$4,200,000. Series 2013

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1 OFFICIAL STATEMENT Rating S&P:"A" NEW ISSUE - Book-Entry Only See "RATING" herein In the opinion of Bond Counsel to the City, assuming continuing compliance by the City with certain covenants set forth in the proceedings under which the Warrants are issued with respect to certain conditions imposed by Section 103 of the Internal Revenue Code of 1986, as amended, the interest income on the Warrants will be excludablee from gross income of the recipients thereof for federal income tax purposes. Bond Counsel to the City is also of the opinion that the interest income on the Warrants is, under existing statutes and regulations, exempt from Alabamaa income taxation. $4,200,000 CITY OF THOMASVILLE, ALABAMA General Obligation Refunding and Capital Improvement Warrants Series 2013 Dated: March 1, 2013 Due: February 15, as shown on inside cover SEE INSIDE COVER FOR MATURITIES, INTEREST RATES AND YIELDS The Warrants are issuable as fully registered warrants and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York, to which principal and interest payments on the Warrants will be made so long as Cede & Co. is the registered owner of the Warrants. Individual purchases of thee Warrants will be made in Book-Entry Only form, and individual purchasers ("Beneficial Owners") of thee Warrants will not receivee physical delivery of warrant certificates. Interest on the Warrants is payable on August 15 and February 15 of each year, commencing [August 15, 2013]. The Warrants will be issued as fully registered warrants in the denominations of $5,000 and any integral multiple thereof. Payment of debt service on Warrants not in Book-Entry Only form shall be made by check or draft mailed to the registered owners thereof, provided that payment of principal of and any premium on the Warrants will be payable upon surrender of such Warrants at the corporate trust office of Regions Bank, Mobile, Alabama (thee "Bank"). So long as DTC or its nominee is the registered owner of the Warrants, disbursements of such payments to DTC is the responsibility of the Bank, disbursements of such payments to DTC Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC Participants or Indirect Participants as more fully described herein. Certain of the Warrants are subject to optional redemption and mandatory redemption prior to maturity at the times and in the manner hereinafter described. The Warrants are general obligations of the City of Thomasville, Alabama, for the payment of which the City has pledged its full faith and credit. In addition, the Warrants are further secured by a special pledge of a gross receipts tax levied by the City to the extentt herein described and on a parity with certain other warrants of the City. The Warrants are offered when, as, and if received by the Underwriter, subject to prior sale, to withdrawal or modification of the offer without notice, andd to the approval of the validity thereof by Bradley Arant Boult Cummings LLP, Birmingham, Alabama, Bond Counsel to the City, and certain other conditions. It is expected that the Warrants will be delivered through DTC on or about March 28, Dated: February 28, 2013

2 $4,200,000 CITY OF THOMASVILLE, ALABAMA General Obligation Refunding and Capital Improvement Warrants Series 2013 Maturity (February 15) Principal Amount Interest Rate Yield 2014 $170, % 0.750% , , $290, % Term Warrants due February 15, 2018, Yield 1.400% $295, % Term Warrants due February 15, 2020, Yield 1.850% $310, % Term Warrants due February 15, 2022, Yield 2.250% $320, % Term Warrants due February 15, 2024, Yield 2.550% $330, % Term Warrants due February 15, 2026, Yield 2.750% $355, % Term Warrants due February 15, 2028, Yield 2.900% $365, % Term Warrants due February 15, 2030, Yield 3.050% $390, % Term Warrants due February 15, 2032, Yield 3.150% $420, % Term Warrants due February 15, 2034, Yield 3.350% $685, % Term Warrants due February 15, 2037, Yield 3.600% i

3 CITY OF THOMASVILLE, ALABAMA SHELDON A. DAY MAYOR CHARLES ALLEN ALBERTA DIXON ROBERT LEWIS HERRON GRACE MEGGINSON GAINES SMITH COUNCILMEMBERS DEBORAH P. BALLARD CITY CLERK - TREASURER EDMON H. MCKINLEY THOMASVILLE, ALABAMA CITY ATTORNEY MERCHANT CAPITAL, L.L.C. MONTGOMERY, ALABAMA UNDERWRITER BRADLEY ARANT BOULT CUMMINGS LLP BIRMINGHAM, ALABAMA BOND COUNSEL ii

4 No dealer, broker, salesman or any other person has been authorized by the City of Thomasville, Alabama, or the Underwriter to give any information or to make any representations other than as contained in this Official Statement in connection with the offering of the Warrants described herein, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Warrants by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information contained in this Official Statement has been furnished by the City and other sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the Underwriter. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement, nor any sale made hereunder, shall under any circumstances create an implication that there has been no change in the affairs of the City since the date hereof. TABLE OF CONTENTS Page No. INTRODUCTION... 1 THE WARRANTS... 1 SECURITY... 8 THE FEDERAL BANKRUPTCY ACT... 9 DEBT INFORMATION ESTIMATED DEBT SERVICE REQUIREMENTS CERTAIN FINANCIAL INFORMATION CERTAIN SOURCES OF REVENUE CERTAIN GENERAL INFORMATION RESPECTING THE CITY EMPLOYEES RETIREMENT PLAN CONTINUING DISCLOSURE LEGALITY TAX MATTERS LITIGATION RATING AUDIT UNDERWRITING MISCELLANEOUS Appendix A - Audited Financial Statements for Fiscal Year Ended September 30, 2011 Appendix B - Proposed Form of Approval Opinion Appendix C - Summary of Continuing Disclosure Agreement iii

