Respectfully submitted, C1 Name oiPurchaser or Manager To>tt�t a Authoriiz d Representative Syndicate Members; ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by City of Georgetown, Texas, this the 12a' day of October, 2010. of Georgetown, f Atct i Y i5ia r orzn Upcoming Calendar J1 Overview Result i Excel Raymond James & Associates, Inc. w Memphis , TN's Bid Georgetown $11,935,000 General Obligation Bonds, Series 2.010A For the aggregate principal amount of $11,935,000.00, we will pay you $11,936,068.90, plus accrued interest from the date of issue to the date of de at the following rates): livery. The Bonds are to bear interest Maturity Date Amount $ Coupon % 08/15/2012 115M 2.0000 08/15/2013 480M 2.0000 08/15/2014 500M 2.0000 08/15/2015 515M 2.0000 08/15/2016 535M 2.0000 08/15/2017 555M 2.2500 08/1512018 575M 2.2500 08/15/2019 595M 2.5000 08/15/2020 615M 2.5000 08/15/2021 635M 3.0000 08/15/2022 655M 3.0000 08/15/2023 680M 3.0000 08/15/2024 705M 3.1250 08/15/2025 730M 3.3750 08/15/2026 [!810M 55M 3.5000 08/15/2027 80M 3.5000 08/1512028 3.5000 08/15/2029 835M 3.5000 08/15/203086 M 3.5000 Total Interest Cost: Premium: Net Interest Cost: TIC: t $4,5691961.77 $1,068.90 $4,568,892.87 3.104331 Time Last Bid Received On: 10/12/2010 9:10:36 CDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Raymond James & Associates, Inc., Memphis, TN Contact: Tony Marcone Title: Municipal Underwrite Telephone: 901-752-6109 Fax: 901-752-8200 Total Interest Cost: Premium: Net Interest Cost: TIC: t $4,5691961.77 $1,068.90 $4,568,892.87 3.104331 Time Last Bid Received On: 10/12/2010 9:10:36 CDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Raymond James & Associates, Inc., Memphis, TN Contact: Tony Marcone Title: Municipal Underwrite Telephone: 901-752-6109 Fax: 901-752-8200 PAI 11 Y Keoltering Result . [fe l Raymond James & Associates, Inc.'s Reoffering Sca[-ix • •i retown $11,936,y00 General Obligation Bonds, Series 2010A Maturity Date Amount $ Coupon % Yield % Dollar Price Call Date 08/15/2012 115M 2.0000 0.7500 102.226 08/15/2013 08/15/2014 480M 500M 2.0000 2,0000 0.9500 1,1500 102.891 103.148 08/15/2015 515M 2.0000 1.4000 102.773 08/15/2016 535M 2.0000 1,7000 101,648 08/15/2017 555M 2.2500 2,0000 101.580 08/15/2018 575M 2.2500 2.1500 100.712 08/15/2019 595M 2.5000 2.3500 101.184 08/15/2020 615M 2.5000 2.5500 99.567 08/15/2021 635M 3.0000 2.8000 101..547 08/15/2019 08/15/2022 655M 3,0000 2,9500 100.382 08/15/2019 08/15/2023 680M 3.0000 3.0500 99,470 08/15/2024 705M 3.1250 3.1500. 99.719 08/15/2025 730M 3.3750 3.2500 100,946 08/1512019 08/1512026 755M 3.5000 3.3500 101.131 08115/2019 08/15/2027 08/15/2028 780M 810M 3.5000 3,5000 3.4000 3.5000 100.751 100.000 08/15/2019 08/15/2029 835M 3.5000 3.5500 99.314 08/15/2030 865M 3.5000 3.6500 97.894 G 1981-2002 i -Deal LLC. All rights reserved, Trademarks 31 Enter Information Return for TaxwExempt Governmental Obligations remaining weighted average maturity of the Form8038=0 0- Under Internal Revenue Code section 149(e) 32 OMB No. 1545-0720 (Rev. May 2010) F See separate instructions. years 33 Department of the Treasury Internal Revenue Service Caution: If the issue price is under $100,000, use Form 8038-GC. last date on which the refunded bonds will • Re orcin Authority If Amended Return, check here ❑ 1 Issuer's name 2 Issuer's employer identification number (EIN) GEORGETOWN, TEXAS (CITY OF) No. 63773S Form 8038-0 (Rev. 5-2010) 74' 6000974 3 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 4 Report number (For IRS Use Only) 193 EAST 8TH STREET 151, 5 City, town, or post office, state, and ZIP code 6 Date of issue GEORGETOWN, TEXAS 78627 10/28/2010 7 Name of issue 8 CUSIP number RIE 2010A GENERALOBLIGATIONNDS, SERIES 373028ZP$ 9 Name and title of officer of the issuer or other person whom the IRS may call for more information 10 Telephone number of officer or other person ICi I RUNDELL, CHIEF FINANCIAL OFFICER. ( 512 ) 930®3676 J= Type of Issue (enter the issue price) See instructions and attach schedule 11 Education 11 12 . . . . . . . . . . . . . . . . . . . . . . . . . Health and hospital . . . . . . . . . . . . . . . . . . . . . . . .12 13 13 Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . 14 14 Public safety 2k. . . . . . . . . . . . . . . . . . 15 15 Environment (including sewage bonds). . . . . . . . . . . . . . . . . . 16 16 Housing . . . . . . . . . . . . . . . . . . . 0w . 17 17 Utilities 18 . . . . . . . . . . . . . . . . . . . . . . . . Other. Describe VARIOUS MUNICIPAL PROJECTS . . 18 12,0861723 19 If obligations are TANS or RANs, check only box 19a. . . . . . . . . . . . ❑ If obligations are BANS, check only box 19b . . ❑ 20 If obligations are in the form of a lease or installment sale, check box t� ❑ • . Description of Obligations. Complete for the entire issue for which this form is bei n filed. (a) Final maturity date (b) Issue price (c) Stated redemption price at maturity (d) Weighted average maturity (e) Yield 21 08/15/2636 $ 1206123 $ 11,930.100 12.666 years 3.0414 % • Uses of Proceeds of Bond Issue(including underwriters' discount) 22 Proceeds used for accrued interest 22 25,931 23 . . . . . . . . . . . . . . . . . Issue price of entire issue (enter amount from line 21, column (b)) . . 23 125006,723 24 Proceeds used for bond issuance costs (including underwriters' discount) 24 25 Proceeds used for credit enhancement 25 � m 26 Proceeds allocated to reasonably required reserve or replacement fund . 26 woa 27 Proceeds used to currently refund prior issues . 27 ®0" 28 Proceeds used to advance refund prior issues . . . . . . . . . 28 -0m 29 Total (add lines 24 through 28) . . . . . . . . . . . . . . . . . . . . . . 29 30 Nonrefunding proceeds of the issue subtract line 29 from line 23 and enter amount here 30 • Description of Refunded Bonds (Complete this part only for refunding bonds.)NOT APPLICABLE 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . years 33 Enter the last date on which the refunded bonds will be called (MM/DD/YYYY) 34 Enter the date{s) the refunded bonds were issued (MM/DD/YYYY) For Privacy Act and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 63773S Form 8038-0 (Rev. 5-2010) GEORGETOWN, TEXAS (CITY E) EiN; 74 - 3000974 Form 8038-G (Rev. 5-2010) Page 2 miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . 35 .0$ 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC) (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . 36a .a b Enter the final maturity date of the GIC Do - 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units . . . . . . . . . . . . . �M<, 37a .0M b If this issue is a loan made from the proceeds of another tax ssue, check box Eland enter the name of the issuer 10*A e date of the issue N/A 38 If the issuer has designated the issue under section 265(b)(3)(B all issuer exception), check box 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate,ck box . i° ❑ 40 If the issuer has identified a hedge, check box . . . . . . 7`-= . . . . . . . . . . . . . . . ❑ Under penalties of perjury, I declare that 1 have examined this return and Signature and belief, they are true, correct, nd complete. I further declare that I cc and to process is return, to the p on that I have authorized above. representative Date anying schedules and statements, and to the best of my knowledge the IRS's disclosure of the issuer's return information, as necessary ��; Preparer's I Date signature -•-- --) Firm's name (or CALL, PARKHURST HORTON L.L.P.Use 9I,- yours if self-employed), address. and ZIP code 717 N. HARWOOD, SUITE 900, DALLAS, Tx 75201 Check if Preparer's SSN or PTIN self-emoloved ❑ 1 P01067358 75: 0799392 214 ) 754-9200 Form 8038mG (Rev. 5-2010) FEDERAL TAX CERTIFICATE 1. In General. 1.1. The undersigned is the Chief Financial Officer of the City of Georgetown, Texas (the "Issuer"). 1.2. This Federal Tax Certificate is executed for the purpose of establishing the reasonable expectations of the Issuer as to future events regarding the Issuer's General Obligation Bonds, Series 2010A (the "Bonds"). The Bonds are being issued pursuant to an ordinance of the Issuer (the "Ordinance") adopted on the date of sale of the Bonds. The Ordinance is incorporated herein by reference. 1.3. To the best of the undersigned's knowledge, information and belief, the expectations contained in this Federal Tax Certificate are reasonable. 1.4. The undersigned is an officer of the Issuer delegated with the responsibility of issuing and delivering the Bonds. 1.5. The undersigned is not aware of any facts or circumstances that would cause him to question the accuracy of the representations made by Specialized Public Finance, Inc. (the "Financial Advisor") of the Schedules attached hereto as Exhibit "D." 2. The Purpose of the Bonds and Useful Lives of Projects. 2.1. The Bonds are being issued pursuant to the Ordinance (a) to provide for the payment of costs of issuing the Bonds, and (b) for constructing, acquisition and rehabilitation of road and park projects (the "Projects"). 2.2. The Issuer expects that the aggregate useful lives of the Projects exceed 20 years from the later of the date the Projects are placed in service or the date on which the Bonds are issued. 2.3. All earnings, such as interest and dividends, received from the investment of the proceeds of the Bonds during the period of acquisition and construction of the Projects and not used to pay interest on the Bonds, will be used to pay the costs of the Projects, unless required to be rebated and paid to the United States in accordance with section 148(f) of the Internal Revenue Code of 1986 (the "Code"). The proceeds of the Bonds, together with any investment earnings thereon, are expected not to exceed the amount necessary for the governmental purpose of the Bonds. The Issuer expects that no disposition proceeds will arise in connection with the Projects or the Bonds. 3. Expenditure of Bond Proceeds and Use of Projects. 3.1. The Issuer will incur, within six months after the date of issue of the Bonds, a binding obligation to commence the Projects, either by entering into contracts for the construction of the Projects or by entering into contracts for architectural or engineering services for such Projects, or contracts for the development, purchase of construction materials, or purchase of equipment, for the Projects, with the amount to be paid under such contracts to be in excess of five percent of the proceeds which are estimated to be used for the cost of the Projects. 3.2. After entering into binding obligations, work on such Projects will proceed promptly with due diligence to completion. 