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HomeMy WebLinkAboutContract 40755-A1 AMENDMENT NO. 1 To CITY SECRETARY CONTRACT No. 40755 STATE of TEXAS CITY SECRETARY CO�NT CT NO. COUNTY of TAR RANT WHEREAS, the City of Fort Worth ("Lessee") and Johnson Controls, Inc. "Lesson") made and entered into a Municipal Equipment Lease/Purchase Agreement, City 'Secretary Contract lo. 407515 (the "Agreement") Which Was authorized by City Council on July 20, 2010, ITC C-24360; and WHEREAS, it has become necessary to execute Amendment Igo. 1 to said Agreement to include revisions to: Equipment Schedule (Exhibit A), Form of opinion to Counsel to Lessee (Exhibit ID),1 No Arbitrage Certificate With new Tax Exemption Certificate (Exhibit 1) and IRS Form 8038-G schedule 1 of Exhibit I . NOW THEREFORE, City and JCI, acting herein by and through their duly authorized representatives, enter into the following agreement that amends the Agreement. 1 Replace entire Equipment schedule (Exhibit A) With Devised Equipment Schedule (Exhibit A attached hereto and incorporated herein by this reference. , ..,r, J I ESPC FINANCING-AMENDMENT NO.I PHASE V,SEC"T"ION 2 SERVICES E 10912161210 10 Page 1 of 3 2. In Form of Op:ini,on of C,ounis,el to Lessee letter (Exhibit D): 1. The date of this letter (Exhibit D) shall be amended to the closing date of the transaction which is: "September 29, 2010". 2. The referenced Date for the original Equipment Lease-Purchase Agreement is amended, to read: September 71 2010 31. The first paragraph shall be amended to include: "I have also examined Amendment No. 1 to the Agreement on file with the City Secretary's Office as Contract No. 40755 3. Replace entire No Arbitrage Certificate (Exhibit 1) with Revised No Arbitrage Certificate and new Tax Exemption Certificate (Exhibit 1) attached hereto and incorporated herein by this reference. 4. Replace the sample IRS Form 8038 (Schedule 1 of Exhibit 1) with the executed IRS Form 8038-G (Schedule 1 of Exhibit 1) attached hereto and incorporated herein by this reference. All other provisions of the Agreement which are not expressly amended herein shall remain in full force and effect. EXECUTED on this the day of 2010, in Fort Worthl Tarrant County, Texas. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) JCJ ESPC FINAN0NG-AMENDMENT NO.1 PHASE V,SECTION 2 SEAVICES 09/26/2010 Page 2 of 3 rty Hendrix Fernando Costa ity Secretary Assistant City Manager QWzation: M,4c, APPROVAL RECOMMENDED,: Xx 16 u 001 A oo AV 0 Q Vs, 4 0 � Frank Crum , .E., "I � �" 0 10 0 Water Department, 0 00 ED AS TO, FORM LEGALITY.- ' r "w Amy J. A 116 ssist Attorney JOHNSON T ROL , INC. e"o 1100,0�057 By- NAME: Daniel Harnil 0 TITLE—Re i t al Solutions Operations Mqr. J'!ESP FINANCING IN's -AMENDMENT ENT NANO I PHASEV,SECTUiO,N 2 SERVICES 09/26/2010 Page 3 of 3 B�NIYNNWWYni]N �9wrWlbwWrs�ww'rtr-w✓w;mwJ4 r nx �,m.mmm«�,+.r. ,..,_ .... .... , REVISED NOTE THIS REPLACES PAGES 23 throuqh 37 of the Munic!paLEgy!pment LeaselPurchase AgLeemenLereviously sent EXMBIT A EQUIPMENT SMEDULE Location and Description of Equipment: See Scope of Work Schedule Below, SCOPE 01F WORK SCHEDULE SUMMARY OF WORK.- The following FIK s will be included in this Agreement, FIM Description Turbine Waste Heat Recovery Equipment Digester Mixing Equipment Anoxic Zone Equipment FACILITIES: The Equipment will be located at the Village Creek Wastewater Treatment Plant located at 4500 Wilma Lane. DETAILED EQUIlPMENT'DESCRIPTION: FIM Description: Turbine Waste Heat Recovety-Equi ment This facility improvement measure comprises the construction of a new turbine heat recovery system for the Village Creek Wastewater Treatment Plant. Two(2)new surface condenser packages and two(2)new condensate pumps per package and other accessories. One(1)new deaerator package including boiler feedwater pumps,and other accessories. Three(3)new plate and frame heat exchangers. • Three(3)new heat recovery circulation pumps. • One (1) new water treatment package including boiler water makeuip, system,, water softener system, and local control panel, • Two (2) rebuilt Roots blowers and two (2) new steam turbine driver packages including lube oil system, lube oil heat exchanger,casing condensate pump(steam driven),steam trapis,digital governor and other,accesisories, • Installation of new interconnecting piping and pipe support systems. • Installation of electrical improvements • Furnish and install new piping, materials and supplementary equipment as necessary to provide a fully functional system for the purposes of heat recovery and aeration air delivery. New DCS control equipment associated with this "III are listed in Table 1. .........'--....... Tablle I New DCS Control Eguipmen Heat Recovery Steam monitoring Equipment New Notes Generator(PLC) Points Number Points Pressure Pressure Pressure Sensor 1 Monitor Level on linear scale Temperature, Temperature Temperature Monitor Level on Sensor linear scale Flow Rate Flow Meter Monitor position Steam Flow on linear scale Flow Volume Same Flow Integrate Flow Meter Rate By-Pass Damper Position Damper 1 Monitor Position Operating Bilo,wdiown, Monitor Status Blow-down Status,: Location 1 (Open/Close Open/Close Flow Rate Flow Meter Monitor position Duct Burner-Digester on linear scale Gas Feed Flow Volume Same Flow Integrate Flow Meter Rate Flow Rate Flow Meter Monitor position Duct Burner-Landfill on linear scale Gas Feed Flow Volume Same Flow Integrate Flow Meter Rate Flow Rate Flow Meter Monitor position Duict Burner-Naturall on linear scale Gas Feed Same Flow Integrate Flow Flow Volume Meter Rate Alarms-Common All All Alarms 1 On/Olff/Relset Alarm Steam Turbine No.1 monitoring Equipment New Notes PLC Points Number Pointe Alarms-Common Alarm All All Alarms 1 On/Off/Reset Vibration,Temp,Oil Flow,Oil Temp,etc., Steam Turbine No.2 Monitoring Equipment New Notes (PLC) Points Number Points Alarms-Common All All Alarms 1 Oin/Off/Reset Alarm Vibration,Temp,Oil Flow,Oil Temp,etc. Surfac,e Conidle�nise�r Monitoring E,qu�ipmenit New Notes (PLC) Points Number Points Temperature within Temperature Temperature 2 Monitor Level on Condensers Sensor linear scale Operating Monitor only. Deaerator Feed Pumps Status:On or Pumps 2 Start/Stop in the Off field. Hot Water Circulation Operating Monitor only. Pumps(Heat Sink Status*On or Pumps 2 Start Stop in the Pumps) Off field. Temperature in CW Temperature `1 Monitor Level on approach to Surface Temperature Condenser Sensor linear scale Temperature in Wtr to Temperature Temperature Monitor Level on Circulation Loop Sensor linear scale Alarms-Common All All Alarms 1 On/Off/Reset Alarm I I Deaerator(PLC) Monitoring Equipment New Notes Points Number Points Temperature Temperature Temperature 1 Monitor Level on Sensor linear scale Boiler(HRSG)Feed Speed Pumps 2 Monitor speed P u m P S Alarms-Common All All Alarms 1 On/Off/Reset Total New Points 24 Hot W ter Steam seer EMtent / "',Y Nmmwn4rvNN;,r>avNIQamti4wrNnlmrrNlr,. Surface Cooden r (New) HRS G � S G /(N I N Wi th B un e r r r (New) CGT#1 Stearn Turbines ( ;i t) Heat Steam Rebuilt Blowers (retrofit) doAN. Air WX w"lt rttia.OYyi;, rrGAr Nxllr �� omw t e n Efflueryt r14NNNWNII4ntiNdNNNdNNVN�i (East) M vaNNaNNNN tiNilr»NVrroalsrNNUSVNNr Surface Condenser r 17�w r (New) a9YnsNrN 1rrNo n mviaNrruTPrr�� ,rfy rAnrrr Y Condensate +y` NNFINE,,V Nla N Y6 N(d�9uPIINNbSINVN�PWN NNi NflNNNl NNVNVNOINN NNN B iN N INNIB NNNaNIN6NN NN1G�(oN�NIN6N� Deaerataar (New) New Turbine Waste bleat RecoveEy Flow Diagram FlM Descriviti�oin�-:11 Di ester Mixing E ui ment This facility improvement measure comprises the installation of six (6) new linear Motion Mixers in Anaerobic Digesters g through, 14, New DCS control equipment associated with this AM are listed in Table 2. Table New DCS Control E uui ment Linear Motion Mixers Monitoring Equipment Near Notes Points Number Points i Operating 1 mixer per Monitor only. Digester Mixers Status:On or digester x 6 6 Star/Stop in the Off digesters field. i FIM Description;- Aeration Anoxic Zone ggluipment This facility improvement measure comprises all equipment necessary to provide six( )fully functional anoxic zones within existing aeration Basins I ---5. • Eighteen (1 Ilnvent Hyperclassic Evolution 61 mixers(3 per basin), • Six ( ) submersible pumps, mounting hardware and FIP return pipe. bump is to be a NRCY recirculation Pump with 12.2 hp motor, or equal. • The installation of new course bubble diffusers in the anoxic zone area only of Aeration 'Basins 1- . Labor, materials, equipment and Incidentals necessary to install stairways, walkways, handrails and ancillary fasteners and components that will conform to OSHA requirements. • Installation of frames and gratings. • New DCS control equipment associated with this AM are listed in Table 3. Tale 3 New DCS Control E ui ment ,Aeration Basin-Anoxic Monitoring Equipment, New Notes Zones Points Number Points 3 mixers per y. Operating Monitor only. Anoxic Zone Mixers Status.Can or 1 Start/Stop in the Oiff basin x b basins field. g pump P Monitor only. 1 um per basin atin Nitrified Recycle rumps Status:+fin or x 6 basins b Start/Stop in the off field. Total New Points 24 TAx EXEMPTION CERTIFICATE AND AGREEMENT RE: $151)365397.00 CITY O'F FO'RT WOR"I'H,TEXAS Municipal Equipment Lease Purchase Agreement dated September 7, 2010, as amended, between Johnson Controls', Inc.,, as Lessor, and the City of Fort Worth,Texas, as Lessee Dated September 2 9, 20,10 New Tax Certifi cate.doc 2180:9158 TABLE OF CONTENTS SECTION HEADING PAGE ARTICLE I DEFINITIONS ..................00**........*#**........ ........ .......#0000....... ....... ...0....I ARTICLE 11 DESCRIPTION OF PROJECT .................I**. 0....*.. #*.0....0**0....... 0........ ...... #.