$4,090,000 TOWN OF ESTILL, SOUTH CAROLINA Waterworks and Sewer System Refunding and Improvement Revenue Bonds, Series 2016

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1 NEW ISSUE; BOOK ENTRY ONLY RATING: S&P: BBB BANK QUALIFIED (See RATING herein) In the opinion of Bond Counsel, under existing statutes, regulations, rulings and judicial decisions and assuming continuing compliance by the Town with certain covenants and the provisions of the Internal Revenue Code of 1986, as amended (the Code ), interest on the Series 2016 Bonds is excludable from gross income for federal income tax purposes pursuant to Section 103 of the Code. Interest on the Series 2016 Bonds is not treated as an item of tax preference for purposes of the alternative minimum tax on individuals or corporations under the Code; however, interest on the Series 2016 Bonds is taken into account in determining adjusted current earnings in the computation of the alternative minimum tax on certain corporations. See TAX EXEMPTION for a brief description of alternative minimum tax treatment and certain other federal income tax consequences to certain recipients of interest on the Series 2016 Bonds. The Series 2016 Bonds and the interest thereon will also be exempt from all State, county, municipal and school district and other taxes or assessments imposed within the State of South Carolina, except estate, transfer and certain franchise taxes. The Series 2016 Bonds will be qualified tax-exempt obligations for purposes of Section 265(b)(3)(B) of the Code. $4,090,000 TOWN OF ESTILL, SOUTH CAROLINA Waterworks and Sewer System Refunding and Improvement Revenue Bonds, Series 2016 Dated: As of the date of delivery Due: October 1, 2030 The Series 2016 Bonds are issuable in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ), to which payments of principal of and interest on the Series 2016 Bonds will be made. Individual purchases will be made in book entry only form, in denominations of $5,000 each, or any integral multiple thereof. So long as Cede & Co., as nominee of DTC, is the registered owner of the Series 2016 Bonds, references herein to holders of the Series 2016 Bonds or registered owners of the Series 2016 Bonds shall mean Cede & Co., and shall not mean the beneficial owners of the Series 2016 Bonds. Interest on the Series 2016 Bonds shall be payable on each April 1 and October 1 commencing October 1, 2016, until maturity or prior redemption. See THE SERIES 2016 BONDS Book Entry Only System. U.S. Bank National Association will be serving as Trustee, Registrar and Paying Agent on the Series 2016 Bonds. The Series 2016 Bonds are being issued under the authority of the Constitution and laws of the State of South Carolina, including Title 6, Chapter 17, Code of Laws of South Carolina 1976, as amended (the Act ), and a Bond Ordinance enacted November 11, 2015 (the Bond Ordinance ), and a Series Ordinance enacted November 11, 2015 (the Series Ordinance ) (the Bond Ordinance and the Series Ordinance are hereinafter referred to collectively as the Ordinance ), by the Town Council, the governing body of the Town (the Town Council ). The Series 2016 Bonds are being issued to (i) refund the Refunded Bonds (defined herein); (ii) defray the cost of capital improvements to the Town's Waterworks and Sewer System (the System ); and (iii) pay certain costs incidental to the issuance of the Series 2016 Bonds. The Series 2016 Bonds, including interest thereon, are payable solely from the Revenues (as defin ed herein) of the System and are secured by a pledge of the Revenues thereof. See SECURITY FOR THE SERIES 2016 BONDS herein for a description of the priority of such pledge and lien. The Series 2016 Bonds will be subject to optional and mandatory redemption prior to maturity. See THE SERIES 2016 BONDS - Redemption. MATURITY SCHEDULE $4,090, % Term Bond due October 1, 2030, Yield 2.55%, CUSIP 29757DAA3 THE SERIES 2016 BONDS DO NOT CONSTITUTE A DEBT OF THE TOWN WITHIN THE MEANING OF ANY PROVISION, LIMITATION OR RESTRICTION OF THE CONSTITUTION OR THE LAWS OF THE STATE OF SOUTH CAROLINA OTHER THAN THOSE PROVISIONS AUTHORIZING INDEBTEDNESS PAYABLE SOLELY FROM A REVENUE- PRODUCING PROJECT NOT INVOLVING REVENUES FROM ANY TAX OR LICENSE. THE TOWN IS NOT OBLIGATED TO PAY ANY OF THE SERIES 2016 BONDS OR THE INTEREST THEREON EXCEPT FROM REVENUES FROM THE OPERATION OF THE SYSTEM. NO RECOURSE MAY BE HAD FOR THE PAYMENT OF THE SERIES 2016 BONDS OR THE INTEREST THEREON AGAINST THE GENERAL FUND OF THE TOWN AND NEITHER THE CREDIT NOR THE TAXING POWER OF THE TOWN SHALL BE DEEMED TO BE PLEDGED THERETO. Kidwell & Company (the Municipal Advisor ), located in Newnan, Georgia, provides municipal advisory services for the Town and is serving as municipal advisor with respect to the Series 2016 Bonds. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. The Series 2016 Bonds are offered when, as, and if issued and accepted by D.A. Davidson & Co. (the Underwriter ), subject to the final approving opinion of Haynsworth Sinkler Boyd, P.A., Florence, South Carolina, Bond Counsel. Certain legal matters will be passed on by Kenneth A. Davis, Columbia, South Carolina, counsel to the Town of Estill. Haynsworth Sinkler Boyd, P.A., Charleston, South Carolina, is serving as Disclosure Counsel in connection with the issuance of the Series 2016 Bonds. It is expected that delivery of the Series 2016 Bonds in definitive form will be made on or about June 30, 2016, through the facilities of The Depository Trust Company against payment therefor. June 22, 2016

