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R12-001
1 1 RESOLUTION NO. R12- OO A SERIES RESOLUTION PROVIDING FOR THE ISSUANCE OF NOT EXCEEDING $55,000,000 AGGREGATE PRINCIPAL AMOUNT OF UTILITY SYSTEM REVENUE BONDS, SERIES 2012; PROVIDING A METHOD FOR FIXING AND DETERMINING THE PRINCIPAL AMOUNT, INTEREST RATES, MATURITY DATES, REDEMPTION PROVISIONS AND OTHER DETAILS OF SAID BONDS; AUTHORIZING THE SALE OF THE BONDS TO RBC CAPITAL MARKETS, LLC; 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 CONTRACT AND A BOND REGISTRAR AGREEMENT; AUTHORIZING THE PREPAYMENT OF ALL OR A PORTION OF THE CITY'S UTILITY SYSTEM REVENUE BONDS, SERIES 2008; 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 RESERVE SURETY BOND 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 I in the Bond Resolution hereinafter defined 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 j "Pledged Revenues" as defined in and to the extent set forth in the Bond Resolution; and 1, WHEREAS, the City desires to issue Bonds (the "Series 2012 Bonds ") under the Bond Resolution to provide funds, together with available funds of the City, for the redemption prior to maturity of all or a portion of the City's Utility System Revenue Bonds, Series 2008 (the "Series 2008 Bonds ")(the Series 2008 Bonds that are to be refunded being referred to as the "Refunded Bonds "), to pay the cost of capital expenditures with respect to the Utility System (as defined in the "Bond Resolution ") and to pay certain costs of issuing such Series 2012 Bonds (including the premium(s) for bond insurance and/or a reserve fund insurance policy); and WHEREAS, prior to the issuance of the Series 2012 Bonds the conditions set forth in Section 209 of the Bond Resolution shall be satisfied; and WHEREAS, the City Commission has determined that the sale of such Series 2012 Bonds through negotiation with RBC Capital Markets, LLC (the "Original Purchaser ") is in the best interest of the City; and WHEREAS, the refunding of the Refunded bonds is in the best interest of the City due to the reduction in interest expense to be realized thereby; and WHEREAS, the City Commission has received from the Original Purchaser a form of a Bond Purchase Contract by and between the City and the Original Purchaser whereby the Original Purchaser would agree to purchase the Series 2012 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 2012 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 2012 Bonds and to appoint The Bank of New York Mellon Trust Company, N.A. as Bond Registrar for such Series 2012 Bonds; and WHEREAS, the City has received a commitment from Assured Guaranty Municipal; Corp. to issue its municipal bond insurance policy insuring the payment of the principal of and interest on all or a portion of the Series 2012 Bonds and it is necessary and desirable to authorize the acceptance of such commitment; and WHEREAS, the City has received a commitment from Assured Guaranty Municipal Corp. to issue its financial guaranty insurance policy to satisfy the Reserve Account Requirement for the Series 2012 Bonds and it is necessary and desirable to authorize the acceptance of such commitment; and 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. 2 I 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: "Authorized Representative" means the Mayor or Vice - Mayor, and in the absence or inability to act of the Mayor or Vice - Mayor, any other City Commissioner or the City Manager (the absence or inability to act of the Mayor of Vice -Mayor as to any particular action being conclusively established by the taking of such action by the City Manager or other City Commissioner). "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 Depository Trust Company is lawfully and temporarily closed. "Closing Date" shall mean the date on which the Series 2012 Bonds are issued and delivered by the City and paid for by the Original Purchaser. "Interest Payment Date" shall mean May 1 and November 1 of each year, commencing May 1, 2012, or such other dates as may be set forth in the certificate establishing the terms of the Series 2012 Bonds pursuant to Section 4(b) hereof. Section 3. Authorization of Bonds. Bonds are hereby authorized to be issued pursuant to this Resolution and Section 210 of the Bond Resolution in the aggregate principal amount of not to exceed $55,000,000. The Bonds hereby authorized shall be known as "Utility System Revenue Bonds, Series 2012." Prior to the issuance of the Series 2012 Bonds the conditions of Section 209 of the Bond Resolution shall be satisfied. The Series 2012 Bonds are being issued for the principal purpose of providing funds, together with funds held in the Bond Service Subaccount under the Bond Resolution in respect of the Series 2008 Bonds, to redeem the Refunded Bonds prior to maturity, to pay the cost of capital expenditures to the Utility System and to pay costs associated with issuing the Series 2012 Bonds (including the premium(s) forl the bond insurance policy and /or a financial guaranty insurance policy). No portion of the Series 2012 Bonds may be issued to provide funds to retire the Refunded Bonds unless the issuance of such portion of the Series 2012 Bonds and the refunding of the Refunded Bonds1 produces net present value debt service savings for the City, calculated as of the date of delivery of the Series 2012 Bonds using the arbitrage yield on the Series 2012 Bonds as the discount rate, of at least 3% of the principal amount of the Refunded Bonds. Section 4. Terms of the Series 2012 Bonds. (a) Form of Bonds. The Series 2012 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 2012 Bonds set forth, herein as may be approved by the officers of the City executing the Series 2012 Bonds, such execution to be conclusive evidence of such approval. 3 11 (b) Amounts, Maturities, Redemption Provisions and Interest Rates. The Series 2012 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 Authorized Representative as hereinafter provided. The Series 2012 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 their date of initial issuance and delivery, and shall bear interest from such date, payable on the Interest Payments Dates. The Series 2012 Bonds shall be issued on such date, in the aggregate principal amount, not in excess of $55,000,000, shall bear interest at the rates per annum, computed on the basis of a 360 -day year consisting of twelve 30 -day months, not in excess of the maximum legal rate, 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 Authorized Representative at or before the issuance of the Series 2012 Bonds, provided however that the final maturity of the Series 2012 Bonds shall not be after November 1, 2042. Principal of the Series 2012 Bonds shall be payable only upon presentation and surrender of such Bonds at the principal office of the Bond Registrar. Interest on the Series 2012 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 2012 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 registered owners of the Series 2012 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 2012 Bonds shall be an amount equal to the lesser of (i) 10% of the aggregate stated principal amount of the Series 2012 Bonds Outstanding, (ii) the maximum amount of principal 1 and interest scheduled to become due on the Outstanding Series 2012 Bonds in the current on any succeeding Bond Year, or (iii) 125% of the average annual debt service on the Series 2012 Bonds (calculated on a Bond Year basis at the time of issuance only). If the Series 2012 Bond 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 2012 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 2012 Bonds. The Series 2012 Reserve Subaccount, which is hereby ordered created, shall be funded in an amount equal to the Reserve Account Requirement for the Series 2012 Bonds at the time of initial issuance and delivery of the Series 2012 Bonds, and in the event any deficiency is created in the Series 2012 Reserve Subaccount, the Reserve Account Deposit Requirement for such Series shall be, in each month, an amount equal to at least [one twelfth (1/12)] of the amount of such deficiency. Section 5. Amendments to Bond Resolution. (a) The amendments to the Bond Resolution set forth in this Section 5(a) shall be effective upon, and only upon the issuance of the Series 2012 Bonds and the purchase by the City of the hereinafter referenced 2012 Bond Insurance Policy. Section 101 of the Bond Resolution is amended by the addition thereto of two new definitions as follows: 4 i i "2012 Bond Insurance Policy" shall mean the insurance policy issued by the 2012 Bond Insurer guaranteeing the scheduled payment of principal of and interest on the Series 2012 Bonds when due. "2012 Bond Insurer" shall mean Assured Guaranty Municipal Corp., a New York stock insurance company, or any successor thereto or assignee thereof. (b) The amendments to the Bond Resolution set forth in this Section 5(b) shall be effective upon, and only upon the issuance of the Series 2012 Bonds and the purchase by the City of the above- referenced 2012 Bond Insurance Policy. A new Section 721 is added to the Bond Resolution to provide as follows: "Section 721. Provisions concerning 2012 Bond Insurer. For so long as the 2012 Bond Insurance Policy shall be outstanding, notwithstanding any provision to the contrary contained herein, the following provisions shall apply with respect to the Series 2012 Bonds: (a) The prior written consent of the 2012 Bond Insurer shall be a condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the Series 2012 Reserve Subaccount, if any. Notwithstanding anything to the contrary set forth in the Bond Resolution, amounts on deposit in the Series 2012 Reserve Subaccount shall be applied solely to the payment of debt service due on the Series 2012 Bonds. (b) The 2012 Bond Insurer shall be deemed to be the sole holder of the Series 2012 Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the holders of the Series 2012 Bonds insured by it are entitled to take pursuant to the Bond Resolution pertaining to (i) defaults and remedies and (ii) the duties and obligations of the Bond Registrar. Remedies available to the Bondholders shall include mandamus. (c) If acceleration is permitted under the Bond Resolution, the maturity of the Series 2012 Bonds insured by the 2012 Bond Insurer shall not be accelerated without the consent of the 2012 Bond Insurer and in the event the maturity of the Series 2012 Bonds is accelerated, the 2012 Bond Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued, on such principal to the date of acceleration (to the extent unpaid by the City) and the Bond Registrar shall be required to accept such amounts. Upon payment of such accelerated principal and interest accrued to the acceleration date as provided above, the 2012 Bond Insurer's obligations under the 2012 Bond Insurance Policy with respect to the Series 2012 Bonds shall be fully discharged. (d) No grace period for a covenant default shall exceed 30 days or be extended for more than 60 days, without the prior written consent of the 2012 Bond Insurer. No grace period shall be permitted for payment defaults. 5 11 1 (e) The 2012 Bond Insurer is a third party beneficiary of the Bond Resolution. (f) Upon the occurrence of an extraordinary optional, special or extraordinary mandatory redemption in part, the selection of Series 2012 Bonds to be redeemed shall be subject to the approval of the 2012 Bond Insurer. The exercise of any provision of the Bond Resolution which permits the purchase of Series 2012 Bonds in lieu of redemption shall require the prior written approval of the 2012 Bond Insurer if any Series 2012 Bond so purchased is not cancelled upon purchase. (g) Any amendment, supplement, modification to, or waiver of, the Bond Resolution or any other transaction document, including any underlying security agreement (each a "Related Document "), that requires the consent of Bondowners or adversely affects the rights and interests of the 2012 Bond Insurer shall be subject to the prior written consent of the 2012 Bond Insurer. (h) Unless the 2012 Bond Insurer otherwise directs, upon the occurrence and continuance of an Event of Default or an event which with notice or lapse of time would constitute an Event of Default, amounts on deposit in the Series 2012 Project Construction Account of the Construction Fund shall not be disbursed, but shall instead be applied to the payment of debt service or redemption price of the Series 2012 Bonds. (i) The rights granted to the 2012 Bond Insurer under the Bond Resolution or any other Related Document to request, consent to or direct any action are rights granted to the 2012 Bond Insurer in consideration of its issuance of the 2012 Bond Insurance Policy. Any exercise by the 2012 Bond Insurer of such rights is merely an exercise of the 2012 Bond Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf, of the Bondholders and such action does not evidence any position of the 2012 Bond Insurer, affirmative or negative, as to whether the consent of the Bondowners or any other person is required in addition to the consent of the 2012 Bond Insurer. (j) Only (1) cash, (2) non callable direct obligations of the United States of America ( "Treasuries "), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (4) subject to the prior written consent of the 2012 Bond Insurer, pre- refunded municipal obligations rated "AAA" and "Aaa" by S &P and Moody's, respectively, or (5) subject to the prior written consent of the 2012 Bond Insurer, securities eligible for "AAA" defeasance under then existing criteria of S & P or any combination thereof, shall be used to effect defeasance of the Bonds unless the 2012 Bond Insurer otherwise approves. 6 I. To accomplish defeasance, the City shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants or such other accountant as shall be acceptable to the 2012 Bond Insurer ( "Accountant ") verifying the sufficiency of the escrow established to pay the Series 2012 Bonds in full on the maturity or redemption date ( "Verification "), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and substance to the 2012 Bond Insurer), (iii) an opinion of nationally recognized bond counsel to the effect that the Series 2012 Bonds are no longer "Outstanding" under the Bond Resolution and (iv) a certificate of discharge of the Trustee with respect to the Series 2012 Bonds; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the City, Bond Registrar and 2012 Bond Insurer. The 2012 Bond Insurer shall be provided with final drafts of the above referenced documentation not less than five business days prior to the funding of the escrow. Series 2012 Bonds shall be deemed "Outstanding" under the Bond Resolution unless and until they are in fact paid and retired or the above criteria are met. (k) Amounts paid by the 2012 Bond Insurer under the 2012 Bond Insurance Policy shall not be deemed paid for purposes of the Bond Resolution and the Series 2012 Bonds relating to such payments shall remain Outstanding and continue to be due and owing until paid by the City in accordance with the Bond Resolution. The Bond Resolution shall not be discharged unless all amounts due or to become due to the 2012 Bond Insurer have been paid in full or duly provided for. (1) Each of the City and Bond Registrar covenant and agree to take such action (including, as applicable, filing of UCC financing statements and continuations thereof) as is necessary from time to time to preserve the priority of the pledge of the Pledged Revenues under applicable law. (m) Claims Upon the 2012 Bond Insurance Policy and Payments by and to the 2012 Bond Insurer. If, on the third Business Day prior to the related scheduled interest payment date or principal payment date ( "Payment Date ") there is not on deposit with the Bond Registrar, after making all transfers and deposits required under the Bond Resolution, moneys sufficient to pay the principal of and interest on the Series 2012 Bonds due on such Payment Date, the Bond Registrar shall give notice to the 2012 Bond Insurer and to its designated agent (if any) (the "2012 Bond Insurer's Fiscal Agent ") by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the Series 2012 Bonds due on such Payment Date, the Bond Registrar shall make a claim under the 2012 Bond Insurance Policy and give notice to the 2012 Bond 7 i 1 Insurer and the 2012 Bond Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the Series 2012 Bonds and the amount required to pay principal of the Series 2012 Bonds, confirmed in writing to the 2012 Bond Insurer and the 2012 Bond Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the 2012 Bond Insurance Policy. The Bond Registrar shall designate any portion of payment of principal on Series 2012 Bonds paid by the 2012 Bond Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Series 2012 Bonds registered to the then current Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the 2012 Bond Insurer, registered in the name of Assured Guaranty Municipal Corp., in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Bond Registrar's failure to so designate any payment or issue any replacement Bond shall have no effect on the amount of principal or interest payable by the City on any Bond or the subrogation rights of the 2012 Bond Insurer. The Bond Registrar shall keep a complete and accurate record of all funds deposited by the 2012 Bond Insurer into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and principal of any Bond. The 2012 Bond Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Bond Registrar. Upon payment of a claim under the 2012 Bond Insurance Policy, the Bond Registrar shall establish a separate special purpose trust account for the benefit of Bondholders referred to herein as the "Policy Payments Account" and over which the Bond Registrar shall have exclusive control and sole right of withdrawal. The Bond Registrar shall receive any amount paid under the 2012 Bond Insurance Policy in trust on behalf of Bondholders and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Bond Registrar to Bondholders in the same manner as principal and interest payments are to be made with respect to the Series 2012 Bonds under the sections hereof regarding payment of Series 2012 Bonds. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Notwithstanding anything herein to the contrary, the City agrees to pay to the 2012 Bond Insurer (i) a sum equal to the total of all amounts paid by the 2012 Bond Insurer under the 2012 Bond Insurance Policy (the "2012 Bond Insurer Advances "); and (ii) interest on such 2012 Bond Insurer Advances from the date paid by the 2012 Bond Insurer until payment thereof in full, payable to the 2012 Bond Insurer at the Late Payment Rate per annum (collectively, the "2012 Bond Insurer Reimbursement 8 1 Amounts "). "Late Payment Rate" means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in The City of New York, as its prime or base lending rate (any change in such rate of interest to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3 %, and (ii) the then applicable highest rate of interest on the Series 2012 Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. The City hereby covenants and agrees that the 2012 Bond Insurer Reimbursement Amounts are secured by a lien on and pledge of the Pledged Revenues and payable from such Pledged Revenues on a parity with debt service due on the Series 2012 Bonds. Funds held in the Policy Payments Account shall not be invested by the Bond Registrar and may not be applied to satisfy any costs, expenses or liabilities of the Bond Registrar. Any funds remaining in the Policy Payments Account following a Bond payment date shall promptly be remitted to the 2012 Bond Insurer. (n) The 2012 Bond Insurer shall, to the extent it makes any payment of principal of or interest on the Series 2012 Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the 2012 Bond Insurance Policy. Each obligation of the City to the 2012 Bond Insurer under the Related Documents shall survive discharge or termination of such Related Documents. (o) The City shall pay or reimburse the 2012 Bond Insurer any and all charges, fees, costs and expenses that the 2012 Bond Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in any Related Document; (ii) the pursuit of any remedies under the Bond Resolution or any other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Bond Resolution or any other Related Document whether or not executed or completed, or (iv) any litigation or other dispute in connection with the Bond Resolution or any other Related Document or the transactions contemplated thereby, other than costs resulting from the failure of the 2012 Bond Insurer to honor its obligations under the 2012 Bond ' Insurance Policy. The 2012 Bond Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Bond Resolution or any other Related Document. (p) After payment of reasonable expenses of the Bond Registrar, the 1 application of funds realized upon default shall be applied to the payment of expenses of the City or rebate only after the payment of past due and current debt service on the Series 2012 Bonds and amounts required to restore the Reserve Account to the Reserve Account Requirement. I� 1 9 1 (q) The 2012 Bond Insurer shall be entitled to pay principal or interest on the Series 2012 Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the City (as such terms are defined in the 2012 Bond Insurance Policy) and any amounts due on the Series 2012 Bonds as a result of acceleration of the maturity thereof in accordance with the Bond Resolution, whether or not the 2012 Bond Insurer has received a Notice of Nonpayment (as such terms are defined in the 2012 Bond Insurance Policy) or a claim upon the 2012 Bond Insurance Policy. (r) The notice address of the 2012 Bond Insurer is: Assured Guaranty Municipal Corp., 31 West 52nd Street, New York, New York 10019, Attention: Managing Director - Surveillance, Re: Policy No. , Telephone: (212) 826 0100; Telecopier: (212) 339 3556. In each case in which notice or other communication refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." (s) The 2012 Bond Insurer shall be provided with the following information by the City or Bond Registrar, as the case may be: (i) Annual audited financial statements within 150 days after the end of the 1 City's fiscal year (together with a certification of the City that it is not aware of any default or Event of Default under the Bond Resolution), and the City's annual budget within 30 days after the approval thereof together with such other information, data or reports as the 2012 Bond Insurer shall reasonably request from time to time; (ii) Notice of any draw upon the Series 2012 Reserve Subaccount within two Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Reserve Account Requirement and (ii) withdrawals in connection with a refunding of Series 2012 Bonds; (iii) Notice of any default known to the Bond Registrar or City within five Business Days after knowledge thereof; (iv) Prior notice of the advance refunding or redemption of any of the Series 2012 Bonds, including the principal amount, maturities and CUSIP numbers thereof; (v) Notice of the resignation or removal of the Bond Registrar and the appointment of, and acceptance of duties by, any successor thereto; (vi) Notice of the commencement of any proceeding by or against the City commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding "); 10 I ' (vii) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Series 2012 Bonds; (viii) A full original transcript of all proceedings relating to the execution of any amendment, supplement, or waiver to the Related Documents; and (ix) All reports, notices and correspondence to be delivered to Bondholders under the terms of the Related Documents. In addition, to the extent that the City has entered into a continuing disclosure agreement, covenant or undertaking with respect to the Series 2012 Bonds, all information furnished pursuant to such agreements shall also be provided to the 2012 Bond Insurer, simultaneously with the furnishing of such information. (t) The 2012 Bond Insurer shall have the right to receive such additional information as it may reasonably request. (u) The City will permit the 2012 Bond Insurer to discuss the affairs, finances and accounts of the City or any information the 2012 Bond Insurer may reasonably request regarding the security for the Series 2012 Bonds with appropriate officers of the City and will use commercially reasonable efforts to enable the 2012 Bond Insurer to have access to the facilities, books and records of the City on any business day upon reasonable prior notice. (v) The Bond Registrar shall notify the 2012 Bond Insurer of any failure of the City to provide notices, certificates and other information under the transaction documents. (w) Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds set forth in the Bond Resolution, no such issuance may occur (1) if an Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) exists unless such default shall be cured upon such issuance and (2) unless the Reserve Account is fully funded at the Reserve Account Requirement (including the proposed issue) upon the issuance of such Additional Bonds, in either case unless otherwise permitted by the 2012 Bond Insurer. (x) In determining whether any amendment, consent, waiver or other action to be taken, or any failure to take action, under the Bond Resolution would adversely affect the security for the Series 2012 Bonds or the rights of the Bondholders, the Bond Registrar shall consider the effect of any such amendment, consent, waiver, action or inaction as if there were no 2012 Bond Insurance Policy. (y) No contract shall be entered into or any action taken by which the rights of the 2012 Bond Insurer or security for or sources of payment of the Series 11 I 1 1 ' 2012 Bonds may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the 2012 Bond Insurer. (z) If the Series 2012 Bonds are issued for refunding purposes, there shall be delivered an opinion of Bond Counsel addressed to the 2012 Bond Insurer (or a reliance letter relating thereto), or a certificate of discharge of the Bond Registrar for the Refunded Bonds, to the effect that, upon the making of the required deposit to the escrow, the legal defeasance of the Refunded Bonds shall have occurred. If the Refunded Bonds are insured by Assured Guaranty Municipal Corp., at least three business days prior to the proposed date for delivery of the Policy with respect to the Refunding Bonds, the 2012 Bond Insurer shall also receive (i) the verification letter, of which the 2012 Bond Insurer shall be an addressee, by an independent firm of certified public accountants which is either nationally recognized or otherwise acceptable to the 2012 Bond Insurer, of the adequacy of the escrow established to provide for the payment of the Refunded Bonds in accordance with the terms and provisions of the Escrow Deposit Agreement, and (ii) the form of an opinion of Bond Counsel addressed to the 2012 Bond Insurer (or a reliance letter relating thereto) to the effect that the Escrow Deposit Agreement is a valid and binding obligation of the parties thereto, enforceable in accordance with its terms (such Escrow Deposit Agreement shall provide that no amendments are permitted without the prior written consent of the 2012 Bond Insurer). An executed copy of each of such opinion and reliance letter, if applicable, or Bond Registrar's discharge I certificate, as the case may be, shall be forwarded to the 2012 Bond Insurer prior to delivery of the Series 2012 Bonds. (aa) Any interest rate exchange agreement ( "Swap Agreement ") entered into by the City that is payable from the Pledged Revenues shall meet the following conditions: (i) the Swap Agreement must be entered into to manage interest costs related to, or a hedge against (a) assets then held, or (b) debt then outstanding, or (iii) debt reasonably expected to be issued within the next twelve (12) months, and (ii) the Swap Agreement shall not contain any leverage element or multiplier component greater than 1.0x unless there is a matching hedge arrangement which effectively off -sets the exposure from any such element or component. Unless otherwise consented to in writing by the 2012 Bond Insurer, any uninsured net settlement, breakage or other termination amount then in effect shall be subordinate to debt service on the Series 2012 Bonds and on any debt on parity with the Series 2012 Bonds. The City shall not terminate a Swap Agreement unless it demonstrates to the satisfaction of the 2012 Bond Insurer prior to the payment of any such termination amount that such payment will not cause the City to be in default under the Related Documents, including but not limited to, any monetary obligations thereunder. All counterparties or guarantors to any Swap Agreement must have a rating of at least "A -" and "A3" by Standard & Poor's ('S &P ") and Moody's Investors Service ( "Moody's "). If the counterparty or guarantor's rating falls below "A -" or "A3" by either S &P or Moody's, the counterparty or guarantor shall execute a credit support annex to the Swap Agreement, which credit support annex shall 12 I be acceptable to the 2012 Bond Insurer. If the counterparty or the guarantor's long term unsecured rating falls below "Baal" or "BBB +" by either Moody's or S &P, a replacement counterparty or guarantor, acceptable to the 2012 Bond Insurer, shall be required. (c) The amendments to the Bond Resolution set forth in this Section 5(c) shall be effective upon, and only upon the issuance of the Series 2012 Bonds and the purchase by the City of the hereinafter referenced 2012 Reserve Account Insurance Policy. Section 101 of the Bond Resolution is amended by the addition thereto of two new definitions as follows: "2012 Reserve Account Insurance Policy" shall mean the municipal bond debt service reserve insurance policy issued by the 2012 Bond Insurer that satisfies the Reserve Account Requirement for the Series 2012 Bonds. "2012 Bond Insurer" shall mean Assured Guaranty Municipal Corp., a New York stock insurance company, or any successor thereto or assignee thereof. (d) The amendments to the Bond Resolution set forth in this Section 5(d) shall be effective upon, and only upon the issuance of the Series 2012 Bonds and the purchase by the City of the above- referenced 2012 Reserve Account Insurance Policy. A new Section 722 is added to the ' ' Bond Resolution to provide as follows: "Section 722. Reserve Surety Provisions. Notwithstanding any provision to the contrary contained herein, the following provisions shall apply while Assured Guaranty Municipal Corp. has issued a municipal bond debt service reserve insurance policy in order to fund all or a portion of the Reserve Account Requirement for any Series 2012 Bonds: (a) The City shall repay any draws under the 2012 Reserve Account Insurance Policy and pay all related reasonable expenses incurred by AGM. Interest shall accrue and be payable on such draws and expenses from the date of payment by AGM at the Late Payment Rate. "Late Payment Rate" means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate ( "Prime Rate ") (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3 %, and (ii) the then applicable highest rate of interest on the Series 2012 Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such national bank as AGM shall specify. Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, "Policy Costs ") shall commence in the first month following each draw, and each such monthly payment shall be I � 13 I I I in an amount at least equal to 1/12 of the aggregate of Policy Costs related to such draw. Amounts in respect of Policy Costs paid to AGM shall be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to AGM on account of principal due, the coverage under the Reserve Policy will be increased by a like amount, subject to the terms of the Reserve Policy. All cash and investments in the Series 2012 Reserve Subaccount established for the Series 2012 Bonds (the "Reserve Fund ") shall be transferred to the Sinking Fund Account for payment of debt service on Series 2012 Bonds before any drawing may be made on the Reserve Policy or any other credit facility credited to the Reserve Fund in lieu of cash ( "Credit Facility "). Payment of any Policy Costs shall be made prior to replenishment of any such cash amounts. Draws on all Credit Facilities (including the Reserve Policy) on which there is available coverage shall be made on a pro -rata basis (calculated by reference to the coverage then available thereunder) after applying all available cash and investments in the Reserve Fund. Payment of Policy Costs and reimbursement of amounts with respect to other Credit Facilities shall be made on a pro -rata basis prior to replenishment of any cash drawn from the Reserve Fund. For the avoidance of doubt, "available coverage" means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw. (b) If the City shall fail to pay any Policy Costs in accordance with the requirements of Paragraph 5(a) hereof, AGM shall be entitled to exercise any 11 and all legal and equitable remedies available to it, including those provided 1 under the Resolution other than (i) acceleration of the maturity of the Series 2012 Bonds or (ii) remedies which would adversely affect owners of the Series 2012 Bonds. jl (c) The Bond Resolution shall not be discharged until all Policy Costs owing to AGM shall have been paid in full. The City's obligation to pay such amounts shall expressly survive payment in full of the Series 2012 Bonds. a l (d) The additional bonds test and the rate covenant in the Bond Resolution shall be applied by treating any Policy Costs then due and owing as Current Expenses. (e) The Bond Registrar shall ascertain the necessity for a claim upon the Reserve Policy in accordance with the provisions of paragraph (a) hereof and provide notice to AGM in accordance with the terms of the Reserve Policy at least five Business Days prior to each date upon which interest or principal is due on the Bonds. { 14 �1 I (e) The definition of "Renewal, Replacement and Improvement Account Requirement" contained in Section 101 of the Bond Resolution is amended to provide as follows, and such amendment shall be deemed incorporated into all Supplemental Resolutions adopted after the date hereof, so that it shall not be necessary to obtain the consent of the Holders of such Bonds to such amendment. However, such amendment shall not become effective until (i) the Outstanding principal amount of the City's Utility System Revenue Refunding Bonds, Series 2002 and the Series 2008 Bonds constitutes less than a majority of the principal amount of all Outstanding Bonds, (ii) notice to the Holders of the Outstanding Series 2002 Bonds and Series 2008 Bonds shall have been given in accordance with Section 1002 of the Bond Resolution, and (iii) the requirements of Section 718(e) of the Bond Resolution (added by Section 5(b) of Resolution No. R01 -193) shall have been satisfied. As permitted by Section 1002 of the Bond Resolution, the Original Purchaser, by its purchase of the Series 2012 Bonds, consents to the following amendment of the definition of "Renewal, Replacement and Improvement Account Requirement." "Renewal, Replacement and Improvement Account Requirement" shall mean an amount equal to six percent of the Revenues for the preceding Fiscal Year or such greater or lesser amount as determined by the City Commission by resolution from time to time. Section 6. Approval of Sale of the Series 2012 Bonds. The City hereby determines that i a negotiated sale of the Series 2012 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 Contract (the "Bond Purchase Contract "). The City approves the Bond Purchase Contract together with such changes thereto as are necessary to reflect the terms of the Series 2012 Bonds and to reflect the purchase price thereof, provided, that the underwriter's discount shall not exceed $6.00 per thousand dollars of principal amount of the Series 2012 Bonds, and with such other completions, additions and /or i changes as shall be approved by the Authorized Representative, such approval to be ! conclusively established by such execution, and the Authorized Representative is hereby authorized and directed for and in the name of the City to execute and deliver the Bond Purchase Contract to the Original Purchaser. Prior to the execution of the Bond Purchase I Contract, the Original Purchaser shall file with the City the disclosure statement required by Section 218.385, Florida Statutes, and the competitive bidding for the Series 2012 Bonds is hereby waived pursuant to the authority of Section 218.385(1), Florida Statutes. Section 7. Execution and Delivery of the Series 2012 Bonds. The Authorized Signatory and the City Clerk are hereby authorized and directed on behalf of the City to execute the Series 2012 Bonds as provided in the Bond Resolution and such officials are hereby authorized and directed upon the execution of the Series 2012 Bonds in the form and manner set forth herein and in the Bond Resolution to deliver the Series 2012 Bonds in the amount authorized to be issued hereunder to the Bond Registrar for authentication (upon the satisfaction of the conditions of Section 209 of the Bond Resolution) and delivery to or upon the order of the Original Purchaser upon payment of the purchase price set forth herein. 15 II of I Section 8. Application of Proceeds. Proceeds from the sale of the Series 2012 Bonds and any amounts available under the Bond Resolution as a result of the refunding of the Refunded Bonds shall be applied for the purposes described herein as provided in a certificate executed by the Authorized Signatory at or prior to the issuance of the Series 2012 Bonds. Section 9. Bond Registrar. The City hereby appoints The Bank of New York Mellon Trust Company, N.A. as Bond Registrar with respect to the Series 2012 Bonds. The form of Bond Registrar Agreement attached hereto as Exhibit "B" is hereby approved and the Authorized Signatory 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 Purchaser in marketing the Series 2012 Bonds, of a Preliminary Official Statement relating to the Series 2012 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 Authorized Signatory, 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 Authorized Signatory 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 2012 Bonds, which shall be in substantially the form of the Preliminary Official Statement, changed to reflect the terms of the Series 2012 Bonds and with such other changes, alterations and corrections therein as may be approved by the Authorized Signatory, such ' approval to be conclusively established by such execution, is hereby authorized, and upon preparation thereof the Authorized Signatory is 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 Authorized Signatory is authorized, but not obligated, to accept either or both commitments from the 2012 Bond Insurer for the , issuance of the 2012 Bond Insurance Policy and /or the 2012 Reserve Account Insurance Policy and to execute, on behalf of the City, an Insurance Agreement with respect to the 2012 Reserve Account Insurance Policy. Section 12. Compliance with Tax Requirements. The City hereby covenants and agrees, for the benefit of the Bondholders from time to time of the Series 2012 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 2012 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 2012 Bonds, and from any other legally available funds, at the times and to the extent 16 t ■ i 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 which would have been earned if such non - purpose investments were invested at a rate equal to the yield on the Series 2012 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 2012 Bonds in a manner that would cause the Series 2012 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 2012 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 2012 Bonds, the City shall designate a certified public accountant, Bond Counsel, or other professional consultant having the skill and 1 expertise necessary (the "Rebate Analyst ") to make any and all calculations required pursuant 1 to this Section regarding the Rebate Amount. Such calculation shall be made in the manner ands, at such times as specified in the Code. The City shall engage and shall be responsible for j paying the fees and expenses of the Rebate Analyst. Section 13. The Refunded Bonds. Subject to the provisions of Section 3, the redemption of all or a portion of the Series 2008 Bonds is authorized and directed. The Series 2008 Bonds to be retired shall be described in the certificate of the Authorized Representative' described in Section 4(b) hereof. The City is authorized to enter into an escrow deposit, agreement in form and substance, and with such escrow agent, as may be approved by the Authorized Representative, and to take such other action, including subscribing or directing the escrow agent to subscribe for U.S. Treasury Obligations -State and Local Government Series, in connection with such refunding. Section 14. Continuing Disclosure.The City agrees, in accordance with the provisions, I of, and to the degree necessary to comply with, the secondary market disclosure requirements 1 of Securities and Exchange Commission Rule 15c2 -12 (the "Rule "), to file with the MSRB in 1 an electronic format as prescribed by the MSRB: 17 I 1 1 1 (1) the following annual financial information and operating data (the "Annual Information "), commencing with the Fiscal Year ending September 30, 2012: (i) Updates of the financial information and operating data of the type set forth in the final official statement for the Series 2012 Bonds, including operating data with respect to the System, in a form which is generally consistent with the presentation of such information in the final Official Statement for the Series 2012 Bonds; and (ii) Audited financial statements with respect to the City utilizing generally accepted accounting principles to local governments. The information in clauses (i) and (ii) above will be available for each Fiscal Year on or prior to the next September 30 following the end of such Fiscal Year, and will be made available, in addition to the MSRB, to each Beneficial Owner of the Series 2012 Bonds who requests such information in writing. The financial statements referred to in clause (ii) above may be available separately from the information in clause (i) above and will be provided by the City as soon as practical after acceptance of such statements from the auditors by the City; if not available within one year after the end of the Fiscal Year, unaudited information will be provided in accordance with the time frame set forth above and audited financial statements will be provided as soon after such time as they become available; (2) in a timely manner not in excess of ten (10) business days after the event, notice of occurrence of any of the following events with respect to the Series 2012 Bonds: (i) principal and interest payment delinquencies; (ii) non - payment related defaults, if material; (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) if applicable to a Series of Bonds, events that may adversely affect