3.3. All original proceeds derived from the sale of the Bonds to be applied to the Projects and all investment earnings thereon (other than any amounts required to be rebated to the United States pursuant to section 148(f) of the Code) will be expended for the Projects no later than a date which is three years after the date of issue of the Bonds. 3.4. The Ordinance provides that allocations of proceeds to expenditures for the Projects are expected not to be later than 18 months after the later of the date of the expenditure or the date that the Projects are placed in service, but, in any event, not longer than 60 days after the earlier of five years of the date hereof or the date the Bonds are retired. 3.5. Moreover, only Project costs paid or incurred by the Issuer within 60 days prior to the date the Issuer approved the funding of the Project (the "60 -day period") through its declaration of official intent ("Qualified Costs") will be paid or reimbursed with Bond proceeds. For this purpose Qualified Costs also include preliminary expenditures, incurred prior to the 60 -day period before the approval of the Issuer through its declaration of official intent, up to an amount not in excess of 20 percent of the aggregate amount of the Bonds. No Qualified Cost represents the cost of property or land acquired from a related party. 3.6. The Issuer will not invest the proceeds prior to such expenditure in any guaranteed investment contract or other non -purpose investment with a substantially guaranteed yield for a period equal to or greater than four years. 3.7. Other than members of the general public, the Issuer expects that throughout the lesser of the term of the Bonds, or the useful lives of the Projects, the only user of the Projects will be the Issuer or the Issuer's employees and agents. The Issuer will be the manager of the Projects. The Issuer does not expect to enter into long-term sales of output from the Projects and sales of output will be made on the basis of generally -applicable and uniformly applied rates. The Issuer may apply different rates for different classes of customers, including volume purchasers, which are reasonable and customary. 3.8. Except as stated below, the Issuer expects not to sell or otherwise dispose of property constituting the Projects prior to the earlier of the end of such property's useful life or the final maturity of the Bonds. The Ordinance provides that the Issuer will not sell or otherwise dispose of the Projects unless the Issuer receives an opinion of nationally -recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. 3.9. For purposes of Subsection 3.8 hereof, the Issuer has not included the portion of the Projects comprised of personal property that is disposed in the ordinary course at a price that is expected to be less than 25 percent of the original purchase price. The Issuer, upon any disposition of such property, will transfer the receipts from the disposition of such property to the general operating fund and expend such receipts within six months for other governmental programs. 4. Interest and Sinking Fund. 4.1. A separate and special Interest and Sinking Fund has been created and established, other than as described herein, solely to pay the principal of and interest on the Bonds (the "Bona Fide Debt Service Portion"). The Bona Fide Debt Service Portion constitutes a fund that is used primarily to achieve a proper matching of revenues and debt service within each bond year. Such portion will be completely depleted at least once each year except for an amount not in excess of the greater of (a) one - 2 twelfth of the debt service on the Bonds for the previous year, or (b) the previous year's earnings on such portion of the Interest and Sinking Fund. Amounts deposited in the Interest and Sinking Fund constituting the Bona Fide Debt Service Portion will be spent within a thirteen -month period beginning on the date of deposit, and any amount received from the investment of money held in the Interest and Sinking Fund will be spent within a one-year period beginning on the date of receipt. 4.2. Any money deposited in the Interest and Sinking Fund and any amounts received from the investment thereof that accumulate and remain on hand therein after thirteen months from the date of deposit of any such money or one year after the receipt of any such amounts from the investment thereof shall constitute a separate portion of the Interest and Sinking Fund. The yield on any investments allocable to the portion of the Interest and Sinking Fund exceeding the sum of (a) the Bona Fide Debt Service Portion and (b) an amount equal to the lesser of five percent of the sale and investment proceeds of the Bonds or $100,000 will be restricted to a yield that does not exceed the yield on the Bonds. 5. Invested Sinking Fund Proceeds. Replacement Proceeds. 5.1. The Issuer has, in addition to the moneys received from the sale of the Bonds, certain other revenues that are invested in various funds which are pledged for various purposes. These other funds are not available to accomplish the purposes described in Section 2 of this Certificate. 5.2. Other than the Interest and Sinking Fund, there are, and will be, no other funds or accounts established, or to be established, by or on behalf of the Issuer (a) which are reasonably expected to be used, or to generate earnings to be used, to pay debt service on the Bonds, or (b) which are reserved or pledged as collateral for payment of debt service on the Bonds and for which there is reasonable assurance that amounts therein will be available to pay such debt service if the Issuer encounters financial difficulties. Accordingly, there are no other amounts constituting "gross proceeds" of the Bonds, within the meaning of section 148 of the Code. 6. Other Obligations. There are no other obligations of the Issuer that (a) are sold at substantially the same time as the Bonds, i.e., within 15 days of the date of sale of the Bonds, (b) are sold pursuant to a common plan of financing with the Bonds, and (c) will be payable from the same source of funds as the Bonds. 7. Federal Tax Audit Responsibilities. The Issuer acknowledges that in the event of an examination by the Internal Revenue Service (the "Service") to determine compliance of the Bonds with the provisions of the Code as they relate to tax- exempt obligations, the Issuer will respond, and will direct its agents and assigns to respond, in a commercially reasonable manner to any inquiries from the Service in connection with such an examination. The Issuer understands and agrees that the examination may be subject to public disclosure under applicable Texas law. 8. Record Retention. The Issuer has covenanted in the Ordinance that it will comply with the requirements of the Code relating to the exclusion of the interest on the Bonds under section 103 of the Code. The Service has determined that certain materials, records and information should be retained by the issuers of tax-exempt obligations for the purpose of enabling the Service to confirm the exclusion of the interest on such obligations under section 103 of the Code. ACCORDINGLY, THE ISSUER SHALL TAKE STEPS TO ENSURE THAT ALL MATERIALS, RECORDS AND INFORMATION NECESSARY TO 3 CONFIRM THE EXCLUSION OF THE INTEREST ON THE BONDS UNDER SECTION 103 OF THE CODE ARE RETAINED FOR THE PERIOD BEGINNING ON THE ISSUE DATE OF THE BONDS AND ENDING THREE YEARS AFTER THE DATE THE BONDS ARE RETIRED. The Issuer acknowledges receipt of the letter attached hereto as Exhibit "B" which, in part, discusses specific guidance by the Service with respect to the retention of records relating to tax-exempt bond transactions. The Issuer also acknowledges that the letter does not constitute an opinion of Bond Counsel as to the proper record retention policy applicable to any specific transaction. 9. Rebate to United States. The Issuer has covenanted in the Ordinance that it will comply with the requirements of the Code, including section 148(f) of the Code, relating to the required rebate to the United States. Specifically, the Issuer will take steps to ensure that all earnings on gross proceeds of the Bonds in excess of the yield on the Bonds required to be rebated to the United States will be timely paid to the United States, The Issuer acknowledges receipt of the memorandum attached hereto as Exhibit "A" which discusses regulations promulgated pursuant to section 148(f) of the Code. This memorandum does not constitute an opinion of Bond Counsel as to the proper federal tax or accounting treatment of any specific transaction. 4 DATED as of October 28, 2010. CITY OF GEORGETOWN, TEXAS Mzcki Rundell Chief Financial Officer City of Georgetown, General Obligation Bonds, Series 2010A The undersigned represents that, to the best of the undersigned's knowledge, information and belief, the representations contained in schedules attached hereto as Exhibit "D" to this Federal Tax Certificate are, as of October 28, 2010, accurate and complete. SPECIALIZED PUBLIC FINANCE, INC. City of Georgetown, General Obligation Bonds, Series 2010A t • " LAW OFFICES M°CALL, PARKHURST & HORTON L.L.P 600 CONGRESS AVENUE 717 NORTH HARWOOD SUITE 1800 SUITE 900 AUSTIN, TEXAS 78701-3248 DALLAS, TEXAS 75201-6587 TELEPHONE: 512 478-3805 TELEPHONE: 214 754-9200 FACSIMILE: 512 472-0871 FACSIMILE: 214 754-9250 January 1, 2006 700 N. ST. MARY'S STREET SUITE 1525 SAN ANTONIO, TEXAS 78205-3503 TELEPHONE: 210225-2800 FACSIMILE: 210 225-2984 The arbitrage rebate requirements set forth in section 148(f) of the Internal Revenue Code of 1986 (the "Code") generally provide that in order for interest on any issue of bonds' to be excluded from gross income (i.e., tax-exempt) the issuer must rebate to the United States the sum of, (1) the excess of the amount earned on all "nonpurpose investments" acquired with "gross proceeds" of the issue over the amount which would have been earned if such investments had been invested at a yield equal to the yield on the issue, and (2) the earnings on such excess earnings. On June 18,1993, the U.S. Treasury Department promulgated regulations relating to the computation of arbitrage rebate and the rebate exceptions. These regulations, which replace the previously -published regulations promulgated on May 15,1989, and on May 181 1992, are effective for bonds issued after June 30, 1993. This memorandum was prepared by McCall, Parkhurst & Horton L. L. P. and provides a general discussion of these arbitrage rebate regulations. This memorandum does not otherwise discuss the general arbitrage