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R96-088RESOLUTION NO. R 96-~ A SERIES RESOLUTION PROVIDING FOR THE ISSUANCE OF NOT EXCEEDING $30,000,000 AGGREGATE PRINCIPAL AMOUNT OF UTILITY SYSTEM REVENUE BONDS, SERIES 1996; PROVIDING A METHOD FOR FIXING AND DETERMINING THE PRINCIPAL AMOUNT, INTEREST RATES, MATURITY DATES, REDEMPTION PROVISIONS AND OTHER DETAILS OF SAID BONDS; AUTHORIZING THE MAYOR TO AWARD THE SALE OF THE BONDS TO WILLIAM R. HOUGH & CO., RAYMOND JAMES & ASSOCIATES, INC. AND SMITH BARNEY INC.; MAKING CERTAIN REVISIONS TO RESOLUTION NO. R 92-96; FINDING NECESSITY FOR A NEGOTIATED SALE OF SUCH BONDS; PROVIDING A METHOD FOR APPROVING THE FORM OF AND AUTHORIZING THE USE OF A PRELIMINARY OFFICIAL STATEMENT AND AUTHORIZING THE PREPARATION, APPROVAL AND EXECUTION OF A FINAL OFFICIAL STATEMENT IN CONNECTION WITH SUCH BONDS; AUTHORIZING THE EXECUTION OF A BOND PURCHASE AGREEMENT AND A BOND REGISTRAR AGREEMENT; AUTHORIZING THE USE OF CERTAIN MONIES HELD IN CERTAIN OF THE FUNDS AND ACCOUNTS ESTABLISHED PURSUANT TO RESOLUTION NO. R 92-96 TO DEFEASE A PORTION OF THE CITY'S UTILITY SYSTEM REVENUE BONDS, SERIES 1992; PROVIDING A METHOD FOR APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION OF AN ESCROW DEPOSIT AGREEMENT; PROVIDING FOR CERTAIN CONTINUING DISCLOSURE OBLIGATIONS OF THE CITY; PROVIDING FOR THE APPLICATION OF THE PROCEEDS OF SAID BONDS AND CERTAIN OTHER MONEYS; AUTHORIZING THE PURCHASE OF A BOND INSURANCE POLICY AND MAKING CERTAIN COVENANTS IN CONNECTION THEREWITH; DESIGNATING THE BOND REGISTRAR FOR SAID BONDS; CONTAINING CERTAIN AUTHORIZATIONS AND OTHER PROVISIONS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Boynton Beach, Florida (the "City") is authorized by the Constitution and laws of the State of Florida, including the City's Charter and Chapter 166, Florida Statutes, to issue revenue bonds of the City payable from Pledged Revenues (as defined in the Bond Resolution hereinafter mentioned) for certain purposes; and WHEREAS, pursuant to Resolution No. R 92-96 adopted by the City Commission of the City (the "City Commission") on June 16, 1992, as amended (the "Bond Resolution") obligations of the City may be issued and may be secured by a lien upon and pledge of certain "Pledged Revenues" as defined in and to the extent set forth in the Bond Resolution; and WHEREAS, the City desires to issue Bonds (the "Series 1996 Bonds") under the Bond Resolution to provide funds to pay the cost of Improvements to the Utility System (as defined in the Bond Resolution), to provide for a deposit to the Reserve Account (as defined in the Bond Resolution) and to pay certain costs of issuing such Series 1996 Bonds; and WHEREAS, prior to the issuance of the Series 1996 Bonds the conditions set forth in Section 209 of the Bond Resolution shall be satisfied; and WHEREAS, the City Commission has determined that because of the unsettled nature of the municipal bond market and for other reasons the sale of such Series 1996 Bonds through negotiation with the Original Purchasers (hereinafter defined) is in the best interest of the City; and WHEREAS, the City Commission has received from William R. Hough & Co., Raymond James & Associates, Inc. and Smith Barney Inc. (collectively, the "Original Purchasers"), a form of a Bond Purchase Agreement by and between the City and the Original Purchasers whereby the Original Purchasers would agree to purchase the Series 1996 Bonds, and the City Commission has determined that the authorization of the acceptance of such proposal pursuant to the terms set forth in Section 6 hereof is in the best interests of the City and will effect the purposes set forth in the Bond Resolution; and WHEREAS, it is necessary and desirable to approve the form and use of a Preliminary Official Statement and to approve the preparation and execution of a Final Official Statement in connection with the issuance of such Series 1996 Bonds; and WHEREAS, it is necessary and desirable to specify a method for determining the dates, the interest rates, maturity dates, and redemption provisions for such Series 1996 Bonds and to appoint The Bank of New York as Bond Registrar for such Series 1996 Bonds and to confirm that The Bank of New York has replaced Barnett Banks Trust Company, N.A. as Bond Registrar for the City's Utility System Revenue Bonds, Series 1992; and WHEREAS, the City has received a commitment from Financial Guaranty Insurance Company to issue its municipal bond insurance policy insuring the payment of principal of and interest on the Series 1996 Bonds and it is necessary and desirable to accept such commitment; and -2- 8121M WHEREAS, the Bond Resolution permits the City to defease the lien of Bonds issued thereunder by setting funds aside in an escrow fund to pay the principal of, interest on, and redemption premium, if any, on such Bonds as the same shall become due, and the City desires to use certain funds currently held by the City in certain of the funds established pursuant to Resolution No. R 92-96 available for such purpose to defease the lien of a portion of the Utility System Revenue Bonds, Series 1992 (the "Defeased Bonds") as shall be further set forth in the Escrow Deposit Agreement (hereinafter defined); and WHEREAS, the City desires to approve the form and use of an escrow deposit agreement to provide for payment of the Defeased Bonds. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF BOYNTON BEACH, FLORIDA: Section 1. Authority for this Resolution. This Resolution is adopted pursuant to the provisions of the Charter of the City of Boynton Beach, Florida, the Constitution of the State of Florida, including, but not limited to, Article VIII, Section 2 thereof, and other applicable provisions of law, including Chapter 166, Florida Statutes, and the Bond Resolution. Section 2. Definitions. Terms used herein in capitalized form and not otherwise defined~ herein shall have the meanings ascribed thereto in the Bond Resolution. The following terms, when used in this Resolution or in the Bond Resolution, as amended hereby, shall have the following meanings: "Business Day" shall mean any day other than a Saturday, Sunday or other day on which the Bond Registrar is lawfully and temporarily closed or a day on which the New York Stock Exchange is lawfully and temporarily closed. "Closing Date" shall mean the date on which the Series 1996 Bonds are issued and delivered by the City and paid for by the Original Purchasers. "Interest Payment Date" shall mean May 1 and November 1 of each year, commencing November 1, 1996. "Project" means certain Improvements to the Utility System consisting generally of renewals, replacements, extensions, expansions and other improvements to the City's water system, wastewater system and stormwater system reasonably anticipated for the next five years, as further described in documents on file with the City. Section 3. Authorization of Bonds. Bonds are hereby authorized to be issued pursuant to this Resolution and Section -3- 8121M 208 of the Bond Resolution in the aggregate principal amount of not to exceed $30,000,000. The Bonds hereby authorized shall be known as "Utility System Revenue Bonds, Series 1996" (the "Series 1996 Bonds"). Prior to the issuance of the Series 1996 Bonds the conditions of Section 209 of the Bond Resolution shall be satisfied. The Series 1996 Bonds are being issued to provide funds to pay the Cost of the Project and the costs of issuing the Series 1996 Bonds, and to provide for a deposit to the Series 1996 Reserve Subaccount. Section 4. Terms of the Series 1996 Bonds. (a) Form of Bonds. The Series 1996 Bonds shall be substantially in the form of the Bonds set forth in the Bond Resolution, with such changes as may be necessary or appropriate to conform to the provisions of this Resolution and the terms of the Series 1996 Bonds set forth herein as may be approved by the officers of the City executing the Series 1996 Bonds, such execution to be conclusive evidence of such approval. (b) Amounts, Maturities, Redemption Provisions and Interes~ Rates. The Series 1996 Bonds will consist of such aggregate principal amount of Current Interest Serial Bonds and such aggregate principal amount of Current Interest Term Bonds as shall be determined by the Mayor as hereinafter provided. The Series 1996 Bonds shall be issued in the denomination of $5,000 and integral multiples thereof, shall be issued in registered form, shall be numbered from R-1 upwards, shall be dated such date and shall bear interest from such date, payable semi-annually on the first day of May and November of each year, commencing November 1, 1996. The Series 1996 Bonds shall be issued in the aggregate principal amount, not in excess of $25,000,000, shall bear interest at the rates per annum computed on the basis of a 360-day year consisting of twelve 30-day months, and shall mature on November 1 of the years and shall have such redemption provisions, all as set forth in a certificate executed by the Mayor at or before the issuance of the Series 1996 Bonds, provided however that the net interest cost of the Series 1996 Bonds shall not exceed 7.00 percent per annum and the final maturity of the Series 1996 Bonds shall not be after November 1, 2020. Principal of the Series 1996 Bonds shall be payable only upon presentation and surrender of such Bonds at the principal office of the Bond Registrar. Interest on the Series 1996 Bonds shall be paid by check or draft, or at the option of any registered owner of not less than $1,000,000 in principal amount of the Series 1996 Bonds, exercised in writing delivered to the Bond Registrar prior to the Regular Record Date or Special Record Date, by wire transfer to an account in the United States designated by such registered owner, mailed or wired by the Bond Registrar to the -4- 8121M registered owners of the Series 1996 Bonds as shown on the registration books kept by the Bond Registrar on the Regular Record Date or the Special Record Date. (c) Reserve Account Deposit Requirement. The Reserve Account Requirement for the Series 1996 Bonds shall be an amount equal to the lesser of. (i) 10% of the aggregate stated principal amount of the Series 1996 Bonds Outstanding, (ii) the maximum amount of principal and interest scheduled to become due on the Outstanding Series 1996 Bonds in the current or any succeeding Bond Year, or (iii) 125% of the average annual debt service on the Outstanding Series 1996 Bonds (calculated on a Bond Year basis at the time of issuance only). If the Series 1996 Bonds have more than a de- minimis amount of original issue discount or premium (as defined in Treas. Reg. §1.148-1(b)), then the issue price (as defined in said regulation) of the Series 1996 Bonds (net of pre-issuance accrued interest) shall be used to measure the aforesaid 10% limitation in lieu of the stated principal amount of the Series 1996 Bonds. The Series 1996 Reserve Subaccount, which is hereby ordered created, shall be funded in an amount equal to the Reserve Account Requirement for the Series 1996 Bonds at the time of initial issuance and delivery of the Series 1996 Bonds, and in the event any deficiency is created in the Series 1996 Reserve Subaccount, the Reserve Account Deposit Requirement for such Series shall be, in each month, an amount equal to at least one twenty-fourth (1/24) of the amount of such deficiency. Section 5. Amendments to Bond Resolution. The amendments to the Bond Resolution set forth in this Section 5 shall be effective upon, and only upon the issuance of the Series 1996 Bonds. In addition, these amendments shall be effective, and the Series 1996 Bonds shall be issued, only if the requirements of Section 1002 of the Bond Resolution, concerning the consent of the Holders of Bonds to amendments to the Bond Resolution, shall have been satisfied and the provisions of Section 716(e) of the Bond Resolution, concerning consent of the 1992 Bond Insurer and notice to each rating agency maintaining a rating on the Bonds, shall have been satisfied, or waived by the 1992 Bond Insurer, prior to the issuance of the Series 1996 Bonds. (a) Section 101 of the Bond Resolution is amended by the addition thereto of two new definitions as follows: "1996 Bond Insurance Policy" shall mean the municipal bond new issue insurance policy issued by the 1996 Bond Insurer that guarantees payment of principal of and interest on the Series 1996 Bonds. "1996 Bond Insurer" shall mean Financial Guaranty Insurance Company, a New York stock insurance company, or any successor thereto. -5- 8121M (b) The definition of "Current Expenses" contained in Section 101 of the Bond Resolution is amended in its entirety to provide as follows: .... Current Expenses" shall mean the City's reasonable and necessary current expenses of maintenance, repair and operation of the Utility System, (a) including all ordinary and usual expenses of maintenance and repair, which may include expenses not annually recurring, all reasonable City administrative expenses allocated to the Utility System pursuant to the Annual Budget, any reasonable payments to pension or retirement funds properly chargeable to the Utility System, insurance premiums, engineering expenses relating to maintenance, repair and operation, expenses, including engineering expenses incurred in connection with the research and development of improvements or planned or possible improvements to the Utility System, fees and expenses of the Bond Registrar, legal and accounting expenses, any fees, fines, or penalties lawfully imposed on the Utility System, any taxes which may be lawfully imposed on the Utility System or its income or operations and reserves for such taxes or payments in lieu of such taxes as the Commission shall determine to pay, premiums for bond insurance, interest rate insurance or insurance assuring availability of the amounts required to be on deposit in the Reserve Account, fees for Credit Facilities or Liquidity Facilities, initial fees paid by the City to a party in consideration of the execution of an Interest Rate Swap (as opposed to payments made by the City based upon the notional amount pursuant to the Interest Rate Swap) and any other expenses required to be paid by the City under the provisions of this Resolution or by law, including any amounts required from time to time to fund the Arbitrage Rebate Fund, (b) but Current Expenses shall not include any reserves for extraordinary maintenance or repair, or any allowance for depreciation or amortization, or any deposits or transfers to the credit of the Sinking Fund Account, the Reserve Account, the Rate Stabilization Account, the Subordinated Indebtedness Account, the Renewal, Replacement and Improvement Account, the General Reserve Account or the Impact Fee Account, and shall not include, for purposes of Sections 209 and 502 of this Resolution, any City administrative expenses allocated to the Utility System." (c) The definition of "Improvements" contained in Section 101 of the Bond Resolution is amended in its entirety ~to provide as follows: "Improvements" shall mean (i) such improvements, renewals and replacements of the Utility System or any -6- 8121M part thereof and such extensions and additions thereto as may be necessary or desirable~ in the judgment of the City, to keep the same in proper condition for the safe, efficient and economic operation thereof and to integrate into the Utility System any unit or part thereof, and shall include such land, structures and facilities as may be authorized to be acquired or constructed by the City under the provisions of State law and such improvements, renewals and replacements of such land, structures and facilities of the Utility System and such extensions and additions thereto as may be necessary or desirable for continuous and efficient service to the public, which Improvements may include, without limitation, land, structures and facilities used or useful for the collection, transmission, treatment, disposal and reclamation of sewage and stormwater runoff and for the supply, storage, treatment, transmission and distribution of water all to the extent the same constitute part of the Utility System and (ii) such other expenditures as may be necessary or desirable in the judgment of the City but not related to the Utility System, provided, that as used in Sections 404 and 702 hereof, the term "Improvements" shall not include the items described in this clause (ii). (d) Section 513(f) of the Bond Resolution is amended in its entirety to provide as follows: "(f) for any lawful use of the City as directed by the City Commission." (e) A new Section 717 is added to the Bond Resolution to provide as follows: "Section 717. Provisions concerning 1996 Bond Insurer. For so long as the 1996 Bond Insurance Policy shall be outstanding: (a) in determining whether payment of the principal of and interest on the Bonds shall have been timely made, no effect shall' be given to payments made under the 1996 Bond Insurance Policy, (b) the City and the Bond Registrar shall notify the 1996 Bond Insurer immediately of any payment default on the Bonds, and the City shall notify the 1996 Bond Insurer of any other default hereunder known to the City within thirty (30) days after the City acquires knowledge of such default, (c) for all purposes of Article VIII hereof governing events of default and remedies, except the giving of notice of default to Bondholders, the -7- 8121M 1996 Bond Insurer shall be deemed to be the sole holder of the Series 1996 Bonds for so long as it has not failed to comply with its payment obligations under the 1996 Bond Insurance Policy, and the 1996 Bond Insurer shall be entitled to notify the City of the occurrence of an event of default, which notice the City shall be required to accept, (d) in determining whether the rights of Bondholders are adversely affected by actions taken pursuant to the terms and provisions hereof, no effect shall be given to payments made under the 1996 Bond Insurance Policy, (e) no amendment or supplement to the Resolution shall be effective without the prior written consent of the 1996 Bond Insurer, and each rating agency maintaining a rating on the Bonds shall be provided a copy of each proposed supplemental resolution at least 15 days in advance of its adoption, and the 1996 Bond Insurer shall be provided with a full transcript of all proceedings relating to the execution of any supplemental resolution. (f) (i) If, at the close of business on the Business Day preceding any Interest Payment Date for the Series 1996 Bonds, there is not on deposit with the Bond Registrar sufficient monies available to pay all principal of and interest on the Series 1996 Bonds due on such date, the City and the Bond Registrar shall immediately notify the 1996 Bond Insurer and State Street Bank and Trust Company, N.A., New York, New York or its successor as its Fiscal Agent (the "Fiscal Agent") of the amount of such deficiency. If, by said Interest Payment Date, the City has not provided the amount of such deficiency, the Bond Registrar shall simultaneously make available to the 1996 Bond Insurer and to the Fiscal Agent the registration books for the Series 1996 Bonds maintained by the Bond Registrar. In addition: (A) The Bond Registrar shall provide the 1996 Bond Insurer with a list of the Bondholders entitled to receive principal or interest payments from -8- 8121M the 1996 Bond Insurer under the terms of the 19'96 Bond Insurance Policy and shall make arrangements for the 1996 Bond Insurer and its Fiscal Agent (1) to mail checks or drafts to Bondholders entitled to receive full or partial interest payments from the 1996 Bond Insurer and (2) to pay principal of the Bonds surrendered to the Fiscal Agent by the Bondholders entitled to receive full or partial principal payments from the 1996 Bond Insurer; and (B) The Bond Registrar shall, at the time it makes the registration books available to the 1996 Bond Insurer pursuant to (A) above, notify Bondholders entitled to receive the payment of principal of or interest on the Bonds from the 1996 Bond Insurer (1) as to the fact of such entitlement, (2) that the 1996 Bond Insurer will remit to them all or part of the interest payments coming due subject to the terms of the 1996 Bond Insurance Policy, (3) that, except as provided in paragraph (ii) below, in the event that any Bondholder is entitled to receive full payment of principal from the 1996 Bond Insurer, such Bondholder must tender his Series 1996 Bond with the instrument of transfer in the form provided on the Series 1996 Bond executed in the name of the 1996 Bond Insurer, and (4) that, except as provided in paragraph (ii) below, in the event that such Bondholder is entitled to receive partial payment of principal from the 1996 Bond Insurer, such Bondholder must tender his Series 1996 Bond for payment first to the Bond Registrar, which shall note on such Series 1996 Bond the portion of principal paid by the Bond Registrar, and then, with an acceptable form of assignment executed in the name of the 1996 Bond Insurer, to the Fiscal Agent, -9- 8121M which will then pay the unpaid portion of principal to the Bondholder subject to the terms of the 1996 Bond Insurance Policy. (ii) In the event that the Bond Registrar has notice that any payment of principal of or interest on a Series 1996 Bond has been recovered from a Bondholder pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Bond Registrar shall, at the time it provides notice to the 1996 Bond Insurer, notify all Bondholders that in the event that any Bondholder's payment is so recovered, such Bondholder will be entitled to payment from the 1996 Bond Insurer to the extent of such recovery, and the Bond Registrar shall furnish to the 1996 Bond Insurer its records evidencing the payments of principal of and interest on the Series 1996 Bonds which have been made by the Bond Registrar and subsequently recovered from Bondholders, and the dates on which such payments were made. (iii) The 1996 Bond Insurer shall, to the extent it makes payment of principal of or interest on the Series 1996 Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the 1996 Bond Insurance Policy and, to evidence such subrogation, (1) in the case of subrogation as to claims for past due interest, the Bond Registrar shall note the 1996 Bond Insurer's rights as subrogee on the registration books maintained by the Bond Registrar upon receipt from the 1996 Bond Insurer of proof of the payment of interest thereon to the Bondholders of such Bonds and (2) in the case of subrogation as to claims for past due principal, the Bond Registrar shall note the 1996 Bond Insurer's rights as subrogee on the registration books for the Series 1996 Bonds maintained by the Bond Registrar upon receipt of proof of the payment of principal thereof to the -10- 8121M Bondholders of such Series 1996 Bonds. Notwithstanding anything in this Resolution or the Series 1996 Bonds to the contrary, the Bond Registrar shall make payment of such past due interest and past due principal directly to the 1996 Bond Insurer to the extent that the 1996 Bond Insurer is a subrogee with respect thereto." (g) The notice addresses for the 1996 Bond Insurer and the Fiscal Agent shall be as follows: 115 Broadway New York, New York, 10006 Attention: General Counsel State Street Bank and Trust Company, N.A. 61 Broadway New York, New YOrk 10006 Attention: Corporate Trust Department (h) The 1996 Bond Insurer shall be provided with the following information: (i) Within 120 days after the end of each of the City's Fiscal Years, the annual audited financial statements, a statement of the amount on deposit in the Reserve Account as of the last valuation, a copy of the budget for the current Fiscal Year, and, if not presented in the audited financial statements, a statement of the Net Revenues pledged to payment of Bonds in such previous Fiscal Year; (ii) a copy of the official statement or other disclosure, if any, prepared in connection with' the issuance of additional debt, whether or not it is on a parity with the insured issue, within 30 days after the sale thereof; (iii) a notice of any draw upon or deficiency due to market fluctuation in the amount, if any, on deposit in the Reserve Account; (iv) a notice of the redemption, other than mandatory sinking fund redemption, of any of the Bonds, including the principal amount, maturities and CUSIP numbers thereof; -11- 8121M (i) (v) Simultaneously with the delivery of the annual audited financial statements: (A) The number of system users as of the end of the Fiscal Year; (B) Notification of the withdrawal of any system user comprising 4% or more of system sales measured in terms of revenue dollars since the last reporting date; and (C) Any significant plant retirements or expansions planned or undertaken since the last report date; and (vi) Such additional information as the 1996 Bond Insurer may reasonably request from time to time. The following requirements shall be fulfilled to the satisfaction of the 1996 Bond Insurer (including incorporation of relevant conditions herein) in the event the Reserve Account Requirement is fulfilled by a deposit of credit instrument (other than a credit instrument issued by the 1996 Bond Insurer) in lieu of cash: A surety bond or insurance policy issued to the Bond Registrar (the "Fiduciary"), as agent of the Bondholders, by a company licensed to issue an insurance policy guaranteeing the timely payment of debt service on the Bonds (a "municipal bond insurer") may be deposited in the Reserve Account to meet the Reserve Account Requirement if the claims paying ability of the issuer thereof shall be rated "AAA" or "Aaa" by S&P or Moody's, respectively. -A surety ~bond or insurance policy issued to the Fiduciary, as agent of the Bondholders, by an entity other than a municipal bond insurer may be deposited in the Reserve Account to meet the Reserve Account Requirement if the form and substance of such instrument and the issuer thereof shall be approved by the 1996 Bond Insurer. An unconditional irrevocable letter of credit issued to the Fiduciary, as agent of the Bondholders, by a bank may be deposited in the Reserve Account to meet the Reserve Account Requirement if the issuer thereof is rated at least "AA" by S&P. The letter of credit shall be payable in one or more draws upon -12- 8121M presentation by the beneficiary of a sight draft accompanied by its certificate that it then holds insufficient funds to make a required payment of principal or interest on bonds. The draws shall be payable within two days of presentation of the sight draft. The letter of credit shall be for a term of not less than three years. The issuer of the letter of credit shall be required to notify the Issuer and the Fiduciary, not later than 30 months prior to the stated expiration date of the letter of credit, as to whether such expiration date shall be extended, and if so, shall indicate the new expiration date. If such notice indicates that the expiration date shall not be extended, the City shall deposit in the Reserve Account an amount sufficient to cause the cash or Investment Obligations on deposit in the Reserve Account together with any other qualifying credit instruments, to equal the Reserve Account Requirement on all outstanding Bonds, such deposit to be paid in equal installments on at least a semi-annual basis over the remaining term of the letter of credit, unless the Reserve Account credit instrument is replaced by a Reserve Account credit instrument meeting the requirements in either of clauses 1 or 2 above or this clause 3. The letter of credit shall permit a draw in full not less than two weeks prior to the expiration or termination of such letter of credit if the letter of credit has not been replaced or renewed. The ReSolution shall direct the Fiduciary to draw upon the letter of credit prior to its expiration or termination unless an acceptable replacement is in place or the Reserve Account is fully funded in its required amount. The use of any Reserve Account credit instrument pursuant to this clause (i) shall be subject to receipt of an opinion of counsel acceptable to the 1996 Bond Insurer and in form and substance satisfactory to the 1996 Bond Insurer as to the due authorization, execution, delivery and enforceability of such instrument in accordance with its terms, subject to applicable laws affecting creditors' rights generally, and, in the event the issuer of such credit instrument is not a domestic entity, an opinion of foreign counsel in form and substance satisfactory to the 1996 -13- 8121M Bond Insurer. In addition, the use of an irrevocable letter of credit shall be subject to receipt of an opinion of counsel acceptable to the 1996 Bond Insurer and in form and substance satisfactory to the 1996 Bond Insurer to the effect that requirements under such letter of credit would not constitute avoidable preferences under Section 547 of the U.S. Bankruptcy Code or similar state laws with avoidable preference provisions in the event of the filing of a petition for relief under the U.S. Bankruptcy Code or similar state laws by or against the issuer of the bonds (or any other account party under the letter or credit). The obligation to reimburse the issuer of a Reserve Account credit instrument for any fees, expenses, claims or draws upon such Reserve Account credit instrument shall be subordinate to the payment of debt service on the bonds. The right of the issuer of a Reserve Account credit instrument to payment or reimbursement of its fees and expenses shall be subordinated to cash replenishment of the Reserve Account, and, subject to the second succeeding sentence, its right to reimbursement for claims or draws shall be on a parity with the cash replenishment of the Reserve Account. The Reserve Account credit instrument shall provide for a revolving feature under which the amount available thereunder will be reinstated to the extent of any reimbursement of draws or claims paid. If the revolving feature is suspended or terminated for any reason, the right of the issuer of the Reserve Account credit instrument to reimbursement will be further subordinated to cash replenishment of the Reserve Account to an amount equal to the difference between the full original amount available under the Reserve Account credit instrument and the amount then available for further draws or claims. If (a) the issuer of a Reserve Account credit instrument becomes insolvent or (b) the issuer of a Reserve Account credit instrument defaults in its payment obligations thereunder or (c) the claims-paying ability of the issuer of the insurance policy or surety bond falls below a S&P "AAA" or a Moody's "Aaa" or (d) the rating of the issuer of the letter of credit falls -14- 8121M below a S&P "AA", the obligation to reimburse the issuer of the Reserve AccounE credit instrument shall be subordinate to the cash replenishment of the Reserve Account. If (a) the revolving reinstatement feature described in the preceding paragraph is suspended or terminated or (b) the rating of the claims paying ability of the issuer of the surety bond or insurance policy falls below a S&P "AAA" or a Moody's "Aaa" or (c) the rating of the issuer of the letter of credit falls below a S&P "AA", the City shall either (i) deposit into the Reserve Account an amount sufficient to cause the cash or permitted investments