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Home My WebLink AboutItem 04 & 05 - Certificates of Obligation and Tax Notes SaleCertificates of Obligation and Tax Notes Sale Notes: Fleet Vehicle Replacements $1,258,800 Computer & Technology Equipment 611,840 Equipment & Furnishings 631,031 Street Improvements 800,000 Issuance Costs 58,329 Total $3,360,000 Copies of the draft official statements are included in your packets. The draft sale ordinances are on file in the City Secretary's Office for public inspection. Staff recommends acceptance of the First Southwest Company's recommendations and approval of the sale ordinances. WAG/slt CAPITAL EQUIPMENT ACQUISITION PLAN FY 2006-07 Proposed Operating Budget 325-XXXXX-XX-07-0009 100-101-2 CMO - IT Replacement of City Hall PCs @ $1,000 Replacement monitors (including WTP 21" LCD monitor) Wide Area Network replacements (routers, switches and converters) 45 Microsoft Office licenses @ $600 7 replacement Laser Jet printers @ $1,500 9 replacement Desk Jet printers @ $500 8 replacement server related items @ $3,000 Replacement sans box 20 replacement laptop PCs @ $1,250 3 additional laptop PCs @ $2,500 VPN Policy software Patch Management software VMWare 375,700 100-105-3 ADMIN SVCS - Purch Replacement van or pickup truck 100-108-1 PUB WKS - Fleet Svcs Portable inventory control device 12'x 30' mezzanine for new warehouse 1 additional PC for new bay area 2 replacement small sedans @ $17,000 Replacement forklift 100-209-1 POLICE - Administration 1 additional laptop PC and printer Wireless network 100-209-2 POLICE - Uniform Ops 2 replacement 4 -wheel all -terrain vehicles @ $7,000 10 replacement Harley-Davidson motorcycles @ $4,200 2 replacement sedans @ $28,000 1 replacement sports utility vehicle (Tahoe) 122,000 15,000 76,000 27,000 10,500 4,500 24,000 42,500 25,000 7,500 5,500 4,100 12,100 21,000 1,500 11,000 1,500 34,000 21,000 3,000 3,000 14,000 42,000 56,000 33,800 AL 117-209-2 Crime District Mobile vehrcle system for motorcycles 100-209-3 POLICE - CID 1 additional PC and software for Evidence & Property 1 additional color laser printer 3 replacement Crown Victoria sedans @ $26,000 2 replacement mid-size sedans @ $20,000 1,500 3,000 78,000 40,000 117-209-3 Crime District two 100-209-4 POLICE - Technical Svcs Internet hosting server 3,500 SAN Storage Area Network 70,000 2 replacement mobile computers @ 6,100 12,200 Replacement sports utility vehicle (Trail Blazer) 20,000'_ �- 4� 200 Fon er Gen"erator System for Backup _ _e l,,w, , „�� -, , t .- � , 117-209-4 Crime District automatic -Vehicle focatorsystem "1002000„ 100-209-5 POLICE - Animal Control 1 additional laptop PC 3,000 1 additional color laser printer 1,500 100-210-1 FIRE - Administration 5 additional routers and printers @ $1,000 5,000 100-210-2 FIRE - Prevention 3 high definition digital cameras @ $1,485 4,455 1 fire extinguisher training simulator 8,500 Replacement large utility vehicle 34,000 100-210-3 FIRE - Operations 20 replacement vehicle PCs @ $6,500 130,000 4 additional PCs with monitors and software @ $1,400 5,600 4 20" flat LCD monitors h $460 1,840 H:\Fred\bond Cert Ob and Equip 2007\Equip Note FY07 FINAL.xls 416120 `7 2:44 PM CAPITAL EQUIPMENT ACQUISITION PLAN FY 2006-07 Proposed Operating Budget 325-XXXXX-XX-07-0009 Adl 210-340-2 GOLF - Course Maint 1 replacement five gang fairway mower 42,000 1 replacement triplex tee mower 24,500 °t 1 replacement greens aerifrer 20,000 I replacement lightweight utility vehicle 6,500 1 replacement outfront rotary mower 21,500 1 radio repeater 8,500 H:\Fred\bond Cert 0FEiQ 2 P1W'$ 2�11ISITIONS $ 3301 X671 25 replacement SCBA cylinders @ $704 17,600 52 SCBA safety upgrades @ $479 24,908 4 replacement PPV fans @ $2,500 10,000 30 replacement gear lockers for Station 1 @ $234 7,020 10 replacement Sigtronic radio headsets @ $350 3,500 20 replacement personal protective ensembles @ $1,700 34,000 1 replacement and 1 additional Thermal Imaging Camera @ $11,00 22,000 5 air compressors @ $750 3,750 2 replacement emergency alert speaker systems for Stations 2 & 3 @ 9 5,600 Replacement ambulance cart (John Deere Gator) 19,500 Replacement command vehicle 22,000 Replacement fire engine late delt�ery 0 i y r$rbecause p 100-210-4 FIRE - Training EMS / Advanced Patient Simulator 8,500 100-312-2 PARKS - Senior Center Replacement 27 passenger bus 166,000 100-312-3 PARKS - Park Maint Replacement small pickup 20,000 Replacement large utility tractor Replaced with 18,000 3 replacement utility tractor / mowers @ $18,000 2 tractor / 54,000 mower comb. . 100-312-8 PARKS - CAC 2 replacement Precor C956i treadmills @ $5,441 10,882 1 replacement Precor C846u upright bike 2,341 1 replacement Precor C546i elliptical crosstrainer 4,241 2 replacement Precor C764 stairsteppers @ $2,741 5,482 1 additional PC with graphics software 2,500 Rectrac scheduling / scoring software 4,000 100-415-3 PUB WKS - Streets 1 replacement construction sweeper 44,000 100-415-4 PUB WKS - Traffic ATSI PCMT 2600 conflict monitor tester 11,000 100-417-2 DEVL SVCS - Bldg Insp Bulding permit software upgrade 13,000 115-350-1 CVB - Administration 10 replacement 19° LCD monitors @ $300 3,000 Auto load scanner 500 All -in -One Printer/Fax/Copier 500 Scheduling software 3,500 Dot matrix check printer 3,000 Replacement sports utility vehicle (Suburban) 42,000 116-535-1 SDUS - Operations 1 replacement mechanical sweeper 150,000 1 replacement regenerated air sweeper 148,000 200-530-1 PUB WKS - Water Distrib Replacement sewer vacuum truck 75,000 Replacement pickup truck 17,500 Replacement air compressor 14,000 200-531-1 PUB WKS - WW Coll Replacement truck chassis for sewer vac 75,000 210-340-2 GOLF - Course Maint 1 replacement five gang fairway mower 42,000 1 replacement triplex tee mower 24,500 °t 1 replacement greens aerifrer 20,000 I replacement lightweight utility vehicle 6,500 1 replacement outfront rotary mower 21,500 1 radio repeater 8,500 H:\Fred\bond Cert 0FEiQ 2 P1W'$ 2�11ISITIONS $ 3301 X671 PRELIMINARY OFFICIAL STATENIENT Ratings: ;= Moody's: Applied For Dated April 18, 2007 S&P: Applied For a n See ("Other Information - r, NEW ISSUE - Book -Entry -Only Ratings" herein) o In the opinion of Bond Counsel, interest on the Certificates is excludable from gross income for federal income tax purposes under existing law and the s Certificates are not private activity bonds. See "Tax Matters - Tax Exemption" herein for a discussion of the opinion of Bond Counsel, including a o n description of alternative minimum tax consequences for corporations. c. T C ° THE CERTIFICATES WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS E, -a ti $2,250,000 CITY OF GRAPEVINE, TEXAS (Tarrant County) v COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2007 a n T Dated Date: May 1, 2007 Due: February 15, as shown below o � o PAYMENT TERMS ... Interest on the $2,250,000 City of Grapevine, Texas Combination Tax and Revenue Certificates of Obligation, Series 2007 (the o ' "Certificates") will accrue from May 1, 2007 (the "Dated Date"), will be payable February 15 and August 15 of each year, commencing February 15, 2008, and will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. The definitive Certificates will be initially registered and E . delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book -Entry -Only System described herein. o Beneficial ownership of the Certificates may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying 5 . o AgenURegistrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates. See "The Certificates and Notes - Book -Entry -Only System" herein. The initial Paying Agent/Registrar is The Bank of New York Trust Company, National Association, Dallas, Texas (see "The Certificates and Notes - Paying AgentfRegistrar"). G y v .w AUTHORITY FOR ISSUANCE ... The Certificates are issued pursuant to the Constitution and general laws of the State of Texas (the "State"), particularly E — ° Subchapter C of Chapter 271, Texas Local Government Code, as amended, and constitute direct obligations of the City of Grapevine, Texas (the "City"), payable from a combination of (i) the levy and collection of a direct and continuing annual ad valorem tax levied , within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of the City's Hotel Occupancy Tar as provided in the ordinance authorizing the Certificates (the y 9 "Certificate Ordinance" and together with the Note Ordinance, the "Ordinances") (see "The Certificates and Notes - Authority for Issuance"). 0 PURPOSE ... Proceeds from the sale of the Certificates will be used for (i) acquisition of two parcels of land at the corner of Main Street and Hudgins Street for the purpose of constructing facilities for the City's Convention and Visitor's Bureau, and (ii) to pay the costs of issuance related to the sale of the Certificates, o � MATURITY SCHEDULE CUSIP Prefix Irl: 388622 N v � ro v CUSIP CUSIP Amount Maturity Rate Yield Suffix") Amount Maturity Rate Yield Suffix", $ 45,000 2008 $ 110,000 2018 E c ° 75,000 2009 120,000 2019 E O o 80,000 2010 125,000 2020 c 80,000 2011 130,000 2021 85,000 2012 135,000 2022 90,000 2013 140,000 2023 .? o 95,000 2014 145,000 2024 w 100,000 2015 155,000 2025 v 105,000 2016 160,000 2026 c 105,000 2017 170,000 2027 v o (Accrued Interest from May 1, 2007 to be added) o c v (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by Standard and Poor's CUSIP Service Bureau, s ° N a division of the McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in anyway as a substitute for the CUSIP 'c o` Services. F :D REDEMPTION ... The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2018, in whole or in part in Y principal amounts of $5,000 or any integral multiple thereof, on February 15, 2017, or any date thereafter, at the par value thereof plus accrued interest to the date o fixed for redemption. SEPARATE ISSUES ... The Certificates are being offered by the City concurrently with the "City of Grapevine, Texas, Tax Notes, Series 2007" (the D o "Notes"), and such Certificates and Notes are hereinafter sometimes referred to collectively as the "Obligations." The Certificates and Notes are separate and distinct securities offerings being issued and sold independently except for the common Official Statement, and, while the Obligations share certain cn v� g g pe Y P g 71; —' common attributes, each issue is separate from the other and should be reviewed and analyzed independently, including the type of obligation being c .2 offered, its terms for payment, the security for its payment, the rights of the holders, and other features. C 3 LEGALITY ...The Certificates are offered for delivery when, as and if issued and received by the Initial Purchaser of the Certificates and subject to the approving opinion of the Attorney General of Texas and the opinion of Vinson & Elkins L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's Opinions"). is v DELIVERY. It is expected that the Certificates will be available for delivery through The Depository Trust Company on June 6, 2007 T c BIDS DUE TUESDAY, MAY 1, 2007, AT 12:00 PM, CDT THIS PAGE LEFT BLANK INTENTIONALLY PRELIMINARY OFFICIAL STATEMENT Dated April 18, 2007 NEW ISSUE - Book -Entry -Only Ratings: Moody's: Applied For S&P: Applied For See ("Other Information - Ratings" herein) In the opinion of Bond Counsel, interest on the Notes is excludable from gross income for federal income tax purposes under existing law and the Notes are not private activity bonds. See "Tax Matters - Tax Exemption" herein for a discussion of the opinion of Bond Counsel, including a description of alternative minimum tax consequences for corporations. THE NOTES WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS $3,360,000 CITY OF GRAPEVINE, TEXAS (Tarrant County) TAY NOTES, SERIES 2007 Dated Date: May t, 2007 Due: February 