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Item 6CM E M O R A N D U M April 13, 2010 To: Shana Yelverton, City Manager From: Sharen Jackson, Director of Finance Subject: Ordnance No. 973, Authorizing the issuance of General Obligation Refunding Bonds, Series 2010 Action Requested: Approvalof Ordinance No. 973 Background Information: City staff and our financial advisor have continued to monitor the market to ensure that we capitalize on any refunding opportunities. Based on the current market, it would be advantageous for the city to refund the bonds noted. The refunding will result in the City saving approximately $2,174,532in debt service payments and further provide present value savings of approximately $1,817,730. The certificates are issued and approved by adoption of an ordinance. Approval of Ordinance No. 973will set in motion the legal requirements to obtain the proceeds to refund the bonds. After approval, the legal documents must be reviewed by the Texas Attorney General’s Office. The City would redeem the outstanding bonds in May. Financial Considerations: The debt will be repaid through the City’s utility fund and debt service of the City’s property tax rate. Strategic Link: F1Adhere to financial management principles and budget Citizen Input/ Board Review: Public hearing scheduled for April 20, 2010 Legal Review: The law firm Fulbright and Jaworski serves as the City’s bond counsel, and as such has prepared the Ordinance. Alternatives: None Honorable Mayor and City Council Page 2of 2 Supporting Documents: Ordinance No. 973 Staff Recommendation: Approval of Ordinance No. 973 ORDINANCE NO. ____ AN ORDINANCE authorizing the issuance of “CITY OF SOUTHLAKE, TEXAS, GENERAL OBLIGATION REFUNDING BONDS, SERIES 2010”; specifying the terms and features of said bonds; levying a continuing direct annual ad valorem tax for the payment of said bonds; and resolving other matters incident and related to the issuance, sale, payment and delivery of said bonds, including the approval and execution of a Paying Agent/Registrar Agreement, and a Purchase Agreement; providing for the redemption of certain outstanding obligations of the City; and providing an effective date. WHEREAS, the City Council of the City of Southlake, Texas (the “City”) has heretofore issued, sold, and delivered, and there is currently outstanding, obligations totaling in principal amount $27,655,000 (collectively, the “Refunded Obligations”) more particularly described as follows: (1) City of Southlake, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1999, dated April 1, 1999, scheduled to mature on February 15 in each of the years 2011 and 2012, and aggregating in principal amount of $1,755,000 (the “Series 1999 Refunded Obligations”); (2) City of Southlake, Texas, Tax and Waterworks and Sewer System Surplus Revenue Certificates of Obligation, Series 2000A, dated March 1, 2000, scheduled to mature on February 15, 2011, in the aggregate principal amount of $455,000 (the “Series 2000A Refunded Obligations”); (3) City of Southlake, Texas, Tax and Limited Pledge Revenue Certificates of Obligation, Series 2000C, dated December 1, 2000, scheduled to mature on August 15 in each of the years 2011 through 2013, inclusive, and aggregating in principal amount of $470,000 (the “Series 2000C Refunded Obligations”); (4) City of Southlake, Texas, Tax and Waterworks and Sewer System Surplus Revenue Certificates of Obligation, Series 2000D, dated December 1, 2000, scheduled to mature on February 15 in each of the years 2011 through 2013, inclusive, and aggregating in principal amount of $1,180,000 (the “Series 2000D Refunded Obligations”); (5) City of Southlake, Texas, Tax and Tax Increment Revenue Certificates of Obligation (Reinvestment Zone #1), Series 2000E, dated December 1, 2000, scheduled to mature on February 15 in each of the years 2011 through 2018, inclusive, and aggregating in principal amount of $1,130,000 (the “Series 2000E Refunded Obligations”); (6) City of Southlake, Texas, General Obligation Refunding and Improvement Bonds, Series 2003, dated April 15, 2003, scheduled to mature on 90005479.2/11000319 February 15 in each of the years 2011 through 2018, inclusive, and aggregating in principal amount of $2,195,000 (the “Series 2003 Refunded Obligations”); (7) City of Southlake, Texas, Tax and Tax Increment Revenue Certificates of Obligation (Reinvestment Zone #1), Series 2003A, dated April 15, 2003, scheduled to mature on February 15 in each of the years 2011 through 2018, inclusive, and aggregating in principal amount of $4,045,000 (the “Series 2003A Refunded Certificates”); (8) City of Southlake, Texas, Tax and Tax Increment Revenue Refunding Bonds (Reinvestment Zone #1), Series 2003A, dated April 15, 2003, scheduled to mature on February 15 in each of the years 2011 through 2018, inclusive, and aggregating in principal amount of $8,785,000 (the “Series 2003A Refunded Bonds”); (9) City of Southlake, Texas, Tax and Waterworks and Sewer System Surplus Revenue Certificates of Obligation, Series 2003, dated April 15, 2003, scheduled to mature on February 15 in each of the years 2011 through 2023, inclusive, and aggregating in principal amount of $7,650,000 (the “Series 2003 Refunded Obligations”); AND WHEREAS, pursuant to the provisions of Texas Government Code, Chapter 1207, as amended, the City Council is authorized to issue refunding bonds and deposit the proceeds of sale directly with the place of payment for the Refunded Obligations, or other authorized depository, and such deposit, when made in accordance with said statute, and the ordinances authorizing the issuance of the Refunded Obligations, shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Refunded Obligation; and WHEREAS, the City Council hereby finds and determines that general obligation refunding bonds should be issued at this time to refund the Refunded Obligations, and such refunding will result in the City saving approximately $_________ in debt service payments on such indebtedness and further provide present value savings of approximately $__________; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: SECTION 1:Authorization - Designation - Principal Amount-Purpose. General obligation refunding bonds of the City shall be and are hereby authorized to be issued in the aggregate principal amount of $28,050,000 to be designated and bear the title “CITY OF SOUTHLAKE, TEXAS, GENERAL OBLIGATION REFUNDING BONDS, SERIES 2010” (hereinafter referred to as the “Bonds”), for the purpose of providing funds for the discharge and final payment of certain outstanding obligations of the City (identified in the preamble hereof and referred to as the “Refunded Obligations”) and to pay costs of issuance, in accordance with authority conferred by and in conformity with the Constitution and laws of the State of Texas, including Texas Government Code, Chapter 1207. 2 90005479.2/11000319 SECTION 2:Fully Registered Obligations - Bond Date - Authorized Denominations Stated Maturities - Interest Rates. The Bonds shall be issued as fully registered obligations only, shall be dated May 1, 2010 (the “Issue Date”), shall be in denominations of $5,000 or any integral multiple (within a Stated Maturity, except for the single Initial Bond referenced in Section 8) thereof, and shall become due and payable on February 15 in each of the years and in principal amounts (the “Stated Maturities”) and bear interest at the rate(s) per annum in accordance with the following schedule: YEAR OF PRINCIPAL INTEREST MATURITYAMOUNTRATE(S) 2011 $ 4,985,000% 2012 4,140,000% 2013 3,455,000% 2014 2,990,000% 2015 3,070,000% 2016 2,805,000% 2017 2,885,000% 2018 2,975,000% 2019 140,000% 2020 145,000% 2021 145,000% 2022 155,000% 2023 160,000% The Bonds shall bear interest on the unpaid principal amounts from Issue Date at the rates per annum shown above in this Section (calculated on the basis of a 360-day year of twelve 30-day months). Interest on the Bonds shall be payable on February 15 and August 15 in each year, commencing August 15, 2010. SECTION 3:Terms of Payment - Paying Agent/Registrar. The principal of, premium, if any, and the interest on the Bonds, due and payable by reason of maturity, redemption or otherwise, shall be payable only to the registered owners or holders of the Bonds (hereinafter called the “Holders”) appearing on the registration and transfer books maintained by the Paying Agent/Registrar, and the payment thereof shall be in any coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, and shall be without exchange or collection charges to the Holders. The selection and appointment of The Bank of New York Mellon Trust Company, N.A., Dallas, Texas, to serve as Paying Agent/Registrar for the Bonds is hereby approved and confirmed. Books and records relating to the registration, payment, exchange and transfer of the Bonds (the “Security Register”) shall at all times be kept and maintained on behalf of the City by the Paying Agent/Registrar, all as provided herein, in accordance with the terms and provisions of a “Paying Agent/Registrar Agreement”, substantially in the form attached hereto as Exhibit A , and such reasonable rules and regulations as the Paying Agent/Registrar and the City may prescribe. The Mayor or Mayor Pro Tem and City Secretary are hereby authorized to execute and deliver such Paying Agent/Registrar Agreement in connection with the delivery of the Bonds. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Bonds are paid and discharged, and any successor Paying Agent/Registrar shall be a 3 90005479.2/11000319 commercial bank, trust company, financial institution or other entity qualified and authorized to serve in such capacity and perform the duties and services of Paying Agent/Registrar. Upon any change in the Paying Agent/Registrar for the Bonds, the City agrees to promptly cause a written notice thereof to be sent to each Holder by United States Mail, first class postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. Principal of and premium, if any, on the Bonds shall be payable at the Stated Maturities or redemption, only upon presentation and surrender of the Bonds to the Paying Agent/Registrar at its designated offices initially in Dallas, Texas, or with respect to a successor Paying Agent/Registrar, at the designated offices of such successor (the “Designated Payment/Transfer Office”). Interest on the Bonds shall be paid to the Holders whose name appears in the Security Register at the close of business on the Record Date (the last business day of the month next preceding each interest payment date) and shall be paid by the Paying Agent/Registrar (i) by check sent United States Mail, first class postage prepaid, to the address of the Holder recorded in the Security Register or (ii) by such other method, acceptable to the Paying Agent/ Registrar, requested by, and at the risk and expense of, the Holder. If the date for the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions in the city where the Designated Payment/Transfer 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 when 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. In the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a “Special Record Date”) will be established by the Paying Agent/ Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (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 Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. SECTION 4:Redemption. (a) Optional Redemption. The Bonds having Stated Maturities on and after February 15, 2020 shall be subject to redemption prior to maturity, at the option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on February 15, 2019 or on any date thereafter at the redemption price of par plus accrued interest to the date of redemption. (b) Exercise of Redemption Option. At least forty-five (45) days prior to a redemption