the Series tax exemption, including issuance by the Internal Revenue Service of proposed and final decisions about whether such Bonds can be taxed; (vii) modifications to rights of security holders, if material; (viii) bond calls, if material, and tender offers; (ix) defeasance; (x) release, substitution or sale of any property securing repayment of the Bonds, if material; (xi) rating changes; (xii) bankruptcy, insolvency, receivership, or similar proceeding of the City. For purposes of this clause (xii), any such event shall be considered to have occurred when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the City in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or l federal law in which a court or governmental authority has assumed jurisdiction over � substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the j i supervision and orders of a court or governmental authority, or the entry of an order confirming II 18 ,t a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City; (xiii) mergers, consolidations, or acquisitions of the City, the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (xiv) appointment of a successor or additional trustee or paying agent or the change of the name of a trustee or paying agent, if material; (3) in a timely manner, to the MSRB, notice of its failure to provide the Annual Information with respect to itself on or prior to September 30 following the end of the preceding Fiscal Year. For purposes of this Section 14, "MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934, as amended. The City also covenants to promptly provide a copy of the above information to the 2012 Bond Insurer. The foregoing covenants shall run to the benefit of the Bondholders and the beneficial owners of Bonds owned in book -entry format. However, failure to meet the covenants set forth in this Section 14 shall not be deemed to constitute an event of default or a breach of any other covenant under this Resolution, and the sole remedy for such a default or breach shall be as described in the next paragraph. Any Bondholder or any beneficial owner may either at law or in equity, by suit, action,) ' j mandamus or other proceeding in any court or competent jurisdiction, protect and enforce any and all rights granted or contained in this Section 14 and may enforce any compel the performance of all duties required hereby to be performed by the City or by any officers thereof. Notwithstanding any other provision of this Ordinance, this Section 14 may be amended', only as follows: (a) the amendment 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; (b) the provisions of this Section 14, as amended, would have complied with the requirements of Rule 15c2 -12 of the Securities and Exchange Commission as in effect as of the date of issuance of'� the Series 2012Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the amendment does not materially impair the interest of the Bondholders and /or beneficial owners as determined by an opinion of nationally' recognized bond counsel delivered to the City, or by approving vote of the Bondholders or beneficial owners of the Series 2012 Bonds at the time of the amendment. In the event of any amendment hereto, the annual financial information provided subsequent to such amendment shall explain, in narrative form, the reasons for the amendment and the impact of the change in l the type of operating data or financial information being provided by the City. If the 1 amendment affects the accounting principles to be followed in preparing financial statements of the City, the annual financial information for the year in which the change is made must present 19 ,a 1 a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison must include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison should also be quantitative. A notice of the change in the accounting principles must be sent to the MSRB. Section 15. Authorizations. The Authorized Signatory, the City Clerk and the Finance Director are hereby jointly and severally authorized to do all acts and things required of them by this Resolution, the Bond Resolution, the Bond Registrar Agreement or the Bond Purchase Contract, 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 2012 Bonds, the Bond Resolution, this Resolution, the Bond Registrar Agreement and the Bond Purchase Contract, and to make any elections necessary or desirable in connection with the arbitrage provisions of Section 148 of the Code. Section 16. Business Days. In any case where the date of maturity of interest on or principal of the Series 2012 Bonds or the date fixed for redemption of any Series 2012 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 17. Resolution to Constitute a Contract. In consideration of the purchase and acceptance of the Series 2012 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 18. 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 2012 Bonds is intended or shall be construed to give any person other than the City, the 1 , Original Purchaser, the 2012 Bond Insurer, the Bond Registrar 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 Purchaser, the 2012 Bond Insurer, the Bond Registrar and the Owners. Section 19. 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 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. I I 20 I I Section 20. Repealer. All 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 21. Effective Date. This Resolution shall take effect immediately upon its adoption. 3 21 PASSED AND ADOPTED THIS 3rd DAY OF JANUARY, 2012. (SEAL) ATTEST: CITY OF BOYNTON BEACH, FLORIDA B / ► I • Plia:atetly: City Jerk Mayor - .,..-4,, 41 #/ ) / /a/ , f 1 `L H "7 ■ i Vi,�(d. -Mayor in Cl: / , 04. Q. yfip h1_ ��' f %/ � t r ' o ssioner Commissioner ,24,-a /1-, ,, Commissioner l ! I I APPROVED AS TO FORM AND LEGAL SUFFICIENCY: i B City Attorney i ll I I i Ii , ,I I I 1 lI 22 i EXHIBIT "A" Bond Purchase Contract I II I ii Ii i t it I I I I . 1 I i i I BONDPURCHASEAGREEMENT CityofBoyntonBeach,Florida UtiiltySystemRevenueBonds,Series2012 January19,2012 CityofBoyntonBeach,Florida 100EastBoyntonBeachBlvd. BoyntonBeach,FL33345 LadiesandGentlemen: Theundersigned,RBCCapitalMarkets,LLC(the“Underwriter”),offerstoenterintothefollowingagreement (this“Agreement”)withtheCityofBoyntonBeach,Florida(the“Issuer”)which,upontheIssuer’swritten acceptanceofthisoffer,willbebindingupontheIssuerandupontheUnderwriter.Thisofferismadesubjectto theIssuer’swrittenacceptancehereofreceivedbytheUnderwriteronorbefore5:00p.m.,NewYork,NewYork time,onJanuary19,2012,and,ifnotsoaccepted,willterminateatsuchtime.Thisofferissubjecttowithdrawal bytheUnderwriteruponnoticedeliveredtotheIssueratanytimepriortotheacceptancehereofbytheIssuer. TermsnototherwisedefinedinthisAgreementshallhavethesamemeaningssetforthintheBondResolution(as definedherein)orintheOfficialStatement(asdefinedherein). 1.PurchaseandSaleoftheBonds.Subjecttothetermsandconditionsandinrelianceuponthe representations,warrantiesandagreementssetforthherein,theUnderwriterherebyagreestopurchasefromthe Issuer,andtheIssuerherebyagreestosellanddelivertotheUnderwriter,all,butnotlessthanall,oftheIssuer’s UtilitySystemRevenueBonds,Series2012(the“Bonds”).Inasmuchasthispurchaseandsalerepresentsa negotiatedtransaction,theIssueracknowledgesandagreesthat:(i)thetransactioncontemplatedbythis Agreementisanarm’slength,commercialtransactionbetweentheIssuerandtheUnderwriterinwhichthe Underwriterisactingsolelyasaprincipalandarenotactingasamunicipaladvisor,financialadvisororfiduciary totheIssuer;(ii)theUnderwriterhasnotassumedanyadvisoryorfiduciaryresponsibilitytotheIssuerwith respecttothetransactioncontemplatedherebyandthediscussions,undertakingsandproceduresleadingthereto (irrespectiveofwhethertheUnderwriterhasprovidedotherservicesoriscurrentlyprovidingotherservicestothe Issueronothermatters);(iii)theUnderwriterisactingsolelyinitscapacityasunderwriterforitsownaccount, (iv)theonlyobligationstheUnderwriterhastotheIssuerwithrespecttothetransactioncontemplatedhereby expresslyaresetforthinthisAgreement;and(v)theIssuerhasconsulteditsownlegal,accounting,tax,financial andotheradvisors,asapplicable,totheextentithasdeemedappropriate. TheprincipalamountoftheBondstobeissued,thedateddatetherefor,thematurities,sinkingfundandoptional redemptionprovisionsandinterestratesperannumaresetforthinScheduleIhereto.TheBondsshallbeas describedin,andshallbeissuedandsecuredunderandpursuanttotheprovisionsoftheResolution92-96 adoptedbytheIssueronJune16,1992asamendedandsupplementedincluldingbyResolutionNo.R2012-001 adoptedonJanuary3,2012(jointly,the“BondResolution”). ThepurchasepricefortheBondsshallbe$50,346,265.20.ThepriceisequaltotheparamountoftheBonds minusanunderwritingdiscountof$243,060.25plusnetoriginalissuepremiumof$4,694,325.45. 2.PublicOffering.TheUnderwriteragreestomakeabonafidepublicofferingofalloftheBondsataprice nottoexceedthepublicofferingpricesetforthontheinsidecoveroftheOfficialStatementandmay subsequentlychangesuchofferingpricewithoutanyrequirementofpriornotice.TheUnderwritermayofferand sellBondstocertaindealers(includingdealersdepositingBondsintoinvestmenttrusts)andothersatpriceslower thanthepublicofferingpricestatedontheinsidecoveroftheOfficialStatement. 3.TheOfficialStatement. (a)AttachedheretoasExhibitAisacopyofthePreliminaryOfficialStatementdatedJanuary10,2012(the “PreliminaryOfficialStatement”),includingthecoverpageandAppendicesthereto,oftheIssuer relatingtotheBonds.ThePreliminaryOfficialStatement,asamendedtoreflectthechangesmarkedor otherwiseindicatedonExhibitAhereto,ishereinaftercalledthe“OfficialStatement.” (b)ThePreliminaryOfficialStatementhasbeenpreparedbytheIssuerforusebytheUnderwriterin connectionwiththepublicoffering,saleanddistributionoftheBonds.TheIssuerherebyrepresentsand warrantsthatthePreliminaryOfficialStatementwasdeemedfinalbytheIssuerasofitsdate,exceptfor theomissionofsuchinformationwhichisdependentuponthefinalpricingoftheBondsforcompletion, allaspermittedtobeexcludedbySection(b)(1)ofRule15c2-12undertheSecuritiesExchangeActof 1934(the“Rule”). (c)TheIssuerrepresentsthatthegoverningbodyoftheIssuerhasreviewedandapprovedtheinformationin theOfficialStatementandherebyauthorizestheOfficialStatementtobeusedbytheUnderwriterin connectionwiththepublicofferingandthesaleoftheBonds.TheIssuershallprovide,orcausetobe provided,totheUnderwriterassoonaspracticableafterthedateoftheIssuer’sacceptanceofthis Agreement(but,inanyevent,notlaterthanwithinsevenbusinessdaysaftertheIssuer’sacceptanceof thisAgreementandinsufficienttimetoaccompanyanyconfirmationthatrequestspaymentfromany customer)copiesoftheOfficialStatementwhichiscompleteasofthedateofitsdeliverytothe UnderwriterinsuchquantityastheUnderwritershallrequestinorderfortheUnderwritertocomplywith Section(b)(4)oftheRuleandtherulesoftheMunicipalSecuritiesRulemakingBoard(the"MSRB"). TheIssuerherebyconfirmsthatitdoesnotobjecttothedistributionoftheOfficialStatementin electronicform. (d)If,afterthedateofthisAgreementtoandincludingthedatetheUnderwriterisnolongerrequiredto provideanOfficialStatementtopotentialcustomerswhorequestthesamepursuanttotheRule(the earlierof(i)90daysfromthe“endoftheunderwritingperiod”(asdefinedintheRule)and(ii)thetime whentheOfficialStatementisavailabletoanypersonfromtheMSRB,butinnocaselessthan25days afterthe“endoftheunderwritingperiod”fortheBonds),theIssuerbecomesawareofanyfactorevent whichmightorwouldcausetheOfficialStatement,asthensupplementedoramended,tocontainany untruestatementofamaterialfactortoomittostateamaterialfactrequiredtobestatedthereinor necessarytomakethestatementsthereinnotmisleading,orifitisnecessarytoamendorsupplementthe OfficialStatementtocomplywithlaw,theIssuerwillnotifytheUnderwriter(andforthepurposesofthis clauseprovidetheUnderwriterwithsuchinformationasitmayfromtimetotimerequest),andif,inthe opinionoftheUnderwriter,suchfactoreventrequirespreparationandpublicationofasupplementor amendmenttotheOfficialStatement,theIssuerwillforthwithprepareandfurnish,attheIssuer’sown expense(inaformandmannerapprovedbytheUnderwriter),areasonablenumberofcopiesofeither amendmentsorsupplementstotheOfficialStatementsothatthestatementsintheOfficialStatementas soamendedandsupplementedwillnotcontainanyuntruestatementofamaterialfactoromittostatea materialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleadingorso thattheOfficialStatementwillcomplywithlaw.IfsuchnotificationshallbesubsequenttotheClosing, theIssuershallfurnishsuchlegalopinions,certificates,instrumentsandotherdocumentsasthe Underwritermaydeemnecessarytoevidencethetruthandaccuracyofsuchsupplementoramendmentto theOfficialStatement. (e)TheUnderwriterherebyagreestofiletheOfficialStatementwiththeMSRB.Unlessotherwisenotifiedin writingbytheUnderwriter,theIssuermayassumethatthe“endoftheunderwritingperiod”forpurposes oftheRuleisthedateoftheClosing. 2 4.Representations,Warranties,andCovenantsoftheIssuer.TheIssuerherebyrepresentsandwarrantstoand covenantswiththeUnderwriterthat: (a)TheIssuerisamunicipalityoftheStateofFlorida(the“State”)dulycreated,organizedandexisting underthelawsoftheState,includingparticularlyChapter166,FloridaStatutes(collectively,the“Act”), andhasfulllegalright,powerandauthorityundertheAct,andatthedateoftheClosingwillhavefull legalright,powerandauthorityundertheActandtheBondResolution(i)toenterinto,executeand deliverthisAgreementandtheBondResolution(includingthecontinuingdisclosureundertaking containedtherein,(the“Undertaking”))andalldocumentsrequiredhereunderandthereundertobe executedanddeliveredbytheIssuer(thisAgreement,theBondResolution,theUndertakingandtheother documentsreferredtointhisclausearehereinafterreferredtoasthe“IssuerDocuments”),(ii)tosell, issueanddelivertheBondstotheUnderwriterasprovidedherein,and(iii)tocarryoutandconsummate thetransactionscontemplatedbytheIssuerDocumentsandtheOfficialStatement,(iv)tooperatethe System(asdefinedintheOfficialStatement),and(v)tohaveenactedand/oradoptedtheordinances and/orresolutionswhichestablishedtherates,fees,rentals,chargesandotherincomewhichcomprisethe RevenuesoftheSystemandtheImpactFees(collectively,the"RateInstrument"),andtheIssuerhas complied,andwillattheClosingbeincomplianceinallrespects,withthetermsoftheActandtheIssuer Documentsastheypertaintosuchtransactions; (b)ByallnecessaryofficialactionoftheIssuerpriortoorconcurrentlywiththeacceptancehereof,theIssuer hasdulyauthorizedallnecessaryactiontobetakenbyitfor(i)theadoptionoftheBondResolutionand theissuanceandsaleoftheBondsandtheadoptionorenactmentoftheRateInstrument,asapplicable, (ii)theapproval,executionanddeliveryof,andtheperformancebytheIssueroftheobligationsonits part,containedintheBondsandtheIssuerDocumentsand(iii)theconsummationbyitofallother transactionscontemplatedbytheOfficialStatement,andtheIssuerDocumentsandanyandallsuchother agreementsanddocumentsasmayberequiredtobeexecuted,deliveredand/orreceivedbytheIssuerin ordertocarryout,giveeffectto,andconsummatethetransactionscontemplatedhereinandintheOfficial Statement; (c)TheIssuerDocumentsconstitutelegal,validandbindingobligationsoftheIssuer,enforceablein accordancewiththeirrespectiveterms,subjecttobankruptcy,insolvency,reorganization,moratoriumand othersimilarlawsandprinciplesofequityrelatingtooraffectingtheenforcementofcreditors’rights;the Bonds,whenissued,deliveredandpaidfor,inaccordancewiththeBondResolutionandthisAgreement, willconstitutelegal,validandbindingobligationsoftheIssuerentitledtothebenefitsoftheBond Resolutionandenforceableinaccordancewiththeirterms,subjecttobankruptcy,insolvency, reorganization,moratoriumandothersimilarlawsandprinciplesofequityrelatingtooraffectingthe enforcementofcreditors’rights;andupontheissuance,authenticationanddeliveryoftheBondsas aforesaid,theBondResolutionwillprovide,forthebenefitoftheholders,fromtimetotime,ofthe Bonds,thelegallyvalidandbindingpledgeandlienitpurportstocreateassetforthintheBond Resolution; (d)TheIssuerisnotinbreachofordefaultinanymaterialrespectunderanyapplicableconstitutional provision,laworadministrativeregulationoftheStateortheUnitedStatesoranyapplicablejudgmentor decreeoranyloanagreement,indenture,bond,note,resolution,agreementorotherinstrumenttowhich theIssuerisapartyortowhichtheIssuerisoranyofitspropertyorassetsareotherwisesubject,andno eventhasoccurredandiscontinuingwhichconstitutesorwiththepassageoftimeorthegivingofnotice, orboth,wouldconstituteadefaultoreventofdefaultbytheIssuerunderanyoftheforegoing;andthe executionanddeliveryoftheBonds,theIssuerDocumentsandtheadoptionoftheBondResolutionand compliancewiththeprovisionsontheIssuer’spartcontainedtherein,willnotconflictwithorconstitutea breachofordefaultunderanyconstitutionalprovision,administrativeregulation,judgment,decree,loan agreement,indenture,bond,note,resolution,agreementorotherinstrumenttowhichtheIssuerisaparty 3 ortowhichtheIssuerisortowhichanyofitspropertyorassetsareotherwisesubjectnorwillanysuch execution,delivery,adoptionorcomplianceresultinthecreationorimpositionofanylien,chargeor othersecurityinterestorencumbranceofanynaturewhatsoeveruponanyofthepropertyorassetsofthe IssuertobepledgedtosecuretheBondsorunderthetermsofanysuchlaw,regulationorinstrument, exceptasprovidedbytheBondsandtheBondResolution (e)Allauthorizations,approvals,licenses,permits,consentsandordersofanygovernmentalauthority, legislativebody,board,agencyorcommissionhavingjurisdictionofthematterwhicharerequiredforthe dueauthorizationof,whichwouldconstituteaconditionprecedentto,ortheabsenceofwhichwould materiallyadverselyaffectthedueperformancebytheIssuerofitsobligationsundertheIssuer DocumentsandtheBondshavebeendulyobtained,exceptforsuchapprovals,consentsandordersas mayberequiredundertheBlueSkyorsecuritieslawsofanyjurisdictioninconnectionwiththeoffering andsaleoftheBonds; (f)TheBondsandtheBondResolutionconformtothedescriptionsthereofcontainedintheOfficial Statement;theproceedsofthesaleoftheBondswillbeappliedgenerallyasdescribedintheOfficial StatementandtheUndertakingconformstothedescriptionthereofcontainedintheOfficialStatement. (g)Thereisnolegislation,action,suit,proceeding,inquiryorinvestigation,atlaworinequity,beforeorby anycourt,governmentagency,publicboardorbody,pendingor,tothebestknowledgeoftheIssuerafter dueinquiry,threatenedagainsttheIssuer,affectingtheexistenceoftheIssuerorthetitlesofitsofficersto theirrespectiveoffices,oraffectingorseekingtoprohibit,restrainorenjointhesale,issuanceordelivery oftheBondsorthecollectionofthePledgedRevenuepursuanttotheBondResolutionorinanyway contestingoraffectingthevalidityorenforceabilityoftheBondsortheIssuerDocuments,orcontesting inanywaytheexclusionfromgrossincomeoftheinterestontheBondsforfederalincometaxpurposes orcontestingthecompletenessoraccuracyofthePreliminaryOfficialStatementortheOfficialStatement oranysupplementoramendmentthereto,orcontestingthepowersoftheIssueroranyauthorityforthe issuanceoftheBonds,theadoptionoftheBondResolutionortheexecutionanddeliveryoftheIssuer Documents,nor,tothebestknowledgeoftheIssuer,isthereanybasistherefor,whereinanunfavorable decision,rulingorfindingwouldmateriallyadverselyaffectthevalidityorenforceabilityoftheBondsor theIssuerDocuments; (h)Asofthedatethereof,thePreliminaryOfficialStatementdidnotcontainanyuntruestatementofa materialfactoromittostateamaterialfactrequiredtobestatedthereinornecessarytomakethe statementstherein,inthelightofthecircumstancesunderwhichtheyweremade,notmisleading; (i)AtthetimeoftheIssuer’sacceptancehereofand(unlesstheOfficialStatementisamendedor supplementedpursuanttoparagraph(d)ofSection3ofthisAgreement)atalltimessubsequentthereto duringtheperioduptoandincludingthedateofClosing,theOfficialStatementdoesnotandwillnot containanyuntruestatementofamaterialfactoromittostateanymaterialfactrequiredtobestated thereinornecessarytomakethestatementstherein,inlightofthecircumstancesunderwhichtheywere made,notmisleading; (j)IftheOfficialStatementissupplementedoramendedpursuanttoparagraph(d)ofSection3ofthis Agreement,atthetimeofeachsupplementoramendmenttheretoand(unlesssubsequentlyagain supplementedoramendedpursuanttosuchparagraph)atalltimessubsequenttheretoduringtheperiod uptoandincludingthedateofClosing(orduringtheunderwritingperiodiflaterthantheclosing),the OfficialStatementassosupplementedoramendedwillnotcontainanyuntruestatementofamaterialfact oromittostateanymaterialfactrequiredtobestatedthereinornecessarytomakethestatementstherein, inlightofthecircumstancesunderwhichmade,notmisleading; 4 (k)TheIssuerwillapply,orcausetobeapplied,theproceedsfromthesaleoftheBondsasprovidedinand subjecttoallofthetermsandprovisionsoftheBondResolutionandwillnottakeoromittotakeany actionwhichactionoromissionwilladverselyaffecttheexclusionfromgrossincomeforfederalincome taxpurposesoftheinterestontheBonds; (l)TheIssuerwillfurnishsuchinformationandexecutesuchinstrumentsandtakesuchactionincooperation withtheUnderwriterastheUnderwritermayreasonablyrequest(A)to(y)qualifytheBondsforofferand saleundertheBlueSkyorothersecuritieslawsandregulationsofsuchstatesandotherjurisdictionsin theUnitedStatesastheUnderwritermaydesignateand(z)determinetheeligibilityoftheBondsfor investmentunderthelawsofsuchstatesandotherjurisdictionsand(B)tocontinuesuchqualificationsin effectsolongasrequiredforthedistributionoftheBonds(provided,however,thattheIssuerwillnotbe requiredtoqualifyasaforeigncorporationortofileanygeneralorspecialconsentstoserviceofprocess underthelawsofanyjurisdiction)andwilladvisetheUnderwriterpromptlyofreceiptbytheIssuerof anynotificationwithrespecttothesuspensionofthequalificationoftheBondsforsaleinanyjurisdiction ortheinitiationorthreatofanyproceedingforthatpurpose; (m)Thefinancialstatementsof,andotherfinancialinformationregardingtheIssuer,intheOfficialStatement fairlypresentthefinancialpositionandresultsoftheIssuerandoftheSystemasofthedatesandforthe periodsthereinsetforthinaccordancewithgenerallyacceptedaccountingprinciplesconsistentlyapplied, asmodifiedbyapplicableStaterequirementsandthegovernmentalaccountingstandardspromulgatedby theGovernmentalAccountingStandardsBoard,andsincethedatethereof,therehasbeennomaterial adversechangeinthefinancialpositionandresultsofoperationsoftheIssueroroftheSystem,and neithertheIssuernortheSystemhasincurredanymaterialliabilitiesotherthanintheordinarycourseof business,exceptassetforthintheOfficialStatement.PriortotheClosing,therewillbenoadverse changeofamaterialnatureinsuchfinancialposition,resultsofoperationsorcondition,financialor otherwise,oftheIssueroroftheSystem.TheIssuerisnotapartytoanylitigationorotherproceeding pendingor,toitsknowledge,isanylitigationorotherproceedingthreatenedwhich,ifdecidedadversely totheIssuer,wouldhaveamateriallyadverseeffectonthefinancialconditionoftheIssuerorofthe System; (n)TheIssuerhasnot,sinceJanuary31,1975,beenindefaultinthepaymentofprincipalof,premium,if any,orintereston,orotherwisebeenindefaultwithrespectto,anybonds,notesorotherobligations whichithasissued,assumedorguaranteedastopaymentofprincipal,premium,ifany,orinterest,except forcertainindustrialdevelopmentbonds,thedisclosureofwhichtheIssuerbelievesingoodfaithwould notbematerialtoareasonableinvestorinconnectionwiththeBondsasprovidedinRule69W-400.003, FloridaAdministrativeCode.OtherthantheBondResolution,theIssuerhasnotenteredintoanycontract orarrangementofanykindwhichmightgiverisetoanylienorencumbranceonthePledgedRevenues, otherthanasdescribedintheOfficialStatement. (o)TheIssuerwillapplytheproceedsoftheBondsinaccordancewiththeBondResolutionandas contemplatedbytheOfficialStatement. (p)TheIssuerhasproceduresinplacetoensurecompliancewithitsundertakingstoprovidesecondary marketdisclosureinaccordancewithparagraph(b)(5)oftheRule. (q)Bycertificate,asofitsdate,thePreliminaryOfficialStatementwasdeemed“final”forpurposesofthe Rule,exceptfor“permittedomissions”asthereindefinedbyanofficialoftheIssuerwhowasheretofore authorizedtomakesuchcertification. (r)Relatingtoanytax-exemptbondspreviouslyissuedbytheIssuer,tothebestknowledgeoftheIssuer, thereisnounfundedmateriallysignificantrebateliabilityowedtotheInternalRevenueService. 