on deposit in the Reserve Account to equal the Reserv.e Account Requirement on all outstanding Bonds, such amount to be paid over the ensuing five years~ in equal installments deposited at least semi-annually or (ii) replace such instrument with a surety bond, insurance policy or letter of credit meeting the requirements in any of 1-3 above within six months of such occurrence. In the event (a) the rating of the claims-paying ability of the issuer of the surety bond or insurance policy falls below "A" or (b) the rating of the issuer of the letter of credit falls below "A" or (c) the issuer of the Reserve Account credit instrument defaults in its payment obligations or (d) the issuer of the Reserve Account credit instrument becomes insolvent, the Issuer shall either (i) deposit into the Reserve Account an amount sufficient to cause the cash or permitted investments on deposit in the Reserve Account to equal to Reserve Account Requirement on all outstanding Bonds, such amount to be paid over the ensuing year in equal installments on at least a monthly basis or (ii) replace such instrument with a surety bond, insurance policy or letter or credit meeting the requirements in any of 1-3 above within six months of such occurrence. Where applicable, the amount available for draws or claims under the Reserve Account credit instrument may be reduced by the amount of cash of permitted investments deposited in the Reserve Account pursuant to clause (i) of the preceding subparagraph 6. -15- 8121M If the City chooses the above described alternatives to a cash-funded Reserve Account, any amounts owed by the City to the issuer of such credit instrument as a result of a draw thereon or a claim thereunder, as appropriate, shall be included in any calculation of debt service requirements required to be made pursuant to this Resolution for any purpose, e.g., rate covenant or additional bonds test. o The Resolution shall require the Fiduciary to ascertain the necessity for a claim or draw upon the Reserve Account credit instrument and to provide notice to the issuer of the Reserve Account credit instrument in accordance with its terms not later than three days (or such longer period as may be necessary depending on the permitted time period for honoring a draw under the Reserve Account credit instrument) prior to each interest payment date. 10. Cash on deposit in the Reserve Account shall be used (or investments purchased with such cash shall be liquidated and the proceeds applied as required) prior to any drawing on any Reserve Account credit instrument. If an to the extent that more than one Reserve Account, drawings thereunder and repayments of costs associated therewith shall be made on a pro rata basis, calculated by reference to the maximum amounts available thereunder. Section 6. Approval of Sale of the Series 1996 Bonds. The City hereby determines that a negotiated sale of the Series 1996 Bonds is in the best interest of the City and the citizens and inhabitants of the City by reason of the volatility of the market for 'tax exempt bonds. Attached hereto as Exhibit "A" is a form of Bond Purchase Agreement (the "Bond Purchase Agreement"). The City approves the Bond Purchase Agreement together with such changes thereto as are necessary to reflect the terms of the Series 1996 Bonds and to reflect the purchase price thereof, provided, that the underwriters' discount shall not exceed $9.00 per thousand dollars of principal amount of the Series 1996 Bonds, and with such other completions, additions and/or changes as shall be approved by the Mayor, such approval to be conclusively established by such execution, and the Mayor is hereby authorized and directed for and in the name of the City to execute, and the City Clerk is authorized to attest to and affix the seal of the City to and deliver the Bond Purchase Agreement to the Original Purchasers. Prior to the execution of the Bond Purchase Agreement, the Original Purchasers shall file with the City the -16- 8121M disclosure statement required by Section 218.385, Florida Statutes, and the competitive bidding for the Series 1996 Bonds is hereby waived pursuant to the authority of Section 218.385(1), Florida Statutes. Section 7 Execution and Delivery of the Series 1996 Bonds. The Mayor and the City Clerk are hereby authorized and directed on behalf of the City to execute the Series 1996 Bonds as provided in the Bond Resolution and such officials are hereby authorized and directed upon the execution of the Series 1996 Bonds in the form and manner set forth herein and in the Bond Resolution to deliver the Series 1996 Bonds in the amount authorized to be issued hereunder to the Bond Registrar for authentication (upon the satisfaction of the conditions of Section 208 of the Bond Resolution) and delivery to or upon the order of the Original Purchasers upon payment of the purchase price set forth herein. Section 8. Application of Series 1996 Bond Proceeds. Proceeds from the sale of the Series 1996 Bonds shall be applied as provided in a certificate executed by the Mayor at or prior to the issuance of the Series 1996 Bonds. Section 9. Bond Reqistrar. The City hereby appoints The Bank of New York (the "Bank") as Bond Registrar with respect to the Series 1996 Bonds, and confirms that The Bank of New York has replaced Barnett Banks Trust Company, N.A. as Bond Registrar for the City's Utility System Revenue Bonds, Series 1992. The form of Bond Registrar Agreement attached hereto as Exhibit "B" is hereby approved and the Mayor is hereby authorized and directed for and in the name of the City to execute, and the City Clerk is authorized to attest and apply the seal of the City to the Bond Registrar Agreement, with such changes, alterations and corrections thereto as shall be approved by the officials executing the same, such execution to constitute conclusive evidence of such approval. Section 10. Official Statement. The City hereby approves the form and content of, and authorizes the use by the Original Purchasers in marketing the Series 1996 Bonds, of a Preliminary Official Statement relating to the Series 1996 Bonds in the form of the document attached hereto as Exhibit "C," together with such other changes, alterations and corrections therein as may be approved by the City Manager, who is hereby authorized to approve the final form of the Preliminary Official Statement, such approval to be conclusively established by the execution by the City Manager of a certificate "deeming final" the Preliminary Official Statement for purposes of Securities and Exchange Commission Rule 15c2-12, which execution is hereby authorized. The preparation of a final Official Statement for the Series 1996 Bonds, which Shall be in substantially the form of the Preliminary Official Statement, changed to reflect the terms of the Series 1996 Bonds and with such other changes, alterations and -17- 8121M corrections therein as may be approved by the Mayor and City Manager, such approval to be conclusively established by such execution, is hereby authorized, and upon preparation thereof the Mayor and the City Manager are authorized and directed for and in the name of the City to execute and deliver the Official Statement. Section 11. Authorization for Bond Insurance. The Mayor, the Finance Director and the City Manager, or any of them, are authorized to arrange for municipal bond insurance on the Series 1996 Bonds to be provided by the 1996 Bond Insurer, to pay or cause to be paid the premium with respect thereto, and to take all actions and execute such documents as may be required in connection therewith. Section 12. Book Entry System. The Series 1996 Bonds shall be initially registered in the name of Cede ~ Co. ("Cede"), as nominee of DTC. Notwithstanding any other provision hereof, for so long as Cede is the registered owner of all of the Series 1996 Bonds, payment of interest for the Series 1996 Bonds shall be made by wire transfer of New York Clearing House or equivalent next day funds to the account of Cede on the business day next preceding any Interest Payment Date for the Series 1996 Bonds at the address indicated for Cede in the registry books of the Bond Registrar. Beneficial owners of the Series 1996 Bonds will not receive physical delivery of Series 1996 Bond certificates nor will they have a right to receive a certificate during the period that the Series 1996 Bonds are immobilized in the custody of DTC. The City and the Bond Registrar are authorized and directed to execute a letter of representations in the form attached hereto as Exhibit "D", completed with the details of the Series 1996 Bonds, and to comply with the provisions thereof. Section 13. Compliance with Tax Requirements. The City hereby covenants and agrees, for the benefit of the Bondholders from time to time of t'he Series 1996 Bonds, to comply with the requirements applicable to it contained in Section 103 and Part IV of Subchapter B of Chapter 1 of the Internal Revenue Code of 1986, as amended (the "Code") to the extent necessary to preserve the exclusion of interest on the Series 1996 Bonds from gross income for federal income tax purposes. Specifically, without intending to limit in any way the generality of the foregoing, the City covenants and agrees: (1) to pay to the United States of America from, to the extent legally available, the funds and sources of revenues pledged to the payment of the Series 1996 Bonds, and from any other legally available funds, at the times required pursuant to Section 148(f) of the Code, the excess of the amount earned on all non- purpose investments (as defined in Section 148(f)(6) of the Code) (other than investments attributed to an excess described in this sentence) over the amount -18- 8121M which would have been earned if such non-purpose investments were invested at a rate equal to the yield on the Series 1996 Bonds, plus any income attributable to such excess (the "Rebate Amount"); (2) to maintain and retain all records pertaining to and to be responsible for making or causing to be made all determinations and calculations of the Rebate Amount and required- payments of the Rebate Amount as shall be necessary to comply with the Code; (3) to refrain from using proceeds from the Series 1996 Bonds in a manner that would cause the Bonds or any of them, to be classified as private activity bonds under Section 141(a) of the Code; and (4) to take or refrain from taking any action that would cause the Series 1996 Bonds, or any of them, to become arbitrage bonds under Section 103(b) and Section 148 of the Code. The City understands that the foregoing covenants impose continuing obligations on the City to comply with the requirements of Section 103 and .Part IV of Subchapter B of Chapter 1 of the Code so long as such requirements are applicable. Unless otherwise specified in the Certificate as to Arbitrage and Other Tax Matters delivered in connection with the issuance of the Series 1996 Bonds, the City shall designate a certified public accountant, Bond Counsel, or other professional consultant having the skill and expertise necessary (the "Rebate Analyst") to make any and all calculations required pursuant to this Section regarding the Rebate Amount. Such calculation shall be made in the manner and at such times as specified in the Code. The City shall engage and shall be responsible for paying the fees and expenses of the Rebate Analyst. Section 14 The Defeased .Bonds and the Escrow Deposit Agreement. The use of funds available for such purpose in the funds and accounts established pursuant to the Bond Resolution to defease the lien of the Defeased Bonds in accordance with the terms of the Bond Resolution is hereby authorized, provided that the precise identity of the Defeased Bonds, and the precise sources of funds for such purpose under the Bond Resolution shall be as provided in the Escrow Deposit Agreement hereinafter authorized. The redemption of the Defeased Bonds as shall be described in the executed Escrow Deposit Agreement is authorized and directed. The Escrow Deposit Agreement in the form attached hereto as Exhibit "E" is hereby approved, subject to such changes, insertions, omissions, and filling in of blanks therein as may be approved by the Mayor, such approval to be conclusively evidenced -19- 8121M by the execution of the Escrow Deposit Agreement by the Mayor. The Mayor and the City Clerk are hereby authorized to execute and deliver the Escrow Deposit Agreement on behalf of the City. The Escrow Agent under the Escrow Deposit Agreement shall be The Bank of New York. The Mayor, Finance Director, City Manager and Escrow Agent, or any of them, are hereby authorized to subscribe for the purchase of United State Treasury Obligations -- State and Local Government Series to be purchased pursuant to the Escrow Deposit Agreement. Section 15. Continuinq Disclosure. (a) Disclosure of Annual Information. The City agrees, in accordance with the provisions of Rule 15c2-12 in effect from time to time and applicable to the Series 1996 Bonds (the "Rule"), promulgated by the Securities and Exchange Commission (the "Commission") pursuant to the Securities Exchange Act of 1934, to provide, either directly or indirectly through a designated agent, to each nationally recognized municipal securities information repository ("NRMSIR") as designated and approved by the Commission and to the appropriate State of Florida information depository ("SID"), if any, operated or designated by the State, respectively, in accordance with the Rule, (i) within 180 days following the end of each Fiscal Year of the City, commencing with the Fiscal Year ending September 30, 1996, annual financial information and operating data concerning the Utility System, of the type included in the Official Statement, including operating revenues, debt service coverage by Net Revenues, debt service coverage by Net Revenues and Impact Fees, rates and charges of the Utility System, summary of any capital improvements plan, and information regarding permitted capacities and actual usage of capacities of the Utility System and financial statements (audited, or, if not available during such time period, unaudited) of the City and, (ii) if not submitted as part of such financial information and operating data, then, when available, audited financial statements for the City prepared in accordance with generally accepted accounting principles applicable to governmental entities from time to time. A copy of such annual financial information and operating data will be provided by the City to the Original Purchasers and to the Bond Registrar for the Series 1996 Bonds as designated by the City from time to time. (The information required to be disclosed in this paragraph shall be hereinafter referred to as the "Annual Report.") (b) Disclosure of Material Events. The City agrees to provide either directly or indirectly through a designated agent, in a timely manner, to (i) each .NRMSIR or to the Municipal Securities Rulemaking Board ("MSRB") and (ii) the SID, if any, notice of the occurrence of any of the following events with respect to the Series 1996 Bonds, if such event is material: (i) principal and interest payment delinquencies; -20- 8121M (ii) non-payment related defaults~; _(iii) unscheduled draws on debt service reserves, if any, reflecting financial difficulties; (iv) unscheduled draws on credit enhancements, reflecting financial difficulties; if any, (v) substitution of credit or liquidity providers, any, or their failure to perform; if (vi) adverse tax opinions or events tax-exempt status of the Series 1996 Bonds; affecting the (vii) 1996 Bonds; modifications to rights of the holders of the Series (viii) bond calls of the Series 1996 Bonds (other than scheduled mandatory redemption) or any acceleration of the maturity thereof; (ix) Bonds; defeasances (in whole or in part) of Series 1996 (x) release, substitution, or sale of property securing repayment of the Series 1996 Bonds; (xi) rating changes; and (xii) any changes in the City's Fiscal Year. (c) Notice of Failure. The City agrees to provide or cause to be provided, in a timely manner, to (i) each NRMSIR or the MSRB and (ii) the SID, if any, notice of a failure by the City to provide the Annual Report described in subsection (a) above on or prior to the date set forth therein. (d) Termination The City reserves the right to terminate its obligation to provide the Annual Report and notices of material events, as set forth above, i~f and when the City no longer remains an obligated person with respect to the Series 1996 Bonds (within the meaning of the Rule). If the City believes such condition exists, the City will provide notice of such termination to the NRMSIR's, the MSRB and the SID. (e) Undertakinq for Benefit of Holders and Beneficial Owners. The City agrees thati its undertaking pursuant to the Rule described herein is intended to be for the benefit of the holders and beneficial owners of the Series 1996 Bonds and shall be enforceable by any holder or beneficial owner; provided that the right to enforce the provisions of this undertaking shall be limited to a right to obtain specific enforcement of the City's -21- 8121M obligations hereunder and any failure by the City to comply with the provisions of this undertaking shall not be an event of default with respect to the Series 1996 Bonds under the Resolution. (f) Voluntary Disclosure Shall Not Bind City. Any voluntary inclusion by the City of information in 'its Annual Report of supplemental information that is not required by the Rule shall not expand the obligations of the City under the Rule and the City shall have no obligation to update such supplemental information or include it in any subsequent report. (g) Third Parties. The covenants described herein are solely for the benefit of the holders and beneficial owners of the Series 1996 Bonds and shall not create any rights in any other parties. (h) Amendment; Waiver. Notwithstanding any other provision of this Resolution, the City may amend the provisions of this Section and any such provision may be waived, provided that the following conditions are satisfied: (1) If the amendment or waiver relates to the provisions of paragraphs (a), (b), or (c) above, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the City or the type of business conducted by the City; (2) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Series 1996 Bonds, after taking into account any amendments or interpretations of the. Rule, as well as any change in circumstances; and (3) The amendment or waiver does not materially impair the interests of holders and beneficial owners as determined either by parties unaffiliated with the City or an obligated person, or by an approving vote of the holders of at least a majority in aggregate principal amount of the then outstanding Series 1996 Bonds pursuant to the terms of the Bond Resolution. In the event of any such amendment or waiver of a provision described above, the City shall describe such amendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of annual financial information or operating data being presented by the City. In addition, if the amendment or waiver relates to the accounting principles to be followed in preparing financial statements, (i) notice of such -22- 8121M change shall be given in the same manner as set forth in subsection (b) and (ii) the Annual Report for the year in which the change is made must present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 16. Authorizations. The Mayor, the City Clerk, the Acting Finance Director, the City Manager and the Assistant City Manager are hereby jointly and severally authorized to do all acts and things required of them by this Resolution, the Bond Resolution or the Bond Purchase Agreement, or desirable or consistent with the requirements hereof or thereof, for the full, punctual and complete performance of all terms, covenants and agreements contained in the Series 1996 Bonds, the Bond Resolution, this Resolution, and the Bond Purchase Agreement, and to make any elections necessary or desirable in connection with the arbitrage provisions of Section 148 of the Code. Section 17. Holidays. In any case where the date of maturity of interest on or principal of the Series 1996 Bonds or the date fixed for redemption of any Series 1996 Bonds is not a Business Day, then payment of principal, premium, if any, or interest need not be made on such date but may be made on the next succeeding Business Day, with the same force and effect as if made on the date of maturity or the date fixed for redemption. Section 18. Resolution to Constitute a Contract. In consideration of the purchase and acceptance of the Series 1996 Bonds authorized to be issued hereunder by those who shall be the holders thereof from time to time, this Resolution shall constitute a contract between the City and such holders, and all covenants and agreements herein and in the Bond Resolution set forth to be performed by the City shall be for the equal benefit and security of all of the holders. Section 19. No Implied Beneficiary. With the exception of any rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Resolution or the Series 1996 Bonds is intended or shall be construed to give any person other than the City, the Original Purchasers, the 1996 Bond Insurer and the Owners, any legal or equitable right, remedy or claim under or with respect to this Resolution or the Bond Resolution or any covenants, conditions, and provisions herein contained; this Resolution and the Bond Resolution and all of the covenants, conditions and provisions hereof and thereof being intended to be and being for the sole and exclusive benefit of the City, the Original Purchasers, the 1996 Bond Insurer and the Owners. Section 20. Severability. If any provision of this Resolution shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable in any context, the same -23- 8121M shall not effect any other provision herein or render any other provision (or such provision in any other context) invalid, inoperative or unenforceable to any extent whatsoever. Section 21. Repealer. Ail Resolutions or parts thereof of the City in conflict with the provisions herein contained or, to the extent of any such conflict, hereby superseded and repealed. Section 22. Effective Date. This effect immediately upon its adoption. Resolution shall take PASSED AND ADOPTED THIS 18th DAY OF JUNE, 1996. (SEAL) ATTEST: Ci~ Clerk CITY OF BOYNTON BEACH, FLORIDA By:Ma~~~/ Commi~ioner APPROVED AS TO FORM ~ /~ / AND ~C~ SUFfiCIEnCY: // ~ ~// // ~ -24- 8121M 8121M/25 EXHIBIT "A" Bond Purchase Agreement $ CITY OF BOYNTON BEACH, FLORmA UTILITY SYSTEM REVENUE BONDS, SERIES 1996 (SERIES 1996 BONDS) BOND PURCHASE AGREEMENT ,1996 City of Boynton Beach 100 East Boynton Beach Boulevard Boynton Beach, Florida Miami, Florida 33435 Ladies and Gentlemen: William R. Hough & Co., acting on behalf of itself Raymond James & Associates, Inc. and Smith Barney Inc. (collectively the "Underwriter"), hereby offer to enter into this Bond Purchase Agreement (the "Agreement") with the City of Boyntnn Beach, Florida, (the "City"), which, upon accep~ce of this offer by the City, will be binding upon the City and the Underwriter. This offer is made subject to acceptance by the City by execution of the Agreement prior tn 5:00 p.m. Florida time, on the date hereof, and, if not so accepted, will be subject to withdxawal by the Underwriter upon written notice to the City at any time prior to acceptance bereof by the City. The Underwfim' represents that it is authorized to enter inW this Agreement and chat it is authorized to execute this Agreement and tn take any crdaer ,~.c~ions which may be required All capitalized terms not otherwise defined herein shall have the same meanings as set forth in a Resolution No. 92-96 dated June 16, 1992, as supplemented and amended. I. Purchase and Sale ofBon~k. . (a) Subject to the terms and conditions and upon thc basis of the represl~ntations, warranties and, covenants hereinafter set forth, the Underwriter, hereby agree~ to purchase from thc City, and the City hereby agrees to sell to the Underwriter on the Closing Date (as hereinafter defined), all (but not lessthan .all) of the $ aggregate principal amount of City of Boynton Beach, Flog& Utility System Revenue Bonds, Series 1996 (the "Series 1996 Bonds"), at the aggregate purchase price of $ (representing the principal amount of $ less net original issue discount of $ and Underwriters' discount of $ ), plus accrued interest in the amount of $ from I, 1996 to the Closing Date. The Series 1996 Bonds shall bear interest at the rates, be sold to the public at the prices, mature on the dates and shall be subject to optiOnal and mandatory sinking fund redemption, ail as set forth on Schedule I, attached hereto. The Preliminary Official Statement of the City of Boyaton Beach relating to the Series 1996 Bonds, dated ,1996, including the cover page .and :Appendices thereto presented hercmlth, with such add~ional changes and amendments as shall be approved by the City acting through its City Manager or her designee, is hereinafter referred to as thc "Official Statement." The Underwriter agrees re.make a bona fide public offering of the Series 1996 Bonds and to offer and sell the Seri~s 1996 Bonds to certain dealers (including dealers depositing the Serics 1996: Bonds into Investment Trusts) at concessions to be determined by the Un&.n-writer~ The Underwriter also reserves the right to over allot or effect trama~ons or maintain the market price of the Series 1996 Bonds at !~ prevail in the open market and to discontinue such stabilizing, if commenced at any time. (b) The Series 1996 Bonds shall be substantially in the form described in, and issued and secured pursuant to Resolution No, 92-96 adopted by thc City Commission of the City (the "City Commission") on June 16, 1992 as amended and supplemented, in particular, by Resolution No. 96- adopted by the. City Commission on June : 1996 (collectively the "Resolution"). Between the date of this A~t and the Closing Date, no changes in the Resolution shall be 'made unless'mutually agreed upon in writing between the City and the Underwriter. The Underwriter has deliver, cl to the City a letter containing thc information requff~d by Section 218.385 of the Florida Statutes, which letter is in the form attached hereto as Schedule II. (c) The Series 1996 Bonds ar~ being issued for the purpose of (i) providing funds, together with other available moncys of thc City, if any, to p~ay thc cost of hnprovemcn~s' w thc. Utility System, (ii) to provide for a dcposit to the! 1996 Reserve Sub-account in the Reserve Account; and (iii) to ;)ay certain costs of issuing such Series 1996 Bonds. (d) The City authorizes the Underwriter to use and distribute copies of the Official Statement and the information contained therein and copies of the Resolution in connection with the public offering and sale of the Series 1996 Bonds and agrees not to.supplement or amend or cause to be supplemented or amended the Resolution or the Official Statement, at any time prior to the Closing, without the written consent of the Underwriter. (e) The Preliminary Official Statement relating to the original issuance of the Series 1996 Bonds has been prepared for use in connection with the public offer, sale and distribution of the Series 1996 Bonds by the Underwriter. As of its date, the Preliminary Official Statement was "deerr, ed final' (except for permitted o~.s,sion) by the City for purposes of Rule 15c2-12 of the Securities Exchange Act of 1934, as amended ("Rule 15c2-I2"), and the Underwriter was and is authorized to use the Preliminary Official Statement in/ts marketing efforts. (f) Within seven (7) business days of the date hereof and no later than, (3) days prior to the Closing Date, thc City shall deliver, or cause to be delivered, to the Underwriter executed copies of the Ot~cial Statement, manually signed on behalf of the City and shall cause copies of thc Official Statement, in sufficient quantity for the Underwriter to comply with the rules of the Municipal Securities Rulemaking City Commission G32 and Rule 15c2-12, to be available to the Underwriter. Delivery of such copies of thc Official Statement within such period shall constitute thc City's representation that such Official Statement is complete as of the dat,.- of its delivezy. The City agrees to deliver to the Underwriter such reasonable quant!ties of the Official Statement and such reasonable quantities of the Resolution ~ the Underwriter may request for use in connection with the offering and sale of the Series 1996 Bonds. 2. Event~ Requiring Disclosure. If at any time prior to Closing and within ~c Disclosure Period (as dcfinext in Section 6(zXi) hereof) any event known to the City rehting to or affecting the System, thc Resolution or thc Series 1996 Bonds shall oc, a~ which might affect the correctness or completeness of any statement of a material fact contained in the Official Statement (an "Event Requiring Notification"), the City will promptly r,.otify the Underwriter in writing 0f the circumstances and details of such event.' if, as a result of such event or a~:),, other event, it is necessary, in the opinion of the City Attorney, the City Managei~ Bond CoUnsel, the Underwriter, or Co-Counsel m the Underwriter (as hereinafter defined), to amend or supplement the Official Statement in order to state any ma~a'/;al fact ~5-1~-1996 82: 1GPM ~-ROM .... -, ,c~9i789 ~ "'~5 necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading and any such counsel shall have so advised the City, the City will, at its expense, take ail actions necessary to carry out the full purpose and intent and to fully comply with Section 6(ac) hereof. ! 3. Good Faith Check. The City hereby acknowledges receipt from the Undecwfiter of a corporate check in the aggregate amount of $ (thc "Good Faith Check"), which is being delivered to the City as security for the l:~rfo~ce by the Underwriter of its obligation to accept and pay for the Series 1996 Bonds. The City agrees not to cash the Good Faith Check unless the Underwriter defaults on its obligations under this Agreement. Upon complianc~ by the Underwriter with i~s obligations under this Agreement, the Good Faith Check shall be returned to the Underwriter at the Closing. If the City does not accept this offer, the Oood Faith Check shall be immediately returned to thc Underwriter. If the Underwriter fails other than for a reason permitted hereunder to accept and pay for the S~es 1996 Bonds upon tender thereof by the City at the Glosing as herein provided, Good Faith Check ~and retain thc funds represented by such Good damages, and not as a lmnalty, for such failure and for any and allldefaults hereunder on the part of thc Underwriter, and the retention of such I constitute a full release and discharge of ali claims, such failure and for any and all t and the Underwriter that actual damages in such ossible to compute. 