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HomeMy WebLinkAboutCity of Tamarac Resolution R-2004-064Temp. Reso. 910368, March 15, 2004 Page 1 CITY OF TAMARAC, FLORIDA RESOLUTION NO. R-2004- 441 A RESOLUTION OF THE. CITY COMMISSON OF THE CITY OF TAMARAC, FLORIDA SUPPLEMENTING RESOLUTION NO. R aDO� AUTHORIZING AND APPROVING THE NEGOTIATED SALE OF NOT TO EXCEED $10,000,000 CITY OF TAMARAC, FLORIDA CAPITAL IMPROVEMENT REVENUE BONDS, SERIES 2004; AUTHORIZING THE SALE THEREOF TO RBC DAIN RAUSCHER INC. SUBJECT TO THE TERMS AND CONDITIONS CONTAINED HEREIN; APPOINTING THE PAYING AGENT AND REGISTRAR; APPOINTING THE INSURER AND APPROVING THE INSURANCE POLICY COMMITMENT; PROVIDING CERTAIN OTHER MATTERS RELATING TO THE SERIES 2004 BONDS; PROVIDING FOR CONFLICTS; PROVIDING FOR SEVERABILITY AND AN EFFECTIVE DATE. WHEREAS, the City Commission (the "City Commission") of the City of Tamarac, Florida (the "Issuer") adopted Resolution No.x_ ap on March 24, 2004, as amended and supplemented from time to time, and as particularly supplemented hereby (collectively, the "Resolution"); and WHEREAS, all capitalized undefined terms used herein shall have the meanings ascribed thereto in the Resolution; and WHEREAS, by the Resolution, the Issuer authorized the issuance of not to exceed $10,000,000 City of Tamarac, Florida Capital Improvement Revenue Bonds, Series 2004 (the "Series 2004 Bonds") to finance the acquisition, construction and equipping of the Project, to fund the Reserve Account (including by purchase of a Reserve Account Policy), and pay certain expenses relating to the issuance of the Series 2004 Bonds including the cost of an Insurance Policy relating to the Series 2004 Bonds; and WHEREAS, the Issuer now desires to supplement the Resolution to authorize the sale of the Series 2004 Bonds on a negotiated basis to RBC Dain Rauscher Inc. (the "Underwriter") based on satisfaction of the terms and conditions contained herein; and WHEREAS, due to the willingness of the Underwriter to purchase the Series 2004 Bonds at interest rates favorable to the Issuer and the critical importance of timing of the sale of the Series 2004 Bonds, it is hereby determined that it is in the best interest of the public and the Issuer to sell the Series 2004 Bonds at a negotiated sale upon meeting the terms and conditions contained herein and in the Purchase Contract attached hereto as Exhibit "A" (the 'Bond Purchase Agreement"); and C\Documents and Settings \junew\Local Settings\Temporary Internet FilesMIX30\10368 Award Reso-6 $10m utiI -sw bond. doe 1 Temp. Reso. 910368, March 15, 2004 Page 2 WHEREAS, the Issuer has received an offer from the Underwriter to purchase the Series 2004 Bonds, subject to the terms and conditions contained in the Resolution, herein and set forth in the Bond Purchase Agreement; and WHEREAS, the Issuer desires to sell its Series 2004 Bonds subject to the terms and conditions contained in the Resolution, herein and set forth in the Bond Purchase Agreement, and authorize execution and distribution of the Official Statement in connection with the issuance of the Series 2004 Bonds; and WHEREAS, prior to the execution of the Bond Purchase Agreement the Issuer will be provided all applicable disclosure information required by Section 218.385, Florida Statutes, a copy of which is attached to or otherwise included as part of the Bond Purchase Agreement; and WHEREAS, this Resolution shall constitute a Supplemental Resolution under the terms of the Resolution. NOW, THEREFORE, BE IT RESOLVED BY THE, CITY COMMISSION OF CITY OF TAMARAC, FLORIDA AS FOLLOWS: SECTION 1. Due to the willingness of the Underwriter to purchase not to exceed $10,000,000 in aggregate principal amount of the Series 2004 Bonds at interest costs favorable to the Issuer and the critical importance of timing of the sale of the Series 2004 Bonds, it is hereby determined that it is in the best interest of the public and the Issuer to sell the Series 2004 Bonds at a negotiated sale (rather than through a competitive bid) and such sale to the