5 (s)PriortotheClosingtheIssuerwillnotofferorissueanybonds,notesorotherobligationsforborrowed moneyorincuranymaterialliabilities,directorcontingent,payablefromorsecuredbyanyofthe revenuesorassetswhichwillsecuretheBondswithoutthepriorapprovaloftheUnderwriter;and (t)Anycertificate,signedbyanyofficialoftheIssuerauthorizedtodosoinconnectionwiththetransactions contemplatedbythisAgreement,shallbedeemedarepresentationandwarrantybytheIssuertothe Underwriterastothestatementsmadetherein. 5.Closing. (a)At11:00a.m.,NewYork,NewYorktime,onFebruary27,2012,oratsuchothertimeanddateasshall havebeenmutuallyagreeduponbytheIssuerandtheUnderwriter(the“Closing”),theIssuerwill,subject tothetermsandconditionshereof,delivertheBondstotheUnderwriterdulyexecutedandauthenticated, togetherwiththeotherdocumentshereinaftermentioned,andtheUnderwriterwill,subjecttotheterms andconditionshereof,acceptsuchdeliveryandpaythepurchasepriceoftheBondsassetforthin Section1ofthisAgreementbyawiretransferpayableinimmediatelyavailablefundstotheorderofthe Issuer.PaymentfortheBondsasaforesaidshallbemadeattheofficesofBondCounsel,orsuchother placeasshallhavebeenmutuallyagreeduponbytheIssuerandtheUnderwriter. (b)DeliveryoftheBondsshallbemadethroughtheFASTprocduresofTheDepositoryTrustCompany, NewYork,NewYork.TheBondsshallbedeliveredindefinitivefullyregisteredform,bearingCUSIP numberswithoutcoupons,withoneBondforeachmaturityoftheBonds,registeredinthenameofCede &Co.,allasprovidedintheBondResolution,andshallbemadeavailabletotheUnderwriteratleastone businessdaybeforetheClosingforpurposesofinspection. 6.ClosingConditions.TheUnderwriterhasenteredintothisAgreementinrelianceupontherepresentations, warrantiesandagreementsoftheIssuercontainedherein,andinrelianceupontherepresentations,warranties andagreementstobecontainedinthedocumentsandinstrumentstobedeliveredattheClosinganduponthe performancebytheIssuerofitsobligationshereunder,bothasofthedatehereofandasofthedateofthe Closing.Accordingly,theUnderwriter’sobligationsunderthisAgreementtopurchase,toacceptdeliveryof andtopayfortheBondsshallbeconditionedupontheperformancebytheIssuerofitsobligationstobe performedhereunderandundersuchdocumentsandinstrumentsatorpriortotheClosing,andshallalsobe subjecttothefollowingadditionalconditions,includingthedeliverybytheIssuerofsuchdocumentsasare enumeratedherein,informandsubstancereasonablysatisfactorytotheUnderwriter: (a)TherepresentationsandwarrantiesoftheIssuercontainedhereinshallbetrue,completeandcorrecton thedatehereofandonandasofthedateoftheClosing,asifmadeonthedateoftheClosing; (b)TheIssuershallhaveperformedandcompliedwithallagreementsandconditionsrequiredbythis AgreementtobeperformedorcompliedwithbyitpriortoorattheClosing; (c)AtthetimeoftheClosing,(i)theIssuerDocumentsandtheBondsshallbeinfullforceandeffectinthe formheretoforeapprovedbytheUnderwriterandshallnothavebeenamended,modifiedor supplemented,andtheOfficialStatementshallnothavebeensupplementedoramended,exceptinany suchcaseasmayhavebeenagreedtobytheUnderwriter;and(ii)allactionsoftheIssuerrequiredtobe takenbytheIssuershallbeperformedinorderforBondCounselandDisclosureCounseltodelivertheir respectiveopinionsreferredtohereafter; (d)AtorpriortotheClosing,theBondResolutionshallhavebeendulyexecutedanddeliveredbytheIssuer andtheIssuershallhavedulyexecutedanddeliveredandtheregistrarshallhavedulyauthenticatedthe Bonds; 6 (e)AtorpriortotheClosing,theMunicipalBondInsurancePolicyandtheDebtServiceReserveSurety Bond(jointly,the"BondInsurance")issuedbyAssuredGuarantyMunicipalCorp.(the"Insurer")shall havebeenexecuted,issuedanddeliveredbytheInsurer; (f)AtthetimeoftheClosing,thereshallnothaveoccurredanychangeoranydevelopmentinvolvinga prospectivechangeintheSystem,inthecondition,financialorotherwise,orintherevenuesoroperations oftheIssuer,fromthatsetforthintheOfficialStatementthatinthejudgmentoftheUnderwriter,is materialandadverseandthatmakesit,inthejudgmentoftheUnderwriter,impracticabletomarketthe BondsonthetermsandinthemannercontemplatedintheOfficialStatement; (g)TheIssuershallnothavefailedtopayprincipalorinterestwhendueonanyofitsoutstandingobligations forborrowedmoney; (h)Allstepstobetakenandallinstrumentsandotherdocumentstobeexecuted,andallotherlegalmattersin connectionwiththetransactionscontemplatedbythisAgreementshallbereasonablysatisfactoryinlegal formandeffecttotheUnderwriter; (i)AtorpriortotheClosing,theUnderwritershallhavereceivedcopiesofeachofthefollowingdocuments: (1)TheOfficialStatement,andeachsupplementoramendmentthereto,ifany,executedonbehalfofthe IssuerbyitsMayororInterimCityManager,orsuchotherofficialasmayhavebeenagreedtobythe Underwriter,andthereportsandauditsreferredtoorappearingintheOfficialStatement; (2)TheBondResolution(includingtheUndertakingcontainedtherein)withsuchsupplementsor amendmentsasmayhavebeenagreedtobytheUnderwriter; (3)theapprovingopinionofBondCounsel,datedthedateoftheClosing,withrespecttotheBonds,in substantiallytheformattachedtotheOfficialStatement,togetherwithaletterofBondCounsel,dated thedateoftheclosingandaddressedtotheUnderwriter,substantiallytotheeffectthatthe Underwritermayrelyuponsuchapprovingopinionasthoughitwereaddressedtoit; (4)asupplementalopinionofBondCounsel,datedthedateoftheClosingaddressedtotheUnderwriter, substantiallytotheeffectthat: (i)theBondsareexemptfromregistrationpursuanttotheSecuritiesActof1933,asamended,and theBondResolutionisexemptfromqualificationpursuanttotheTrustIndentureActof1939,as amended;and; (ii)thestatementsandinformationcontainedintheOfficialStatementunderthecaptions "DESCRIPTIONOFTHE2012BONDS"(exceptthesubsectionthereinentitled"Book-Entry OnlySystem,"astowhichnoopinionneedbeexpressed),"SECURITYFORTHE2012 BONDS""TAXEXEMPTION"and"COVENANTSCONCERNINGONGOING DISCLOSURE"(otherthanthefinancialandstatisticalinformationincludedthereinastowhich noopinionneedbeexpressed),constituteaccurateandfairstatementsorsummariesofthe matterssetforthorthedocumentsorlawsreferredtotherein,insofarassuchinformationpurports todescribeorsummarizeoftheAct,theBondResolution,theBonds,andthelawsoftheStateof FloridaandtheUnitedStates. (5A)Anopinion,datedthedateoftheClosing,ofDisclosureCounsel,addressedtotheIssuer, substantiallytotheeffectthatbasedupontheinformationmadeavailabletoitinthecourseofhis participationinthepreparationoftheOfficialStatement,andwithouthavingundertakento determineindependentlytheaccuracy,completenessorfairnessofthestatementscontainedinthe 7 OfficialStatement,asofthedateoftheClosingnothinghascometohisattentionthatwould causehimtobelievethattheOfficialStatementasofitsdate,andatalltimessubsequentthereto uptoandincludingthedateoftheClosing,containedorcontainsanyuntruestatementofa materialfactoromittedoromitstostateamaterialfactnecessaryinordertomakethestatements therein,inthelightofthecircumstancesunderwhichtheyweremade,notmisleading; (5B)aletterofDisclosureCounsel,datedthedateoftheclosingandaddressedtotheUnderwriter, substantiallytotheeffectthattheUnderwritermayrelyupontheopinionofDisclosureCounsel describedinSection6(h)(5A)aboveasthoughitwereaddressedtothem; (6)[Reserved] (7)AnopinionoftheIssuer’sCounsel,addressedtotheUnderwriterandtoBondCounsel,totheeffect that: (i)TheIssuerisamunicipalityoftheStateofFlorida(the“State”)dulycreated,organizedand existingunderthelawsoftheState,andhasfulllegalright,powerandauthorityundertheAct andtheBondResolution(A)toenterinto,executeanddelivertheIssuerDocumentsandall documentsrequiredhereunderandthereundertobeexecutedanddeliveredbytheIssuer,(B)to sell,issueanddelivertheBondstotheUnderwriterasprovidedherein,and(C)tocarryoutand consummatethetransactionscontemplatedbytheIssuerDocuments,andtheOfficialStatement and(D)tooperatetheSystem,andtheIssuerhascomplied,andwillattheClosingbein complianceinallrespects,withthetermsoftheActandtheIssuerDocumentsastheypertain tosuchtransactions; (ii)ByallnecessaryofficialactionoftheIssuerpriortoorconcurrentlywiththeacceptancehereof, theIssuerhasdulyauthorizedallnecessaryactiontobetakenbyitfor(A)theadoptionofthe BondResolution,theissuanceandsaleoftheBondsandtheadoptionorenactmentoftheRate Instrument,asapplicable,(B)theapproval,executionanddeliveryof,andtheperformanceby theIssueroftheobligationsonitspart,containedintheBondsandtheIssuerDocuments,and (C)theconsummationbyitofallothertransactionscontemplatedbytheOfficialStatement,the IssuerDocumentsandanyandallsuchotheragreementsanddocumentsasmayberequiredto beexecuted,deliveredand/orreceivedbytheIssuerinordertocarryout,giveeffectto,and consummatethetransactionscontemplatedhereinandintheOfficialStatement; (iii)TheBondResolutionwasdulyandvalidlyadoptedbytheIssuerandisinfullforceandeffect; theBondResolutionandallotherproceedingspertinenttothevalidityandenforceabilityofthe Bondsandthereceiptofthepledgedrevenueshavebeendulyandvalidlyadoptedor undertakenincompliancewithallapplicableproceduralrequirementsoftheIssuerandin compliancewiththeConstitutionandlawsoftheState,includingtheAct; (iv)TheIssuerDocumentshavebeendulyauthorized,executedanddeliveredbytheIssuer,and constitutelegal,validandbindingobligationsoftheIssuerenforceableagainsttheIssuerin accordancewiththeirrespectiveterms,excepttotheextentlimitedbybankruptcy,insolvency, reorganization,moratoriumorothersimilarlawsandequitableprinciplesofgeneralapplication relatingtooraffectingtheenforcementofcreditors’rights;andtheBonds,whenissued, deliveredandpaidfor,inaccordancewiththeBondResolutionandthisAgreement,will constitutelegal,validandbindingobligationsoftheIssuerentitledtothebenefitsoftheBond Resolutionandenforceableinaccordancewiththeirterms,subjecttobankruptcy,insolvency, reorganization,moratoriumandothersimilarlawsandprinciplesofequityrelatingtoor affectingtheenforcementofcreditors’rights;upontheissuance,authenticationanddeliveryof theBondsasaforesaid,theBondResolutionwillprovide,forthebenefitoftheholders,from 8 timetotime,oftheBonds,thelegallyvalidandbindingpledgeofandlienitpurportstocreate assetforthintheBondResolution; (v)ThedistributionofthePreliminaryOfficialStatementandtheOfficialStatementhasbeenduly authorizedbytheIssuer; (vi)Allauthorizations,approvals,licenses,permits,consentsandordersofanygovernmental authority,legislativebody,board,agencyorcommissionhavingjurisdictionofthematter whicharerequiredforthedueauthorizationof,whichwouldconstituteaconditionprecedent to,ortheabsenceofwhichwouldmateriallyadverselyaffectthedueperformancebytheIssuer ofitsobligationsundertheIssuerDocumentsandtheBondshavebeenobtained; (vii)Totheknowledgeofsaidcounsel,thereisnolegislation,action,suit,proceeding,inquiryor investigation,atlaworinequity,beforeorbytheCircuitCourtoftheStateofFloridainand forPalmBeachCounty,Florida,theDistrictCourtofAppealfortheFourthJudicialDistrictof Florida,theFloridaSupremeCourt,theUnitedStatesDistrictCourtfortheSouthernDistrictof Florida,theUnitedStatesEleventhCircuitCourtofAppealsortheUnitedStatesSupreme Court,oranyothercourt,governmentagency,publicboardorbodypendingandforwhichthe Issuerhasreceivedserviceofprocessoractualnotice,orthreatenedagainsttheIssuer,affecting thecorporateexistenceoftheIssuerorthetitlesofitsofficerstotheirrespectiveoffices,or affectingorseekingtoprohibit,restrainorenjointhesale,issuanceordeliveryoftheBondsor thecollectionofthePledgedRevenuepursuanttotheBondResolution,orcontestinginany waythecompletenessoraccuracyofthePreliminaryOfficialStatementortheOfficial Statementoranysupplementoramendmentthereto,orcontestingthepowersoftheIssueror anyauthorityfortheissuanceoftheBonds,theadoptionoftheBondResolutionorthe executionanddeliveryoftheIssuerDocuments,nor,tothebestknowledgeoftheIssuer,is thereanybasistherefor,whereinanunfavorabledecision,rulingorfindingwouldmaterially adverselyaffectthevalidityorenforceabilityoftheBonds,ortheIssuerDocuments; (viii)TheexecutionanddeliveryoftheIssuerDocumentsandcompliancebytheIssuerwiththe provisionshereofandthereof,underthecircumstancescontemplatedhereinandtherein,will not(i)totheknowledgeofsaidcounsel,conflictwithorconstituteonthepartoftheIssuera materialbreachoforadefaultunderanyagreementorinstrumenttowhichtheIssuerisaparty, orviolateanyexistingcourtorderorconsentdecreetowhichtheIssuerissubject,or(ii)violate anyexistinglaworadministrativeregulationtowhichtheIssuerissubject;and (ix)Basedontheexaminationwhichsuchcounselhascausedtobemadeanditsparticipationat conferencesatwhichthePreliminaryOfficialStatementandtheOfficialStatementwere discussed,suchcounselhasnoreasontobelievethattheOfficialStatementasofitsdateandas ofthedatehereofcontainsanyuntruestatementofamaterialfactoromitstostateamaterial factnecessarytomakethestatementstherein,inlightofthecircumstancesunderwhichthey weremade,notmisleadinginanymaterialrespect(exceptforanyfinancialforecast,technical andstatisticaldataincludedintheOfficialStatementandexceptforinformationregardingthe Depositoryanditsbook-entrysystem,andinformationregardingtheInsurer,ineachcaseasto whichnoviewneedbeexpressed); (8)Acertificate,datedthedateofClosing,oftheIssuertotheeffectthat(i)therepresentationsand warrantiesoftheIssuercontainedhereinaretrueandcorrectinallmaterialrespectsonandasofthe dateofClosingasifmadeonthedateofClosing;(ii)thereisnolegislation,action,suit,proceeding, inquiryorinvestigation,atlaworinequity,beforeorbytheCircuitCourtoftheStateofFloridain andforPalmBeachCounty,Florida,theDistrictCourtofAppealfortheFourthJudicialDistrictof Florida,theFloridaSupremeCourt,theUnitedStatesDistrictCourtfortheSouthernDistrictof 9 Florida,theUnitedStatesEleventhCircuitCourtofAppealsortheUnitedStatesSupremeCourt,or anyothercourt,governmentagency,publicboardorbodypendingandforwhichtheIssuerhas receivedserviceofprocessoractualnotice,orthreatenedagainsttheIssuer,noristhereabasisfor litigationwhichwouldinanycase(a)contesttherightofthemembersorofficialsoftheIssuerto holdandexercisetheirrespectivepositions,(b)contestthedueorganizationandvalidexistenceofthe Issuer,(c)contestthevalidity,dueauthorizationandexecutionoftheBondsortheIssuerDocuments ortheRateInstrumentor(d)attempttolimit,enjoinorotherwiserestrictorpreventtheIssuerfrom functioningandcollectingrevenues,includingpaymentsontheBonds,pursuanttotheBond Resolution,andotherincomeortheanticipatedreceiptofPledgedRevenues;(iii)theresolutionsand ordinancesoftheIssuerauthorizingtheexecution,deliveryand/orperformanceoftheOfficial Statement,theBondsandtheIssuerDocumentsandtheRateInstrumenthavebeendulyadoptedor enacted,applicable,bytheIssuer,areinfullforceandeffectandhavenotbeenmodified,amendedor repealed,(iv)tothebestofitsknowledge,noeventaffectingtheIssuerhasoccurredsincethedateof theOfficialStatementwhichshouldbedisclosedintheOfficialStatementforthepurposeforwhich itistobeusedorwhichitisnecessarytodisclosethereininordertomakethestatementsand informationtherein,inlightofthecircumstancesunderwhichmade,notmisleadinginanyrespectas ofthetimeofClosing,andtheinformationcontainedintheOfficialStatementiscorrectinall materialrespectsand,asofthedateoftheOfficialStatementdidnot,andasofthedateoftheClosing doesnot,containanyuntruestatementofamaterialfactoromittostateamaterialfactrequiredtobe statedthereinornecessarytomakethestatementsmadetherein,inthelightofthecircumstances underwhichtheyweremade,notmisleadingand(v)totheknowledgeoftheIssuer,noneofthe Bondsisthesubjectofanyaudit,inquiryorinvestigationbytheUnitedStatesInternalRevenue ServiceorSecuritiesandExchangeCommission; (9)AcertificateoftheIssuerinformandsubstancesatisfactorytoBondCounselandcounseltothe Underwriter(a)settingforththefacts,estimatesandcircumstancesinexistenceonthedateofthe Closing,whichestablishthatitisnotexpectedthattheproceedsoftheBondswillbeusedina mannerthatwouldcausetheBondstobe“arbitragebonds”withinthemeaningofSection148ofthe InternalRevenueCodeof1986,asamended(the“Code”),andanyapplicableregulations(whether final,temporaryorproposed),issuedpursuanttotheCode,and(b)certifyingthattothebestofthe knowledgeandbeliefoftheIssuertherearenootherfacts,estimatesorcircumstancesthatwould materiallychangetheconclusions,representationsandexpectationscontainedinsuchcertificate; (10)AnyothercertificatesandopinionsrequiredbytheBondResolutionfortheissuancethereunderof theBonds; (11)EvidencesatisfactorytotheUnderwriterthattheBondshavebeenrated"A1"byMoody'sand"A+" byStandard&Poor's,withoutregardtotheBondInsurance,and"Aa3"(negativeoutlook)by Moody'sand"AA-"(stableoutlook)byStandard&Poor'stakingintoaccounttheBondInsurance, andthatallsuchratingsareineffectasofthedateofClosing; (12)AcopyoftheMunicipalBondInsurancePolicyandtheDebtServiceReserveSuretyBondissued bytheInsurertogetherwithanopinionofcounseltotheInsurerinformandsubstancesatisfactory totheUnderwriter; (13)EvidencethattheIssuerhasdeemedthePreliminaryOfficialStatement"final"asofitsdatefor purposeoftheRule,exceptfor"permittedomissions." (14)AcertificateoftheInsurerwithrespecttotheaccuracyofstatementscontainedintheOfficial StatementregardingtheInsurerandBondInsuranceandthedueauthorizationexecutionissuance anddeliveryoftheBondInsurance;and 10 (15)Suchadditionallegalopinions,certificates,instrumentsandotherdocumentsastheUnderwriteror counseltotheUnderwritermayreasonablyrequesttoevidencethetruthandaccuracy,asofthedate hereofandasofthedateoftheClosing,oftheIssuer’srepresentationsandwarrantiescontained hereinandofthestatementsandinformationcontainedintheOfficialStatementandthedue performanceorsatisfactionbytheIssueronorpriortothedateoftheClosingofalltherespective agreementsthentobeperformedandconditionsthentobesatisfiedbytheIssuer. Alloftheopinions,letters,certificates,instrumentsandotherdocumentsmentionedaboveorelsewhere inthisAgreementshallbedeemedtobeincompliancewiththeprovisionshereofif,butonlyif,theyare informandsubstancesatisfactorytotheUnderwriter. IftheIssuershallbeunabletosatisfytheconditionstotheobligationsoftheUnderwritertopurchase,to acceptdeliveryofandtopayfortheBondscontainedinthisAgreement,oriftheobligationsofthe Underwritertopurchase,toacceptdeliveryofandtopayfortheBondsshallbeterminatedforanyreason permittedbythisAgreement,thisAgreementshallterminateandneithertheUnderwriternortheIssuer shallbeunderanyfurtherobligationhereunder,exceptthattherespectiveobligationsoftheIssuerandthe UnderwritersetforthinSection8hereofshallcontinueinfullforceandeffect. 