*-....5 Section 2.1. Purpose of the Lease..........................................................................................5 Section 2.2. The Project--Binding Commitment and Timing ...............*..****..........***.......6 Section 2.3. Reimbursement ................................................................................................6 Section 2.4. Working,Capital............... . . . .... .... ..... ..... ...........w w w.,..w.w...•.w,.�� Section 2.5. Consequences of Contrary Expenditure...........................................................6 Section 2.6. Investment of Sale Proceeds............................................................................6 Section2.7. No Grants............................................................................................................6 Section2.8. Hedges..............................................................................................................7 Section 2.9. Internal Revenue Service Audits ..,....... ......... ................... ARTICLE III USE OF PROCEEDS; DESCRJPTION OF FuNDs ..............................................................7 Section 3.1. Use of Proceeds ...............................................................................................7 Section 3.2. No Other Gross Proceeds.................................................................................8 ARTICLE IV AR. I.TRAOE REBATE;RECORD KEEP fNG-INVESTMENT.DiREGION....00000,....... 8 Sectlon4.1. Compliance with Rebate *.�8 Section4.2. Rebate Fund .....................................................................................................9 Section4.3. Records ..............w.............................. ..........---I...................... ....... ....... .9 Section 4.4. Fair Market Value; Certificates of Deposit and Investment Agreements.............................................................................................9 ARTICLE V YIELD AND INVESTM[ENT LIMITATIONS...............0*0....... .......A***.........000................10 Section5.1. Issue Price........,........................�.1....................... ...... .....................lo Section5.2. Yield Limits...................................................................................................10 Section 5.3. Continuing Nature of YieldLimits.............................................................w..1 ARTICL-EVI PRIVATE ACTIVITY BOND REPRESENTATIONS;FORM 8038-G; FEDERALGUARANTEES ,......I............-......... .—.......... ................................. Section 6.1. Payment and Use Tests..................................................................................I I Section 62. I.R.S. Form 8038-G .................. ...................... .............. I Section 6.3. Federal Guarantees.........................................................................................I I ARTICLE V 1 1 MIS,CELLANEO:USI.........,....,..,.,.............................w....... ............................. ............11 Section 7.1. Termination; Interest of City in Rebate Fund................................................I n - 1 2 Sectio 7.2. Plan of Finance........... .... . .. I Section 7.3. No Sale of the Equipment..............................................................................12 Section 7.4. Future Events..................................................................................................12 Section 7.5. Permitted Changes; Opinion of Special Tax Counsel....................................12 Section 7.6. Records Retention..........................................................................................12 Section7.7. S every bility........................................................................................................13 Section 7.8. Successors and Assigns........ ......•....*-,..- -... 13 Section7.9. Headings ..,............... ........................................................................................13 Section 7.10. GoverningLaw ............................................................................................13 Section 7.11. Expectations.................................................................................................14 EXMBIT A Estimated Sources and 'Uses of Funds Ems-- IT B raw own Schedule for Acquisition Fund EX.HfBfT C Certificate of Original, Purchaser Exj,,,jfB,IT D Memorandum of Special Tax Counsel Regarding Arbitrage Rebate Exj--,i,[BIT E Completed Form 8038-G ExtuBIT F Acceptance of Acqtjlsition Fund Custodian ................ ................ TAx EXEMPTION CERTIFICATE AND,AGREEMENT The undersigned is a duly authorized officer of the City of Fort Worth, Texas, a home ,rule municipal corporation situated in Tarrant, Denton, Parker and Wise Counties, Texas (the ii City" or the "'Lessee"),, and is charged, with others, with the responsibility for executing and delivering, on behalf of the City, that certain Municipal Equipment Lease/Purchase Agreement dated as of September 7, 201 0, as amended by Amendment No. 1. thereto (collectively, the "Lease") between the City, as lessee, and Johnson Controls, Inc., as lessor (the "Lessor"), for the installment purchase of certain Equipment therein described. On the date hereof, the Lessor has assigned and caused to be further assigned, all of its right, title and interest in and to the Lease to Johnson Controls Performance Funding Pass Through Trust, Series 2001-1, Class No. N-023 (the "Trust" , for the financing of the Equipment Costs and Costs of Delivery. The Lessor has caused, the Trust to execute and deliver on the date hereof to, the Original Purchaser as defined herein) $15,365,397.00 aggregate principal amount of Johnson Controls Performance Pass Through Trust Certificates, Series 2001-1, Class No. N-023 (the "Cerlijicates"), which evidence fractionalized ownership interests in Rental Payments and certain other payments to be made by the City under the Lease. Terms used herein and not defined in Article I shall have the meanings given to them in the Lease. One purpose of executing this Tax Agreement is to set forth various facts regarding the financing provided by the Lease and to establish the expectations of the City as to future events regarding the Lease and the use of the proceeds derived from the Lease. The certifications, covenants and representations contained herein are made on behalf of the City for the benefit of the owners from time to time of the Lessor's right, title and interest in and to the Lease. The City hereby covenants that it will not take any action, omit to take any action or permit the taking or omission of any action within its control. (including, without limitation, making or permitting any use of the proceeds of the Lease) if taking, permitting or omitting to take such action, would cause such Lease to be an arbitrage bond or a private activity bond, within the meaning of the Code or would otherwise cause the interest portion (including amounts treated as interest) of the Rental Payments under such Lease to be included in the gross income of the recipients thereof for federal income tax purposes. The City acknowledges that, in the event of an examination by the Internal Revenue Service of the exemption from federal income taxation of the interest portion of the Rental, Payments under the Lease, under present rules, the City will be treated as a "taxpayer" in such examination and agrees that it will respond in a commercially reasonable manner to any inquiries from the Internal Revenue Service in connection with such an examination. ARTICLE I DEFINITIONS In addition to such other words and terms used and defined in this Tax Agreement, the following words and terms used in this Tax Agreement shall have the following meanings unless,' in either case, the context or use clearly indicates another or different meaning is intended: "Acquisition Fund YY means the Rind established and administered pursuant to the Acquisition Fund Agreement. "Acquisition Fund Agreement" means, the Acquisition Fund and Account Control Agreement dated as of September 7', 2010, among the City, the Lessor and the Acquisition Fund Custodian. "Acquisition Fund Custodian" means Deutsche Batik National Trust Company, in its capacity as custodian 'under the Acquisition Fund Agreement, and its successors and assigns to the extent provided in the Acquisition Fund Agreement. "Bond Issue I PP rneans City of Fort Worth, Texas Water and Sewer System Revenue Bonds, Series 2010B, authorized to be issued in the aggregate principal amount of$28,000,000. "'Bond ssue H" t-neans City of Fort Worth, Texas Water and Sewer System Revenue Bonds, Series 20100, authorized to be issued in the aggregate principal amount of$45,870,000. "Capital Expenditures" means costs of a type that would be properly chargeable to a capital account under the Code or would be so chargeable with a proper election) under federal income tax principles if the City were treated as a corporation subject to federal income taxation,1 taking into account the definition of P'laced-in-Service set forth herein. "Certificates YY is defined in the first paragraph of this Tax Agreement. "Closing Date" means the date oft is Tax Agreement, which, is the first date on which the Lessee is receiving the purchase price for the Lease by the deposit into the Acquisition Fund held under,the Acquisition Fund Agreement. "Code"means the Internal. Revenue Code of 1986, as amended. "Commingled Fund" means any fund or account containing both Gross, Proceeds, and an amount in excess 000 Of$25� that are not Gross Proceeds, if the amounts n the fund or account , i are invested and accounted for, collectively, without regard to the source of funds deposited in the fund or account. An open-ended regulated investment company under Section 851 of the Code is not a Commingled Fund. "Constructed Personal Property IP means, Tangible Personal Property (or, if acquired pursuant to a single acquisition contract, properties) if(a) a substantial portion of the property or properties is completed more than six months after the earlier of the date construction or rehabilitation commenced and the date the City entered into an acquisition contract; (b) based on the reasonable expectations of the City, with the exercise of due diligence, completion of construction or rehabilitation (and delivery to the City) could not have occurred 'within that six- month period-, and (c) if the City itself builds or rehabilitates the property, not more than 75 percent of the capitalizable cost is attributable to property acquired by the City (e.g., components, raw materials and other supplies). -2- ............. 