15, as shown below PAYMENT TERMS ... Interest on the $3,360,000 City of Grapevine, Texas Tax Notes, Series 2007 (the "Notes") will accrue from May 1, 2007 (the "Dated Date"), will be payable February 15 and August 15 of each year, commencing August 15, 2007, and will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. The definitive Notes will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book -Entry -Only System described herein. Beneficial ownership of the Notes maybe acquired in denominations of $5,000 or integral multiples thereof No physical delivery of the Notes will be made to the owners thereof. Principal of, premium, if any, and interest on the Notes will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Notes. See "The Certificates and Notes - Book -Entry -Only System" herein. The initial Paying Agent/Registrar is The Bank of New York Trust Company, National Association, Dallas, Texas (see "The Certificates and Notes - Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE ... The Notes are issued pursuant to the Constitution and general laws of the State of Texas, (the "State") particularly Chapter 1431, Texas Government Code, as amended, and constitute direct obligations of the City of Grapevine, Texas (the "City"), payable from a continuing ad valorem tax levied on all taxable property within the City, within the limits prescribed by law, as provided in the ordinance authorizing the Notes (the "Note Ordinance" and together with the Certificate Ordinance, the "Ordinances") (see "The Certificates and Notes -Authority for Issuance"). PURPOSE ... Proceeds from the sale of the Notes will be used for (i) the acquisition of computers, software and computer equipment for City departments; (ii) designing, constructing, improving, extending and expanding streets, thoroughfares, sidewalks, bridges and other public ways of the City, including signage, signalization, street lighting, related storm drainage and environmental improvements; and acquiring land, rights-of- way and other interests in land in connection therewith, (iii) the acquisition of new and replacement vehicles for City departments, (iv) the acquisition of new and replacement equipment for City departments and (v) to pay the costs of issuance related to the sale of the Notes. MATURITY SCHEDULE CUSIP Prefix tn: 388622 CUSIP CUSIP Amount Maturity Rate Yield Suffix") Amount Maturity Rate Yield Suffix") $ 425,000 2008 $ 485,000 2012 500,000 2009 485,000 2013 490,000 2010 485,000 2014 490,000 2011 (Accrued Interest from May 1, 2007 to be added) (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by Standard and Poor s CUSIP Service Bureau, a division of the McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. REDEMPTION ... The Notes are not subject to redemption prior to maturity. SEPARATE ISSUES ... The Notes are being offered by the City concurrently with the "City of Grapevine, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2007" (the "Certificates"), under a common Official Statement, and such Certificates and Notes are hereinafter sometimes referred to collectively as the "Obligations." The Certificates and Notes are separate and distinct securities offerings being issued and sold independently except for the common Official Statement, and, while the Obligations share certain common attributes, each issue is separate from the other and should be reviewed and analyzed independently, including the type of obligation being offered, its terms for payment, the security for its payment, the rights of the holders, and other features. LEGALITY ... The Notes are offered for delivery when, as and if issued and received by the Initial Purchaser of the Notes and subject to the approving opinion of the Attorney General of Texas and the opinion of Vinson & Elkins L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's Opinions") DELIVERY ... It is expected that the Notes will be available for delivery through The Depository Trust Company on June 6, 2007 BIDS DUE TUESDAY, MAY 1, 2007, AT 12:00 PM, CDT THIS PAGE LEFT BLANK INTENTIONALLY This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation, or sale. No dealer, broker, salesperson, or other person has been authorized to give information or to make any representation other than those contained in this Official Statement, and, if given or made, such other infornation or representations must not be relied upon. For purposes of compliance with Rule 15c 2-12 of the Securities and Exchange Commission (the "Rule'), this document constitutes an Official Statement of the City with respect to the Certificates and Notes that has been "deemed final" by the City as of its date except for the omission of no more than the information permitted by the Rule. The information set forth herein has been obtained from the City and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as the representation, promise, or guarantee of the Financial Advisor. Any information and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or other matters described herein since the date hereof. See "Other Information - Continuing Disclosure of Information"for a description of the City's undertaking to provide certain information on a continuing basis. Neither the City nor its Financial Advisor make any representation as to the accuracy, completeness, or adequacy of the information supplied by The Depository Trust Company for use in this Official Statement. This Official Statement contains 'Forward -Looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, and achievements to be different from future results, performance, and achievements expressed or implied by such forward-looking statements. Investors are cautioned that the actual results could differ materially from those set forth in the forward- looking statements. The Certificates and Notes are exempt from registration with the Securities and Exchange Commission and consequently have not been registered therewith. The registration, qualification, or exemption of the Certificates and Notes in accordance with applicable securities law provisions of the jurisdiction in which these securities have been registered or exempted should not be regarded as a recommendation thereof. TABLE OF CONTENTS OFFICIAL STATEMENT SUMMARY ...................... ...6 CITY OFFICIALS, STAFF, AND CONSULTANTS .... 8 ELECTED OFFICIALS ................................................... 8 SELECTED ADMINISTRATIVE STAFF .............................8 CONSULTANTS, ADVISORS AND INDEPENDENT AUDITORS... ...................................................... 8 INTRODUCTION............................................................9 THE CERTIFICATES AND NOTES .............................9 TAX INFORMATION...................................................14 TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT .......................................... 17 TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY...................................................... 18 TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY ................................................ 19 TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY......................................................... 19 TABLE 5 - TEN LARGEST TAXPAYERS ....................... 19 TABLE 6 - TAX ADEQUACY.......................................20 TABLE 7 - ESTIMATED OVERLAPPING DEBT .............. 20 DEBT INFORMATION.................................................21 TABLE 8 - GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS ............................................... 21 TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION.................................................... 22 TABLE 10 - COMPUTATION OF SELF-SUPPORTING DEBT..................................................................22 TABLE I I - AUTHORIZED BUT UNISSUED TAX NOTEs23 TABLE 12 - OTHER OBLIGATIONS..............................23 FINANCIAL INFORiMATION..................................... 24 TABLE 13 — CHANGES IN NET ASSETS ...................... 24 TABLE 13A - GENERAL FUND REVENUES AND EXPENDITURE HISTORY .................................. 25 TABLE 14 - MUNICIPAL SALES TAX HISTORY ........... 26 TABLE 15 - CURRENT INVESTMENTS ......................... 28 TAXMATTERS............................................................. 29 CONTINUING DISCLOSURE OF INFORMATION 31 OTHER INFORMATION ............................................. 32 RATINGS.................................................................. 32 LITIGATION.............................................................. 32 REGISTRATION AND QUALIFICATION OF CERTIFICATES AND NOTES FOR SALE ..................................... 32 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS ................................. 32 LEGAL MATTERS ...................................................... 33 AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION................................................. 33 FINANCIAL ADVISOR ................................................ 33 INITIAL PURCHASER OF THE NOTES .......................... 33 INITIAL PURCHASER OF THE CERTIFICATES ............... 33 FORWARD LOOKING STATEMENTS ............................ 34 CERTIFICATION OF THE OFFICIAL STATEMENT .......... 34 APPENDICES GENERAL INFORMATION REGARDING THE CITY ........ A EXCERPTS FROM THE ANNUAL FINANCIAL REPORT.. B FORM OF BOND COUNSEL'S OPINIONS ...................... C The cover page hereof, this page, the appendices included herein and any addenda, supplement, or amendment hereto, are part of the Official Statement. OFFICIAL STATEMENT SUMIWARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Certificates and Notes to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE CITY... ......... - ....................... The City of Grapevine, Texas (the "City') is a political subdivision and municipal corporation of the State, located in Tarrant County, Texas. The City covers approximately 35.8 square miles (see "Introduction - Description of City"). THE CERTIFICATES ..................... The $2,250,000 Combination Tax and Revenue Certificates of Obligation, Series 2007 are to mature on February 15 in the years 2008 through 2027 (see "The Certificates and Notes - Description of the Certificates and Notes"). THE NOTES .................................. The $3,360,000 Tax Notes, Series 2007 are to mature on February 15 in the years 2008 through 2014 (see "The Certificates and Notes - Description of the Certificates and Notes"). PAYMENT OF INTEREST ............... Interest on the Certificates accrues from May 1, 2007, and is payable February 15, 2008, and each August 15 and February 15 thereafter until maturity or prior redemption. Interest on the Notes accrues from May 1, 2007, and is payable August 15, 2007, and each August 15 and February 15 thereafter until maturity or prior redemption (see "The Certificates and Notes - Description of the Certificates and Notes," "The Certificates and Notes - Optional Redemption"). AUTHORITY FOR ISSUANCE OF THE CERTIFICATES .............. The Certificates are issued pursuant to the general laws of the State, particularly Subchapter C of Chapter 271, Texas Local Government Code, as amended, and the Certificate Ordinance passed by the City Council of the City (see "The Certificates and Notes - Authority for Issuance"). AUTHORITY FOR ISSUANCE OF THE NOTES ........................... The Notes are being issued pursuant to the Constitution and general Iaws of the State of Texas, particularly Chapter 1431, Texas Government Code, as amended, and an Ordinance passed by the City Council of the City (see "The Certificates and Notes - Authority for Issuance"). SECURITY FOR THE CERTIFICATES ............................. The Certificates constitute direct obligations of the City, payable from a combination of (i) a direct and continuing annual ad valorem tax levied, within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of the City's Hotel Occupancy Tax as provided in the Certificate Ordinance (see "The Certificates and Notes - Security and Source of Payment"). SECURITY FOR THE NOTES .......... The Notes constitute direct and voted obligations of the City, payable from a direct and continuing annual ad valorem tax levied, within the limit prescribed by law, on all taxable property located within the City (see "The Certificates and Notes - Security and Source of Payment"). REDEMPTION OF THE CERTIFICATES .......................... The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2018, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2017, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "The Certificates and Notes — The Certificates Optional Redemption"). REDEMPTION OF THE NOTES ....... The Notes are not subject to redemption prior to maturity. TAx EXEMPTION ............................ In the opinion of Bond Counsel, the interest on the Certificates and Notes will be excludable from gross income for federal income tax purposes under existing law and the Certificates and Notes are not private activity bonds. See "Tax Matters - Tax Exemption" for a discussion of the opinion of Bond Counsel, including a description of the alternative minimum tax consequences for corporations. USE of PROCEEDS .......................... Proceeds from the sale of the Certificates will be used for (i) acquisition of two parcels of land at the corner of Main Street and Hudgins Street for the purpose of constructing facilities for the City's Convention and Visitor's Bureau, and (ii) to pay the costs of issuance related to the sale of the Certificates. Proceeds from the sale of the Notes will be used for (i) the acquisition of computers, software and computer equipment for City departments; (ii) designing, constructing, improving, extending and expanding streets, thoroughfares, sidewalks, bridges and other public ways of the City, including signage, signalization, street lighting, related storm drainage and environmental improvements; and acquiring land, rights-of-way and other interests in land in connection therewith, (iii) the acquisition of new and replacement vehicles for City departments, (iv) the acquisition of new and replacement equipment for City departments and (v) to pay the costs of issuance related to the sale of the Notes. RATINGS ...................................... The presently outstanding general obligation debt of the City is rated "A1" by Moody's Investors Service, Inc. ("Moody's") and "AA-" by Standard & Poor's Ratings Services, A Division of The McGraw-Hill Companies, Inc. ("S&P"). The City also has issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through credit enhancement in the form of municipal bond insurance policies. Applications for contract ratings on the Certificates and Notes have been made to Moody's and S&P (see "Other Information - Ratings"). BooK-ENTRY-ONLY SYSTEM...... The definitive Certificates and Notes will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book -Entry -Only System described herein. Beneficial ownership of the Certificates and Notes may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Certificates and Notes will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Certificates and Notes will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates and Notes (see "The Certificates and Notes - Book -Entry -Only System"). PAYMENT RECORD ...................... The City has not defaulted on its tax -supported debt since 1932 when all defaults were corrected without refunding. SELECTED FINANCIAL INFORNIATION Ratio Funded Fiscal Per Capita Per Capita Tax Debt to Year Estimated Taxable Taxable Funded Funded Taxable % of Ended City Assessed Assessed Tax Tax Assessed Total Tax 9/30 Population (I) Valuation (2) Valuation Debt Debt Valuation Collections 2003 46,400 $ 4,766,361,580 $ 102,723 $ 157,645,000 $ 3,398 3.31% 99.40% 2004 46,684 4,880,107,595 104,535 148,300,000 3,177 3.04% 99.70% 2005 47,036 5,227,295,000 111,134 144,685,000 3,076 2.77% 98.50% 2006 47,500 5,427,160,086 114,256 147,615,000 3,108 2.72% 99.30% 2007 49,000 5,444,409,754 111,110 149,995,000 t3) 3,061 2.76% 97.53% 14> (1) Source: The City of Grapevine. (2) Source: Tarrant Appraisal District. (3) Projected, includes the Certificates and the Notes. (4) Collections for part year only, through April 1, 2007. For additional information regarding the City, please contact: Fred Werner David K. Medanich Director of Finance Laura Alexander City of Grapevine First Southwest Company 200 South Main 777 Main Street, Suite 1200 Grapevine, Texas 76051 Fort Worth, Texas 76102 (817)410-3111 (817)332-9710 CITY OFFICIALS, STAFF, AND CONSULTANTS ELECTED OFFICIALS Name Position Length of Service Bruno Rumbelow City Manager 8 Years ct> Bill Gaither Administrative Services Director 10 Years Fred Werner Director of Finance 9 Years Linda Huff City Secretary 19 Years (2) (1) 8 years with City; 2 years in present position. (2) 24 years with City; 19 years in present position. CONSULTANTS, ADVISORS AND INDEPENDENT AUDITORS Independent Auditors.....................................................................................................................................Deloitte & Touche LLP Dallas, Texas BondCounsel................................................................................................................................................Vinson & Elkins L.L.P. Dallas, Texas Financial Advisor...................................................................................................................................... First Southwest Company Fort Worth, Texas 8 Length of Term City Council Service Expires Occupation William D. Tate 18 Years (�) May, 2009 Attorney -at -Law Mayor Ted R. Ware 27 Years May, 2008 Commercial Contractor Mayor Pro Tem C. Shane Wilbanks 21 Years May, 2009 Personnel Director Councilmember, Place 1 Sharron Spencer 21 Years May, 2009 Retired Sales Representative Councilmember, Place 2 Clydene Johnson 1 I Years May, 2007 Independent Insurance Agent Councilmember, Place 3 Darlene Freed 8 Years May, 2007 Commercial Real Estate Agent Councilmember, Place 4 Roy Stewart 10 Years May, 2008 Construction Company Owner Councilmember, Place 6 (1) Previously served 14 years as Mayor and Councilmember. SELECTED ADMINISTRATIVE STAFF Name Position Length of Service Bruno Rumbelow City Manager 8 Years ct> Bill Gaither Administrative Services Director 10 Years Fred Werner Director of Finance 9 Years Linda Huff City Secretary 19 Years (2) (1) 8 years with City; 2 years in present position. (2) 24 years with City; 19 years in present position. CONSULTANTS, ADVISORS AND INDEPENDENT AUDITORS Independent Auditors.....................................................................................................................................Deloitte & Touche LLP Dallas, Texas BondCounsel................................................................................................................................................Vinson & Elkins L.L.P. Dallas, Texas Financial Advisor...................................................................................................................................... First Southwest Company Fort Worth, Texas 8 NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $2,250,000 CITY OF GRAPEVINE, TEXAS (Tarrant County) COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2007 Sealed Bids Due Tuesday, May 1, 2007, at 12:00 PM, CDT THE CERTIFICATES WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS. THE SALE CERTIFICATES OFFERED FOR SALE AT COMPETITIVE. BIDDING... The City of City of Grapevine, Texas (the "City") is offering for sale its $2,250,000 Combination Tax and Revenue Certificates of Obligation, Series 2007 (the "Certificates"). Bidders may submit bids for the Certificates by any of the following methods: (1) Deliver bids directly to the City as described below in "Bids Delivered to the City;" (2) Submit bids electronically as described below in "Electronic Bidding Procedures;" or (3) Submit bids by telephone or facsimile as described below in "Bids by Telephone or Facsimile." BIDS DELIVERED TO CITY ... Sealed bids, plainly marked "Bid for Certificates," should be addressed to "Mayor and City Council, City of Grapevine, Texas," and delivered to the City's Financial Advisor at 777 Main Street, Suite 1200, Fort Worth, Texas 76102, prior to 12:00 PM, CDT, on the date of the sale. ELECTRONIC BIDDING PROCEDURE ... Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of PARITY. Subscription to i -Deal's BIDCOMP Competitive Bidding System is required in order to submit an electronic bid. The City will neither confirm any subscription nor be responsible for the failure of any prospective bidder to subscribe. Bidders submitting an electronic bid shall not be required to submit Official Bid Forms. An electronic bid made through the facilities of PARITY shall be deemed an irrevocable offer to purchase the Certificates on the terms provided in this Notice of Sale, and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the City. The City shall not be responsible for any malfunction or mistake made by, or as a result of the use of the facilities of, PARITY, the use of such facilities being the sole risk of the prospective bidder. If any provisions of the Notice of Sale shall conflict with information provided by PARITY as the approved provider of electronic bidding services, this Notice of Sale shall control. Further information about PARITY, including any fee charged, may be obtained from Parity Customer Support, 40 West 23rd Street, 5th Floor, New York, New York 10010, (212)404-8102. For purposes of the bidding process, the time as maintained by PARITY shall constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true interest cost to the City, as described under "Basis for Award" below. All electronic bids shall be deemed to incorporate the provisions of this Notice of Sale and the Official Bid Form. BIDS BY TELEPHONE OR FACSIMILE ... Bidders must submit, prior to May 1, 2007, SIGNED Official Bid Forms to David Medanich, First Southwest Company, 777 Main Street, Suite 1200, Fort Worth, Texas 76102, and submit their bid by telephone or facsimile (fax) on the date of the sale. Telephone bids will be accepted at (817) 332-9710, between 11:00 AM, CDT and 12:00 PM, CDT on the date of the sale. Fax bids will be received between 11:00 AM, CDT and 12:00 PM, CDT, on the date of the sale at (817) 336-5572, attention: Rhonda Van Iderstine. First Southwest Company will not be responsible for submitting any bids received after the above deadlines. The City and First Southwest Company are not responsible if such telephone or facsimile numbers are busy which prevents a bid or bids from being submitted on a timely basis. First Southwest Company assumes no responsibility or liability with respect to any irregularities associated with the submission of bids if any options are exercised. PLACE AND TIME OF BID OPENING... The bids for the Certificates will be publicly opened and read at the offices of the Financial Advisor, 777 Main Street, Suite 1200, Fort Worth, Texas, at 12:00 PM, CDT, Tuesday, May 1, 2007. AWARD OF THE CERTIFICATES ... The City Council will take action to award the Certificates (or reject all bids) at a meeting scheduled to convene at 7:30 PM, CDT, on the date of the bid opening, and adopt an ordinance authorizing the Certificates and approving the Official Statement (the "Certificate Ordinance"). THE CERTIFICATES DESCRIPTION ... The Certificates will be dated May 1, 2007 (the "Dated Date"). Interest will accrue from the Dated Date and will be due on February 