5 OFFICIAL STATEMENT Pertaining to $4,200,000 CITY OF THOMASVILLE, ALABAMA General Obligation Refunding and Capital Improvement Warrants Series 2013 Dated March 1, 2013 INTRODUCTION The City of Thomasville, Alabama (the "City"), is furnishing this Official Statement, including all appendices hereto, in connection with the sale of its $4,200,000 General Obligation Refunding and Capital Improvement Warrants, Series 2013, dated March 1, 2013 (the "Warrants"). The City is issuing the Warrants for the purpose of (i) refunding, on an advance basis, the City's $4,035,000 initial principal amount General Obligation Warrants, Series 2007, dated July 1, 2007, presently outstanding in the aggregate principal amount of $3,595,000 (the "Series 2007 Warrants"), (ii) paying the costs of certain public capital improvements in the City, and (iii) paying the costs of issuing the Warrants. The Warrants are being issued pursuant to the provisions of an ordinance (the "Authorizing Ordinance") adopted by the governing body of the City. The Warrants will constitute general obligations of the City for payment of the principal of and interest on which the City will irrevocably pledge its full faith and credit. In addition, the Warrants will be secured by a special pledge of a gross receipts tax levied by the City to the extent herein described and on a parity of lien with certain other warrants of the City heretofore or hereafter issued as hereinafter described under the heading "SECURITY". Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinions and not as representations of fact. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale of the Warrants shall under any circumstances create any implication that there has been no change in the affairs of the City since the respective dates as of which such information is given. The address for the City is Post Office Box 127, 137 Adams Street, Thomasville, Alabama The telephone number is (334) Inquiries with respect to information contained in this Official Statement should be directed to the Underwriter, Merchant Capital, L.L.C. Lakeview Center, Suite 400, 2660 Eastchase Lane, Montgomery, Alabama 36117, attention: Reid Cavnar, telephone (334) Payment of Principal and Interest THE WARRANTS The principal of the Warrants will be payable at the corporate trust office of Regions Bank (the "Bank") in the City of Mobile, Alabama. Interest (computed on the basis of a 360-day year of twelve consecutive 30-day months) will be payable on August 15, 2013, and semiannually thereafter on each February 15 and August 15 until the final maturity thereof, in lawful money of the United States of America by check or draft mailed by the Bank to the lawful holders of the Warrants at the address shown on the registry books of the Bank pertaining to the Warrants. The Authorizing Ordinance provides that payment of such interest shall be deemed to have been timely made if such check or draft is mailed by the Bank on the due date of such interest (or, if such due date is not a business day, on the business day immediately following such due date). Purpose of Issuance The Warrants are being issued for the purpose of providing the funds necessary to (i) refund, on an advance basis, the Series 2007 Warrants, (ii) pay the costs of certain public capital improvements in the City consisting of various public water, sewer and roadway improvements (the "2013 Improvements"), and (iii) pay the costs of issuing the Warrants. The Series 2007 Warrants were issued pursuant to a July 9, 2007 ordinance of the governing body of the City (the "2007 Ordinance") for the purpose of paying the costs of constructing and acquiring