regulations, other than as they may incidentally relate to rebate. This memorandum also does not attempt to provide an exhaustive discussion of the arbitrage rebate regulations and should not be considered advice with respect to the arbitrage rebate requirements as applied to any individual or governmental unit or any specific transaction. Any tax advice contained in this memorandum is of a general nature and is not intended to be used, and should not be used, by any person to avoid penalties under the Code. McCall, Parkhurst & Horton L.L.P. remains available to provide legal advice to issuers with respect to the provisions of these tax regulations but recommends that issuers I In this memorandum the word "bond" is defined to include any bond, note, certificate, financing lease or other obligation of an issuer. Copvriciht 2006 bv Harold T. Flanaaan,• • k •, •i seek competent financial and accounting assistance in calculating the amount of such issuer's rebate liability under section 148(f) of the Code and in making elections to apply the rebate exceptions. The regulations promulgated on June 18, 1993, generally apply to bonds delivered after June 30, 1993, although they do permit an issuer to elect to apply the rules to bonds issued prior to that date. The temporary regulations adopted by the U.S. Treasury Department in 1989 and 1992 incorporated the same effective dates which generally apply for purposes of section 148(f) of the Code. As such, the previous versions of the rebate regulations generally applied to bonds issued between August 1986 and June 30, 1993 (or, with an election, to bonds issued prior to August 15, 1993). The statutory provisions of section 148(f) of the Code, other than the exception for construction issues, apply to all bonds issued after August 15, 1986, (for private activity bonds) and August 31, 1986, (for governmental public purpose bonds). The statutory exception to rebate applicable for construction issues generally applies if such issue is delivered after December 19, 1989. The regulations provide numerous transitional rules for bonds sold prior to July 1, 1993. Moreover, since, under prior law, rules were previously published with respect to industrial development bonds and mortgage revenue bonds, the transitional rules contained in these regulations permit an issuer to elect to apply certain of these rules for computing rebate on pre1986 bonds. The regulations provide for numerous elections which would permit an issuer to apply the rules (other than 18 -month spending exception) to bonds which were issued prior to July 1, 1993 and remain outstanding on June 30, 1993. Due to the complexity of the regulations, it is impossible to discuss in this memorandum all circumstances for which specific elections are provided. If an issuer prefers to use these final version of rebate regulations in lieu of the computational method stated under prior law (e.g., due to prior redemption) or the regulations, please contact McCall, Parkhurst & Horton L.L.P. for advice as to the availability of such options. The regulations employ an actuarial method for computing the rebate amount based on the future value of the investment receipts (i.e., earnings) and payments. The rebate method employs a two-step computation to determine the amount of the rebate payment. First, the issuer determines the bond yield. Second, the issuer determines the arbitrage rebate amount. The regulations require that the computations be made at the end of each five-year period and upon final maturity of the issue (the "computation dates"). THE FINAL MATURITY DATE WILL ACCELERATE IN CIRCUMSTANCES IN WHICH THE BONDS ARE OPTIONALLY REDEEMED PRIOR TO MATURITY. AS SUCH, IF BONDS ARE REFUNDED OR OTHERWISE REDEEMED, THE REBATE MAYBE DUE EARLIER THAN e jj�?!1111111111110!111111 1111 1111111111114311• • '.s- INITIALLY PROJECTED. In orderto accommodate accurate record-keeping and to assure that sufficient amounts will be available for the payment of arbitrage rebate liability, however, we recommend that the computations be performed at least annually. Please refer to other materials provided by McCall, Parkhurst &Horton L.L.P. relating to federal tax rules regarding record retention. Under the future value method, the amount of rebate is determined by compounding the aggregate earnings on all the investments from the date of receipt by the issuer to the computation date. Similarly, a payment for an investment is future valued from the date that the payment is made to the computation date. The receipts and payments are future valued at a discount rate equal to the yield on the bonds. The rebatable arbitrage, as of any computation date, is equal to the excess of the (1) future value of all receipts from investments (i.e., earnings), over (2) the future value of all payments. The following example is provided in the regulations to illustrate how arbitrage rebate is computed under the future value method for a fixed -yield bond: "On January 1, 1994, City A issues a fixed yield issue and invests all the sale proceeds of the issue ($49 million). There are no other gross proceeds. The issue has a yield of 7.0000 percent per year compounded semiannually (computed on a 30 day month/360 day year basis). City 8. receives amounts from the investment and immediately expends them for the governmental purpose of the issue as follows: Date Amount 2/1/1994 $ 31 000, 000 4/1/1994 570001000 6/1/1994 14, 000, 000 9/1/1994 2070001000 711/1995 10, 000, 000 City A selects a bond year ending on January 1, and thus the first required computation date is January 1, 1999. The rebate amount as of this date is computed by determining the future value of the receipts and the payments for the investment. The compounding interval is each 6 -month (or shorter) period and the 30 day month/360 day year basis is used because these conventions were used to compute yield on the issue. The future value of these amounts, plus the computation credit, as of January 1, 1999, is: • Date Receipts (Payments) FY (7.0000 percent) 01/1/1994 ($49,0007000) ($6911191339) 02/1/1994 310001000 412077602 04/1/1994 5, 000, 000 619321715 0611/1994 14, 000, 000 19,190, 277 09/1/1994 20, 000, 000 26, 947,162 01/1/1995 (17000) (11317) 07/1/1995 10, 000, 000 12, 722, 793 01/1/1996 (11000) (1 1229) Rebate amount (01 /01 /1999) 878 664"' •• •P • • • -I• • • •' In general, the term "yield," with respect to a bond, means the discount rate that when used in computing the present value of all unconditionally due payments of principal and interest and all of the payments for a qualified guarantee produces an amount equal to the issue price of the bond. The term "issue price" has the same meaning as provided in sections 1273 and 1274 of the Code. That is, if bonds are publicly offered (i.e., sold by the issuer to a bond house, broker or similar person acting in the capacity of underwriter or wholesaler), the issue price of each bond is determined on the basis of the initial offering price to the public (not to the aforementioned intermediaries) at which price a substantial amount of such bond was sold to the public (not to the aforementioned intermediaries). The "issue price" is separately determined for each bond (i.e., maturity) comprising an issue. The regulations also provide varying periods for computing yield on the bonds depending on the method by which the interest payment is determined. Thus, for example, yield on an issue of bonds sold with variable interest rates (i.e., interest rates which are reset periodically based on changes in market) is computed separately for each annual period ending on the first anniversary of the delivery date that the issue is outstanding. In effect, yield on a variable yield issue is determined on each computation date by "looking back" at the interest payments for such period. The regulations, however, permit an issuer of a variable -yield issue to elect to compute the yield for annual periods ending on any date in order to permit a matching of such yield to the expenditure of the proceeds. Any such election must be made in writing, is irrevocable, and must be made no later than the earlier of (1) the fifth anniversary date, or (2) the final maturity date. Yield on a fixed interest rate issue (i.e., an issue of bonds the interest rate on which is determined as of the date of the issue) is computed over the entire term of the issue. Parkhurst & HortonL.L.P. Page Issuers of fixed -yield issues generally use the yield computed as of the date of issue for all rebate computations. Such yield on fixed -yield issues generally is recomputed only if (1) the issue is sold at a substantial premium, may be retired within five years of the date of delivery, and such date is earlier than its scheduled maturity date, or (2) the issue is a stepped -coupon bond. In such cases, the regulations require the issuer to recompute the yield on such issues by taking into account the early retirement value of the bonds. Similarly, recomputation may occur in circumstances in which the issuer or bondholder modify or waive certain terms of, or rights with respect to, the issue or in sophisticated hedging transactions. iN SUCH CIRCUMSTANCES ISSUERS ARE ADVISED TO CONSULT McCALL4 PARKHURST & HORTON LLP. TO ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THESE TRANSACTIONS. For purposes of determining the principal or redemption payments on a bond, different rules are used for fixed-rate and variable-rate bonds. The payment is computed separately on each maturity of bonds rather than on the issue as a whole. In certain circumstances, the yield on the bond is determined by assuming that principal on the bond is paid as scheduled and that the bond is retired on the final maturity date for the stated retirement price. For bonds subject to early redemption or stepped -coupon bonds, described above, or for bonds subject to mandatory early redemption, the yield is computed assuming the bonds are paid on the early redemption date for an amount equal to their value. Premiums paid to guarantee the payment of debt service on bonds are taken into account in computing the yield on the bond. Payments for guarantees are taken into account by treating such premiums as the payment of interest on the bonds. This treatment, in effect, raises the yield on the bond, thereby permitting the issuer to recover such fee with excess earnings. The guarantee must be an unconditional obligation of the guarantor enforceable by the bondholder for the payment of principal or interest on the bond or the tender price of a tender bond. The guarantee