1 4 C/"-y 17 7 onstruction Purposes means capital expenditures that are allocable to the cost of Real Property or Constructed Personal Property. Except as provided in the next succeeding sentence, construction expenditures do not include expenditures for acquisitions of 'interests in land or other existing real property. Expenditures are not for the acquisition of an interest in existing real property other than land if the contract between the seller and the City requires the seller to build or install the property (e.g., a turnkey contract), but only to the extent that the property has not been built or installed at the time the parties enter into the contract., "Contractor" means Johnson Controls, Inc., in its capacity as the contractor under the Energy Savings Performance Contract. "Control" means the possession, directly or indirectly, of the discretionary and none ministerial rights or powers over another entity either(a): to approve and to remove without cause a controlling portion of the governing body of a controlled entity; or (b) to require the use of funds or assets of a controlled entity for any purpose. "Controlled Group YY means a group of entities directly or indirectly subject to Control by the same entity or group of entities, including the entity that has Control of the other entities. "Costs of Delivery means the costs, incurred in connection with the execution and delivery of'the Lease, including, placement agent fee, counsel fees and other similar costs, fees and expenses. "Energy Savings Performance Contract YY means Amendment No. 5 dated September 1, 2010 (relating to Phase V, Section 2, at the City's Village Creek Wastewater Treatment Plant), to that certain Energy Savings Performance Contract,, dated September 2,, 201013, between the Lessee and the Contractor, pursuant to which the Contractor will deliver and install the Equipment for purposes of'the Lease. "Equipment" means facility improvement measures to the City's Village Creek Wastewater Treatment Plant located at 4500 Wilma Lane that consist of(a) turbine waste heat recovery equipment, including two new condenser packages and related condensate pumps and accessories, a new deaerator package (including boiler feedwater pumps and other accessories), heat exchangers, heat recovery circulation rculation pumps, boiler water makeup system, water softener system and local control panel, two rebuilt Roots blowers and two new steam turbine driver packages, interconnecting piping and pipe support systems, electrical improvements and associated control equipment- (b) digester mixing equipment, including six new linear motion mixers in Nnaerobic, Digesters 9 through 14 and associated control equipment; and (c) aeration anoxic zone equipment for six fully functional anoxic zones within existing Aeration Basins I through 61, including eighteen invent hyperclassic evolution 61 mixers, submersible pumps, mounting hardware and return pipe, bubble diffusers, frames, gratings and related improvements and associated control equipment. "Equipment Costs 1� means the total cost for acquisition and installation of the Equipment, including related costs such as freight, installation and taxes and other capitalizable costs with respect to the Equipment. -3- ............... ' t" - 'External Commingled Fund JVY means a Commingled Fund in which the City and all members of the same Controlled Group as the City own, in the aggregate, not more than ten percent of the beneficial interests. means (a) any investment that has specifically negotiated withdrawal or reinvestment provisions and, a specifically negotiated interest rate and (b any agreement to supply investments on two or more future dates (e.g., a forward supply contract). "Gross Proceeds Y3 means Sale Proceeds and investment earnings thereon. "Lease" is defined in the First paragraph of this Tax Agreement. i1essee" is defined in the first paragraph of this Tax Agreement. "Lessor"' is defined in the first paragraph of this Tax Agreement. " Or'i 1 n al.Purchaser" means Banc of America Public Capital Corp, in its capacity as the initial Purchaser of the Certificates. "Placed-in-Service" means the date on which, based on all facts and circumstances, (a) a I I facility has reached a degree of completion that WOUld permit its operation at substantially its dles,ign level and (bi) the facility is, in fact, in operation at such level. "Private Business Use'Y means any use of the Equipment by any person other than a state or local government unit, including as a result of (a): ownership, (b) actual or beneficial use pursuant to a lease or a management, service, incentive payment,, research or output contract or (caw any other similar arrangement, agreement or understanding, whether written or oral, except for use of the Equipment on the sarne basis as the general public. Private Business Use includes any formal or informal arrangement with any person other than a state or local, government unit that conveys special legal entitlements to any portion of the Equipment that is available for use by the general public or that conveys to any person other than a state or local government unit any special economic benefit with respect to any portion of the Equipment that is not available for use by the general public,. "Project" means the acquisition and installation of the Equipment at the City's Village Creek Wastewater Treatment Plant 'in accordance with the Energy Savings Performance Contract. "Real Property" means buildings or other inherently permanent structures, including interests in real property. For example, real property includes wiring in a building, plurribing, systems,, central heating or air-conditioning systems, pipes or ducts, elevators,, escalators installed in a building, paved parking areas, roads, wharves and docks, bridges, and sewage lines. "Rebate Fund" means the fund,, if any, identified and defined in Section 4.2 herein. -4- "Rebate Provisions" means the rebate requireaients contained in Section 148(0 of the Code and in the Regulations. "ReoriiIations" means United States Treasury Regulations dealing with the tax-exempt 0 bond provisions of the Code. "Reimhursed F_.xpendittires IVY means expenditures of the City paid prior to the Closing Date to which Sale Proceeds or investment earnings thereon are or will be allocated. "Rental`Payments''J'means the amounts specified as such in the Lease. "Sale Proceeds YI means amounts actually or constructively received from the sale oft e Lease. aT 0 means Chapman and Cutler ALP or any other nationally ,�pecial T C' unsel n I recognized firm of attorneys experienced in matters pertaining to the tax-exempt status of interest on obligations issued by states and their political subdivisions whose oplinioins are generally accepted by purchasers of tax-exempt obligations. "Tangihle Personal Prol)erry" means any tangible property other than real property, .1 11 including interests in tangible personal property. For example, tangible personal property includes machinery that is not a structural component of a building, subway cars, fire trucks, automobiles, office equipment, testing equipment, and ftirnishings. "Tax Agreement" means this Tax Exemption Certificate and Agreement. "Yield" means that discount rate which when used in Computing the present value of all payments of principal and interest paid and to be paid on an obligation (using semi-annual compounding on the basis of a 360-1day year) produces an aM10Unt equal to the olbligation's, purchase, price,, including accrued interest. ARTJCLE 11 .I ES ION OF PROJECT &ction 2.1. Pitrpose of the Lease. The Lease is being executed and delivered to finance the Project in a prudent manner consistent with the revenue needs, of the City. A breakdown of the sources and uses of funds is attached as Erhiblt A. The City expects that at least 75% of the sum of(1) Sale Proceeds plus (ii) all investment earnings thereon during the period ending on the date of completion of the Project, less (Iii) Costs of Delivery paid from Sale Proceeds or investment earnings thereon are to be used for Construction Purposes,. The Project is to be financed with the proceeds from the sale of the Certificates in the aggregate principal amount of $15,365,397.00, including $76,000.00 to be paid from Such proceeds for Costs of Delivery. The City intends to treat, and will continue to treat, the Lease as -5- an installment purchase agreement for federal income tax purposes. The City intends to treat, and will continue to treat itself as the owner of the Equipment for federal income tax purposes. Section 2.2. The Project — Binding Commitment and Timing. The City has incurred a substantial binding obligation (not subject to contingencies within the control of the City or any member of the same Controlled Group as the City) to expend at least five percent of the Sale Proceeds on the Equipment. It is expected that the work of acquiring and installing the Equipment and the expenditure of amounts deposited into the