7.Termination.TheUnderwritershallhavetherighttocancelitsobligationtopurchasetheBondsif,between thedateofthisAgreementandtheClosing,themarketpriceormarketabilityoftheBondsshallbematerially adverselyaffected,inthesolejudgmentoftheUnderwriter,bytheoccurrenceofanyofthefollowing: (a)(x)legislationshallbeenactedbyor(y)introducedintheCongressoftheUnitedStatesorrecommended totheCongressforpassagebythePresidentoftheUnitedStates(apartfromtheAmericanJobsActof 2012describedundertheheading"TAXEXEMPTION"intheOfficialStatement),ortheTreasury DepartmentoftheUnitedStatesortheInternalRevenueServiceoranymemberoftheCongressor favorablyreportedforpassagetoeitherHouseoftheCongressbyanycommitteeofsuchHousetowhich suchlegislationhasbeenreferredforconsideration,adecisionbyacourtoftheUnitedStatesorofthe StateortheUnitedStatesTaxCourtshallberendered,oranorder,ruling,regulation(final,temporaryor proposed),pressrelease,statementorotherformofnoticebyoronbehalfoftheTreasuryDepartmentof theUnitedStates,theInternalRevenueServiceorothergovernmentalagencyshallbemadeorproposed, theeffectofanyorallofwhichwouldbetoimpose,directlyorindirectly,federalincometaxupon interestreceivedontheBondsorobligationsofthegeneralcharacteroftheBonds,oranyotheractionor eventsshallhavetranspiredwhichmayhavethepurposeoreffect,directlyorindirectly,ofchangingthe federalincometaxconsequencesofanyofthetransactionscontemplatedhereinordescribedinthe OfficialStatement; (b)legislationintroducedinorenacted(orresolutionpassed)bytheCongressoranorder,decree,or injunctionissuedbyanycourtofcompetentjurisdiction,oranorder,ruling,regulation(final,temporary, orproposed),pressreleaseorotherformofnoticeissuedormadebyoronbehalfoftheSecuritiesand ExchangeCommission,oranyothergovernmentalagencyhavingjurisdictionofthesubjectmatter,tothe effectthatobligationsofthegeneralcharacteroftheBonds,includinganyorallunderlyingarrangements, arenotexemptfromregistrationunderorotherrequirementsofthe1933Act,orthattheBondResolution isnotexemptfromqualificationunderorotherrequirementsoftheTrustIndentureAct,orthatthe issuance,offering,orsaleofobligationsofthegeneralcharacteroftheBonds,includinganyorall underlyingarrangements,ascontemplatedherebyorbytheOfficialStatementorotherwise,isorwould beinviolationofthefederalsecuritieslawasamendedandthenineffect; (c)anystateBlueSkyorsecuritiescommissionorothergovernmentalagencyorbodyshallhavewithheld registration,exemptionorclearanceoftheofferingoftheBondsasdescribedherein,orissuedastop orderorsimilarrulingrelatingthereto; 11 (d)ageneralsuspensionoftradinginsecuritiesontheNewYorkStockExchangeortheAmericanStock Exchange,theestablishmentofminimumpricesoneithersuchexchange,theestablishmentofmaterial restrictions(notinforceasofthedatehereof)upontradingsecuritiesgenerallybyanygovernmental authorityoranynationalsecuritiesexchange,ageneralbankingmoratoriumdeclaredbyfederal,Stateof NewYork,orStateofficialsauthorizedtodoso; (e)theNewYorkStockExchangeorothernationalsecuritiesexchangeoranygovernmentalauthority,shall impose,astotheBondsorastoobligationsofthegeneralcharacteroftheBonds,anymaterial restrictionsnotnowinforce,orincreasemateriallythosenowinforce,withrespecttotheextensionof creditby,orthechargetothenetcapitalrequirementsof,theUnderwriter; (f)anyamendmenttothefederalorstateConstitutionoractionbyanyfederalorstatecourt,legislative body,regulatorybody,orotherauthoritymateriallyadverselyaffectingthetaxstatusoftheIssuer,its property,incomesecurities(orinterestthereon); (g)anyeventoccurring,orinformationbecomingknownwhich,inthejudgmentoftheUnderwriter,makes untrueinanymaterialrespectanystatementorinformationcontainedintheOfficialStatement,orhasthe effectthattheOfficialStatementcontainsanyuntruestatementofmaterialfactoromitstostateamaterial factrequiredtobestatedthereinornecessarytomakethestatementstherein,inthelightofthe circumstancesunderwhichtheyweremade,notmisleading; (h)thereshallhaveoccurredanymateriallyadversechangeintheaffairsorfinancialconditionoftheIssuer; (i)theUnitedStatesshallhavebecomeengagedinhostilitieswhichhaveresultedinadeclarationofwarora nationalemergencyorthereshallhaveoccurredanyotheroutbreakorescalationofhostilities; (j)anyfactoreventshallexistorhaveexistedthat,intheUnderwriter’sjudgment,requiresorhasrequired anamendmentoforsupplementtotheOfficialStatement; (k)thereshallhaveoccurredoranynoticeshallhavebeengivenofanyintendedreview,downgrading, suspension,withdrawal,ornegativechangeincreditwatchstatusbyanynationalratingservicetoanyof theIssuer’sobligationsoroftheclaim'spayingabilityoftheInsurer; (l)additionalmaterialrestrictionsnotinforceasofthedatehereofshallhavebeenimposedupontradingin securitiesgenerallybyanygovernmentalauthorityorbyanynationalsecuritiesexchangewhich,inthe opinionoftheUnderwriter,willmateriallyadverselyaffectthemarketpriceoftheBonds; (m)ageneralbankingmoratoriumshallhavebeenestablishedbyfederal,FloridaorNewYorkauthorities; (n)thereshallhaveoccurredanynationalorinternationalcalamityorcrisis,includingfinancialcrisisorthe escalationofanythereof,theeffectofwhichonthefinancialmarketsoftheUnitedStatesissuchas,in thejudgmentoftheUnderwriter,wouldmateriallyadverselyaffectthemarketfortheBonds,orthesale, atthecontemplatedofferingpricesbytheUnderwriteroftheBonds;and (o)thepurchaseofandpaymentfortheBondsbytheUnderwriter,ortheresaleoftheBondsbythe Underwriter,onthetermsandconditionshereinprovidedshallbeprohibitedbyanyapplicablelaw, governmentalauthority,board,agencyorcommission. 8.Expenses. (a)TheUnderwritershallbeundernoobligationtopay,andtheIssuershallpay,anyexpensesincidenttothe performanceoftheIssuer’sobligationshereunder,including,butnotlimitedto(i)thecostofpreparation 12 andprintingoftheBonds,(ii)thefeesanddisbursementsofBondCounsel,DisclosureCounseland counseltotheIssuer;(iii)thefeesanddisbursementsoftheFinancialAdvisortotheIssuer;(iv)thefees anddisbursementsofanyotherengineers,accountants,andotherexperts,consultantsoradvisersretained bytheIssuer;and(v)thefeesforbondratingsandtheBondInsurancepremium.TheIssuer acknowledgesthattheexpensecomponentoftheUnderwriter’sdiscountincludesreimbursementbythe IssuertotheUnderwriterofexpensesincurredbytheUnderwriterwhichareincidentaltoimplementing thisBondPurchaseAgreementandtheissuanceoftheBonds,including,butnotlimitedto,meals, transportationandlodging,ifany,andanyothermiscellaneousclosingcosts. (b)TheIssueracknowledgesthatithashadanopportunity,inconsultationwithsuchadvisorsasitmaydeem appropriate,ifany,toevaluateandconsiderthefeesandexpensesbeingincurredaspartoftheissuance oftheBonds. (c)TheUnderwritershallpay(i)thecostofpreparationofthisAgreement,andanyBlueSkySurveyand LegalInvestmentMemorandum;(ii)alladvertisingexpensesincurredbyitinconnectionwiththepublic offeringoftheBonds;and(iii)allotherexpensesincurredbytheminconnectionwiththepublicoffering oftheBonds,includingthefeesanddisbursementsofcounselretainedbytheUnderwriter. (d)IfthisAgreementshallbeterminatedbytheUnderwriterbecauseofanyfailureorrefusalonthepartof theIssuertocomplywiththetermsortofulfillanyoftheconditionsofthisAgreement,orifforany reasontheIssuershallbeunabletoperformitsobligationsunderthisAgreement,theIssuerwill reimbursetheUnderwriterforallout-of-pocketexpenses(includingthefeesanddisbursementsof counseltotheUnderwriter)reasonablyincurredbytheUnderwriterinconnectionwiththisAgreementor theofferingcontemplatedhereunder. 9.Notices.AnynoticeorothercommunicationtobegiventotheIssuerunderthisAgreementmaybegivenby deliveringthesameinwritingatCityofBoyntonBeach,Florida,100EastBoyntonBeachBlvd.,Boynton Beach,FL33314,Attn:CitymanagerandanynoticeorothercommunicationtobegiventotheUnderwriter underthisAgreementmaybegivenbydeliveringthesameinwritingtoRBCCapitalMarkets,LLC,1002nd AvenueSouth,Suite1201,St.Petersburg,Florida33701,Attn:JulieSantamaria,Director. 10.PartiesinInterest.ThisAgreementasheretoforespecifiedshallconstitutetheentireagreementbetweenus andismadesolelyforthebenefitoftheIssuerandtheUnderwriter(includingsuccessorsorassignsofthe Underwriter)andnootherpersonshallacquireorhaveanyrighthereunderorbyvirtuehereof.This AgreementmaynotbeassignedbytheIssuer.AlloftheIssuer’srepresentations,warrantiesandagreements containedinthisAgreementshallremainoperativeandinfullforceandeffect,regardlessof(i)any investigationsmadebyoronbehalfofanyoftheUnderwriter;(ii)deliveryofandpaymentfortheBonds pursuanttothisAgreement;and(iii)anyterminationofthisAgreement. 11.Effectiveness.ThisAgreementshallbecomeeffectiveupontheacceptancehereofbytheIssuerandshallbe validandenforceableatthetimeofsuchacceptance. 12.ChoiceofLaw.ThisAgreementshallbegovernedbyandconstruedinaccordancewiththelawoftheState. 13.Severability.IfanyprovisionofthisAgreementshallbeheldordeemedtobeorshall,infact,beinvalid, inoperativeorunenforceableasappliedinanyparticularcaseinanyjurisdictionorjurisdictions,orinall jurisdictionsbecauseitconflictswithanyprovisionsofanyConstitution,statute,ruleofpublicpolicy,orany otherreason,suchcircumstancesshallnothavetheeffectofrenderingtheprovisioninquestioninvalid, inoperativeorunenforceableinanyothercaseorcircumstance,orofrenderinganyotherprovisionor provisionsofthisAgreementinvalid,inoperativeorunenforceabletoanyextentwhatever. 14.BusinessDay.ForpurposesofthisAgreement,“businessday”meansanydayonwhichtheNewYorkStock 13 ei I EXHIBIT "B" Registrar Agreement i ' i ii I i 1 Ij I I 11 ■ 1 BOND REGISTRAR AGREEMENT THIS BOND REGISTRAR AGREEMENT is made and entered into as of _, 2012, by and between the City of Boynton Beach, Florida (the "Issuer ") and The Bank of New York Mellon Trust Company, N.A. (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 2012 (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 the 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 an annual fee in the amount of $750.00 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 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, by providing notice in 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 this 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. 2 (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 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 33425 As to the Bank: The Bank of New York Mellon Trust Company, N.A. 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. CITY OF BOYNTON BEACH, FLORIDA By: City Manager THE BANK OF NEW YORK MELLION TRUST COMPANY, N.A., as Bond Registrar By: Its Authorized Signatory 3 II 1 EXHIBIT "C" Preliminary Official Statement 1 1 'I i I! i i 1 i I, 1 1 I 1 j Rya -©o1 PRELIMINARY OFFICIAL STATEMENT DATED JANUARY _, 2012 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. SCHEDULE I MATURITY SCHEDULE 16 SI CHEDULE MATURITYSCHEDULE MaturityDatePrincipalAmountInterestRate 11/1/2013410,0002.000% 11/1/2014410,0003.000% 11/1/2015430,0003.000% 11/1/2016445,0004.000% 11/1/2017460,0004.000% 11/1/2018480,0004.000% 11/1/2019500,0004.000% 11/1/2020520,0004.000% 11/1/20212,565,0004.500% 11/1/20222,695,0004.500% 11/1/20232,835,0005.000% 11/1/20242,985,0005.000% 11/1/20253,145,0005.000% 11/1/20263,315,0005.000% 11/1/20273,490,0005.000% 11/1/20283,675,0005.000% 11/1/20291,890,0003.625% 11/1/20301,960,0003.750% 11/1/20312,035,0005.000% 11/1/20322,135,0005.000% 11/1/20369,515,0004.000% RedemptionProvisionsforthe2012Bonds OptionalRedemption.The2012BondsmaturingonorpriortoNovember1,2021arenotsubjectto optionalredemptionpriortomaturity.The2012BondsmaturingonorafterNovember1,2022aresubjectto redemptionpriortomaturity,attheoptionoftheCity,fromanyfundslegallyavailableforsuchpurpose,onor afterNovember1,2021,inwholeorinpartonanydate,andifinpartinanyorderofmaturityselectedbythe City,andbylotwithinamaturityiflessthananentirematurityistoberedeemed,attheredemptionpricesequal totheprincipalamountofthe2012Bondstoberedeemedplusaccruedinteresttotheredemptiondate. MandatoryRedemption.The2012BondsmaturingonNovember1,2036willbesubjecttomandatory redemptioninpartpriortotheirmaturitydateataredemptionpriceequaltotheprincipalamountthereof,without premium,plusaccruedinteresttotheredemptiondate,onNovember1,2033andoneachNovember1thereafter intheyearsandprincipalamountssetforthbelow(exceptforthefinalinstallmentdueatmaturity,whichshallnot bearedemption): YearRedemptionAmount 2033$2,240,000 20342,330,000 20352,425,000 20362,520,000 S-1 NEW ISSUE - BOOK -ENTRY ONLY RATINGS: See "RATINGS" herein In the opinion of Bond Counsel, under existing law and assuming continuing compliance by the City with certain covenants, interest on the 2012 Bonds will be excluded from gross income for federal income tax purposes and interest on the 2012 Bonds will not be an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations See, however, the information under the heading "TAX EXEMPTION" herein for a description of certain taxes on corporations and for a discussion of certain other tax consequences to holders of the 2012 Bonds See "TAX EXEMPTION" herein $ _ ,000,000* City of Boynton Beach, Florida Utility System Revenue Bonds, Series 2012 Dated: Date of Delivery Due: November 1, as shown on the inside cover The City of Boynton Beach, Florida Utility System Revenue Bonds, Series 2012 (the "2012 Bonds ") are being issued by the City of Boynton Beach, Florida (the "City ") as fully registered bonds and will be initially issued and registered to Cede & Co., as nominee of The Depository Trust Company, New York, New York ( "DTC "), which will act as securities depository for the 2012 Bonds Purchases of beneficial interests in the 2012 Bonds will be made in book -entry form only and the purchasers will not receive physical delivery of the 2012 Bonds or any certificate representing their beneficial ownership interest in the 2012 Bonds The 2012 Bonds will be available to purchasers in principal denominations of $5,000 and integral multiples thereof under the book -entry system maintained by DTC through brokers and dealers who are, or who act through, DTC Participants. For so long as DTC or its nominee, Cede & Co , is the registered owner of the 2012 Bonds, payments of principal of, premium, if any, and interest will be made directly to Cede & Co Disbursement of payments of principal and interest to individual purchasers is described under the heading "DESCRIPTION OF THE 2012 BONDS - Book- Entry- Only System" herein Interest on the 2012 Bonds will be payable on May 1, 2012 and semi- annually thereafter on each May 1 and November 1 The 2012 Bonds are subject to optional and mandatory redemption prior to maturity as described herein This cover page contains certain information for quick reference only. It is not a summary of the issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. The 2012 Bonds are being issued for the principal purpose of providing funds to pay capital expenditures relating to the City's water, sewer and stormwater utility system (the "System ") and to refinance all or a portion of the City's outstanding Utility System Revenue Bonds, Series 2008 The 2012 Bonds will be limited obligations of the City payable solely from the Net Revenues derived by the City from the operation of 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 2012 Bonds on the Pledged Revenues will be on a parity with the lien of the City's outstanding Utility System Revenue Refunding Bonds, Series 2002, Utility System Revenue Refunding Bonds, Series 2005, and Utility System Revenue Bonds, Series 2008 and any Additional Bonds (herein defined). The 2012 Bonds will 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 State of Florida within the meaning of any constitutional, 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, premium, if any, or interest on the 2012 Bonds. The scheduled payment of principal of and interest on all or a portion of the 2012 Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the 2012 Bonds by Assured Guaranty Municipal Corp [Insert Logo] The 2012 Bonds are offered when, as and if issued, subject to the satisfaction of certain conditions and subject to the unqualified approval of legality and tax - exempt status of Mark E. Raymond, Esq , Palm Beach Gardens, Florida, Bond Counsel and Disclosure Counsel to the City Certain legal matters will be passed upon for the City by its City Attorney, Goren, Cherof, Doody & Ezrol, P A., Fort Lauderdale, Florida Public Financial Management, Inc is acting as financial advisor to the City It is expected that the 2012 Bonds will be delivered through the facilities of The Depository Trust Company in New York, New York, on or about November , 2012 RBC CAPITAL MARKETS The date of this Official Statement is , 2012 *Preliminary, subject to change AMOUNTS, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND INITIAL CUSIPS $ Serial Bonds Interest Price or Amount Maturity Rate Yield CUSIP $ - % Term Bonds due November 1, 20 - Price % - Yield % CUSIP $ - % Term Bonds due November 1, 20 - Price % - Yield % CUSIP CITY OF BOYNTON BEACH, FLORIDA 100 East Boynton Beach Boulevard Boynton Beach, Florida 33425 Telephone: 561- 375 -6000 CITY COMMISSION Jose Rodriguez, Mayor William Orlove, Vice -Mayor Woodrow Hay, Commissioner Steven Holzman, Commissioner Marlene Ross, Commissioner CITY OFFICIALS Lori LaVerriere, Interim City Manager E. Barrett (Barry) Atwood, Sr., CPA, Finance Director Janet Prainito, City Clerk CITY ATTORNEY James Cherof Goren, Cherof, Doody & Ezrol, P.A. Fort Lauderdale, Florida BOND AND DISCLOSURE COUNSEL Mark E. Raymond, Esq. Palm Beach Gardens, Florida FINANCIAL ADVISOR Public Financial Management Orlando, 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 2012 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. The Underwriter has reviewed the information in this Official Statement in accordance with and as part of its responsibilities to investors under federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guaranty the accuracy or completeness of such information. Any statements in this Official Statement involving estimates, assumptions and matters of opinion whether or not so expressly stated, are intended as such and not as representations of fact, and the City expressly makes no representations that such estimates, 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. ASSURED GUARANTY MUNICIPAL CORP. ( "AGM ") MAKES NO REPRESENTATION REGARDING THE BONDS OR THE ADVISABILITY OF INVESTING IN THE BONDS IN ADDITION, AGM HAS NOT INDEPENDENTLY VERIFIED, MAKES NO REPRESENTATION REGARDING, AND DOES NOT ACCEPT ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT OR ANY INFORMATION OR DISCLOSURE CONTAINED HEREIN, OR OMITTED HEREFROM, OTHER THAN WITH RESPECT TO THE ACCURACY OF THE INFORMATION REGARDING AGM SUPPLIED BY AGM AND PRESENTED UNDER THE HEADING "MUNICIPAL BOND INSURANCE" AND "APPENDIX F - FORM OF MUNICIPAL BOND INSURANCE POLICY ". THE 2012 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 2012 BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THE SECURITIES LAWS OF THE STATES, IF ANY, IN WHICH THE 2012 BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN CERTAIN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE 2012 BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. THIS PRELIMINARY OFFICIAL STATEMENT HAS BEEN "DEEMED FINAL" BY THE CITY FOR PURPOSES OF SECURITIES AND EXCHANGE COMMISSION RULE 15c2 -12, EXCEPT FOR PERMITTED OMISSIONS. TABLE OF CONTENTS P age INTRODUCTION . .. . . 1 PURPOSE OF THE 2012 BONDS .... ... 1 ESTIMATED SOURCES AND USES OF FUNDS. . . 2 DESCRIPTION OF THE 2012 BONDS ... . ....... .... . 2 General . 2 Redemption Provisions for the 2012 Bonds .. . . 2 Selection of 2012 Bonds for Redemption 3 Notice of Redemption . . . . . 3 Effect of Redemption . .. .. .... . 3 Book -Entry Only System.. . . .. . 3 SECURITY FOR THE 2012 BONDS . . .. . . 5 General ... . ... . . .. 5 Definitions . ... . ... . . . . 6 Rate Covenant . . ... . ..... . . . .. .... Reserve Account. . .... ... 7 Flow of Funds. . . ... 9 General Reserve Account .. 10 Issuance of Additional Bonds .. 11 MUNICIPAL BOND INSURANCE . 12 Bond Insurance Policy . .. . . .. . 12 Assured Guaranty Municipal Corp .. . 12 Current Financial Strength Ratings . . . 13 Incorporation of Certain Documents by Reference . . . 13 BOND INSURANCE RISK FACTORS .. .. 14 THE SYSTEM. . . .. . . .... .. 15 General ... . . ... .. 15 Service Area . . .. . ... . . . .. . 16 Condition of the Overall System and System Performance . ... .. . 16 Administration . ... .... .. .. 16 Water System . .. 16 Wastewater System .. 17 Stormwater System . . . . . 18 Capital Improvement Plan . .. . . 18 Rates and Customer Base.. . .. . ... .. .. 19 Impact Fees .... . . . . 19 System Customers . . .. . . 20 Historical Revenues and Debt Service Coverage . . 20 Historical Revenues and Debt Service Coverage ... .. 21 DEBT SERVICE REQUIREMENTS 22 RISK FACTORS . . . . . . 23 POST EMPLOYMENT BENEFIT PLANS AND PENSIONS . 24 TAX EXEMPTION . . 24 LITIGATION .. .. .. 26 COVENANTS CONCERNING ONGOING DISCLOSURE 27 UNDERWRITING . .. . ... .. 29 RATINGS . .. .. .. 29 LEGALITY ... . .... .. 29 COMPREHENSIVE ANNUAL REPORT.. . . .. . 30 MISCELLANEOUS . .... . . .. . .. . 30 AUTHORIZATION OF OFFICIAL STATEMENT . . . . 