6 capital improvements in the City consisting principally of a civic center, repaying a temporary loan obtained to pay a portion of the costs of said center, and paying the costs of issuing the Series 2007 Warrants. Plan of Refunding Under the 2007 Ordinance, those of the outstanding Series 2007 Warrants having a stated maturity in 2017 and thereafter are subject to redemption and prepayment, at the option of the City, on February 15, 2015, and on any date thereafter, at and for a redemption price equal to the principal amount of the Series 2007 Warrants to be redeemed plus accrued interest to the date set for redemption. A portion of the proceeds from the sale of the Warrants shall be remitted to Regions Bank, Mobile Alabama, in its capacity as escrow trustee under an Escrow Trust Agreement dated as of March 1, 2013 (the "2007 Warrants Escrow Trust Agreement"), for deposit into the escrow fund created therein for the benefit of the Series 2007 Warrants (the "2007 Warrants Escrow Fund"). Amounts on deposit in the 2007 Warrants Escrow Fund shall be used to pay maturing installments of principal and interest on the Series 2007 Warrants through and including February 15, 2015, and to pay, on February 15, 2015, the redemption price of those of the Series 2007 Warrants having stated maturities in 2017 and thereafter called for redemption and payment on February 15, 2015 (such Series 2007 Warrants, the "Called Series 2007 Warrants"). The accuracy of the mathematical computations of (a) the adequacy of the cash to be put on deposit in the 2007 Warrants Escrow Fund (i) to provide for payment of the maturing installments of principal and interest on the Series 2007 Warrants until and including February 15, 2015, and (ii) to pay, on February 15, 2015, the redemption price of the Called Series 2007 Warrants, and (b) the actuarial yield on the Warrants and any obligations that may be put on deposit in the 2007 Warrants Escrow Fund, which computations support the conclusion that the Warrants are not "arbitrage bonds" under Section 148 of the Internal Revenue Code of 1986, as amended, will be verified by Jackson Thornton & Co., P.C., Montgomery, Alabama. Sources and Uses of Proceeds The proceeds to be derived from the sale of the Warrants (less accrued interest, if any) are expected to be applied substantially as follows: Redemption Prior to Maturity Sources Par amount of Warrants $4,200, Less net original issue discount (47,609.50) Total Sources $4,152, Uses Deposit to 2007 Warrants Escrow Fund $3,886, Improvements 170, Costs of issuance (including underwriting discount, legal, printing, and other costs) 95, Total Uses $4,152, Optional Redemption. Those of the Warrants having a stated maturity on February 15, 2021, and thereafter, will be subject to redemption prior to maturity, at the option of the City, as a whole or in part (but if in part, in maturities of $5,000 with those of the maturities to be redeemed to be selected by the City at its discretion), on February 15, 2020, and on any date thereafter, at and for a redemption price equal to the par or face amount of each Warrant redeemed, plus accrued interest thereon to the date fixed for redemption. Mandatory Redemption. (a) Those of the Warrants maturing on February 15, 2018, shall be subject to mandatory redemption and prepayment prior to their maturity on February 15 in the following years and in the following aggregate principal amounts at and for a redemption price equal to the principal amount thereof plus accrued interest thereon to the redemption date: 2

7 Amount Required Year to be Redeemed 2017 $145, (maturity) 145,000 In the event that the City shall have partially redeemed the Warrants having a stated maturity on February 15, 2018, or shall have provided for a partial redemption of such Warrants in such a manner that the Warrants for the redemption of which provision is made are considered as fully paid, the City may elect to apply all or any part (but only in integral multiples of $5,000) of the principal amount of such Warrants so redeemed or to be redeemed to the reduction of the principal amount of Warrants required to be redeemed pursuant to the schedule set forth immediately above on any February 15 coterminous with or subsequent to the date such optional redemption actually occurs. (b) Those of the Warrants maturing on February 15, 2020, shall be subject to mandatory redemption and prepayment prior to their maturity on February 15 in the following years and in the following aggregate principal amounts at and for a redemption price equal to the principal amount thereof plus accrued interest thereon to the redemption date: Amount Required Year to be Redeemed 2019 $145, (maturity) 150,000 In the event that the City shall have partially redeemed the Warrants having a stated maturity on February 15, 2020, or shall have provided for a partial redemption of such Warrants in such a manner that the Warrants for the redemption of which provision is made are considered as fully paid, the City may elect to apply all or any part (but only in integral multiples of $5,000) of the principal amount of such Warrants so redeemed or to be redeemed to the reduction of the principal amount of Warrants required to be redeemed pursuant to the schedule set forth immediately above on any February 15 coterminous with or subsequent to the date such optional redemption actually occurs. (c) Those of the Warrants maturing on February 15, 2022, shall be subject to mandatory redemption and prepayment prior to their maturity on February 15 in the following years and in the following aggregate principal amounts at and for a redemption price equal to the principal amount thereof plus accrued interest thereon to the redemption date: Amount Required Year to be Redeemed 2021 $155, (maturity) 155,000 In the event that the City shall have partially redeemed the Warrants having a stated maturity on February 15, 2022, or shall have provided for a partial redemption of such Warrants in such a manner that the Warrants for the redemption of which provision is made are considered as fully paid, the City may elect to apply all or any part (but only in integral multiples of $5,000) of the principal amount of such Warrants so redeemed or to be redeemed to the reduction of the principal amount of Warrants required to be redeemed pursuant to the schedule set forth immediately above on any February 15 coterminous with or subsequent to the date such optional redemption actually occurs. (d) Those of the Warrants maturing on February 15, 2024, shall be subject to mandatory redemption and prepayment prior to their maturity on February 15 in the following years and in the following aggregate principal amounts at and for a redemption price equal to the principal amount thereof plus accrued interest thereon to the redemption date: 3