may be in the form of an insurance policy, surety bond, irrevocable letter or line of credit, or standby purchase agreement. Importantly, the guarantor must be legally entitled to full reimbursement for any payment made on the guarantee either immediately or upon commercially reasonable repayment terms. The guarantor may not be a co -obligor of the bonds or a user of more than 10 percent of the proceeds of the bonds. Payments for the guarantee may not exceed a reasonable charge for the transfer of credit risk. This reasonable charge requirement is not satisfied unless it is reasonably expected that the guarantee will result in a net present value savings on the bond (Le., the premium does not exceed the present value of the interest savings resulting by virtue of the guarantee). If the guarantee is entered into after June 14, 1989, then any fees charged Parkhurst & HortonPage 5 for the nonguarantee services must be separately stated or the guarantee fee is not recoverable. The regulations also treat certain "hedging" transactions in a manner similar to qualified guarantees. "Hedges" are contracts, e.g., interest rate swaps, futures contracts or options, which are intended to reduce the risk of interest rate fluctuations. Hedges and other financial derivatives are sophisticated and ever -evolving financial products with which a memorandum, such as this, can not readily deal. IN SUCH CIRCUMSTANCES ISSUERS ARE ADVISED TO CONSULT McCALL, PARKHURST & HORTON LLP. TO ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THESE TRANSACTIONS. The arbitrage rebate provisions apply only to the receipts from the investment of "gross proceeds" in "nonpurpose investments." Forthis purpose, nonpurpose investments are stock, bonds or other obligations acquired with the gross proceeds of the bonds for the period prior to the expenditure of the gross proceeds for the ultimate purpose. For example, investments deposited to construction funds, reserve funds (including surplus taxes or revenues deposited to sinking funds) or other similar funds are nonpurpose investments. Such investments include only those which are acquired with "gross proceeds." For this purpose, the term "gross proceeds" includes original proceeds received from the sale of the bonds, investment earnings from the investment of such original proceeds, amounts pledged to the payment of debt service on the bonds or amounts actually used to pay debt service on the bonds. The regulations do not provide a sufficient amount of guidance to include an exhaustive list of "gross proceeds" for this purpose; however, it can be assumed that "gross proceeds" represent all amounts received from the sale of bonds, amounts earned as a result of such sale or amounts (including taxes and revenues) which are used to pay, or secure the payment of, debt service for the bonds. The total amount of "gross proceeds" allocated to a bond generally can not exceed the outstanding principal amount of the bonds. The regulations provide that an investment is allocated to an issue for the period (1) that begins on the date gross proceeds are used to acquire the investment, and (2) that ends on the date such investment ceases to be allocated to the issue. In general, proceeds are allocated to a bond issue until expended for the ultimate purpose for which the bond was issued orforwhich such proceeds are received (e.g., construction of a bond - financed facility or payment of debt service on the bonds). Deposit of gross proceeds to the general fund of the issuer (or other fund in which they are commingled with revenues or taxes) does not eliminate or ameliorate the Issuer's obligation to compute rebate in most cases. As such, proceeds commingled with the general revenues of the issuer are not "freed -up" from the rebate obligation. An exception to this commingling limitation for bonds, McCall, Parkhurst & Horton".•• .. other than private activity bonds, permits "investment earnings" (but not sale proceeds or other types of gross proceeds) to be considered spent when deposited to a commingled fund if those amounts are reasonably expected to be spent within six months. Other than for these amounts, issuers may consider segregating investments in order to more easily compute the amount of such arbitrage earnings by not having to allocate investments. Special rules are provided for purposes of advance refundings. These rules are too complex to discuss in this memorandum. Essentially, the rules relating to refundings, however, do not require that amounts deposited to the escrow fund to defease the prior obligations of the issuer be subject to arbitrage rebate to the extent that the investments deposited to the escrow fund do not have a yield in excess of the yield on the bonds. Any loss resulting from the investment of proceeds in an escrow fund below the yield on the bonds, however, may be recovered by combining those investments with investments deposited to other funds, e.g., reserve or construction funds. The arbitrage regulations also provide an exception to the arbitrage limitations for the investment of bond proceeds in tax-exempt obligations. As such, investment of proceeds in tax exempt bonds eliminates the Issuer's rebate obligation. A caveat; this exception does not apply to gross proceeds derived allocable to a bond, which is not subject to the alternative minimum tax under section 57(x)(5) of the Code, if invested in tax-exempt bonds subject to the alternative minimum tax, i.e., " private activity bonds." Such "AMT -subject" investment is treated as a taxable investment and must comply with the arbitrage rules, including rebate. Earnings from these tax-exempt investments are subject to arbitrage restrictions, including rebate. Similarly, the investment of gross proceeds in certain tax-exempt mutual funds are treated as a direct investment in the tax-exempt obligations deposited in such fund. While issuers may invest in such funds for purposes of avoiding arbitrage rebate, they should be aware that if "private activity bonds" are included in the fund then a portion of the earnings will be subject to arbitrage rebate. Issuers should be prudent in assuring that the funds do not contain private activity bonds. The arbitrage regulations provide a number of instances in which earnings will be imputed to nonpurpose investments. Receipts generallywill be imputed to investments that do not bear interest at an arm's-length (Le., market) interest rate. As such, the regulations adopt a "market price" rule. In effect, this rule prohibits an issuer from investing bond proceeds in investments at a price which is higher than the market price of comparable obligations, in order to reduce the yield. Special rules are included for determining the market price for investment contracts, certificates of deposit and certain U.S. Treasury obligations. For example, to establish the fair market value of investment contracts a bidding process between three qualified bidders must be used. The fair market value of certificates of deposit which bear a fixed interest rate and are subject to an early McCall, Parkhurst & Horton Page 7 withdrawal penalty is its purchase price if that price is not less than the yield on comparable U.S. Treasury obligations and is the highest yield available from the institution. In any event, a basic "common sense" rule -of -thumb that can be used to determine whether a fair market value has been paid is to ask whether the general funds of the issuer would be invested at the same yield or at a higher yield. An exception to this market price rule is available for United States Treasury Obligations - State or Local Government Series in which case the purchase price is always the market price. The regulations provide rules for purposes of determining whether gross proceeds are used for working capital and, if so, at what times those proceeds are considered spent. In general, working capital financings are subject to many of the same rules that have existed since the mid-1970s. For example, the regulations generally continue the 13 -month temporary period. By adopting a "proceeds -spent -last" rule, the regulations also generally require that an issuer actually incur a deficit (i.e., expenditures must exceed receipts) for the computation period (which generally corresponds to the issuer's fiscal year). Also, the regulations continue to permit an operating reserve, but unlike prior regulations the amount of such reserve may not exceed five percent of the issuer's actual working capital expenditures for the prior fiscal year. Another change made by the regulations is that the issuer may not finance the operating reserve with proceeds of a tax-exempt obligation. Importantly, the regulations contain rules for determining whether proceeds used to reimburse an issuer for costs paid prior to the date of issue of the obligation, in fact, are considered spent at the time of reimbursement. These rules apply to an issuer who uses general revenues for the payment of all or a portion of the costs of a project then uses the proceeds of the bonds to reimburse those general revenues. Failure to comply with these rules would result in the proceeds continuing to be subject to federal income tax restrictions, including rebate. To qualify for reimbursement, a cost must be described in an expression (e.g., resolution, legislative authorization) evidencing the issuer's intent to reimburse which is made no later than 60 days after the payment of the cost. Reimbursement must occur no later than 18 months after the later of (1) the date the cost is paid or (2) the date the project is placed in service. Except for projects requiring an extended construction period or small issuers, in no event can a cost be reimbursed more than three years after the cost is paid. Reimbursement generally is not permitted for working capital; only capital costs, grants and loans may be reimbursed. Moreover, certain anti -abuse rules apply to prevent issuers from avoiding the limitations on refundings. IN CASES INVOLVING WORKING CAPITAL OR REIMBURSEMENT, ISSUERS ARE ADVISED TO CONTACT McCALL, Parkhurst & HortonPage 8 •.