30 APPENDIX A Statistical and Other General Information Concerning the City of Boynton Beach, Florida APPENDIX B Comprehensive Annual Financial Report of the City for the Fiscal Year Ended September 30, 2010 APPENDIX C Summary of Certain Provisions of the Resolution APPENDIX D Proposed Form of Opinion of Bond Counsel APPENDIX F Specimen Municipal Bond Insurance Policy APPENDIX G Rate Study OFFICIAL STATEMENT $ _,000,000* City of Boynton Beach, Florida Utility System Revenue Bonds, Series 2012 INTRODUCTION 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 2012, in the aggregate principal amount of $_,000,000* (the "2012 Bonds "). The 2012 Bonds will be 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. R11 -_, adopted by the City Commission on _, 2012 (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 2012 Bonds, the custody and application of the proceeds of the 2012 Bonds, the rights and remedies of the holders of the 2012 Bonds and the rights, duties and obligations of the City. The 2012 Bonds will be issued on a parity with the City's outstanding Utility System Revenue Refunding Bonds, Series 2002 (the "2002 Bonds "), Utility System Revenue Refunding Bonds, Series 2005 (the "2005 Bonds "), any Utility System Revenue Bonds, Series 2008 not refunded by the 2012 Bonds (the "Unrefunded 2008 Bonds ") and any additional parity bonds issued pursuant to the Resolution (the "Additional Bonds "). The 2002 Bonds, the 2005 Bonds, the Unrefunded 2008 Bonds, the 2012 Bonds and any Additional Bonds are herein collectively referred to as the "Bonds." The 2012 Bonds will be limited obligations of the City and will be secured and payable solely from the Net Revenues (as hereinafter defined) derived by the City from the operation of its water, sewer and stormwater utility system (the "System "), certain 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 will be pledged to the payment of the principal of or interest on the 2012 Bonds. See "SECURITY FOR THE 2012 BONDS" herein. The scheduled payment of principal of and interest on all or a portion of the 2012 Bonds when due will be guaranteed under insurance policy to be issued concurrently with the delivery of the 2012 Bonds by Assured Guaranty Municipal Corp See "MUNICIPAL BOND INSURANCE" 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 2012 BONDS The 2012 Bonds are being issued by the City for the principal purpose of providing funds, together with other available funds of the City, to pay capital expenditures relating to the City's water, sewer and stormwater utility system (the "System ") and to refinance all or a portion of the City's outstanding Utility System Revenue Bonds, Series 2008 (the "Refunded Bonds "). Approximately $20,000,000 of proceeds of the Series 2012 Bonds will be used to pay capital expenditures and the balance will be used to retire the Refunded Bonds on _, 2012 and pay costs associated with the issuance of the 2012 Bonds. *Preliminary, subject to change ESTIMATED SOURCES AND USES OF FUNDS SOURCES OF FUNDS: Principal Amount of 2012 Bonds Net Original Issue Premium/Discount TOTAL SOURCES: USES OF FUNDS: Repayment of Refunded Bonds Deposit to 2012 Construction Account Costs of Issuance ) TOTAL USES: (I) Includes, among other things, underwriter's discount, legal fees, registrar fees and bond insurance and reserve surety premiums. DESCRIPTION OF THE 2012 BONDS General The 2012 Bonds will be issued in the aggregate principal amounts shown on the cover page hereof The 2012 Bonds will be issued in fully registered form without coupons in principal denominations of $5,000 each or any integral multiple thereof, as described below under "Book -Entry -Only System." The 2012 Bonds will be dated the date of delivery, will bear interest at the rates per annum, computed on the basis of a 360 -day year consisting of twelve thirty -day months, and will mature on the dates and in the amounts set forth on the inside cover page hereof. Interest on the 2012 Bonds will be payable on May 1, 2012, and semi- annually thereafter on May 1 and November 1 of each year. The Bank of New York Mellon Trust Company, N.A., will act as Paying Agent and Bond Registrar for the 2012 Bonds. Redemption Provisions for the 2012 Bonds Optional Redemption. The 2012 Bonds maturing on or prior to November 1, 20_ are not subject to optional redemption prior to maturity The 2012 Bonds maturing on or after November 1, 20 are subject to redemption prior to maturity, at the option of the City, from any funds legally available for such purpose, on or after November 1, 20_, in whole or in part on any date, and if in part in any order of maturity selected by the City, and by lot within a maturity if less than an entire maturity is to be redeemed, at the redemption prices equal to the principal amount of the 2012 Bonds to be redeemed plus accrued interest to the redemption date. 2 Mandatory Redemption. The 2012 Bonds maturing on November 1, 20 will be subject to mandatory redemption in part 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, 20 and on each November 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): Year Amount Selection of 2012 Bonds for Redemption If less than all of the Bonds of a given maturity are to be redeemed, the City shall select the 2012 Bonds or portions thereof to be redeemed by lot. The City shall promptly notify the Bond Registrar in writing of the numbers of the 2012 Bonds so selected for redemption and in making such selection, each 2012 Bond shall be treated as representing that number of 2012 Bonds of the lowest authorized denomination of 2012 Bonds as is obtained by dividing the principal amount of such 2012 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: (1) shall be filed with the Bond Registrar and (ii) shall be mailed postage prepaid, to all registered owners of the 2012 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 2012 Bond shall not affect the validity of the redemption of any other 2012 Bond Effect of Redemption On the date so designated for redemption, notice having been given in the manner and under the conditions provided in the Resolution, the 2012 Bonds so called for redemption shall become and be due and payable at the redemption price provided for redemption of such 2012 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 2012 Bonds to be redeemed, interest on the 2012 Bonds so called for redemption shall cease to accrue, such 2012 Bonds shall cease to be entitled to any hen, benefit or security under the Resolution, and the Holders or registered owners of such 2012 Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof and accrued interest thereon Book - Entry Only System The Depository Trust Company ( "DTC ") will act as securities depository for the 2012 Bonds One fully - registered certificate will be issued for each maturity of the 2012 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest securities depository, is a limited - purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, 3 a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U S and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ( "Direct Participants ") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts This eliminates the need for physical movement of securities certificates Direct Participants include both U.S. and non -U. S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ( "DTCC "). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U S and non -US. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants "). DTC has Standard & Poor's rating of AA+ The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of beneficial ownership interests in 2012 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2012 Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ( "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 Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2012 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the 2012 Bonds, except in the event that use of the book entry system for the 2012 Bonds is discontinued. To facilitate subsequent transfers, all 2012 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of 2012 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2012 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 2012 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of 2012 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2012 Bonds, such as redemptions and proposed amendments to the bond documents. For example, Beneficial Owners of 2012 Bonds may wish to ascertain that the nominee holding the 2012 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Paying Agent and request that copies of notices be provided directly to them 4 Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the 2012 Bonds unless authorized by a Direct Participant in accordance with DTC procedure. 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 2012 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption notices shall be sent to DTC. If less than all of the 2012 Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Principal and interest payments on the 2012 Bonds will be made to Cede & Co , or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Registrar, the Paying Agent or the City, subject to any statutory or regulatory requirement as may be in effect from time to time Payment of principal and interest on the 2012 Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC), is the responsibility of the City and the Paying Agent, disbursement of such payment to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the 2012 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, 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, 2012 Bond certificates will be printed and delivered. Thereafter, 2012 Bond certificates may be transferred and exchanged as described in the Bond Resolution See "Appendix C - Summary of Certain Provisions of the Resolution." 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 does not guarantee the accuracy thereof. SECURITY FOR THE 2012 BONDS General The principal of, premium, if any, and interest on the 2012 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 hen of the 2012 Bonds on the Pledged Revenues will be on a parity with the 2002 Bonds, the 2005 Bonds, any Unrefunded 2008 Bonds and any Additional Bonds issued under the Resolution. THE BONDS DO NOT AND WILL 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 5 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, IS OR WILL BE PLEDGED OR OBLIGATED AS SECURITY FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON ANY BONDS. THE BONDS ARE AND WILL BE 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 (see "The System- Impact Fees" for further information) 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. "Revenues" 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 held under the 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) 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 System pursuant to the Annual Budget, any reasonable payments to pension or retirement funds properly chargeable 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 Sinking Fund Account, the Reserve Account, the Rate Stabilization Account, the Subordinated Indebtedness Account, the Renewal, Replacement and Improvement Account, the General 6 Reserve Account or the Impact Fee Account, and shall not include, for purposes 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 City administrative expenses allocated to the System "Impact Fees" means all non - refundable (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 earnings from the investment of funds on deposit in the Impact Fee Account, but excluding those charges imposed by the City on persons connecting 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 shall appear necessary, to adjust such rates and charges by increasing or decreasing the same or any selected 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 Fiscal Year on account of the 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. The City has further covenanted under the Resolution 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 of 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 copies thereof to the City Manager and shall revise its rates, fees and charges, or alter its methods of operation and take such other action as shall conform with such recommendations If the City fails 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 complies 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 General. 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 2012 Bonds, equal to the lesser of (a) 10% of the aggregate stated 7 principal amount of the 2012 Bonds Outstanding, (b) the maximum amount of principal and interest scheduled to become due on the 2012 Bonds in the current or any succeeding Bond Year, or (c) 125% of the average annual debt service on the Outstanding 2012 Bonds (calculated on a Bond Year basis at the time of issuance only) and (n) 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 "Reserve Account Requirement "). The Series 2012 Reserve Subaccount in the Reserve Account will be established in connection with the issuance of the 2012 Bonds. 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. In lieu of the required deposit into the Series 2012 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 2012 Reserve Subaccount a Reserve Account Insurance Policy or Reserve Account Letter of Credit for the benefit of the Holders of the 2012 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 Series 2012 Reserve Subaccount and the sum, if any, then on deposit in the Series 2012 Reserve Subaccount, which Reserve Account Insurance Policy or Reserve Account Letter of Credit shall be payable (upon the giving of notice as required thereunder) on any interest payment date on which a deficiency exists for the 2012 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 such 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 2012 Reserve Subaccount, the excess moneys in the Series 2012 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. The City has received a commitment from Assured Guaranty Municipal Corp. ( "AGM ") for the issuance of a Reserve Account Insurance Policy in connection with the 2012 Bonds, and expects that upon issuance of the 2012 Bonds the Reserve Account Requirement for the 2012 Bonds will be satisfied by the issuance of such Reserve Account Insurance Policy Information about AGM is included herein under the heading "MUNICIPAL BOND INSURANCE. There is no requirement in the Resolution that the City take any action in the event of the withdrawal or downgrade of any credit rating(s) of AGM. Under the terms of the Reserve Account Insurance Policy and subject to the limitation hereinafter described, AGM will unconditionally and irrevocably guarantee to pay that portion of the scheduled principal and interest on the 2012 Bonds that becomes due for payment but shall be unpaid by reason of Nonpayment by the City (the "Insured Payments "). AGM will pay each portion of an Insured Payment that is due for payment and unpaid by reason of nonpayment by the City to the Paying Agent, as beneficiary of the Reserve Account Insurance Policy on behalf of the holders of the 2012 Bonds on the later to occur of (i) the date such scheduled principal or interest becomes due for payment or (ii) the business day next following the day on which AGM receives a demand for payment therefor in accordance with the terms of the Reserve Account Insurance Policy. 8 No payment shall be made under the Reserve Account Insurance Policy in excess of $ (the "Reserve Account Insurance Policy Limit "). Pursuant to the terms of the Reserve Account Insurance Policy, the amount available at any particular time to be paid to the Paying Agent shall automatically be reduced to the extent of any payment made by AGM under the Reserve Account Insurance Policy, provided, that, to the extent of the reimbursement of such payment to AGM, the amount available under the Reserve Account Insurance Policy shall be reinstated in full or in part, in an amount not to exceed the Reserve Account Insurance Policy Limit. The Reserve Account Insurance Policy does not insure against nonpayment caused by the insolvency or negligence of the Paying Agent. The Reserve Account Insurance Policy is not covered by any insurance or guaranty fund established under New York, California, Connecticut or Florida insurance law. 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 (1 /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 2012 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 subparagraph 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, if 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, 9 (c) to the credit of the Reserve Account and the subaccounts therein, such amount, 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 subaccounts therein 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 less than the Reserve Account Deposit Requirement for all Bonds at such time, the amount available shall be allocated among the various subaccounts having a Reserve Account Deposit Requirement pro rata, based upon the proportion that the Reserve Account Deposit Requirement for each subaccount bears 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 (1 /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 City 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 City 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) through (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. General Reserve Account The General Reserve shall be disbursed as follows (a) to pay the Cost of Improvements; (b) to purchase or redeem Bonds; (c) to make up deficiencies in any of the accounts and funds created by the Resolution; (d) to pay the Cost of any item qualifying as an authorized expenditure from the Renewal, Replacement and Improvement Account; 10 (e) to make payments required under any Interest Rate Swap agreements; and (f) for any lawful use of the City as directed by the City 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 centum (110 %) or (ii) prepared by the Consulting 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. (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 stormwater system during the Measurement Period shall be adjusted by deducting the cost of operation and maintenance of said existing water system, sewer system or stormwater 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 Additional 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 11 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 Bond Insurance Policy Concurrently with the issuance of the Series 2012 Bonds, Assured Guaranty Municipal Corp ( "AGM ") will issue its Municipal Bond Insurance Policy for the Series 2012 Bonds (the "Policy ") The Policy guarantees the scheduled payment of principal of and interest on all or a portion of the Series 2012 Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. Assured Guaranty Municipal Corp. AGM is a New York domiciled financial guaranty insurance company and a wholly owned subsidiary of Assured Guaranty Municipal Holdings Inc. ( "Holdings "). Holdings is an indirect subsidiary of Assured Guaranty Ltd. ( "AGL "), a Bermuda -based holding company whose shares are publicly traded and are fisted on the New York Stock Exchange under the symbol "AGO ". AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, infrastructure and structured finance markets. No shareholder of AGL, Holdings or AGM is liable for the obligations of AGM 12 AGM's financial strength is rated "AA -" (stable outlook) by Standard and Poor's Ratings Services, a Standard & Poor's Financial Services LLC business ( "S &P ") and "Aa3" (negative outlook) by Moody's Investors Service, Inc. ( "Moody's "). An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies, including withdrawal initiated at the request of AGM in its sole discretion. In addition, the rating agencies may at any time change AGM's long -term rating outlooks or place such ratings on a watch list for possible downgrade in the near term Any downward revision or withdrawal of any of the above ratings, the assignment of a negative outlook to such ratings or the placement of such ratings on a negative watch list may have an adverse effect on the market price of any security guaranteed by AGM. AGM only guarantees scheduled principal and scheduled interest payments payable by the issuer of bonds insured by AGM on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the relevant insurance policy), and does not guarantee the market price or liquidity of the securities it insures, nor does it guarantee that the ratings on such securities will not be revised or withdrawn. Current Financial Strength Ratings On November 30, 2012, S &P published a Research Update in which it downgraded AGM's financial strength rating from "AA +" to "AA -" At the same time, S &P removed the financial strength rating from CreditWatch negative and changed the outlook to stable. AGM can give no assurance as to any further ratings action that S &P may take. Reference is made to the Research Update, a copy of which is available at www.standardandpoors.com, for the complete text of S &P's comments. The most recent rating action by Moody's on AGM took place on December 18, 2009, when Moody's issued a press release stating that it had affirmed the "Aa3" insurance financial strength rating of AGM, with a negative outlook. Reference is made to the press release, a copy of which is available at www.moodys.com, for the complete text of Moody's comments. Moody's is in the process of reviewing AGL and its subsidiaries and there can be no assurance as to any ratings action that Moody's may take with respect to AGM. For more information regarding AGM's financial strength ratings and the risks relating thereto, see AGL's Annual Report on Form 10 -K for the fiscal year ended December 31, 2010, as amended by its Form 10 -K/A; its Quarterly Reports on Form 10 -Q for the quarterly periods ended March 31, 2012 and June 30, 2012, each as amended by its Form 10 -Q /A, and its Quarterly Report on Form 10 -Q for the quarterly period ended September 30, 2012. Capitalization of AGM At September 30, 2012, AGM's consolidated policyholders' surplus and contingency reserves were approximately $3,105,604,840 and its total net unearned premium reserve was approximately $2,207,101,966, in each case, in accordance with statutory accounting principles. AGM's statutory financial statements for the fiscal year ended December 31, 2010 and for the quarterly periods ended March 31, 2012, June 30, 2012 and September 30, 2012, which have been filed with the New York State Department of Financial Services and posted on AGL's website at http: / /www.assuredguaranty.com, are incorporated by reference into this Official Statement and shall be deemed to be a part hereof 13 Incorporation of Certain Documents by Reference Portions of the following documents filed by AGL with the Securities and Exchange Commission (the "SEC ") that relate to AGM are incorporated by reference into this Official Statement and shall be deemed to be a part hereof: (i) the Annual Report on Form 10 -K for the fiscal year ended December 31, 2010, as amended by Amendment No 1 on Form 10 -K/A (filed by AGL with the SEC on March 1, 2012 and October 31, 2012, respectively); (ii) the Quarterly Report on Form 10 -Q for the quarterly period ended March 31, 2012, as amended by Amendment No. 1 on Form 10 -Q /A (filed by AGL with the SEC on May 10, 2012 and November 14, 2012, respectively), (in) the Quarterly Report on Form 10 -Q for the quarterly period ended June 30, 2012, as amended by Amendment No 1 on Form 10 -Q /A (filed by AGL with the SEC on August 9, 2012 and November 14, 2012, respectively); and (iv) the Quarterly Report on Form 10 -Q for the quarterly period ended September 30, 2012 (filed by AGL with the SEC on November 14, 2012). All information relating to AGM included in, or as exhibits to, documents filed by AGL pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, after the filing of the last document referred to above and before the termination of the offering of the Series 2012 Bonds shall be deemed incorporated by reference into this Official Statement and to be a part hereof from the respective dates of filing such documents. Copies of materials incorporated by reference are available over the mternet at the SEC's website at http: / /www.sec.gov, at AGL's website at http /www.assuredguaranty.com, or will be provided upon request to Assured Guaranty Municipal Corp.: 31 West 52nd Street, New York, New York 10019, Attention: Communications Department (telephone (212) 826 - 0100). Any information regarding AGM included herein under the caption "MUNICIPAL BOND INSURANCE - Assured Guaranty Municipal Corp." or included in a document incorporated by reference herein (collectively, the "AGM Information ") shall be modified or superseded to the extent that any subsequently included AGM Information (either directly or through incorporation by reference) modifies or supersedes such previously included AGM Information. Any AGM Information so modified or superseded shall not constitute a part of this Official Statement, except as so modified or superseded. Miscellaneous Matters AGM or one of its affiliates may purchase a portion of the Series 2012 Bonds or any uninsured bonds offered under this Official Statement and may hold such Series 2012 Bonds or uninsured bonds for investment or may sell or otherwise dispose of such Series 2012 Bonds or uninsured bonds at any time or from time to time. AGM makes no representation regarding the Series 2012 Bonds or the advisability of investing in the Series 2012 Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading "MUNICIPAL BOND INSURANCE ". 