Underwriter (pursuant to the terms and conditions contained in the Resolution, herein and in the Bond Purchase Agreement) is hereby authorized and approved. SECTION 2. Subject to the terms and conditions of Section 3 hereof, the Series 2004 Bonds may be sold in a negotiated sale to the Underwriter upon the terms and conditions set forth in the Resolution, herein and in the Bond Purchase Agreement which is attached hereto as Exhibit "A" and incorporated by reference. The form of the Bond Purchase Agreement is hereby approved by the Issuer (such approval indicating the recognition of the Issuer that the conditions precedent in the Bond Purchase Agreement and Section 3 hereof have been met or will be met prior to the delivery of the Series 2004 Bonds). Upon satisfaction of the conditions contained in the Resolution, Section 3 hereof and the Bond Purchase Agreement, the Issuer hereby authorizes the Mayor or Vice Mayor and the City Manager or assistant or deputy City Manager to execute and deliver the Bond Purchase Agreement in substantially the form attached hereto as Exhibit "A" (with such changes and filling of blanks as shall be approved by the Mayor or Vice Mayor and the City Manager or assistant or deputy City Manager) in the name of and on behalf of the Issuer, such signatures to be attested by the City Clerk or assistant or deputy City Clerk, and form of which Bond Purchase Agreement to be approved by the City Attorney or the Assistant City Attorney. All of the provisions of the Bond Purchase Agreement, when executed and delivered by the Issuer as authorized herein shall be deemed to be part of C;\Docwnenls and SeR ings\junew\ Local Settings\Temporary Internet Files\ OLK30\ 10368 Award Reso6510m utdsw bond.doc 2 Temp. Reso. #10368, March 15, 2004 Page 3 this instrument as fully and to the same extent as if incorporated verbatim herein. The execution and delivery of the Bond Purchase Agreement to be conclusive evidence of the approval thereof. SECTION 3. (I) The Issuer hereby delegates to the Mayor of the Issuer or his designee the authority (a) to determine (i) the dated date, (ii) the maturity dates and amounts, (iii) the interest rates and payment dates, (iv) the redemption features, (v) the Amortization Installments for the Term Bonds, if any, (vi) the delivery date, and (vii) all other details of the Series 2004 Bonds; and (b) to take such further action as shall be required for carrying out the purposes of the Resolution and this Resolution all with respect to the Series 2004 Bonds; and (c) to execute and deliver, on behalf of the Issuer, the Bond Purchase Agreement as provided in Section 2 above; provided, however, that the Mayor or his designee shall not take any action pursuant to this Section 3 unless the Mayor or his designee shall have received from the Underwriter such information as the Mayor or his designee shall deem necessary in order to demonstrate that (i) the par amount of the Series 2004 Bonds is not in excess of $10,000,000, (ii) the true interest cost rate of the Series 2004 Bonds is not more than 5.00%, (iii) the final maturity of the Series 2004 Bonds is not later than October 1, 2024, and (iv) the underwriting discount is not greater than 0.455% of the original principal amount of the Series 2004 Bonds. (Il) All actions of the Mayor or his designee taken pursuant to the authority contained in this Section 3 shall be evidenced by a certificate to be executed by the Mayor or his designee (the "Certificate of Mayor") and filed with the City Clerk. The execution of the Certificate of Mayor or his designee shall constitute complete evidence of the actions of the Mayor or his designee in accordance with this Section and shall constitute official action of the Issuer. SECTION 4. The Series 2004 Bonds shall be issued under and secured by the Resolution and shall be executed and delivered in the manner as set forth in the Resolution, with such additional changes and insertions therein as conform to the provisions of the Bond Purchase Agreement, and such execution and delivery shall