2 TOWN OF ESTILL, SOUTH CAROLINA MAYOR Anderson Taylor TOWN COUNCIL MEMBERS James A. Williams, Mayor Pro-Tem Frankie Bennett Corrin F. Bowers III Tammy Solomon TOWN ADMINISTRATOR Danny Lucas SUPERINTENDENT OF WATER AND WASTEWATER DEPARTMENT Christie L. Weidenhof EA Services, LLC Environmental Systems Operator TOWN ATTORNEY Kenneth A. Davis MUNICIPAL ADVISOR Kidwell & Company Newnan, Georgia BOND COUNSEL Haynsworth Sinkler Boyd, P.A. Florence, South Carolina DISCLOSURE COUNSEL Haynsworth Sinkler Boyd, P.A. Charleston, South Carolina

3 This Official Statement does not constitute an offering of any security other than the original offering of the Series 2016 Bonds identified on the cover. No dealer, broker, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the Town of Estill, South Carolina (the Town ). This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Series 2016 Bonds by any person in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. Certain information contained in this Official Statement may have been obtained from sources other than the Town and, while believed to be reliable, is not guaranteed as to completeness or accuracy. THE INFORMATION AND EXPRESSIONS OF OPINION IN THIS OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR ANY SALE MADE UNDER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE TOWN OR THE SYSTEM. U.S. Bank National Association, as Trustee and Registrar/Paying Agent, has not provided, or undertaken to determine the accuracy of, any of the information contained in this Official Statement and makes no representation or warranty, express or implied, as to (i) the accuracy or completeness of such information, (ii) the validity of the Series 2016 Bonds; or (iii) the tax exempt status of the interest on the Series 2016 Bonds. Upon execution and delivery, the Series 2016 Bonds will not be registered under the Securities Act of 1933, as amended, or any state securities law, and will not be listed on any stock or other securities exchange. Neither the Securities and Exchange Commission nor any other federal, state or other governmental entity or agency will have passed upon the accuracy or adequacy of this Official Statement or approved the Series 2016 Bonds for sale. Reference herein to laws, rules, regulations, agreements, reports and other documents, do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made therein. Where full texts have not been included as appendices to the Official Statement, they will be furnished upon request.

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5 TABLE OF CONTENTS Page SUMMARY STATEMENT...i INTRODUCTION...1 AUTHORIZATION AND PURPOSE...1 Authorization...1 Purpose...1 THE SERIES 2016 BONDS...1 General...1 Book-Entry Only System...1 Procedure in the Event of Discontinuation of Book-Entry Only System...3 Registration and Transfer...3 Redemption...4 General Redemption Provisions; Notice...4 Continuing Disclosure...5 SECURITY FOR THE SERIES 2016 BONDS...5 Pledged Revenues; Special Obligations...5 Rate Covenant...6 Disposition of Revenues and Funds Established by the Ordinance...6 Debt Service Reserve Fund...7 Additional and Refunding Bonds...7 Junior Bonds...8 SOURCES AND USES OF FUNDS...8 CAPITAL IMPROVEMENTS...8 THE PLAN OF REFUNDING...9 FINANCIAL FACTORS...10 Statement of Net Assets...10 Five-Year Summary...11 Summary of Unaudited Recent Operating Results...13 Management's Discussion and Analysis...13 Historical Debt Service Coverage of the System...14 Debt Service Requirements of the System...14 Projected Debt Service Coverage of the System...15 THE TOWN AND THE SYSTEM...15 General Description...15 Administration of the Town...15 Administration of the System...16 Accounting Policies...16 Budgeting Procedure...16 Largest Customers...16 Operations...17 Waterworks and Sewer Rates and Fees...17 Water and Sewer Billing and Collection Policies...18 Capital Expenditures...18 Environmental Matters...18 Employee Benefits; Post-Employment Benefits...19 GASB Statement No Liability Insurance...20 LEGAL MATTERS...20 Litigation...20 TAX EXEMPTION...20 Federal Income Tax Generally...20 State Tax Exemption...21 Collateral Federal Tax Considerations...21

6 Underwriting...22 Other Legal Matters...22 RATING...22 MUNICIPAL ADVISOR...22 FINANCIAL STATEMENTS...22 MISCELLANEOUS...23 Appendix A Financial Statements of the Town for the Year Ended June 30, 2015 Appendix B Appendix C Appendix D Appendix E Supplemental Information Regarding the Town of Estill and Its Surrounding Area Copy of the Bond Ordinance Form of Opinion of Bond Counsel Form of Disclosure Dissemination Agent Agreement