Acquisition Fund'; will continue to proceed with due diligence through June 30, 2012, at which time it is anticipated that all Sale Proceeds, and investment earnings thereon will have been spent. It is expected that the Sale Proceeds deposited into the Acquisition Fund, including investment earnings, thereon, will be spent to pay Equipment Costs in accordance with the estimated drawdown schedule contained in Exhibit B. Estimated total investment income as set forth in Exhibit has been calculated on the basis of an expected overall investment rate as set forth therein on amounts in the Acquisition Fund assuming that (a) the Equipment Costs are drawn down in accordance with the schedule contained in Exhibit B and (b) Costs of Delivery will be drawn down on the Closing Date. The foregoing assumptions represent the City's best estimate, as of this date", of the draw down schedules of and investment earnings on the Sale Proceeds and investment earnings thereon. Section 2.3. Reimbursement. None of the Sales Proceeds or investment eamings thereon will be used for Reimbursed Expenditures. Section 2.4. Working Capila,l. All Sale Proceeds and investment earnings, thereon will be used,: directly or indirectly,, to finance Capital Expenditures including Costs of Delivery. No, Gross, Proceeds, may be spent for non-capita] purposes pursuant to this Section 2.4 If the expenditure merely substitutes Gross Proiceed�s for other amounts that would have been used to make expenditures, in a manner that gives rise se to replacement proceeds. Section 2.5. Consequences of Contrary Expenditure. The City acknowledges that if Sale Proceeds and investment eamings thereon are spent for non-Capital Expenditures other than as permitted by Section 2.4 hereof, a like amount of then available funds of the City will be treated as unspent Sale Proceeds. Section 2.6. Investment o 'Sale Proceeds, Not more than 50% of the Sale Proceeds and investment earnings thereon are or will be 'Invested in investments (other than qualified tax exempt obligations) having a Yield that is substantially guaranteed for four years or more. No portion of the principal portion of the Rental Payments is being issued solely for the purpose of investing Sale Proceeds or investment earnings thereon at a Yield higher than the 'Yield with respect to the Lease. Section 2.7. No Grants. None of the Sale Proceeds or investment earnings, thereon will be used to make grants to any person. i Section 2.8. He,dge,s,, Neither the City nor any milember of the same Controlledl Group as the City has entered into or expects to enter into any hedlge (e.g., an interest rate swap,, interest rate cap,, ftitures contract, forward contract or an option) with respect to the Lease. The City acknowledges that any such hedge could affect, among other things, the calculation of Yield with respect to the Lease under the Regulations. The Internal Revenue Service could recalculate Yield with respect to the Lease if the failure to account for the hedge fails to clearly reflect the economic Substance of the transaction. Section 2.9. Internal Revenue Service Audits. Except as otherwise disclosed to Special Tax Counsel, the City represents, that the Internal Revenue Service has not contacted the City regarding any obligations issued by or on behalf of the City. To the best of the knowledge of the City, no Such obligations of the City are currently under examination by the Internal Revenue Service. ARTICLE 11-1 USE OF PROCEEDS;D:ESCR,fPTION OF FuNDs Section 3.1. Use of Proceeds. (a) Exhibit A hereto describes the use of the Sale Proceeds deposited under the Acquisition Fund Agreement on the Closing Date. No Sale Proceeds will be used to pre-pay for goods or services to be received over aperiod of years prior to the date such goods or services are to be received, except for progress payments made in the ordinary course of business in connection with the acquisition of equipment the construction of which extends over an extended period of time, but only if such progress payments do not reduce the amount that would be paid for such equipment if the equipment were plaid: for in a single Jump sure. No, Sale Proceeds or investment earnings thereon will be used to pay maintenance or training costs with respect to the Equipment, all of which will be paid by the City. No Sale Proceeds or any investment earnings thereon will be used to pay for or otherwise acquire goods or services from any entity affiliated in any manner with the City, except that payments can be made to an affiliate if such payments reimburse the affiliate for direct and actual costs that it has paid to a person or entity that is not affiliated in any manner with the City. (b) I'he Acquisition Fund, will be the only fund or account funded on the Closing Date. There are no other funds or accounts created under the Acquisition Fund Agreement. (c) Costs of Delivery for the e placement fee incurred n connection with the Lease in the amount of$761,000.00 will be paid from amounts on deposit in the Acquisition Fund. (d) ".Fhe costs for the Project will, be paid from the Acquisition Fund, and no other moneys are expected to be deposited therein,, except for investment earnings thereon. -7- Section 3.2. No Other Gross Proceeds. (a) Other than amounts in the Acquisition Fund, after the Closing Date, neither the City nor any member of the same Controlled Group as the City has or will have any property, including cash, securities or any other property held as a passive vehicle for the production of income or for investment purposes, that constitutes: (i), Sale Proceeds,-, (ii) amounts in any fund or account with respect, to the Lease (other than the Rebate Fund),- (iii) amounts that have a sufficiently direct nexus to the Lease or to the governmental purpose of the Lease to conclude that the amounts would have been used for that governmental purpose if the Lease were not used or to be used for that governmental 'purpose (the mere availability or preliminary earmarking of such amounts for a governmental purpose, however, does not itself establish such a sufficient nexus,)- �p (iv), amounts, in any fund to, the extent reasonably expected to be used directly or indirectly to pay the principal or interest portions of the Rental Payments under the Lease or any amounts for which there is provided, directly or indirectly, a reasonable assurance that the amount will be available to pay the principal or interest portions of Rental Payments under the Lease even if the City encounters financial difficulties; (v) any amounts held pursuant to any agreement (such as an agreement to maintain certain levels of types of assets) made for the benefit of the Lessor's interest in the Lease; or vi) amounts actually or constructively received from the investment and reinvestment of the amounts,described in clause(i), or(ii) above. (b) No compensating balance, liquidity account, negative pledge of property held for investment purposes or similar arrangement exists with respect to, in any way, the Lease. (c) The term of the Lease is not longer than is reasonably necessary for the governmental purposes of the Lease. The average reasonably expected economic life of the Equipment is at least ten years. The weighted average maturity of the Lease does not exceed 120 percent of the average reasonably expected economic life oft e Equipment. ARTICLE IV ARBITRAGE REBATE; RECoRD KEEPING- INVESTMENT DIRECTION Section 4.1. Compliance with Rebate Provisions. The City covenants to take such actions and make, or cause to be made, all calculations, transfers and payments that may be ,necessary to comply with the Rebate Provisions applicable to the Lease. The City will make, or cause to be made, rebate payments with respect to the Lease in accordance with law. Special -8- Tax Counsel has provided a memorandum attached hereto as E,Yhibil D concerning the principles set forth in the Regulations regarding rebate. ,section 4.2. Rebate Fund The City is authorized to create and establish a special find to be known as the "City of Fort Worth, Texas Village Creek Wastewater Treatment Plant Phase V Rebate Fund" which if created, shall be continuously held, invested, expended and accounted for in accordance with this Tax Agreement. Moneys in the Rebate Fund shall not be considered moneys held for the benefit of the owners of the Lease and the Certificates. Except as provided 0 # 0 in the Regulations, moneys in the Rebate Fund (including earnings and deposits therein) shall be held in trust for payment to the United States as required by the Rebate Provisions, and by the Regulations and as contemplated under the provisions of this Tax Agreement. Section 43. Records. The City agrees, to keep and retain or cause to be kept and retained until three years after the Rental Payments are paid in full adequate records with respect to the 'Investment of all Gross Proceeds and amounts in the Rebate Fund. Such records shall include: (a) purchase price; (b) purchase date-, (c) type of investment; (d) accrued interest paid; (e) interest rate- (0 principal amount- (g) maturity date- (h) interest payment date3 (1) date of Liquidation; and 0) receipt upon liquidation. I I If any investment Deco es Gross Proceeds on a date other: than the date such investment is purchased, the records required to be kept shall include the fair market value of such investment on the date it becomes Gross Proceeds. If any investment is retained after the date the last Dental ;Payment is paid',the record's required red to be kept shall include the fair market value of such investment on the date the last Rental Payment is paid. Amounts or investments will be segregated whenever necessary to maintain these records. ,5ection 4.4. Fair Market Value; Cert ificates of Deposit and Investment Agreements. (a)The