14 BOND INSURANCE RISK FACTORS The following are certain risk factors relating to bond insurance In the event of default of the payment of principal or interest with respect to the 2012 Bonds when all or some becomes due, any owner of the 2012 Bonds shall have a claim under the Policy for such payments However, in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments are to be made in such amounts and at such times as such payments would have been due had there not been any such acceleration. Under most circumstances, default of payment ofprmcipal and interest does not obligate acceleration of the obligations of AGM without appropriate consent AGM may direct and must consent to any remedies and AGM's consent may be required in connection with amendments to any applicable bond documents. In the event AGM is unable to make payment of principal and interest as such payments become due under the Policy, the 2012 Bonds are payable solely from the moneys received pursuant to the Resolution. In the event AGM becomes obligated to make payments with respect to the 2012 Bonds, no assurance is given that such event will not adversely affect the market price of the 2012 Bonds or the marketability for the 2012 Bonds The long -term ratings on the 2012 Bonds are dependent in part on the financial strength of AGM and its claim paying ability. AGM's financial strength and claims paying ability are predicated upon a number of factors which could change over time. No assurance is given that the long -term ratings of AGM and of the ratings on the 2012 Bonds insured by AGM will not be subject to downgrade and such event could adversely affect the market price of the 2012 Bonds or the marketability for the 2012 Bonds See "RATINGS" herein The obligations of AGM are general obligations of AGM and in an event of default by AGM, the remedies available may be limited by applicable bankruptcy law or other similar laws related to insolvency. Neither the City or the Underwriter have made independent investigation into the claims paying ability of AGM and no assurance or representation regarding the financial strength or projected financial strength of AGM is given. Thus, when making an investment decision, potential investors should carefully consider the ability of the City to pay principal and interest on the 2012 Bonds and the claims paying ability of AGM, particularly over the life of the investment. See "MUNICIPAL BOND INSURANCE" above herein for further information provided by AGM and the Policy, which includes further instructions for obtaining current financial information concerning AGM. THE CITY The City is a municipal corporation with a population of 68,217, according to the 2010 U.S. Censu. The City is 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 15 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 15 City of Boynton Beach, with manufactured products ranging from paper processing machinery to electrical switches. For additional information regarding the City, see "Appendix A -- Statistical and Other General Information Concerning the City of Boynton Beach." THE SYSTEM General The City provides water and wastewater services to a geographic area within Palm Beach County approximately twice the size of the City itself. Approximately 27% of the customers of the water and wastewater system are located outside of the municipal boundaries The City's water system includes facilities for raw water supply, water treatment and water distribution. The City's wastewater system includes sewage collection and transmission. The City also provides stormwater services within the City limits for all City-owned roadways, facilities and canals. 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 City may extend its boundaries in the future through annexation of unincorporated areas of Palm Beach County, which primarily he to the west of existing City limits. 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 However, the 25% rate surcharge currently imposed by the City with respect to service provided outside the City limits would no longer apply to areas annexed by the City. Stormwater services is limited strictly to the area within the City limits. Condition of the Overall System and System Performance The City believes that the production, transmission, distribution, treatment and collection facilities of the System are in good condition, 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 believes that plant staffing is at a reasonable level and that staff is receiving adequate training for operation of the System. Administration The City's Water and Sewer Utilities Department is divided administratively into ten divisions, consisting of an administrative division and nine operating divisions. The Department is responsible for the operation and maintenance of the water supply, treatment, distribution and storage facilities, wastewater collection, pumping and transmission and stormwater system operations. Wastewater treatment facilities are operated and maintained under the South Central Regional Wastewater Treatment and Disposal Board. See "THE SYSTEM - Wastewater System" herein. The Department operates its own billing system, under the direction of the City's Finance Department, with revenue collections handled by the City's Finance Department. 16 Water System The water system operated by the City consists of groundwater withdrawal, treatment, transmission, storage, distribution, administration, and operations. Treatment Plants and Well Fields. The City has two water treatment plants One plant, known as the East Water Treatment Plant (the "East WTP "), is capable of operating at a maximum daily rate of 12.00 MGD The East WTP treats the surficial groundwater withdrawn from the East Well Field. The plant's facilities are capable of treating 20.5 MGD, but the plant's rating is limited to 12.00 MGD because of limited raw water supply 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 19 active production wells, is used to supply water to the East WTP. The City also operates two aquifer storage and recovery (ASR) wells at the East WTP to store surplus water in the upper Florida aquifer. The other treatment plant, known as the "West Water Treatment Plant" (the "West WTP ") provides 8.5 MGD of finished water through the use of a nannofiltration membrane process, with up to 1.6 MGD of additional water available by blending filtered water with the finished nannofiltration product. Water supply for the West WTP comes from the West Well Field immediately west of the West WTP. The West Well Field includes ten wells. Only five of the wells are needed for the 8 MGD capacity of the West WTP The City is planning to utilize the capacity of the remaining wells by pumping the raw water to the East WTP via a new pipeline, after first pre - treating the water using ion exchange resin to remove organic impurities. The City will also be upgrading the East WTP to ensure reliability of operation. Water Distribution and Storage. The water distribution system covers the entire water service area. Approximately 400 miles of piping comprise the system, ranging in size from 2 inches to 42 inches in diameter The storage capacity within the system includes one 1.5 -MG elevated storage tank, a 1.4 -MG clear well at the East WTP, a 1 0 -MG and two 3.0 -MG ground storage tanks. The 1.5 MG elevated storage tank is located immediately south of the East WTP. Regulatory Framework and Compliance. The City operates the water system to meet all local, state and federal regulations. The City believes that the System will be able to meet all currently proposed regulatory standards 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. A new 20 -year Consumptive Use Permit was granted by SFWMD in December, 2009. The City anticipates that it will be able to legally obtain sufficient water to satisfy demand for the foreseeable future, although drought conditions occur in the City's geographical area, and one way in which SFWMD protects the water supply in such conditions is by limiting the amount of water municipalities may withdraw. When such limitations are imposed, the City takes steps to reduce water usage, such as through public awareness campaigns and by imposing limitations on irrigation These steps have reduced the amount of water usage, and they also reduce the Revenues of the System. The City will use both ASR wells during drought or dry weather conditions to supplement supply from the surficial aquifer. 17 Wastewater System 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 Interlocal Agreement created 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. The Interlocal Agreement may only be terminated with the consent of the City. Wastewater Collection and Transmission. The existing wastewater collection and transmission system consists of approximately 325 miles of gravity sewer, 73 miles of force main, and 150 lift stations. The predominant pipe materials are vitrified clay for gravity sewers and ductile iron for force mains. The City undertaken a number of significant improvements to the wastewater collection system in the last three years. This includes the complete replacement of the lift station control and telemetry systems and incorporation into a new SCADA system. The City has also completed the major part of an Inflow and Infiltration study of the majority of the older vitreous clay gravity mains. The study included the cleaning, videoing and condition assessment of the lines and manholes and making subsequent repairs as necessary. The results of this study are all held in a central digital repository. The City is also constructing a second back -up force main to the regional plant and an associated sub - master lift station for the south eastern part of the service area. Finally the City has also installed further emergency generators or dry prime back -up pumps at a number of lift stations. Regulatory Framework and Compliance The City operates the wastewater system i to meet all local, state and federal regulations. The City believes that the System will be able to meet all currently proposed regulatory standards Stormwater System In 1993, the City formed a Stormwater Utility to operate and maintain the existing stormwater system, and also to make the necessary improvements required by projected water quality discharge standards The system currently comprises stormwater detention ponds, roadside swales, and underground piping Pursuant to the Resolution, the stormwater utility, including all of its assets, liabilities and revenues, became a part of the combined water, wastewater and stormwater System in 1996. Capital Improvement Plan The City is planning for multiple water, wastewater, and stormwater capital improvements during the fiscal years beginning October 1, 2012 through 2016, with a total estimated cost of approximately S101.6 million. Based upon historical precedent, of the total planned improvements, the City believes that only approximately 80% will actually be undertaken during the planning period (which is why the total expenditures shown in the following table are only approximately $83 million). The expected capital expenditures are anticipated to be funded from the 2012 Bonds, Additional Bonds anticipated to be issued in fiscal year 2013 in the amount of $20 million, cash reserves of approximately $48.4 million and interest earnings and capital facility charges of approximately $1 million. See the following table for further information. 18 EXPENDITURES Neighbor Utility Improvements $31,210,120 Water Supply and Plant Improvements 41,697,446 Wastewater System Improvements 8,646,515 Studies, Analysis, Misc. 1,577,388 Regional Plant 589,600 Total $83,721,069 AVAILABLE FUNDING Beginning Fund Balance $26,467,434 Revenue Bonds 40,000,000 Interest Income 1,070,000 Capital Facilities Charge Funding 642,914 Transfers from Operating Fund 25,900,000 Total $94,080,348 Rates and Customer Base The City believes that the rates it charges for the services provided by the System are reasonable and comparable to rates charges by similarly situated municipal utilities located in South Florida. In addition, the City believes that it has a diverse customer base, with no material reliance upon any customer, or small group of customers, for a material amount of the System revenues The methods used in developing the City's water, sewer and stormwater 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 The water, wastewater and stormwater activities, currently commingled within the same fund for budgeting purposes, were treated as three distinct and separate funds for analysis In so doing, a proper matching of revenues and expenditures was developed for all three activities. To encourage conservation, the water rate structure incorporates an inverted rate mechanism in the volumetric charge As water use increases, the cost per thousand gallons increases. Due to water supply concerns in the State of Florida, many municipal utilities are required by 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 City Commission adopted the rate structure that is currently in place in 2009. In 2012, the City Commission engaged CH2MHi11, the City's Utility System consulting engineers, to produce a rate study taking into account the capital improvement program and debt issuances described herein. The completed rate study (the "Rate Study ") is included herein as Appendix G. On October 4, 2012 the City Commission enacted an ordinance implementing the rate structure recommended by the Rate Study. Impact Fees Impact Fees are one- time payments made by new customers at the time a unit is connected to the System. The Impact Fee rates are designed to ensure that each new customer connecting to the System will 19 pay a fair share of the costs incurred by the City in constructing the facilities needed to serve such new customers The amount of the Impact Fee per equivalent connection or dwelling unit paid by the new customer will be the one that is in effect at the time of connection to the System. Judicial rulings in the State of Florida have determined that Impact Fees may be imposed and expended only to cover the expansion of a utility system that is necessary to service new customers. As a result, the City is of the opinion that Impact Fees can be used to pay debt service only to the extent that such payments reflect costs incurred to expand the System to service new customers. The City has determined that approximately 30 78% of the debt service on the 2005 Bonds and approximately 56% of the debt service on the 2002 Bonds may lawfully be paid from Impact Fees. The City expects that approximately _% of the debt service on the 2012 Bonds will lawfully be payable from Impact Fees, although until the proceeds of the 2012 Bonds have been expended the precise percentage will not be definitely determined. For the Fiscal Year ended September 30, 2010, the City collected $ in Impact Fees. System Customers The following table sets forth the actual and projected number of water, wastewater and stormwater accounts served by the System for the fiscal years indicated. The Rate Study assumes no increase in customer accounts during the study period. FYE Water Wastewater Stormwater 2006 34,009 32,204 22,621 2007 34,195 32,362 22,364 2008 34,448 32,615 22,921 2009 34,808 33,210 22,974 2010 34,422 32,677 22,975 2012- 2015(proj ected) 34,476 32,712 23,115 20 Historical Revenues and Debt Service Coverage Shown below is a summary of the historical "Revenues," "Current Expenses" and "Net Revenues" of the System, calculated in compliance with the requirements of the Resolution described under "Security for the 2012 Bonds -Rate Covenant" above, and debt service coverage, for the following fiscal years ended September 30 REVENUES" 2006 2007 2008 2009 2010 2011 Water Sales $11,763,770 $10,708,970 $10,680,291 $14,542,350 $17,332,495 $17,900,000 Sewer Service 11,830,428 11,776,300 12,894,132 15,445,276 15,103,514 15,950,000 Stormwater Utility Fees 3,267,523 3,277,967 3,320,148 3,336,377 3,508,982 3,900,000 Interest Income 1,221,190 210,000 Miscellaneous Incomem 126,094 40,000 TOTAL REVENUES $29,120,123 $26,488,843 $27,711,311 $33,794,004 $37,292,275 $38,000,000 CURRENT EXPENSES $20,788,693 $21,143,317 $23,260,736 $23,615,312 $22,675,570 $21,227,000 NET REVENUES $8,331,430 $5,345,526 $4,450,575 $10,178,692 $14,616,705 $16,773,000 MAXIMUM ANNUAL DEBT $4,031,675 $4,031,675 $5,440,333 $5,440,333 $5,440,333 $5,440,333 SERVICE COVERAGE 2 06x 1 32x 0 82x 1 87x 2 68x 3 08x (I) Does not include Impact Fees or interest earnings on Construction Fund. See "Impact Fees" below (2) Miscellaneous Income includes: Interest deposits, Bell South lease, utility tax administrative fee and discounts. (3) Based upon actual debt service for the Series 2002 Bonds, Series 2005 Bonds and Series 2008 Bonds. (4) Actual results through September 29, 2011, with estimated year -end accruals. Projected Revenues and Debt Service Coverage Shown below is a summary of the projected "Revenues," "Current Expenses" and "Net Revenues" of the System, calculated in compliance with the requirements of the Resolution described under "Security for the 2012 Bonds -Rate Covenant" above, and debt service coverage, for the following fiscal years ending September 30 of the years indicated This table is derived from the Rate Study, and is subject to all assumptions and qualifications set forth therein. See APPENDIX G hereto 2012 2013 2014 2015 2016 TOTAL REVENUES $36,854,520 $37,748,704 $38,777,168 $39,841,035 $40,922,488 CURRENT EXPENSES $26,071,639 $25,917,275 $26,176,353 $26,703,630 $27,237,703 NET REVENUES $10,782,881 $11,831,429 $12,600,815 $13,137,405 $13,684,785 ANNUAL DEBT SERVICE $6,248,027 $6,637,483 $7,770,934 $7,769,296 $7,771,954 COVERAGE 1 70x 1 44x 1 53x 1 60x 1 66x 21 DEBT SERVICE REQUIREMENTS The following table sets forth the approximate debt service requirements for the outstanding 2002 Bonds, 2005 Bonds, any Unrefunded 2008 Bonds and the 2012 Bonds Bond Year 2002, 2005 and 2012 Total ending Unrefunded 2012 Bonds 2012 Bonds Bonds Annual November 1 2008 Bonds Principal Interest Total Debt Service 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 TOTAL 22 RISK FACTORS A purchase of the 2012 Bonds involves a degree of risk, as is the case with all investments. Factors that could affect the City's ability to perform its obligations under the Resolution, including the timely payment of principal of and interest on the 2012 Bonds, include the following. 1 The System may need additional repairs and improvements beyond those projected by the City The cost of additional repairs would have to be financed through either additional monies from the Operating Fund and Impact Fees or the issuance of Additional Bonds or Subordinated Indebtedness Any of these alternatives could potentially require an increase in the rates, fees and charges of the System. 2. There is no assurance that permits for operation of major components of the System will be renewed or can be renewed without the incurrence of increased Operating Expenses or the issuance of Additional Bonds or Subordinated Indebtedness. Further, there is no assurance that the requirements for renewal of the permits will remain the same prior to the time that renewal is mandatory; a change in requirements could require additional expenditures for improvements. 3 There is no assurance that any rating assigned to the 2012 Bonds by any rating agency, including ratings based on the Bond Insurance Policy, will continue for any given period of time or that it will not be lowered or withdrawn entirely by such rating agency, if in its judgment, circumstances warrant. A downgrade change in or withdrawal of any rating may have an adverse effect on the market price of the 2012 Bonds. 