8 Amount Required Year to be Redeemed 2023 $155, (maturity) 165,000 In the event that the City shall have partially redeemed the Warrants having a stated maturity on February 15, 2024, or shall have provided for a partial redemption of such Warrants in such a manner that the Warrants for the redemption of which provision is made are considered as fully paid, the City may elect to apply all or any part (but only in integral multiples of $5,000) of the principal amount of such Warrants so redeemed or to be redeemed to the reduction of the principal amount of Warrants required to be redeemed pursuant to the schedule set forth immediately above on any February 15 coterminous with or subsequent to the date such optional redemption actually occurs. (e) Those of the Warrants maturing on February 15, 2026, shall be subject to mandatory redemption and prepayment prior to their maturity on February 15 in the following years and in the following aggregate principal amounts at and for a redemption price equal to the principal amount thereof plus accrued interest thereon to the redemption date: Amount Required Year to be Redeemed 2025 $165, (maturity) 165,000 In the event that the City shall have partially redeemed the Warrants having a stated maturity on February 15, 2026, or shall have provided for a partial redemption of such Warrants in such a manner that the Warrants for the redemption of which provision is made are considered as fully paid, the City may elect to apply all or any part (but only in integral multiples of $5,000) of the principal amount of such Warrants so redeemed or to be redeemed to the reduction of the principal amount of Warrants required to be redeemed pursuant to the schedule set forth immediately above on any February 15 coterminous with or subsequent to the date such optional redemption actually occurs. (f) Those of the Warrants maturing on February 15, 2028, shall be subject to mandatory redemption and prepayment prior to their maturity on February 15 in the following years and in the following aggregate principal amounts at and for a redemption price equal to the principal amount thereof plus accrued interest thereon to the redemption date: Amount Required Year to be Redeemed 2027 $175, (maturity) 180,000 In the event that the City shall have partially redeemed the Warrants having a stated maturity on February 15, 2028, or shall have provided for a partial redemption of such Warrants in such a manner that the Warrants for the redemption of which provision is made are considered as fully paid, the City may elect to apply all or any part (but only in integral multiples of $5,000) of the principal amount of such Warrants so redeemed or to be redeemed to the reduction of the principal amount of Warrants required to be redeemed pursuant to the schedule set forth immediately above on any February 15 coterminous with or subsequent to the date such optional redemption actually occurs. (g) Those of the Warrants maturing on February 15, 2030, shall be subject to mandatory redemption and prepayment prior to their maturity on February 15 in the following years and in the following aggregate principal amounts at and for a redemption price equal to the principal amount thereof plus accrued interest thereon to the redemption date: 4

9 Amount Required Year to be Redeemed 2029 $180, (maturity) 185,000 In the event that the City shall have partially redeemed the Warrants having a stated maturity on February 15, 2030, or shall have provided for a partial redemption of such Warrants in such a manner that the Warrants for the redemption of which provision is made are considered as fully paid, the City may elect to apply all or any part (but only in integral multiples of $5,000) of the principal amount of such Warrants so redeemed or to be redeemed to the reduction of the principal amount of Warrants required to be redeemed pursuant to the schedule set forth immediately above on any February 15 coterminous with or subsequent to the date such optional redemption actually occurs. (h) Those of the Warrants maturing on February 15, 2032, shall be subject to mandatory redemption and prepayment prior to their maturity on February 15 in the following years and in the following aggregate principal amounts at and for a redemption price equal to the principal amount thereof plus accrued interest thereon to the redemption date: Amount Required Year to be Redeemed 2031 $195, (maturity) 195,000 In the event that the City shall have partially redeemed the Warrants having a stated maturity on February 15, 2032, or shall have provided for a partial redemption of such Warrants in such a manner that the Warrants for the redemption of which provision is made are considered as fully paid, the City may elect to apply all or any part (but only in integral multiples of $5,000) of the principal amount of such Warrants so redeemed or to be redeemed to the reduction of the principal amount of Warrants required to be redeemed pursuant to the schedule set forth immediately above on any February 15 coterminous with or subsequent to the date such optional redemption actually occurs. (i) Those of the Warrants maturing on February 15, 2034, shall be subject to mandatory redemption and prepayment prior to their maturity on February 15 in the following years and in the following aggregate principal amounts at and for a redemption price equal to the principal amount thereof plus accrued interest thereon to the redemption date: Amount Required Year to be Redeemed 2033 $205, (maturity) 215,000 In the event that the City shall have partially redeemed the Warrants having a stated maturity on February 15, 2034, or shall have provided for a partial redemption of such Warrants in such a manner that the Warrants for the redemption of which provision is made are considered as fully paid, the City may elect to apply all or any part (but only in integral multiples of $5,000) of the principal amount of such Warrants so redeemed or to be redeemed to the reduction of the principal amount of Warrants required to be redeemed pursuant to the schedule set forth immediately above on any February 15 coterminous with or subsequent to the date such optional redemption actually occurs. (j) Those of the Warrants maturing on February 15, 2037, shall be subject to mandatory redemption and prepayment prior to their maturity on February 15 in the following years and in the following aggregate principal amounts at and for a redemption price equal to the principal amount thereof plus accrued interest thereon to the redemption date: 5