4. ~ The Closing will occur before 1:00 p.m., Florida time, on , 1996 or at such other time or on such earlier or later date as shall have been mutually agreed upon by the City and the Underwriter. Prior t~ the closing of the Series 1996 Bonds, the City will deposit with The Depository Trust Company ("DTC") a Bond Certificate for each maturity of the Series 1996 Bonds registered in the name of DTC's nominee, Cede & Co. representing, in the aggregate, 100% of the principal amount of such Series 1996 Bonds. The Underwriter will accept such delivery and pay the purchase price of the Series 1996 Bonds by. delivering to thc City a wire transfer credited to the order of the City in immediately available federal funds.Payment for and delivery of the Series 1996 Bonds as place as shall be agreed upon between the City and the Underwriter. and delivery is herein called the "Closing" and the date of the Closing iS herein called the "Closing Date." 5. Representations. Warranties and Covenants of the City. The. City, by its acceptance hereof, represents, warrants and covenants to the Underwriter as of the date hereof and the Closing Date that: .~-1~-1996 ~2: 17~M FROM TO (a) the City is and will be on the Closing Date, a political subdivision of and validly existing under the Constitution and laws of the State of Florida; Co) the City Commission had, has and will have, as the case may be, full legal right, power and authority (i) to adopt the Resolution and to execute and deliver this Agreement and the Official Statement, (ii) to issue, sell, execute and deliver the Series 1996 Bonds to the Underwriter as provided in this Agreement, (iii) to secure the Series 1996 Bonds in the manner contemplated by the Resolution and (iv) to carry out and consummate all other transactions contemplated by the aforesaid documents and instruments; and the City has complied or will have complied as of the Closing Date with all provisions of applicable law in all matters relating to such transactions; provided, however, that the City makes no representation as to the qualification of the Series 1996 Bonds under the Blue Sky laws of the various states or the legality of the Series 1996 Bonds for investment under the laws ofllae various states; (c) the City Commission has duly adopted the Resolution and has duly authorized-or ratified (i) the execution, delivery and performance of this Agreement, and the issuance, sale execuion and delivery of thc Series 1996 Bonds, (ii) the distributution of the Preliminary Official Statement and the Official Statement and (iii) the taking of any and all such action as may be required on the part of the City to carry out, give effect to and consummate the transactions contemplated by the aforesaid documents and instalments; provided, however, that no representation is made conca'ning compliance with the federal securities laws or Securities or Blue Sky laws ofthe various states; (d) this Agreement when executed and delivered by the parties thereto, will, and the Resolution does, each constitute a legal, valid and binding obligation of the City enforceable in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, imolveney, moratorium or other laws affecting creditor's rights generally or subject to the exercise of the state's police power and to judicial discretion in appropriate cases; (e) the City has complied, or will at the. Closing be in compliance in all material respects, with the Resolution; (f) when paid for by the Un~tcr at the Closing in accordance with the provisions of this Agreement, and when authenticated by , as Bond Registrar and Paying Agent (the "Registrar"), the Series 1996 Bonds will be 0S-14-19~6 02:18PM FROM 9156165917~ ~ ~ · duly authorized, executed, issued and delivered and will constitute legal, valid and binding obligations of the City enforceable in accordance with their terms and the terms of the Resolution, except as may be limited by bankrupt, insolvency, moratorium or other laws affecting o'editor~s fights generally or subject to the exercise of the state's police power and to judicial discretion in appropriate cases; (g) the Resolution cre~es a valid pledge of, and lien and charge upon, thc Net Revenues of the System, certain Impact .Fees and monies and investments held in certain funds and accounts created by the Resolution, to the extent set forth 'in the Resolution (collectively the "Pledged Revenues"). The Series 1996 Bonds constitute a limited obligation of thc City and are secured and payable solely from the Pledged Revenues. (h) at the Closing, all approvals, consents and orders of and filings with any governmental authority or agency which would constitute a condition precedent 'to the issuance of the Series 1996 Bonds or the execution and delivery of or the performance by the City of its obligations under this Agreement, the Series 1996 Bonds or the Resolution will have been obtained or made and any consents, approvals and orders so received or filings so made will be in full force and effect; provided, however, that no representation is made concerning compliance with the federal securities laws or the securities or Blue Sky laws of the various states; (i) except as described in the Official Statement, the City is :aot in breach of or in default under any applicable ilaw or administrative regulations of the State or the United States of America relating to the System, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinmace, agreement or other instrument to which the City is a party or is otherwise subject, the consequence o£which or the correction of which materially adversely affects the operation of the Systemi as of such dates; and the execution and delivery of this Agreement, the Series 1996 Bonds, the enactment of the Resolution and compliance with the provisions of each of such agreements or instruments do not and will not conflict with or eonstitut~ a breach or violation of or default tmdir any applicable law or adnfini~trative regulation of the State or the United States-of' America or any apphc~18 judgment or decree or any bond resolution, loan agreement, bond, note, resolution, ordinance, agreement or other immanent to which the City is a party or is otherwise subject; (j) other than as disclosed in the Official Statement, the enactment or adoption by thc City Commission and performance by the City of the Resolution and the authorization, execution, delivery and! performance of this Agreement, the Serics 1996 Bonds, and any other agreement or instrument to which the City is a party, used or contemplated for use in consummation of the transactions contemplated hereby orby the Official Statement and, to the best of the City's knowledge, compliance with the provisions of each such instrument, do not and will not conflict with, or constitute or result in (i) a violation of thc Constitution of the State, or any existing law, administrative regulation, rule, decree or o~'der, state or federal, or the Charter or the Code of the City (ii) a breach of or default under a material provision of any agreement, indenture, mortgage, lease, note or other insU'ument to which thc City, or its properties or any of the officers of the City as such is subject, or (iii) the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the revenues, credit, property or assets of the City under the terms of:the Constitution of the State or any law, instrument or agreement; (k) the Official Statement (including the Ruancial and statisfic~,l data included therein and the Appendices thereto) will at all times prior to and including the Closing Date bc truc, correct and complete in all material respects and will not contain any untrue statement of a material fact or omit to sate any material fact necessary in order to make the statements made therein, in light of the circumstances uader which they were made, not misleading; (1) at thc Closing, thc financial sta~ments and other historical financial and statistical information contained in the Official Statement will fairly represent the financial position of the City and thc financial position and results of operations of the System for the periods therein set forth in accordance with generally accepted accounting principles applied consistently; (m) other than as discussed in the Official Statement, there shall not have been any material adverse change since September 30, 1995 in the results of condition of the System other than changes in thc ordinary course of business or in the normal operation of thc System; (n) between the time of the acceptance hereof by thc City and the Closing, thc City will not execute or issue any bonds or notes, without thc written consent of the Underwriter, or incur any other obligation or borrow money secured by a pledge of thc Net Revenues of thc System and there will not have bccn any adverse change of a material nsture in the financial position of the System, thc assessed value for ad valorem tax purposes of taxable property in the City, and property tax levies and collections; (o) the City will famish such information, execute such instruments and take such other action in cooperation with the Underwriter, as the Underwriter may -7- reasonably r¢cluest to qualify the Series 1996 Bonds for offer and sale and to determine thc eligibility of the Scries'1996 Bonds for investment under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate, provided that in connection therewith thc City shall not be required to file a general consent to service of process or qualify to do business in any.jurisdiction or become subject to service of process in any jurisdiction in which thc City is not now subject to such service; (p) to the best of the City's knowledge and belief, other than as described in the Official Statement, as of the date hereof there is no claim, action, suit, proceeding, inquiry or investigation, at law or in equity, or before or by any court,. public City Commission or body pending, or, to the best knowledge of the City, threatened against or affecting the City (i) to restrain or enjoin the issumtce or delivery of any of the Series 1996 Bonds or the collection of Revenues pledged under the Resolution (ii) in any .way contesting or affecting: (1) the authority for the issuance of the Series 1996 Bonds; (2) the validity or enforceability of the Series 1996 Bonds, the Resolution this Agreement, or (3) the power of the City Commission to 'enact the Resolution and to execute and deliver thc Series I996 Bonds, this Agreement, or to consummate the transactions relating to the City contemplated by the Resolution, and this Agreement, (iii) in any way contesting the existence or powers of the City or the City Commission or the title to office of any member of the City Commission, or (iv) contesting in any way thc completeness, accuracy or fairness of the Official Statement or the completion of the 1996 Poject; (q) no authorization, approval, consent or order of or filing or registratim~ with any court or governmental agency or body is required for thc valid 'authorization, execution, issuance, sale or delivery of the Series 1996 Bonds or the exclusion from gross income of interest thereon for federal income tax purposes or the valid adoption by the City Commission of the Resolution or the execution and delivery of this Agreement, except such action as may be required to qualify the Series 1996 Bonds for sale under the Blue Sky or securities laws of any jurisdiction; (r) the City will not knowingly take or omit to take any action, which action or omission would adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Series 1996 Bonds under the Internal Revenue Code of 1986, as amended; (s) thc City has not been in default in the payment of principal of, premium, if any, or interest on, any City indebtedness or obligations of the City -8- which it has issued, assumed or guaranteed as to payment of principal, premimm if any, or interest, and other than the Resolution, thc City has not entered into any contract or arrangement of any kind which might give rise to any lien or encumbrances on the Revenues of the System, or the funds and moneys, pledged pursuant to the Resolution, other than as described in the Official Statement; (t) any certificate signed by any official of the City and delivered to the Underwriter in connection with the issuance, sale and delivery of the Series 1996 Bonds shall be deemed to be a representation and warranty by the City to the Underwriter as to the statements made therein; (u) the description of thc Resolution, the Series 1996 Bonds and thc 1996 Project in the Official Statement conforms in all material respects to the Resolution and ~e Series 1996 Bonds; (v) the City will apply the proceeds of the Series 1996 Bonds in accordance with the Resolution, and as contemplated by the Official Statement; (w) neither the City nor anyone authorized to act on its behaIf~ directly or indirectly, has offered the Series I996 Bonds for sale to, or solicited any offer to buy, the Series 1996 Bonds from anyone o~er than the Underwriter; (x) the tire to the System is vested in the City, and will be vested in the City at Closing; (y) all proceedings of the City Commission relating to the enactment of the Resolution, approval and authorization of the execution and delivery of this Agreement and the Official Statement, and thc approval and authorization 0f the issuance and sale of the Series 1996 Bonds were, or will be prior to Closing, conducted at duly convened meetings of the City Commission, with respect to which all required notices were duly given to the public at which quonnm were at all material times present, and no authority or proceeding for the issuance of the Series 1996 Bonds has been or will be repealed, rescinded, or revoked; (z) (i) For the purposes of this Agreement, the term "Disclosure Period" shall mean the earlier of (1) ninety (90) days from the End of the Underwriting Period (as hereafter defined), or (2) the time when the Official Statement is available to any person from a nationally recognized municipal securities information repository, but in no case less than twenty-five (25) days following the End of the Underwriting Periods. (ii) For the purposes of this Agreement, the t~rn "End of the Underwriting Period" shall mean the later of such time as (1) the Closing, or (2) the time at which the Under-,~ter does not retain, directly or as members of any underwriting syndicate, an unsold balance of the Series 1996 Bonds for sale to the public. (iii) Both at the time of acceptance hereof by the City and (unless amended or supplemented as described in Section 6(ac) hereof) at all times during the DiscIosure Period the statements and the informai~ contained in the 'Official Statement pertaining to the City and the use and application of the proceeds of the Series 1996 Bonds are and will be true, correct and complete in all material respects, and the Official Statement, does not as of the date of acceptance hereof and will not (unless amended or supplemented as described in Section 6(ac) hereof) at all times during the Disclosure Period, contain ~y untrue statement of a material fact or omit to state a material fact necessary in order to make the statements and information therein, in light of the circumstances under which they were made, not misleading in any material respect. (aa) Prior m the execution of this Agreement, the City delivered to the Underwriter copies of the Preliminary Official Statement which the City deemed final for purposes of Rule 15c2-12 as oft.he date thereof, except for the omission of no more than the following information: ff~e offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery date, ratings, bond insurance and other terms of the Series 1996 Bonds depending on sucli matters. (ab) if the Official Statement is supplemented or amended pursuant to Sectio~ 6(ac) hereof, at the time of cact, supplement or amendment thereio and (unless subsequently again supplemente~t or amended pursuant to Section 6(ac) hereof) at all times during the Disclosure Period, the Official Statement as so supplemented or amended will not contain any untrue statement of a material ihct or omit to state a material fact necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. (ac) during the Disclosure 'Period, the City will (i) not adopt any amenament of or supplement to the OiHcial Statement to which, af,.er having been furnished wi& a copy, the Undenvfiter shall reasonably object in writing, unless the City has obtained the opinion of Bond Counsel, stating that such amendment or supplement is in order to make the Official Statement not misleading in light Of the circumstances existing at the time that it is delivered to a purchaser, and (ii) if any ~5-i'~ ......... ': ..... *.Or, TO 915616591?89 P 12 event to or affecting thc City shall occur which would or might cause the in.formation contained in the Official Statement, as then supplemented or amended, 'to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the City shall notify the Underwriter thereof; and if.as a result of which it is necessary, in the opinion of. the Co-Counsel to the Underwriter, to amend or to supplement the O~cial Statement in order to make the Official Statement not misleading in light of the circumstances existing at the time it is delivered to a purchaser, the City shall forthwith prepare and furnish 'to the Underwriter (at the expense of the City) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and subs~ce satisfactory to the Underwriter ~d. the City) which will amend or supplement the Official Statement so that such OffiCial Statement, as amended or supplemented, will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading in any material respect. UnIess otherwise notified in writing by the Underwriter tm or prior to the Closing Date, the End of the Underwriting Period for the Series 1996 Bonds for all purposes of Rule 15c2-12 and Section 6(z)(ii) herein above, is the Closing Date. In the event such notice is given in writing by the Underwriter, the Underwriter agrees to notify the City in writing following the occurrence of the End of the Underwriting Period for the Series 1996 Bonds. 6. Continuing Disct0s~e Requirement. To induce the Underwriter hereto to enter into this Agreement, the City has agreed in the Resolution, which will inure to the benefit of the Underwater, to provide or cause to be provided, in accordance with the requirements of Rule 15c2-12 (i) certain annual financial information and operating data ;(the "Annual Information") for the preceding fiscal year, together with the City's General Purpose Financial Statements and the System's audited financial statements, if available, (ii) timely notice Of the occurrence of certain material events with respect to the Series 1996 Bonds and (iii) timely notice of the City's inability to provide the Annual Information with respect to the City or the System on or before the date specified in the Resolution. 7. Conditions Of Closinv_ The Und~vriter has entered into this Agreement in reliance on the representations and agreements of the City herein. The obligations of the Undeaw~tcr hcrcundcr shall be subject to thc performance by the City of its obligations to be performed hereunder at or prior to the Closing, to the accuracy of and compliance with the representations, warranties and covenants of the City herein, in each case as of the time of delivery of this Agreement and.as of- ~5-1~-199G 0~:2~J ...... TO 91S~16591789 the Closing, and are also subject, in the discretion of the Underwriter, to thc following further conditions: . (a). The. Delivery of Documents. At Closing, the City shall deliver to the Underwriter (i) a copy of the ResoIution and all proceedings relating to its adoption, appropriately certified, and (ii) letters from Bond Counsel (as hereina~er defined) and the City Attorney, to the effect that the Underwriter may rely upon the opinions delivered on such date with respect to the execution and delivery of the Resolution and certain other matters, as the case may be, together with copies of said opinions. (b) at the Closing, (i) the 'Resolution and this Agreement shall be in full force ~and effect and shall not have been repealed, amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and the City shall have executed and there shall be in full force and effect and sha~..l have been agreed to in writing in connection with the issuance of the Series 1996 Bonds such action as shall, in the opinion ofMoyle, FIanigan, Katz, FitzGerald & Sheehan, P.A., West Palm Be. ack, Florida (the "Bond Counsel") or Holland & Knight, Lakeland, Florida and Mikel D. Jones & Associates, West Palm Beach, Florida (collectively the "Co-Counsel to the Underwriter"), be necessary in connection with the transactions contemplated hereby, (ii) the Series 1996 Bonds shall have been duly authorized, executed and delivered, (iii) the Official Statement shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and (iv) the City shall perform or have performed all of its obligations under or specified in this Agreement, thc Continuing Disclosure Commitment, the Official Statement, or the Resolution; (c) At or prior to the Closing Date, the Underwriter shall have reCeived the following: (i) the opinion of the City Attorney, dated the Closing Date, in substantially in the form attached hereto as Exhibit "B"; (ii) the final approving opinion of Bond Counsel, dated the Closing Date in substantially the form attached to the Official Statement as Appendix D together with a reliance letter addressed to the Underwriter; (iii) the opinions of Co-Counsel to the Underwriter datecl the Closing Date, to the effect that the Series 1996 Bonds are not subject m the registration requirements of the Securities Act of 1933, as amended, and the Resolution is exempt from qualification under the Trust Indenture Act of 1939, as amended. Such opinion shall also staxe that, based upon their participation in the 'preparation of the Official Statement as Co-Counsel to the Undemrfiter and without having undertaken to determine independently the accuracy or completeness of the contents of the Official Statement, nothing has come to the attention of such counsel which has caused them to believe that the Official Statement (except for the financiaI and statistical data included therein to which no view need be expressed) as of its date contained, or as of the Closing Date contains, any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; and (iv) the supplemental opinion of Bond Counsel, dated the Closing Date, to the effect that;, (i) the Series 1996 Bonds are not subject to the registration requirements of the Securities Act of t933, as amended, and the ResoIution is exempt from qualification pta'suant to the Trust Indenture Act of I939, as amended; and (ii) the statements contained in the Official Statement under the captions "Amendments to Resolution," "DESCRIPTION OF THE 1996 BONDS," "SECURITY FOR THE 1996 BONDS" "Covenants Concerning Ongoing Disclosure" and "Appendix C. SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION," to the extent such Sections purport to summarize provisions of the Resolution and the Bonds, such statements constitute fair. and. accurate summaries of thc portions of the Resolution and the Bonds purpolled to be summarized, and (iii) the statements made in the Official Statement under the caption "TAX EXEMPTION-" are accurate and (iv) the lein of the Utility System Revenue Bonds, Series I992 maturing on the Revenues has been defeased in accordance with the Resolution. (v) a certificate, dated the Closing Date, signed by the City Manager or Assist;mt City Manager, the Finance Direct:or and the Utilities Director, to the effect · that, to the best of their knowledge, information and belief (i) the representations and warranties of the City contained in this Agreement are true and correct in all martial respects as of the Closing Date as if made on the date thereof; and (ii) the City has performed all obligations to be performed hereunder as of the Closing Date; ' (vi) a copy of the Resolution certified by the City Clerk or Deputy as a true and correct copy of the original thereof; as currently in full force and effect and as not having been otherwise amended since its adoption, except as provided herein; (vii) letters from Moody's In,res~ors Service, Inc., Standard & Poor's a division of The McGmw-Hill and Fitch Investor's Service, Inc., confirming that they have rated the Serie~ 1996 Bonds" "" "and" , rating~ are in eft~ct on the Closing Date; "respectively, and that such (viii) a certificate from the Registrar, dated abe Closing Date and addressed to the Uniter, Bond Counsel and the City to the effect that (i) the Registrar is a national banking association on, duly organized and validly existing under the laws of the United States of America authorized to do business in the State, (ii) the Registrar had duly accepted its duties under the Resolution, and (iii) the Regisuar has taken all necessary corPorate action required to act in its role as Registrar and Paying Agent under the Resolution and to perform its duties thereunder; =(ix) a letter from Accountant addressed to the City, dated the Closing Date, to the effect that they consent to the inclusion of the City's audited General Parpose Financial Statements and the financial statements of the System for Fiscal Year 1994-1995 in the Official Statement and to the references made to such audited financial statements in the Official Statement; (x) at the Closing, the Underwriter shall receive a letter fi:om the Consulting Engineers, addressed to the City, dated the Closing Date, to the effect that they consent to the inclusion of the Consulting Engineer's Letter dated ;Iune 3, 1996 in the Official Statement and that there have been no material changes in the Consulting Engineer's Le~er from such date; (xi) two copies of the Official Statement executed by the Mayor and the City Manager. (xii) a policy of . Insuance Corporation (the "Bond Insurer") guaranteeing the timely payment of principal of and interest on the Series 1996 Bonds (the "Bond Policy"). (xiii) an opinion of Bond Insurer's counsel, addressed to the Underwriter, in a form and substance satisfactory to the Underwriter; (xiv) such additional legal opinions, certificates (including such certificates as may be required by regulations of the Internal Revenue Service in order to establish the exclusion from income, for federal income tax purposes, of the interest on the Series 1996 Bonds, which certificates shall be satisfactory in form and substance to Bond Counsel) and other evidence as the Unde~a~ter, Bond Counsel, or Co-Counsel to the Underwriter may reasonably deem, provided such additional legal opinions, certificzIes and other evidence is requested by the Underwriter at least two business days before the Closing Date; 05~14-1996 02:~4PM ~ROM 9!56~.As~i789 P.16 If between the date of this Agreement and the Closing Date, an' Event Requiring Notification shall have occurred, the City shall notify thc Underwriter as set forth in Section 3 hereof and shall furnish any documents required to be furnished by Section 3 hereof. The foregoing opinions, certificates and other evidence shall be in form and substance satisfactory to the Underwriter. If the City shall be unable to satisfy the conditions to the obligations of the Underwriter contained in this Agreement, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Agreement, this Agreement shall terminate and neither the Underwriter nor the City shall be under any fimher obligation hereunder, except as provided in Section 10 hereof and except that the Good Faith Cheek shall be returned by the City to the Underwriter. 