15, 2008, and each August 15 and February 15 thereafter until the earlier of maturity or prior redemption. The Certificates will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity. The Certificates will mature on February 15 in each year as follows: MATURITY SCHEDULE OPTIONAL REDEMPTION ... The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2018, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2017, or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. SERIAL CERTIFICATES AND/OR TERM CERTIFICATES ... Bidders may provide that all of the Certificates be issued as Serial Certificates or may provide that any two or more consecutive annual principal amounts be combined into one or more Term Certificates. MANDATORY SINKING FUND ... If the successful bidder elects to alter the Maturity Schedule reflected above and convert principal amounts of the Serial Certificates into Term Certificates, such Term Certificates shall be subject to mandatory redemption on the first February 15 next following the last maturity for Serial Certificates, and annually thereafter on each February 15 until the stated maturity for the Term Certificates at the redemption prices of par plus accrued interest to the date of redemption. The principal amounts of the Term Certificates to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the Maturity Schedule shown above had no conversion to Term Certificates occurred. At least thirty (30) days prior to each mandatory redemption date, the Paying Agent/Registrar shall select by lot the Term Certificates to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement. The principal amount of the Term Certificates required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced, at the option of the City, by the principal amount of the Term Certificates of the same maturity which (i) shall have been acquired by the City at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. A final official statement will incorporate the mandatory redemption provisions for the Certificates in the event the successful bidder elects to convert serial maturities into one or more Term Certificates. BooK-ENTRY-ONLY SYSTEM ... The City intends to utilize the Book -Entry -Only System of The Depository Trust Company ("DTC"). See "The Certificates and Notes - Book -Entry -Only System" in the Official Statement. PAYING AGENT/REGISTRAR ... The initial Paying Agent/Registrar shall be The Bank of New York Trust Company, National Association, Dallas, "Texas (see "The Certificates and Notes - Paying Agent/Registrar" in the Official Statement). SOURCE OF PAYMENT ... The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy and collection of a direct and continuing annual ad valorem tax, levied, within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of the City's Hotel Occupancy Tax, as provided in the Certificate Ordinance. Further details regarding the Certificates are set forth in the Official Statement Principal Principal Principal Year Amount Year Amount Year Amount 2008 $ 45,000 2015 $ 100,000 2021 $ 130,000 2009 75,000 2016 105,000 2022 135,000 2010 80,000 2017 105,000 2023 140,000 2011 80,000 2018 110,000 2024 145,000 2012 85,000 2019 120,000 2025 155,000 2013 90,000 2020 125,000 2026 160,000 2014 95,000 2027 170,000 OPTIONAL REDEMPTION ... The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2018, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2017, or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. SERIAL CERTIFICATES AND/OR TERM CERTIFICATES ... Bidders may provide that all of the Certificates be issued as Serial Certificates or may provide that any two or more consecutive annual principal amounts be combined into one or more Term Certificates. MANDATORY SINKING FUND ... If the successful bidder elects to alter the Maturity Schedule reflected above and convert principal amounts of the Serial Certificates into Term Certificates, such Term Certificates shall be subject to mandatory redemption on the first February 15 next following the last maturity for Serial Certificates, and annually thereafter on each February 15 until the stated maturity for the Term Certificates at the redemption prices of par plus accrued interest to the date of redemption. The principal amounts of the Term Certificates to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the Maturity Schedule shown above had no conversion to Term Certificates occurred. At least thirty (30) days prior to each mandatory redemption date, the Paying Agent/Registrar shall select by lot the Term Certificates to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement. The principal amount of the Term Certificates required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced, at the option of the City, by the principal amount of the Term Certificates of the same maturity which (i) shall have been acquired by the City at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. A final official statement will incorporate the mandatory redemption provisions for the Certificates in the event the successful bidder elects to convert serial maturities into one or more Term Certificates. BooK-ENTRY-ONLY SYSTEM ... The City intends to utilize the Book -Entry -Only System of The Depository Trust Company ("DTC"). See "The Certificates and Notes - Book -Entry -Only System" in the Official Statement. PAYING AGENT/REGISTRAR ... The initial Paying Agent/Registrar shall be The Bank of New York Trust Company, National Association, Dallas, "Texas (see "The Certificates and Notes - Paying Agent/Registrar" in the Official Statement). SOURCE OF PAYMENT ... The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy and collection of a direct and continuing annual ad valorem tax, levied, within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of the City's Hotel Occupancy Tax, as provided in the Certificate Ordinance. Further details regarding the Certificates are set forth in the Official Statement CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES ... The Certificates will be sold in one block on an "All or None" basis, and at a price of not less than their par value and not more than 102.2% of par plus accrued interest from the date of the Certificates to the date of delivery of the Certificates. Bidders are invited to name the rate(s) of interest to be borne by the Certificates, provided that each rate bid must be in a multiple of 1/8 of 1% or 1/100 of 1% and the net effective interest rate must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 1.5% in rate. Interest rates shall be structured in ascending order such that for each succeeding maturity, rates shall be equal to or greater than the interest rate for the maturity of the preceding year. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Certificates of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. Each bidder shall state in the bid the total interest cost in dollars and the effective interest rate determined thereby (calculated in the manner prescribed by Chapter 1204, Texas Government Code), which shall be considered informative only and not as part of the bid. BASIS FOR AWARD ... Subject to the City's right to reject any or all bids and to waive irregularities except for time of filing, the sale of the Certificates will be awarded to the bidder making a bid that conforms to the specifications herein and which produces the lowest True Interest Cost rate to the City. The True Interest Cost rate is that rate which, when used to compute the total present value as of the Dated Date of all debt service payments on the Certificates on the basis of semi-annual compounding, produces an amount equal to the sum of the par value of the Certificates plus any premium bid (but not interest accrued from the Dated Date to the date of their delivery). In the event of a bidder's error in interest cost rate calculations, the interest rates, and premium, if any, set forth in the Official Bid Form will be considered as the official bid. GOOD FAITH DEPOSIT ... A Good Faith Deposit, payable to the "City of Grapevine, Texas," in the amount of $45,000.00, is required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the City pending the Initial Purchaser's compliance with the terms of the bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Initial Purchaser who shall be named in such instructions. The Good Faith Deposit of the Initial Purchaser will be returned to the Initial Purchaser upon payment for the Certificates. No interest will be allowed on the Good Faith Deposit. In the event the Initial Purchaser should fail or refuse to take up and pay for the Certificates in accordance with the bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened and an award of the Certificates has been made. DELIVERY OF THE CERTIFICATES AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS ... It is anticipated that CUSIP identification numbers will appear on the Certificates, but neither the failure to print or type such number on any Certificate nor any error with respect thereto shall constitute cause for a failure or refusal by the Initial Purchaser to accept delivery of and pay for the Certificates in accordance with the terms of this Notice of Sale and Bidding Instructions and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Certificates shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Initial Purchaser. DELIVERY of CERTIFICATES ... Initial Delivery will be accomplished by the issuance of one Initial Certificate (also called the "Certificate" or "Certificates"), either in typed or printed form, in the aggregate principal amount of $2,250,000, payable in stated installments to the Initial Purchaser or its designee, signed by the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts. Upon delivery of the Initial Certificate, it shall be immediately canceled and one definitive Certificate for each maturity will be registered and delivered only to Cede & Co., and deposited with DTC in connection with DTC's Book -Entry -Only System. Delivery will be at the corporate trust office of the Paying Agent/Registrar in Dallas, Texas. Payment for the Certificates must be made in immediately available funds for unconditional credit to the City, or as otherwise directed by the City. The Initial Purchaser will be given six business days' notice of the time fixed for delivery of the Certificates. It is anticipated that delivery of the Certificates can be made on or about June 6, 2007, and it is understood and agreed that the Initial Purchaser will accept delivery and make payment for the Certificates by 10:00 AM, CDT, on June 6, 2007, or thereafter on the date the Certificate is tendered for delivery, up to and including June 20, 2007. If for any reason the City is unable to make delivery on or before June 20, 2007, the City shall immediately contact the Initial Purchaser and offer to allow the Initial Purchaser to extend its offer for an additional thirty days. If the Initial Purchaser does not elect to extend its offer within six days thereafter, then its Good Faith Deposit will be returned, and both the City and the Initial Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages by reason of its failure to deliver the Certificates, provided such failure is due to circumstances beyond the City's reasonable control. CONDITIONS To DELIVERY ... The obligation of the Initial Purchaser to take up and pay for the Certificates is subject to the Purchaser's receipt of (a) the legal opinion of Vinson & Elkins L.L.P., Dallas, Texas, Bond Counsel for the City ("Bond Counsel"), (b) the no -litigation certificate, and (c) the certification as to the Official Statement, all as further described in the Official Statement. To provide the City with information to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exemption of interest