10 Amount Required Year to be Redeemed 2035 $220, , (maturity) 240,000 In the event that the City shall have partially redeemed the Warrants having a stated maturity on February 15, 2037, or shall have provided for a partial redemption of such Warrants in such a manner that the Warrants for the redemption of which provision is made are considered as fully paid, the City may elect to apply all or any part (but only in integral multiples of $5,000) of the principal amount of such Warrants so redeemed or to be redeemed to the reduction of the principal amount of Warrants required to be redeemed pursuant to the schedule set forth immediately above on any February 15 coterminous with or subsequent to the date such optional redemption actually occurs. In the event that less than all of the principal of the Warrants of a single maturity is redeemed and prepaid, the Bank shall select by lot that portion of the principal of the Warrants of such maturity to be redeemed and prepaid. Notice of each such redemption must be given one time, not more than sixty (60) nor less than thirty (30) days before the date fixed for redemption, to the holders of each of the Warrants by registered or certified mail, at the address shown on the registry books of the Bank pertaining to the Warrants. No further interest will accrue after the date fixed for redemption on the principal of any Warrants called for redemption if notice has been duly given as provided in the Authorizing Ordinance and payment duly provided for. Manner, Notice and Effect of Redemption. Notice of any redemption of the Warrants must be given one time, not more than sixty (60) nor less than (30) days before the date fixed for redemption, to the holders of each of the Warrants all or a portion of which are to be redeemed, by registered or certified mail, at the addresses shown on the registry books of the Bank pertaining to the Warrants. No further interest will accrue, after the date fixed for redemption, on the principal of any Warrants called for redemption if notice has been duly given and payment therefor has been duly provided. In the event of the redemption of a portion of a Warrant in a denomination larger than $5,000, the Bank will, upon surrender to it of such Warrant called for redemption in part, register and deliver a new warrant or warrants in an aggregate principal amount equal to the unredeemed portion of, and of the same maturity as, the Warrant so surrendered, all as may be requested by the holder of such Warrant. No charge will be made by the Bank for any such exchange necessitated by the partial redemption of a Warrant. Book-Entry Only System Portions of the following information concerning The Depository Trust Company ("DTC") and DTC's book-entry system have been obtained from DTC. The City, the Bank and the Underwriter make no representation as to the accuracy of such information. Initially, DTC will act as Securities Depository for the Warrants. The Warrants initially will be issued solely in book-entry form to be held under DTC's book-entry system, registered in the name of Cede & Co. (DTC's partnership nominee). Initially, one fully-registered Warrant certificate for each maturity will be issued for the Warrants, in the aggregate principal amount of Warrants of such maturity, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized bookentry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants ("Direct Participants") include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities 6

11 Dealers, Inc. Access to the DTC system is also available to others, such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and Participants are on file with the Securities and Exchange Commission. So long as the Warrants are maintained in book-entry form with DTC, the following procedures will be applicable with respect to the Warrants. Purchases of the Warrants under the DTC system must be made by or through Direct Participants, which will receive a credit for the Warrants on DTC's records. The ownership interest of each actual purchaser of each Warrant ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Warrants are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Warrants, except in the event that use of the book-entry system for the Warrants is discontinued. To facilitate subsequent transfers, all Warrants deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Warrants with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Warrants; DTC's records reflect only the identity of the Direct Participants to whose accounts such Warrants are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. As long as the book-entry system is used for the Warrants, redemption notices will be sent to Cede & Co. If less than all of the Warrants within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. As long as the book-entry system is used for the Warrants, principal, premium, if any, and interest payments on the Warrants will be made to DTC. DTC's practice is to credit Direct Participants' accounts, upon receipt of funds and corresponding detail information from the Bank, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Bank or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, and interest to Cede & Co. is the responsibility of the City or the Bank, and disbursement of such payments to the Participants or the Beneficial Owners will be the responsibility of Direct and Indirect Participants. Neither DTC nor Cede & Co. will consent or vote with respect to the Warrants. Under its usual procedures, DTC mails an Omnibus Proxy to the Bank as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Warrants are credited on the record date (identified in a listing attached to the Omnibus Proxy). DTC may discontinue providing its services as securities depository with respect to the Warrants at any time by giving reasonable notice to the City and the Bank. In the event that a successor securities depository is not obtained, Warrant certificates are required to be printed and delivered. The City and the Bank will have no responsibility or obligation to any securities depository, any Participants in the book-entry system, or the Beneficial Owners with respect to (i) the accuracy of any records maintained by the securities depository or any Participant; (ii) the payment by the securities depository or by any Participant of any amount due to any Participant or Beneficial Owner, respectively, in respect of the principal 7