8. Termination of' A_areemem The Underwriter may terminate this Agreement, without liability therefor, by written notification to the City, if at any time subsequent to the date of this Agreement and at or prior to the Closing: (a) the marketability of the Series 1996 Bonds or the market price thereof, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States of America or by any legislation (i) enacted or adopted by the United States of America, (ii) recommended to the Congress or otherv, ise endorsed for passage, by press release, other form of notice or otherwise, by the President of the United States of America, the Chairman or ranking minority member of the Commi~ on Finance of the United States Senate or the Comm{tt~ oll Ways and Mearls of th~ United States House of Representatives, the Treasury Department of the United States of America or the Internal Revenue Service or (iii) favorably reported out of the appropriate Committee for passage to either House of the Congress by any full Committee of such House to which such legislation has been referred for consideration, or by any decision of any court of the United Stats$ of America or by any order, rule or regulation (final, temporary or proposed) on behalf of th~ Treasury Department of the United States of America, the Internal Revenue Service or any other authority or regulatory body of the United States of America, or by a release or announcement or communication issued ot sent by the Treasury Department or thc Internal Revenue Service of the United Steles of America, or any comparable legislative, judicial or adminiswative development ~ng the federal tax status of the City, i~s property or income, obligations of the general character of thc Series 1996 Bonds, as contemplated hereby, or the interest thereon, or any tax exemption of the Series 1996 Bonds; or -IS- (b) any legislation, rule, or regulations shall be introduced ha or be enacted or adopted by any department or agency ha thc State, or a decision by any court of competent jurisdiction within the State shall be rendered which, in the reasonable opinion of the Underwriter, materially adversely affects the market for the Series 1996 Bonds or the sale, at the contemplated offering prices, by the Underwriter of the Series 1996 Bonds to be purchased by them; or (c) any amendment to the Official Statement is proposed by the City or deemed necessary by Bond Counsel, or the Underwriter which, in the reasonable opinion of the Underwriter, materially adversely affects the market for the Series 1996 Bonds or the sale, atthe contemplated offering prices, by the Underwriter of the Series 1996 Bonds to be purchased by them; or (d) a national or international calamity or crisis shall have occurred or escalated which, in the sole opinion of the Underwriter with the concurrence Of the City adversely affects the market for the Series 1996 Bonds or the sale, at the eontempIated offering prices, by the Underwriter of the Series 1996 Bonds to be purchased by them; or (e) Legislation shall be enacted or adopted, or any action shall be taken by, or on behalf of~ the Securities and Exchange Commission which, in the reasonable opinion of Co-Counsel to the Underwriter, has the effect of requiring the contemplated distribution of the Series 1996 Bonds to be registered Under the Securities Act of 1933, as amended, or the Resolution to be qualified under the Trust Indenture Act of 1939, as amended, or any laws analogous thereto relating to governmental bodies, and compliance therewith cannot be accomplished prior to the Closing; or (f) legislation shall be introduced by amendment or o~erwise in or be enacted by, the House of' Representatives or the Senate of the Congress of the United States of America, or a decision by a Court of the United States of America shall be rendered, or a.stop order, ruling, release, reguIafion, official statement or n.o-action letter by or on behalf of the Securities having jurisdiction of. the subject issued or made (which is beyond the to prevent or avoid) to the effect uhat the issuance, offering or sale of the Series I996 Bonds, including ail the underlying obligations as contemplated hereby or by the Official Statement or any doc~maent relating to the issuance, offering or sale of '.he Series 1996 Bonds is or would be in violation of any of the federal securities laws at Closing, including the Sectaries Act of 1933, as amended and then m effect, the Securities Exchange Act of 1934, as amended and then in effect, orthe Trust Indenture Act of' 1939, as amended and then in effect, or with the purpose or effect of otherwise prohibiting the offering 0~-14-1996 02:25PM FR~M P.i8 and sale of obligations of the general character of the Series 1996 Bonds, or the Series I996 Bonds, as contemplated hereby; or (g)- there shall have occurred, alter the signing hereof, either a financial crisis or a default with respect to the debt obligations o£ the City or proceedings under the federal or State bankruptcy laws shall have been instituted by the City, in either case the effect of which, in the reasonable judgment of the Underwriter, is such as ~o materially and adversely affect (i) the market price or thc marketability of the Series 1996 Bonds, or (ii) the ability of the Underwriter to enforce contracts for the sale of thc Series 1996 Bonds; or (h) a general banking moratorium shall have been declared by the United States of America, New York or State authorities, which in the reasonable opinion of thc Senior Managing Underwriter, materially adversely affects thc market for the Series 1996 Bonds or the sale, at the contemplated offering prices, by the Underwriter of the Series 1996 Bonds to be purchased by them; or (i) any national securities exchange, or any governmental authority, shall impose, az to the Series 1996 Bonds or obligations of the character of the Series 1996 Bonds any material resffictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwn'~er, or the establishment of material restrictions upon trading of securities, including limited or minimum prices, by any governmental authority or by any national securities exchange; or (j) legal action shall have been filed against the City wherein an adverse ruling would adversely affect the transactions contemplated hereby or by the Official Statement or the validity of the Series 1996 Bonds, this Agreement,¢,r the Resolution; provided, however, that as to any such litigation, the City may roquest and the Underwriter may accept an opinion by Bond Counsel, or of other counsel acceptable to the Underwriter, that in such Counsel's opinion issues raised by any such litigalion or proceeding are without substance or that the contentions of any plaintiffs therein are without merit; or (k) the rating of any of the Series 1996 Bonds shall have been downz~-adext below" "by Standard & Poogs or "___" by Moody's Investors Service, Inc. or "__" by Fitch Investor's Service, Inc. which in the opinion of the Underwriter, is materially and adversely the market prices of the Series 1996 Bonds or trading in any of thc City shall have becn suspended on any national securities exchange; or any proceeding shall be pending or threatened by the Securities and Exchange Commission against the City; or a general suspension of trading on the i~5-14-1996 B2:26PM FROM TO 915S165917~]~ ' .... New York Stock Exchange or the American Stock Exchange or other national securities exchange; or (I) any information shall have become known which, in the Underwriter's reasonable opinion, makes untrue, incorrect or misleading in any material respect any statement or information contained in the Official Statement, as the information contained therein has been supplemented or mended by other information, as of the date furnished or supplied to the Underwriter and until toe end of the Disclosure Period thereafter, or muses the Official Statement, as so supplemented or mended, to contain an untrue, incorrect or misleading statement of a material fact or to omit to state a material fact required or necessary to be stated therein in order to make the statements made therein, in light of. the circumsumces under which Uhey were made, not misleading, and upon the receipt of notice of same by the City, the City fails to promptly amend or supplement the Official Statement in a manner which is reasonably acceptable in form and content to the Underwriter; (m) an event occurs as a result of which the Official Statement, as then amended or supplemented, would include an unlrue statement of a material fact or omit to state to be any material fact which would required or necessary to be stated therein in order to make the statements made therein, in the light of the circumstances under which they were made, not mialeading which, in the opinion of the Underwriter, requires an amendment or supplement to the Official Statement and, in the reasonable opinion of the Underarriter, materially adversely affects flue marketability of the Series 1996 Bonds or the contempIated offering prices thereof and upon the receipt of notice by the City, the City fails to promptly amend or sul~plement the Official Statement in a manner which is reasonably acceptable in form and content to the Underwriter. (a) The City agrees to pay all expenses incident to the performance of its obligations hereunder, including, but not limited to (i) the cost of the preparation, printing or other reproduction (for distribution prior to, on, or after the date of acceptance of this Agreement) of copies of the Official Stamrnent and Preliminary Official Statement as provided herein, (ii) charges made by rating agencies for the rating of the Series 1996 Bonds, (iii) the fees and disbursements of Bond Counsel, the Financial Advisor, and of any other experts or consultants retained by the City, (iv)the cost of any consent letters and verification reports delivered by the City's accountants or consultants and (v) the costs of issuance of the Series 1996 Bonds, including the cost of the bond insurance premium. Cb) The Underwriter shall pay all expenses incident to their performance hereunder, including, but not limited to (i) the fees and disbursements of C~C. xam~l to the Underwriters and (ii) all other expenses incurred by them or any of them in connection with their offering and distribution of 'he Series 1996 Bonds and for the preparation, printing and separate distribution, if any of the Blue Sky memoranda and legal investment surveys. (c) In the event either the City or the Underwriter shall have paid obligations of the other as set forth in this Section, appropriate reimbursements and adjustments shall be made. 10. Txtlth in Bonding Statement. The Series 1996 Bonds are being issued for the purpose of (i) providing funds, which together with other available moneys of the City, if any, to pay the cost of Impwvements to the Utility System, (ii) to provide for a deposit to the Reserve Account; and (iii) to pay certain costs of issuing such Series ! 996 Bonds. The debt or obligation created by the Series 1996 Bonds is expected to be repaid over a period of__ years from ,1996. At a tree interest cost (TIC) of %. the total interest paid over the life of the debt or obligation will be $ The source of repayment or security for the Series 1996 Bonds is exclusively limited to certain System revenues known as Net Revenues of the System as defined in the Bond Resolution. a) All notices, demands and formal actions hereunder shall be in writing and mailed, telegraphed, or deliverexi to: The Und~writors: William 1~ Hough 8= Co. 4400 P6A Boulevard, Suite 501 Palm Beach Cfardens, FL 33410-6555 A~=nfion: David Kayo Thc City: City of Boynton Beach 100 East Boynton Beach Boulevard Boynton Beach, Florida 33435 Atm.: Carrie Parker, City Manager Diane Keese, Finance Director City of Boynton Beach Utilities Department 124 S.E. 15th Avenue Boynton Beach, Florida 33435 Attn.: John Cmidry, Utilities Director . (b) This Agreement will inure to the benefit of and be binding upon the parties and their successors and assigns, and will not confer any rights upon any other person. Thc terms "successors" and assigns shall not include any purchaser of any of the Series 1996 Bonds from the Underwriter merely because of such purchase. (c) All thc representations, warranties, covenants and agreements of the City in this Agreement shall remain operative and in full force and effect as if made on the date hereof and the Closing Date, regardless of (i) any investigation made by or on behalf of the Underwriter, or (ii) delivery of and any payment for the Series 1996 Bonds hereunder. (d) The agreements contained in Sections 4 and 10 thereof shall survive any termination of this Agreement. (e) Section headings have been inserted in this Agreement as a matter of convenience of reference only, and it is agreed that such section headings are not a part of this Agreement and will not be used in the interpretation of any provisions of this Agreement. (f) If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provisions of any constitution, statute, or rule of public policy, or for any other reasons, such circumstm~ces shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case or circumstances, -or of rendezing any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatever. (g) This Agreemem may be exeCUted in several counterparts, ci~ch of xvhich shall be regarded as an original and ail of which shall constitute one and the same document. ~5-24-2~%~ ~2:28PM FROM TO 915616592?89 P,22 (h) This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. (i) This Agreement shall become effective upon the execution by the appropriate City officials of the acceptance hereof by the City and shall be valid and enforceable at the time of such acceptance. WILLIAM R. HOUGH & CO. By: Accepted as of the date first above written: BOYNTON BEACH, FLORIDA By: City Marmgcr Approved as to form: By: City Attorney SCHEDULE I SERIES 1996 BOND TERMS ~S-14-~ ~w~'~ FR~ TO 91S616591789 P.R4 SCHEDULE II DISCLOSURE LETTER APPENDIX A OFFICIAL STATEMENT APPENDIX B OPINION OF CITY ATTORNEY -25- TOTRL P.26 8121M/26 EXHIBIT "B" Registrar Agreement 8124M BOND REGISTRAR AGREEMENT THIS BOND REGISTRAR AGREEMENT is made and entered into as of , 1996, by and between the City of Boynton Beach, Florida (the' "Issuer") and The Bank of New York, Jacksonville, Florida (the "Bank"). WHEREAS, the Issuer by the Resolution (as hereinafter defined), designated the Bank as Bond Registrar (as defined in the Resolution) for its Utility System Revenue Bonds, Series 1992 and its Utility System Revenue Bonds, Series 1996 (the "Bonds"); and WHEREAS, the Issuer and the Bank desire to set forth the Bank's duties as Bond Registrar and the compensation to be paid the Bank for its services. NOW, THEREFORE, it is agreed by the parties hereto as follows: 1. The Bank agrees to serve as Bond Registrar for the Bonds and to perform the duties of Bond Registrar under Resolution No. 92-96 adopted by the City Commission of the Issuer on June 16, 1992, as amended and supplemented, with respect to the Bonds (the "Resolution"). 2. The Issuer shall timely deposit with the Bank sufficient funds from the accounts established for the payment of the Bonds under the Resolution to pay when due and payable the principal of, premium, if any, and interest on the Bonds. 3. The Bank shall use the funds received from the Issuer pursuant to paragraph 2 hereof (and only such funds) to pay the principal of, premium, if any, and interest on the Bonds in accordance with the Resolution. The Bank shall cremate cancelled Bonds and transmit to the Issuer a certificate of destruction therefor. 4. The Bank shall be obligated to act only in accordance with the Resolution and any written instructions received in accordance therewith, and is authorized hereby to comply with any orders, judgments, or decrees of any court and shall not be liable as a result of its compliance with the same. 5. The Bank may rely absolutely upon the genuineness and authorization of the signature and purported signature of any party upon any instruction, notice, release, request, affidavit, certificate, opinion or other document delivered to it pursuant to the Resolution. 6. To the extent allowed by Florida law, the Issuer hereby agrees to indemnify the Bank and its agents and hold it harmless from any and all claims, liabilities, losses, actions, suits, or proceedings at law or in equity, or any other expenses, fees (including attorneys' fees and expenses), or charges of any character or nature, which it may incur or with which it may be threatened by reason of its acting as Bond Registrar under the Resolution, unless caused by tke Bank's willful misconduct or gross negligence; and in connection therewith, to indemnify the Bank against any and' all expenses, including attorneys' fees and the costs of defending any action, suit, or proceeding, or resisting any claim. This Section shall survive termination of this Agreement. 7. The Bank may consult with counsel of its own choice and shall have sole and complete authorization and protection for any action taken or suffered by it under the Resolution in good faith and in accordance with the opinion of such counsel. The Bank shall otherwise not be liable for any mistakes of fact or errors of judgment, or for any acts or omissions of any kind unless caused by the Bank's willful misconduct or gross negligence. 8. In consideration of the services rendered by the Bank as Bond Registrar, the Issuer agrees to and shall pay to the Bank a fee in accordance with Exhibit A hereto during the term of this Agreement, payable annually in advance, and all expenses, charges, attorneys' fees and expenses, and other disbursements incurred by it or its attorneys, agents, and employees in and about the acceptance and performance of its powers and duties as Bond Registrar. In the event the system for immobilization of bond certificates (the book-entry only system) is terminated, the fee of the Bank would be revised based upon the then current fee schedule of the Bank. This Section shall survive termination of this Agreement. 9. The Bank shall, at all times, when requested to do so by the Issuer, furnish full and complete information pertaining to its functions as the Bond Registrar with regard to the Bonds, and shall without further authorization, execute all necessary and proper deposit slips, checks, certificates and other documents with reference thereto. 10. Either of the parties hereto, at its option, may cancel this Agreement after giving thirty (30) days written notice to the other party of its intention to cancel, and this Agreement may be cancelled at any time by mutual consent of the parties hereto. This Agreement shall terminate without further action upon final payment of the Bonds and the interest appertaining thereto. 11. In the event of a cancellation of this Agreement, the Issuer shall deliver any proper and necessary releases to the Bank -2- 8124M upon demand and the Bank shall, after payment of all amounts owing to it hereunder, upon demand pay over the funds on deposit in connection with the Bonds and surrender all registration books and related records, and the Issuer may appoint and name a successor to act as Bond Registrar for the Bonds. The Issuer shall, in such event, notify all holders of the Bonds of the appointment and name of the successor, hy providing notice iD the manner required by the Resolution for the redemption of the Bonds. 12. This Agreement shall not be assigned by either party without written consent of the other party. 13. No modification of this Agreement shall be valid unless made by a written agreement, executed and approved by the parties hereto. 14. Should any section or part of any section of %his Agreement be declared void, invalid, or unenforceable by any court of law for any reason, such determination shall not render void, invalid, or unenforceable any other section or other part of any section of this Agreement. 15. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Florida. 16. (a) The Issuer hereby instructs the Bank to pay the principal of and interest on the Bonds at the dates specified in the Resolution. (b) The Bank shall be under no liability for interest on any money received by it hereunder. (c) Any money deposited with the Bank for the payment of the principal, redemption premium, if any, or interest on any Bond and remaining unclaimed for three years after final maturity of the Bond has become due and payable will be paid by the Bank to the Issuer, and the owner of such Bond shall thereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such monies shall thereupon cease. 17. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its persons as well as funds on deposit, waive personal service of any process, and agree that service of process by certified or registered mail, return receipt requested, to the address set forth below, or such other address as designated in writing sent by one party hereto to the other, shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent -3- 8124M jurisdiction to determine the rights of any person claiming any interest herein. As to the Issuer: City Manager City of Boynton Beach 100 East Boynton Beach Boulevard Boynton Beach, FlOrida 33.425 As to the Bank: The Bank of New York 10161 Centurion Parkway 2nd Floor Jacksonville, Florida 32256 18. Reference is hereby made to Sections 205, 206, 214 and 306 of the Resolution, which relate, respectively, to the exchange of Bonds, the negotiability, registration and transfer of Bonds, mutilated, destroyed or lost Bonds and cancellation of Bonds. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. Attested: CITY OF BOYNTON BEACH, FLORIDA By: By: City Clerk Mayor (SEAL) THE BANK OF NEW YORK, as Bond Registrar By: Its -4- 8124M 8121M/27 EXHIBIT "C" Preliminary Offici,.1 Statement NEW ISSUE - BOOK-ENTRY ONLY $. * City of Boynton Beach, Florida Utility System Revenue Bonds Series 1996 Date& ., 1996 Due: November 1, as shown below The City of Boynton Beach~ Florida Utility System Revenue Bonds (the · 1996 Bon&") are being i~sued by the City of Boynton Beach, Florida (the 'City') as ~ully reghtered bonds and will be initially issued and registered to Cede & Co., as nominee of Thc Depository Trust Company, New Yor~ New York ('DTC'), which wilt act as securities depository for the 1996 Bonds. Purclx .es of beneficial interesu in the 1996 Bonds wi". be made i~ hook-entry form only and the purch~ers will not receive physical delivery of the 1996 Bonds or any certificate representing their beneficial ownership i~ere~t in the 1996 Bomb. The 1996 Bonds will be available to purchasers in principal denominatiom of $5,000 and integral multiples thereof under the book-entry system rtu~intained by DTC through brokers and dealers who are. or who act through, DTC Participants. For so long as DTC or its nominee, Cede & Co., i~ the registered owner of the 1996 Bonds, payments ol principal and interest will be made directly to Cede & Co. Disbursement of paymems of principal and interest to individual purchasen is described under the heading 'DESCRIPTION OF THE 1996 BONT)S - Book-Entry- Only System' herein. Interest on the 1996 Bonds is payable semi-annually on each May 1 and November 1, commencing November 1, 1996. The 1996 Bonds are subject to redemption prior to maturity as more fully described herein. This cover page contains certain information for quick reference only. ]t is not a summary of the issue. Inv,-ton must read the entire Official Statement to obtain information essent, i~l to the making of an informed investment decision. The 1996 Bonds are being issued for the purpose of paying the costs of constructing certain additions and improvements to the City's water and se~er utility system, as described herein, (ii) funding a debt service reserve account and (iii) paying certain cost~ of issuing the 1996 Bonds The 1996 Bonds are limited obligations of the City payable solely from the Net Revenues derived by the City from the operation of its water and sewer utility system (the 'System'), certain Impact Fees and moneys and investments held in certain funds and accounts created by the Resolution (collectively, the 'Pledged Revenues'). The lien of the 1996 Bonds on the Pledged Revenues is on a parity with the ilen of the City's outstanding Utility System Revenue Bonds, Series 1992. The 1996 Bonds do not constitute a general obligation, debt or liability of the City or of the State of Florida or any political subdivision, agency or instrumentality of the City or the S~ate of Florida within the meaning of any ~.omtitutiona[, statutory, or charter provisions or limitations and neither the full faith and credit nor the taxing power of the State of Florida or the City are pledged as security for the payment of the principal of or interest on the 1996 Bonds. Payment of the principal of and interest on the 1996 Bonds when due will be guaranteed by a municipal bond insurance policy issued simultaneously with the delivery of the 1996 Bonds by Financial Guaranty Insurance Company. See 'MUNICIPAL BOND INSURANCE' herein. [LOgo] In tl,~ opinion of Bond Counsel under cresting law and assuming compliance by the Cay wah certain covenants, ~merest on the 1996 Bonds i~ e~.duded from gross m~ome for federal income tax purposes and interest on the ]996 Bonds is not an ttem of tax preference for purposes of the federal ~a~rnative minimum tax imposed on indtviduah and corporations. See, however, the reformation under the heading 'TAX EXEMPTION ' herein for · de&.~t~on of certain taxes on corporations and.for a discussion ofcerta:n other tax consequences to holders of the 1996 Bonds~ Bond Counsel i~ also of tl~ opinion tI~at the 1996 Bonds are exempt from all present mtangib[e personal property taxes imposed by the State of Florida~ See 'TAX EXEMPTION' hereto. Smgunt AMOUIN~TS, MATURI~ES, INTEREST RATES AND PRICES OR YIELDS $ Serial Bonds Interest Price or Maturity Rate Yield Amount Maturity Interest Price or Rate Yield $. __% Term Bonds due ~ 1, - Yield % $ % Term Bonds due 1, - Yield % (Accrued interest to be added) The 1996 Bonds are offered when, ~s and if issued and received by the Underwriters, subject to the unqualified approval of legality by Moyle, lghnigan, Katz, FitzGerald & Sheehan, P.A, West Palm Beach, Florid~ Bond Counsel. Certain legal matters will be p~sed upon for the City by its City Anorney, Jmias, Goren, Cherof, Doody & Ezrol, P.A., Fort Lauderdale, Florida. Certain legal matters will be passed upon for the Underwriters by their ¢o-~oumel, Holland ~ Knighg Lakeland, Florida and Jones & Evans, West Palm Beach, Florida. It ~s expected that ~he 1996 Bonds will be available for delivery to the Underwriters in New York, New York on or about ,1996. William IL Hough & Co. Raymond James & A,~ates Smith Barney Inc. Dated: ,1996 CITY OF BOYNTON BEACH, FLORIDA OFFICIALS CITY COMMISSION Gerald Taylor, Mayor Shirley Jaskiewicz, Vice Mayor Matt Bradley, Commissioner Henderson Tillman, Commissioner James Titcomb, Commissioner CITY OFFICIALS Carrie A. Parker, City Manager John A. Guidry, Utilities Director Diane Reese, Finance Director Suzanne M. Kruse, City Clerk CITY ATTORNEY James Cherof Josias, Goren, Chero£, Doody & Ezrol, P.A. Fort Lauderdale, Florida BOND COLYNSEL Moyle, Flanigan, Katz, FitzGerald & Sheehan, P.A. West Palm Beach, Florida CONSULTING ENGINEER CH2M Hill Southeast, Inc. Deerfield Beach, Florida No dealer, broker, salesman or other person has been authorized to make any representations, other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon. 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 1996 Bonds 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 obtained from public documents, records and other sources considered to be reliable and, while not guaranteed as to completeness or accuracy, is believed to be correct. Any statements in this Official Statement involving estimates, assumptions and matters of opinion whether or not so expressly statec~ are intended as such and not as representations of fact, and the City expressly makes no representations that such eatlmates, assumptions and opinions will be realized or fulfilled. No information, estimates, assumptions and matters of opinion contained in this Official Statement, or any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the City since the date hereof. THE 1996 BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE BOND RESOLUTION BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE 1996 BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THE SECURITIES LAWS OF THE STATES, IF ANY, IN WHICH THE 1996 BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OK QUALIFICATION IN CERTAIN OTHER STATES CAN'NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE 1996 BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. A.NY REPRESENTATION TO THE CONTKAKY MAY BE A CRIMINAL OFFENSE. IN CONNECTION WITH THE OFFERING OF THE 1996 BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH 1996 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. TABLE 07 2J'NrTENTS Page INTRODUCTION ............................................................. 6 PURPOSE OF THE ISSUE ....................................................... 6 AMENDMENTS TO RESOLUTION ............................................... ? General ................................................................ 7 Amendments to Become Effective Upon Issuance of 1996 Bonds ...................... 7 DESCRIPTION OF THE 1996 BONDS ............................................. 8 General ...: ............................................................ 8 Redemption Provisions for the 1996 Bonds ...................................... 8 Selection of 1996 Bonds for Redemption ......................................... 9 Notice of Redemption ..................................................... 9 Effect of Redemption ...................................................... 9 Book-Entry Only System ................................................... 10 SECURITY FOR THE 1996 BONDS ............................................... 12 General ................................................................ 12 Definitions .............................................................. 12 Rate Covenant ........................................................... 13 Reserve Account ......................................................... 14 Flow of Funds ........................................................... 15 I996 Project Construction Account ........................................... 17 Issuance of Additional Bonds ................................................ 17 MUNICIPAL BOND INSURANCE ................................................ 18 ESTIMATED SOURCES AND USES OF FUNDS ..................................... 19 DEBT SERVICE REQUIREMENTS ................................................ 20 THE SYSTEM ................................................................. 21 General ................................................................ 21 Service Area ............................................................. 21 Condition of the System and System Performance ................................. 22 Administration ........................................................... 22 Water System ............................................................ 23 Wastewater System ....................................................... 27 Description of Rate Structure ................................................ 29 Water Rates ............................................................. 31 Wastewater Rates ......................................................... 33 Water Meter Installation .................................................... 34 Water and Sewer Impact Fees ................................................ 34 Historical Revenues ....................................................... 35 Consolidation of Separate Systems into System ................................... 36 THE CITY ................................................................... 36 TAX EXEMPTION ............................................................ 36 LITIGATION ................................................................. 37 COVENANTS CONCERNING ONGOING DISCLOSURE ............................ 38 UNDERWRITING ............................................................. 40 RATINGS .................................................................... 40 LEGALITY ................................................................... 40 GENERAL PLYRPOSE FINANCIAL STATEMENTS ................................... 40 MISCELLANEOUS ............................................................ 41 AUTHORIZATION OF OFFICIAL STATEMENT .................................... 