7 SUMMARY STATEMENT The following Summary Statement is qualified in its entirety by the more detailed information and financial statements contained elsewhere in this Official Statement and the Appendices hereto (collectively, the Official Statement ). Unless otherwise defined in this Official Statement, all capitalized terms shall have those meanings ascribed to them in APPENDIX C Copy of the Bond Ordinance. The offering of the Bonds to potential investors is made only by means of this entire Official Statement, and no person is authorized to detach this Summary Statement from the Official Statement or to otherwise use it without the entire Official Statement. The Town Series 2016 Bonds Date of Issue and Delivery of Bonds Interest Payments The Waterworks and Sewer System (the System ) of the Town of Estill (the Town ) provides service throughout the Town and the surrounding area, which is located in Hampton County. See APPENDIX B - Supplemental Information Regarding the Town of Estill and its Surrounding Area. The $4,090,000 Town of Estill, South Carolina, Waterworks and Sewer System Refunding and Improvement Revenue Bonds, Series 2016 (the 2016 Bonds ) are being issued initially in book entry only form in principal amounts of $5,000 and integral multiples thereof. See THE SERIES 2016 BONDS - General. The Series 2016 Bonds will be initially dated as of the date of their delivery and will bear interest from that date. It is expected that the Series 2016 Bonds will be available for delivery through the facilities of DTC in New York, New York on or about June 30, Interest on the Series 2016 Bonds is payable on each April 1 and October 1 commencing October 1, Maturity The 2016 Bonds mature on October 1, Redemption Security Purpose of the Issue At the option of the Town, the 2016 Bonds shall be subject to optional redemption in whole at any time on or after June 30, 2016, at par plus accrued interest. The Series 2016 Bonds are subject to mandatory sinking fund redemption, in part on the dates and at the prices and on the terms described in this Official Statement. See THE SERIES 2016 BONDS - Redemption. The Series 2016 Bonds, including interest thereon, are payable solely from the Revenues of the System and are secured by a pledge of the Revenues of the System. The Town has pledged to establish, levy, maintain and collect fees and charges of the System so that Revenues of the System will be sufficient to meet certain minimum levels. See SECURITY FOR THE SERIES 2016 BONDS and FINANCIAL FACTORS Debt Structure. The Series 2016 Bonds are being issued to (i) refund the Refunded Bonds (defined herein); (ii) defray the cost of capital improvements to the Town's Waterworks and Sewer System (the System ); and ( iii) pay certain costs incidental to the issuance of the Series 2016 Bonds. See AUTHORIZATION AND PURPOSE, SOURCES AND USES OF FUNDS, CAPITAL IMPROVEMENTS and THE PLAN OF REFUNDING. i

8 Tax Status of Interest on the Series 2016 Bonds Professionals involved in the Offering Information Concerning Terms of the Offering Continuing Disclosure Assuming continuing compliance by the Town with certain covenants, interest on the Series 2016 Bonds is excludable from gross income for federal income tax purposes under existing statutes, regulations and judicial decisions. Interest on the Series 2016 Bonds is not an item of tax preference in computing the alternative minimum taxable income of individuals or corporations. Interest on the Series 2016 Bonds will, however, be included in the computation of certain taxes including alternative minimum tax for corporations. Interest on the Series 2016 Bonds is excludable from gross income for federal income tax purposes under existing statutes, regulations and judicial decisions. Interest on the Series 2016 Bonds is not an item of tax preference in computing the alternative minimum taxable income of individuals or corporations nor will interest on the Series 2016 Bonds be included in the computation of certain taxes including alternative minimum tax for corporations. See TAX EXEMPTION for a brief description of alternative minimum tax treatment and certain other federal income tax consequences to certain recipients of interest on the Series 2016 Bonds. The Series 2016 Bonds will be qualified tax-exempt obligations for purposes of Section 265(b)(3)(B) of the Code (as defined herein). The Series 2016 Bonds and the interest thereon will also be exempt from all State, county, municipal and school district and other taxes or assessments imposed within the State of South Carolina, except estate, transfer and certain franchise taxes. Such opinion is subject to certain limitations and conditions described in the form of opinion of Bond Counsel set forth in APPENDIX D, and in LEGAL MATTERS. U.S. Bank National Association is serving as Trustee and as Registrar and Paying Agent (the Registrar/Paying Agent ). Haynsworth Sinkler Boyd, P.A., Florence, South Carolina, is serving as Bond Counsel. Certain legal matters will be passed upon for the Town by its counsel, Kenneth A. Davis, Columbia, South Carolina. Kidwell & Company, Newnan, Georgia, has acted as Municipal Advisor to the Town in connection with the offer and sale of the Series 2016 Bonds. Haynsworth Sinkler Boyd, P.A., Charleston, South Carolina, is serving as Disclosure Counsel in connection with the issuance of the Series 2016 Bonds. The Series 2016 Bonds are being issued under the Constitution and laws of the State of South Carolina, including Title 6, Chapter 17, Code of Laws of South Carolina 1976, as amended, and certain ordinances adopted by the Town Council of the Town of Estill. See AUTHORIZATION AND PURPOSE. The Series 2016 Bonds are offered when, as and if issued and delivered by the Town, subject to the final approving opinion of Bond Counsel. The Town has covenanted, so long as required, pursuant to Section , Code of Laws of South Carolina 1976, as amended, to file with a central repository for availability on the secondary bond market, an annual audit within 30 days of its receipt and event-specific information within 30 days of an event adversely affecting more than 5% of its revenues or its tax base. In order to provide certain continuing disclosure with respect to the Series 2016 Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time ("Rule 15c2-12"), the Town has entered into a Disclosure Dissemination Agent Agreement dated the date of the issuance of the Series 2016 Bonds ("Disclosure Dissemination Agreement") for the benefit of the beneficial owners of the Series 2016 Bonds with Digital Assurance Certification, L.L.C. ("DAC") under which the Town has designated DAC as Disclosure Dissemination Agent. See SERIES 2016 BONDS - Continuing Disclosure and APPENDIX E FORM OF DISLCOSURE DISSEMINATION AGENT AGREEMENT. ii