date for the Bonds (unless a shorter notification period shall be satisfactory to the Paying Agent/Registrar), the City shall notify the Paying Agent/Registrar of the decision to redeem Bonds, the principal amount of each Stated Maturity to be redeemed, and the date of redemption therefor. The decision of the City to exercise the right to redeem Bonds shall be entered in the minutes of the governing body of the City. 4 90005479.2/11000319 (c) Selection of Bonds for Redemption. If less than all Outstanding Bonds of the same Stated Maturity are to be redeemed on a redemption date, the Paying Agent/Registrar shall treat such Bonds as representing the number of Bonds Outstanding which is obtained by dividing the principal amount of such Bonds by $5,000 and shall select the Bonds, or the principal amount thereof, to be redeemed within such Stated Maturity by lot. (d) Notice of Redemption. Not less than thirty (30) days prior to a redemption date for the Bonds, a notice of redemption shall be sent by United States Mail, first class postage prepaid, in the name of the City and at the City’s expense, to each Holder of a Bond to be redeemed in whole or in part at the address of the Holder appearing on the Security Register at the close of business on the business day next preceding the date of mailing such notice, and any notice of redemption so mailed shall be conclusively presumed to have been duly given irrespective of whether received by the Holder. All notices of redemption shall (i) specify the date of redemption for the Bonds, (ii) identify the Bonds to be redeemed and, in the case of a portion of the principal amount to be redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price, (iv) state that the Bonds, or the portion of the principal amount thereof to be redeemed, shall become due and payable on the redemption date specified, and the interest thereon, or on the portion of the principal amount thereof to be redeemed, shall cease to accrue from and after the redemption date, and (v) specify that payment of the redemption price for the Bonds, or the principal amount thereof to be redeemed, shall be made at the Designated Payment/Transfer Office of the Paying Agent/Registrar only upon presentation and surrender thereof by the Holder. If a Bond is subject by its terms to prior redemption and has been called for redemption and notice of redemption thereof has been duly given as hereinabove provided, such Bond (or the principal amount thereof to be redeemed) shall become due and payable and interest thereon shall cease to accrue from and after the redemption date therefor; provided moneys sufficient for the payment of such Bond (or of the principal amount thereof to be redeemed) at the then applicable redemption price are held for the purpose of such payment by the Paying Agent/Registrar. (e) Conditional Notice of Redemption. With respect to any optional redemption of the Bonds, unless moneys sufficient to pay the principal of and premium, if any, and interest on the Bonds to be redeemed shall have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice may state that said redemption may, at the option of the City, be conditional upon the receipt of such moneys by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon the satisfaction of any prerequisites set forth in such notice of redemption; and, if sufficient moneys are not received, such notice shall be of no force and effect, the City shall not redeem such Bonds and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, to the effect that the Bonds have not been redeemed. SECTION 5:Registration - Transfer - Exchange of Bonds-Predecessor Bonds. The Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and address of each and every owner of the Bonds issued under and pursuant to the provisions of this Ordinance, or if appropriate, the nominee thereof. Any Bond may be transferred or exchanged for Bonds of other authorized denominations by the Holder, in person or by his duly authorized agent, upon surrender of such Bond to the Paying Agent/Registrar at the Designated 5 90005479.2/11000319 Payment/Transfer Office for cancellation, accompanied by a written instrument of transfer or request for exchange duly executed by the Holder or by his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. Upon surrender of any Bond (except for the single Initial Bond referenced in Section 8 hereof) for transfer at the Designated Payment/Transfer Office of the Paying Agent/Registrar, one or more new Bonds shall be registered and issued to the assignee or transferee of the previous Holder; such Bonds to be in authorized denominations, of like Stated Maturity and of a like aggregate principal amount as the Bond or Bonds surrendered for transfer. At the option of the Holder, Bonds (other than the single Initial Bond referenced in Section 8) may be exchanged for other Bonds of authorized denominations and having the same Stated Maturity, bearing the same rate of interest and of like aggregate principal amount as the Bonds surrendered for exchange, upon surrender of the Bonds to be exchanged at the Designated Payment/Transfer Office of the Paying Agent/ Registrar. Whenever any Bonds are surrendered for exchange, the Paying Agent/Registrar shall register and deliver new Bonds to the Holder requesting the exchange. All Bonds issued in any transfer or exchange of Bonds shall be delivered to the Holders at the Designated Payment/Transfer Office of the Paying Agent/Registrar or sent by United States Mail, first class, postage prepaid to the Holders, and, upon the registration and delivery thereof, the same shall be the valid obligations of the City, evidencing the same obligation to pay, and entitled to the same benefits under this Ordinance, as the Bonds surrendered in such transfer or exchange. All transfers or exchanges of Bonds pursuant to this Section shall be made without expense or service charge to the Holder, except as otherwise herein provided, and except that the Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange of any tax or other governmental charges required to be paid with respect to such transfer or exchange. Bonds cancelled by reason of an exchange or transfer pursuant to the provisions hereof are hereby defined to be “Predecessor Bonds,” evidencing all or a portion, as the case may be, of the same obligation to pay evidenced by the new Bond or Bonds registered and delivered in the exchange or transfer therefor. Additionally, the term “Predecessor Bonds” shall include any mutilated, lost, destroyed, or stolen Bond for which a replacement Bond has been issued, registered and delivered in lieu thereof pursuant to the provisions of Section 10 hereof and such new replacement Bond shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Bond. Neither the City nor the Paying Agent/Registrar shall be required to issue or transfer to an assignee of a Holder any Bond called for redemption, in whole or in part, within 45 days of the date fixed for the redemption of such Bond; provided, however, such limitation on transferability shall not be applicable to an exchange by the Holder of the unredeemed balance of a Bond called for redemption in part. 6 90005479.2/11000319 SECTION 6:Execution - Registration. The Bonds shall be executed on behalf of the City by the Mayor under its seal reproduced or impressed thereon and countersigned by the City Secretary. The signature of said officers on the Bonds may be manual or facsimile. Bonds bearing the manual or facsimile signatures of individuals who are or were the proper officers of the City on the Issue Date shall be deemed to be duly executed on behalf of the City, notwithstanding that such individuals or either of them shall cease to hold such offices at the time of delivery of the Bonds to the initial purchaser(s) and with respect to Bonds delivered in subsequent exchanges and transfers, all as authorized and provided in Texas Government Code, Chapter 1201, as amended. No Bond shall be entitled to any right or benefit under this Ordinance, or be valid or obligatory for any purpose, unless there appears on such Bond either a certificate of registration substantially in the form provided in Section 8(c), manually executed by the Comptroller of Public Accounts of the State of Texas, or his duly authorized agent, or a certificate of registration substantially in the form provided in Section 8(d), manually executed by an authorized officer, employee or representative of the Paying Agent/Registrar, and either such certificate duly signed upon any Bond shall be conclusive evidence, and the only evidence, that such Bond has been duly certified, registered and delivered. SECTION 7:Initial Bond(s). The Bonds herein authorized shall be initially issued either (i) as a single fully registered bond in the total principal amount stated in Section 1 hereof with principal installments to become due and payable as provided in Section 2 hereof and numbered T-1, or (ii) as multiple fully registered bonds, being one bond for each stated maturity in the applicable principal amount and denomination and to be numbered consecutively from T-1 and upward (hereinafter called the “Initial Bond(s)”) and, in either case, the Initial Bond(s) shall be registered in the name of the initial purchaser(s) or the designee thereof. The Initial Bond(s) shall be the Bond(s) submitted to the Office of the Attorney General of the State of Texas for approval, certified and registered by the Office of the Comptroller of Public Accounts of the State of Texas and delivered to the initial purchaser(s). Any time after the delivery of the Initial Bond(s), the Paying Agent/Registrar, pursuant to written instructions from the initial purchaser(s), or the designee thereof, shall cancel the Initial Bond(s) delivered hereunder and exchange therefor definitive Bonds of authorized denominations, Stated Maturities, principal amounts and bearing applicable interest rates for transfer and delivery to the Holders named at the addresses identified therefor; all pursuant to and in accordance with such written instructions from the initial purchaser(s), or the designee thereof, and such other information and documentation as the Paying Agent/Registrar may reasonably require. SECTION 8:Forms. (a) Forms Generally. The Bonds, the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Registration Certificate of Paying Agent/Registrar, and the form of Assignment to be printed on each of the Bonds, shall be substantially in the forms set forth in this Section with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance and may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including insurance legends in the event the Bonds, or any maturities thereof, are purchased with insurance, and any reproduction of an opinion of counsel) thereon as may, consistently herewith, be established by the City or 7 90005479.2/11000319 determined by the officers executing such Bonds as evidenced by their execution. Any portion of the text of any Bonds may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Bond. The definitive Bonds and the Initial Bond(s) shall be printed, lithographed, or engraved or typewritten, photocopied or otherwise reproduced in any other similar manner, all as determined by the officers executing such Bonds as evidenced by their execution thereof. (b)Form of Definitive Bond. REGISTERED REGISTERED NO.