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amount and interest on each Bond on the dates and at the places and manner prescribed in such Bond; and the City will, at the times and in the manner prescribed by this Ordinance, deposit or cause to be deposited the amounts of money specified by this Ordinance. (b) The City is duly authorized under the laws of the State of Texas to issue the Bonds; all action on its part for the creation and issuance of the Bonds has been duly and effectively taken; and the Bonds in the hands of the Owners thereof are and will be valid and enforceable direct and general obligations of the City in accordance with their terms. (c) The City hereby represents that the proceeds of the Bonds are needed at this time to provide funds in the amounts and for the respective purposes specified in Section 3.01 of this Ordinance; that based on current facts, estimates, and circumstances, it is reasonably expected that final disbursement of the proceeds of the Bonds will occur within three years after the Closing Date, that it is not reasonably expected that the proceeds of the Bonds or money deposited in the Interest and Sinking Fund will be used or invested in a manner that would cause the Bonds to be or become "arbitrage bonds," within the meaning of Section 148 of the Code; and that, except for the Interest and Sinking Fund, no other funds or accounts have been established or pledged to the payment of the Bonds. (d) The City will not take any action or fail to take any action with respect to the investment of the proceeds of the Bonds or any other funds of the City, including amounts received from the investment of any of the foregoing, that, based upon the facts, estimates, and circumstances known on the Closing Date, would result in constituting the Bonds "arbitrage bonds," within the meaning of Section 148 of the Code, and the City will not take any deliberate action motivated by arbitrage that would have such result. (e) As provided in Section 148(f)(4)(C) of the Code, the City will not be required to rebate arbitrage earnings, if any, on the proceeds of the Bonds, and in connection therewith the City hereby represents that: (i) the City is a governmental unit with general taxing powers; (ii) the Bonds are not private activity bonds within the meaning of 141(a) of the Code; (iii) 95 percent or more of the net proceeds will be used for local governmental activities of the City; and (iv) the aggregate face amount of all tax exempt obligations (other than private activity bonds) issued by the City (and all subordinate entities thereof) during the calendar year in which the Bonds are issued is not reasonably expected to exceed $5,000,000. (f) The Bonds are hereby designated "Qualified Tax Exempt Obligations" for purposes of Section 265 of the Code. The Bonds are not "private activity bonds" as defined in the Code and neither the City nor any of its subordinate entities, if any, reasonably expect to issue in excess of $10,000,000 aggregate amount of Qualified Tax Exempt Obligations during the calendar year in which the Bonds are issued, and the City hereby covenants not to designate more than $10,000,000 aggregate amount of Qualified Tax Exempt Obligations during this calendar year in which the Bonds are issued. 0406s -20-