be conclusive evidence of the approval thereof by such officers. SECTION 5. The members of the City Commission and the Issuer's officers, attorneys and other agents and employees are hereby authorized and directed to execute any and all certifications or other instruments or documents required by the Resolution, the Bond Purchase Agreement or any other document referred to above as a prerequisite or precondition to the issuance of the Series 2004 Bonds and any such representation made therein shall be deemed to be made on behalf of the Issuer. All action taken to date by the officers of the Issuer in furtherance of the issuance of the Series 2004 Bonds is hereby approved, confirmed and ratified. SECTION 6. A policy of municipal bond insurance (the "Financial Guaranty Insurance Policy") to insure the holder of any Series 2004 Bond of receiving the scheduled payment of principal and interest on behalf of the Issuer is hereby authorized to be purchased from Ambac Assurance Corporation (the "Insurer") in accordance with the commitment for insurance C \ Document, and Sellin8s\Iunew \ Local Settings\Temporary Internet Files\ OLK30\10368 Award Keso•6 $10m util_sw bond.doc 3 Temp. Reso. #10368, March 15, 2004 Page 4 attached hereto as Exhibit "B" (the "Bond Insurance Commitment"), and payment for such Financial Guaranty Insurance Policy is hereby authorized from Series 2004 Bond proceeds. The City Manager or assistant or deputy City Manager is hereby authorized to execute such Bond Insurance Commitment. The provisions of the Bond Insurance Commitment are hereby incorporated by reference. To the extent of any inconsistency between the provisions of the Bond Insurance Commitment and provisions otherwise contained in the Resolution, the provisions of the Resolution shall prevail. A statement of insurance is hereby authorized to be printed on or attached to the Series 2004 Bonds for the benefit and information of the Series 2004 Bondholders. SECTION 7. A Reserve Account Surety Bond to be deposited in the Reserve Account to satisfy all or a portion of the Reserve Account Requirement (the 'Reserve Policy") is hereby authorized to be purchased from the Insurer in accordance with the commitment for surety bond attached hereto as Exhibit "C" (the "Surety Commitment"), and payment for such Reserve Account Surety Bond is hereby authorized from the Series 2004 Bond proceeds. The City Manager or assistant or deputy City Manager is hereby authorized to execute such Surety Commitment. The provisions of the Surety Commitment are hereby incorporated by reference. To the extent of any inconsistency between the provision of the Surety Commitment and the provisions otherwise provided in the Resolution, the provisions of the Resolution shall prevail. The Issuer hereby authorizes the Mayor or Vice Mayor and the City Manager or assistant or deputy City Manager to execute and deliver the Guaranty Agreement substantially in the form attached to the Surety Commitment (with such changes and filling of blanks as shall be approved by the Mayor or Vice Mayor and the City Manager or assistant or deputy City Manager) in the name of and on behalf of the Issuer, such signatures to be attested by the City Clerk or assistant or deputy City Clerk and the form of which Guaranty Agreement to be approved by the City Attorney or the Assistant City Attorney. Upon execution and delivery of such Guaranty Agreement, all the provisions thereof shall be deemed to be part hereof and of the Resolution as fully and to the extent as if incorporated verbatim herein. The execution and delivery of the Guaranty Agreement shall constitute conclusive evidence of the approval. thereof. SECTION 8. JP Morgan Trust Company, N.A. is hereby appointed as Paying Agent and Registrar with respect to the Series 2004 Bonds. The Mayor or Vice Mayor and the City Manager or are hereby authorized to execute an agreement with JP Morgan Trust Company, N.A. to act as Paying Agent and Registrar, the form of which shall be approved by the City Attorney or the Assistant City