on the Certificates from gross income for federal income tax purposes, the Initial Purchaser will be required ft to complete, execute, and deliver to the City (on or before the 6th business day prior to the delivery of the Certificates) a certification regarding "issue price" substantially in the form and to the effect attached hereto or accompanying this Notice of Sale and Bidding Instructions. In the event the successful bidder will not reoffer the Certificates for sale or has not sold a substantial amount of certificates of anv maturity by the date of delivery, such certificate may be modified in a manner approved by the City. In no event will the City fail to deliver the Certificates as a result of the Initial Purchaser's inability to certify actual sales of Certificates at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver such a certificate by the date of delivery of the Certificates, if its bid is accepted by the City. It will be the responsibility of the Purchaser to institute such syndicate reporting requirements to make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to Bond Counsel. LEGAL OPINIONS... The Certificates are offered when, as and if issued, subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Certificates is subject to the receipt by the Purchaser of the opinion of Bond Counsel substantially in the form reproduced in Appendix C to the Official Statement, to the effect that based upon an examination of a transcript of certified proceedings of the City relating to the authorization and issuance of the Certificates, the Certificates are valid and binding obligations of the City and that the interest on the Certificates will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "Tax Matters" in the Official Statement, including the alternative minimum tax on corporations. CERTIFICATION OF OFFICIAL STATE,NIENT ... At the time of payment for and Initial Delivery of the Certificates, the City will execute and deliver to the Initial Purchaser a certificate in the form set forth in the Official Statement. CHANGE IN TAX EXEMPT STATUS ... At any time before the Certificates are tendered for delivery, the Initial Purchaser may withdraw its bid if the interest received by private holders on obligations of the same type and character shall be declared to be includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale and Bidding Instructions. GENERAL FINANCIAL ADVISOR ... First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent upon the issuance and delivery of the Certificates. First Southwest Company may submit a bid for the Certificates, either independently or as a member of a syndicate organized to submit a bid for the Certificates. First Southwest Company, in its capacity as Financial Advisor, has not verified and does not assume any responsibility for the information, covenants, and representations contained in any of the legal documents with respect to the federal income tax status of the Certificates, or the possible impact of any present, pending, or future actions taken by any legislative or judicial bodies. BLUE SKv LAWS ... By submission of its bid, the Initial Purchaser represents that the sale of the Certificates in states other than Texas will be made only pursuant to exemptions from registration or, where necessary, the Initial Purchaser will register the Certificates in accordance with the securities law of the states in which the Certificates are offered or sold. The City agrees to cooperate with the Initial Purchaser, at the Initial Purchaser's written request and expense, in registering the Certificates or obtaining an exemption from registration in any state where such action is necessary, provided, however, that the City shall not be obligated to execute a general or special consent to service of process in any such jurisdiction. NOT AN OFFER TO SELL ... This Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Certificates, but is merely notice of the sale of the Certificates. The offer to sell the Certificates is being made by means of the Notice of Sale and Bidding Instructions, the Official Bid Form, and the Official Statement. Prospective purchasers are urged to carefully examine the Official Statement to determine the investment quality of the Certificates. ISSUANCE OF ADDITIONAL DEBT ... Except for the $3,360,000 Tax Notes, Series 2007 being offered simultaneously with the issuance of the Certificates, the City does not anticipate the issuance of additional tax debt within the next six months. RATINGS ... The presently outstanding tax supported debt of the City is rated "Al" by Moody's Investors Service, Inc. ("Moody's") and "AA-" by Standard & Poor's Ratings Services, A Division of McGraw-Hill Companies, Inc. ("S&P"). The City also has issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies. Applications for contract ratings on this issue have been made to Moody's and S&P. The result of their determinations will be provided as soon as possible. MUNICIPAL BOND INSURANCE ... In the event the Certificates are qualified for municipal bond insurance, and the Initial Purchaser desires to purchase such insurance, the cost will be paid by the Initial Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be paid by the City. It will be the responsibility of the Initial Purchaser to disclose the existence of insurance, its terms, and the effect thereof with respect to the reoffering of the Certificates. iv THE OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15C2-12 ... The City has prepared the accompanying Official Statement and, for the limited purpose of complying with SEC Rule 15c2-12, deems such Official Statement to be final as of its date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City, the Official Statement contains information, including financial information or operating data, concerning every entity, enterprise, fund, account, or person that is material to an evaluation of the offering of the Certificates. Representations made and to be made by the City concerning the absence of material misstatements and omissions in the Official Statement are addressed elsewhere in this Notice of Sale and Bidding Instructions and in the Official Statement. The City will furnish to the Initial Purchaser, acting through a designated senior representative, in accordance with instructions received from the Initial Purchaser, within seven (7) business days from the sale date an aggregate of 100 copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the Certificates. The cost of any Official Statement in excess of the number specified shall be prepared and distributed at the cost of the Initial Purchaser. The Initial Purchaser shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Except as noted above, the City assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject securities. CONTINUING DISCLOSURE AGREEMENT ... The City will agree in the Certificate Ordinance to provide certain periodic information and notices of material events in accordance with Securities and Exchange Commission Rule 15c2-12, as described in the Official Statement under "Continuing Disclosure of Information." The Initial Purchaser's obligation to accept and pay for the Certificates is conditioned upon delivery to the Initial Purchaser or agent of a certified copy of the Certificate Ordinance containing the agreement described under such heading. COMPLIANCE WITH PRIOR UNDERTAKINGS ... During the last five years, the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12. ADDITIONAL COPIES OF NOTICE, BID FORM, AND STATEMENT ... A limited number of additional copies of this Notice of Sale and Bidding Instructions, the Official Bid Form, and the Official Statement, as available over and above the normal mailing, may be obtained at the offices of First Southwest Company, Investment Bankers, 325 North St. Paul, Suite 800, Dallas, Texas 75201, Financial Advisor to the City. On the date of the sale, the City will, in the Certificate Ordinance authorizing the issuance of the Certificates, confirm its approval of the form and content of the Official Statement, and any addenda, supplement, or amendment thereto, and authorize its use in the reoffering of the Certificates by the Initial Purchaser. WILLIAM D. TATE Mayor City of Grapevine, Texas ATTEST: LINDA HUFF City Secretary April 18, 2007 BOND YEARS Bonds Accumulated Bonds Maturing Amount Bond Years Bond Years Ntaturing 2008 45,000 35.500 35.500 2008 2009 75,000 134.167 169.667 2009 2010 80,000 223.111 392.778 2010 2011 80,000 303.111 695.889 2011 2012 85,000 407.056 1,102.944 2012 2013 90,000 521.000 1,623.944 2013 2014 95,000 644.944 2,268.889 2014 2015 100,000 778.889 3,047.778 2015 2016 105,000 922.833 3,970.611 2016 2017 105,000 1,027.833 4,998.444 2017 2018 110,000 1,186.778 6,185.222 2018 2019 120,000 1,414.667 7,599.889 2019 2020 125,000 1,598.611 9,198.500 2020 2021 130,000 1,792.556 10,991.056 2021 2022 135,000 1,996.500 12,987.556 2022 2023 140,000 2,210.444 15,198.000 2023 2024 145,000 2,434.389 17,632.389 2024 2025 155,000 2,757.278 20,389.667 2025 2026 160,000 3,006.222 23,395.889 2026 2027 170,000 3,364.111 26,760.000 2027 Average Maturity ............................. 11.893 Years OFFICIAL BID FOPUVI Honorable Mayor and City Council May 1, 2007 City of Grapevine, Texas Honorable Mayor and Members of the City Council: Reference is made to your Official Statement and Notice of Sale and Bidding Instructions, dated April 18, 2007 of $2,250,000 CITY OF GRAPEVINE, TEXAS COMBINATION TAX REVENUE CERTIFICATES OF OBLIGATION, SERIES 2007, both of which constitute a part hereof. For your legally issued Certificates, as described in said Notice of Sale and Bidding Instructions and Official Statement, we will pay you par and accrued interest from date of issue to date of delivery to us, plus a cash premium of $ (not to exceed $49,500) for Certificates maturing and bearing interest as follows: Of the principal maturities set forth in the table above, term certificates have been created as indicated in the following table (which may include multiple term certificates, one term certificate or no term certificate if none is indicated). For those years which have been combined into a term certificate, the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term certificate maturity date shall mature in such year. The term certificates created are as follows: Year of Maturity Date First Mandatory Principal Interest February 15 Redemption Amount Rate $ $ $ Our calculation (which is not a part of this bid) of the true interest cost from the above is: TRUE INTEREST COST RATE We are having the Certificates of the following maturities insured by at a premium of $ , said premium to be paid by the Initial Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be paid by the City. The Initial Certificate shall be registered in the name of which will, upon payment for the Certificates, be cancelled by the Paying Agent/Registrar. The Certificates will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the Book -Entry -Only System. Principal Interest Principal Interest Principal Interest Maturity Amount Rate Maturity Amount Rate Maturity Amount Rate 2/15/2008 $ 45,000 2/15/2015 $ 100,000 2/15/2021 $ 130,000 2/15/2009 75,000 2/15/2016 105,000 2/15/2022 135,000 2/15/2010 80,000 2/15/2017 105,000 2/15/2023 140,000 2/15/2011 80,000 2/15/2018 110,000 2/15/2024 145,000 2/15/2012 85,000 2/15/2019 120,000 2/15/2025 155,000 2/15/2013 90,000 2/15/2020 125,000 2/15/2026 160,000 2/15/2014 95,000 2/15/2027 170,000 Of the principal maturities set forth in the table above, term certificates have been created as indicated in the following table (which may include multiple term certificates, one term certificate or no term certificate if none is indicated). For those years which