• i. i a •, i IN i i • + + i I kwn MW TM Rebate payments generally are due 60 days after each installment computation date. The interim computation dates occur each fifth anniversary of the issue date. The final computation date is on the latest of (1) the date 60 days after the date the issue of bonds is no longer outstanding, (2) the date eight months after the date of issue for certain short-term obligations (Le., obligations retired within three years), or (3) the date the issuer no longer reasonably expects any spending exception, discussed below, to apply to the issue. On such payment dates, other than the final payment date, an issuer is required to pay 90 percent of the rebatable arbitrage to the United States. On the final payment date, an issuer is required to pay 100 percent of the remaining rebate liability. Failure to timely pay rebate does not necessarily result in the loss of tax -exemption. Late payments, however, are subject to the payment of interest, and unless waived, a penalty of 50 percent (or, in the case of private activity bonds, other than qualified 501 (c)(3) bonds, 100 percent) of the rebate amount which is due. IN SUCH CIRCUMSTANCES, ISSUERS ARE ADVISED TO CONSULT McCALL, PARKHURST & HORTON L.L.P. TO ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THESE TRANSACTIONS. Rebate payments are refundable. The issuer, however, must establish to the satisfaction of the Commissioner of the Internal Revenue Service that the issuer paid an amount in excess of the rebate and that the recovery of the overpayment on that date would not result in additional rebatable arbitrage. An overpayment of less than $5,000 may not be recovered before the final computation date. In certain cases, an issuer of a bond the proceeds of which are to be used for construction may elect to pay a penalty, in lieu of rebate. The penalty may be elected in circumstances in which the issuer expects to satisfy the two-year spending exception which is more fully described under the heading "Exceptions to Rebate." The penalty is payable, if at all, within 60 days after the end of each six-month period. This is more often than rebate. The election of the alternative penalty amount would subject an issuer, which fails the two-year spend -out requirements, to the payment of a penalty equal to one and one-half of the excess of the amount of proceeds which was required to be spent during that period over the amount which was actually spent during the period. Parkhurst & HortonPage 9 The penalty has characteristics which distinguish it from arbitrage rebate. First, the penalty would be payable without regard to whether any arbitrage profit is actually earned. Second, the penalty continues to accrue until either (1) the appropriate amount is expended or (2) the issuer elects to terminate the penalty. To be able to terminate the penalty, the issuer must meet specific requirements and, in some instances, must pay an additional penalty equal to three percent of the unexpended proceeds. The Code and regulations provide certain exceptions to the requirement that the excess investment earnings be rebated to the United States. a. Small Issuers. The first exception provides that if an issuer (together with all subordinate issuers) during a calendar year does not issue tax-exempt bonds2 in an aggregate face amount exceeding $5 million, then the obligations are not subject to rebate. Only issuers with general taxing powers may take advantage of this exception. Subordinate issuers are those issuers which derive their authority to issue bonds from the same issuer, e.g., a city and a health facilities development corporation, or which are controlled by the same issuer, e.g., a state and the board of a public university. In the case of bonds issued for public school capital expenditures, the $5 million cap may be increased to as much as $15 million. For purposes of measuring whether bonds in the calendar year exceed these dollar limits, current refunding bonds can be disregarded if they meet certain structural requirements. Please contact McCall, Parkhurst & Horton L.L.P. for further information. b. Spending Exceptions. Six -Month Exception. The second exception to the rebate requirement is available to all tax-exempt bonds, all of the gross proceeds of which are expended during six months. The six month rule is available to bonds issued after the effective date of the Tax Reform Act of 1986. See the discussion of effective dates on page two. For this purpose, proceeds used for the redemption of bonds (other than proceeds of a refunding bond deposited to an escrow fund to discharge refunded bonds) can not be taken into account as expended. As such, bonds with excess gross proceeds generally can not satisfy the second exception unless the amount does not exceed the lesser of five percent or $100,000 and such de minimis amount must be expended within one year. Certain gross proceeds are not subject to the spend -out requirement, including amounts deposited to a bona fide debt service fund, to a reserve fund and amounts which 2For this purpose, "private activity bonds" neither are afforded the benefit of this exception nor are taken into account for purposes of determining the amount of bonds issued. Parkhurst & Horton.•• 10 become gross proceeds received from purpose investments. These amounts themselves, however, may be subject to rebate even though the originally expended proceeds were not. The Code provides a special rule for tax and revenue anticipation notes (Le., obligations issued to pay operating expenses in anticipation of the receipt of taxes and other revenues). Such notes are referred to as TRANs. To determine the timely expenditure of the proceeds of a TRAN, the computation of the "cumulative cash flow deficit" is important. If the "cumulative cash flow deficit" (Le., the point at which the operating expenditures of the issuer on a cumulative basis exceed the revenues of the issuer during the fiscal year) occurs within the first six months of the date of issue and must be equal to at least 90 percent of the proceeds of the TRAN, then the notes are deemed to satisfy the exception. This special rule requires, however, that the deficit actually occur, not that the issuer merely have an expectation that the deficit will occur. In lieu of the statutory exception for TRANs, the regulations also provide a second exception. Under this exception, 100 percent of the proceeds must be spent within six months, but before note proceeds can be considered spent, all other available amounts of the issuer must be spent first ("proceeds -spent -last" rule). In determining whether all available amounts are spent, a reasonable working capital reserve equal to five percent of the prior year's expenditures may be set aside and treated as unavailable. 18 -Month Exception. The regulations also establish a non -statutory exception to arbitrage rebate if all of the gross proceeds (including investment earnings) are expended within 18 months after the date of issue. Under this exception, 15 percent of the gross proceeds must be expended within a six-month spending period, 60 percent within a 12 - month spending period and 100 percent within an 18 -month spending period. The rule permits an issuer to rely on its reasonable expectations for computing investment earnings which are included as gross proceeds during the first and second spending period. A reasonable retainage not to exceed five percent of the sale proceeds of the issue is not required to be spent within the 18 -month period but must be expended within 30 months. Rules similar to the six-month exception relate to the definition of gross proceeds. Two YearException. Bonds issued after December 19, 1989 (i.e., the effective date of the Omnibus Reconciliation Act of 1989), at least 75 percent of the net proceeds of which are to be used for construction, may be exempted from rebate if the gross proceeds are spent within two years. Bonds more than 25 percent of the proceeds of which are used for acquisition or working capital may not take advantage of this exception. The exception applies only to governmental bonds, qualified 501 (c)(3) bonds and private activity bonds for governmentally owned airports and docks and wharves. The two-year exception requires that at least 10 percent of the available construction proceeds must be expended within six months after the date of issue, 45 percent within 12 months, 75 percent within 18 months and 100 percent within 24 months. The term "available construction proceeds" generally means sale proceeds of the bonds together with investment earnings less amounts deposited to a qualified reserve fund or used to pay costs of issuance. Under this McCall, Parkhurst & Horton.s* 11 rule, a reasonable retainage not to exceed five percent need not be spent within 24 months but must be spent within 36 months. The two-year rule also provides for numerous elections which must be made not later than the date of issuance of the bonds. Once made, the elections are irrevocable. Certain elections permit an issuer to bifurcate bond issues, thereby treating only a portion of the issue as a qualified construction bond; and, permit an issuer to disregard earnings from reserve funds for purposes of determining "available construction proceeds." Another election permits an issuer to pay the alternative penalty amount discussed above in lieu of rebate if the issuer ultimately fails to satisfy the two-year rule. Issuers should discuss these elections with their financial advisors prior to issuance of the bonds. Of course, McCall, Parkhurst & Horton L.L.P. remains available to assist you by providing legal interpretations thereof. Debt Service Funds. Additionally, an exception to the rebate requirement, whether or not any of the previously discussed exceptions are available, applies for earnings on "bona fide debt service funds." A "bona fide debt service fund" is one in which the amounts are expended within 13 months of the accumulation of such amounts by the issuer. In general, most interest and sinking funds (other than any excess taxes or revenues accumulated therein) satisfy these requirements. For private activity bonds, short term bonds (i.e., have a term of less than five years) or variable rate bonds, the exclusion is available only if the gross earnings in such fund does not exceed $100,000, for the bond year. For other bonds issued after November 11, 1988, no limitation is applied to the gross earnings on such funds for purposes of this exception. Therefore, subject to the foregoing discussion, the issuer is not required to take such amounts into account for purposes of the computation. FOR BONDS ISSUED AFTER THE EFFECTIVE DATE OF THE TAX REFORM ACT OF 1986 WHICH WERE OUTSTANDING AS OF NOVEMBER 11,1988, OTHER THAN PRIVATE ACTIVITY BONDS, SHORT TERM BONDS OR VARIABLE RATE BONDS, A ONE-TIME ELECTION MAY BE MADE TO EXCLUDE EARNINGS ON "BONA FIDE DEBT SERVICE FUNDS" WITHOUT REGARD TO THE $100,000, LIMITATION. THE ELECTION MUST BE MADE IN WRITING (AND MAINTAINED AS PART OF THE ISSUER'S BOOKS AND RECORDS) NO LATER THAN THE LATER OF MARCH 21, 1990, OR THE FIRST DATE A REBATE PAYMENT IS REQUIRED. F616TIM V M •, McCall, Parkhurst & Horton L.L.P. hopes that this memorandum will prove to be useful as a general guide to the arbitrage rebate requirements. Again, this memorandum is not intended as an exhaustive discussion nor as specific advice with respect to any specific transaction. We advise our clients to seek competent McCall, Parkhurst :< Horton.