______$ UNITED STATES OF AMERICA STATE OF TEXAS CITY OF SOUTHLAKE, TEXAS GENERAL OBLIGATION REFUNDING BOND SERIES 2010 Issue Date: Interest Rate: Stated Maturity: CUSIP NO: May 1, 2010 __________%February 15, 20___ ________ Registered Owner: Principal Amount: The City of Southlake (hereinafter referred to as the “City”), a body corporate and municipal corporation in the Counties of Tarrant and Denton, State of Texas, for value received, acknowledges itself indebted to and hereby promises to pay to the Registered Owner named above, or the registered assigns thereof, on the Stated Maturity date specified above the Principal Amount hereinabove stated (or so much thereof as shall not have been paid upon prior redemption), and to pay interest on the unpaid principal amount hereof from the Issue Date at the per annum rate of interest specified above computed on the basis of a 360-day year of twelve 30-day months; such interest being payable on February 15 and August 15 in each year, commencing August 15, 2010. Principal of this Bond is payable at its Stated Maturity or upon prior redemption to the registered owner hereof, upon presentation and surrender, at the Designated Payment/Transfer Office of the Paying Agent/Registrar executing the registration certificate appearing hereon, or its successor. Interest is payable to the registered owner of this Bond (or one or more Predecessor Bonds, as defined in the Ordinance hereinafter referenced) whose name appears on the “Security Register” maintained by the Paying Agent/Registrar at the close of business on the “Record Date”, which is the last business day of the month next preceding each interest payment date, and interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of the registered owner recorded in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. If the date for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal 8 90005479.2/11000319 holiday, or a day when banking institutions in the city where the Designated Payment/Transfer 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 a day when 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. All payments of principal of, premium, if any, and interest on this Bond shall be without exchange or collection charges to the owner hereof and in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. This Bond is one of the series specified in its title issued in the aggregate principal amount of $28,050,000 (herein referred to as the “Bonds”) for the purpose of providing funds for the discharge and final payment of certain outstanding obligations of the City (identified in the Ordinance hereinafter referenced and referred to as the “Refunded Obligations”) and to pay costs of issuance, under and in strict conformity with the Constitution and laws of the State of Texas, including Texas Government Code, Chapter 1207, as amended, and pursuant to an Ordinance adopted by the City Council of the City (herein referred to as the “Ordinance”). The Bonds maturing on and after February 15, 2020 may be redeemed prior to their Stated Maturities, at the option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on February 15, 2019, or on any date thereafter, at the redemption price of par, together with accrued interest to the date of redemption. At least thirty (30) days prior to the date fixed for any redemption of Bonds, the City shall cause a written notice of such redemption to be sent by United States Mail, first class postage prepaid, to the registered owners of each Bond to be redeemed at the address shown on the Security Register and subject to the terms and provisions relating thereto contained in the Ordinance. If a Bond (or any portion of its principal sum) shall have been duly called for redemption and notice of such redemption duly given, then upon such redemption date such Bond (or the portion of its principal sum to be redeemed) shall become due and payable, and interest thereon shall cease to accrue from and after the redemption date therefor, provided moneys for the payment of the redemption price and the interest on the principal amount to be redeemed to the date of redemption are held for the purpose of such payment by the Paying Agent/Registrar. In the event a portion of the principal amount of a Bond is to be redeemed and the registered owner is someone other than Cede & Co., payment of the redemption price of such principal amount shall be made to the registered owner only upon presentation and surrender of such Bond to the Designated Payment/Transfer Office of the Paying Agent/Registrar, and a new Bond or Bonds of like maturity and interest rate in any authorized denominations provided by the Ordinance for the then unredeemed balance of the principal sum thereof will be issued to the registered owner, without charge. If a Bond is selected for redemption, in whole or in part, the City and the Paying Agent/Registrar shall not be required to transfer such Bond to an assignee of the registered owner within 45 days of the redemption date therefor; provided, however, such limitation on transferability shall not be applicable to an exchange by the registered owner of the unredeemed balance of a Bond redeemed in part. 9 90005479.2/11000319 With respect to any optional redemption of the Bonds, unless moneys sufficient to pay the principal of and premium if any, and interest on the Bonds to be redeemed shall have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice may state that said redemption may, at the option of the City, be conditional upon the receipt of such moneys by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon the satisfaction of any prerequisites set forth in such notice of redemption; and, if sufficient moneys are not received, such notice shall be of no force and effect, the City shall not redeem such Bonds, and the Paying Agent/Registrar shall give notice, in the same manner in which the notice of redemption was given, to the effect that the Bonds have not been redeemed. The Bonds are payable from the proceeds of an ad valorem tax levied, within the limitations prescribed by law, upon all taxable property in the City. Reference is hereby made to the Ordinance, a copy of which is on file in the Designated Payment/Transfer Office of the Paying Agent/Registrar, and to all of the provisions of which the owner or holder of this Bond by the acceptance hereof hereby assents, for definitions of terms; the description of and the nature and extent of the tax levied for the payment of the Bonds; the terms and conditions relating to the transfer or exchange of this Bond; the conditions upon which the Ordinance may be amended or supplemented with or without the consent of the Holders; the rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and provisions upon which this Bond may be discharged at or prior to its maturity, and deemed to be no longer Outstanding thereunder; and for other terms and provisions contained therein. Capitalized terms used herein have the meanings assigned in the Ordinance. This Bond, subject to certain limitations contained in the Ordinance, may be transferred on the Security Register only upon its presentation and surrender at the Designated Payment/Transfer Office of the Paying Agent/Registrar, with the Assignment hereon duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Paying Agent/Registrar duly executed by, the registered owner hereof, or his duly authorized agent. When a transfer on the Security Register occurs, one or more new fully registered Bonds of the same Stated Maturity, of authorized denominations, bearing the same rate of interest, and of the same aggregate principal amount will be issued by the Paying Agent/Registrar to the designated transferee or transferees. The City and the Paying Agent/Registrar, and any agent of either, shall treat the registered owner whose name appears on the Security Register (i) on the Record Date as the owner entitled to payment of interest hereon, (ii) on the date of surrender of this Bond as the owner entitled to payment of principal hereof at its Stated Maturity, or upon its prior redemption, in whole or in part, and (iii) on any other date as the owner for all other purposes, and neither the City nor the Paying Agent/Registrar, or any agent of either, shall be affected by notice to the contrary. In the event of nonpayment of interest on a scheduled payment date and for thirty (30) days thereafter, a new record date for such interest payment (a “Special Record Date”) will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (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, 10 90005479.2/11000319 first class postage prepaid, to the address of each Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. It is hereby certified, recited, represented and declared that the City is a body corporate and political subdivision duly organized and legally existing under and by virtue of the Constitution and laws of the State of Texas; that the issuance of the Bonds is duly authorized by law; that all acts, conditions and things required to exist and be done precedent to and in the issuance of the Bonds to render the same lawful and valid obligations of the City have been properly done, have happened and have been performed in regular and due time, form and manner as required by the Constitution and laws of the State of Texas, and the Ordinance; that the Bonds do not exceed any Constitutional or statutory limitation; and that due provision has been made for the payment of the principal of and interest on the Bonds by the levy of a tax as aforestated. In case any provision in this Bond 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. The terms and provisions of this Bond and the Ordinance shall be construed in accordance with and shall be governed by the laws of the State of Texas. IN WITNESS WHEREOF, the City Council of the City has caused this Bond to be duly executed under the official seal of the City as of the Issue Date. CITY OF SOUTHLAKE, TEXAS Mayor COUNTERSIGNED: City Secretary (SEAL) 11 90005479.2/11000319 (c)Form of Registration Certificate of Comptroller of Public Accounts to appear on Initial Bond(s) only. REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER) ) OF PUBLIC ACCOUNTS )REGISTER NO. ___________________ ) THE STATE OF TEXAS ) 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 duly registered by the Comptroller of Public Accounts of the State of Texas. WITNESS my signature and seal of office this _______________________. Comptroller of Public Accounts of the State of Texas (SEAL) (d)Form of Certificate of Paying Agent/Registrar to appear on Definitive Bonds only. REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR This Bond has been duly issued and registered in the name of the Registered Owner shown above under the provisions of the within-mentioned Ordinance; the bond or bonds of the above entitled and designated series originally delivered having been approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts, as shown by the records of the Paying Agent/Registrar. The designated office of the Paying Agent/Registrar in Dallas, Texas, is the Designated Payment/Transfer Office for this Bond. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., Dallas, Texas, Registration date: as Paying Agent/Registrar __________________________________ By: Authorized Signature 12 90005479.2/11000319 (e)Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto (Print or typewrite name, address, and zip code of transferee:)_______________________ (Social Security or other identifying number____________________________) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: NOTICE: The signature on this assignment must correspond with the Signature guaranteed: name of the registered owner as it appears on the face of the within Bond in every particular. (f)The Initial Bond(s) shall be in the form set forth in paragraph (b)of this Section, except that the form of the single fully registered Initial Bond shall be modified as follows: Heading and first paragraph shall read as follows: REGISTERED REGISTERED NO T-1 $28,050,000 UNITED STATES OF AMERICA STATE OF TEXAS CITY OF SOUTHLAKE, TEXAS GENERAL OBLIGATION REFUNDING BOND SERIES 2010 Issue Date: May 1, 2010 Registered Owner: Principal Amount: TWENTY-EIGHT MILLION FIFTY THOUSAND DOLLARS The City of Southlake (hereinafter referred to as the “City”), a body corporate and municipal corporation in the Counties of Tarrant and Denton, State of Texas, for value received, acknowledges itself indebted to and hereby promises to pay to the Registered Owner named 13 90005479.2/11000319 above, or the registered assigns thereof, the Principal Amount hereinabove stated on February 15 in each of the years and in principal installments in accordance with the following schedule: YEAR OF PRINCIPAL INTEREST MATURITY INSTALLMENTSRATE (information to be inserted from schedule in section 2 hereof). (or so much principal thereof as shall not have been prepaid prior to maturity) and to pay interest on the unpaid Principal Amount hereof from the Issue Date at the per annum rates of interest specified above computed on the basis of a 360-day year of twelve 30-day months; such interest being payable on February 15 and August 15 in each year, commencing August 15, 2010. Principal installments of this Bond are payable in the year of maturity to the registered owner hereof by The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (the “Paying Agent/Registrar”), upon presentation and surrender, at its designated offices in Dallas, Texas; or with respect to a successor paying agent/registrar, at the designated offices of such successor (the “Designated Payment/Transfer Office”). Interest is payable to the registered owner of this Bond whose name appears on the “Security Register” maintained by the Paying Agent/Registrar at the close of business on the “Record Date”, which is the last business day of the month next preceding each interest payment date, and interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of the registered owner recorded in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. 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 when banking institutions in the city where the Designated Payment/Transfer 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 when 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. All payments of principal of, premium, if any, and interest on this Bond shall be without exchange or collection charges to the owner hereof and in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. SECTION 9:Levy of Taxes. To provide for the payment of the “Debt Service Requirements” of the Bonds, being (i) the interest on the Bonds and (ii) a sinking fund for their payment at maturity or redemption or a sinking fund of 2% (whichever amount is the greater), there is hereby levied, and there shall be annually assessed and collected in due time, form, and manner, a tax on all taxable property in the City, within the limitations prescribed by law, and such tax hereby levied on each one hundred dollars’ valuation of taxable property in the City for the Debt Service Requirements of the Bonds shall be at a rate from year to year as will be ample and sufficient to provide funds each year to pay the principal of and interest on said Bonds while Outstanding; full allowance being made for delinquencies and costs of collection; separate books and records relating to the receipt and disbursement of taxes levied, assessed and collected for and on account of the Bonds shall be kept and maintained by the City at all times while the Bonds are Outstanding, and the taxes collected for the payment of the Debt Service Requirements on the Bonds shall be deposited to the credit of a “Special 2010 Refunding Bond 14 90005479.2/11000319 Account” (the “Interest and Sinking Fund”) maintained on the records of the City and deposited in a special fund maintained at an official depository of the City’s funds; and such tax hereby levied, and to be assessed and collected annually, is hereby pledged to the payment of the Bonds. Proper officers of the City are hereby authorized and directed to cause to be transferred to the Paying Agent/ Registrar for the Bonds, from funds on deposit in the Interest and Sinking Fund, amounts sufficient to fully pay and discharge promptly each installment of interest and principal of the Bonds as the same accrues or matures; such transfers of funds to be made in such manner as will cause collected funds to be deposited with the Paying Agent/Registrar on or before each principal and interest payment date for the Bonds. PROVIDED, however, in regard to the payments to become due on the Bonds on August 15, 2010, sufficient current funds will be available and are hereby appropriated to make such payments; and proper officials of the City are hereby authorized and directed to transfer and deposit in the Interest and Sinking Fund such current funds which, together with the accrued interest received from the initial purchasers, will be sufficient to pay the payments on the Bonds on August 15, 2010. SECTION 10:Mutilated - Destroyed - Lost and Stolen Bonds. In case any Bond shall be mutilated, destroyed, lost or stolen, the Paying Agent/Registrar may execute and deliver a replacement Bond of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Bond, or in lieu of and in substitution for such destroyed, lost or stolen Bond, only upon the approval of the City and after (i) the filing by the Holder thereof with the Paying Agent/ Registrar of evidence satisfactory to the Paying Agent/ Registrar of the destruction, loss or theft of such Bond, and of the authenticity of the ownership thereof and (ii) the furnishing to the Paying Agent/Registrar of indemnification in an amount satisfactory to hold the City and the Paying Agent/ Registrar harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Bond shall be borne by the Holder of the Bond mutilated, destroyed, lost or stolen. Every replacement Bond issued pursuant to this Section shall be a valid and binding obligation, and shall be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Bonds; notwithstanding the enforceability of payment by anyone of the destroyed, lost, or stolen Bonds. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement and payment of mutilated, destroyed, lost or stolen Bonds. SECTION 11:Satisfaction of Obligation of City. If the City shall pay or cause to be paid, or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest on the Bonds, at the times and in the manner stipulated in this Ordinance, then the pledge of taxes levied under this Ordinance and all covenants, agreements, and other obligations of the City to the Holders shall thereupon cease, terminate, and be discharged and satisfied. 15 90005479.2/11000319 Bonds or any principal amount(s) thereof shall be deemed to have been paid within the meaning and with the effect expressed above in this Section when (i) money sufficient to pay in full such Bonds or the principal amount(s) thereof at maturity or to the redemption date therefor, together with all interest due thereon, shall have been irrevocably deposited with and held in trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) Government Securities shall have been irrevocably deposited in trust with the Paying Agent/Registrar, or an authorized escrow agent, which Government Securities have been certified by an independent accounting firm to mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money, together with any moneys deposited therewith, if any, to pay when due the principal of and interest on such Bonds, or the principal amount(s) thereof, on and prior to the Stated Maturity thereof or (if notice of redemption has been duly given or waived or if irrevocable arrangements therefor acceptable to the Paying Agent/Registrar have been made) the redemption date thereof. The City covenants that no deposit of moneys or Government Securities will be made under this Section and no use made of any such deposit which would cause the Bonds to be treated as “arbitrage bonds” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or regulations adopted pursuant thereto. Any moneys so deposited with the Paying Agent/Registrar, or an authorized escrow agent, and all income from Government Securities held in trust by the Paying Agent/Registrar, or an authorized escrow agent, pursuant to this Section which is not required for the payment of the Bonds, or any principal amount(s) thereof, or interest thereon with respect to which such moneys have been so deposited shall be remitted to the City or deposited as directed by the City. Furthermore, any money held by the Paying Agent/Registrar for the payment of the principal of and interest on the Bonds and remaining unclaimed for a period of three (3) years after the Stated Maturity, or applicable redemption date, of the Bonds such moneys were deposited and are held in trust to pay shall upon the request of the City be remitted to the City against a written receipt therefor. Notwithstanding the above and foregoing, any remittance of funds from the Paying Agent/Registrar to the City shall be subject to any applicable unclaimed property laws of the State of Texas. The term “Government Securities”, as used herein, means (i) direct noncallable obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, (ii) noncallable obligations of an agency or instrumentality of the United States, including obligations unconditionally guaranteed or insured by the agency or instrumentality and on the date of their acquisition or purchase by the City are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent and (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 of their acquisition or purchase by the City, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. SECTION 12:Ordinance a Contract - Amendments - Outstanding Bonds. This Ordinance shall constitute a contract with the Holders from time to time, be binding on the City, and shall not be amended or repealed by the City so long as any Bond remains Outstanding except as permitted in this Section. The City may, without the consent of or notice to any 16 90005479.2/11000319 Holders, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Holders, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the City may, with the consent of Holders holding a majority in aggregate principal amount of the Bonds then Outstanding, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders of Outstanding Bonds, no such amendment, addition, or rescission shall (1) extend the time or times of payment of the principal of, premium, if any, and interest on the Bonds, reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Bonds, (2) give any preference to any Bond over any other Bond, or (3) reduce the aggregate principal amount of Bonds required to be held by Holders for consent to any such amendment, addition, or rescission. The term “Outstanding” when used in this Ordinance with respect to Bonds means, as of the date of determination, all Bonds theretofore issued and delivered under this Ordinance, except: (1) those Bonds cancelled by the Paying Agent/Registrar or delivered to the Paying Agent/Registrar for cancellation; (2) those Bonds deemed to be duly paid by the City in accordance with the provisions of Section 12 hereof; and (3) those mutilated, destroyed, lost, or stolen Bonds which have been replaced with Bonds registered and delivered in lieu thereof as provided in Section 11 hereof. SECTION 13:Covenants to Maintain Tax-Exempt Status. (a) Definitions. When used in this Section, the following terms shall have the following meanings: “Closing Date” means the date on which the Bonds are first authenticated and delivered to the initial purchasers against payment therefor. “Code” means the Internal Revenue Code of 1986, as amended by all legislation, if any, effective on or before the Closing Date. “Computation Date” has the meaning set forth in Section 1.148-1(b) of the Regulations. “Gross Proceeds” means any proceeds as defined in Section 1.148-1(b) of the Regulations, and any replacement proceeds as defined in Section 1.148-1(c) of the Regulations, of the Bonds. “Investment” has the meaning set forth in Section 1.148-1(b) of the Regulations. “Nonpurpose Investment” means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested and which is not acquired to carry out the governmental purposes of the Bonds. 