City will continuously invest all amounts on deposit in the Acquisition Fund and the Rebate Fund, together with the amounts,, if any, to be transferred to the Rebate Fund, in an.Y%/ investment permitted under this Tax Agreement. The City shall take into account prudent investment standards and the date on which moneys, may be needed. Except as provided in the next sentence,, all amounts, that constitute Gross, Proceeds and amounts in the Rebate Fund shall be invested at all, times to the greatest extent practicable, and no amounts may be held as cash or be invested in zero yield investments other than obligations of the United States purchased directly from the United States., In the event moneys, cannot be invested, other than as provided in this sentence, due to the denomination, price or availability of investments, the amounts shall be invested in an interest bearing deposit account of a bank with a Yield not less than that paid to the general public or held uninvested to the minimum amount necessary. (b) For purposes of determining the purchase price of investments (for either yield restriction, or rebate purposes), Gross Proceeds and amounts in the Rebate Fund shall not be invested nvested in certificates of deposit or in GICs, unless such investments are made in con-ipil,tance with the applicable Regulations. The City agrees to obtain the advice of its financial advisor or Special 'l'ax. Counsel to the extent necessary before making any such investments in certificates of deposit or GICs. The City does not expect to make any investment in certificates of deposit or GICs. -9- (c) All investments made with Gross Proceeds, or amounts in the Rebate Fund shall be bought and sold at fair market value. The fair market value of an investment is the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's- length transaction. Moneys to be rebated to the United States shall be invested to mature on or prior to the anticipated rebate payment date. (d) An investment of Gross Proceeds in an External Commingled Fund shall be made only to the extent that such investment is made without an intent to reduce the amount to be rebated to the United States, Government or to create a smaller profit or a larger loss, than would have resulted if the transaction had been at arm's length and had the rebate or Yield restriction requirements not been relevant to the City. An investment of Gross Proceeds shall be made in a Commingled Fund other than an External Commingled Fund only If the investments made by such Commingled Fund satisfy the provisions of this Section 4.4. ARTICLE V YIELD AND INVESTMENT LimITATIONS, Section 5.1. Issite Price. The Lease will be completely funded on the Closing Date in the amount of $15,400,045.90, a portion of which in the amount of $15,365,397.00 wi,11 be deposited into the Acquisition Fund as described in Section 2.1 hereof and the balance of which shall be paid to the City for interest accrued from the dated date of the Lease to the date hereof. The Original Purchaser has certified in the Certificate of Original Purchaser set forth in Exhibit C hereto that it has no present intention to resell, the Certificates. Section 5.2. Yield Limits. Except as provided in paragraph (a) or (b), all Gross Proceeds shall be invested at market prices and at a Yield not in excess of the Yield with respect to the Lease plus, if only amounts in the Acquisition Fund are subject to yield restriction, 1/8, of one percent. (a) The following may be invested without Yield restriction: (i) amounts on depiols,it in the Acquisition Fund that are reasonably expected to pay Equipment Costs and Costs of Delivery prior to the earlier of three years after the Closing Date or the completion (or abandonment) of the Project; (ii) all amounts,other than Sale Proceeds for the first 30 days after they become Gross Proceeds; and (iii) all amounts derived from the investment of Sale Proceeds, or investment earnings thereon for a period of one year from the date received. (b) An amount not to exceed the lesser of $10101,0001 or 5% of the Sale Proceeds may be invested without regard to Yield restrictions. -10- Section 5.3. Continuing Nature of Yield' Liai,41s. Except as provided in Section 7.,5 hereof, once moneys are subject to the Yield limits of Section 5.2 hereof, such moneys remain Yield restricted until they cease to be Gross Proceeds. ARTICLE V1 PRIVATE ACTFVITY BOND REPRESENTATIONS; FORM,8038-G; FEDERAL GUARANTEES Section 6.1. Payment and Use Tests. (a)No more than 5% of the Sale Proceeds, plus investment earnings, thereon, will be used, directly or indirectly, in whole or in part, in any Private Business Use. (b) The payment of more than 5%of the Rental Payments with respect to the Lease will not be, directly or indirectly, (i) secured by any interest in (A) property used or to be used in any Private, Business, Use or(B payments in respect of such property or (11) on a present value basis, derived from payments (whether or not to the City or a member of the same Controlled Group: as the City) in respect of property, or borrowed money, used or to be used 'in any Private Business Use. (c) No Sale Proceeds will be used, directly or indirectly, to make or finance loans to any persons. (d) No user of the Equipment other than a state or local governmental unit will use more than 5%, in the aggregate, of the Equipment on any basis other than the same basis as the general public., Section 6.2. I.R.S. Form 8038-G. The undersigned has reviewed the information contained in the Information Return for Tax-Exempt Governmental Obligations, Forrn 8038-G, attached hereto as Exhibit E. and to the best of the undersigned's knowledge, the information is true and clompl�ete. The City will file or cause to be filed Form. 8,038-G (and all other required information reporting forms) in a timely manner.. Section 6.3. Federal Guarantees. No portion of the payment of the Rental Payments with respect to the Lease is or will be guaranteed, directly or indirectly (in whole or 'In part), by the United States, (or any agency or instrumentality thereof). No portion of the Gross Proceeds has been or will be used to make loans, the payment of principal or interest with respect to which is or will be guaranteed in whole or in part) by the United States or any agency or instrumentality thereof). ARTICLE,V11 MISCELLANEOUS Section 7.1. Termination,,, Interest oj"City in Rebate Fund. This Tax Agreement shall terminate at the later date of(a), 75 days, after the Lease has been fully paid and retired orb all amounts remaining on deposit in the Rebate Fund, if any, shall have been paid to or upon the order of the United States and any other payments required to satisfy the Rebate Provisions of the Code have been made to the United States,. Notwithstanding the foregoing, the provisions of Section 4.3 hereof shall not terminate until the third anniversary of the date the Lease is fully paid and retired, and the provisions of Section 7.6 shall not terminate until the third anniversary of the date the Lease is fully paid and retired. Section 7.2., Plan qf Finance. (A) Since September 14, 2010, the City has not sold or delivered, pursuant to the same 'plan of financing as the Lease, any obligations that are reasonably expected to be paid out of substantially the same source of funds as the Lease. The City will not sell or deliver, pursuant to the same plan of financing as the Lease,, within 15 days after the date hereof any obligations that are reasonably expected to be paid out of substantially the same source of funds as the Lease. (B) The Lease was sold on September 29, 2010. Bond Issue I was sold on August 24, 2010. Bond Issue 11 was sold on September 1,4, 2010. Section 7.3. No Sale of the Equipment. (a) Neither the Equipment nor any portion thereof has been or is reasonably expected to be sold or otherwise disposed of in whole or in part prior to the earlier of(i) the last day of the reasonably expected economic life to the City of the property (determined on the date of execution and delivery of the Lease) or (11) last stated payment date of the Lease. (b) The City acknowledges that if any portion of the Equipment is sold or otherwise disposed of in a mariner contrary to (a) above, such sale or disposition may constitute a "deliberate action" within the meaning of the Regulations that may require remedial actions to prevent the Lease from becoming private activity bonds. The City shall promptly contact Special Tax Counsel if a sale Or other disposition of any portion of the Equipment is considered by the City. Section 7.4'. P"uture events.vents. The City acknowledges that any changes in facts or expectations from those set forth herein may result in difTerent yield restrictions or rebate requirements, from those set forth herein. The City shall promptly contact Special Tax Counsel, the Acquisition Fund Custodian if such changes do occur and are known to the C'ity. Section 7.,5. Permitted Changes; Opinion of Special Tax Counsel. Any restriction or covenant contained herein need not be observed or may be changed if the City receives an opinion of Special Tax Counsel to the effect that such nonobservance or change will not result in the loss of any exemption for the purpose of federal income taxation to which the interest portion of Rental Payments Linder the Lease is otherwise entitled. Section 7.6. Recorcls Retention:. The City agrees to keep and retain Or cause to be kept and retained sufficient records to support the continued exclusion of the interest portion (including, amounts treated as interest) of Rental Payments paid under the Lease from federal income taxation, to demonstrate compliance with the covenants in this Tax Agreement and to A show that all tax-exempt obligation related 'tax returns related to the