9 General This Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of the Official Statement will be deposited with the Electronic Municipal Market Access ("EMMA") system. Copies of the Official Statement, the Bond Ordinance and the Series Ordinance (as such documents are de fined herein) and other relevant documents and information regarding the Series 2016 Bonds, are available from Danny Lucas, Town Administrator, Town of Estill, 323 Martin L. King Jr. Blvd. S, Estill, South Carolina The Official Statement, including the cover page and the attached Appendices, contains specific information relating to the Series 2016 Bonds, the Town and the System and other information pertinent to this issue. See FINANCIAL FACTORS and APPENDIX A for financial information relating to the System. All information included herein has been provided by the Town except where attributed to other sources. The summaries and references to all documents, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such reference or summary is qualified in its entirety by reference to each such document, statute, report or other instrument. iii

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11 OFFICIAL STATEMENT $4,090,000 TOWN OF ESTILL, SOUTH CAROLINA Waterworks and Sewer System Refunding and Improvement Revenue Bonds, Series 2016 INTRODUCTION This Official Statement of the Town of Estill, South Carolina (the Town ), which includes the cover page hereof and the appendices hereto, provides information relating to the Town and its $4,090,000 Waterworks and Sewer System Refunding and Improvement Revenue Bonds, Series 2016 (the Series 2016 Bonds ). The Series 2016 Bonds and any Additional Bonds (as such terms are hereinafter defined) are referred to herein as the Bonds. Included in this Official Statement are brief descriptions of the Series 2016 Bonds and the security therefor, the Combined Waterworks and Sewerage System of the Town (the System ), the Town and the surrounding area and the ordinances pursuant to which the Series 2016 Bonds are authorized and issued by the Town. Also included is certain financial information relating to the System. The summaries and references to all documents, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such reference or summary is qualified in its entirety by reference to each such document, statute, report or other instrument. Capitalized terms used herein without specific definition are used as defined in APPENDIX C - Copy of the Bond Ordinance. Authorization AUTHORIZATION AND PURPOSE The Series 2016 Bonds are being issued under the Constitution and laws of South Carolina, including Title 6, Chapter 17, Code of Laws of South Carolina 1976, as amended (the Act ), a Bond Ordinance enacted by the Town Council, the governing body of the Town (the Town Council ) on November 11, 2015 (as amended, the Bond Ordinance ) and a Series Ordinance enacted by the Town Council on November 11, 2015 (the Series Ordinance ) (the Bond Ordinance and the Series Ordinance are collectively referred to as the Ordinance ). Purpose The Series 2016 Bonds are being issued to (i) refund the outstanding approximately $659,106 of an original issue of $2,745,000 Waterworks and Sewer System Improvement Revenue Bond of 2003 (the Refunded Bonds ); (ii) defray the cost of capital improvements to the Town's Waterworks and Sewer System (the System ); and (iii) pay certain costs incidental to the issuance of the Series 2016 Bonds. See SOURCES AND USES OF FUNDS, CAPITAL IMPROVEMENTS and THE PLAN OF REFUNDING. General THE SERIES 2016 BONDS The Series 2016 Bonds are dated as of their date of delivery, and bear interest from that date (payable on each April 1 and October 1 commencing October 1, 2016), at the rate of 2.55% and mature on October 1, Book-Entry Only System The Depository Trust Company ( DTC ) will initially act as securities depository for the Series 2016 Bonds. The Series 2016 Bonds will be issued as fully-registered securities in the name of Cede & Co. (DTC 's partnership nominee). Upon issuance of the Series 2016 Bonds, one fully-registered bond will be issued for each maturity of each series of the Series 2016 Bonds as set forth on the cover page hereof, each in the aggregate principal amount of such maturity and will be deposited with DTC. So long as Cede & Co., as nominee of DTC, is

12 the registered owner of the Series 2016 Bonds, references herein to the holders or registered owners (the Holders ) of the Series 2016 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners (hereinafter defined) of the Series 2016 Bonds. The information under this caption concerning DTC and DTC's book-entry system has been obtained from sources believed to be reliable, but neither the Town nor the Underwriter takes any responsibility for the accuracy or completeness thereof. DTC, the world's largest depository, 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 and provides asset servicing for over 2.2 million issues of U.S. and non-u.s. equity, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor's rating of AA+. The DTC rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Series 2016 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2016 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2016 Bond ( Beneficial Owner ) is in turn to be recorded on the DTC Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, 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 Series 2016 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2016 Bonds, except in the event that use of the book-entry system for the Series 2016 Bonds is discontinued. To facilitate subsequent transfers, all Series 2016 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other names may be requested by an authorized representative of DTC. The deposit of Series 2016 Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2016 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2016 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. The Town, the Registrar and the Paying Agent will recognize DTC or its nominee, Cede & Co., as the registered owner of the Series 2016 Bonds for all purposes. 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. 2