have been combined into a term certificate, the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term certificate maturity date shall mature in such year. The term certificates created are as follows: Year of Maturity Date First Mandatory Principal Interest February 15 Redemption Amount Rate $ $ $ Our calculation (which is not a part of this bid) of the true interest cost from the above is: TRUE INTEREST COST RATE We are having the Certificates of the following maturities insured by at a premium of $ , said premium to be paid by the Initial Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be paid by the City. The Initial Certificate shall be registered in the name of which will, upon payment for the Certificates, be cancelled by the Paying Agent/Registrar. The Certificates will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the Book -Entry -Only System. A bank cashier's check or certified check of the Bank, , in the amount of $45,000.00, which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Notice of Sale and Bidding Instructions. We agree to accept delivery of the Certificates utilizing the Book -Entry -Only System through DTC and make payment for the Initial Certificate in immediately available funds in the Corporate Trust Division, The Bank of New York Trust Company, National Association, Dallas, Texas, not later than 10:00 AM, CDT, on June 6, 2007, or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Notice of Sale and Bidding Instructions. It will be the obligation of the purchaser of the Certificates to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete, execute, and deliver to the City, at least six business days prior to delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect accompanying the Notice of Sale and Bidding Instructions, with such changes thereto as may be acceptable to the City. We agree to provide in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Respectfully submitted, Syndicate Members: Name of Underwriter or Manager Authorized Representative Phone Number Signature ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by the City of Grapevine, Texas, subject to and in accordance with the Notice of Sale and Bidding Instructions, this the 1 st day of May, 2007. ATTEST: City Secretary Mayor City of Grapevine, Texas CERTIFICATE OF UNDERWRITER The undersigned hereby certifies as follows with respect to the bid and purchase of the $2,250,000 CITY OF GRAPEVINE, TEXAS COMBINATION TAX REVENUE CERTIFICATES OF OBLIGATION, SERIES 2007 (the "Certificates"): 1. The undersigned is the duly authorized representative of the purchaser (the "Purchaser") of the Certificates from the City of Grapevine, Texas (the "Issuer"). 2. All of the Certificates have been offered to members of the public in a bona fide initial offering. For purposes of this Certificate, the term "public" does not include any bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers (including the Purchaser or members of the selling group or persons that are related to, or controlled by, or are acting on behalf of or as agents for the undersigned or members of the selling group). 3. Each maturity of the Certificates was offered to the public at a price which, on the date of such offering, was reasonably expected by the Purchaser to be equal to the fair market value of such maturity. 4. Other than the obligations set forth in paragraph 5 hereof (the "Retained Maturity" or "Retained Maturities"), the first price/yield at which a substantial amount (i.e., at least ten (10) percent) of the principal amount of each maturity of the Certificates was sold to the public is set forth below. Principal Offering Principal Offering Amount Year of Price Amount Year of Price Maturing Maturity (%/Yield) Maturing Maturity (%/Yield) $ 45,000 2008 $ 110,000 2018 75,000 2009 120,000 2019 80,000 2010 125,000 2020 80,000 2011 130,000 2021 85,000 2012 135,000 2022 90,000 2013 140,000 2023 95,000 2014 145,000 2024 100,000 2015 155,000 2025 105,000 2016 160,000 2026 105,000 2017 170,000 2027 5. In the case of the Retained Maturities, the Purchaser reasonably expected on the offering date to sell a substantial amount (i.e., at least ten (10) percent) of each Retained Maturity at the initial offering price/yield as set forth below: Principal Offering Principal Offering Amount Year of Price Amount Year of Price Maturing Maturity (%/Yield) Maturing Maturity (%/Yield) $ 45,000 2008 $ 110,000 2018 75,000 2009 120,000 2019 80,000 2010 125,000 2020 80,000 2011 130,000 2021 85,000 2012 135,000 2022 90,000 2013 140,000 2023 95,000 2014 145,000 2024 100,000 2015 155,000 2025 105,000 2016 160,000 2026 105,000 2017 170,000 2027 6. Please choose the appropriate statement ) The Purchaser will not purchase bond insurance for the Certificates ( ) The Purchaser will purchase bond insurance from (the "Insurer") for a fee/premium of $ (the "Fee"). The Fee is a reasonable amount payable solely for the transfer of credit risk for the payment of debt service on the Certificates and does not include any amount payable for a cost other than such guarantee, e.g., a credit rating or Iegal fees. The Purchaser represents that the present value of the Fee for each obligation constituting the Certificates to which such Fee is properly allocated and which are insured thereby is less than the present value of the interest reasonably expected to be saved as a result of the insurance on each obligation constituting the Certificates. The Fee has been paid to a person who is not exempt from federal income taxation and who is not a user or related to the user of any proceeds of the Certificates. In determining present value for this purpose, the yield of the Certificates (determined with regard to the payment of the guarantee fee) has been used as the discount rate. No portion of the Fee is refundable upon redemption of any of the Certificates in an amount which would exceed the portion of such Fee that has not been earned. 7. The Purchaser understands that the statements made herein will be relied upon, by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986, and by Bond Counsel in rendering their opinion that the interest on the Certificates is excludable from the gross income of the owners thereof. EXECUTED and DELIVERED this day of , 2007 By (Name of Underwriter or Manager) (Title) NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $3,360,000 CITY OF GRAPEVINE, TEXAS (Tarrant County) TAX NOTES, SERIES 2007 Sealed Bids Due Tuesday, May 1, 2007, at 12:00 PM, CDT THE NOTES WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS. THE SALE NOTES OFFERED FOR SALE AT COMPETITIVE BIDDING... The City of City of Grapevine, Texas (the "City") is offering for sale its $3,360,000 Tax Notes, Series 2007 (the "Notes"). Bidders may submit bids for the Notes by any of the following methods: (1) Deliver bids directly to the City as described below in "Bids Delivered to the City;" (2) Submit bids electronically as described below in "Electronic Bidding Procedures;" or (3) Submit bids by telephone or facsimile as described below in "Bids by Telephone or Facsimile." BIDS DELIVERED To CITY ... Sealed bids, plainly marked "Bid for Notes," should be addressed to "Mayor and City Council, City of Grapevine, Texas," and delivered to the City's Financial Advisor at 777 Main Street, Suite 1200, Fort Worth, Texas 76102, prior to 12:00 PM, CDT, on the date of the sale. ELECTRONIC BIDDING PROCEDURE ... Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of PARITY. Subscription to i -Deal's BIDCOMP Competitive Bidding System is required in order to submit an electronic bid. The City will neither confirm any subscription nor be responsible for the failure of any prospective bidder to subscribe. Bidders submitting an electronic bid shall not be required to submit Official Bid Forms. An electronic bid made through the facilities of PARITY shall be deemed an irrevocable offer to purchase the Notes on the terms provided in this Notice of Sale, and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the City. The City shall not be responsible for any malfunction or mistake made by, or as a result of the use of the facilities of, PARITY, the use of such facilities being the sole risk of the prospective bidder. If any provisions of the Notice of Sale shall conflict with information provided by PARITY as the approved provider of electronic bidding services, this Notice of Sale shall control. Further information about PARITY, including any fee charged, may be obtained from Parity Customer Support, 40 West 23rd Street, 5th Floor, New York, New York 10010, (212)404-8102. For purposes of the bidding process, the time as maintained by PARITY shall constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true interest cost to the City, as described under "Basis for Award" below. All electronic bids shall be deemed to incorporate the provisions of this Notice of Sale and the Official Bid Form. BIDS By TELEPHONE OR FACSIMILE ... Bidders must submit, prior to May 1, 2007, SIGNED Official Bid Forms to David Medanich, First Southwest Company, 777 Main Street, Suite 1200, Fort Worth, Texas 76102, and submit their bid by telephone or facsimile (far) on the date of the sale. Telephone bids will be accepted at (817) 332-9710, between 11:00 AM, CDT and 12:00 PM, CDT on the date of the sale. Fax bids will be received between 11:00 AM, CDT and 12:00 PM, CDT, on the date of the sale at (817) 336-5572, attention: Rhonda Van Iderstine. First Southwest Company will not be responsible for submitting any bids received after the above deadlines. The City and First Southwest Company are not responsible if such telephone or facsimile numbers are busy which prevents a bid or bids from being submitted on a timely basis. First Southwest Company assumes no responsibility or liability with respect to any irregularities associated with the submission of bids if any options are exercised. PLACE AND TIME OF BID OPENING... The bids for the Notes will be publicly opened and read at the offices of the Financial Advisor, 777 Main Street, Suite 1200, Fort Worth, Texas, at 12:00 PM, CDT, Tuesday, May 1, 2007. AWARD of THE NOTES ... The City Council will take action to award the Notes (or reject all bids) at a meeting scheduled to convene at 7:30 PM, CDT, on the date of the bid opening, and adopt an ordinance authorizing the Notes and approving the Official Statement (the "Note Ordinance"). THE NOTES DESCRIPTION ... The Notes will be dated May 1, 2007 (the "Dated Date"). Interest will accrue from the Dated Date and will be due on August 15, 2007, and each August 15 and February 15 thereafter until the earlier of maturity or prior redemption. The Notes will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity. The Notes will mature on February 15 in each year as follows: MATURITY SCHEDULE Principal Principal Principal Year Amount Year Amount Year Amount 2008 S 425,000 2010 $ 490,000 2013 $ 485,000 2009 500,000 2011 490,000 2014 485,000 2012 485,000 OPTIONAL REDEMPTION ... The Notes are not subject to redemption prior to maturity. SERIAL NOTES AND/OR TERM NOTES ... Bidders may provide that all of the Notes be issued as Serial Notes or may provide that any two or more consecutive annual principal amounts be combined into one or more Term Notes. MANDATORY SINKING FUND ... If the successful bidder elects to alter the Maturity Schedule reflected above and convert principal amounts of the Serial Notes into Term Notes, such Term Notes shall be subject to mandatory redemption on the first February 15 next following the last maturity for Serial Notes, and annually thereafter on each February 15 until the stated maturity for the Term Notes at the redemption prices of par plus accrued interest to the date of redemption. The principal amounts of the Term Notes