41 APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E APPENDIX F APPENDIX G General Information Concerning the City of Boynton Beach, Florida and Palm Beach County, Florida General Purpose Financial Statements of the City and Combining Statements for the City's Enterprise Fund for the Fiscal Year Ended September 30, 1995 Summary of Certain Provisions of the Resolution Proposed Form of Opinion of Bond Counsel Specimen Municipal Bond Insurance Policy Letter of Consulting Engineer Maps of System Service Area OFFICIAL STATEMENT City of Boynton Beach, Florida Utility System Revenue Bonds, Series 1996 INTRODUC~ON The purpose of this Official Statement, including the cover page and appendices, is to set forth certain information concerning the sale by the City of Boynton Beach, Florida (the 'City") of its Utility System Revenue Bonds, Series 1996, dated as of , 1996, in the aggregate principal amount of $ * (the ' 1996 Bonds"). The 1996 Bonds are issued under and secured pursuant to Resolution No. 92-96 adopted by the City Commission of the City (the "City Commission") on June 16, 1992, as amended and supplemented, in particular by Resolution No. 96- adopted by the City Commission on June 18, 1996 (collectively, the 'Resolution') and the Constitution and laws of the State of Florida, particularly Chapter 166, Florida Statutes and the Charter of the City. Copies of the Resolution are on file with the City at the office of the City Clerk, and reference thereto is hereby made for a complete understanding of the terms of and security for the 1996 Bonds, the custody and application of the proceeds of the 1996 Bonds, the rights and remedies of the holders of the 1996 Bonds and the rights, duties and obligations of the City. The 1996 Bonds are being issued on a parity with the City's outstanding Utility System Revenue Bonds, Series 1992 (the ' 1992 Bonds"). The I992 Bonds, the 1996 Bonds and any additional parity bonds issued pursuant to the Resolution (the 'Additional Bonds') are herein collectively referred to as the 'Bonds." The 1996 Bonds are limited obligations of the City and are secured and payable solely from the Net Revenues (as hereinafter defined) derived by the City from the operation of its water and sewer utility system (the "System"), ce.train Impact Fees (as hereinafter defined), and moneys and investments held in certain funds and accounts created by the Resolution (collectively, the "Pledged Revenues"). Neither the faith and credit nor the taxing power of the City, the State of Florida or any political subdivision thereof is or shall be pledged to the payment of the principal of or interest on the 1996 Bonds. See "SECURITY FOR THE 1996 BONDS" herein. All capitalized terms in this Official Statement not otherwise defined herein shall have the meanings set forth in Appendix C hereto, unless the context clearly indicates otherwise. PURPOSE OF THE ISSUE-THE 1996 PROJECT The I996 Bonds are being issued by the City for the purpose of providing funds (i) for the purpose of paying the costs of the Project as more fully described below (the "Project'), (ii) to fund the Reserve Account established under the Resolution (the 'Reserve Account') for the 1996 Bonds and (iii)for the payment of certain costs incidental to the issuance of the 1996 Bonds. The 1996 Project consists of the acquisition and construction of improvements to the City's existing water treatment and distribution facilities, the wastewater c611ection and disposal facilities and stormwater LAK-103045.4 / 8719-11 Preliminary, ~bject to change. H&K DRAFT 06/07/96 management facilities, in the amounts set forth below, estimated by the City. The total cost of all such improvements has been estimated by the City and the Consulting Engineer to be approximately $ Project Water Projects Wastewater Projects E~timated Cost of Project AMENDMENTS TO RESOLUTION General Pursuant to the Resolution, the City may make certain amendments to the Resolution upon receipt by the City of the consent of the Holders of a majority of the principal amount of Bonds outstanding. The Resolution provides that the consent of the Holders of any Series of Additional Bonds to be issued under the Resolution shall be deemed to have been given if the underwriters or initial purchasers for resale of such Series of Additional Bonds consent in writing to such amendments and if the nature of the amendments is disclosed in the offering document or official statement pursuant to which the Series of Additional Bonds is offered and sold to the public. Upon issuance of the 1996 Bonds, the Underwriters will consent to the amendments to the Resolution contained in Resolution No. 96-__ adopted by the City on June ___, 1996 (the '1996 Series Resolution"). The amendments to the Resolution contained in the 1996 Series Resolution, which require the consent of the Holders of a majority of the principal amount of the Bonds outstanding under the Resolution are described below. Such amendments will be consented to by the Underwriters upon, and will become effective upon, the issuance of the 1996 Bonds. Amendments to Become Effective Upon Issuance of 1996 Bonds The following amendments to the Resolution will be consented to by the Underwriters and will become effective upon issuance of the 1996 Bonds: (i) The definition of Current Expenses contained in Section 101 of the Resolution is amended to read in its entirety as described under "SECURITY FOR THE 1996 BONDS - Definitions" herein; and (ii) Section 513(0 of the Resolution is amended to read in its entirety as follows: for any lawful-use of the City. .... LAK-103045.4 / 8719-11 6 H&K DRAFT 06/07/96 DESCRIPTION OF THE 1996 BONDS General The 1996 Bonds shall be issued in the aggregate principal mounts shown on the cover page hereof. The 1996 Bonds shall be issued in fully registered form without coupons in principal denominations of $5,000 each or any integral..mltiples thereof, as described brow under 'Book-Entry-Only System.' The 1996 Bonds daall be dated ,1996, shall bear interest at the rates per annum set forth on the cover page hereof, computed on the basis of a 360-day year consisting of twelve thirty-day months, and shall mature on the dates and in the amounts set forth on the cover page hereof. Interest on the 1996 Bonds is payable ~emi-armually on 1 and 1 of each year commencing 1, 1996. will act as Paying Agent and Bond Registrar for the 1996 Bonds. Redemption Provisions for the 1996 Bonds Optional Redemption. The 1996 Bonds maturing before November I, are not subject to optional redemption prior to their stated maturities. The 1996 Bonds maturing on or after November 1, __ are subject to redemption, at the option of the City, as a whole or in part on any date on or after November 1, at the following redemption prices (expressed as percentages of the principal amount of the 1996 Bonds to be redeemed), together with accrued interest to the date of redemption, as follows: Redemption Period {Both Dates Inclusive) Redemption Price November 1, November 1, November I, through October 31, through October 31, and thereafter Mandatory_ Redemption. The 1996 Bonds maturing on 1, are subject to mandatory redemption prior to their maturity date at a redemption price equal to the phncipal amount thereof, without premium, plus accrued interest to the redemption date, on 1, and on each 1 thereafter in the years and principal amounts set forth below (except for the final installment due at maturity, which shall not be a redemption): Amount Final Maturity. - ~- LAKo103045.4 / 8719-11 7 H&K DRAFT 06/07/96 The 1996 Bonds maturing on November 1, . are subject to mandatory redemption prior to their maturity date at a redemption price equal to the principal amount thereof, without premium, plus accrued interest to the redemption date, on November 1, .. and on each November I thereafter in the years and principal amounts set forth below (except for the final installment due at maturity, which shall not be a redemption): Year Amount Final Maturity. Selection of 1996 Bonds for Redemption The City shall select the 1996 Bonds or portions thereof to be purchased or redeemed by lot. The City shall promptly notify the Bond Registrar in writing of the numbers of the 1996 Bonds so selected for redemption and in making such selection, each 1996 Bond shall be treated as representing that number of 1996 Bonds of the lowest authorized denomination of 1996 Bonds as is obtained by dividing the principal amount of such 1996 Bond by such denomination. Notice of Redemption At least thirty (30) and not more than sixty (60) days prior to the redemption date, a notice of such redemption: (i) shall be filed with the Bond Registrar and (ii) shall be mailed postage prepaid, to all registered owners of the 1996 Bonds to be redeemed at their addresses as they appear on the registration books maintained by the Bond Registrar, but failure of any bondholder to receive any such notice shall not affect the validity of the proceedings for such redemption, and any defect in the giving of such notice of redemption of any 1996 Bond shall not affect the validity of the redemption of any other 1996 Bond. Effect of Redemption On the date so designated for redemption, notice having been published and filed in the manner and under the conditions provided in the Resolution, the 1996 Bonds so called for redemption shall become and be due and payable at the redemption price provided for redemption of such 1996 Bonds on such date, and, moneys for payment of the redemption price being held in separate accounts by the Finance Director or by the Bond Registrar in trust for the Holders of the 1996 Bonds to be redeemed, interest on the 1996 Bonds so called for redemption shall cease to accrue, such 1996 Bonds shall cease to be entitled to any lien, benefit or security under the Resolution, and the Holders or registered owners of such 1996 Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof and accrued interest thereon. -~ LAK-103045.4 / 8719-I1 8 H&K DRAFT 06/07/96 Book-Entry Only System The 1996 Bonds will, when issued, be registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"), and DTC will act as securities depository for the 1996 Bonds. Purchases of beneficial interests in the 1996 Bonds will be made in book-entry form only, in denominations of $5,000 or any integral multiple thereof. Purchasers of beneficial interests in the 1996 Bonds (the 'Beneficial Owners") will not recei,'e certificates representing their interests in the I996 Bonds purchased. So long as Cede & Co. is the registered owner of the 1996 Bonds, references herein to the Bondholders or registered owners shall mean Cede & Co. as aforesaid, and shall not mean the Beneficial Owners of the 1996 Bonds. $o long as Cede & Co. is the registered owner of the 1996 Bonds, principal, premium, if any, and interest on the 1996 Bonds are payable by the Paying Agent, directly to Cede & Co, as nominee for DTC. Disbursement of such payments to the DTC Participants (as defined herein) is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of the DTC Participants and Indirect Participants (as defined below). DTC will act as securities depository for the 1996 Bonds. The 1996 Bonds will be issued as fully- registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered certificate will be issued for each separate maturity as set forth on the cover page of this Official Statement, of the 1996 Bonds, each in the aggregate principal amount 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 provisaons of Section 17A of the Securities Exchange Act of 1934. 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 book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. 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 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 its Participants are on file with the Securities and Exchange Commission. Purchases of 1996 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 1996 Bonds on DTC's records. The beneficial ownership interest of each 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 con£n'mations 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 owfiership interests in the 1996 Bonds 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 the 1996 Bonds, except in the event that use of the book-entry system for the 1996 Bonds is discontinued. LAK-103045.4 / 8719-11 9 H&K DRAFT 06~07/96 To facilitate subsequent transfers, all 1996 Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of 1996 Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the a~xmal Beneficial Owners of the 1996 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 1996 Bonds 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 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 dine. Neither DTC nor Cede & Co. will consent or vote with respect to 1996 Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the City 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 1996 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the 1996 Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts on payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the ease 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 Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City, 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 1996 Bonds at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, 1996 Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, 1996 Bond certificates will be printed and delivered. For every transfer and exchange of the 1996 Bonds, or interest therein, the Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other governmental charge that may be imposed relating thereto. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. The City doe~ not have any responsibility or obligation to the DTC Participants, Indirect Participant* or the Beneficial Owners with respect to (a) the accuracy of any records maintained by DTC or any DTC Participant or Indirect Participant; (b) the payment by DTC or any DTC Participant or Indirect Participant of any amount due to any Beneficial Owner in respect of the principal of and premium, if any, and interest on the 1996 Bonds; (c) the delivery or timeliness of delivery by DTC or any LAK-103045.4 / 8719-11 I0 H&K DRAFT 06/07/96 DTC Participant or Indirect Participant of any notice to any Beneficial Owner which is required or permitted under the terms of the Resolution to be given to Bondholders; (d) the selection of the Beneficial Owner~ to receive payments in the event of any partial redemption of the 1996 Bonds; or (e) any consent given or other action taken by DTC, or its nominee, Cede & Co., as Bondowner. In the event the system of book-entry ownership of the 1996 Bonds is discontinued, transfers and ,-~ehanges of the 1996 Bonds will be . :complished as described in the Apl: endix C 'Summary of Certain Provisions of the Resolution' hereto. SECURITY FOR THE 1996 BONDS General The principal of, premium, if any, and interest on the 1996 Bonds will be payable solely from and secured by a pledge of the Pledged Revenues, which include (i) Net Revenues of the System, (ii) to the extent hereinafter described, certain Impact Fees, and (iii)subject to the application thereof as provided in the Resolution, amounts in certain funds and accounts established under the Resolution. The lien of the 1996 Bonds on the Pledged Revenues will be on a parity with the 1992 Bonds and any Additional Bonds issued under the Resolution. ALL BONDS ISSUED UNDER THE RESOLUTION DO NOT CONSTITUTE A GENERAL OBLIGATION, DEBT OR LIABILITY OF THE CITY OR THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION, AGENCY OR INSTRUMENTALITY OF THE CITY OR THE STATE OF FLORIDA WITHIN THE MEANING OF THE FLORIDA CONSTITUTION, AND NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE STATE OF FLORIDA, OR ANY POLITICAL SUBDIVISION THEREOF, ARE PLEDGED OR OBLIGATED AS SECURITY FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON ANY BONDS. THE BONDS ARE LIMITED OBLIGATIONS OF THE CITY AND THE HOLDERS OF THE BONDS SHALL HAVE NO RIGHT TO REQUIRE THE IMPOSITION OF ANY TAX OR THE ESTABLISHMENT OF ANY RATE OF TAXATION FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON ANY BONDS. Definitions "Pledged Revenues" means (i) Net Revenues, (ii) to the extent provided in the Resolution, Impact Fees and (iii) to the extent provided in' the Resolution, other amounts in certain funds and accounts created by the Resolution. "Net Revenues" means for any particular period the amount of excess of the Revenues for such period over the Current Expenses payable from the Revenue Account for such period, provided that for purposes of determining whether or not the City can meet debt service coverage requirements with respect to the issuance of Additional Bonds or determining whether or not the City has met its rate covenant, the term 'Net Revenues" shall not include Revenues deposited in the Rate Stabilization Account. *Revenu~s" means all moneys received by the City in connection with or as a result of its ownership or operation of the System, including any income derived from the sale of water produced, treated or - distributed by the System, or the collection, transmission, treatment or disposal of sewage or stormwater runoff by the System, any proceeds of use and occupancy insurance on the System or any part thereof, payments made to the City under Interest Rate Swaps, income from investment of money hdd under the ~ ~ LAK-103045.4 / 8719-I1 11 H&:K DRAFT 06/07/96 Resolution and amounts transferred from the Rate Stabilization Account to the Revenue Account pursuant to the Resolution and any Assessments; but excluding (i) Impact Fees, (ii) special assessments other than any Assessments, (iii) grants,' contributions or donations, (iv) income from the investment of moneys in the Construction Fund and the Impact Fee Account, (v) proceeds of insurance (except use and occupancy insurance) and condemnation awards, (vi) money held in any Arbitrage Rebate Fund, (vii) proceeds of sales of property constituting a part of the System or (viii) the proceeds of Bonds or other Utility Debt. *Current Expenses" means the City's reasonable and necessary current expenses of maintenance, repair and operation of the System, (a) inclu~ling all ordinary and usual expenses of maintenance and repair, which may include expenses not annually recurring, all reasonable City administrative expenses allocated to the System pursuant to the Annual Budget, any reasonable payments to pension or retirement funds properly ehargcable to the System, insurance premiums, engineering expenses relating to maintenance, repair and operation, expenses, including engineering expenses incurred in connection with the research and development of improvements or planned or possible improvements to the System, fees and expenses of the Bond Registrar, legal and accounting expenses, any fees, fines, or penalties lawfully imposed on the System, any taxes which may be lawfully imposed on the System or its income or operations and reserves for such taxes or payments in lieu of such taxes .as the Commission shall determine to pay, premiums for bond insurance, interest rate insurance or insurance assuring availability: of the amounts required to be on deposit in the Reserve Account, fees for Credit Facilities or Liquidity Facilities, initial fees paid by the City to a party in consideration of the execution of an Interest Rate Swap (as opposed to payments made by the City based upon the notional amount pursuant to the Interest Rate Swap) and any other expenses required to be paid by the City under the provisions of the Resolution or by law, including any amounts required from time to time to fund the Arbitrage Rebate Fund, (b) but Current Expenses shall not include any reserves for extraordinary maintenance or repair, or any allowance for depreciation or amortization, or any deposits or transfers to the credit of the SAinking Fund Account, the Reserve Account, the Rate Stabilization Account, the Subordinated Indebtedness ccount, the:Renewal, Replacement and Improvement Account, the General Reserve Account or the Impact Fee Account, and shall n~t include, for pu~p.,oses of determining whether or not the City has met its rate covenant, or determining whether or not the City: can meet the debt service coverage requirement with respect to the issuance of Additional Bonds, any Cky administrative expenses allocated to the System. "Impact Fees" means all nonrefundable (except at the option of the City) capital recovery charges, pollution control fees, capacity charges and other similar fees and charges separately imposed by the City as a nonuser capacity charge for the proportionate share of the cost of expanding, oversizing, separating or constructing Improvements to the System and any investment carning?.fro_m the investment of funds .on deposit in the Impact Fee Account, but excluding those charges imposed by the City on persons connectzng to the System for the cost of physically connecting thereto, including but not limited to the costs of excavation, plumbing, installation of meters and landscaping. Rate Covenant The City has covenanted under the Resolution to fix, charge and collect reasonable rates and charges for the use of the services and facilities furnished by the System and that from time to time, and as often as It ~ appear necessary, to adjust such rates and charges by increasing or decreasing the same or any sdected categories of rates and charges so that the Net Revenues will be sufficient to provide an amount in each Fiscal Year at least equal to one hundred ten per centum (110%) of the Principal and Interest Requirements for such Fi.~gal Year on account of the 1996 Bonds then Outstanding and one hundred per centum (100%) of all amounts required to be deposited to the Reserve Account and the Renewal, Replacement and Improvement Account. LAK-103045.4 / 8719-11 12 H&K DRAFT 06/07/96 The City has further covenanted under the Resolution and agrees that if in any Fiscal Year the Net Revenues shall be less than the amount required under the preceding paragraph, within 30 days of the receipt of the audit report for such Fiscal Year, the City shall employ a Rate Consultant to review and analyze the financial status of the System, to inspect the System and to submit, within 60 days thereafter, a written report to the City recommending revisions of the rates, fees and charges of the System and the methods of operation o/the System that will result in producing the amount so required in the following Fiscal Year. Promptly upon its receipt of such recommendations, the City shall transmit co?ies thereof to the City Manager and si ~1 revise its rates, fees and charges, or alter its methods of operation and take such other action as shall conform · rith such recommendations. If the City shall fail to comply with the recommendations of the Rate Consultant, the registered owners of not less than ten per centum (10%) in principal amount of all Bonds then Outstanding may institute and prosecute an action or proceeding in any court or before any board or commission having jurisdiction to compel the City to comply with the recommendations and the requirements of the Rate Consultant. If the City shall comply with all recommendations of the Rate Consultant in respect to its rates, fees, charges and methods of operation, the failure of Net Revenues to meet the above described requirements shall not constitute an Event of Default so long as the Revenues, together with available moneys in the funds and accounts under the Resolution, are sufficient to pay in cash the Current Expenses and to pay the Principal and Interest Requirements on all Outstanding Bonds and other Utility Debt, except any Subordinated Indebtedness, for such Fiscal Year. Reserve Account The Resolution provides for the establishment and maintenance of a Reserve Account, and separate subaccounts within the Reserve Account for each Series of Bonds issued pursuant to the Resolution, in an amount (i) with respect to the 1996 Bonds, equal to the lesser of (a) 10% of the aggregate stated principal amount of the 1996 Bonds Outstanding, (b) the maximum amount of principal and interest scheduled to become due on the 1996 Bonds in the current or any succeeding Bond Year, or (c) 125% of the average annual debt service on the Outstanding 1996 Bonds (calculated on a Bond Year basis at the time of issuance only) and (ii) with respect to any Series of Additional Bonds, such funding requirement for the Reserve Account, if any, as shall be established in the Series Resolution for such Series of Additional Bonds (the "Re~erve Account Requirement'). Moneys held for the credit of each subaccount in the Reserve Account shall be used for the payment of the interest on, the principal of and the Amortization Requirements for the Bonds for which such Subaccount was established whenever and to the extent that moneys held for the credit of the Bond Service Subaccount or the Redemption Subaccount in respect of such Bonds shall be insufficient for such purpose. If at any time the moneys held for the credit of any such subaccount in the Reserve Account shall exceed the Reserve Account Requirement for the Series for which such subaccount in the Reserve Account' was established, Such excess shall be withdrawn and deposited to the credit of the Revenue Account. The Series 1996 Reserve Subaccount in the Reserve Account shall be funded in an amount equal to the Reserve Account Requirement upon the issuance of the 1996 Bonds. In lieu of the required deposit into the Series 1996 Reserve Subaccount, the City may, with the consent of any applicable issuer of a Credit Facility or Liquidity Facility then in effect, cause to be deposited into the Series 1996 Reserve Subaccount a Reserve Account Insurance Policy or Reserve Account Letter of Ca'edit for the benefit of the Holders of the 1996 Bonds either in substitution for the full amount then on ' deposit therein, or in an amount equal to the difference between the amount required to be deposited in the 5eries 1996 Reserve Subaccount and the sum, if any, then on deposit in the Series 1996 Reserve Subaccount, which Reserve Account Insurance Policy or Reserve Account Letter of Credit shall be payable (upon the LAK-103045.4 / 8719-11 13 H&K DRAFT 06/07/96 giving of notice as required thereunder) on any interest payment date on which a deficiency exists for the 1996 Bonds, which cannot be cured by moneys in any other fund or account held pursuant to the Resolution and available for such purpose. To the extent required by the issuer of a Reserve Account Insurance Policy or Reserve Account Letter of Credit, the City may enter into an agreement or agreements with a Depositary for the purpose of depositing such Reserve Account Insurance Policy or Reserve Account Letter of Credit with math Depositary. and providing for utilization of proceeds of the Reserve Account Insurance Policy or Reserve Account Letter of Credit as provided in the Resolution. If any such Reserve Account Insurance Policy or Reserve Account Letter of Credit is substituted for moneys on deposit in the Series 1996 Reserve Subaccount, · e excess moneys in the Series 1996 Reserve Subaccount shall be applied to satisfy any such deficiency in any of the funds or accounts under the Resolution, and any remaining balance shall be deposited in the General Reserve ACcount. Flow of Funds Revenues will be collected by the City and deposited as received with a Depositary or Depositaries to the credit of the Revenue Account. All moneys in the Revenue Account shall be held by the City in trust and applied as follows: On or before the 20th day of each month, except as provided hereafter, the City shall withdraw an amount equal to the balance remaining in the Revenue Account, less an amount (to be held for the payment of Current Expenses) equal to the amount shown by the Annual Budget to be necessary for Current Expenses during the next two (2) ensuing months, and deposit the sum so withdrawn in the following order: (a) to the credit of the Bond Service Subaccount of the Sinking Fund Account, an amount, together with any amount concurrently deposited therein from the Impact Fee Account, equal to one-sixth (I/6th) of the amount of interest payable on the Bonds of each Series on the next succeeding Interest Payment Date and equal to one-twelfth (1/12th) or, if principal is payable semi-annually, one-sixth (1/6th), of the next maturing installment of principal on all Serial Bonds then outstanding; provided, however, that in each month intervening between the date of delivery of the 1996 Bonds, any Additional Bonds or any Refunding Bonds (beginning with the month following the month in which such delivery takes place) and the next succeeding Interest Payment Date and the next succeeding principal payment date. respectively, the amount specified in this subpaxagraph shall be that amount which when multiplied by the number of deposits to the credit of the Bond Service Subaccount required to be made during such respective periods as provided above will equal the amounts required (in addition to any amounts received as accrued interest or capitalized interest from the proceeds of such Bonds) for such next succeeding interest payment and next maturing installment of principal, respectively; and provided further that on or before the 15th day of the month preceding any Interest Payment Date or maturity date of Bonds, the required deposit to the Bond Service Subaccount shall be the amount. necessary, together with other amounts on deposit in such Subaccount, to provide for the interest and principal coming due on such Interest Payment Date or maturity date; (b) to the credit of the Redemption Subaccount of the Sinking Fund Account, an amount, together with any amount concurrently deposited therein from the Impact Fee Account, equal to one-twelfth (1/12th) or, ff any Bonds are required to be retired semi-annually in satisfaction of the Amortization Requirements therefor, one-sixth (1/6th), of the principal amount of Term Bonds of each Series then outstanding required to be retired, in satisfaction of the Amortization Requirements, if any, for such Fiscal Year;, provided that on or before the 20th day 'of the month preceding the due date of any Amortization Requirement, the required deposit to the Redemption Subaccount shall be the amount necessary, together with other amounts on deposit therein, to provide for such Amortization Requirement; LAK-103045.4 / 8719-11 14 H&:K DRAFT 06/07/96 (c) to the credit of the Reserve Account and the subaccounts therein, such a. mount, if any, of any balance remaining after making the deposit described in clauses (a) and (b) above (or the entire balance if less than the required amount) which will be required to make the amount deposited to the credit of the Reserve Account and the ~ubaccounts xherein in such month equal to the Reserve Account Deposit Requirement for all Bonds for such month. In the event the amount available to be deposited in the Reserve Account at any time is/le~,s than the Reserve Account Deposit Requirement for all Bonds at such time, the amount available flaall Be allocated among the ,arlous subaccounts having a Reserve. Account Deposit Requirement pro rata, ba.