Lease Submitted or required to be submitted to the Internal Revenue Service are correct and tamely filed. Such records shall include, but are not limited to, basic records relating to the Lease (including this Tax Agreement and the Lease); documentation evidencing the expenditure of Lease proceeds; documentation evidencing the use of Lease-financed property by public and private entities (including, copies of vi I t� I leases, management contracts and research agreements)* documentation evidencing all sources,of payment or security for the Lease; and documentation pertaining to any investment of Lease proceeds (including the information required tinder Section 4.3 hereof and in particular information related to the purchase and sale of securities, SLGS subscriptions, yield calculations for each class, of investments if any,,y, actual investment income received from the I*nvestment of proceeds, guaranteed investment contracts and documentation of any bidding procedure related thereto and any fees paid for the acquisition or management of investments and any rebate calculations). Such records shall be kept for as long as the Lease is, unpaid, plus, the period ending three years after the latest of the final payment date of the Lease or the final payment date of any obligations or series of obligations issued to refund directly or indirectly all or any portion of the Lease. Section 7.7. Severability. If any clause, provision or section of this Tax Agreement is ruled invalid by any court of competent jurisdiction, the invalidity of such clause, provision or section shall not affect any of the remaining clauses, sections or provisions hereof. Section 7.8. Successors and Assigns. The terms, provisions, covenants and conditions of this Tax Agreement shall bind and inure to the benefit of the respective successors and assigns, of the ity. Section 7.9. Headings. The headings of this Tax Agreement are inserted for convenience only and shall not be deemed to constitute a part of this Tax Agreement. Section 7.. . Governing Law. This Tax Agreement shall be governed by and construed in accordance with the laws of the State of Texas. [Remainder of Page Intentionally Left Blank] -13- ................. Section 7.11. Expectations. The City (including the undersigned employee) has reviewed the facts, estimates and circumstances presented by the City and other persons in existence as of the Closing Date. Such facts, estimates and circumstances, together with the expectations of the City as to future events, are set forth in summary form in this Tax Agreement. To the best of the undersigned's knowledge, after diligent inquiry, such facts and estimates are true and are not incomplete in any material respect. On the basis of the facts and estimates conta,ined herein and in the Certificate of Original Purchaser attached as Exhibit C hereto, the City has adopted the expectations contained herein. On the basis of such facts, estimates, circumstances and expectations, it is not expected that the Sale Proceeds, investment earnings thereon or any other moneys or property will be used in a manner that will cause the Lease to be an arbitrage bond within the mean,ing, of the Rebate Provisions and the Regulations. Such expectations are reasonable, and there are no other facts, estimates and circumstances that would materially change such expectations. DATED: September 219, 2010. GUY of Fort Worth, Texas Fernando Costa Assistant City Manager R e c o,At ' ded by wJ S. Frank Crumb, P.E. Director, Water Department A'Oni Approved i-orm and Leg'a,li 00 010- ............. Am a A Assistant orney Atte 44p� 000 Authorization: M&C C-24360 Approved: July 20, 2010 T40 16.? Ij Hendrix, City ec tary 000, 0 "ec 0 00 J0 * 0000-0 000 I(Z( r41 ex -14- ExIIJBI-r A FjSTIMATF.D SO"CF.S AND USES OF FU'N'I)S SOURCES: Sale Proceeds I including $34,648.90 of accrued 'Interest $15�400 7045.90 Investment earnings (assumed interest rate of 0.03%,per arinurn) 47250.35 J"OTAL $15 404,296.25 USES: Accrued interest 347648.90 Equipment Costs 151293M7.35 Costs of Delivery 76X0.00 OTAL $15-..,.404.296.2.) Al -P-,,v,vHI.BIT B DRAWDOWN SCHEDULE FOR AcQuISITION FUND QUARTERLY PERIOD ENDING ExPECTED EXPEND ITUUS 9/30/2010 $ 76,000.00 12/31/2010 112361344.00 3/31/2011 315461052.00 6/30/2011 3,041,1 98.00 '9/30/20 I'l 2,5041516-00 12/31/2011 '1,9671834-00 3/3 1/2 Ol 2 1,61 01046.0! 6/30'/2012 1,42213 '6.25 TOTAL.- B-1 EXHIBIT C CERTIFICATE OF ORIGINAL PURCHASER The undersigned is an officer of Banc of America Public Capital Corp (the is.Original Purchaser") and does hereby certify as follows: 1. The Original Purchaser, is purchasing $15,365,397.00 aggregate principal amount of Johnson Controls Performance Pass Through Trust Certificates, Series 2001-1. Class No.N-023 (the "Cerlificates"), at the price of $15,400,045.90, a portion of which in the amount of $15,365,397.00 represents the aggregate principal amount of the Certificates and the 'balance of which in the amount of$34,648.90 is for payment of accrued interest. 2. The Original Purchaser is the first buyer of the Certificates and is buying the Certificates as an *investment for its own account with no present intention to resell the Certificates. I The purchase, price of each of the Certificates is not less than the fair market value of the Certificates as of the date the Original Purchaser!agreed to buy the Certificates. 4. The Original Purchaser hereby confirms that the weighted average maturity of the, Certificates is not greater than,eight years. All terms, not defined herein shall have the same meanings as in the Tax Exemption Certificate and Agreement with respect to the Certificates,to which this Certificate is attached. DATED: September 29, 2010. BA NC OF AMERICA PUBUC CAPITAL CORP., as Original Purchaser ................ "f............. ............. By Name: Title,. Audzdz/, C-1 CHAPMAN AND CUTLER LLP MEMORANDUM ExtUBIT D To: City of Fort worth, Texas DATE: September 29, 2010 Re: Municipal Equipment Lease/Purchase Agreement dated as of September 7, 2010, as amended by Amendment No. l thereto (collectively, the "Lease") between Johnson Controls, Inc., as lessor, and City of Fort worth, Texas, as lessee. We have acted as Special Tax Counsel in connection with the execution and delivery on this date of the above-referenced Lease. In a Tax Exemption Certificate and Agreement delivered by you on this date (the "Tax Agreement"), you have agreed to comply with the arbitrage rebate requirements of Section 148 of the Internal Revenue Code of 1986. The purpose of this memorandum is to set out generally the rules that you must follow to comply with the Tax Agreement. This memorandum does not describe how to compute the amount to be rebated to the United States, and due to the complexity involved, the computation will, in all, likelihood, require consultation with an expert. The Internal Revenue Service has issued regulations relating to arbitrage and rebate matters. This memorandum is based upon these regulations, which are subject to change in the future. Such changes may require future recalculation of rebate amounts. For these reasons, it is very important for you and your tax advisors to keep abreast of developments in this area. The following advice is based on factual information contained in the Tax Agreement. If the facts or expectations stated therein change, please call us to determine whether this results in a change in the following rules. Please note that the rules governing permissible Yield on investments set forth in the Tax Agreement are in addition to the rebate rules and, although you might be allowed to earn a Yield in excess of Yield with respect to the Lease under the Yield rules, such excess may still be required to be rebated. In some cases, the payment of rebate may assist in compliance with the Yield restriction requirements. Thus, rebate compliance and Yield restriction compliance may operate together rather than independently. In any case, rebate compliance is essential to the maintenance of tax exemption even if no amounts are subject to Yield restriction. Terms not defined herein shall have the meanings set forth in the Tax Agreement. General Rule. Except in the case of certain exceptions and elections as summarized below, every five years and at the final retirement of the Lease you must compute and pay (as described below) to the United States the difference (the "Excess Earnings") between the amount earned on all investments and reinvestments of"Gross Proceeds" (as defined in the Tax Agreement) of the Lease ("Actual Earnings") and the amount that would have been earned if D-1 CHAPMAN AND CUTLER LLP Gross Proceeds, of the Lease had been invested at the Yield with respect to the Lease (the "Allowable Earnings"). Earnings to be taken into account are not determined under normal tax accounting principles. In addition to taking into account earnings received (either actually or constructively), receipts with respect to investments that have not been liquidated are computed by assuming that such investments are, in essence, converted to cash as of each computation date as such dates are described below). The "cash value" of investments determined in this manner is subject to many special rules. Under many circumstances, the "market value" of an investment may be used. The application oft ese rules is complex and requires a comprehensive understanding of the rebate regulations,., To properly plan for the eventual payment of rebate to the United States, we suggest that you make annual calculations estimating rebate liability. The Tax Agreement establishes, a rebate fund"' into which you may also, wish to deposit annual estimates of rebate liability so that the payment to the United States may be made from amounts set aside. Federal tax law does