17 90005479.2/11000319 “Rebate Amount” has the meaning set forth in Section 1.148-1(b) of the Regulations. “Regulations” means any proposed, temporary, or final Income Tax Regulations issued pursuant to Sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue Code of 1954, which are applicable to the Bonds. Any reference to any specific Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax Regulation designed to supplement, amend or replace the specific Regulation referenced. “Yield” of (i) any Investment has the meaning set forth in Section 1.148-5 of the Regulations; and (ii) the Bonds has the meaning set forth in Section 1.148-4 of the Regulations. (b)Not to Cause Interest to Become Taxable. The City shall not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner which if made or omitted, respectively, would cause the interest on any Bond to become includable in the gross income, as defined in section 61 of the Code, of the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the City receives a written opinion of counsel nationally recognized in the field of municipal bond law to the effect that failure to comply with such covenant will not adversely affect the exemption from federal income tax of the interest on any Bond, the City shall comply with each of the specific covenants in this Section. (c)No Private Use or Private Payments. Except as permitted by section 141 of the Code and the Regulations and rulings thereunder, the City shall at all times prior to the last Stated Maturity of Bonds: (1)exclusively own, operate and possess all property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Bonds (including property financed with Gross Proceeds of the Refunded Obligations), and not use or permit the use of such Gross Proceeds (including all contractual arrangements with terms different than those applicable to the general public) or any property acquired, constructed or improved with such Gross Proceeds in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and (2)not directly or indirectly impose or accept any charge or other payment by any person or entity who is treated as using Gross Proceeds of the Bonds or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds (including property financed with Gross Proceeds of the Refunded Obligations), other than taxes of general application within the City or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. 18 90005479.2/11000319 (d)No Private Loan. Except to the extent permitted by section 141 of the Code and the Regulations and rulings thereunder, the City shall not use Gross Proceeds of the Bonds to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be “loaned” to a person or entity if: (1) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction which creates a debt for federal income tax purposes; (2) capacity in or service from such property is committed to such person or entity under a take-or-pay, output or similar contract or arrangement; or (3) indirect benefits, or burdens and benefits of ownership, of such Gross Proceeds or any property acquired, constructed or improved with such Gross Proceeds are otherwise transferred in a transaction which is the economic equivalent of a loan. (e)Not to Invest at Higher Yield. Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not at any time prior to the final Stated Maturity of the Bonds directly or indirectly invest Gross Proceeds in any Investment (or use Gross Proceeds to replace money so invested), if as a result of such investment the Yield from the Closing Date of all Investments acquired with Gross Proceeds (or with money replaced thereby), whether then held or previously disposed of, exceeds the Yield of the Bonds. (f)Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any action which would cause the Bonds to be federally guaranteed within the meaning of section 149(b) of the Code and the Regulations and rulings thereunder. (g)Information Report. The City shall timely file the information required by section 149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe. (h)Rebate of Arbitrage Profits. Except to the extent otherwise provided in section 148(f) of the Code and the Regulations and rulings thereunder: (1)The City shall account for all Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least six years after the day on which the last outstanding Bond is discharged. However, to the extent permitted by law, the City may commingle Gross Proceeds of the Bonds with other money of the City, provided that the City separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. (2)Not less frequently than each Computation Date, the City shall calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Regulations and rulings thereunder. The City shall maintain such calculations with its official transcript of proceedings relating to the issuance of the Bonds until six years after the final Computation Date. 19 90005479.2/11000319 (3)As additional consideration for the purchase of the Bonds by the Purchasers and the loan of the money represented thereby and in order to induce such purchase by measures designed to insure the excludability of the interest thereon from the gross income of the owners thereof for federal income tax purposes, the City shall pay to the United States from an appropriate fund, or if permitted by applicable Texas statute, regulation or opinion of the Attorney General of the State of Texas, the Interest and Sinking Fund, the amount that when added to the future value of previous rebate payments made for the Bonds equals (i) in the case of a Final Computation Date as defined in Section 1.148- 3(e)(2) of the Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (ii) in the case of any other Computation Date, ninety percent (90%) of the Rebate Amount on such date. In all cases, the rebate payments shall be made at the times, in the installments, to the place and in the manner as is or may be required by section 148(f) of the Code and the Regulations and rulings thereunder, and shall be accompanied by Form 8038-T or such other forms and information as is or may be required by Section 148(f) of the Code and the Regulations and rulings thereunder. (4)The City shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (2) and (3), and if an error is made, to discover and promptly correct such error within a reasonable amount of time thereafter (and in all events within one hundred eighty (180) days after discovery of the error), including payment to the United States of any additional Rebate Amount owed to it, interest thereon, and any penalty imposed under Section 1.148-3(h) of the Regulations. (i)Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the earlier of the Stated Maturity or final payment of the Bonds, enter into any transaction that reduces the amount required to be paid to the United States pursuant to Subsection (h) of this Section because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm’s length and had the Yield of the Bonds not been relevant to either party. (j)Elections. The City hereby directs and authorizes the Mayor, Mayor Pro Tem, City Manager, Director of Finance, Assistant City Manager and City Secretary, individually or jointly, to make elections permitted or required pursuant to the provisions of the Code or the Regulations, as they deem necessary or appropriate in connection with the Bonds, in the Certificate as to Tax Exemption or similar or other appropriate certificate, form or document. (k)Bonds Not Hedge Bonds. (1) At the time the original obligations refunded by the Bonds were issued, the City reasonably expected to spend at least 85% of the spendable proceeds of such obligations within three years after such obligations were issued and (2) not more than 50% of the proceeds of the original obligations refunded by the Bonds were invested in Nonpurpose Investments having a substantially guaranteed Yield for a period of 4 years or more. 20 90005479.2/11000319 (l)Current Refunding. The Bonds are a current refunding of the Refunded Obligations in that the Bonds will be issued less than 90 days before the redemption of the Refunded Obligations. SECTION 14:Sale of Bonds – Official Statement Approval. The sale of the Bonds authorized by this Ordinance to Southwest Securities, Inc., RBC Capital Markets Corporation, Stifel, Nicolaus & Company, Inc., and Morgan Keegan & Company, Inc. (herein referred to as the “Purchasers”) in accordance with the Purchase Agreement, dated April 20, 2010, attached Exhibit B hereto as and incorporated herein by reference as a part of this Ordinance for all purposes. The Mayor or Mayor Pro Tem is hereby authorized and directed to execute said Purchase Agreement for and on behalf of the City and as the act and deed of this Council, and in regard to the approval and execution of the Purchase Agreement, the Council hereby finds, determines and declares that the representations, warranties and agreements of the City contained in the Purchase Agreement are true and correct in all material respects and shall be honored and performed by the City. Furthermore, the use of the Preliminary Official Statement by the Purchasers in connection with the public offering and sale of the Certificates is hereby ratified, confirmed and approved in all respects. The final Official Statement, which reflects the terms of sale (together with such changes approved by the Mayor, Mayor Pro Tem, City Manager, Director of Finance or City Secretary, individually or collectively), shall be and is hereby in all respects approved, and the Purchasers are hereby authorized to use and distribute said final Official Statement, dated April 20, 2010 in the reoffering, sale and delivery of the Certificates to the public. The Mayor and City Secretary are further authorized and directed to manually execute and deliver for and on behalf of the City copies of said Official Statement in final form as may be required by the Purchasers, and such final Official Statement in the form and content manually executed by said officials shall be deemed to be approved by the City Council and constitute the Official Statement authorized for distribution and use by the Purchasers. SECTION 15:Reserved. SECTION 16:Control and Custody of Bonds. The Mayor of the City shall be and is hereby authorized to take and have charge of all necessary orders and records pending investigation by the Attorney General of the State of Texas, including the printing and supply of definitive Bonds, and shall take and have charge and control of the Initial Bond(s) pending the approval thereof by the Attorney General, the registration thereof by the Comptroller of Public Accounts and the delivery thereof to the Purchasers. Furthermore, the Mayor, Mayor Pro Tem, City Manager, Assistant City Manager, Director of Finance, and City Secretary, any one or more of said officials, are hereby authorized and directed to furnish and execute such agreements, documents and certifications relating to the City and the issuance, sale and delivery of the Bonds, including certifications as to facts, estimates, circumstances and reasonable expectations pertaining to the use, expenditure and investment of the proceeds of the Bonds, as may be necessary for the approval of the Attorney General, the registration by the Comptroller of Public Accounts and the delivery of the Bonds to the Purchasers, and, together with the City’s bond counsel and the Paying Agent/Registrar, make 21 90005479.2/11000319 the necessary arrangements for the delivery of the Initial Bond(s) to the Purchasers and the initial exchange thereof for definitive Bonds. SECTION 17:Proceeds of Sale. Immediately following the delivery of the Bonds, proceeds of sale, excluding