12 amount or redemption or purchase price of, or interest on, any Warrants; (iii) delivery of any notice by the securities depository or any Participant; (iv) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Warrants; or (v) any other action taken by the securities depository or any Participant. In the event of the discontinuance of the book-entry system for the Warrants, warrant certificates will be printed and delivered and the following provisions of the Authorizing Ordinance will apply: (i) principal of the Warrants will be payable upon surrender of the Warrants at the designated office of the Bank; (ii) Warrants may be transferred or exchanged for other Warrants of authorized denominations as set forth in the next succeeding two paragraphs; and (iii) Warrants will be issued in denominations of $5,000 or integral multiples thereof as described above. Certain Provisions Respecting Registration and Transfer of the Warrants The following provisions shall apply only upon discontinuance of the book-entry only system described above. The Warrants shall be registered as to both principal and interest and may be transferred only on the registry books of the Bank pertaining to the Warrants. No transfer of the Warrants shall be permitted except upon presentation and surrender of such security at the office of the Bank with written power to transfer signed by the registered owner thereof in person or by a duly authorized attorney in form and with guaranty of signature satisfactory to the Bank. The holder of one or more of the Warrants may, upon request, and upon the surrender to the Bank of such security, exchange such securities for securities of other authorized denominations ($5,000 principal amount or any integral multiple thereof) of the same series, maturity and interest rate and together aggregating the same principal amount as the Warrants so surrendered. Any registration, transfer and exchange of securities at the request of a holder thereof shall be without expense to such holder, except that the holder shall pay all taxes and other governmental charges, if any, required to be paid in connection with such transfer, registration or exchange. The holder of any Warrant will be required to pay any expenses incurred in connection with the replacement of a mutilated, lost or stolen or destroyed Warrant. The Authorizing Ordinance provides that each holder of the Warrants, by receiving or accepting the Warrants, consents and agrees and is estopped to deny that, insofar as the City and the Bank are concerned, the Warrants may be transferred only in accordance with the applicable provisions of the Authorizing Ordinance. The Authorizing Ordinance also provides that each transferee of the Warrants takes them subject to all principal and interest payments in fact made with respect to the Warrants. The Authorizing Ordinance provides (i) that the Bank shall not be required to register or transfer any Warrant during the period following the February 1 or the August 1 next preceding any February 15 or August 15, and if any Warrant is called for redemption, the Bank is not required to register or transfer any such Warrant during the period of forty-five (45) days next preceding the date fixed for its redemption. Reference is made to the provisions of the Authorizing Ordinance in full for its provisions pertaining to the registration, transfer and exchange of Warrants and the method of payment of the principal thereof and interest thereon. SECURITY General Obligation The Warrants will be direct general obligations of the City for the payment of the principal of and interest on which its full faith and credit will be irrevocably pledged. Special Pledge of Gross Receipts Tax The payment of debt service on the Warrants will be additionally secured on a parity with the City's $8,125,000 General Obligation Refunding Warrants, Series 2009, dated September 1, 2009, now outstanding in the aggregate principal amount of $6,425,000 (the "Series 2009 Warrants"), the City's $4,565,000 General Obligation Refunding and Capital Improvement Warrants, Series 2011, dated June 1, 2011, now outstanding in the aggregate principal amount of $4,445,000 (the "Series 2011 Warrants"), and any Additional Parity Securities 8