Attorney. SECTION 9. The Issuer hereby covenants and agrees that, in order to assist the Underwriter in complying with the continuing disclosure requirements of Rule 15c2-12 of the Securities and Exchange Commission with respect to the Series 2004 Bonds, it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate to be executed by the Issuer prior to the time the Issuer delivers the Series 2004 Bonds to the Underwriter, as it may be amended from time to time in accordance with the terms thereof. The form of the C:\Docurnents and Settings\junew\Local Setting:\Temporary Internet file~\OLK30\10368 Award Rt su-6 $]Om util_vw bond.doe 4 Temp. Reso. #10368, March 15, 2004 Pate 5 Continuing Disclosure Certificate, attached hereto as Exhibit "D", is hereby approved and ratified, and the Issuer hereby authorizes the Mayor or Vice Mayor and the City Manager or assistant or deputy City Manager to execute and deliver said Continuing Disclosure Certificate in the name of and on behalf of the Issuer, the form of which Continuing Disclosure Certificate shall be approved by the City Attorney or the Assistant City Attorney. Notwithstanding any other provision of this Resolution, failure of the Issuer to comply with such Continuing Disclosure Certificate shall not be considered an Event of Default under the Resolution. However, the Continuing Disclosure Certificate shall be enforceable by the Series 2004 Bondholders in the event that the Issuer fails to cure a breach thereunder within a reasonable time after written notice from a Series 2004 Bondholder to the Issuer that a breach exists. Any rights of the Series 2004 Bondholders to enforce the provisions of the covenant shall be on behalf of all Series 2004 Bondholders and shall be limited to a right to obtain specific performance of the Issuer's obligations thereunder. SECTION 10. The Issuer hereby ratifies and approves the form of the Preliminary Official Statement attached hereto as Exhibit "E". The Issuer hereby authorizes execution by the Mayor and City Manager of the Issuer, and the delivery of, a final Official Statement which incorporates the terms and provisions set forth in the Bond Purchase Agreement. SECTION 11. The Issuer hereby designates the Series 2004 Bonds as "qualified tax- exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). The Issuer and all subordinate entities of the Issuer and all issuers of "tax-exempt" debt that issue on behalf of the Issuer, if any, do not reasonably expect during calendar year 2004 to issue more than $10,000,000 of "tax-exempt obligations," including the Series 2004 Bonds, exclusive of any private activity bonds, as defined in Section 141(a) of the Code (other than qualified 501(c)(3) bonds as defined in Section 146 of the Code). SECTION 12. All prior resolutions of the Issuer inconsistent with the provisions of this Resolution are hereby amended and supplemented to conform with the provisions herein contained and, except as may otherwise amended and supplemented hereby, the Resolution shall remain in full force and effect. SECTION 13. If any one or more of the covenants, agreements or provisions of this Resolution shall be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separable from the remaining covenants, agreements and provisions of this Resolution and shall in no way affect the validity of any of the other covenants, agreements or provisions hereof or of the Series 2004 Bonds issued hereunder. SECTION 14. Except as may be expressly described herein or in the Resolution, nothing in the Resolution, this Resolution or in the Series 2004 Bonds, expressed or implied, is intended or shall be construed to confer upon anyone of another entity other than the Issuer, the Series 2004 Insurer and the Series 2004 Bondholders any right, remedy or claim, legal or equitable, C. \ Documents and Settings\junew\Local Settings\Temporary Internet h1ts\0LK30\10368 Award Resofi S10m util_sw bond.doc 5 Temp. Rcso. #10368, March 15, 2004 Page 6 under and by reason of the Resolution or any provision thereof, or of the Series 2004 Bonds, all