13 Redemption notices shall be sent to DTC. If less than all of the Series 2016 Bonds 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. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series 2016 Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Town 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 Series 2016 Bonds are credited on the record date (identified on a listing attached to the Omnibus Proxy). Principal, redemption premium, if any, and interest payments on the Series 2016 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit DTC Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Town, the Registrar or the Paying Agent 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 nor its nominee, the Town, the Registrar and the Paying Agent, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption premium, if any, and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Town acting through the Registrar or the Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Series 2016 Bonds at any time by giving reasonable notice to the Town, the Registrar or the Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2016 Bond certificates are required to be printed and delivered. The Town may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Series 2016 Bond certificates will be printed and delivered to DTC. Procedure in the Event of Discontinuation of Book-Entry Only System The Town has entered into an agreement with DTC providing for the book-entry only system described herein. DTC may determine to discontinue providing its service with respect to the Series 2016 Bonds at any time by giving notice to the Trustee and discharging its responsibilities with respect thereto under applicable law. In the event of such termination, the Town may select another securities depository or discontinue the book-entry only system. In the event the book-entry only system is discontinued, the Trustee will register and deliver to the Beneficial Owners replacement Series 2016 Bonds in denominations of $5,000 or integral multiples thereof in accordance with the instructions of DTC or its nominee, Cede & Co. The Series 2016 Bonds thereupon delivered will be subject to registration and transfer as described below under the heading Registration and Transfer. Registration and Transfer Upon the discontinuance of the book-entry only system, Series 2016 Bonds shall be evidenced by bond certificates issued in the name of the registered owners thereof as set forth on the Books of Registry, and Series 2016 Bonds shall be transferable only upon the Books of Registry by the registered owner thereof in person or by his attorney, duly authorized in writing, upon surrender thereof, together with a written instrument of transfer satisfactory to the Trustee, as Registrar, duly executed by the registered owner or his duly authorized attorney with signature guaranteed. Upon the transfer of any Series 2016 Bond, the Town shall execute and thereupon the Trustee, as Registrar, shall authenticate and deliver to the transferee a new fully registered Series 2016 Bond or Bonds, registered in the name of the transferee of the same series, aggregate principal amount, maturity and interest rate as the surrendered Series 2016 Bond. 3

14 The Town and the Trustee may deem and treat the person in whose name any Series 2016 Bond is registered as the absolute owner of such Series 2016 Bond for the purpose of receiving payment of the principal and redemption premium, if any, of, and interest on, such Series 2016 Bond and for all other purposes. For every exchange or transfer of any Series 2016 Bond, whether temporary or definitive, the Town and the Trustee may make a charge sufficient to reimburse them for any tax or other governmental charge required to be paid with respect to such exchange or transfer. Redemption Optional Redemption. At the option of the Town, the Series 2016 Bonds are subject to redemption in whole at any time on or after June 30, 2016, at a redemption price equal to 100% of the principal amount thereof to be redeemed, together with interest accrued thereon to the date of redemption. Mandatory Sinking Fund Redemption. The Series 2016 Bonds shall be subject to mandatory sinking fund redemption commencing October 1, 2016, and will be redeemed (to the extent not previously redeemed) at 100% of the principal amount, plus interest accrued to the redemption date, on October 1, of each of the following years in the respective principal amounts for each year specified below: Year Amount 2016 $250, , , , , , , , , , , , , , ,000* *Final Maturity Moneys credited to the Debt Service Fund (as hereinafter defined) representing sinking fund installments for the retirement of the Series 2016 Bonds may be applied to the purchase of the Series 2016 Bonds at the direction of the Town, at a price not to exceed par plus accrued interest. In such event the principal amount of the Series 2016 Bonds required to be redeemed on the next ensuing sinking fund installment date shall be reduced by the principal amount of the Series 2016 Bonds so purchased; provided, however, that no Series 2016 Bonds shall be purchased during the interval between the date on which notice of redemption of the Series 2016 Bonds from sinking fund installments is given and the date of redemption set forth in such notice, unless the Series 2016 Bonds so purchased are the Series 2016 Bonds called for redemption in such notice or are purchased from moneys other than those accrued in the Debt Service Fund. The amount of the mandatory sinking fund redemption prescribed above shall be reduced to the extent Series 2016 Bonds have been purchased or redeemed by the Town pursuant to the optional redemption provisions set forth above, in such manner as the Town may direct or, absent such direction, on a pro rata basis. General Redemption Provisions; Notice In the event the Series 2016 Bonds or any portion thereof shall be called for redemption, notice of the redemption, describing the Series 2016 Bonds to be redeemed, specifying the redemption date and the redemption price payable on such redemption, shall be mailed by first-class mail, postage prepaid, to the registered owner thereof as shown on the Books of Registry not less than 30 days prior to the redemption date. So long as the Series 4