not, however, require such set asides. In any event, we strongly encourage you to make an annual estimate of the rebate liability. The calculations can be lengthy and often produce surprising results. Experience in operating our rebate calculation service indicates that the calculation is far more difficult as the period of tune for which the calculation is being performed increases. Phantom Income. With certain exceptions, amounts paid for administrative costs are not treated as Increasing earnings, for purposes, of rebate calculations. Administrative costs that do not increase earnings are reasonable, direct administrative costs, other than carrying costs, and generally include brokerage commissions for the purchase of *investment agreements and separately stated brokerage or selling commissions, but not legal and accounting fees, record keeping, custody,, and similar costs and expenses,., The Regulations provide a safe harbor for determining that a broker's fee for the purchase of an investment agreement is reasonable. Computation Dates. Each calculation of Excess Eamings should be made as of a "Computation, Date." The Computation Date should be the same date in each calendar year (except that the final Computation Date should be the date on which the Lease is actually 'retired). As indicated above, a Computation Date is required at least every five years. The first Computation Date Must be on or before the fifth anniversary of the original execution and delivery of the Lease. Each Computation Date, other than the final Computation Date, is the end of a bond year. A bond year ends on any date within one year of the original execution and delivery of the Lease that you choose. If you do not choose an ending date for a bond year, it will be the anniversary date of the original execution and delivery of the Lease. Excess Earnings with respect to the Lease are determined by comparing Actual Earnings as of a Computation Date with Allowable Earnings as of the same date. Allowable :Earnings are based on the Yield with respect to the Lease as of such Computation Date. The Yield with respect to the Lease may change, but for reasons described below Linder "Yield With Respect to Lease"" It IS unlikely to change over the life of the Lease. If the Yield with respect tote Lease decreases as of a particular Computation Date, rebate or additional rebate) may be due with respect to investments that have previously matured and the proceeds thereof spent. D-2 . ........... ........ CHAP MAN AND CUTLER LLP Yield With Respect to Lease. Generally Yield with respect to the Lease is calculated based upon expected payments of principal of and interest paid pursuant to the Lease ('Including amounts treated as interest). The Yield with respect to the Lease is generally not required to be recalculated after the date of original execution and delivery except under certain limited circumstances. Generally, recomputation is required upon changes in hedging transactions (e.g., purchase or termination of a swap or cap agreement associated with the Lease) or the transfer of rights associated with the Lease. The actual rules for computing the Yield with respect to the Lease are quite complex, and if the Yield with respect to the Lease must be calculated or recalculated, an expert should be consulted. Gross Proceeds. Based upon the facts and expectations presented in the Tax Agreement, the Gross, Proceeds, of' the Lease are all moneys and in,vestments in the Acquisition Fund described, in the Tax Agreement. If,, contrary to the expectations described in the Tax Agreement, moneys, or investments, are plled'gedl or otherwise set aside for payment of principal or interest distributable with respect to the Lease, such amounts may also constitute Gross, Proceeds. Universal Cap. Gross proceeds will cease to be allocated to the Lease an will therefore be treated as if spent) to the extent that the amount of Gross Proceeds exceeds the Outstanding anlount of the aggregate principal portion of Rental Payments under the Lease (the "Universal Cap"). Although special rules are applicable in the case of discount bonds, the outstanding amount of bonds is roughly equal to the outstanding principal amount. Generally, but not always, the market value of investments is used to test the amount of Gross Proceeds. The Universal Cap may cause allocations on the second anniversary of the issue date and as of the first day of each bond year thereafter. Commingled Funds., Funds, allocated to, two or more issues, or containing amounts that are not Gross Proceeds of the Lease and amounts that are Gross Proceeds of the Lease in which ,amounts are invested collectively without regard' to source of funds, must be treated as commingled funds. Investment earnings on commingled funds must be allocated to the Gross, Proceeds of the Lease according to a consistently applied reasonable allocation method. Such method, for example, may be based on average daily balances. Investments in commingled funds must be valued annually to properly allocate unrealized gain or loss to the Gross Proceeds of the Lease. This mark to market requirement will not apply if the weighted average maturity of al.1 investments held in the commingled fund during a particular fiscal year does not exceed 18 months and does not apply to commingled debt service and debt service reserve funds. Si.-,c-Month Exception to the General Rule. If all Gross Proceeds of the Lease (including earnings thereon) are spent within six months of the date the Lease i,s executed and delivered, no rebate is required except as described below in the case of unexpected gross proceeds arising after the Closing Date. If all proceeds (Including earnings thereon) required to be spent are so spent within this six-month periold�, except for 51% of the Lease proceeds,, and you spend the 5% (plus earnings, thereon with* I I within one, year from the Closing Date, no, rebate is required,. To qualify for the six-month exception, there must be no other amounts that are treated as Gross Proceeds of D-3 CHAPMAN AND CUTLER LLP the Lease. Even if you qualify for this exception, you may have to rebate with respect to any amounts that arise or are pledged to the payment of the Lease at a later date. Eighteen-Month Exception to the General Rule. If all. Gross Proceeds of the Lease, other than those in a bona fide debt service fund, are expended in accordance with the spend-down requirements set forth below, then rebate will only be required with respect to unexpected Gross Proceeds arising after the Closing Date, if any. PERIOD SPEND-DowN REQUIREMENT 6 months 15% 12 months 60% 18 months 100% (except for reasonable retainages up to 5%) 30 months all reasonable retainages must be spent To test these percentages for the six-month and 12-month periods, earnings reasonably expected at the Closing Date are used to calculate the total to which the percentages are applied. Actual earnings are used for the 18-mouth period test. if you exercise due diligence to complete the financed project and an amount not exceeding the lesser of three percent of the issue price of the Lease or $250,000 remains unspent as of the end of the 1 8th month, you will be treated as satisfying the final expenditure requirement. If the issue is secured by a reasonably required reserve fund, rebate is required on the reserve fund from the date the Lease is originally executed and delivered, but not on the other funds. To qualify for the 18-month exception, there must be no other amounts that are treated as Gross Proceeds of the Lease, other than a bona fide debt service fund. Even if you qualify for this exception, you may have to rebate with respect to any amounts that arise or are pledged to the payment of the Lease at a later date. Two-.dear Construction Expenditure Exception to the General Rule. Rebate can also be avoided in the case of an issue (or, if an appropriate election is made at the Closing Date, the portion of an issue) 75% of the "available construction proceeds" of which are expected to be used for construction expenditures (with respect to property that is owned by a governmental unit or a 501(c)(3) organization) and the proceeds of which are spent in accordance with the spend- down requirements set forth below, except as described below. In general, amounts in a reasonably required reserve fund are subject to rebate as of the earlier of substantial completion of construction or the date two years from the date of issuance of the Lease. Please see our memorandum concerning elections. PERIOD SPEND-DowN REQUIREMENT 6 months l0% 12 months 45% 18 months 75/0 24 months 100% (except for reasonable retainages up to 5%) D-4 CHAPMAN AND CUTLER LLP 36 months All reasonable retainages Must be spent In addition, if you exercise due diligence to complete the Project, an amount not exceeding the lesser of three percent of the issue price of the issue or $250,000 may be disregarded in testing compliance with the 24 month spend-down requirement if the reasonable retainage is not used, or the 36 month spend-down requirement if the reasonable retai,nage is used. Gross proceeds, used to pay costs of issuance are not available construction proceeds and expenditures for costs of issuance do not count towards, meeting the spending requirements. If, however, the requirements are met, and all costs, o!f'issuance are paid within two, years, no rebate is required on amounts used to pay such costs. Available construction proceeds include earnings on other available construction proceeds. For the first three periods you must use reasonable expectations regarding future investment earnings in calculating such expenditure requirements. YOU may have elected to use actual facts rather than reasonable expectations as to future earnings. You may have elected