13 (defined below) that may hereafter be issued by a pledge of so much as may be necessary for that purpose of the proceeds of that certain special privilege or license tax of the City levied on those engaging in the businesses of selling at retail tangible personal property and conducting places of amusement within the corporate limits of the City at the rate of 4.0% (the "Gross Receipts Tax"). See "Privilege Reserved to Issue Additional Parity Securities" below. Only that portion of the said tax that is levied with respect to businesses conducted within the corporate limits of the City is pledged to the payment of the Series 2009 Warrants, the Series 2011 Warrants, the Warrants, and any Additional Parity Securities hereafter issued (the said portion being herein called the "Pledged Tax Proceeds"). The pledge of the Pledged Tax Proceeds for the Series 2009 Warrants, the Series 2011 Warrants, the Warrants and any Additional Parity Securities hereafter issued is subject to the law-imposed requirement that, if necessary, the proceeds of the Pledged Tax Proceeds must first be used to pay the necessary and legitimate governmental expenses of operating the City, to the parity pledges herein referred to and to the privilege reserved by the City of issuing the Additional Parity Securities hereinafter referred to. Privilege Reserved to Issue Additional Parity Securities The Authorizing Ordinance will contain a reservation by the City of the privilege of issuing from time to time additional securities ("Additional Parity Securities") secured by a pledge of the Pledged Tax Proceeds on a parity with the pledge thereof made for the benefit of the Series 2009 Warrants, the Series 2011 Warrants, and the Warrants if there shall have been filed in the office of the City Clerk a certificate stating that the amount of the proceeds of the Pledged Tax Proceeds received by the City during the fiscal year next preceding the issuance of the Additional Parity Securities then proposed to be issued was not less than 140% of the sum of the maximum annual principal and interest that will mature during the current or any then succeeding fiscal year with respect to (i) the Series 2009 Warrants, (ii) the Series 2011 Warrants, (iii) the Warrants, (iv) any Additional Parity Securities theretofore issued, and (v) the Additional Parity Securities then proposed to be issued. THE FEDERAL BANKRUPTCY ACT The rights and remedies of the holders of the Warrants are subject to the provisions of Chapter 9 of Title 11 of the United States Code (the "Bankruptcy Act"), which was enacted on November 6, 1978, and took effect on October 1, Chapter 9 permits, under certain specified circumstances (but only after authorization by the legislature or by a governmental officer or organization empowered by state law to give such authorization), a political subdivision of a state such as the City to file a petition for relief in the federal bankruptcy court if it is insolvent or unable to meet its debts as they mature and desires to effect a plan to adjust its debts. Under the statute, the filing of such a petition operates, with certain limited exceptions, as an "automatic" stay of the commencement or the continuation of any judicial or other proceedings against the petitioner, its property, or any officer or inhabitant thereof and as an "automatic" stay of any act or proceeding which seeks to enforce a lien on the property of the petitioner or a lien on any taxes or assessments due to the petitioner. Chapter 9 also permits a political subdivision that files a petition under the Bankruptcy Act to issue, with the approval of the Court, certificates of indebtedness having priority of payment over pre-existing obligations. Section 922(d) of Chapter 9 of the Bankruptcy Act provides that a bankruptcy petition does not operate as a stay of application of pledged special revenues to the payment of indebtedness secured by such revenues. Any political subdivision filing a petition for relief under Chapter 9 must in due course file a plan for the adjustment of its debts, and such plan may include provisions modifying or altering the rights of creditors generally, or any class of them, secured or unsecured. Such plan, when confirmed by the Court, binds all creditors who had notice or knowledge of the plan and discharges all claims against the petitioning political subdivision provided for in the plan when (a) the petitioning subdivision has deposited, with a duly appointed disbursing agent, all money, securities or other consideration required by the plan to be distributed, and (b) the Court is satisfied that any securities to be so distributed are valid obligations of the petitioning political subdivision and that any provision to pay or secure such obligations is also valid. No plan may, however, be confirmed by the Court unless certain conditions occur, among which are (1) that the plan has been accepted in writing by two-thirds (2/3) in amount and 9

14 fifty per cent (50%) in number of the allowed claims of each class which are affected by the plan, and (2) that the plan is fair, equitable and feasible and does not discriminate unfairly in favor of any creditor or class of creditors. Prospective purchasers of the Warrants should be aware that existing Alabama statutes and judicial rulings authorize the City and other incorporated municipalities in Alabama to file petitions for relief under Chapter 9. Payment Record DEBT INFORMATION The City has never defaulted on the payment of interest or principal on any indebtedness. Estimated General Obligation Debt The City has the following estimated long-term general obligation indebtedness (including the Warrants, but excluding indebtedness provision for the payment of which has heretofore been made or will be made simultaneously with the issuance of the Warrants) following issuance of the Warrants: Principal Amount Description Outstanding General Obligation Note Payable dated June 19, 2007 $407,203 Lease Purchase Agreement dated March 1, ,265 General Obligation Warrant, Series 2009 dated April 1, 2009 (USDA) 839,950 General Obligation Refunding Warrants, Series 2009, dated September 1, ,425,000 General Obligation Refunding and Capital Improvement Warrants, Series 2011, dated June 1, ,445,000 General Obligation Note dated May 31, ,000 The Warrants 4,200,000 Total $16,912,418 Constitutional Debt Limit The Constitution of Alabama provides that cities having a population of 6,000 or less may not become indebted in an amount in excess of twenty per cent (20%) of the assessed valuation of property situated therein. The Constitution provides for additional indebtedness not exceeding three per centum (3%) of such assessed value for the construction of waterworks, gas or electric lighting plants, sewers or improvements of streets. Said provisions expressly do not prohibit the issuance of indebtedness for the purpose of refunding validly issued debt. The Constitution of Alabama also provides an exemption from the constitutional debt limitation for indebtedness issued by cities having a population of 6,000 or less for the construction of public school facilities if there is pledged to the payment of such indebtedness a tax which the governing body estimates will be sufficient to pay the principal of and interest on such indebtedness. A portion of the Series 2009 Warrants now outstanding in the aggregate principal amount of $5,686,767 were issued, and a portion of the Series 2011 Warrants aggregating $1,814,005 were issued, to refinance the construction of public school facilities and will be payable from a pledge of the Pledged Tax Proceeds; which 10