~d upon the proportion that the Reserve Account Deposit Requirement for each subaccount .years to the total Reserve Account Deposit Requirements for all subaccounts; (d) to the credit of the Renewal, Replacement and Improvement Account, such amount, if any, of any balance remaining after making the deposits described in clauses (a), (b) and (c) above (or the entire balance if less than the required amount) as may be required to make the amount deposited in such month to the credit of the Renewal, Replacement and Improvement Account equal to one-twelfth (l/12th) of the difference between any lesser amount on deposit therein and the Renewal, Replacement and Improvement Account Requirement for such Fiscal Year;, (e) to the credit of the Rate Stabilization Account, such amounts as shall be determined from time to time by the Commission for crediting thereto; (f) to the credit of any Arbitrage Rebate Fund, such amount as shall be determined from time to time by the Commission for crediting theretO; (g) to the credit of the Subordinated Indebtedness Account, an amount, if any, of any balance remaining after making the deposits under clauses (a) through (f) above (or the entire balance if less than the required amount) equal to the sum of one-twelfth (1/12th)of the principal of, redemption premium, if any, and interest coming due on any Subordinated Indebtedness during the next succeeding twelve month period and the amount, if any, required to be deposited in any special reserve subaccount established within the Subordinated Indebtedness Account as provided in the Resolution; and (h) to the credit of the General Reserve Account, the balance, if any, remaining after making the deposits described in clauses (a) through (g) above. If the amount deposited in any month to the credit of any of the Accounts mentioned in (a) to (h), inclusive, above shall be less than the amount required to be deposited therein under the Resolution, the requirement therefor shall nevertheless be cumulative and the amount of any deficiency in any month shall be added to the amount otherwise required to be deposited in each month thereafter until such time as all such deficiencies have been made up. .... LAK-103045.4 / 8719-11 15 H&K DRAFT 06/07/96 1996 Project Construction Account Moneys in the Series 1996 Project Construction Account in the Construction Fund are required to be held in trust and applied to the payment of a portion of the Cost of the 1996 Project and, pending such application, shall be subject to a lien and charge in favor of the Holders of the 1996 Bonds. To the extent there axe no other funds available under the Resolution for such purpose, moneys in the Series 1996 Project Construction Account shall be used to pay t Ancipal and interest on the 1996 Bonds to the extent necessary to prevent a payment default on the 1996 Bonds. Amounts remaining in the Series 1996 Construction Account upon completion of the 1996 Project which axe not reserved by the City for the payment of any part of the 1996 Project shall be transferred by the Finance Director, in the discretion of the Commission, to the credit of the Renewal, Replacement and Improvement Account, to the credit of the Sinking Fund Account for the payment of the principal of the 1996 Bonds or retained in the Series 1996 Project Construction Account for the payment of the costs of a different Improvement or Improvements to the System which have been approved by the Commission. Issuance of Additional Bonds The City may issue Additional Bonds under and secured by the Resolution, on a parity as to the pledge of the Pledged Revenues with any other Bonds then Outstanding, provided that there shall be filed with the City a written statement or report, with respect to such Additional Bonds being issued to provide funds to pay the Cost of a Project, described in either (i) or (ii) below, or, with respect to Additional Bonds issued to pay debt service on Utility Debt, described in (ii) below: (i) prepared by the Consulting Engineers and demonstrating that the percentage derived by dividing the Net Revenues projected for the System, based upon assumptions approved in writing by each issuer of a Credit Facility after an opportunity to review and comment on such statement or report, for the Fiscal Year following the Fiscal Year in which the Completion Date of the Improvements to be financed by the Additional Bonds then to be delivered is expected to occur, as such Completion Date is established by the Consulting Engineers, adjusted as provided below, by the Maximum Principal and Interest Requirements, including the Principal and Interest Requirements with respect to the Additional Bonds then to be delivered, for any future Fiscal Year is not less than one hundred ten per eentum (110%) or (ii) prepared by the Consu~lting Engineers, the Finance Director, the Accountant or the Rate Consultant and demonstrating that the percentage derived by dividing the Net Revenues for any period of twelve consecutive months selected by the City out of the twenty four months preceding the delivery of such written statement or report, by the Maximum Principal and Interest Requirements, including the Principal and Interest Requirements with respect to the Additional Bonds then to be delivered, for any future Fiscal Year is not less than one hundred ten per centum (110%), provided, that for purposes of this clause (ii), Net Revenues consisting of Impact Fees and amounts transferred from the Rate Stabilization Account shall not account for more than 10% of the total Net Revenues. The period during which Net Revenues are determined is referred to as the 'Measurement Period'. In calculating Net Revenues for purposes of the preceding paragraph, the following adjustments to Net Revenues may be made: (1) If the City, prior to the issuance of the proposed Additional Bonds, shall have increased the rates, fees, rentals or other charges for the services of the System, the Net Revenues for the Measurement Period may be adjusted to show the Net Revenues which would have been derived from the System in such Measurement Period as if such increased rates, fees, rentals or other charges for the services of the System had been in effect during all of such Measurement Period. ...... LAK-103045.4 / 8719-11 16 H&K DRAFT 06/07/96 (2) If the City shall have acquired or has contracted to acquire any privately or publicly owned existing water system, sewer system or stormwater system, then the Net Revenues derived from the System during the Measurement Period may be increased by addition to the Net Revenues for the Measurement Period of the Net Revenues which would have been derived from said existing water system, sewer system or stormwater system if such existing water system, sewer system or stormwater system had been a part of the System during the Measurement Period. For the purposes of this paragraph, the Net Revenues derived from said existing water system, sewer system or stormwat~: system during the Measurement Period shall be ~ljusted by deducting the cost of operation and maintenance of said existing water system, sewer system or ~tormwater system from the gross revenues of said existing water system, sewer system or stormwater system in the same manner provided in the Resolution for the determination of Net Revenues, and adjusted in each case to reflect municipal ownership of such system. (3) If the City, in connection with the issuance of Addition a.l Bonds, shall enter into a contract (with a duration not less than the final maturity of such Additional Bonds) with any public or private entity whereby the City agrees to furnish services in connection with any water system, sewer system or stormwater system, then the Net Revenues of the System during the Measurement Period may be increased by the least amount which said public or private entity shall guarantee to pay in any one year for the furnishing of said services by the City, after deducting therefrom the proportion of operating expenses and repair, renewal and replacement cost attributable in such year to such services. Such payments shall be deemed to be Net Revenues of the System and pledged for the Bonds in the same manner as other Net Revenues of the System. (4) If the City covenants to levy Assessments or Impact Fees against property to be benefitted by the Improvements (which levy will be done in accordance with State law), the cost of which shall be paid from the proceeds of the proposed Additional Bonds and if in the case of Impact Fees, such Impact Fees are legally available for application with respect to such Additional Bonds as permitted under the Resolution, then the Net Revenues during the Measurement Period may be increased by an amount equal to one hundred per centum (100%) of the amount which the Consulting Engineer estimates will be received in each year from the levy of said Assessments or Impact Fees, as the case may be, within three years of the date of the sale of such Additional Bonds, said amount to be the total received from the installment payments on the Assessments or Impact Fees, as the case may be, plus, in the case of Assessments, any interest paid on the unpaid portion of the Assessments. In the case of Assessments, the estimate of the Consulting Engineer shall be based upon the preliminary assessment roll filed with the City prior to the construction of such Improvements. (5) Should the City be constructing or acquiring additions, extensions or Improvements to the System from the proceeds of such Additional Bonds and if the City shall have established rates, fees, rentals or other charges to be charged and collected from users of such facilities when service is rendered, the Net Revenues for the Measurement Period may be adjusted to show the Net Revenues estimated by the Consulting Engineers or the Rate Consultant to be received from the users of the facilities to be financed, during the first full Fiscal Year of operation after completiOn of the construction or acquisition of said additions, extensions and improvements as if such rates, fees, rentals or other charges for such services had been in effect during all of such Fiscal Year. MUNICIPAL BOND INSURANCE [TO COME] LAK-103045.4 / 8719-11 17 H&K DRAFT 06/07/96 ESTIMATED SOURCES AND USES OF FUNDS SOURCES OF FUNDS: Principal Amount of 1996 Bonds $ Less: Original Issue Discount .... - ...................................... Accrued Interest ................................................... TOTAL SOURCES: USES OF FUNDS: Deposit to Construction Fund ........................................ $ Deposit to Reserve Account ........................................... Deposit to Interest Account ........................................... Costs of Issuance(" .................................................. TOTAL USES: (1) Includes, among other things, underwriters' discount, counsel fees, registrar fees and municipal bond insurance premium. LAK-103045.4 / 8719-11 18 H&K DRAFT 06/07/96 DEBT SERVICE REQUIREMENTS The following table sets forth the debt service requirements for the outstanding 1992 Bonds and the 1996 Bonds: Bond Year Total Debt Service Total Annual ending on Outstanding 1996 Bonds 1996 Bonds Debt Service on 1996 1, 1992 Bonds Principal Interest Bonds and 1992 Bonds $ $ (1) $ .... TOTAL $ $ $ (1) Includes Accrued Interest ~ ' LAK-103045.4 / 8719-11 19 H&K DRAFT 06/07/96 Gener31 THE SYSTEM {NOTE-Double Spacing In This Section Is For Ease In Drafting Purposes Only} The City provides water and wastewater services to a geographic area within Palm Beach County about twice the size of the City itself. The City's water system includes facilities for raw water supply, water treatment and water distribution and the City's wastewater system includes sewage collection and transmission. The information contained below has been provided by the City. Service Area The System serves the City, the Town of Briny Breezes, a portion of the Town of Hypoluxo and several unincorporated areas of Palm Beach County. The Town of Ocean Ridge, which is geographically within the City's service area is also served by the City's water system, but has no sanitary sewers and relies on a combination of septic tanks and small neighborhood package plants for wastewater treatment. The City also provides wastewater collection service to the Village of Golf, but provides no water service. The service areas for the City's water system and wastewater collection and transmission system are illustrated in Appendix G hereto. The estimated population [in 1991] within the service area was approximately [70,000.] The City may extend Raze boundaries in the future through annexation of unincorporated areas of Palm Beach County, which primarily lie to the west of existing City limits or purchase of the water system from the Village of Golf. Current City policy is to limit annexation to the west to areas east of Lawrence Road. Because most of the areas that may be annexed are already encompassed by the water and wastewater service areas and connected to the water and wastewater systems, annexation is not expected to have a significant effect on water and wastewater service demands. LAK-103045.4 / 8719-11 20 H&K DRAFT 06/07/96 Condition of the System and System Performance The City has represented that, giving consideration to the age and complexity of the System, the production, transmission, distribution, treatment and collection facilities of the System are in good condition md well operated and maintained in accordance with usual utility practice and can reasonably be expected to provide adequate and reliable service to meet the existing requirements of the System. In addition, the City has represented that plant staff is at a reasonable level and is receiving adequate training for operation of the System. The Consulting Engineer has conducted a review of the condition and maintenance practices of the System. See Appendix F "Letter of Consulting Engineer" hereto. Administration The City's Water and Sewer Utilities Department is divided administratively into nine divisions, consisting of an administrative division and eight operating divisions. Total staff for the department was [96 as Of June, 1991] and includes :2 professional engineers, 15 certified water treatment plant operators, 6 certified system operators and 13 certified field technicians. This staff is responsible for the operation and maintenance of the water supply, treatment, distribution and storage facilities, as well as wastewater collection, pumping and transmission. Wastewater treatment facilities are operated and maintained under the South Central Regional Wastewater Treatment and Disposal Board. As a means of maintaining employee satisfaction and good service and utility performance, quality circles have been instituted [within the last year.] Eight such groups are currently functioning. The utility also supports an ongoing safety training program for its staff. Billing and collection for the System is handled by the City's Finance Department. ' LAK-103045.4 / 8719-II 21 H&K DRAFT 06/07/96 Water System The water system operated by the City consists of groundwater withdrawal, treatment, transmission, storage, distribution, administration, and operations. The projectedaverage and maximum daily demands [for the year 1997] are 14.2 million gallons per day (mgd) and 19.5 mgd, respectively. Treatment Plants and Well Fields. The City has one water treatment plant known as the East Water Treatment Plant (the 'East WTP") which ~s permitted to operate at a maximum daily rate of 19.24 mgd. The East WTP uses lime softening, filtration, ammoniation and chlorination to treat the surficial groundwater withdrawn from the East Well Field. The plant's treatment facilities are capable of treating 20.5 mgd, but the plant's rating is limited to 19.24 mgd because of insufficient raw water supply. The East WTP can be uprated to 20.5 mgd if two additional raw water wells are added, however, this additional capacity is not expected to be needed because of available raw water and treatment capacity at the West WTP. The City's water system uses groundwater withdrawn from the surficial aquifer to supply water to its treatment system. Currently, only the East Well Field, which comprises 20 active production wells, is used to supply water to the East WTP. The City began operation of the West Water Treatment Plant (the "West WTP") in the western portion of the City in January, 1994. Design and construction of the West WTP was funded with proceeds of the City's Water and Sewer Utility Revenue Bonds, Series 1990 (the "Series 1990 Bonds'), which bonds are being refunded with the proceeds of the 1996 Bonds. The West WTP provides 4 mgd of finished water with an ultimate capacity of 16 mgd. The plant will use low-pressure reverse osmosis (nanofiltration or membrane softening) to remove organics and hardness from the groundwater and then employ &gasification =- LAK.103045.4 / 8719-11 22 H&K DRAFT 06/07/96 to remove hydrogen sulfide. It is the Consulting Engineers' opinion that the finished water quality produced at the West WTP is very high and meets all current and will meet anticipated future water regulations. In addition to membrane softening and degasiflcation, an odor control system will neutralize hydrogen sulfide from the off-gas of the degasification unit. Other treatment processes will include chemical storage and feed ~/vtem~, standby emergency power for the plant and well field, high service pumping, a 3.0 MG storage tank, a plant operations and laboratory facility, a deep injection well to dispose of the concentrate byproduct produced during the membrane softening process, and an emergency concentrate water disposal system to the City's wastewater collection system. A data acquisition and control system ("DACS") is scheduled for completion in 1996 which will allow the East WTP to monitor all operations within the West WTP and transfer information to and from the East WTP. The City has also begun design for an expansion of the West WTP to increase capacity to approximately 8 mgd. Additional capacity may be available by blending a portion of the pretreated raw water with the membrane softened water. As part of this expansion, three new raw water wells will be added as well as additional membrane treatment capacity and high service pumping. Water supply for the West WTP comes from the West Well Field immediately west of the West WTP. The City has completed drilling and developing the ten wells that make up the West Well Field and has completed the' raw water system piping that interconnects with each well and terminates at the new West WTP. Each well has also been outfitted with a well head and discharge piping. The surficial aquifer is the water source for these wells, which will supply raw water to the new West WTP. Only four of the wells will be utilized for the 4 mgd first phase of the West WTP. These wells will be outfitted with pumps, controls, and electrical equipment, and each well will be capable of providing 1.5 mgd of flow. As the West WTP expands beyond its initial 4 mgd Capacity to 8 mgd by the year 1998 and to 16 mgd by buildout, the remainder of the wells in the West Well Field will be utilized. ~ LAK-103045.4 / 8719-11 23 H&:K DRAFT 06/07/96 Water Distribution and Storage. The water distribution system covers the entire water service area. Pipe sizes range from 2 inches to 30 inches in diameter within the system. As part pan of the project in connection with the issuance of the Series 1990 Bonds, the replacement of substandard small-diameter p~ping has been partially completed. The storage cap-city within the system includes two 0.5-MG elevated storage tanks, a 1.4-MG clear well at the East XXrI'p, a 1.0-MG and two 3.0-MG ground storage tanks. In addition, the City is replacing the two existing 0.5 MG elevated storage tanks with a new 1.5 MG elevated storage tank. The two existing tanks will be demolished because one suffers from operational problems and the other has a persistent leak. The new 1.5 MG elevated storage tank will be located immediately south of the East WTP. The new is constructed of prestressed concrete rather than steel which reduces operation and maintenance costs because the tank does not have to be painted. With the completion of this new tank, no additional storage facilities are anticipated through buildout. Regulatory Framework and Compliance. The City operates the water system in such a manner that all local, state and federal regulations are met. Standards of utility operation and water quality for the water system have been established by the Environmental Protection Agency ("EPA") under the 1974 Safe Drinking Water Act ('SDWA") and the 1986 SDWA Amendments. This Act, in addition to regulations established by the FloNda Department of Environmental Regulation ("FDER") and the Palm Beach County Public Health Unit's ("PBCPHU") Environmental Control Rule 11 ("ECR"), set the regulatory framework within which the City's water supply treatment, and distribution system operate. The system is monitored by the PBCPHU operating under the Florida Department of Health and Rehabilitative Services, Division of Health. According to the Consulting Engineers, the water supply, treatment and distribution facilities of the City meet all current water quality regulations and permitting requirements. The groundwater supply is regulated by the South Florida Water Management District ("SFWMD") which regulates the withdrawal of water from the City's well fields. The City currently has a Consumptive LAK-103045.4 / 8719-11 24 H&K DRAFT 06/07/96 Use Permit for an annual average day withdrawal of 21.0 mgd and a peak day withdrawal of 28.4 mgd between the East and West Well Fields. This permit is scheduled to be revised in 1997. At the West WTP, the City meets the additional requirements of the Lake Worth Drainage District ("LWDD') pertaining to the impact of groundwater withdrawals on canal levels under the jurisdiction of the LWDD. New regulations associated with the SDWA that may affect the City include the Disinfectant-Disinfection Byproduct (D-DBP) Rule (Phase VI-A), the Groundwater Disinfection Rule, and Phase VI-B rules. According to the Consulting Engineers, the D-DBP Rule will have the most impact on the City. This rule may limit the concentrations of disinfectants that may be added to the water and may lower the maximum contaminant level for trihalomethanes (THMs) and other byproducts of the reaction between chlorine and natural organics. The City has previously studied the use of ozone and chlorine dioxide to meet the requirements of the new rule. According to the Consulting Engineers, the new West WTP is producing high quality water that is improving the overall water quality in the System. Whether this will be sufficient to meet the new rule or whether additional treatment will be required at the East WTP will be unknown until the D-DBP Rule is promulgated in 2000. Capital Improvements. The City finished a capital improvements project to the East WTP in 1993 that renovated or replaced facilities which were not working properly or had become outdated. The City continues a maintenance program that keeps existing equipment in proper operating condition and maintains existing capital facilities. Equipment and facilities that are slightly deficient are scheduled to be upgraded over the next few years as part of the City's Renewal and Replacement Program. Several other capital improvement projects have been completed at the East WTP within the last five ymrs resulting in the increase of its treatment capacity to 20.5 mgd. These include rehabilitation and uprating of the west filter bank, improving hydraulics from the soutl/softening unit to the filter basin~, increasing the LAK-103045.4 / 8719-I 1 25 H&K DRAFT 06/07/96 chlorine feed capacity, providing a new chlorine scrubber facility for use during chlorine leaks, adding a new emergency diesel generator,, improvements to the lime storage and feed system, new chemical feed systems and replacement of the internal softening units. Other improvements at the plant include a new aquifer and storage recovery ("ASR') well which was completed in 1993. This well provides underground storage of finished water to be withdrawn during periods of high demand. A new computer system, to be integrated with a new system being installed at the West WTP, will link the East and West WTPs and share data between the two plants. The City purchased 7.8 acres immediately south of the existing East WTP site to be used for the new elevated storage tank, equipment storage, parking and for new treatment facilities that may be required to meet future water regulations. A 0.75 acre area at the southern end of the tract has been designated as a preserve of native habitat and will serve as a buffer for neighboring residents. ~astewater System [Describe 5 year capital improvement program] In 1974, the City entered into an interlocal agreement with the adjacent City of Delray Beach, Florida (the 'Interlocal Agreement") for the provision of wastewater treatment, sludge disposal and effluent disposal on a regional level. The lnterlocal Agreement creates a legal entity known as the South Central Regional Wastewater Treatment and Disposal Board, composed of the five members of the respective City Commissions of the two cities, who operate the South Central Regional Wastewater Treatment Plant (the "Plant') through an executive director. Pursuant to the Interlocal Agreement, the two cities own the Plant located within the corporate limits of the City of Delray Beach. ~--,~ LAK-103045.4 / 8719-11 26 H&K DRAFT 06/07/96 Current wastewater flows for the City are approximately mgd on an annual average daily basis and mgd on a maximum month average daily basis. By the year 2000, average daily and maximum month daily flows are projected to be 10.0 mgd and 11.4 mgd, respectively. Wastewater Collection and Transmission. The existing wastewater collection and transmission system consists of approximately 221 miles of gravity sewer, 67 miles of force main, and 141 life stations. The predominant pipe materials are vitrified clay for gravity sewers and ductile iron for force mains. A hydraulic analysis of the system performed for the Master Plan showed that the wastewater collection and transmission system appears to be sufficiently sized to meet projected future flows in most areas. However, several improvements are needed to maintain the system in good condition. These include replacement of pumps at four pump stations; rehabilitation of pumps, electrical equipment and wet well coatings, concrete, and surfaces at seven master lift stations; and completion of wastewater transmission system telemetry to all pump stations to improve system operations and control. The telemetry system for pump stations included in the DACS system being constructed for the West and East WTP. Although most of the City's sewage lift stations are in good condition, several of the older subsystem lift stations are in need of replacement. The City will continue to inspect all stations throughout the system to verify the condition of the wet wells and pumps so that repairs can be made when needed. Equipment and facilities at the City's master lift stations wilt be rehabilitated and replaced to repair wet well walls damaged by corrosion and to replace pumps and associated equipment. Other slight deficiencies to the City's master pump and lift stations will be upgraded over the next few years as part of the City's Renewal and Replacement Program. It is the Consulting Engineers' opinion that the City's existing wastewater system facilities are in good condition. LAK-103045.4 / 8719-11 27 H&K DRAFT 06/07/96 Regulatory. Framework and Compliance. Standards of utility operation and water quality for the wastewater system have been established by federal and state codes. Wastewater collection and pumping facilities are regulated and permitted by FDER and monitored through the PBCPHU. According to the Consulting Engineers, the wastewate- system meets all local, state and federal regulations and permitting requirements. The quality of the wastewater entering the collection system is regulated by the General Pretreatment Regulations (40 CFR 403) promulgated by the EPA. These regulations govern industrial discharged into publicly owned treatment works (POTW) and controls non-domestic wastes containing pollutants that may have direct adverse effects on human health or the environment, interfere with sewage treatment plant processes, or pass untreated through the treatment plant to the receiving water. The EPA audits the City annually to determine conformance with the Pretreatment Rule and has determined that the City is in compliance with these regulations. The City continues to staff a program coordinator and technicians to monitor industrial discharges into the collection system. Description of Rate Structure The methods used in developing the City's water and sewer utility rates adhere to generally accepted methodologies, policies and procedures and result in a corresponding rate structure that generates sufficient revenues to maintain a self-supporting utility. The rates do not unduly discriminate toward any class of customer. Revenue requirements are often unique to a given utility. In all cases, conformance to bond covenants and regulatory constraints provides one measure of revenue sufficiency. Also, it is the City's goal with respect LAK-103045.4 / 8719-11 28 H&K DRAFT 06~07~96 to the System to avoid operating losses, as measured by cash flow. Excluded from the cash flow test are major capital projects to be funded through debt. Minor capital outlays and renewal and replacement are generally included, reflecting the on going nature of some capital outlays. The water and wastewater activities, currently commingled within the same fund for budgeting purpose.s, were treated as two distinct and separate funds for analysis. In so doing, a proper matching of revenues and expenditures was developed for both water and wastewater activities. The rate structure incorporates an inverted rate mechanism in the volumetric charge. As water use increases, the cost per thousand gallons increases, the intent of which is to encourage conservation. Due to water supply problems in the State of Florida, many municipal utilities are required by permit condition of the water management districts to adopt conservation techniques such as the one enacted by the City. The City Commission has exclusive authority to establish and revise the rates. The rates indicated below were adopted by City Ordinance No. 90-35 on September 13, 1990 and became effective October I, 1990 (the "Rate Ordinance"). Future rate adjustment set forth in the Rate Ordinance may be revised and the rates may be restructured by the Commission. The City cannot predict what action, if any, will be taken by the Commission with respect to the current rates, scheduled rate increases or the rate structure. LAK-103045.4 / 8719-11 29 H&K DRAFT 06/07/96 ~ater Rates B~se Charge 3,001-6,000 gal. g001-9,000 gal. 9,001q2,000 gal. 12,001-15,000 gal. 15,00~-25,000 gal. 25,001-50,000 gal. 50,001-75,000 gal. over 75,000 gal. Base Charge 3,00I-6,000 gal. 6,001-9,000 gal. 9,001-I2,000 gal. 12,001-15,000 gal. 15,001-25,000 gal. 25,001-50,000 gal. 50,001-75,000 gal. over 75,000 gal. POTABLE WATER RATE SCHEDULEm IN CITY/RESIDENTIAL FOR FISCAL YEAR ENDED SEPTEMBER 30, .1992 1993 1994 .1995 OUTSIDE CITY/RESIDENTIAL FOR FISCAL YEAR ENDED SEPTEMBER 30, .1.992 1993 1994 .1995 LAK-103045.4 / 8719-I 1 3O H&K DRAFT 06/07/96 Base Charge 3,001-6,000 gal. 6,001-9,000 gal. 9,001-12,000 gal. 12,001-15,000 gal. 15,001-25,000 gal. 25,001-50,000 gal. 50,001-75,000 gal. over 75,000 gal. IN CITY/COMMERCIAL FOR FISCAL YEAR ENDED SEPTEMBER 30, 992 ! 