•- a financial and accounting assistance. Of course, we remain available to provide legal advice regarding all federal income tax matters, including arbitrage rebate. If you have any questions, please feel free to contact either Harold T. Flanagan or Stefano Taverno at (214) 754-9200. McCall, Parkhurst & Horton g_ 13 600 CONGRESS AVENUE SUITE 1800 AUSTIN, TEXAS 78701-3248 TELEPHONE: (512) 478-3805 FACSIMILE: (512) 472-0871 Ms. Micki Rundell Chief Financial Officer City of Georgetown, Texas 113 East 8th Street Georgetown, Texas 78627 Exhibit "B" LAW OFFICES . O. 717 NORTH HARWOOD SUITE 900 DALLAS, TEXAS 75201-6587 TELEPHONE: (214) 754-9200 FACSIMILE: (214) 754-9250 October 20, 2010 Re: City of Georgetown, Texas General Obligation Bonds, Series 2010A Dear Ms. Rundell: 700 N. ST. MARY'S STREET SUITE 1525 SAN ANTONIO, TEXAS 78205-3503 TELEPHONE: (210) 225-2800 FACSIMILE: (210) 225-2984 As you know, the City of Georgetown, Texas (the "Issuer") will issue the captioned bonds in order to provide for the acquisition and construction of the project. As a result of that issuance, the federal income tax laws impose certain restrictions on the investment and expenditure of amounts to be used for the project or to be deposited to the interest and sinking fund and the reserve fund for the captioned bonds. The purpose of this letter is to set forth in somewhat less technical language, those provisions of the tax law which require the timely use of bond proceeds and that investment of these amounts be at a yield which is not higher than the yield on the captioned bonds. For this purpose, please refer to line 21(e) of the Form 8038-G included in the transcript of proceedings for the yield on the captioned bonds. Please note that the Form 8038-G has been prepared based on the information provided by or on your behalf by your financial advisor. Accordingly, while we believe that the information is correct you may wish to have the yield confirmed before your rebate consultant or the paying agent attempt to rely on it. Generally, the federal tax laws provide that, unless excepted, amounts to be used for the project or to be deposited to the interest and sinking fund and the reserve fund must be invested in bonds the combined yield on which does not exceed the yield on the bonds. Importantly, for purposes of administrative convenience, the bonds, however, have been structured in such a way as to avoid, for the most part, this restriction on investment yield. They also contain certain covenants relating to expenditures of proceeds designed to alert you to unintentional failures to comply with the laws affecting expenditures of proceeds and dispositions of property. First, the sale and investment proceeds to be used for the project may be invested for up to three years without regard to yield. (Such amounts, however, may be subject to rebate.) Thereafter, they must be invested at or below the bond yield. Importantly, expenditure of these proceeds must be accounted in your books and records. Allocations of these expenditures must occur within 18 months of the later of the date paid or the date the project is completed. The foregoing notwithstanding, the allocation should not occur later than 60 days after the earlier of (1) of five years after the delivery date of the bonds or (2) the date the bonds are retired unless you obtain an opinion of bond counsel. Second, the interest and sinking fund is made up of amounts which are received annually for the payment of current debt service on all the Issuer's outstanding bonds. Any taxes or revenues deposited to the interest and sinking fund which are to be used for the payment of current debt service on the captioned bonds, or any other outstanding bonds, are not subject to yield restriction. By definition, current debt service refers only to debt service to be paid within one year of the date of receipt of these amounts. For the most part, this would be debt service in the current fiscal year. These amounts deposited to the account for current debt service may be invested without regard to any constraint imposed by the federal income tax laws. Third, a portion of the interest and sinking fund is permitted to be invested without regard to yield restriction as a "minor portion." The "minor portion" exception is available for de minimis amounts of taxes or revenues deposited to the interest and sinking fund. The maximum amount that may be invested as part of this account may not exceed the lesser of five percent of the principal amount of the bonds or $100,000. Accordingly, you should review the current balance in the interest and sinking fund and the reserve fund in order to determine if such balances exceed the aggregate amounts discussed above. Additionally, in the future it is important that you be aware of these restrictions as additional amounts are deposited to the fund. The amounts in these funds which are subject to yield restriction would only be the amounts which are in excess of, in the case of the interest and sinking fund, the sum of (1) the current debt service account and (2) the "minor portion" account. Moreover, to the extent that additional bonds are issued by the Issuer, whether for new money projects or for refunding, these amounts will change in their proportion. The Ordinance contains covenants that require the Issuer to comply with the requirements of the federal tax laws relating to the tax-exempt bonds. The Internal Revenue Service (the "Service") has determined that certain materials, records and information should be retained by the issuers of tax-exempt bonds for the purpose of enabling the Service to confirm the exclusion of the interest on such bonds under the Internal Revenue Code. Accordingly, the Issuer should retain such materials, records and information for the periods beginning on the respective issue date of the outstanding bonds, or, in the case of a sequence of refunding bonds, the issue date of the bonds originally financing the refinanced projects and ending three years after the date the captioned bonds are retired. Please note this federal tax law standard may vary from state law standards. The material, records and information required to be retained will generally be contained in the transcript of proceedings for the captioned bonds, however, the Issuer should collect and retain additional materials, records and information to ensure the continued compliance with federal tax law requirements. For example, beyond the transcript of proceedings for the bonds, the Issuer should keep schedules evidencing the expenditure of bond proceeds, documents relating to the use of bond -financed property by governmental and any private parties (e.g., leases and management contracts, if any) and schedules pertaining to the investment of bond proceeds. In the event that you have questions relating to record retention, please contact us. Finally, you should notice that the Ordinance contains a covenant that limits the ability of the Issuer to sell or otherwise dispose of bond -financed property for compensation. Beginning for bonds issued after May 15, 1997 (including certain refunding bonds), or in cases in which an issuer elects to apply new private activity bond regulations, such sale or disposition causes the creation of a class of proceeds referred to as "disposition proceeds." Disposition proceeds, like sale proceeds and investment earnings, are tax -restricted funds. Failure to appropriately account, invest or expend such disposition proceeds would adversely affect the tax-exempt status of the bonds. In the event that you anticipate selling property, even in the ordinary course, please contact us. Obviously, this letter only presents a fundamental discussion of the yield restriction rules as applied to amounts deposited to the funds. Moreover, this letter does not address the rebate consequences with respect to the interest and sinking fund and the reserve fund. You should review the memorandum attached to the Federal Tax Certificate as Exhibit "A" for this purpose. If you have certain concerns with respect to the matters discussed in this letter or wish to ask additional questions with regards to certain limitations imposed, please feel free to contact our firm. Thank you for your consideration and we look forward to our continued relationship. Very truly yours, McCALL, PARKHURST & HORTON L.L.P. cc: Ms. Carol D. Polumbo Ms. Jana Hansen Edwards Exhibit "C" CERTIFICATE OF ELECTION PURSUANT TO SECTION 148(f)(4)(C) OF THE INTERNAL REVENUE CODE OF 1986 I, the undersigned, being the duly authorized representative of the City of Georgetown, Texas (the "Issuer") hereby state that the Issuer elects the provisions of section 148(f)(4)(C) of the Internal Revenue Code of 1986 (the "Code"), relating to the exception to arbitrage rebate for temporary investments, as more specifically designated below, with respect to the Issuer's General Obligation Bonds, Series 2010A (the "Bonds") which are being issued on the date of delivery of the Bonds in a face amount equal to $11,930,000. The CUSIP Number for the Bonds is stated on the Form 8038-G filed in connection with the Bonds. The Issuer intends to take action to comply with the two-year temporary investments exception to rebate afforded construction certificates under section 148(f)(4)(C) of the Code. Capitalized terms have the same meaning as defined in the Federal Tax Certificate. M 1. PENALTY ELECTION. In the event that the Issuer should fail to expend the "available construction proceeds" of the Bonds in accordance with the provisions of section 148(f)(4)(C) of the Code, the Issuer elects, in lieu of rebate, the penalty provisions of section 148(f)(4)(C)(vii)(I) of the Code. M 2. RESERVE FUND ELECTION. The Issuer elects to exclude from "available construction proceeds," within the meaning of section 148(f)(4)(C)(vi) of the Code, of the Bonds, earnings on the Reserve Fund in accordance with section 148(f)(4)(C)(vi)(IV) of the Code. ® 3. MULTIPURPOSE ELECTION. The Issuer elects to treat that portion of the Bonds the proceeds of which are to be used for the payment of expenditures for construction, reconstruction or rehabilitation of the Projects, as defined in the instrument authorizing the issuance of the Bonds, in an amount which is currently expected to be equal to $ _ as a separate issue in accordance with the provisions of section 148(f)(4)(C)(v)(I1) of the Code. (Note: This election is not necessary unless less than 75 percent of the proceeds of the Bonds will be used for construction, reconstruction or renovation.) M4. ACTUAL FACTS. For purposes of determining compliance with section 148(f)(c) of the Code (other than qualification of the Bonds as a qualified construction issue), the Iss r elects to use actual facts rather than reasonable expectations. 