4. In the event of a default in the payment of principal of and interest on the 2012 Bonds, the remedies of the owners of the 2012 Bonds are limited under the Resolution. 5 The estimate of future Pledged Revenues and Operating Expenses, and the realization of such estimates, are subject to, among other things, the capabilities of the management of the City and the System and future economic and other conditions which are unpredictable and which may affect Pledged Revenues, and, in turn, the payment of principal of and interest on the 2012 Bonds. 6 The future financial condition of the System could be affected adversely by, among other things, legislation, environmental and other regulatory actions, changes in demand for services, demographic changes and litigation. Possible future changes may include, but not be limited to, the following: (I) The System's wastewater treatment and potable water production facilities are subject to regulation and control by numerous federal, state and local governmental agencies. The City cannot predict future policies such agencies may adopt. Future changes could result in the City having to discontinue or change operations at certain facilities or to make significant capital expenditures; (11) The City's capital improvement construction costs projections are based in part on preliminary design estimates for work for which construction bids have not yet been received. Unforeseen events could result in increases in construction costs and delays in completion of construction. Increased costs could have an adverse effect on the City's ability to complete construction within the projected costs, and delays in completion could adversely affect the City's ability to generate sufficient Net Revenues to meet its obligations under the Resolution; (iii) The possible investment earnings and accumulation of certain fund balances that have been estimated are based on assumed earnings rates While these assumptions are believed to be reasonable, there is no assurance that such rates will be available in the future nor is there any assurance that the potential accumulations shown will actually be realized; 23 (iv) The general economic conditions and demographic characteristics of the City can change in ways beyond the control of the City and in ways that could negatively impact the Net Revenues Prospective purchasers of the 2012 Bonds should review carefully all of the provisions of this Official Statement and the appendices hereto. POST EMPLOYMENT BENEFIT PLANS AND PENSIONS In June 2004, the Governmental Accounting Standards Board ( "GASB ") issued Statement No. 45 ( "GASB 45 "), which addresses how state and local governments should account for and report their costs and obligations related to post - employment health care and other non - pension benefits referred to as other post employment benefits ( "OPEB "). GASB 45 generally requires that employers account for and report the annual cost of OPEB and the outstanding obligations and commitments related to OPEB in essentially the same manner they currently do for pensions. Annual OPEB cost for most employers will be based on actuarially determined amounts that, if paid on an ongoing basis, generally would provide sufficient resources to pay benefits as they come due The provisions of GASB 45 establishes disclosure requirements for information about the plans in which an employer participates, the funding policy followed, the actuarial valuation process and assumptions, and for certain employers, the extent to which the plan has been funded over time. According to the City's Comprehensive Annual Financial Report for the fiscal year ended September 30, 2010, as of October 1, 2009, the unfunded accrued actuarial OPEB liability of the City was $8,934,672. As of October 1, 2008 such liability was $9,204,224. The City also maintains three separate defined benefit pension plans, one for its general municipal employees, one for its police officers and one for its firefighters. Contributions and actual information regarding these plans can be found in "Appendix B - Comprehensive Annual Financial Report of the City for the Fiscal Year Ended September 30, 2010" attached hereto. 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 2012 Bonds. Although the City has covenanted to comply with such requirements, noncompliance with such requirements could cause the interest on the 2012 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issue of the 2012 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 2012 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. The ability of Bond Counsel to deliver his final approving opinion in substantially the form attached hereto as Appendix D on the date of issuance of the 2012 Bonds is subject to his review and analysis as of the date of issuance of certain matters, including, among others, pertinent provisions of statutes, regulations, rulings and court decisions, including, but not necessarily limited to, Florida law and federal income tax then in effect or proposed to be in effect. Bond Counsel has advised the City and the Underwriter that, subject to his review and analysis of certain assumptions, its expects to be able to issue on the closing date an opinion substantially in the form attached hereto as Appendix D 24 In the opinion of Mark E. Raymond, Esq., Palm Beach Gardens, Florida, Bond Counsel, under existing law, and assuming continuing compliance with the aforementioned covenants, interest on the 2012 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. [The 2012 Bonds maturing in the years through 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 amount of the 2012 Bonds) and the "issue price" of the 2012 Bonds The "issue price" of each maturity of the 2012 Bonds is the respective initial offering prices to the public at which prices a substantial amount of such maturity of the 2012 Bonds was sold. OID 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 2012 Bonds at a constant interest rate compounded semi - annually. The portion of OID that accrues during the time an Owner owns a 2012 Bond constitutes interest excludable from gross income for federal income tax purposes and will increase such purchaser's adjusted basis in such 2012 Bonds for purposes of determining taxable gain or loss on the sale or other disposition of such 2012 Bonds. The federal income tax consequences of the purchase, ownership and sale or other disposition of 2012 Bonds which are not purchased in the initial offering at the initial offering prices may be determined according to rules which differ from those described above Holders of 2012 Bonds should consult their own tax advisors as to the precise federal income tax and state and local tax consequences of owning and disposing of 2012 Bonds.] [The 2012 Bonds maturing in the years are being offered and sold in the initial public offering at a premium (the "Premium Bonds "). Section 171 of the Code provides rules under which a bond premium may be amortized and a deduction allowed for the amount of the amortizable bond premium for a taxable year. Under Section 171(a)(2) of the Code, however, no deduction is allowable for the amortizable bond premium in the case of the bonds, like the Premium Bonds, the interest on which is excluded from gross income. Under Section 1016(a)(5) of the Code, the purchaser's basis in a Premium Bond will be reduced by the amount of the amortizable bond premium disallowable as a deduction under Section 171(a)(2) of the Code. Proceeds received from the sale, exchange, or other disposition including redemption of a Premium Bond in excess of the owner's adjusted basis (as reduced pursuant to Section 1016(a)(5) of the Code) will be treated as a gain from the sale or exchange of such Premium Bond and not as tax - exempt interest The basis of an original purchaser of a Premium Bond who holds such Premium Bond to maturity will have a basis equal to the principal amount of the Premium Bond and therefore will have no loss upon receipt of such principal amount.] Interest paid on tax - exempt bonds, such as the 2012 Bonds, is subject to information reporting to the Internal Revenue Service in a manner similar to interest paid on taxable obligations. This reporting requirement does not affect the exclusion of interest on the 2012 Bonds from gross income for federal income tax purposes. However, in conj unction with that information reporting requirement, the Code subs ects certain non - corporate owners of 2012 Bonds, under certain circumstances, to "backup withholding" at (i) the fourth lowest rate of tax applicable under Section 1(c) of the Code (i.e., a rate applicable to unmarried individuals) for taxable years beginning on or before December 31, 2010; and (ii) the rate of 31% for taxable years beginning after December 31, 2010, with respect to payments on the 2012 Bonds and proceeds from the sale of 2012 Bonds. Any amounts so withheld would be refunded or allowed as a credit against the federal income tax of such owner of 2012 Bonds. This withholding generally applies if the owner of 2012 Bonds (i) fails to furnish the payer such owner's social security number or other taxpayer identification number ( "TIN "), (ii) furnished the payer an incorrect TIN, (iii) fails to properly report interest, dividends, or other "reportable payments" as defined in the Code, or (iv) under certain circumstances, fails to provide the payer or such owner's securities broker with a certified statement, signed under penalty of perjury, that the TIN provided is correct and that such owner is not subject to backup withholding. Owners of 2012 Bonds should 25 consult their own tax advisors as to their qualifications for exemption from backup withholding and the procedures for obtaining exemption Except as stated above, Bond Counsel expresses no opinion as to any other tax consequences of acquiring, carrying, owning or disposing of the 2012 Bonds. The law upon which Bond Counsel will base his 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 adversely affect the tax treatment of ownership of the 2012 Bonds. Prospective purchasers of the 2012 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 States and S corporations with passive investment income which includes tax exempt income Prospective purchasers falling within any of these categories should consult their own tax advisors as to the applicability of these consequences. From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the 2012 Bonds or otherwise prevent holders of the 2012 Bonds from realizing the full benefit of the tax exemption of interest on the 2012 Bonds. Further, such proposals may impact the marketability or market value of the 2012 Bonds simply by being proposed One such proposal is the American Jobs Act of 2012 (S.1549) (the "Jobs Bill ") which was introduced in the Senate on September 13, 2012 at the request of the President. Although the Jobs Bill was not passed by the Senate, if enacted in its current form, the Jobs Bill could adversely impact the marketability and market value of the 2012 Bonds and prevent certain bondholders (depending on the financial and tax circumstances of the particular bondholder) from realizing the full benefit of the tax exemption of interest on the 2012 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the 2012 Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the 2012 Bonds would be impacted thereby. Potential purchasers of the 2012 Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The disclosures and opinions expressed herein are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the 2012 Bonds, and no opinion is expressed as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation. LITIGATION In the opinion of the City Attorney, no legal proceedings are pending or threatened which are reasonably expected to materially affect the City's ability to perform its obligations to the holders of the 2012 Bonds or materially affect the financial condition of the City 26 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 2012 Bonds, or (ii) in any way questioning or attesting the validity of the 2012 Bonds, the Resolution, any proceedings of the City taken with respect to the authorization, sale or issuance of said Bonds or the pledge or application of any moneys provided for the payment of the 2012 Bonds. COVENANTS CONCERNING ONGOING DISCLOSURE The City agrees, in accordance with the provisions of, and to the degree necessary to comply with, the secondary market disclosure requirements of Securities and Exchange Commission Rule 15c2 -12 (the "Rule "), to file with the MSRB in an electronic format as prescribed by the MSRB• (1) The following annual financial information and operating data (the "Annual Information "), commencing with the Fiscal Year ending September 30, 2012: (1) Updates of the financial information and operating data of the type set forth in this Official Statement, including operating date with respect to the System, in a form which is generally consistent with the presentation of such information herein; and (ii) Audited financial statements with respect to the City utilizing generally accepted accounting principles to local governments. The information in clauses (i) and (ii) above will be available for each Fiscal Year on or prior to the next September 30 following the end of such Fiscal Year, and will be made available, in addition to the MSRB, to each Beneficial Owner of the 2012 Bonds who requests such information in writing. The financial statements referred to in clause (ii) above may be available separately from the information in clause (i) above and will be provided by the City as soon as practical after acceptance of such statements from the auditors by the City; if not available within one year after the end of the Fiscal Year, unaudited information will be provided in accordance with the time frame set forth above and audited financial statements will be provided as soon after such time as they become available; (2) in a timely manner not in excess of ten (10) business days after the event, notice of occurrence of any of the following events with respect to the 2012 Bonds: (i) principal and interest payment delinquencies; (ii) non - payment related defaults, if material; (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) if applicable to a Series of Bonds, events that may adversely affect the Series tax exemption, including issuance by the Internal Revenue Service of proposed and final decisions about whether such Bonds can be taxed; (vii) modifications to rights of security holders, if material; (viii) bond calls, if material, and tender offers; (ix) defeasance; (x) release, substitution or sale of any property securing repayment of the Bonds, if material; (xi) rating changes; (xii) bankruptcy, insolvency, receivership, or sinularproceeding of the City For purposes of this clause (xii), any such event shall be considered to have occurred when any of the following occur. 27 the appointment of a receiver, fiscal agent or similar officer for the City in a proceeding under the U S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City; (xiii) mergers, consolidations, or acquisitions of the City, the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (xiv) appointment of a successor or additional trustee or paying agent or the change of the name of a trustee or paying agent, if material; (3) in a timely manner, to the MSRB, notice of its failure to provide the Annual Information with respect to itself on or prior to September 30 following the end of the preceding Fiscal Year. "MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934, as amended. The City also covenants to promptly provide a copy of the above information to the Insurer and the Underwriter The foregoing covenants shall run to the benefit of the Bondholders and the beneficial owners of Bonds owned in book -entry format. However, failure to meet such covenants shall not be deemed to constitute an event of default or a breach of any other covenant under the Resolution, and the sole remedy for such a default or breach shall be as described in the next paragraph. Any Bondholder or any beneficial owner may either at law or in equity, by suit, action, mandamus or other proceeding in any court or competent jurisdiction, protect and enforce any and all rights described in this section and may enforce any compel the performance of all duties required hereby to be performed by the City or by any officers thereof. The continuing disclosure undertaking of the City may be amended only as follows: (a) the amendment 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; (b) the provisions of the undertaking, as amended, would have complied with the requirements of Rule 15c2 -12 of the Securities and Exchange Commission as in effect as of the date of issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the amendment does not materially impair the interest of the Bondholders and/or beneficial owners as determined by an opinion of nationally recognized bond counsel delivered to the City, or by approving vote of the Bondholders or beneficial owners of the Bonds at the time of the amendment. In the event of any amendment hereto, the annual financial information provided subsequent to such amendment shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided by the City If the amendment affects the accounting principles to be followed in preparing financial statements of the City, the annual financial information for the year in which the change is made must present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison must include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to 28 enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison should also be quantitative. A notice of the change in the accounting principles must be sent to the MSRB. Prior to 2007, the City complied with all of its continuing disclosure undertakings in connection with its existing bond issues. However, for the fiscal years ending 2007 through 2010 the City failed to comply with its continuing disclosure obligations. This failure was due primarily to significant turnover of personnel in the City's financial services department which resulted in a focus on day -to -day accounting, budgeting and purchasing controls to assure that City finances were properly monitored and controlled on a day -to -day basis. For the same reasons, the comprehensive annual financial report of the City, including audited financial statements, for the fiscal year ended September 30, 2010 was not available until December, 2011. On December 19, 2011, the City filed a material event notice with the MSRB disclosing the City's non - compliance with its continuing disclosure undertakings, and also filed the information for the fiscal years ended 2007 though 2010 that it had agreed to provide in its continuing disclosure undertakings. The City intends to comply with its continuing disclosure obligations in the future. UNDERWRITING The Underwriter, RBC Capital Markets, LLC, has agreed to purchase the 2012 Bonds from the City at an aggregate purchase price of $ (representing the $, ,000.00 aggregate principal amount of the 2012 Bonds less an underwriter's discount of $ plus a net original issue premium/discount of $ ). The Underwriter will be obligated to purchase all the 2012 Bonds if any are purchased. The offering prices shown on the cover of this Official Statement may be changed from time to time by the Underwriter. RATINGS Moody's Investors Service ( "Moody's ") and Standard and Poor's Ratings Services, a Standard & Poor's Financial Services LLC business ( "S &P ") are expected to assign to the 2012 Bonds their municipal bond ratings of (i) and , respectively, with the understanding that upon delivery of the 2012 Bonds, the Policy insuring the payment when due of the principal of and interest on the 2012 Bonds will be issued by AGM and (ii)_ and , respectively, without regard to the Policy. The ratings assigned to the 2012 Bonds by any rating agency reflect only the views of the rating agency, and an explanation of the significance of the ratings may be obtained only from the rating agency. The ratings are not a recommendation to buy, sell or hold the 2012 Bonds and there is no assurance that such ratings will remain in effect for any given period of time or that they will not be revised downward or withdrawn entirely if, in the judgment of the rating agency, circumstances so warrant Any downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2012 Bonds. The Underwriter has undertaken no responsibility to bring to the attention of the holders of the 2012 Bonds any proposed revision or withdrawal of the ratings of the 2012 Bonds, or to oppose any proposed revision or withdrawal. LEGALITY Certain legal matters in connection with the issuance of the 2012 Bonds are subject to the approval of Mark E. Raymond, Esq., Palm Beach Gardens, Florida, Bond Counsel, whose unqualified approving opinion will be available at the time of delivery of the 2012 Bonds. The proposed form of such opinion of Bond Counsel is attached hereto as Appendix D Certain legal matters will be passed upon for the City by Goren, Cherof, Doody & Ezrol, P A., City Attorneys, Fort Lauderdale, Florida. 29 COMPREHENSIVE ANNUAL REPORT The Comprehensive Annual Financial Report of the City for the fiscal year ended September 30, 2010 is included as Appendix B attached hereto. The City's Comprehensive Annual Financial Report, including the auditor's report, has been included in this Official Statement as a public document 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 2012 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. CITY OF BOYNTON BEACH, FLORIDA Mayor 30