993 1994 1995 Source: City Finance Department (1) In dollars per 1000 gallons. LAK-103045.4 / 8719-11 31 H&K DRAFT 06107196 Base Charge 3,001-6,000 gal. 6,001-9,000 gal. 9,001-12,000 gal. 12,001-I5,000 gal. 15,001-25,000 gal. 25,001-50,000 gal. 50,001-75,000 gaJ. over 75,000 gal. OUTSIDE CITY/CO~MMERCIAL FOR FISCAL YEAR ENDED SEPTEMBER 30, 1992 J.993 1994 1995 ~rastewater Rates FISCAL YEAR WASTEWATER RATE SCHEDULE IN CITY RESIDENTIAL & COMMERCIAL~') BASE CHARGE COMMODITY RATE(' MONTHLY CHARGE IF NO METER OUTSIDE CITY RESIDENTIAL & COMMERCIAL(2) MONTHLY CHARGE BASE CHARGE QOMMODITY RATE (I) IF NO METER Source: City Finance Department In dollars per 1,000 gallons. Sewer commodity charge for residential customers (in-city or outside city) will be based upon a maximum sewer usage of 7,000 gallons per month. Commercial accounts will be billed sewer charges based upon total water usage. ' --' LAK-103045.4 / 8719-11 32 H&K DRAFT 06/07/96 Water Meter Installation Water meter connection and deposit charges for the City, are as follows: Meter Size Inside City Outside City 3/4' 1' 1 1/2~ 2' 3" 4" Deposit (~ONSTRUCTION METERS 3/4' 1' 1 Hydrant Meter Penalty for Non-Read/Month Deposit If the customer requests to increase the size of his water meter to a size greater than originally installed the customer shall pay only the differential cost between the original meter and the cost of the new meter for both the connection and deposit charges. Source: City Finance Department Water and Sewer Impact Fees Use Cat~orym Single Family One Bedroom Two Bedroom Three Bedroom Four Bedroom Water Sewer Inside Outside Inside Outside City Citya=) City Cit?) Source: (1) City Finance Department Equivalent dwdling units, which is based on 312 gallons per day. 25% over In-City rates. LAK-103045.4 / 8719-11 33 H&K DRAFT 06/07/96 Historical Revenues Shown below is a summary of the historical revenues and expenses of the System for the following fiscal years ended September 30: OPERATING REVENUES 1993 1994 1995 Water S; :es Service Charges Connection Chargesm Sewer Service Interest Income Miscellaneous Income~:) TOTAL REVENUES OPERATING EXPENSES Water Operating Expenses Sewer Operating Expenses Administration Engineering Utility Billing Utility Mechanics General Administration Lab Service Utility Construction Nonbudgeted Expense Bad Debt Litigation Expense Refund of Meter Connection TOTAL OPERATING EXPENSES FOR BOND COVERAGE CALCULATIONS NET REVENUES DEBT SERVICE COVERAGE Source: City of Boynton Beach Department of Finance Includes only those Impact Fees properly allocable to the debt service portion attributable to capital expansion. Miscellaneous Income includes: Interest deposits, Bell South lease, utility tax administrative fee and discounts. ~__ LAK-103045.4 /8719-11 34 H&K DRAFT 06/07/96 Ca~n~olidation of Separate Systems into System Pursuant to the Resolution, the City may establish Separate Systems, as defined in the Resolution, which may be consolidated into the System upon demonstration of compliance with paragraph (d) of Section 209 of the Resolution. For a description of the conditions that must be satisfied prior to the consolidation of a Separate System into t}.e System, see Appendix C "Summary of Certain Provisions of the Resolution" THE CITY The City is a municipal corporation with a population of approximately , organized and existing under the laws of the State of Florida. The City is located in Palm Beach County approximately 13 miles south of West Palm Beach and 30 miles north of Fort Lauderdale and covers approximately __ square miles. The City is governed by a Commission-Manager form of government and employs both a full-time city manager and a full-time director of finance, who has responsibility for all internal auditing and financial record keeping operations of the City. The major segments of the economy of the area are retail and wholesale trade, real estate, finance, tourism, agriculture, professional services and light manufacturing. Several light industries are located in the City of Boynton Beach, with manufactured products ranging from paper processing machinery to electrical $~itches. For additional information regarding the City, see "Appendix A -- General Information Concerning the City of Boynton Beach and Palm Beach County." TAX EXEMPTION The Internal Revenue Code of 1986, as amended (the 'Code"), provides that the interest on state and local governmental bonds will not be included in the gross income for federal income tax purposes of the owner thereof only if certain requirements are met, some of which must be met on a continuing basis, subsequent to the issuance and delivery of the 1996 Bonds. Although the City has covenanted to comply with such requirements, noncompliance with such requirements could cause the interest on the 1996 Bond~ t° be included in gross income for federal income tax purposes retroactive to the date of issue of the 1996 Bonds regardless of the date on which such noncompliance occurs or is ascertained. Those requirements include, but are not limited to, provisions which prescribe yield and other limits within which the proceeds of the 1996 Bonds and other amounts are to be invested and which require that certain investment earnings on the foregoing be rebated on a periodical basis to the Treasury Department of the United States. In the opinion of Moyle, Hanigan, Katz, FitzGerald & Sheehan, P.A., West Palm Beach, Florida, Bond Counsel, under existing law, and assuming continuing compliance with the aforementioned covenants, interest on the 1996 Bonds is excluded from gross income of the owners thereof for federal income tax purposes and is not an item of tax preference for purposes of the Federal alternative minimum tax imposed on individuals and corporations. Certain of the 1996 Bonds are being offered and sold in the initial public offering at an original issue discount ('OID'). OID is the difference between the stated redemption price at maturity (generally the face LAK-103045.4 / 8719-11 35 H&K' DRAFT 06/07/96 amount of the 1996 Bonds) and the "issue price" of such Bonds. The "issue price" of the 1996 Bonds is the respective inidaJ offering prices to the punic at which prices a substantial amount of the 1996 Bonds was sold. Oil) represents interest which is excluded from gross income for federal income tax purposes and which may result in the collateral federal tax consequences described below. OID will accrue over the term of such 1996 Bonds at a constant interest rate compounded semi-annually. The portion of OID that accrues during the time a Holder owns a 1996 Bond constitutes interest excludable from gross income for federal income tax purposes and will increase such purehas, r's adjusted basis in such 1996 Bonds for purposes of determining taxable gain or loss on the sale or other disposition of such 1996 Bonds. The federal income tax consequences ~ff the purchase, ownership and sale or other dispositio~ of 1996 Bonds which are not purchased in the initial offeri~k at the initial offering prices may be determined according to rules which differ from those described above. Owners of 1996 Bon~ls should consult their own advisors as to the precise federal income tax and state and local tax consequences of owning and disposing of 1996 Bonds. Except as stated above, Bond Counsel expresses no opinion as to any other tax consequences of acquiring, carrying, owning or disposing of the 1996 Bonds. The law upon which' Bond Counsel will base their opinion is subject to change by the Congress and the Department of the Treasury and to subsequent judicial and administrative interpretation. There can be no assurance that such law or the interpretation thereof will not be changed in a manner which would adverselyaffect the tax treatment of ownership of the 1996 Bonds. Prospective purchasers of the 1996 Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, foreign corporations doing business in the United Stat~s and S corporations with passive investment income whic~ includes tax exempt income. Prospective purghasers falling within any of these categories should consult their own tax advisors as to the applicabilitv Of these consequences. In addition, in the opinion of Bond Counsel, the 1996 Bonds are exempt from all present intangible personal property taxes of the State of Florida. LITIGATION In the opinion of the City Attorney, no legal proceedings are pending or threatened which materially ~fect the City's ability to perform its obligations to the holders of the 1996 Bonds or materially affect the f'mancial condition of the City. There is no litigation or controversy of any nature now pending or threatened: (i) to restrain or enjoin the issuance, sale, execution or delivery of the 1996 Bonds, or (ii) in any way questioning or attesting the validity of the 1996 Bonds, the Resolution, any proceedings of the City taken with respect to the authorization, sale or issuance of said Bonds or the p!edge or application of any moneys provided for the payment of the 1996 Bonds. LAK-I03045.4 / 8719-11 36 H&K DRAFT 06/07/96 COVENANTS CONGEKNING ONGOING DISCLOSURE The City has agreed in the Resolution, in accordance with the provisions of Rule 15c2-12 in effect from time to time and applicable to the 1996 Bonds (the "Rule"), promulgated by the Securities and Exchange Commission (the 'Commission") pursuant to the Securities Exchange Act of 1934, to provide or cause to be provided, to each nationally recognized municipal securities information repository ('NRMSIR') and to the State of Florida information depomory ("SID"), if any, in each case as designated and approved by the Commission and the State, respectively, in accordance with the Rule, (i) within 180 days following the end of each fiscal year of the City, commencing with the fiscal year ending September 30, 1996, annual financial information and operating data concerning the System of the type included in this Official Statement, including operating revenues, debt service coverage by Net Revenues and Impact Fees, rates and charges of the System, a ~ummary of any capital, improvement plans and information regarding permitted capacities and actual usage of capacities of the System and financial statements (audited or, if not available, unaudited) of the City and (ii) if not submitted as part of such financial information and operating data, then, when available, audited f'mancial statements for the City prepared in accordance with generallY accepted accounting principles applicable to governmental entities from time to time. A copy of such annual financial information and operating data will be provided to the Underwriters and the ]3,ond Registrar. ('~.,he annual information required to be disclosed hereunder shall be referred to herein as the Annual Report ). The City has agreed to provide or cause to be provided, in a timely manner, to (i) each NRMSIR or to the Municipal Securities Rulemaking Board ("MSRB") and (ii) the SID, if any, notice of the occurrence of any of the following events with respect to the 1996 Bonds, if such event is material: (i) principal and interest payment delinquencies on the 1996 Bonds; (ii) non-payment related defaults; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (v) substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions with respect to or events affecting the tax-exempt status of the 1996 Bonds; (vii) modifications to rights of the holders of the 1996 Bonds; (viii) any call of the 1996 Bonds for redemption (other than scheduled mandatory redemption) or any acceleration of the maturity thereof; (ix) defeasance in whole or in part of the 1996 Bonds; (x) release, substitution, or sale of property securing repayment of the 1996 Bonds; (xi) rating changes; and (xii) any changes in the City's fiscal year. LAK-103045.4 / 8719-11 37 H&K DRAFT 06/07/96 The City has agreed to provide or cause to be provided, in a timely manner, to (i) each NRM$IR or the MSRB and (ii) the SID, if any, notice of a failure by the City to provide the Annual Report described in subsection (a) above on or prior to the date set forth therein. The City has reserved the right to terminate its obligation, to provide Annual Report and notices of material events, as set forth above, if and when the City no longe? remains an obligated person with respect to the 1996 Bonds within the meaning of the Rule. If the City bel:'~.ves such condition exists, the City will provide notice of such termination to the NtLMSIR's, the MSRB and the SID. The City has agreed that its undertaking pursuant to the Rule set forth is intended to be for the benefit of the holders and beneficial owners of the 1996 Bonds and shall be enforceable by any holder or beneficial owner;, provided that the right to enforce the provisions of such un dertaking shall be limited to a right to obtain specific enforcement of the City's obligations hereunder and any failure by the City to comply with the provisions of such undertaking shall not be an event of default with respect to the 1996 Bonds under the 'Resolution. Any voluntary inclusion by the City of information in its Annual Report of supplemental information that is not required under the Rule shall not expand the obligations of the City thereunder and the City shall have no obligation to update such supplemental information or include it in any subsequent report. The covenants contained in the Resolution are solely for the benefit of the holders and beneficial owners of the 1996 Bonds and shall not create any rights in any other parties. Notwithstanding any other provision of the Resolution, the City may amend the provisions of the Resolution described above and any provision thereof may be waived, provided that the following conditiOns are satisfied: (1) If the amendment or waiver pertains to the Annual Report or other information to be provided by the City, the amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identify, nature or status of the City or the type of business conducted by the City; and (2) The undertaking, as amended or taking into account such waiver would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the 1996 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances. (3) The amendment or waiver does not materially impair the interests of holders of and beneficial owners as determined either by parties unaffiliated with the City or an obligated person, or by an approving vote of the holders of at least a majority in aggregate principal amount of the then outstanding 1996 Bonds pursuant to the terms of the Resolution. In the event of any amendment or waiver of a provision of the Resolution described in this section, the City ~ describe ~ch amendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of annual financial information or operating data being presented by the City. In addition, if the amendment or waiver relates to the accounting principles to LAKo103045.4 / 8719-11 38 H&K DRAFT 06~07~96 be followed in preparing financial statements (i) notice of such change shall be given m the manner provided in the Resolution and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. UNDERWRITING The Underwriters, as shown on the cover page hereof, have jointly and severally agreed to purchase the V)96 Bonds from the City at an aggregate purchase price of $ (representing the aggregate principal amount of the 1996 Bonds less an underwriters discount of $ and an original issue discount of $ ) plus accrued interest. The Underwriters will be obligated to purchase all the 1996 Bonds if any are purchased. Following the initial public offering, the public offering prices may be changed from time to time by the Underwriters. The 1996 Bonds may be offered and sold to certain dealers (including Underwriters and other dealers depositing such Bonds into investment trusts) and others at prices lower than tach public offering prices. RATINGS Moody's Investors Service and Standard & Poor's, a Division of The McGraw Hill Companies have given the 1996 Bonds ratings of ' "and" ," respectively, with the understanding that upon delivery of the 1996 Bonds a policy insuring payment when due of the principal of and ~nterest on the 1996 Bonds will be issued by Such ratings reflect the views only of the aforesaid credit rating organizations, and an explanation of the significance of these ratings may be obtained only from ~ueh rating organizations. There is no assurance that such ratings wilt continue for any given period of time, or that such ratings may not be lowered or withdrawn entirely by the respective rating agency if, in its judgment, circumstances so warrant. Anv such downward change or withdrawal of either or both such ratings may have an adverse effect on the market price of the 1996 Bonds. LEGALITY Certain legal matters in connection with the issuance of the 1996 Bonds are subject to the approval of Moyle, Flanigan, Katz, FitzGerald & Sheehan, P.A., West Palm Beach, Horida, Bond Counsel, whose unqualified approving opinion will be availableat the time of delivery of the 1996 Bonds. The proposed form of math opinion of Bond Counsel is attached hereto as Appendix D. Certain legal matters will be passed upon for the City by Josias, Goren, Cherof, Doody & Ezrol, P.A., City Attorneys, Fort Lauderdale, Florida, and for the Underwriters by their co-counsel, Holland & Knight, Lakeland, Florida and Jones & Evans, West Palm Beach, Florida. LAK-103045.4 / 8719-11 39 H&K DRAFT 06/07/96 GENERAL PURPOSE FINANCIAL STATEMENTS The audited general purpose financial statements of the City and the combining statements for the City's enterprise fund for the fiscal year ended September 30, 1995 are included in Appendix B attached hereto. Such excerpts from the City's Comprehensive Annual Financial Report, including the auditor's report thereon, have been included in this Official Statement as public documents and consent from the auditors was not requested. MISCELLANEOUS The information in the foregoing pages is presented for the guidance of prospective purchasers of the 1996 Bonds described herein. The information has been compiled from official and other sources and, while not guaranteed as to accuracy by the City, is believed to be correct. So far as any statements made in this Official Statement and the appendices attached hereto involve matters of opinion or of estimates, whether or not expressly stated, they are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. AUTHORIZATION OF OFFICIAL STATEMENT This Official Statement has been authorized and prepared by the City of Boynton Beach, Florida. Concurrently with the delivery of the 1996 Bonds, the undersigned will furnish their certificate to the effect that, to the best of their knowledge, this Official Statement (except for the information in the sections entitled 'DESCRIPTION OF THE 1996 BONDS--Book-Entry-Only System," "MUNICIPAL BOND INSURANCE" and "TAX EXEMPTION" herein, as to which no certification will be made by the City), did not as of its date, and does not as of the date of delivery of the 1996 Bonds, contain any untrue statement of a material fact or omit to state a material fact which should be included therein for the purpose for which this Official Statement is to be used, or which is necessary in order to make the statements contained therein, in light of the circumstances in which they were made, not misleading. CITY OF BOYNTON BEACH, FLORIDA Mayor City Clerk 40 H&K DRAFT 06/07/96 8121M/28 EXHIBIT "D" DTC Lette. of Representations Letter of Representations Attention: Genera] Counse]'s Office The DepositoO Trust Company 55 \Vater Street: 49th New York. NY 101~41 ] ).d~- Ladk-s am! T]~i~ ]~-ttt,r ~et, fro't], our understandin,~ wit}~ re*l)pct t~, c,-rtai], mattcr~ ]'c].di~ 1, ~-. al~ove-retbrenced issut- the "Bond;". AEt'l'lt xk~]] ,ici a, trustee. ]~a}J~lZ .tZt-nt. ti~cal a~ent of Issuer uSth respvet to the Bonds. The Bond, u~ll }w issu,-d pursuant t,~ bond resolution, or othvr such document authorizin~ iht. issll,tllc.t-I)J 199~ (the "Document"~. is ~stdbutinE the Bonds through The DepositoU Trust Company ("DTC"'. To induce DTC to accept the Bonds a.~ eligible for deposit at DTC. and to act in acc.ordam'c with its Bules with respect to the Bonds. Issuer and Agent. if any. make the followin~ representations to DTC: 1. Prior to closing on fl~e Bonds on 199 , there shall be deposited wifl~ DTC one Bond certificate registered in the name of DTC's nominee. Cede & Co.. for each stated maturi~' of the Bonds in the face amounts se! forth on Schedule A hereto, the total of whic}l represents 100,q of the principal amount of such Bonds. If. however, the aggregate pnncipal amount of anv-maturi~- excveds $150 fl~illion, one certificate will be issued with respect to eat.}, $150 million of principal amount and an additiomd certificate u~ll 1. ? issued.with respect to any remaining principal amount. Ea¢,h 8150 million Bond certificate shall bear fl~e following legend: Unless this certificate is presented by an authorized representative of The Depository Trus~ Company a New York corporation ("DTC"). to Issuer or its agent for registration of transfer. exd~ange, or pa.x~nent, m~d troy certificate issued is re~stered in the name of Cede & Co. or in such other name as is requestbd by an authorized representative of DTC (and any pax~nent is made to Cede & Co. or to such oti~er entih' as is requested by an authorized represer~tative of DTCt. ANY TRANSFER. PLEDGE. OB OTHER USE HEBEOF FOB X:-XLUE OB OTHER\VISE BI' OB TO ANY PERSON IS WBONGFUL inasmud-~ as the registered oxxa~er hereof. Cede & Co.. has an interest herein. ~. In the even! of anx solicitation of consents from or voting by holders of the Bonds. Issm~r Agent sh~dl establish a r~cord date for such purposes i xxith no pmxnsion for revocation of cwnsent~ votes by subsequent holders: and shall, to the exlent possible, send notice of such record datt, DTC not less than 15 caJendar days m advance of su¢.]~ rtx.ord date. a. In the eyelet of a fi~ll or partial redemption or an advanct, refimding of part of the outst,mdi~ B{mds. Issuer or Agent shall send a not-icy to DTC specik, ing: :a the amount of the redemption or refunding: ;b in the t'~ue of a refimdh]z, the matudp,' date, s establidwd under the rerun&hz: amt ,c' the date such nohce is to })e mailed to beneficild oxxn~ers or published .the "Pu}qlicatio~ Dat~:' Such notice sh~d] })e sent t{~ DTC bx a secure memos c.~.. ]e¢l~}e telecopy, re~stered or ~nail overnizl~t de]ix'e]~ i]~ a tim{Jlv manner designed to assnrt- that such notice is i~ DTC'$ p~)*session no later tha~ th~ close o~ l)usine~ on tht-{m~iness day before the Pu}-,lic.atio~ Is>ncr or Affent shall fi)m'a~xt qllq']l ~}otice eit])t,r in a set~arat~ secure transmission t}~r eacl~ CUSIP nm'nl)e,r or in a st,cure tran,missi(,n t})r multlp]~ CUSIP nmn]~erq if applk'abl~- wl3k.h includes mani¢-~t or list ~.)f ~ac.}) CUSIP sutm~itt~-d in that transmisqo~. Tht- pa~ sen&n= such nr)tic'e on in t]w c'as~~ ~ff an adx'am,e rd~mdin~, tht~ daIt. tha~ th~ protx-ed.~ are deposited m 4. h; th~ ex'c~ {~' an imStafion t{; tender tht, Bond<. notk.t~ }~x lssner or A~ent to B~mdl~ ,id, ,', ~l>x'i~ the t~nn~ oftlw tender and t]~- Pul~lic-ati~m Dat~~ ol'~m)~ notic~ shall l~t- sent to DT(i ~,~ s~x.urt~ ~-ans in the rammer set fo~h m the preee(hn: Paragrap}~. 5. All notices and pa}~nent adxsces senl m DTC sh;dl cont;~n th~~ CUS1P number ~ftl, ~. N~tices to DTC pursuant to Paragraph 2 by tetecopy shall be sent to DTC's Department at 212. 709-6S9fi or ;212 709-6S97. and receipt of such notices shall r~nfinned by telephonin~ ;212~ 709-6S70. Nofit~s to DTC pursuant to Paragraph 2 by mail or ~x' other means shtdl Iw sent to: Su~masor: Proxy Beorganimtion Depamnent The Depositor' Trust Company 7 Hanover Square: 23rd Floor New 5brk. NY 1~-2695 7. Notices to DTC pursuant to Paragraph 3 by telecopy shall be sent to DTC's Call Xotific.ation Depamnent at (51t5) 2274164 or (516) '22741~. if the party sending tile notice does not receive a telecx>py receipt from DTC c~nfirming that the notice ha_s been received, such part).- shall telephone (5163 ~74070. Notices to DTC pursuant to Paragraph 3 by mail or by any other means shal! be .sent to: Call Notification Department The Depositor).' TrUst Company 711 Stewart Avenue Garddn Ci~'. NY 11530-4719 8. Notices to DTC pursuant to Para~aph 4 and notices of other actions/including mandator~ tenders, exchanges, and capital changes) by telecopy shall be sent to DTC's Beorganizatioil Department at t212) 709-1093 or (212~ 709-1694, and receipt ofsud~ notices shall be confirmed by telephoning (212) 709-6S84. Notices to DTC pursuant to file above by mail or by any other means shall be sent to: Manager: Reorganization Department Reorganization Window The Depositor' Trust Company 7 Hanm'er Square: '2Z3rd Floor New York. NY 10004-2695 9. Transactions in file Bonds shall be eligible for next-day funds settlement in DTC's Next-Dax Funds Settlement ("NDFS") system. A. Interest pa.xanents shall be received by Cede & Co.. as nominee of DTC. or its re~sterect assigns in next-day funds on each pa.xanent date cor the equivalen! in accordance with existing arrangements between Issuer or Agent and DTC:. Such pa.xanents shall be made payable to the order of Cede & Co. Absent any other existing arrangements such pa.xanents shall be addressed as follows: Manager: Cash Bec'eipts DixSdend Devartment The DepositoD' Trust Company 7 Hanmer Square: 24th Floor New York. NY 10004-2695 B. Principal pa.xanents shall be received by Cede & Co.. as nominee of DTC. or its rewster[-ct assigns in next-day funds on each pa)anent date {or the equivalent in ac'cordance x~'ith e,,dsting arrangements between Issuer or Agent and DTC t. Sudl pa)anents sh~dl be made payable to the order of Cede & Co., and shall be addressed as follows: NDFS Redemption Department The Depositor' Trust Company 55 V~:ater Street: 50th Floor New 5brk, NY 10041-0099 10. DTC may direct Issuer or Agent to use any other telephone nnmber or address as the number or address to whidl notices or pay~nents of i~terest or principal may be sent. 11. In file event ora redemption, ac~z'eleration, or any other similar transaction (e.g.. tender madt~ and ac~:epted in response to Issuer's or Agent's im'itation: necessitating a reduction in the aggregate principal amount of Bonds outstanding or mi advmlce refunding of part of tile Bonds outstanding. DTC, in its discretion: (a) may request Issuer or Agent to issue and authenticate a new Bond certificate, or (b) may m'~e an appropriate notatiou on tile Bond certificate indic~ating the date and amount of such reduc'tion in principal except in the case of final maturity, in which case tlw certificate will be presented to Issuer or Agent prior to p~\x~nent if required. -3- 12. In the event that Issuer determines that beneficial owners of Bonds shall be able to obtain certificated Bonds, Issuer or Agent shall notify DTC of the availability of Bond certificates. In such event, Issuer or Agent shall issue, transfer, and exchange Bond certificates in appropriate amounts as required by DTC and others. 113, DTC max' discontinue prox4ding its serx'ices as securities depositor).' w~th respect to the Bonds at am' time bx' gMng reasonable notice to Issuer or Agent (at which time DTC will eonfim~ with Issuer or Agent the aggregate principal amount of Bonds outstanding). Under suc. J circumstances, at DTC's request Issuer and Agent shall cooperate fully with DTC by taking appropriate action to make available one or more separate certificates ex~idencing Bonds to any DTC Participant having Bonds_credited to its DTC acc~)unts. 14. Noticing herein sh'a]l be deemed to require Agent to advance funds on behalf of Issuer. Notes: A. If there is an Agent Ias defined in this Letter of RepresentatJons~. Agent as well as Issuer must sa~cm fl~i.s Lefler. If there is no A~ent. in sig~ng t]~ Letter Issuer itseff undertakes to perform ~ of-the obliga~om .~ forO~ B. Under Rules of flw .Mmxicipal Sec~-ities BulemakSn~ Board rela~g to "goof) deliver,'", a mumc4prd securitie:s detder must be able to detemm~; the date fl~at a notice ora ~ roll or of an adv, mce refunding of a part of an isme is pubkshed !the "pubhcation &tv"'. The estabkshment of .~s..h a pubhcation date is addressed in Paragraph 3 of the Letter C. Schednle B c,oma.ins statements that DTC beheves ac,mmtelx desc~'ibe DTC. the methtxt of effec~q }'xrok- entn' tr, u'ufers of seca~ties distributt-'d thrrml~h DTC. ,md cert~ rek~t~t matter~ Received and Accepted: THE DEPOSITORY TRUST COMPANY Very truly yours, ~Authorized Offitvr {.'C': Undem,riter Undem'riter's Comv~el (Describe Issue) SCHEDULE A CUSIP Principal Amount Maturity Date Interes', Rate SCHEDULE B SAMPLE OFFICIAL STATEMENT LANGUAGE DESCRIBING BOOK-ENTRY-ONLY ISSUANCE (Prepared by DTC--bracketed material may be applicable only to certain issues) 1. The Depository Trust Company ("DTC"), New York. NY, will act as securities depository for the securit~es ,Securities") The Securities will be issued as fully-registered secunties registered in the name of Cede & Co fDTC's partnership nominee). One fully-registered Security certificate will be issued for [each Issue o~ the Securities. leachI the aggregate principal amount of such ~ssue, and will be deposited with DTC, [If, however, the aggregate principa~ amount of [any] issue exceeds $150 million, one certificate will be issued with respect to each S150 milhon of prir, c Da: amount and an additional certificate will be issued with respect to any remaining principal amount of such ~ssue ~ 2. DTC is a limited-purpose trust company organized under the New York Banking Law. a "ba,~k~ng orga~:za:.on' within the meaning of the New York Banking Law, a member of the Federa! Reserve System. a "clearing corpora',~o~'' within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered oursuam ~.c provisions of Section 17A of the Securities Exchange Act of 193,4 DTC holds securibes that its ~oar',~ocams ("Participants") deposit with OTC. OTC also facilitates the settlement among Participants of securities ~ransac'.~or, s such as transfers and pledges, in deposited securities through electronic computer,zed book-er~tr¥ cnana~es Participants' accounts, thereby eliminating the need for physical movement of securities cerbf~cates. D~rec; Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and cedai~ other organizations DTC is owned by a number of its Direct Participants and by the New York Stock Exchange. !%. the American Stock Exchange, Inc.. and the National Association of Securities Dealers. Inc. Access to the DTC sz'si6m also available to others SuCh as secunties brokers and dealers, banks, and trust oomoan~es that o~ear throd? or maintain a custodial relationship with a Direct Participant, e~ther directly or indirectly ("indirect Parbcipants"). The q~les applicable to DTC and its Participants are on file with the Securities and Exchange Commission. 3. Purchases of Securities under the OTC system must be made by or through D~rect Participants which receive a credit for the Securities on DTC's records. The ownership) interest of each actual purchaser of each ("Benef, cial Owner") is ~n turn to be recorded on the Direct and Indirect Participants' records. Beneficia', Owners not receive written confirmat,on from DTC of their purchase, b'Jt Beneficial Owners are excecteo to rece,,ve confirmations providing details of the transaction as well as periodic statements of t,be~r holdings, from tr',e D~rec: or Indirect Participant through which the Beneficial Owner entered ~n~o the transaction. Transfers of ownership in the Securities are to be accomplished by entries made on the bOOkS of Participants acting on beha!f of Ber, e%ia Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities. excec: the event that use of the booN-entry system for the Securities is discontinued. ,4. To facilitate subsequent transfers, all Securities deposited by Participants with OTC are registered ~n the r, ame cf DTC's partnership nominee. Cede & Co. The deposit of Securities with OTC and their registration in the name o~ Cede & Co. effect no change in beneficial ownership. OTC has no knowledge of the actuai Beneficial Ow.qers o' Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securi',~es credited, which may or may not be the Beneficial Owners The Participants will remain responsible for kee2 account of their holdings on behaff of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Pad~c~car~:s Indirect Participants. and by Direct Participants and Indirect P. articipants to Beneficial Owners will De go',.e,".,e~ arrangements among them, subject to any statutory or regulatory requirements as may be in effect from t~me tc [6. Redemption notices shall be sent to Cede & Co. If less than all of the Securities within an issue are be ~.~ redeemed. DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such ~ssue be redeemed.] 7. Neither OTC nor Cede & Co. will consent or vote with respect to Securities. Under ~ts usual procedures. OTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & 0o.% consenting or voting rights to those Direct Participants to whose accounts the Securities are credited dC tr, e record date (identified in a listing attached to the Omnibus Proxy). 