the accrued interest received from the purchasers, in an amount sufficient to refund the Refunded Obligations shall be deposited with The Bank of New York Mellon Trust Company, N.A. (the current paying agent for the Refunded Obligations and hereinafter called the “Deposit Agent”) for the payment and discharge of the Refunded Obligations. The proceeds of sale of the Bonds not so deposited with the Deposit Agent for the refunding of the Refunded Obligations shall be disbursed and deposited for the payment of costs of issuance. Any investment earnings realized shall be expended for such authorized projects and purposes or deposited in the Interest and Sinking Fund. Accrued interest received from the Purchasers as well as all surplus proceeds of sale of the Bonds, including investment earnings, remaining after refunding the Refunded Obligations shall be deposited to the credit of the Interest and Sinking Fund. Additionally, on or immediately prior to the date of delivery of the Bonds to the Purchasers, the Director of Finance shall cause to be transferred in immediately available funds to the Deposit Agent from moneys on deposit in the interest and sinking funds maintained for the payment of the Refunded Obligations the sum of $___________ to accomplish the refunding. SECTION 18:Redemption of Refunded Obligations. (a) In order to provide for the refunding, discharge and retirement of the Series 1999 Refunded Obligations, the Series 1999 Refunded Obligations shall be redeemed and the same are hereby called for redemption on May 27, 2010, at the price of par and accrued interest to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to certificateholders, with The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (successor paying agent/registrar to Chase Bank of Texas, National Association, Dallas, Texas) in accordance with the redemption provisions applicable to such obligations; such suggested form of notice of redemption being attached hereto as Exhibit C-1 and incorporated herein by reference as a part of this Ordinance for all purposes. (b)In order to provide for the refunding, discharge and retirement of the Series 2000A Refunded Obligations, the Series 2000A Refunded Obligations shall be redeemed and the same are hereby called for redemption on May 27, 2010, at the price of par and accrued interest to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to certificateholders, with The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (successor paying agent/registrar to Chase Bank of Texas, National Association, Dallas, Texas), in accordance with the redemption provisions applicable to such obligations; such suggested Exhibit C-2 form of notice of redemption being attached hereto as and incorporated herein by reference as a part of this Ordinance for all purposes. (c)In order to provide for the refunding, discharge and retirement of the Series 2000C Refunded Obligations, the Series 2000C Refunded Obligations shall be redeemed and the same are hereby called for redemption on May 27, 2010, at the price of par and accrued interest to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of 22 90005479.2/11000319 this Ordinance, together with a suggested form of notice of redemption to be sent to certificateholders, with The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (successor paying agent/registrar to U.S. Trust Company of Texas, N.A., Dallas, Texas), in accordance with the redemption provisions applicable to such obligations; such suggested form Exhibit C-3 of notice of redemption being attached hereto as and incorporated herein by reference as a part of this Ordinance for all purposes. (d)In order to provide for the refunding, discharge and retirement of the Series 2000D Refunded Obligations, the Series 2000D Refunded Obligations are hereby called for redemption on May 27, 2010, at the price of par and accrued interest to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to certificateholders, with The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (successor paying agent/registrar to U.S. Trust Company of Texas, N.A., Dallas, Texas), in accordance with the redemption provisions applicable to such obligations; such suggested form of notice of redemption being attached Exhibit C-4 hereto as and incorporated herein by reference as a part of this Ordinance for all purposes. (e)In order to provide for the refunding, discharge and retirement of the Series 2000E Refunded Obligations, the Series 2000E Refunded Obligations shall be redeemed and the same are hereby called for redemption on May 27, 2010, at the price of par and accrued interest to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to certificateholders, with The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (successor paying agent/registrar to U.S. Trust Company of Texas, N.A., Dallas, Texas), in accordance with the redemption provisions applicable to such obligations; such suggested form Exhibit C-5 of notice of redemption being attached hereto as and incorporated herein by reference as a part of this Ordinance for all purposes. (f)In order to provide for the refunding, discharge and retirement of the Series 2003 Refunded Obligations, the Series 2003 Refunded Obligations shall be redeemed and the same are hereby called for redemption on May 27, 2010, at the price of par and accrued interest to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to bondholders, with U.S. Bank National Association, Dallas, Texas (successor paying agent/registrar to Wachovia Bank, N.A., Houston, Texas) in accordance with the redemption provisions applicable to such obligations; such suggested form of notice of redemption being attached hereto as Exhibit C-6 and incorporated herein by reference as a part of this Ordinance for all purposes. (g)In order to provide for the refunding, discharge and retirement of the Series 2003A Refunded Certificates, the Series 2003A Refunded Certificates shall be redeemed and the same are hereby called for redemption on May 27, 2010, at the price of par and accrued interest to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to certificateholders, with U.S. Bank National Association, Dallas, Texas (successor paying agent/registrar to Wachovia Bank, N.A., Houston, Texas), in accordance with the redemption provisions applicable to such obligations; such suggested form of notice of redemption being 23 90005479.2/11000319 Exhibit C-7 attached hereto as and incorporated herein by reference as a part of this Ordinance for all purposes. (h)In order to provide for the refunding, discharge and retirement of the Series 2003A Refunded Bonds, the Series 2003A Refunded Bonds shall be redeemed and the same are hereby called for redemption on May 27, 2010, at the price of par and accrued interest to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to bondholders, with U.S. Bank National Association, Dallas, Texas (successor paying agent/registrar to Wachovia Bank, N.A., Houston, Texas), in accordance with the redemption provisions applicable to such obligations; such suggested form of notice of redemption being attached Exhibit C-8 hereto as and incorporated herein by reference as a part of this Ordinance for all purposes. (i)In order to provide for the refunding, discharge and retirement of the Series 2003 Refunded Obligations, the Series 2003 Refunded Obligations shall be redeemed and the same are hereby called for redemption on May 27, 2010, at the price of par and accrued interest to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to certificateholders, with U.S. Bank National Association, Dallas, Texas (successor paying agent/registrar to Wachovia Bank, N.A., Houston, Texas), in accordance with the redemption provisions applicable to such obligations; such suggested form of notice of redemption being Exhibit C-9 attached hereto as and incorporated herein by reference as a part of this Ordinance for all purposes. The redemption of the obligations described above being associated with the refunding of such Refunded Obligations, the approval, authorization and arrangements herein given and provided for the redemption of such Refunded Obligations on the redemption dates designated therefor and in the manner provided shall be irrevocable upon the issuance and delivery of the Bonds; and the City Secretary is hereby authorized and directed to make all arrangements necessary to notify the holders of such Refunded Obligations of the City’s decision to redeem such Refunded Obligations on the date and in the manner herein provided and in accordance with the ordinances authorizing the issuance of the Refunded Obligations and this Ordinance. SECTION 19:Notices to Holders - Waiver. Wherever this Ordinance provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and sent by United States Mail, first class postage prepaid, to the address of each Holder appearing in the Security Register at the close of business on the business day next preceding the mailing of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice to any particular Holders, nor any defect in any notice so mailed, shall affect the sufficiency of such notice with respect to all other Bonds. Where this Ordinance provides for notice in any manner, such notice may be waived in writing by the Holder entitled to receive such notice, either before or after the event with respect to which such notice is given, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. 24 90005479.2/11000319 SECTION 20:Cancellation. All Bonds surrendered for payment, redemption, transfer, exchange, or replacement, if surrendered to the Paying Agent/Registrar, shall be promptly cancelled by it and, if surrendered to the City, shall be delivered to the Paying Agent/Registrar and, if not already cancelled, shall be promptly cancelled by the Paying Agent/ Registrar. The City may at any time deliver to the Paying Agent/Registrar for cancellation any Bonds previously certified or registered and delivered which the City may have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the Paying Agent/Registrar. All cancelled Bonds held by the Paying Agent/Registrar shall be returned to the City. SECTION 21:Continuing Disclosure Undertaking. (a)Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: “MSRB” 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. (b)Annual Reports. The City shall provide annually to the MSRB within six months after the end of each fiscal year (beginning with the fiscal year ending September 30, 2010) financial information and operating data with respect to the City of the general type included in the final Official Statement approved by Section 14 of this Ordinance, being the information Exhibit D described in hereto. Financial statements to be provided shall be (1) prepared in Exhibit D accordance with the accounting principles described in hereto 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 audited financial statements are not available at the time the financial information and operating data must be provided, then the City shall provide unaudited financial statements for the applicable fiscal year and will file the annual audit report when and if the same becomes available. (c)Material Events Notices. The City shall notify the MSRB, in a timely manner, of any of the following events with respect to the Certificates, if such event is material within the meaning of the federal securities laws: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7. Modifications to rights of holders of the Bonds; 8. Bond calls; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the Bonds; and 11. Rating changes. 