15 2016 Bonds are in book entry only form and are registered in the name of Cede & Co., as the nominee of DTC, notices of redemption with respect to the Series 2016 Bonds will be given to Cede & Co., and will be distributed by Cede & Co. as set forth under Book Entry Only System below. If the Series 2016 Bonds are no longer held in book entry only form and less than all the Series 2016 Bonds of any maturity are called for redemption, the Series 2016 Bonds of such maturity to be redeemed shall be selected at random by the Registrar/Paying Agent or in such other manner as the Registrar/Paying Agent in its discretion may deem fair and appropriate as to Series 2016 Bonds held in book entry only form, and as set forth under Book Entry Only System as to Series 2016 Bonds held in book entry only form by Cede & Co., as nominee of DTC. If a Series 2016 Bond is subject by its terms to redemption prior to its stated maturity and has been duly called for redemption and notice of the redemption thereof has been duly given as in the Ordinance provided and if moneys for the payment of such Series 2016 Bond at the then applicable redemption price and the interest to accrue to the redemption date on such Series 2016 Bond are held for the purpose of such payment by the Paying Agent/Registrar, then such Series 2016 Bond so called for redemption shall, on the redemption date designated in such notice, become due and payable, and interest on the Series 2016 Bond so called for redemption shall cease to accrue. Continuing Disclosure In order to provide certain continuing disclosure with respect to the Series 2016 Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time ("Rule 15c2-12"), the Town has entered into a Disclosure Dissemination Agent Agreement dated the date of the issuance of the Series 2016 Bonds ("Disclosure Dissemination Agreement") for the benefit of the beneficial owners of the Series 2016 Bonds with Digital Assurance Certification, L.L.C. ("DAC") under which the Town has designated DAC as Disclosure Dissemination Agent. The form of Disclosure Dissemination Agreement is attached as Appendix E. years. The Town has not had any continuing disclosure obligations pursuant to Rule 15c2-12 during the past five Pledged Revenues; Special Obligations SECURITY FOR THE SERIES 2016 BONDS The Bond Ordinance provides that all bonds issued pursuant to such ordinance shall be secured by a pledge of, and a lien upon, the Revenues (as such term is defined herein in APPENDIX C - COPY OF THE BOND ORDINANCE ) less amounts required to fund the operation and maintenance of the System (the Net Revenues ). Such pledge securing the Bonds (as defined herein) shall at all times and in all respects remain superior to pledges made to secure other bonds or obligations payable out of the revenues of the System. The Series 2016 Bonds are payable solely from and are secured equally and ratably with all bonds hereafter issued on a parity therewith (with respect to the pledge of and lien upon the Net Revenues) under the Bond Ordinance ( Additional Bonds ) by a pledge of and lien upon the Net Revenues of the System. Pursuant to an ordinance adopted November 25, 2003 (the 2003 Bond Ordinance ), the Town has issued $2,745,000 Waterworks and Sewer System Refunding Revenue Bonds, Series 2003 ( the Refunded Bonds ). The Town has determined that a savings in debt service requirements may be achieved through the refunding of the Refunded Bonds. See THE PLAN OF REFUNDING herein. The Town contemplates extensive improvements to the System in the future and has determined that such improvements should be financed through the issuance of revenue bonds necessitating the defeasance of the Refunded Bonds. As a result, following the issuance of the Series 2016 Bonds, there will be no outstanding obligations. 5

16 THE SERIES 2016 BOND HAS BEEN ISSUED UNDER THE PROVISIONS OF TITLE 6, CHAPTER 17 OF THE CODE OF LAWS OF SOUTH CAROLINA 1976, AS AMENDED (COLLECTIVELY, THE ENABLING STATUTE ), AND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE TOWN WITHIN ANY STATE CONSTITUTIONAL PROVISIONS (OTHER THAN ARTICLE X, SECTION 14, PARAGRAPH 10 OF THE CONSTITUTION OF THE STATE OF SOUTH CAROLINA, 1895, AS AMENDED, AUTHORIZING OBLIGATIONS PAYABLE SOLELY FROM SPECIAL SOURCES PERMITTED THEREIN) OR STATUTORY LIMITATION AND SHALL NEVER CONSTITUTE NOR GIVE RISE TO A PECUNIARY LIABILITY OF THE TOWN OR A CHARGE AGAINST ITS GENERAL CREDIT OR TAXING POWER. THE FULL FAITH, CREDIT, AND TAXING POWERS OF THE TOWN ARE NOT PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THIS BOND. Rate Covenant The Town has covenanted and agrees that it will establish, levy, maintain, revise when necessary, and collect the rates and charges for all services furnished by the System, so that such rates and charges shall at all times be sufficient (i) to provide for the punctual payment of the principal and interest on all Bonds and any other indebtedness payable from the Revenues that may from time to time be outstanding and to maintain any required reserves therefor; (ii) to pay all Operation and Maintenance Expenses; (iii) to establish all reserves required by this Ordinance or the Enabling Act, including a reserve for depreciation of the System, for contingencies and for improvements, betterments and extensions to the System other than those necessary to maintain the same in good repair and working order; (iv) to meet any further oblig ations of the Town which are charges, liens, or encumbrances upon the Revenues; and (v) to comply in all respect with the terms of this Ordinance. The Town has further covenanted and agrees that it will, at all times, prescribe and maintain and thereafter collect rates and charges for all services furnished by the System which together with other income will yield Net Revenues in the current Fiscal Year equal to at least one hundred twenty percent (120%) of the combined principal and interest requirements of the current Fiscal Year on all Bonds then outstanding. For purposes of this paragraph, long-term indebtedness and depreciation shall not be taken into account in the calculation of Net Revenues. In the event of a deficiency in Net Revenues available to meet the foregoing requirement, the Town has covenanted and agrees to revise the schedule of rates and charges for all services furnished by the System in an amount necessary to fund such deficiency. The ability of the Net Revenues to meet the foregoing requirement shall be evaluated by the Town at least annually and action required to meet the requirements of this paragraph shall be taken promptly. Disposition of Revenues and Funds Established by the Ordinance The Town shall deposit all Revenues in the Gross Revenue Fund and withdrawl as therefrom shall be made on or before the 15 th day of each month and in the following order of priority: First: There shall be deposited in the Operation and Maintenance Fund that sum which has been currently determined to be the cost of operating and maintaining the System for the next ensuing month. Second: Provision shall then be made for the payment of the principal of and interest on all Bonds then outstanding, all without priority of any Bonds over others. To that end: (A) There shall be deposited into the Debt Service Fund an amount which when added to all amounts then on deposit therein and available to pay principal of Outstanding Bonds shall be equal to the amount of interest payable on the Outstanding Bonds upon the next succeeding date on which interest on all Outstanding Bonds shall become due. (B) There shall be deposited into the Debt Service Fund an amount which when added to all amounts then on deposit therein and available to pay principal of Outstanding Bonds shall be equal to the amount of principal of Outstanding Bonds due upon the next succeeding date on which interest on all Outstanding Bonds shall become due. (C) If, on the occasion when deposits required by Paragraphs (A) and (B) above are to be made, the sum of the deposits required thereby plus previous monthly deposits and the remaining deposits to be made prior to 6