to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the Maturity Schedule shown above had no conversion to Term Notes occurred. At least thirty (30) days prior to each mandatory redemption date, the Paying Agent/Registrar shall select by lot the Term Notes to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement. The principal amount of the Term Notes required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced, at the option of the City, by the principal amount of the Term Notes of the same maturity which (i) shall have been acquired by the City at a price not exceeding the principal amount of such Term Notes plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. A final official statement will incorporate the mandatory redemption provisions for the Notes in the event the successful bidder elects to convert serial maturities into one or more Term Notes. BOOK -ENTRY -ONLY SYSTEM ... The City intends to utilize the Book -Entry -Only System of The Depository Trust Company ("DTC"). See "The Certificates and Notes - Book -Entry -Only System" in the Official Statement. PAYING AGENT/REGISTRAR ... The initial Paying Agent/Registrar shall be The Bank of New York Trust Company, National Association, Dallas, Texas (see "The Certificates and Notes - Paying Agent/Registrar" in the Official Statement). SOURCE of PAYMEN-r ... The Notes constitute direct obligations of the City, payable out of the receipts from an ad valorem tar levied, within the limits prescribed by law, on all taxable property within the City, as provided in the Note Ordinance. Further details regarding the Notes are set forth in the Official Statement. CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES ... The Notes will be sold in one block on an "All or None" basis, and at a price of not Iess than their par value and not more than 100.5% of par plus accrued interest from the date of the Notes to the date of delivery of the Notes. Bidders are invited to name the rate(s) of interest to be borne by the Notes, provided that each rate bid must be in a multiple of 1/8 of 1% or 1/100 of 1% and the net effective interest rate must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 1% in rate. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Notes of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. BASIS FOR AWARD ... Subject to the City's right to reject any or all bids and to waive irregularities except for time of filing, the sale of the Notes will be awarded to the bidder making a bid that conforms to the specifications herein and which produces the lowest True Interest Cost rate to the City. The True Interest Cost rate is that rate which, when used to compute the total present value as of the Dated Date of all debt service payments on the Notes on the basis of semi-annual compounding, produces an amount equal to the sum of the par value of the Notes plus any premium bid (but not interest accrued from the Dated Date to the date of their delivery). In the event of a bidder's error in interest cost rate calculations, the interest rates, and premium, if any, set forth in the Official Bid Form will be considered as the official bid. GOOD FAITH DEPOSIT ... A Good Faith Deposit, payable to the "City of Grapevine, Texas," in the amount of $67,200.00, is required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the City pending the Initial Purchaser's compliance with the terms of the bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Initial Purchaser who shall be named in such instructions. The Good Faith Deposit of the Initial Purchaser will be returned to the Initial Purchaser upon payment for the Notes. No interest will be allowed on the Good Faith Deposit. In the event the Initial Purchaser should fail or refuse to take up and pay for the Notes in accordance with the bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened and an award of the Notes has been made. DELIVERY OF THE NOTES AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS ... It is anticipated that CUSIP identification numbers will appear on the Notes, but neither the failure to print or type such number on any Note nor any error with respect thereto shall constitute cause for a failure or refusal by the Initial Purchaser to accept delivery of and pay for the Notes in accordance with the terms of this Notice of Sale and Bidding Instructions and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Notes shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Initial Purchaser. DELIVERY OF NOTES ... Initial Delivery will be accomplished by the issuance of one Initial Note (also called the "Note" or "Notes"), either in typed or printed form, in the aggregate principal amount of $3,360,000, payable in stated installments to the Initial Purchaser or its designee, signed by the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts. Upon delivery of the Initial Note, it shall be immediately canceled and one definitive Note for each maturity will be registered and delivered only to Cede & Co., and deposited with DTC in connection with DTC's Book -Entry -Only System. Delivery will be at the corporate trust office of the Paying Agent/Registrar in Dallas, Texas. Payment for the Notes must be made in immediately available funds for unconditional credit to the City, or as otherwise directed by the City. The Initial Purchaser will be given six business days' notice of the time fixed for delivery of the Notes. It is anticipated that delivery of the Notes can be made on or about June 6, 2007, and it is understood and agreed that the Initial Purchaser will accept delivery and make payment for the Notes by 10:00 AM, CDT, on June 6, 2007, or thereafter on the date the Note is tendered for delivery, up to and including June 20, 2007. If for any reason the City is unable to make delivery on or before June 20, 2007, the City shall immediately contact the Initial Purchaser and offer to allow the Initial Purchaser to extend its offer for an additional thirty days. If the Initial Purchaser does not elect to extend its offer within six days thereafter, then its Good Faith Deposit will be returned, and both the City and the Initial Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages by reason of its failure to deliver the Notes, provided such failure is due to circumstances beyond the City's reasonable control. CONDITIONS To DELIVERY ... The obligation of the Initial Purchaser to take up and pay for the Notes is subject to the Purchaser's receipt of (a) the legal opinion of Vinson & Elkins L.L.P., Dallas, Texas, Bond Counsel for the City ("Bond Counsel"), (b) the no -litigation certificate, and (c) the certification as to the Official Statement, all as further described in the Official Statement. To provide the City with information to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exemption of interest on the Notes from gross income for federal income tax purposes, the Initial Purchaser will be required to complete, execute, and deliver to the City (on or before the 6th business day prior to the delivery of the Notes) a certification regarding "issue price" substantially in the form and to the effect attached hereto or accompanying this Notice of Sale and Bidding Instructions. In the event the successful bidder will not reoffer the Notes for sale or has not sold a substantial amount of certificates of any maturity by the date of delivery, such certificate may be modified in a manner approved by the City. In no event will the City fail to deliver the Notes as a result of the Initial Purchaser's inability to certify actual sales of Notes at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver such a certificate by the date of in delivery of the Notes, if its bid is accepted by the City. It will be the responsibility of the Purchaser to institute such syndicate reporting requirements to make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to Bond Counsel. LEGAL OPINIONS ... The Notes are offered when, as and if issued, subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Notes is subject to the receipt by the Purchaser of the opinion of Bond Counsel substantially in the form reproduced in Appendix C to the Official Statement, to the effect that based upon an examination of a transcript of certified proceedings of the City relating to the authorization and issuance of the Notes, the Notes are valid and binding obligations of the City and that the interest on the Notes will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "Tax Matters" in the Official Statement, including the alternative minimum tax on corporations. CERTIFICATION of OFFICIAL STATEMENT ... At the time of payment for and Initial Delivery of the Notes, the City will execute and deliver to the Initial Purchaser a certificate in the form set forth in the Official Statement, CHANGE IN TAx ExEmPT STATUS ... At any time before the Notes are tendered for delivery, the Initial Purchaser may withdraw its bid if the interest received by private holders on obligations of the same type and character shall be declared to be includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale and Bidding Instructions. GENERAL FINANCIAL ADVISOR ... First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Notes. The Financial Advisor's fee for services rendered with respect to the sale of the Notes is contingent upon the issuance and delivery of the Notes. First Southwest Company may submit a bid for the Notes, either independently or as a member of a syndicate organized to submit a bid for the Notes. First Southwest Company, in its capacity as Financial Advisor, has not verified and does not assume any responsibility for the information, covenants, and representations contained in any of the legal documents with respect to the federal income tax status of the Notes, or the possible impact of any present, pending, or future actions taken by any legislative or judicial bodies. BLUE SKY LAWS ... By submission of its bid, the Initial Purchaser represents that the sale of the Notes in states other than Texas will be made only pursuant to exemptions from registration or, where necessary, the Initial Purchaser will register the Notes in accordance with the securities law of the states in which the Notes are offered or sold. The City agrees to cooperate with the Initial Purchaser, at the Initial Purchaser's written request and expense, in registering the Notes or obtaining an exemption from registration in any state where such action is necessary, provided, however, that the City shall not be obligated to execute a general or special consent to service of process in any such jurisdiction. NOT AN OFFER TO SELL ... This Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Notes, but is merely notice of the sale of the Notes. The offer to sell the Notes is being made by means of the Notice of Sale and Bidding Instructions, the Official Bid Form, and the Official Statement. Prospective purchasers are urged to carefully examine the Official Statement to determine the investment quality of the Notes. ISSUANCE OF ADDITIONAL DEBT . . . Except for the $2,250,000 Certificates of Obligation, Series 2007 being offered simultaneously with the issuance of the Notes, the City does not anticipate the issuance of additional tax debt within the next six months. RATINGS ... The presently outstanding tax supported debt of the City is rated "Al" by Moody's Investors Service, Inc. ("Moody's") and "AA-" by Standard & Poor's Ratings Services, A Division of McGraw-Hill Companies, Inc. ("S&P"). The City also has issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies. Applications for contract ratings on this issue have been made to Moody's and S&P. The result of their determinations will be provided as soon as possible. MUNICIPAL BOND INSURANCE ... In the event the