5. NO ELECTION. The Issuer understands that the elections which are adopted as evidenced by the check in the box adjacent to the applicable provision are irrevocable. Further, the Issuer understands that qualification of the Bonds for eligibility for the exclusion from the rebate requirement set forth in section 148(f) of the Code is based on subsequent events and is unaffected by the Issuer's expectations of such events as of the date of delivery of the Bonds. Accordingly, while failure to execute this certificate and to designate the intended election does not preclude qualification, it would preclude the Issuer from the relief a fforded by such election. DATED: Chief Financial Officer City of Georgetown, Texas 113 East 8th Street Georgetown, Texas 78627 Employer I.D. Number: 74-6000974 Exhibit 'D" SCHEDULES OF FINANCIAL ADVISOR [To be attached hereto] FINAL City of Georgetown, Texas $11,930,000 General Obligation Bonds, Series 2010A Dated 10/01/2010 1 Delivered 10/28/2010 Sources Of Funds of Bonds Reoffering Premium ......................................... -------------------------------- ......... --------------------------------- Accrued Interest from ----.................__----------------------..-........-----........-----------............................-_-------------- - 10/01/2010 to 10/28/2010 .............. Total Sources Uses Of Funds 11.930.000.00 76,722.75 25,930.78 ................... -..--------------._... --------------------------- X12,032,653.53 Total Underwriter's Discount (0.634%0) ........ ........._.... --------------............--------------------------.......---...............---------.. ........... _ ------ - -.75,653.85 Costs of Issuance 90,000.00 ...--------- ----...._...........I .............. ----- ----..-.....-........................------------.......-........_...........-...........--.......................... M - MM ---- Deposit to Deb2530 t Se-rvice Fund ,9.78 ---- ------- - ------- --- _... --- - - ---------- ---.._..... - .. ----__ -------------------..........------- ----- ..._.._....------ ------------ ------ ------ ------- Deposit to Project Construction Fund 11,840,000.00 _ __._. .-. ...._.. _ _-. .......-.-.... _ _.. . ___.- Rounding Amount 1,068.90 - ................_....... - ......_.............__..... -- . - ..................__..... .......--............... Total Uses 10A $11.935mm FINAL (10/1 1 SINGLE PURPOSE 1 10/12/2010 1 3:26 PM City of Georgetown, Texas $11,930,000 General Obligation Bonds, Series 2010A Bid Information Par Amount of Bonds ..................._... ------------------ ...............-------------.-.................. ............................. $11,930,000.00 ......--------------- ....................... ...... ....--._...................... Type of 76,722:75 Gross Production1. $12 006,722.75 Total Underwriter's Discount ( 0.634% ....................._...-_..-.......-------......................._.....------ 75,653.85 ....._.._.__.....---------- ......... - )... ....................................................-..-------.�......................... Bid (100.009%) 11,931,068.90 .......... ---------.-................................. ..-- - ..... ........ .-----.._.-.....---------..-----.............._...._.... -------------........... - .......------------------- Maturity Bond Coupon Yield Maturity Value Price Dollar Price 08/15/2012 Serial Coupon 2.000% 0.750% 11500.00 _-- 102.226% -- ------------- 117,559.90 08/15/2013 Serial Coupon 2.000% 0.950% 480,000.00 102.891% 493,876.80 08/15/2014 Serial Coupon 2.000% 1.150% 50000.00 103.148% 515,740.00 08/15/2015 Serial Coupon 2.000% 1.400% 515,000.00 102.773% 529,280.95 08/15/2016 Serial Coupon 2.000% 1.700% 535,000.00 101.648% 5431816.80 08/15/2017 Serial Coupon 2.250% 2.000% 555,000.00 101.580% 5635769.00 08/15/2018 Serial Coupon 2.250% 2.150% 575,000.00 100.712% 579,094.00 08/15/2019 Serial Coupon 2.500% 2.350% 595,000.00 101.184% 602,044.80 08/15/2020 Serial Coupon 2.500% 2.550% 615,000.00 99.567% 612,337.05 08/15/2021 Serial Coupon 3.000% 2.800% 63500.00 101.547% c 644,823.45 08/15/2022 Serial Coupon 3.000% 2.950% 6555000.00 100.382% c 657,502.10 08/15/2023 Serial Coupon 3.000% 3.050% 680,000.00 99.470% 676,396.00 08/15/2024 Serial Coupon 3.125% 3.150% 70500.00 99.719% 703,018.95 08/15/2025 Serial Coupon 3.375% 3.250% 73000.00 100.946% c 736,905.80 08/15/2026 Serial Coupon 3.500% 3.350% 7555000.00 101.131% c 763,539.05 08/15/2027 Serial Coupon 3.500% 3.400% 780,000.00 100.751% c 7857857.80 08/15/2028 Serial Coupon 3.500% 3.500% 810,000.00 100.000% 810,000.00 08/15/2029 Serial Coupon 3.500% 3.550% 8355000.00 99.314% 829,271.90 08/15/2030 Serial Coupon 3.500% 3.650% 8607000.00 97.894% 8415888.40 Total - - - $11,9305000.00 - $12,0061722.75 Bid Information Par Amount of Bonds ..................._... ------------------ ...............-------------.-.................. ............................. $11,930,000.00 ......--------------- ....................... ...... ....--._...................... .......... Reoffering Premium or (Discount? 76,722:75 Gross Production1. $12 006,722.75 Total Underwriter's Discount ( 0.634% ....................._...-_..-.......-------......................._.....------ 75,653.85 ....._.._.__.....---------- ......... - )... ....................................................-..-------.�......................... Bid (100.009%) 11,931,068.90 .......... ---------.-................................. ..-- - ..... ........ .-----.._.-.....---------..-----.............._...._.... -------------........... - .......------------------- Accrued Interest from 10/01/2010 to 10/28/2010 Total Purchase Price Bond Year Dollars ----------------- .................. Average Life Average Coupon Net Interest Cost (NIC) - - -------I .............. - True Interest Cost (TIC) 10A $11.935mm FINAL (10/1 1 SINGLE PURPOSE 1 10/12/2010 1 3:26 PM 25,930.78 $11,956,999.68 $144,515.86 ............ ................. .................. ... . . . . . . . . . . . . . . I ..............._......... 12.114 Years ----------- _--------------------------------..._..------ 3.1598499% ----------------- --.._--- -----------. _-- ..............----- -- ------------- 3.1591102% 3.1040865% F®RMA City of Georgetown, Texas $11,930,000 General Obligation Bonds, Series 2010A Debt Service Schedule Part 1 of 2 Date Principal Coupon Interest Total P¢I Fiscal Total 10/28/2010 - 02/15/2012 474,437.26 474,437.26 08/15/2012 11500.00 2.000% 1725871.88 2875871.88 - 09/30/2012 762,309.14 02/15/2013 171,721.88 ..1 ...... 171,721.88 _.-.. ....... ......... ............. 08/15/2013 4809000.00 2.000% 171,721.88 651,721.88 09/30/2013 823,443.76 02/15/2014 - 166,921.88 1665921.88 08/15/2014 500,000.00 2.000% 166,921.88 6662921.88 - 09/30/2014 ...I... - - 833,843.76 _. 02/15/2015 __- .I..... __- -..... 161,921.88 161,921.88 - 08/15/2015 5152000.00 2.000% 161,921.88 676,921.88 - 09/30/2015 - - - 838,843.76 02/15/2016 - 156,771.88 156,771.88 - 08/15/2016 53500.00 2.000% 156,771.88 6915771.88 09/30/2016 - 848,543.76 02/15/2017 - 151,421.88 151,421.88 - 08/15/2017 555,000.00 2.250% 151,421.88 706,421.88 09/30/2017 857, 843.76 02/15/2018 145,178.13 145,178.13 -------------------........ --- ... ................. ...._._......_.. ---- --- - ---._..............-- 08/15/2018 ......-.....-.-........-------...-------------------------------------...__..._..._...._._...................-------------- 575,000.00 2.250% 145,178.13 7205178.13 09/30/2018 865,356.26 02/15/2019 138,709.38 138,709.38 08/15/2019 595,000.00 2.500% 138,709.38 733,709.38 09/30/2019 - _----_..._..-.------------ - 872,418.76 . _.._._......._-----------------------------------------------------------_----.-..-..._............_.-..------._.-..........------------ 02/15/2020 ---------- 131,271.88 131,271.88 08/15/2020 61500.00 2.500% 131,271.88 746,271.88 09/30/2020 - 877,543.76 02/15/2021 - 123,584.38 1235584.38 - 08/15/2021 ---- --- - ------ -- 635,000.00 . -----...... ............. ----------------------------------------------------- 3.000% 123,584.38 ............._....._._ -------------------------------------....__._......_-------------_......._._..-.- 758,584.38 09/30/2021 - 8827168.76 02/15/2022 - 114,059.38 114,059.38 - 08/15/2022 655,000.00 3.000% 114,059.38 769,059.38 - 09/30/2022 - 883,118.76 02/15/2023 - 104,234.38 104,234.38 --- - - ----...-..__ ..................-..-..-------- --------------------------------------- ._...._._.-_...__......-------.....-----------------------------.._._...----------------- ------------- -------- *------- ..-....... 08/15/2023 680,000.00 3.000% 104,234.38 784,234.38 09/30/2023 - 888,468.76 02/15/2024 942034.38 941034.38 08/15/2024 705,000.00 3.125% 947034.38 799,034.38 09/30/2024 893,068.76 10A $11.935mm FINAL (10/1 I SINGLE PURPOSE 1 10/12/2010 1 3:26 PM FINAL City of Georgetown, Texas $11,930,000 General Obligation Bonds, Series 2010A Part 2 of 2 Date Principal Coupon Interest Total P+I Fiscal Total 02/15/2025 10/28/2010 ---------- - ......... .------------------- 832018.75 83,018.75 08/15/2025 730,000.00 3.375% 83,018.75 8137018.75 09/30/2025 896,037.50 02/15/2026 70,700.00 703700.00 - 08/15/2026 7555000.00 3.500% 70,700.00 825,700.00 09/30/2026 - 8963400.00 02/15/2027 57,487.50 57,487.50 08/15/2027 780,000.00 3.500% 575487.50 837,487.50 09/30/2027 - 894,975.00 02/15/2028 435837.50 43,837.50 08/15/2028 810,000.00 3.500% 43,837.50 853,837.50 09/30/2028 897,675.00 02/15/2029 - 29,662.50 297662.50 08/15/2029 835,000.00 3.500% 29,662.50 864,662.50 09/30/2029 ....... - ..._.. 894,325.00 ...- 02/15/2030 _ -.--...... ......I.. - _...... 15,050.00 - -. 151050.00 08/15/2030 860,000.00 3.500% 15,050.00 875,050.00 09/30/2030 890,100.00 Total $11,930,000.00 - $49566,484.26 $1654965484.26 - Yield Statistics Accrued Interest from 10/01/2010 to .._------------------------------------_................. 10/28/2010 ---------- Bond Year Dollars -.......................... ......... .