17 the next succeeding principal and interest payment dates, will be less than the sum required to effect the payment of the next succeeding installment of either principal or interest, or both, as the case may be, a sum equal to such deficiency shall be added to the deposits so to be made. Third: Provision shall then be made for deposit to any Debt Service Reserve Fund established by any Series Ordinance of such amount as shall be required by such Series Ordinance. Fourth: There shall be deposited into the Depreciation Fund that sum which is one-twelfth of the sum to be needed for the Deprecation Fund for the then current Fiscal Year. Fifth: There shall be deposited into the Contingent Fund that sum which is one-twelfth of the sum to be needed for the Contingent Fund for the then current Fiscal Year. Sixth: Any Revenues remaining at the end of the Fiscal Year after making the payments described above may be disposed of for any lawful purpose in such manner as the Town shall from time to time determine; provided, however, that no such transfers shall be made unless, immediately after any such transfer, (y) the aggregate balance in (i) the Gross Revenue Fund retained and available for deposit in the Operation and Maintenance Fund and (ii) the Contingent Fund shall equal or exceed the preceding nine months aggregate Operations and Maintenance Expenses of the System, and (z) the Net Revenues of the System for the preceding Fiscal Year were equal to at least 1.75 times the maximum debt service requirement for any succeeding year on the Series 2016 Bonds and any Additional Bonds then outstanding. Debt Service Reserve Fund The Bond Ordinance provides that each Series Ordinance may provide for the establishment of a Debt Service Reserve Fund for any Series of Bonds Outstanding. Each such Debt Service Reserve Fund shall bear a number series designation as may be necessary to distinguish such Debt Service Reserve Fund and shall, subject to the other provisions of this Bond Ordinance, be maintained in an amount equal to the applicable Reserve Requirement, as determined pursuant to the applicable Series Ordinance so long as the applicable Series of Bonds shall be Outstanding. Each such fund is intended to insure the timely payment of the principal of, premium, if any, and interest on the applicable Series of Bonds, and to provide for the redemption of such Series of Bonds prior to their stated maturities. THERE IS NO DEBT SERVICE RESERVE FUND OR RESERVE FUND REQUIREMENT FOR THE SERIES 2016 BONDS. Additional and Refunding Bonds For the issuance of Additional Bonds (other than the Series 2016 Bonds and Junior Bonds) to finance the Costs of the Project there shall be delivered to the Trustee a certificate of the Authorized Representative, based upon the most recent audited financial statements of the Town, to the effect that Net Revenues deposited into the Revenue Fund for the most recent Fiscal Year immediately preceding the issuance date of the proposed Bonds for which audited financial statements of the Town are available (the Test Period ) are not less than 120% of the average annual Principal and Interest Requirements for all Series of Bonds then Outstanding and the additional Bonds then proposed to be issued (with adjustments, if any, for any Bonds that will be discharged upon the issuance of such additional Bonds). Revenues may be adjusted for the purpose of the calculation required by Section 3.03(c) of the Bond Ordinance to reflect additional Revenues to be received from establishments which commenced payment of Revenues during the Test Period. As to such an establishment, Revenues may be annualized based upon the average monthly Revenues paid by such establishment during the Test Period. In determining Net Revenues for this purpose, the principal of an interest on Bonds or other long-term indebtedness and depreciation shall not be taken into account. In addition, Additional Bonds may be issued if a new schedule of rates and charges for the services, facilities and commodities furnished by the System has been adopted and is in effect, and an independent and recognized firm of certified public accountants or registered municipal advisors certify that had the new rate schedule been in effect during the period described above, the Net Revenues of the System would have been not less than 125% of the Principal and Interest Requirements for any succeeding Fiscal Year on all Bonds then outstanding and on the additional Bonds then proposed to be issued. Additional Bonds may be issued to secure funds to defray Project Costs, or to refund any Bonds, Junior Bonds, or any notes, bonds, or other obligations issued to finance or to aid in financing Projects. 7