15 such Pledged Tax Proceeds the City has heretofore estimated will be sufficient to timely pay the principal of and interest on such indebtedness. The remaining outstanding principal amount of the Series 2009 Warrants and Series 2011 Warrants, along with the principal amount of the Warrants, together with the other outstanding long-term indebtedness of the City, is estimated to aggregate not more than $9,411,646. The net assessed value of property in the City as of October 1, 2012 (using the most recent assessed value for motor vehicles), was not less than $49,835,000; 20% of which is $9,967,000. It is therefore projected that following issuance of the Warrants the City should have a constitutional debt margin of $555,354. Pursuant to further Constitutional provisions, statutes and court decisions, the limitation on debt is not applicable to revenue bonds and warrants which may be issued by the City for a variety of purposes, including hospitals, public buildings, recreation facilities, and water, sewer and gas systems. The debt limit provisions of the Constitution do not restrict the borrowing by separate public corporations authorized by the City to be created for the purpose of financing and operating certain municipal functions. Debt Ratios Direct Debt Estimated direct general obligation debt of the City as of January 1, 2013 (plus the Warrants; less the Series 2007 Warrants) $16,912,418 Assessed value of property in the City as of October 1, 2012, not including motor vehicles 43,710,980 Assessed value of motor vehicles in the City as of October 1, ,124,020 Total Assessed Value $49,835, (estimated) population of the City 4,209 Ratio of estimated direct general obligation debt to City s 2012 Total Assessed Value 33.94% Estimated per capita general obligation direct debt $4,018 Overlapping Debt As of September 30, 2012, Clarke County (the "County") had outstanding not more than $9,316,404 of general obligation long-term and other miscellaneous debt. Of said amount, $1,397,460 is referable to the City, which such amount is based upon the percentage (15%) of the assessed value of taxable property (including motor vehicles) in the City ($49,835,000) to that (including motor vehicles) in the County ($331,402,480). (Remainder of Page Intentionally Left Blank) 11

16 ESTIMATED DEBT SERVICE REQUIREMENTS Estimated Long-Term Indebtedness of the City Secured and Payable From Pledged Tax Proceeds The following table shows, on a fiscal year basis (ending September 30 for each of the years shown below), the estimated debt service requirements for the Series 2009 Warrants, the Series 2011 Warrants, and the Warrants, which such indebtedness will be payable from and secured by a pledge of the Pledged Tax Proceeds: Fiscal Series 2009 Series 2011 The Warrants Grand Year Warrants Warrants Principal Interest Total Total 2013 $798,016 $199,053 $49, $49, $1,046, , ,453 $170, , , ,281, , , , , , ,252, , , , , , ,234, , , , , , ,239, , , ,000 98, , ,227, , , ,000 96, , ,225, , , ,000 93, , ,207, , , ,000 90, , ,182, , , ,000 87, , ,240, , , ,000 84, , ,225, , ,000 80, , ,235, , ,000 76, , ,233, , ,000 71, , ,234, , ,000 67, , ,231, , ,000 62, , , ,000 57, , , ,000 52, , , ,000 46, , , ,000 40, , , ,000 34, , , ,000 27, , , ,000 20, , , ,000 12, , , ,000 4, , ,

17 All Estimated Long-Term Indebtedness of the City The following table shows, on a fiscal year basis (ending September 30 for each of the years shown below), the estimated debt service requirements for all long-term warrants of the City and for the Warrants (but does not include indebtedness to be refinanced by the Warrants or debt service on any miscellaneous notes and capital leases). Fiscal Long-Term The Warrants Grand Year Indebtedness (1) Principal Interest Total Total 2013 $1,270,079 $49, $49, $1,319, ,325,121 $170, , , ,602, ,309, , , , ,549, ,291, , , , ,529, ,291, , , , ,537, ,283, ,000 98, , ,527, ,280, ,000 96, , ,522, ,261, ,000 93, , ,504, ,235, ,000 90, , ,481, ,298, ,000 87, , ,541, ,283, ,000 84, , ,523, ,284, ,000 80, , ,529, ,292, ,000 76, , ,534, ,288, ,000 71, , ,525, ,286, ,000 67, , ,528, , ,000 62, , , , ,000 57, , , , ,000 52, , , , ,000 46, , , , ,000 40, , , , ,000 34, , , , ,000 27, , , , ,000 20, , , , ,000 12, , , , ,000 4, , , (1) Includes (1) the February 15, 2013 maturity ($85,000) of the Series 2007 Warrants, (2) the City's General Obligation Warrant, Series 2009, dated April 1, 2009 (USDA), (3) the City's General Obligation Refunding Warrants, Series 2009, dated September 1, 2009, and (4) the City's General Obligation Refunding and Capital Improvement Warrants, Series 2011, dated June 1, Does not include debt service on various short term obligations of the City, as follows: (i) the City's general obligation lease purchase agreement respecting police cars outstanding as of December 1, 2012 in the amount of not to exceed $11,932, (ii) the City's general obligation lease purchase agreement dated March 1, 2008, outstanding as of January 1, 2013 in the amount of $85,265, (iii) the City's General Obligation Note Payable dated June 19, 2007, outstanding in the principal amount of not to exceed $407,203 as of January 1, 2013, and (iv) the City's General Obligation Note Payable dated August 31, 2010, in the principal amount of $510,