------------------- Average Life Average Coupon _. Net Interest Cost (NIC) True Interest Cost (TIC) ...................----------------------------- --....... ............. ................... ....----------------- --........ ..................... Bond Yield for Arbitrage Purposes----------- _..........____...... .-.------------------------------------------- All Inclusive Cost (AIC) 25,930.78 ...._.........--- - .... .....................................-- $144,515.86 ............ ........._..-............ ------ .............. .......... --- --- ----------------------.. -- -------- ----12.114 Years 3.1598499% 3.1591102% ..................................-_.-- ................................ ...... 3.1040865% - _.....-.....-....................................__- ------.......... 3.0414072% - ....... ....... ..------ ...... - ._.._... 3.1824675% IRS Form 8038 Net Interest Cost 3.0828103% ......................................................... .............._...--------------------------- ....._.. - .................... ---------------- ---......................---------- - -._....-... ---------------------- Weighted Average Maturity 12.060 Years 10A $11.935mm FINAL (10/1 1 SINGLE PURPOSE 1 10/12/2010 1 3:26 PM 1210M City of Georgetown, Texas $11,930,000 General Obligation Bonds, Series 2010A 1111111111 1 1 1 i 1 1 Ii1 11 J' t Date Cashflow PV Factor Present Value Cumulative PV 10/28/2010 1.0000000x 02/15/2012 4741437.26 0.9615999x 456,218.82 456,218.82 08/15/2012 2873871.88 0.9471958x 272,671.05 728,889.87 02/15/2013 1713721.88 0.9330076x 160,217.81 889,107.68 .. .....2013 ................... .........------------651,721.88........._...__..__....09190318x ............ ........._....._--------- ..... 3:14................... 1488,Ob0:83 02/15/2014 166,921.88 0.9052654x 151,108.61 1,639,169.43 08/15/2014 666,921.88 0.8917052x 594,697.72 2,233,867.15 02/15/2015 1615921.88 0.878348lx 142,223.78 2,376,090.94 08/15/2015 676,921.88 0.8651912x 585,666.82 21961,757.76 02/15/2016 156,771.88 0.8522312x ........ 133,605.89 ..... 3,095,363.66 _. ........ 1.. 08/15/2016 691,771.88 0.8394655x 580,718.60 3,676,082.26 02/15/2017 151,421.88 0.8268909x 125,209.38 3,801,291.63 08/15/2017 7063421.88 0.8145047x 5755383.94 4,376,675.58 02/15/2018 1455178.13 0.8023040x 1163477.00 4,493,152.58 08/15/2018 ............... - -.720,178.13......__.._..._.............0:7902861x._....... ... _........_56 --- ...... 5,062,299.36 02/15/2019 1385709.38 0.7784482x 1071978.07 55170,277.43 08/15/2019 733,709.38 0.7667877x 5622599.30 5,7321876.74 02/15/2020 1313271.88 0.7553018x 99,149.88 5,832,026.62 08/15/2020 7463271.88 0.7439879x 555,217.26 61387,243.88 02/15/2021 123,584.38 _...... _ _.-... 0.7328435x ......... 90,568.01 6 477 811.89 08/15/2021 758,584.38 0.721866lx 547,596.34 750252408.24 02/15/2022 1147059.38 0.7110531x 81,102.27 73106,510.51 08/15/2022 769,059.38 0.7004020x 538,650.76 77645,161.27 02/15/2023 104,234.38 0.6899105x 715912.40 737171073.67 08/15/2023 250,020 .70- --- ... ----------------------------- 02/15/2024 --784,234.38........-----------------.0,6795762x........._.._..._... 943034.38 0.6693967x ........532,947.03.................... 62,946.30 -----------8, 83312,967.00 08/15/2024 7991034.38 0.6593696x 5265858.99 8,8393825.99 02/15/2025 83,018.75 0.6494928x 53,920.08 8,8935746.07 08/15/2025 813,018.75 0.6397638x 520,140.00 924133886.06 02/15/2026 ........................... 0.6301807x_._......... . . ....44,553.77............------------------ 9,458,439.84------------------ - . _........._._........_...------70,700.00 0815/2026 825,700.00 0.6207410x 512,545.87 9,970,985.71 02/15/2027 573487.50 0.6114428x 355150.32 10,006,136.02 08/15/2027 837,487.50 0.6022838x 5047405.19 10,5103541.22 02/15/2028 43,837.50 0.593262lx 26,007.13 105536,548.34 08/15/2028853,837.50 0.5843755x 498,961.69 _- __11,035,510.03 02/15/2029 29,662.50 0.5756220x 17,074.39 11,052,584.42 08/15/2029 8642662.50 0.5669996x 490,263.28 11,542,847.69 02/15/2030 15,050.00 0.5585064x 8,405.52 11,551,253.22 08/15/2030 875,050.00 0.5501404x 4811400.31 12,032,653.53 Total $16,4961484.26 $12,032,653.53 Derivation Of Target Amount Par Amount of Bonds 5115930,000.00 Reoffering Premium or Discount _. _....... 76 722.75 ........ ....._... -....... ..) . .._. ......... _..._. .. ......... .._... ..... Accrued Interest from 10/01/2010 to 10/28/2010 25,930.78 Original Issue Proceeds 512,032,653.53 10A $11.935mm FINAL (10/1 1 SINGLE PURPOSE 1 10/1212010 1 3:26 PM City of Georgetown, 'texas $11,930,000 General Obligation Bonds, Series 2010A Maturity Issuance Value Price Issuance Price Exponent Bond Years 10/28/2010 - - 35152,626.84 08/15/2017 555,000.00 08/15/2012 1151000.00 102.226% 117,559.90 1.7972222x 211,281.26 08/15/2013 480,000.00 102.891% 493,876.80 2.7972222x 579,094.00 1,3811483.16 7.7972222x 08/15/2014 50000.00 103.148% 515,740.00 3.7972222x 11958,379.39 08/15/2015 515.000.00 102.773% 529,280.95 4.7972222x 2,539,078.34 61500.00 08/15/2016 5352000.00 101.648% 543,816.80 5.7972222x 35152,626.84 08/15/2017 555,000.00 101.580% 563,769.00 6.7972222x 318322063.18 08/15/2018 5755000.00 100.712% 579,094.00 7.7972222x 41515,324.61 08/15/2019 595,000.00 101.184% 602,044.80 8.7972222x 5,296,321.89 08/15/2020 61500.00 99.567% 612,337.05 9.7972222x 5,999,202.15 08/15/2021 635,000.00 101.547% 644,823.45 10.7972222x 6,962,302.08 08/15/2022 655,000.00 100.382% 657,502.10 11.7972222x 7,7565698.39 08/15/2023 6807000.00 99.470% 676,396.00 12.7972222x 81655,989.92 08/15/2024 705,000.00 99.719% 703,018.95 13.7972222x 9,699,708.68 08/15/2025 730,000.00 100.946% 736,905.80 14.7972222x 10,904,158.88 08/15/2026 75500.00 101.131% 7637539.05 15.7972222x 12,0615796.05 08/15/2027 78000.00 100.751% 785,857.80 16.7972222x 13,200,228.10 08/15/2028 810,000.00 100.000% 8101000.00 17.7972222x 145415,750.00 08/15/2029 835,000.00 99.314% 829,271.90 18.7972222x 15,588,008.19 08/15/2030 _.._..-..-------------------------------------------- 860,000.00 ----------- -------............_.._._..........___..._..._....-....----------------------------------------.........__......._._................. 97.894% 841,888.40 19.7972222x 16,667,051.74 .....--_........... Total $115930,000.00 $12,006,722.75 - $144,797,452.84 Weighted Average Maturity = Bond Years/Issue Price ------- 12.060 Years Total Interest from Debt Service 455661484.26 ............._ ......__-------------------------------------.......-...-................................................_...........................------------................................................__......................... Accrued Interest from 10/01/2010 to 10/28/2010 (25 930.78) ........................._...__......_........... ................ ....-------------------..........................................................--------------- -- ---------------..........................a..-------- .. Reoffering (Premium) or Discount (76,722.75) .................................... ............... ...........................-----------.....------........-...-..---------------------------.-.-.-----..... Total Interest NIC = Interest / (Issue Price * Average Maturity) - ...- --------- ........... Bond Yield for 10A $11.935mm FINAL (10/1 1 SINGLE PURPOSE 1 10/12/2010 1 3:26 PM 73 3.0828103% 3.0414072% DATED as of October 28, 2010. CITY OF GEORGETOWN, TEXAS Micki Kundell Chief Financial Officer City of Georgetown, General Obligation Bonds, Series 2010A Exhibit "C" CERTIFICATE OF ELECTION PURSUANT TO SECTION 148(f)(4)(C) OF THE INTERNAL REVENUE CODE OF 1986 I, the undersigned, being the duly authorized representative of the City of Georgetown, Texas (the "Issuer") hereby state that the Issuer elects the provisions of section 148(f)(4)(C) of the Internal Revenue Code of 1986 (the "Code"), relating to the exception to arbitrage rebate for temporary investments, as more specifically designated below, with respect to the Issuer's General Obligation Bonds, Series 2010A (the "Bonds") which are being issued on the date of delivery of the Bonds in a face amount equal to $11,930,000. The CUSIP Number for the Bonds is stated on the Form 8038-G filed in connection with the Bonds. The Issuer intends to take action to comply with the two-year temporary investments exception to rebate afforded construction certificates under section 148(f)(4)(C) of the Code. Capitalized terms have the same meaning as defined in the Federal Tax Certificate. ® 1. PENALTY ELECTION. In the event that the Issuer should fail to expend the "available construction proceeds" of the Bonds in accordance with the provisions of section 148(f)(4)(C) of the Code, the Issuer elects, in lieu of rebate, the penalty provisions of section 148(f)(4)(C)(vii)(I) of the Code. M 2. RESERVE FUND ELECTION. The Issuer elects to exclude from "available construction proceeds," within the meaning of section 148(f)(4)(C)(vi) of the Code, of the Bonds, earnings on the Reserve Fund in accordance with section 148(f)(4)(C)(vi)(IV) of the Code. M 3. MULTIPURPOSE ELECTION. The Issuer elects to treat that portion of the Bonds the proceeds of which are to be used for the payment of expenditures for construction, reconstruction or rehabilitation of the Projects, as defined in the instrument authorizing the issuance of the Bonds, in an amount which is currently expected to be equal to $ as a separate issue in accordance with the provisions of section 148(f)(4)(C)(v)(II) of the Code. (Note: This election is not necessary unless less than 75 percent of the proceeds of the Bonds will be used for construction, reconstruction or renovation) M4. ACTUAL FACTS. For purposes of determining compliance with section 148(f)(c) of the Code (other than qualification of the Bonds as a qualified construction issue), the Is er elects to use actual facts rather than reasonable expectations. 5. NO ELECTION. The Issuer understands that the elections which are adopted as evidenced by the check in the box adjacent to the applicable provision are irrevocable. Further, the Issuer understands that qualification of the Bonds for eligibility for the exclusion from the rebate requirement set forth in section 148(f) of the Code is based on subsequent events and is unaffected by the Issuer's expectations of such events as of the date of delivery of the Bonds. Accordingly, while Failure to execute this certificate and to designate the intended election does not preclude qualification, it would preclude the Issuer From the relief afforded by such election. Chief Financial Officer City of Georgetown, Texas 113 East 8th Street Georgetown, Texas 78627 Employer I.D. Number: 74-6000974