to base the 75% construction rule on actual facts rather than reasonable expectations as of the date of issuance. If so, actual lesser use for construction will prevent use of this exception. Even if you qualify for this exception, you may have to rebate with respect to any amounts that arise or are pledged to the payment of the Lease at a later date. Qualified Tax-Exempt Obligration Exce tion to the General Rule. To the extent that any Gross Proceeds are invested in qualified tax exempt obligations (generally not including as qual1fied tax exempt obligations) those obligations subject to the individual alternative minimum tax), the earnings thereon would not be considered when calculating 'Excess Earnings. To the extent that 100% of gross proceeds, are continually invested in qualified tax exempt obligations, there would be no rebate requirement. Investment f Re to Fund and'Other Funds. Investments, olf'moneys, in the Rebate Fund and any other fund must be made in arm s-liength transactions in a manner that does not reduce the amount to be rebated to the United States. Investment decisions, (other than the decision to invest in qualified tax, exempt obligations to avoid rebate) must be made on the basis of nor rnal investment criteria of safety, Yield, and when the money will be needed. A interest rates and Yields must be market rates and Yields. Money must not be attowed to remain uninvested except for small amounts or for short periods of time, as provided in Section 4.2 of the Tax Agreement. Rebate Payments. Within 60 days after the Computation Date that is the end of the fifth bond year and every fifth bond year thereafter, at least 90% of the Excess Earnings and all earnings on the Excess Earnings (net of an appropriate credit depending on whether unexpended gross proceeds continue to exist) must be paid to the United States. Within 60 days of final D-5 CHAPMAN AND CUTLER LLP payment of all Rental Payments with respect to the Lease to the owners thereof, all Excess Earnings and all earnings on the Excess, Earnings net of the credit) must be paid to the United States. All 'payments to the United States must be mailed to the address provided in the instructions to Form 8038-T or such other form specified by the internal Revenue Service. Form 8038-T or such other form specified by the Internal Revenue Service must be signed by the City. D-6 EXHIBIT E [ATTACH COMPLETED FORM 8038-G] E-1 EXIMIT F ACCEPTANCE OF AcQuisITI.ON FUND CUSTOD"N Deutsche Bank National Trust Company, as custodian (the "Custodian"), under the Acquisition Fund and Account Control Agreement, dated as of September 7, 2010 (the "Acquisition Fund Agreement"), among City of Fort Worth, Texas (the "Lessee"), Johnson Controls, Inc. (the "Lessor") and the Custodian, related to that certain Municipal Equipalent Lease/Purchase Agreement dated as of September 7, 2010, as amended by Amendment No. I thereto (collectively, the "Lease"), between the Lessee and the Lessor, hereby agrees as follows, L The Custodian hereby acknowledges receipt of a Tax Exemption Certificate and Agreement (the "Tax Agrees nent"),i dated September 2,9, 2010, from the including h Lessee, , uding Ex ibits A through F'theretol. 2. Other than the Acquisition Fund and the Rebate Fund if any), the Custodian will not establish any other fund or account with respect to or relating to the Lease or the payment of the principal or interest portions under the Lease. 3. The Custodian shall make or cause to be made (but solely from amounts held in the Acquisition Fund or otherwise provided by the Lessee) rebate payments in accordance with the written instructions of the Lessee. 4. The Custodian agrees to keep and retain the records referred to in Sections 4,.3 of the Tax Agreement until three years after the Lease is paid in full and the records referred to in Section 7.6 of the Tax Agreement until three years after the Lease is paid in full. 51. The Custodian will take, or cause to be taken, such further action as the Lessee may direct in writing in order to comply with the rebate requirements, contained in Section 148(f) of the Internal Revenue Code of 1 . 6. The Custodian will perform the agreed actions only upon and subject to the express terms and conditions set forth in the Acquisition Fund Agreement. F-I A Al-I terms not defined herein shall have the same meanings as,in the Tax Agreement., Dated: September 2010 DEUTSCHE BANK NATIONAL TRUST COMPANY, as Custo By itle, VL - e President By Name.- 13au't-vmen M i Title: i rug' F-2 8038-G Information Return for Tax-Exempt Governmental Obligations Form ■ Under internal Revenue Code section 149(e) OMB No.1545-0720 (Rev.May 2010) ■ See separate instructions. Department of the Treasury Caution:If the issue price is under$100,000, use Form 8038-GC. Internal Revenue Service [M Reporting Authority If Amended Return, check here ■ ❑ 1 Issuer's name 2 Issuer's employer idenication number(EIN) City of Fort Worth,Texas 75 6000528 3 Number and street(or P.C.box if mail is not delivered to street address) Room/suite 4 Report number(For IRS Use Only) 1000 Throckmorton Street NIA ooa 5 City,town,or post office,state,and ZIP code 6 Date of issue Fort Worth,Texas 76102 September 29,2010 7 Name of issue Municipal Equipment Lease(Purchase Agreement dated as of 917110,as amended 8 CUSIP number by Amendment No.1 thereto,between the City of Fort Worth,Texas Johnson Controls,Inc. None 9 Name and title of officer of the issuer or other person whom the IRS may call for more information 10 Telephone number of officer or other person Fernando Costa,Assistant City Manager ( 817 } 392-7600 [���Type of Issue (enter the issue price) See instructions and attach schedule 11 Education . . . . _ . . . . . . . . . . . . . . . 11 12 Health and hospital . . . . . . . . .Y . �u". . . . . . . . . . .` . . . . 12 13 Transportation . . . . . . . . . . . . . . . . . . . . . . . _ . . . 13 14 Public safety . . . . . . . . . . . . . . . . . . . . . . . . . 14 15 Environment (including sewage bonds). . . . . . . . . . . . . . . 15 16 Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 17 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 18 other. Describe ■ Energy saving equipment 1 154000❑45 90 19 If obligations are TANs or RANs, check only box 19a . . ❑ If obligations are BANS check only box 19b . . . . . . . . . . . . . . . ■ ❑ 20 If obligations are in the form of a lease or installment sale check box _ ■ ❑ �/�;����'1 ��'f/, ''��%���t������� �!/ Description of obligations. Complete for the entire issue for which this form is being filed. (a)Final maturity date (b)Issue price (c)Stated redemption (d)Weighted (e)Yield price at maturity average maturity 21 March 4,2023 1 $ 15,40 01045.90 1 $ 1%782,fi91.1 fi 1 7.5346 years 3.6812 `. Ei Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest. . . . . . . . . . . . . . . . . . . . . 22 341548 90 23 Issue price of entire issue(enter amount from line 21, column (b)} . . . . . . _ . . _ 23 15,4003045 90 000 00 24 Proceeds used for bond issuance costs including underwriters 24 76 discount} 25 Proceeds used for credit enhancement . . . . . . . . . . . 25 ❑ 26 Proceeds allocated to reasonably required reserve or replacement fund. 26 0 ' , 1 27 Proceeds used to currently refund prior issues . . . . . . . . . 27 0 28 Proceeds used to advance refund prior issues . . . . . . . . 29 Total (add lines 24 through 28) . . . . . . . . . . . . . . . . . . . . . . 29 763000 00 30 Nonrefunding proceeds of the issue subtract line 29 from line 23 and enter amount here) 30 15,324,045 90 [M Description of Refunded Bonds (Complete this park only for refunding bonds. 31 Enter the remaining weighted average maturity of the bonds to be currently refunded. . . ■ years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . . ■ years 33 Enter the last date on which the refunded bonds will be called (MMIDD/YYYY) ■ 34 Enter the date(s)the refunded bonds were issued ■(MM/DDNYYY) For Privacy Act and Paperwork Reduction Act Notice, see separate instructions. Cat.No.53773S Form 8038-G (Rev.5-2010) 2871773 2180958 �B Form 8038-G(Rev.5-2010) 'page 2 EEZT--Miscellaneous � section 1 5 N/A nter e amoun tf the state volume ca p allocated to th e issue under 141 b5� . . . 36a Enter the amount of gross proceeds invested)or to be Ingested in a guaranteed investment contract , GIC see instructions) 0 b Enter the final maturity date of the GIC �� Illim- 37 Pooled financings:. a Proceeds of this issue that are to be used to make Fans to other governmental units . .. . . . . . . . 37a Of b If this issue is a loan made from the proceeds of another tax-exempt issue, check box I 0 and enter the name of the issuer Illio- and the date of the issue 00- 38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III)(small issuer exception), check box . Oo- El 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . lo- EJ 40 If the issuer has identified a hedge, check box . . . . . . . . . . . . . . . . . . . . . . . . 110. 0 Under plenailties of perjury,I declare:that I have e arrnirned this return and accompanying s,chiedules and statements,,and to the best of any kno ledge and"belief,the are true correct arnd oorrn Bete,I further declare that I consent to the IRS's,disclosure of the issuer's,return information,as necessary ��IIna��re � ,� and to proces al i 1ga- the person that have authorized)above. Fem-oqn& 60 Consent Y/Z4 ,*+ Signature of issuer's authorized representative Gate Type or print name and title Paid Nreparer"� _�,�' .�"" pa Check if Preparer's SSN or P7N 1� d ,� ��... signature I /rte self-employed P01079240 Preparers Firm's name r Chapman and Cutler LLP EIN 38 2153731 Use Only yours if self-employed), address,and ZIP code 111 West Monroe Street,Chicago, Illinois 80803 Phone no.. ( 312 ) 845-3000 Form 803$-G (Rev.5--201