Notes are qualified for municipal bond insurance, and the Initial Purchaser desires to purchase such insurance, the cost will be paid by the Initial Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be paid by the City. It will be the responsibility of the Initial Purchaser to disclose the existence of insurance, its terms, and the effect thereof with respect to the reoffering of the Notes. iv THE OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15C2-12 ... The City has prepared the accompanying Official Statement and, for the limited purpose of complying with SEC Rule 15c2-12, deems such Official Statement to be final as of its date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City, the Official Statement contains information, including financial information or operating data, concerning every entity, enterprise, fund, account, or person that is material to an evaluation of the offering of the Notes. Representations made and to be made by the City concerning the absence of material misstatements and omissions in the Official Statement are addressed elsewhere in this Notice of Sale and Bidding Instructions and in the Official Statement. The City will furnish to the Initial Purchaser, acting through a designated senior representative, in accordance with instructions received from the Initial Purchaser, within seven (7) business days from the sale date an aggregate of 100 copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the Notes. The cost of any Official Statement in excess of the number specified shall be prepared and distributed at the cost of the Initial Purchaser. The Initial Purchaser shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Except as noted above, the City assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject securities. CONTINUING DISCLOSURE AGREEMENT ... The City will agree in the Note Ordinance to provide certain periodic information and notices of material events in accordance with Securities and Exchange Commission Rule 15c2-12, as described in the Official Statement under "Continuing Disclosure of Information." The Initial Purchaser's obligation to accept and pay for the Notes is conditioned upon delivery to the Initial Purchaser or agent of a certified copy of the Note Ordinance containing the agreement described under such heading. COMPLIANCE WITH PRIOR UNDERTAKINGS ... During the last five years, the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule 15e2-12. ADDITIONAL COPIES OF NOTICE, BID FORM, AND STATEMENT ... A limited number of additional copies of this Notice of Sale and Bidding Instructions, the Official Bid Form, and the Official Statement, as available over and above the normal mailing, may be obtained at the offices of First Southwest Company, Investment Bankers, 325 North St. Paul, Suite 800, Dallas, Texas 75201, Financial Advisor to the City. On the date of the sale, the City will, in the Note Ordinance authorizing the issuance of the Notes, confirm its approval of the form and content of the Official Statement, and any addenda, supplement, or amendment thereto, and authorize its use in the reoffering of the Notes by the Initial Purchaser. WILLIAM D. TATE Mayor City of Grapevine, Texas ATTEST: LINDA HUFF City Secretary April 18, 2007 BOND YEARS Bonds Accumulated Bonds Maturing Amount Bond Years Bond Years Maturing 2008 425,000 335.278 335.278 2008 2009 500,000 894.444 1,229.722 2009 2010 490,000 1,366.556 2,596.278 2010 2011 490,000 1,856.556 4,452.833 2011 2012 485,000 2,322.611 6,775.444 2012 2013 485,000 2,807.611 9,583.056 2013 2014 485,000 3,292.611 12,875.667 2014 Average Maturity ............................. 3.832 Years OFFICIAL BID FORM Honorable Mayor and City Council City of Grapevine, Texas Honorable Mayor and Members of the City Council: May 1, 2007 Reference is made to your Official Statement and Notice of Sale and Bidding Instructions, dated April 18, 2007 of $3,360,000 CITY OF GRAPEVINE, TEXAS TAX NOTES, SERIES 2007, both of which constitute a part hereof. For your legally issued Notes, as described in said Notice of Sale and Bidding Instructions and Official Statement, we will pay you par and accrued interest from date of issue to date of delivery to us, plus a cash premium of $ (note to exceed $16,800) for Notes maturing and bearing interest as follows: Of the principal maturities set forth in the table above, term certificates have been created as indicated in the following table (which may include multiple term certificates, one term certificate or no term certificate if none is indicated). For those years which have been combined into a term certificate, the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term certificate maturity date shall mature in such year. The term certificates created are as follows: Year of Maturity Date First Mandatory Princip al Interest February 15 Redemption Amount Rate $ Our calculation (which is not a part of this bid) of the true interest cost from the above is: TRUE INTEREST COST RATE We are having the Notes of the following maturities insured by at a premium of $ , said premium to be paid by the Initial Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be paid by the City. The Initial Note shall be registered in the name of I which will, upon payment for the Notes, be cancelled by the Paying Agent/Registrar. The Notes will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the Book -Entry -Only System. Principal Interest Principal Interest Maturity Amount Rate Maturity Amount Rate 2/15/2008 $ 425,000 2/15/2012 $ 485,000 2/15/2009 500,000 2/15/2013 485,000 2/15/2010 490,000 2/15/2014 485,000 2/15/2011 490,000 Of the principal maturities set forth in the table above, term certificates have been created as indicated in the following table (which may include multiple term certificates, one term certificate or no term certificate if none is indicated). For those years which have been combined into a term certificate, the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term certificate maturity date shall mature in such year. The term certificates created are as follows: Year of Maturity Date First Mandatory Princip al Interest February 15 Redemption Amount Rate $ Our calculation (which is not a part of this bid) of the true interest cost from the above is: TRUE INTEREST COST RATE We are having the Notes of the following maturities insured by at a premium of $ , said premium to be paid by the Initial Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be paid by the City. The Initial Note shall be registered in the name of I which will, upon payment for the Notes, be cancelled by the Paying Agent/Registrar. The Notes will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the Book -Entry -Only System. A bank cashier's check or certified check of the Bank, , in the amount of $67,200.00, which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Notice of Sale and Bidding Instructions. We agree to accept delivery of the Notes utilizing the Book -Entry -Only System through DTC and make payment for the Initial Note in immediately available funds in the Corporate Trust Division, The Bank of New York Trust Company, National Association, Dallas, Texas, not later than 10:00 AM, CDT, on June 6, 2007, or thereafter on the date the Notes are tendered for delivery, pursuant to the terms set forth in the Notice of Sale and Bidding Instructions. It will be the obligation of the purchaser of the Notes to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete, execute, and deliver to the City, at least six business days prior to delivery of the Notes, a certificate relating to the "issue price" of the Notes in the form and to the effect accompanying the Notice of Sale and Bidding Instructions, with such changes thereto as may be acceptable to the City. We agree to provide in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Respectfully submitted, Syndicate Members: Name of Underwriter or Manager Authorized Representative Phone Number S ignature ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by the City of Grapevine, Texas, subject to and in accordance with the Notice of Sale and Bidding Instructions, this the I' day of May, 2007. ATTEST: City Secretary Mayor City of Grapevine, Texas CERTIFICATE OF UNDERWRITER The undersigned hereby certifies as follows with respect to the bid and purchase of the $3,360,000 CITY OF GRAPEVINE, TEXAS TAX NOTES, SERIES 2007 (the "Notes"): I. The undersigned is the duly authorized representative of the purchaser (the "Purchaser") of the Notes from the City of Grapevine, Texas (the "Issuer"). 2. All of the Notes have been offered to members of the public in a bona fide initial offering. For purposes of this Note, the term "public" does not include any bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers (including the Purchaser or members of the selling group or persons that are related to, or controlled by, or are acting on behalf of or as agents for the undersigned or members of the selling group). 3. Each maturity of the Notes was offered to the public at a price which, on the date of such offering, was reasonably expected by the Purchaser to be equal to the fair market value of such maturity. 4. Other than the obligations set forth in paragraph 5 hereof (the 'Retained Maturity" or 'Retained Maturities"), the first price/yield at which a substantial amount (i.e., at least ten (10) percent) of the principal amount of each maturity of the Notes was sold to the public is set forth below. Principal Offering Principal Offering Amount Year of Price Amount Year of Price Maturing Maturity (%/Yield) Maturing Maturity (%/Yield) $ 425,000 2008 $ 485,000 2012 500,000 2009 485,000 2013 490,000 2010 485,000 2014 490,000 2011 5. In the case of the Retained Maturities, the Purchaser reasonably expected on the offering date to sell a substantial amount (i.e., at least ten (10) percent) of each Retained Maturity at the initial offering price/yield as set forth below: Principal Offering Principal Offering Amount Year of Price Amount Year of Price Maturing Maturity (%/Yield) Maturing Maturity (%/Yield) $ 425,000 2008 $ 485,000 2012 500,000 2009 485,000 2013 490,000 2010 485,000 2014 490,000 2011 6. Please choose the appropriate statement: ( ) The Purchaser will not purchase bond insurance for the Notes. ( ) The Purchaser will purchase bond insurance from (the "Insurer") for a fee/premium of $ (the "Fee"). The Fee is a reasonable amount payable solely for the transfer of credit risk for the payment of debt service on the Notes and does not include any amount payable for a cost other than such guarantee, e.g., a credit rating or legal fees. The Purchaser represents that the present value of the Fee for each obligation constituting the Notes to which such Fee is properly allocated and which are insured thereby is less than the present value of the interest reasonably expected to be saved as a result of the insurance on each obligation constituting the Notes. The Fee has been paid to a person who is not exempt from federal income taxation and who is not a user or related to the user of any proceeds of the Notes. In determining present value for this purpose, the yield of the Notes (determined with regard to the payment of the guarantee fee) has been used as the discount rate. No portion of the Fee is refundable upon redemption of any of the Notes in an amount which would exceed the portion of such Fee that has not been earned. 7. The Purchaser understands that the statements made herein will be relied upon, by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986, and by Bond Counsel in rendering their opinion that the interest on the Notes is excludable from the gross income of the owners thereof. EXECUTED and DELIVERED this day of 2007. By (Name of Underwriter or Manager) (Title)