8. Principal and interest payments on the Securities wilt be made to DTC. DTC's practice is to credit Direct Participants' accounts on payable date tn accordance with their respective holdings shown on DTC's records un~ess DTC has reason to believe that it will not receive payment on payable date. Payments by Participants to Be~efic,a Owners will be governed by standing instructions and customary practices, as ~s the case with securities held for accounts of customers in bearer form or registered in "street name," and will be the responsibil~ of such Partite, ar,', and not of DTC, the Agent, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Issuer or the Agent, disbursement of ~ payments to Direct Participants ,,.;hall be the responsibility of DTC. and disbursement of such payments to the Benefic~l Owners shall be the responsibility of Direct and Indirect Participants. [9. A Beneficial Owner shall g~ve notice to elect to have its Securities purchased or teqderea, through ~ts Participant. to the Fender/Remarketing] Agent. and shall effect delivery of such Securities by causing the D~rect Participant to transfer the Participant's interest in the Securities, on DTC's records, to the [Tender/RemarKe,,~ng] Agem. The requirement for physical delivery of Securities in connection w~ti~ a demand for purchase or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Partic~par-,ts DTC's records.] 10. DTC may discontinue providing its services as securities decository w~th respect to the Securities at an', t~me by grving reasonable notice to the Issuer or the Agent. Under such ctrcumstanoes, ~n the event tna~ a successor securities depository ~s not obtained, Security certificates are required to be printed and delivered. 11. The Issuer may decide to discontinue use of the system of book-entry transfers through DTC for a successor securities depository). In that event, Secudty certificates will ~)e pnnted and delivered. 12. The information in this section concerning DTC and DTC's book-entry system has been obtained from so~rces that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. -ii- 8121M/29 Escrow EXHIBIT D~posit Agreemen~ CITY OF BOYNTON BEACH, FLORIDA UTILITY SYSTEM REVENUE BONDS SERIES 1996 ESCROW DEPOSIT AGREEMENT THIS ESCROW DEPOSIT AGREEMENT (this "Agreement"), is dated as of , 1996, and is by and between CITY OF BOYNTON BEACH, FLORIDA, s political subdivision of the State of Florida (the "Issuer") and The Bank of New York, Florida, a New York banking corporation, as escrow agent (the "Escrow Agent"). WI TNESSETH: WHEREAS, the Issuer has heretofore issued $60,255,000 aggregate principal amount of its Utility System Revenue Bonds, Series 1992, dated June 15, 1992, (the "1992 Bonds"); and WHEREAS, the Issuer has determined to provide for the payment of a portion of the 1992 Bonds described on Exhibit A hereto (the "Defeased Bonds") by depositing with the Escrow Agent certain moneys derived from certain funds and accounts established in connection with the Defeased Bonds; and WHEREAS, the moneys made available by the Issuer for such purpose will be applied to the purchase of certain direct obligations of the United States of America ("Government Obligations"), the principal of which, together with investment earnings thereon and an initial cash balance, will be sufficient to pay when due the principal, redemption premium, and ~interest on the Defeased Bonds; and WHEREAS, in order to provide for the proper and timely application of the moneys deposited in the trust created herein to the payment of the Defeased Bonds, it is necessary for the Issuer to enter into this Escrow Deposit Agreement with the Escrow Agent on behalf of the holders from time to time of the Defeased Bonds; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein set forth and in order to secure the payment of the principal of, premium, and interest on the Defeased Bonds, according to their tenor and effect, the Issuer does by these presents hereby deliver to and give, grant, assign and pledge to the Escrow Agent and to its successors in the trust hereby created, and to it and its assigns forever, all and singular the property hereinafter described, t~ wit: Ail right, title, and interest of the Issuer in and to $ deposited by or on behalf of the Issuer with the Escrow Agent hereunder. II. Ail right, title, and interest of the Issuer in and to the Government Obligations purchased from the moneys described in Clause I above. III. All right, title, and interest of the Issuer in and to all cash balances held from time to time hereunder and all income and earnings derived from or accruing to the Government Obligations described in Clause II above. IV. All (i) property which is by the express provisions of this Agreement required to be subject to the pledge hereof and (ii) additional property of every kind and nature that may, from time to time hereafter, by delivery or by writing of any kind, be conveyed, pledged, assigned, or transferred as and for additional security hereunder or to be subject to the pledge hereof, by the Issuer or by anyone in its behalf, and the Escrow Agent is hereby authorized to receive the same at any time as additional security hereunder, provided that no property described in (ii) shall be accepted by the Escrow Agent unless the Escrow Agent shall receive an opinion of nationally recognized bond counsel to the effect that such acceptance will not cause the interest on the Defeased Bonds to be included in the gross income of the holders thereof for federal income tax purposes. TO BAVE AND TO HOLD, all and the same; in trust nevertheless, upon the terms herein set forth, for the equal and proportionate benefit, security and protection, as herein described, of the holders or owners from time to time of the Defeased Bonds in the manner herein provided; but if the Defeased Bonds shall be fully and promptly paid when due or redeemed in accordance with the terms thereof and hereof, then this Agreement -2- 8125M shall be and become void and of no further force and effect, otherwise the same shall remain in full force and effect, and subject to the covenants and conditions hereinafter set forth. ARTICLE I DEFINITIONS Section 1.01. Definitions. Ail terms used in capitalized form herein and not otherwise defined herein shall have the meanings ascribed to them in the Bond Resolution. In addition to words and terms elsewhere defined in this Agreement, as used herein, unless some other meaning is plainly intended, the following terms and phrases shall have the following meanings: "Bond Resolution" means Resolution No. 92-96 of the Issuer adopted June 16, 1992, as amended and supplemented by Resolution No. 92-102, adopted June 29, 1992 and Resolution No. 92-114 adopted July 16, 1992, authorizing the issuance of the Defeased Bonds. "Escrow Deposit Trust Fund" means the fund so designated and established under Section 2.01 of this Agreement. "Government Obligations" means direct obligations of the United States of America that are not callable prior to maturity by the obligor thereon. "1992 Bond Registrar" means The Bank of New York, as bond registrar for the 1992 Bonds, or such other bond registrar for the 1992 Bonds as may be appointed by the Issuer from time to time. Section 1.02. Uses of Phrases. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice-versa. ARTICLE II ESTABLISHMENT OF FUNDS: FLOW OF FUNDS Section 2.01. Creation of Escrow Deposit Trust Fund. There is hereby created and established with the Escrow Agent a special and irrevocable trust fund designated the "Escrow Deposit Trust Fund" to be held in the custody of the Escrow Agent separate and apart from other funds of the Issuer Or the Escrow Agent. -3- 8125M Section 2.02. Deposit to Escrow Deposit Trust Fund. Concurrently with the execution of this Agreement the Issuer has deposited or caused to be deposited with the Escrow Agent and the Escrow Agent acknowledges receipt of immediately available moneys in the amount of $ , consisting of amounts previously held by the Issuer in the funds and accounts established with respect to the Defease~~ Bonds as further described on Exhibit B hereto for deposit in the Escrow Deposit Trust Fund. The funds deposited in the Escrow Deposit Trust Fund pursuant to the preceding sentence shall, except for a cash balance of $ be immediately invested by the Escrow Agent in the Government Obligations described in Schedule A attached hereto. Section 2.03. Application of Escrow Deposit Trust Fund. The Escrow Agent shall apply the Government Obligations and other moneys deposited in the Escrow Deposit Trust Fund, together with all income and earnings thereon, in accordance with the provisions hereof. The Escrow Agent shall not invest any moneys held hereunder or make substitutions of the Government Obligations hereunder or sell, transfer, or otherwise dispose of the Government Obligations or moneys held hereunder except as provided in this Agreement. Section 2.04. Irrevocable Trust Created. Except as expressly provided herein, the deposit of (or purchase of for deposit) the Government Obligations and moneys in the Escrow Deposit Trust Fund shall constitute an irrevocable deposit for the benefit of the holders of the Defeased Bonds and the holders of the Defeased Bonds shall have an express lien on the principal of and earnings on the Government Obligations and other moneys held in the Escrow Deposit Trust Fund hereunder until applied in accordance with this Agreement. The Government Obligations and earnings thereon and other moneys shall be held by the Escrow Agent and used only for the purposes and in the manner provided in this Agreement. Section 2.05. Redemption of Defeased Bonds. (A) The Issuer hereby irrevocably instructs the 1992 Bond Registrar (i) to call the outstanding Defeased Bonds maturing in the years through , inclusive, for redemption on 1, , (ii) to call the outstanding Defeased Bonds maturing in the years after for redemption on 1, , and (iii) at least thirty (30), but not more than sixty (60), days before 1, , and 1, , to give notice of redemption of the Defeased Bonds to be redeemed on such dates as required by the applicable provisions of Section 303 of the Bond Resolution, and also to give such other notices as may be required by Section 303 of the Bond Resolution. (B) On or before the date thirty (30) days after the date of this Agreement, the Escrow Agent shall cause a notice signed by the Escrow Agent, setting forth the dates designated for the -4- 8125M redemption of the Defeased Bonds, respectively, or, if a portion of the Defeased Bonds are not being redeemed prior to their maturities or mandatory redemption dates, a statement to the effect that such Defeased Bonds are being paid at maturity and that any Term Bonds (as defined in the Bond Resolution) are being redeemed in amounts and at times which will satisfy the Amortization Requirements (as defined in the Bond Resolution) therefor, a description of the Government Obligations held by the EscrOw Agent hereunder, and stating that the Defeased Bonds shall not be deemed to be Outstanding under the provisions of the Bond Resolution. Such notice shall be substantially in the form of the notice attached hereto as Exhibit C, together with such changes as deemed necessary or desirable by the Escrow Agent, but not inconsistent with the provisions of this (B). Section 2.06. Use of Moneys in Escrow Deposit Trust Fund. On each date on which principal, premium, and/or interest on any of the Defeased Bonds shall become payable, the Escrow Agent shall transfer from funds in the Escrow Deposit Trust Fund to the 1992 Bond Registrar an amount sufficient to pay the interest, principal and/or redemption price of the Defeased Bonds coming due on such dates, as shown on Schedule B. Such amounts shall be applied by the 1992 Bond Registrar to the payment of all principal of, interest on, and redemption premium, if any, when due with respect to the Defeased Bonds~ for the equal and ratable benefit of the holders and registered owners of the respective Defeased Bonds. Section 2.07. Investment and Reinvestment of Trust Funds. Subject to the requirements of this Section 2.07, the Issuer may direct the Escrow Agent in writing to invest and reinvest any moneys remaining from time to time in the Escrow Deposit Trust 'Fund until such time as they are needed, and the Escrow Agent shall comply with such request, otherwise the Escrow Agent shall hold such moneys uninvested (except as otherwise provided herein). Such moneys may be invested and reinvested only in Government Obligations bearing interest at such rate or rates and maturing on such date or dates and in such amounts as directed in writing by the Issuer. The Issuer shall give no such instruction to the Escrow Agent unless the Issuer shall receive an opinion of nationally recognized bond counsel 'to the effect that such investment of such moneys will not adversely affect the exclusion from gross income of the interest on the Defeased Bonds for federal income tax purposes. Provided further, that no such investment instruction shall be given unless the Issuer shall have received verification from a firm of independent certified public accountants to the effect that, taking into account such investment, the amounts held hereunder will be sufficient to pay the principal, premium, and interest on the Defeased Bonds in full as the same shall become due Whether by redemption or otherwise. -5- 8125M Section 2.08. Transfer of Funds After All Payments Required by This Agreement Are Made. After all the principal of, interest on, and redemption premium, if any, with respect to the Defeased Bonds has been paid in full, and after all fees and expenses of the Escrow Agent (including any attorneys' fees and expenses) due hereunder have been paid in full, all remaining moneys and Government Obligations, together with any income and interest thereon, in the Escrow Deposit Trust Fund shall be transferred to the Issuer by the Escrow Agent and shall be used by the Issuer for any lawful purpose of the Issuer authorized by a written opinion of nationally recognized bond counsel. The Escrow Agent shall have no responsibility for the application of amounts transferred by it to the Issuer as provided above. Section 2.09. Deficiencies. If at any time it shall appear to the Escrow Agent that the available proceeds in the Escrow Deposit Trust Fund will not be sufficient to make any payment when due to the holders of any of the Defeased Bonds, the Escrow Agent shall notify the Issuer not less than fifteen (15) days prior to such payment date and the Issuer agrees that it will make available to the Escrow Agent, from legally available funds, if any, amounts sufficient to eliminate the anticipated deficit so that the Escrow Agent will have sufficient funds to make such payment on the Defeased Bonds. Section 2.10. Escrow Agent and Bond Registrar Fees. The Issuer hereby agrees to provide for the payment, from lawfully available funds of the Issuer, of the compensation due and owing the Escrow Agent and 1992 Bond Registrar, which compensation shall be paid at such times and in such amounts as agreed between the Issuer and the 1992 Bond Registrar and Escrow Agent, respectively. In no event shall the 1992 Bond Registrar or Escrow Agent have any lien, security interest or right of set-off whatsoever upon any of the moneys or investments in the Escrow Deposit Trust Fund 'for the payment of such Compensation, or for the reimbursement of any expenses incurred by the 1992 Bond Registrar or Escrow Agent in connection with this Agreement. Section 2.11. Bond Registrar. The Escrow Agent shall cooperate with the 1992 Bond Registrar, to cause necessary arrangements to be made and thereafter continued whereby funds shall be made available by the Escrow Agent to the 1992 Bond Registrar, for the payment of the Defeased Bonds as the same shall be come due and payable. ARTICLE III CONCERNING THE ESCROW AGENT Section 3.01. Appointment of Escrow Agent. hereby appoints The Bank of N~w York, , as Escrow Agent under this Agreement. The Issuer -6- 8125M Section 3.02. Acceptance by Escrow Agent. By execution of this Agreement, the Escrow Agent accepts its duties and obligations hereunder. The Escrow Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement and no implied covenants or obligations shall be read into this Agreement against the Escrow Agent. Section 3.03. Liability of Escrow Agent. The Escrow Agent shall not be liable in connection with the performance of its duties hereunder except for its own negligence or willful misconduct. The Escrow Agent shall not be liable for any loss or any resulting taxability of interest on the Defeased Bonds resulting from any investment made pursuant to the terms and provisions of this Agreement. The Escrow Agent shall not be liable for the accuracy of the calculations as to the sufficiency of moneys and of the principal amount of the Government Obligations and the earnings thereon, to pay the Defeased Bonds. The Escrow Agent shall keep such books and records as shall be consistent with prudent industry practice and shall make such books and records available for inspection by the Issuer at all reasonable times. In the event of the Escrow Agent's failure to account for any of the Government Obligations or moneys received by it, said Government Obligations or moneys shall be and remain the property of the Issuer for the benefit of the holders of the Defeased Bonds, as herein provided. Section 3.04. Permitted Acts. The Escrow Agent and its affiliates may become the owner of or may deal in any obligations of the Issuer described herein as fully and with the same rights as if it were not the Escrow Agent. Section 3.05. Resignation of Escrow Agent. The Escrow Agent at the time acting hereunder may at any time resign and be discharged from the trusts hereby created by giving not less than sixty (60) days' written notice to~ the Issuer and by publishing notice thereof, specifying the date when such resignation will take effect, at least once not less than sixty (60) days before such resignation is to take effect in the The Bond Buyer, but no such resignation shall take effect unless a successor Escrow Agent shall have been appointed by the holders of the Defeased Bonds or by the Issuer as hereinafter provided and such successor Escrow Agent shall have accepted such appointment, in which event such resignation shall take effect immediately upon the appointment and acceptance of a successor Escrow Agent and the transfer to such successor Escrow Agent of the funds and accounts held by the Escrow Agent hereunder. -7- 8125M Section 3.06. Removal of Escrow Agent. (a) The Escrow Agent may be removed at any time if the holders of a majority in aggregate principal amount of the Defeased Bonds then outstanding file a request for removal in writing with the Issuer, but the Escrow Agent shall remain in office until the appointment and taking office of a successor Escrow Agent in accordance with the provisions of this Agreement. A copy of any such Bondholders' request shall be delivered by the Issuer to the Escrow Agent. (b) The Escrow Agent may also be removed at any time for any violation of this Agreement by a court of competent jurisdiction upon the application of the Issuer or the holders of not less than fifty percent (50%) in aggregate principal amount of the Defeased Bonds then outstanding. (c) The Escrow Agent shall be deemed to have been removed if it is dissolved, becomes incapable of exercising the powers of Escrow Agent hereunder or is taken over by any governmental action. (d) Notwithstanding the foregoing provisions of this Section 3.06, no removal of the Escrow Agent shall take effect until all fees and expenses of the Escrow Agent to be removed (including attorneys' fees and expenses) due hereunder shall have been paid. Section 3.07. Successor Escrow Agent. (a) When the position of the Escrow Agent becomes or is about to become vacant, the Issuer shall appoint a successor Escrow Agent to fill such vacancy. The Issuer shall publish notice of such appointment in-the same manner required for publication of notice provided in Section 3.05 hereof. (b) If no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this Section, the holder of any Defeased Bond then outstanding may, or any Escrow Agent retiring or being removed from office shall, apply to any court of competent jurisdiction to appoint a successor Escrow Agent. Upon the deposit by the retiring Escrow Agent of all funds and securities held by it under the provisions hereof into the registry of such court, such Escrow Agent shall be relieved of all future duties hereunder. Section 3.08. Receipt of Proceedings. Receipt of true and correct copies of the Defeased Bond Resolutions and the Bond Resolution is hereby acknowledged by the Escrow Agent. -8- 8125M ARTICLE IV MISCELLANEOUS Section 4.01. Amendments to this Agreement. This Agreement is made for the benefit of the Issuer, the Escrow Agent and the holders from time to time of the Defeased Bonds and it shall no~~ be repealed, revoked, altered or amended without the written consent of all such holders, the Escrow Agent and the Issuer; provided, however, that the Issuer and the Escrow Agent, may, without the consent of, or notice to, such holders, enter into such agreements supplemental to this Agreement as shall not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Defeased Bonds and the rights of such holders and as shall not be inconsistent with the terms and provisions of this Agreement, for any one or more of the following purposes: (a) to cure any ambiguity or formal defect or omission in this Agreement; (b) to grant to, or confer upon, the Escrow Agent for the benefit of the holders of the Defeased Bonds, any additional rights, remedies, powers or authority that may lawfully be. granted to, or conferred upon, such holders or the Escrow Agent; and (c) to subject to securities or properties. this Agreement additional funds, The Escrow Agent shall be entitled to rely exclusively upon an unqualified opinion of Moyle, Flanigan, Katz, Fitzgerald & Sheehan, P.A. or other nationally recognized bond counsel with respect to compliance with this Section, including the extent, if any, to which any change, modification, addition or elimination affects the rights of the holders of the Defeased Bonds, or that any instrument executed hereunder complies with the conditions and provisions of this Section. Notwithstanding the foregoing or any other provision of this Agreement, at the written request of the Issuer and upon compliance with the conditions hereinafter stated, the Escrow Agent shall have the power to and shall, in simultaneous transactions, sell, transfer, otherwise dispose of or request the redemption of the Government Obligations held hereunder and to substitute therefor other Government Obligations, subject to the condition that such moneys or securities together with the interest or income thereof, shall be sufficient to pay, when due, the principal of, interest on and redemption premiums, if any, with respect to the Defeased Bonds. The Escrow Agent shall purchase such substituted securities with the proceeds derived from the sale, transfer, disposition or redemption of the -9- 8125M Government Obligations held hereunder or from other moneys available. The transactions may be effected only if there shall have been obtained: (1) an independent verification by a nationally recognized independent certified public accounting firm acceptable to the Escrow Agent concerning the adequacy of such substituted securities with respect to the principal and the interest thereon and any other moneys or securities held for such purpose to meet the principal, premium, and interest when due of the Defeased Bonds in the manner required hereby and by the proceedings which authorized their issuance; and (2) an opinion from Moyle, Flanigan, Katz, FitzGerald & Sheehan, P.A. or other nationally recognized bond counsel to the Issuer to the effect that the disposition and substitution or purchase of Such securities will not adversely affect the status of the interest on the Defeased Bonds and Refunding Bonds for federal income tax purposes. If securities are substituted pursuant to this Section 4.01, any surplus moneys resulting from the sale, transfer, other disposition or redemption of the Government Obligations held hereunder and the substitutions therefor of Government Obligations shall be released from the trust created hereunder and shall be transferred to the Issuer, and shall be used by the Issuer for any lawful purpose of the Issuer approved in writing by nationally recognized bond counsel. Section 4.02. Substitution of Government Obligations. Notwithstanding any other provisions of this Agreement, if so directed in writing by the Issuer on the date proposed for the initial delivery of the Government Obligations listed on Schedule "A" hereto (the "Original Government Obligations"), the Escrow Agent shall accept in substitution for any of the Original Government Obligations an equal or greater principal amount of an earlier maturity of Government Obligations which provide payments of principal and interest to be received at the same time or earlier and in amounts equal to or greater than the corresponding payments that would have been received on the Original Government O~ligations for which the substitution is made, and which are described on Schedule "A-l" to be affixed to this Agreement at the time of delivery to the Escrow Agent (the "Substitute S~curities"), the principal of and interest on which, together with the principal and interest on the other Government O~ligations to be held by the Escrow Agent under this Agreement, will meet the requirements for payment of all principal of, premium, and interest on the Defeased Bonds, when due in accordance with the terms of this Agreement. Before any such substitution, the Issuer and the Escrow Agent shall have received a verification from a firm of qualified and nationally recognized independent certified public accountants acceptable to the Escrow Agent and the Issuer as to the cash flow sufficiency of the securities described in Schedule A and the securities described in -10- 8125M Schedule A-I, together with the other securities to be held by the Escrow Agent under this Agreement, in each case to cover the principal of, interest on and redemption premium on the Defeased Bonds as the same become due in accordance with the schedules attached to this Agreement. As further directed in writing by the Issuer, upon satisfaction of the conditions set forth below, at any time prior to the maturity of the Substitute Securities to be exchanged, the Escrow Agent shall exchange any or all of the Substitute Securities for all or any part of the Original Government Obligations for which such Substitute Securities were substituted; provided, however, that no such exchange shall be made unless the principal of and interest on such Original Government Obligations, together with the principal of and interest on the other Government Obligations held by the Escrow Agent under this Agreement will meet the requirements of payment of all principal of, premium, and interest on the Defeased Bonds when due in accordance with the terms of this Agreement. Amounts received on Substitute Securities in excess of amounts that would have been received on the Original Govlernment Obligations, to the extent not needed to pay principal of, premium,~ and interest on the Defeased Bonds when due, shall be transferred as directed in writing by the Issuer. Notwithstanding the foregoing, the Issuer shall not request, and the Escrow Agent shall not accept, all or any part of the Original Government Obligations for all or any part of the Substitute Securities until the Escrow Agent shall have received: (a) delivery of all or such part of the Original Government Obligations and (b) if any payment of principal or interest on either the Substitute Securities or the Original Government Obligations has been made subsequent to the date hereof or if only part of the Substitute Securities are to be exchanged, an independent verification by a nationally recognized certified public accounting firm acceptable to the Escrow Agent setting forth a new Schedule "A" reflecting such substitution and a new report verifying the sufficiency of the cash flow from the securities held by the Escrow Agent after substitution to pay all required payments of principal of, premium, and interest on the Defeased Bonds when due in accordance with the terms of this Agreement. Section 4.03. Severability. If any one or more of the covenants or agreements provided in this Agreement should be determined by a court of competent jurisdiction to be contrary to law, such covenant or agreement shall be deemed to be separate and shall in no way affect the validity of the remaining provisions of this Agreement. Section 4.04. Agreement Binding. Ail the covenants, promises and agreements in this Agreement contained by or on -11- 8125M behalf of the Issuer or by or on behalf of the Escrow Agent shall bind and inure to the benefit of their respective successors and assigns, and to the benefit of the holders of the Defeased Bonds, whether so expressed or not. Section 4.05. Termination. This Agreement shall terminate when all transfers and payments required to be made by the Escrow Agent under the provisions hereof shall have been made. Section 4.06. -Governing Law. This Agreement shall governed by the applicable laws of the State of Florida. be Section 4.07. Execution by Counterparts. This Agreement may be executed in several counterparts, each of which shall be regarded for all purposes as an original, and all of which, together, shall constitute and be but one and the same instrument. Section 4.08. Notices. Any notice, demand, direction, request or other instrument authorized or required by this Agreement to be given shall be deemed sufficiently given on the day sent by registered mail, return receipt requested, addressed as follows or to such other address furnished in writing by any of the following to all of the following: If to the Issuer: City of Boynton Beach, Florida Attn: City Manager 100 East Boynton Beach Boulevard Boynton Beach, Florida 33425 If to the Escrow Agent: The Bank of New York 10161 Centurion Parkway 2nd Floor Jacksonville, Florida 32256 IN WITNESS WHEREOF, the Issuer and the Escrow Agent have duly executed this Agreement as of the date first above written. CITY OF BOYNTON BEACH, FLORIDA By: Mayor THE BANK OF NEW YORK, as Escrow Agent By: Its -12- 8125M 8125M/13 EXHIBIT A DEFEASED BONDS 8125M/14 ~XHIBIT B SOURCES OF CASH 8125M/15 EXHIBIT C NOTICE OF DEFEASANCE CITY OF BOYNTON BEACH, FLORIDA UTILITY SYSTEM REVENUE BONDS SERIES 1992 NOTICE IS HEREBY GIVEN that for the payment of the principal of, premium and interest on the above-designated Bonds maturing on November 1 in the years through , inclusive (the "Bonds"), there has been deposited with , as escrow agent, cash, which, except to the extent maintained in cash, has been invested in noncallable direct obligations of the United States of America. The projected principal and interest payments to be received from such obligations have been calculated to be adequate to pay the principal of, premium and interest on the Bonds when due to and including November 1, , the date on which the Bonds maturing in the years through , inclusive, and then outstanding shall be called for redemption, and to and including November 1, , the date on which the Bonds maturing in the years through , inclusive, and then outstanding shall be called for redemption. The Bonds are no longer outstanding for purposes of the resolution that authorized the issuance of the Bonds. Dated this day of , 1996. /s/ , as escrow agent 8125M/16 GOVERNMEI~T OBLIGATI0~$ TO BE DEPOSITED INT0 ESCROW DEPQ~_L~II~ Maturity 8125M/17 SCHEDULE B DEFEASED BONDS DEBT SERVICE SCHEDULES Date Principal Called Principal Premium Interest B-1