25 90005479.2/11000319 (d)Filings with the MSRB. All financial information, operating data, financial statements, notices, and other documents provided to the MSRB in accordance with this Section shall be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. (e)Limitations, Disclaimers, and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section while, but only while, 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 the notice required by subsection (c) hereof of any Bond calls and defeasance that cause the City to be no longer such an “obligated person.” The provisions of this Section are for the sole benefit of the Holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City’s financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Certificates at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH 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 constitute a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. Notwithstanding anything herein to the contrary, the provisions of this Section may be amended by the City from time to time to adapt to changed circumstances resulting 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 underwriters 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 to the date of such amendment, 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 26 90005479.2/11000319 consent 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 interests of the Holders and beneficial owners of the Bonds. The provisions of this Section may also be amended from time to time or repealed by the City if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction determines that such provisions are invalid, but only if and to the extent that reservation of the City’s right to do so would not prevent underwriters of the initial public offering of the Bonds from lawfully purchasing or selling Bonds in such offering. 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 subsection (b) an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information or operating data so provided. SECTION 22:Legal Opinion. The obligation of the Purchasers to accept delivery of the Bonds is subject to being furnished a final opinion of Fulbright & Jaworski L.L.P., Attorneys, Dallas, Texas, approving such Bonds as to their validity, said opinion to be dated and delivered as of the date of delivery and payment for such Bonds. A true and correct reproduction of said opinion or an executed counterpart thereof is hereby authorized to be either printed on definitive printed obligations or deposited with DTC along with the global certificates for the implementation and use of the Book-Entry-Only System used in the settlement and transfer of the Bonds. SECTION 23:CUSIP Numbers. CUSIP numbers may be printed or typed on the Bonds deposited with The Depository Trust Company or on printed definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP numbers on the definitive Bonds shall be of no significance or effect as regards the legality thereof and neither the City nor attorneys approving the Bonds as to legality are to be held responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds. SECTION 24:Benefits of Ordinance. Nothing in this Ordinance, expressed or implied, is intended or shall be construed to confer upon any person other than the City, the Paying Agent/Registrar and the Holders, any right, remedy, or claim, legal or equitable, under or by reason of this Ordinance or any provision hereof, and this Ordinance and all its provisions is intended to be and shall be for the sole and exclusive benefit of the City, the Paying Agent/Registrar and the Holders. SECTION 25:Inconsistent Provisions. All ordinances, orders or resolutions, or parts thereof, which are in conflict or inconsistent with any provision 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 26:Governing Law. This Ordinance shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. SECTION 27:Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. 27 90005479.2/11000319 SECTION 28:Construction of Terms. If appropriate in the context of this Ordinance, words of the singular number shall be considered to include the plural, words of the plural number shall be considered to include the singular, and words of the masculine, feminine or neuter gender shall be considered to include the other genders. SECTION 29:Severability. If any provision of this Ordinance or the application thereof to any circumstance shall be held to be invalid, the remainder of this Ordinance and the application thereof to other circumstances shall nevertheless be valid, and the City Council hereby declares that this Ordinance would have been enacted without such invalid provision. SECTION 30:Further Procedures. Any one or more of the Mayor, Mayor Pro Tem, City Manager, Assistant City Manager, Director of Finance, and City Secretary are hereby expressly 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 on behalf of the City all agreements, instruments, certificates or other documents, whether mentioned herein or not, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance and the issuance, sale and delivery of the Bonds. In addition, prior to the delivery of the Bonds, the Mayor, Mayor Pro Tem, City Manager, Assistant City Manager, Director of Finance, City Secretary or Bond Counsel to the City are each hereby authorized and directed to approve any changes or corrections to this Ordinance or to any of the documents authorized and approved by this Ordinance: (i) in order to cure any ambiguity, formal defect, or omission in the Ordinance or such other document, or (ii) as requested by the Attorney General of the State of Texas or his representative to obtain the approval of the Bonds by the Attorney General. In the event that any officer of the City whose signature shall appear on any document shall cease to be such officer before the delivery of such document, such signature nevertheless shall be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. SECTION 31:Incorporation of Findings and Determinations. The findings and determinations of the City Council contained in the preamble hereof are hereby incorporated by reference and made a part of this Ordinance for all purposes as if the same were restated in full in this Section. SECTION 32:Public Meeting. It is officially found, determined, and declared that the meeting at which this Ordinance is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Ordinance, was given, all as required by Texas Government Code, Chapter 551, as amended. SECTION 33:Effective Date. This Ordinance shall take effect and be in full force from and after its adoption on the date shown below in accordance with Texas Government Code, Section 1201.028. [remainder of page left blank intentionally] 28 90005479.2/11000319 PASSED AND ADOPTED, this April 20, 2010. CITY OF SOUTHLAKE, TEXAS ______________________________ Mayor ATTEST: _____________________________ City Secretary (City Seal) S-1 90005479.2/11000319 EXHIBIT A PAYING AGENT/REGISTRAR AGREEMENT A-1 90005479.2/11000319 EXHIBIT B PURCHASE AGREEMENT B-1 90005479.2/11000319 EXHIBIT C-1 NOTICE OF REDEMPTION CITY OF SOUTHLAKE, TEXAS TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATIONS SERIES 1999 NOTICE IS HEREBY GIVEN that certificates of obligation of the above series maturing on and after February 15, 2011, and aggregating in the principal amount of $1,755,000 have been called for redemption on May 27, 2010 at the redemption price of par and accrued interest to the date of redemption, such certificates being identified as follows: Year of Principal CUSIP MaturityAmountNumber 2011 $ 855,000 2012 900,000 ALL OF SUCH REFUNDED CERTIFICATES shall become due and payable on May 27, 2010 and interest thereon shall cease to accrue from and after said redemption date and payment of the redemption price of said refunded certificates shall be paid to the registered owners of such certificates only upon presentation and surrender of such certificates to the designated payment/transfer office in Dallas, Texas of The Bank of New York Mellon Trust Company, N.A., (successor in interest to Chase Bank of Texas, N.A., Dallas, Texas) at its designated offices as follows: First Class/ Registered/CertifieExpress Delivery OnlBy Hand Onl dyy The Bank of New York The Bank of New York Mellon The Bank of New York Mellon Mellon Trust Company, N.A. Trust Company, N.A. Trust Company, N.A. Global Corporate Trust Global Corporate Trust Global Corporate Trust th P. O. Box 2320 2001 Bryan Street, 9 Floor Corporate Trust Window st Dallas, Texas 75221-2320 Dallas, Texas 75201 101 Barclay Street, 1 Floor East New York, New York 10286 THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for the redemption of said certificates and pursuant to an Ordinance by the City Council of the City of Southlake, Texas. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. th Address: 2001 Bryan Street, 11 Floor Dallas, Texas 75201 C-1 90005479.2/11000319 EXHIBIT C-2 NOTICE OF REDEMPTION CITY OF SOUTHLAKE, TEXAS TAX AND WATERWORKS AND SEWER SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATIONS SERIES 2000A NOTICE IS HEREBY GIVEN that certificates of obligation of the above series maturing on February 15, 2011, and aggregating in the principal amount of $455,000 have been called for redemption on May 27, 2010 at the redemption price of par and accrued interest to the date of redemption, such certificates being identified as follows: Year of Principal CUSIP MaturityAmountNumber 2011 $ 455,000 ALL OF SUCH REFUNDED CERTIFICATES shall become due and payable on May 27, 2010 and interest thereon shall cease to accrue from and after said redemption date and payment of the redemption price of said refunded certificates shall be paid to the registered owners of such certificates only upon presentation and surrender of such certificates to the designated payment/transfer office in Dallas, Texas of The Bank of New York Mellon Trust Company, N.A., (successor in interest to Chase Bank of Texas, N.A., Dallas, Texas) at its designated offices as follows: First Class/ Registered/CertifiedExpress Delivery OnlyBy Hand Only The Bank of New York The Bank of New York Mellon The Bank of New York Mellon Mellon Trust Company, N.A. Trust Company, N.A. Trust Company, N.A. Global Corporate Trust Global Corporate Trust Global Corporate Trust th P. O. Box 2320 2001 Bryan Street, 9 Floor Corporate Trust Window st Dallas, Texas 75221-2320 Dallas, Texas 75201 101 Barclay Street, 1 Floor East New York, New York 10286 THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for the redemption of said certificates and pursuant to an Ordinance by the City Council of the City of Southlake, Texas. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. th Address: 2001 Bryan Street, 11 Floor Dallas, Texas 75201 C-2 90005479.2/11000319 EXHIBIT C-3 NOTICE OF REDEMPTION CITY OF SOUTHLAKE, TEXAS TAX AND LIMITED PLEDGE REVENUE CERTIFICATES OF OBLIGATIONS SERIES 2000C NOTICE IS HEREBY GIVEN that certificates of obligation of the above series maturing on and after August 15, 2011, and aggregating in the principal amount of $470,000 have been called for redemption on May 27, 2010 at the redemption price of par and accrued interest to the date of redemption, such certificates being identified as follows: Year of Principal CUSIP MaturityAmountNumber 2011 $ 150,000 2012 155,000 2013 165,000 ALL OF SUCH REFUNDED CERTIFICATES shall become due and payable on May 27, 2010 and interest thereon shall cease to accrue from and after said redemption date and payment of the redemption price of said refunded certificates shall be paid to the registered owners of such certificates only upon presentation and surrender of such certificates to the designated payment/transfer office in Dallas, Texas of The Bank of New York Mellon Trust Company, N.A., (successor in interest to U.S. Trust Company of Texas, N.A., Dallas, Texas) at its designated offices as follows: First Class/ Registered/CertifieExpress Delivery OnlBy Hand Onl dyy The Bank of New York The Bank of New York Mellon The Bank of New York Mellon Mellon Trust Company, N.A. Trust Company, N.A. Trust Company, N.A. Global Corporate Trust Global Corporate Trust Global Corporate Trust th P. O. Box 2320 2001 Bryan Street, 9 Floor Corporate Trust Window st Dallas, Texas 75221-2320 Dallas, Texas 75201 101 Barclay Street, 1 Floor East New York, New York 10286 THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for the redemption of said certificates and pursuant to an Ordinance by the City Council of the City of Southlake, Texas. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. th Address: 2001 Bryan Street, 11 Floor Dallas, Texas 75201 C-3 90005479.2/11000319 EXHIBIT C-4 NOTICE OF REDEMPTION CITY OF SOUTHLAKE, TEXAS TAX AND WATERWORKS AND SEWER SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATIONS SERIES 2000D NOTICE IS HEREBY GIVEN that certificates of obligation of the above series maturing on and after February 15, 2011, and aggregating in the principal amount of $1,180,000 have been called for redemption on May 27, 2010 at the redemption price of par and accrued interest to the date of redemption, such certificates being identified as follows: Year of Principal CUSIP MaturityAmountNumber 2011 $ 375,000 2012 390,000 2013 415,000 ALL OF SUCH REFUNDED CERTIFICATES shall become due and payable on May 27, 2010 and interest thereon shall cease to accrue from and after said redemption date and payment of the redemption price of said refunded certificates shall be paid to the registered owners of such certificates only upon presentation and surrender of such certificates to the designated payment/transfer office in Dallas, Texas of The Bank of New York Mellon Trust Company, N.A., (successor in interest to U.S. Trust Company, N.A., Dallas, Texas) at its designated offices as follows: First Class/ Registered/CertifiedExpress Delivery OnlyBy Hand Only The Bank of New York The Bank of New York Mellon The Bank of New York Mellon Mellon Trust Company, N.A. Trust Company, N.A. Trust Company, N.A. Global Corporate Trust Global Corporate Trust Global Corporate Trust th P. O. Box 2320 2001 Bryan Street, 9 Floor Corporate Trust Window st Dallas, Texas 75221-2320 Dallas, Texas 75201 101 Barclay Street, 1 Floor East New York, New York 10286 THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for the redemption of said certificates and pursuant to an Ordinance by the City Council of the City of Southlake, Texas. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. th Address: 2001 Bryan Street, 11 Floor Dallas, Texas 75201 / C-4 90005479.211000319 EXHIBIT C-5 NOTICE OF REDEMPTION CITY OF SOUTHLAKE, TEXAS TAX AND TAX INCREMENT REVENUE (REINVESTMENT ZONE #1) CERTIFICATES OF OBLIGATIONS SERIES 2000E NOTICE IS HEREBY GIVEN that certificates of obligation of the above series maturing on and after February 15, 2011, and aggregating in the principal amount of $1,130,000 have been called for redemption on May 27, 2010 at the redemption price of par and accrued interest to the date of redemption, such certificates being identified as follows: Year of Principal CUSIP Year of Principal CUSIP MaturityAmountNumberMaturityAmountNumber 2011 $ 635,000 2015 70,000 2012 60,000 2016 75,000 2013 65,000 2017 80,000 2014 65,000 2018 80,000 ALL OF SUCH REFUNDED CERTIFICATES shall become due and payable on May 27, 2010 and interest thereon shall cease to accrue from and after said redemption date and payment of the redemption price of said refunded certificates shall be paid to the registered owners of such certificates only upon presentation and surrender of such certificates to the designated payment/transfer office in Dallas, Texas of The Bank of New York Mellon Trust Company, N.A., (successor in interest to U.S. Trust Company, N.A., Dallas, Texas) at its designated offices as follows: First Class/ Registered/CertifiedExpress Delivery OnlyBy Hand Only The Bank of New York The Bank of New York Mellon The Bank of New York Mellon Mellon Trust Company, N.A. Trust Company, N.A. Trust Company, N.A. Global Corporate Trust Global Corporate Trust Global Corporate Trust th P. O. Box 2320 2001 Bryan Street, 9 Floor Corporate Trust Window st Dallas, Texas 75221-2320 Dallas, Texas 75201 101 Barclay Street, 1 Floor East New York, New York 10286 THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for the redemption of said certificates and pursuant to an Ordinance by the City Council of the City of Southlake, Texas. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. th Address: 2001 Bryan Street, 11 Floor Dallas, Texas 75201 C-5 90005479.2/11000319 EXHIBIT C-6 NOTICE OF REDEMPTION CITY OF SOUTHLAKE, TEXAS GENERAL OBLIGATION REFUNDING AND IMPROVEMENT BONDS SERIES 2003 NOTICE IS HEREBY GIVEN that certificates of obligation of the above series maturing on and after February 15, 2011, and aggregating in the principal amount of $2,1950,000 have been called for redemption on May 27, 2010 at the redemption price of par and accrued interest to the date of redemption, such certificates being identified as follows: Year of Principal CUSIP Year of Principal CUSIP MaturityAmountNumberMaturityAmountNumber 2011 $ 410,000 2015 385,000 2012 435,000 2016 50,000 2013 445,000 2017 50,000 2014 365,000 2018 55,000 ALL OF SUCH REFUNDED CERTIFICATES shall become due and payable on May 27, 2010 and interest thereon shall cease to accrue from and after said redemption date and payment of the redemption price of said refunded certificates shall be paid to the registered owners of such certificates only upon presentation and surrender of such certificates to the designated payment/transfer office in Dallas, Texas of U.S. Bank, National Association, Dallas, Texas, (successor in interest to Wachovia Bank, N.A., Houston, Texas) at its designated offices as follows: U.S. Bank National Association Attention: Bond Operations 60 Livingston Avenue, First Floor St. Paul, Minnesota 55107 THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for the redemption of said certificates and pursuant to an Ordinance by the City Council of the City of Southlake, Texas. U.S. BANK NATIONAL ASSOCIATION, Address: 14241 Dallas Parkway, Suite 490 Dallas, Texas 75254 C-6 90005479.2/11000319 EXHIBIT C-7 NOTICE OF REDEMPTION CITY OF SOUTHLAKE, TEXAS TAX AND TAX INCREMENT REVENUE (REINVESTMENT ZONE #1) CERTIFICATES OF OBLIGATION SERIES 2003A NOTICE IS HEREBY GIVEN that certificates of obligation of the above series maturing on and after February 15, 2011, and aggregating in the principal amount of $4,045,000 have been called for redemption on May 27, 2010 at the redemption price of par and accrued interest to the date of redemption, such certificates being identified as follows: Year of Principal CUSIP Year of Principal CUSIP MaturityAmountNumberMaturityAmountNumber 2011 $ 440,000 2015 515,000 2012 455,000 2016 535,000 2013 475,000 2017 555,000 2014 490,000 2018 580,000 ALL OF SUCH REFUNDED CERTIFICATES shall become due and payable on May 27, 2010 and interest thereon shall cease to accrue from and after said redemption date and payment of the redemption price of said refunded certificates shall be paid to the registered owners of such certificates only upon presentation and surrender of such certificates to the designated payment/transfer office in Dallas, Texas of U.S. Bank, National Association, Dallas, Texas, (successor in interest to Wachovia Bank, N.A., Houston, Texas) at its designated offices as follows: U.S. Bank National Association Attention: Bond Operations 60 Livingston Avenue, First Floor St. Paul, Minnesota 55107 THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for the redemption of said certificates and pursuant to an Ordinance by the City Council of the City of Southlake, Texas. U.S. BANK NATIONAL ASSOCIATION, Address: 14241 Dallas Parkway, Suite 490 Dallas, Texas 75254 C-7 90005479.2/11000319 EXHIBIT C-8 NOTICE OF REDEMPTION CITY OF SOUTHLAKE, TEXAS TAX AND TAX INCREMENT REVENUE (REINVESTMENT ZONE #1) REFUNDING BONDS SERIES 2003A NOTICE IS HEREBY GIVEN that certificates of obligation of the above series maturing on and after February 15, 2011, and aggregating in the principal amount of $8,785,000 have been called for redemption on May 27, 2010 at the redemption price of par and accrued interest to the date of redemption, such certificates being identified as follows: Year of Principal CUSIP Year of Principal CUSIP MaturityAmountNumberMaturityAmountNumber 2011 $ 545,000 2015 1,235,000 2012 740,000 2016 1,305,000 2013 950,000 2017 1,380,000 2014 1,180,000 2018 1,450,000 ALL OF SUCH REFUNDED CERTIFICATES shall become due and payable on May 27, 2010 and interest thereon shall cease to accrue from and after said redemption date and payment of the redemption price of said refunded certificates shall be paid to the registered owners of such certificates only upon presentation and surrender of such certificates to the designated payment/transfer office in Dallas, Texas of U.S. Bank, National Association, Dallas, Texas, (successor in interest to Wachovia Bank, N.A., Houston, Texas) at its designated offices as follows: U.S. Bank National Association Attention: Bond Operations 60 Livingston Avenue, First Floor St. Paul, Minnesota 55107 THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for the redemption of said certificates and pursuant to an Ordinance by the City Council of the City of Southlake, Texas. U.S. BANK NATIONAL ASSOCIATION, Address: 14241 Dallas Parkway, Suite 490 Dallas, Texas 75254 C-8 90005479.2/11000319 EXHIBIT C-9 NOTICE OF REDEMPTION CITY OF SOUTHLAKE, TEXAS TAX AND WATERWORKS AND SEWER SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION SERIES 2003 NOTICE IS HEREBY GIVEN that certificates of obligation of the above series maturing on and after February 15, 2011, and aggregating in the principal amount of $7,650,000 have been called for redemption on May 27, 2010 at the redemption price of par and accrued interest to the date of redemption, such certificates being identified as follows: Year of Principal CUSIP Year of Principal CUSIP MaturityAmountNumberMaturityAmountNumber 2011 $ 685,000 2018 895,000 2012 705,000 2019 255,000 2013 730,000 2020 265,000 2014 760,000 2021 275,000 2015 795,000 2022 290,000 2016 830,000 2023 305,000 2017 860,000 ALL OF SUCH REFUNDED CERTIFICATES shall become due and payable on May 27, 2010 and interest thereon shall cease to accrue from and after said redemption date and payment of the redemption price of said refunded certificates shall be paid to the registered owners of such certificates only upon presentation and surrender of such certificates to the designated payment/transfer office in Dallas, Texas of U.S. Bank, National Association, Dallas, Texas, (successor in interest to Wachovia Bank, N.A., Houston, Texas) at its designated offices as follows: U.S. Bank National Association Attention: Bond Operations 60 Livingston Avenue, First Floor St. Paul, Minnesota 55107 THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for the redemption of said certificates and pursuant to an Ordinance by the City Council of the City of Southlake, Texas. U.S. BANK NATIONAL ASSOCIATION, Address: 14241 Dallas Parkway, Suite 490 Dallas, Texas 75254 C-9 90005479.2/11000319 EXHIBIT D DESCRIPTION OF ANNUAL FINANCIAL INFORMATION AND OPERATING DATA The following information is referred to in Section 21 of this Ordinance. Annual Financial Statements and Operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the headings of the Official Statement referred to) below: 1. The financial statements of the City appended to the Official Statement as Appendix B, but for the most recently concluded fiscal year. 2. The information in the Official Statement contained in Tables 1 through 6 and 8 through 14 . Accounting Principles The accounting principles referred to in such Section are the generally accepted accounting principles as applicable to governmental units as prescribed by The Government Accounting Standards Board. D-1 90005479.2/11000319