18 There shall be on deposit in the Debt Service Reserve Fund, if such is required by any Series Ordinance, cash and securities (including any insurance policy, surety bond or letter of credit permitted by Series Ordinance) as provided in Section 6.04 of the Bond Ordinance (inclusive of any proceeds of Bonds to be deposited in the Debt Service Reserve Fund), having an aggregate value not less than the Debt Service Reserve Fund Requirement, if any, with respect to each Series of Bonds to be then Outstanding and the Bonds then proposed to be issued. Upon compliance with the provisions of paragraphs (a), (b), (c) and (e) of Section 3.03 of the Bond Ordinance, the Town by means of a Series Ordinance enacted in compliance with the Enabling Act and any other statutory provisions authorizing the issuance of revenue refunding bonds, including advance refunding bonds, may issue hereunder refunding Bonds for the purpose of refunding (including by purchase) Bonds, Junior Lien Bonds, or any other notes, bonds or other obligations issued to finance or to aid in financing of Projects, including amounts to pay principal, redemption premium, and interest to the date of the redemption (or purchase) of the refunded Bonds or any other notes, bonds or other obligations issued to finance or to aid in financing of Projects, and the Costs of Issuance of the refunding Bonds and to fund any necessary reserves or other accounts. In addition, the Town by means of a Series Ordinance may issue refunding Bonds for the purpose of refunding Bonds issued to finance or to aid in financing of Projects, without satisfying the conditions for the issuance of Bonds as contained in Section 3.03(c) of the Bond Ordinance to the extent that the aggregate Principal and Interest Requirements with respect to the refunding Bonds is less than the aggregate Principal and Interest Requirements with respect to the to be refunded. Junior Bonds The Town may at any time upon the enactment of a Junior Bond Ordinance issue Junior Bonds, including obligations issued in the form of Capital Leases as it may from time to time determine, payable from the Net Revenues; provided that (a) such Junior Bonds are issued to secure funds to defray Project Costs, or to refund Bonds, Junior Bonds, or any notes, bonds, or other obligations issued to finance or to aid in financing Projects; (b) the pledge of Net Revenues securing Net Junior Bonds shall at all times be subordinate and inferior to the pledge of Net Revenues securing the Bonds such that Junior Bonds shall be payable from Net Revenues held in the Net Revenue Fund after provision has been made for all payments required to be made hereunder with respect to the Bonds, and (c) there shall be delivered to the Trustee a certificate of the Town Administrator to the effect that Net Revenues for the Test Period is not less than 100% of the greatest sum for any Fiscal Year obtained by adding the Principal and Interest Requirements for each Fiscal Year for all Bonds Outstanding plus the principal and interest requirements for the Junior Bonds then issued and proposed to be issued. Net Revenues may be adjusted for purpose of such calculation in the manner provided in Section 3.03(c) of the Bond Ordinance. SOURCES AND USES OF FUNDS The proceeds of the sale of the Series 2016 Bonds are expected to be used substantially as follows: Sources of Funds Principal Amount $4,090, Uses of Funds Refunding of the Refunded Bonds $ 608, Deposit to Construction Fund 3,265, Expenses of Issuance * 215, Total Uses $4,090, *Includes Underwriter's discount, certain legal, accounting and other financing expenses incurred by the Town. CAPITAL IMPROVEMENTS The proceeds of the Series 2016 Bonds, together with the $500,000 of grant funds from the South Carolina Rural Infrastructure Authority, will be used by the Town to defray the costs of improvements to the System, 8

19 including the improvements identified in the 2015 Consent Order (as defined herein). The improvements to the System will include the replacement, acquisition and expansions of the following: plant lagoon liner at the wastewater treatment plant, Land Application System, water system looping, Automatic Meter Reading System, water distribution lines, valves and hydrants, deep water well and Supervisory Control & Data Acquisition System. THE PLAN OF REFUNDING On the date of delivery of the Series 2016 Bonds, the Town will use a portion of the proceeds of the Series 2016 Bonds to refund the Refunded Bonds. [Remainder of page intentionally left blank.] 9

20 FINANCIAL FACTORS Statement of Net Assets TOWN OF ESTILL, SOUTH CAROLINA STATEMENT OF NET ASSETS WATER AND SEWER ENTERPRISE FUND FISCAL YEARS ENDING JUNE ASSETS Current Assets Cash and cash equivalents $ 116,808 $ 198,147 $ 44,563 $ 28,496 $ 113,951 Restricted cash 122,586 11,378 29,575 59, ,513 Accounts receivable-net 251, , ,355 70, ,447 Grants receivable Total current assets $ 490,483 $ 394,420 $ 274,493 $ 258,953 $ 427,911 Noncurrent Assets Property, plant and equipment, net $8,632,884 $8,259,781 $7,870,267 $7,824,308 $8,120,759 Deferred charges, net 12,448 10,770 9, Total noncurrent assets $8,645,332 $8,270,551 $7,879,359 $7,824,308 $8,120,759 Deferred outflows of resources Deferred pension outflows $ 48,900 TOTAL ASSETS AND DEFERRED OUTFLOWS $9,135,815 $8,664,971 $8,153,852 $8,083,261 $8,597,570 LIABILITIES Current Liabilities Accounts payable $ 204,450 $ 136,901 $ 52,203 $ 118,589 $ 141,718 Other accrued liabilities 15,927 Accrued payroll 10,322 14,015 13,347 14,239 Accrued interest 7,233 6,409 5,545 4,640 3,690 Due to refuse fund 17,687 39,332 10,554 Customer deposits 66,510 72,512 71,135 74,869 80,020 Compensated absences payable 9,126 16,667 9,567 8,313 12,423 Capital lease 8,432 Revenue bonds payable 221,834 Non-current Liabilities Net pension liabilities 584,965 Capital lease 51,311 Revenue bonds payable 1,573,835 1,395,611 1,208,478 1,035, ,982 TOTAL LIABILITIES $1,871,476 $1,642,115 $1,377,962 $1,295,361 $1,732,856 Deferred inflows of resources Deferred pension inflows $ 49,317 NET ASSETS Invested in capital assets, net of related debt $7,059,049 $6,914,470 $6,661,789 $6,788,930 $7,237,200 Restricted net position-spendable 59,533 Unrestricted-unfunded pension obligation (585,382) Unrestricted-other 205, , ,101 (1,030) 104,046 TOTAL NET ASSETS $7,264,339 $7,022,856 $6,775,890 $6,787,900 $6,815,397 10