provisions hereof and thereof being intended to be and being for the sole and exclusive benefit of the Issuer, the Series 2004 Insurer and the Series 2004 Bondholders from time to time. SECTION 15. Neither the members of the City Commission nor any person executing the Series 2004 Bonds shall be personally liable therefor or be subject to any personal liability or accountability by reason of the issuance thereof. SECTION 16. This Resolution shall take effect immediately upon its adoption.PASSED AND ADOPTED this 241" day of March, 2004. ATTEST: I Marion Swenson, City Clerk I HEREBY CERTIFY that I have approved this Resolution as to form. � 1 Mitchell S. Kraft, City Atto ey CITY OF TAMARAC, FLORIDA � D e Schreiber, Mayor RECORD OF COMMISSION VOTE: MAYOR SCHREIBER DIST 1: COMM. PORTNER DIST 2: COMM. FLANSBAUM-TALABISCO DIST 3: V/M SULTANOF DIST 4: COMM. ROBERTS C: \ Uocumentc and Set tings\junvw \ Local Setting.\Temporary Internet Piles\01.K30\10368 Award Resn-6 $IOm util_ H- bond, doc 6 L 1 11 1 1 1 EXHIBIT A Form of Bond Purchase Agreement Temp. Reso. #10368, March 15, 2004 I'agc 7 Temp. Reso. #10368, March 15, 2004 Page 8 EXHIBIT B Bond Insurance Commitment 1 1 1 F-1 L EXHIBIT C Reserve Surety Commitment Temp. Reso. #10368, March 15, 2004 Page 9 'hemp. Rcso. #10368, March 15, 2004 Pagc 10 EXHIBIT D Form of Continuing Disclosure Certificate 1 _J 1 1 Temp. Reso. #10367 —March 15, 2004 Page 11 EXHIBIT E Form of Preliminary Official Statement J: \ Bonds \ City of Tamarac (441501) \ Award Reso-5.doc C\Documents: and Settingti\junew\l,oc;il Settings\Temporary Internet File+\OL.K30\1036R Award Repo-6 $10m ulil_+w bond.doc Temp. Reso. #10368, March 15, 2004 Page 7 EXHIBIT A Form of Bond Purchase Agreement BOND PURCHASE AGREEMENT City of Tamarac, Florida Capital Improvement Revenue Bonds, Series 2004 April , 2004 City of Tamarac, Florida City Hall, 7525 N.W. 88`" Avenue Tamarac, Florida Ladies and Gentlemen: The undersigned, RBC Dain Rauscher Inc. (the "Underwriter"), and not acting as fiduciary or agent for you, offers to enter into the following agreement (this "Agreement") with the City of Tamarac, Florida (the "Issuer") which, upon the Issuer's written acceptance of this offer, will be binding upon the Issuer and upon the Underwriter. This offer is made subject to the Issuer's written acceptance hereof on or before 10 p.m., Eastern Daylight time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Issuer at any time prior to the acceptance hereof by the Issuer. Terms not otherwise defined in this Agreement shall have the same meanings set forth in the Bond Resolution (as defined herein) or in the Official Statement (as defined herein). 1. Purchase and Sale of the Bonds. Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to purchase from the Issuer, and the Issuer hereby agrees to sell and deliver to the Underwriter, all, but not less than all, of the Issuer's Capital Improvement Revenue Bonds, Series 2004 (the "Bonds "). Inasmuch as this purchase and sale represents a negotiated transaction, the Issuer understands, and hereby confirms, that the Underwriter are not acting as a fiduciary of the Issuer, but rather are acting solely in their capacity as Underwriter for their own account. The Underwriter has been duly authorized to execute this Agreement and to act hereunder. The principal amount of the Bonds to be issued, the dated date therefor, the maturities, sinking fund and optional redemption provisions and interest rates per annum are set forth in Schedule I hereto. The Bonds shall be as described in, and shall be issued and secured under and pursuant to the provisions of Issuer Resolution No. as amended (the "Bond Resolution "). The purchase price for the Bonds shall be $ plus interest accrued on the Bonds from the dated date of the Bonds to the Closing Date (as hereinafter defined). The discount of $ represents an underwriting discount of $ and an original issue discount of {QR726765;1 } Delivered to the Issuer herewith as a good faith deposit is a check payable to the order of the Issuer in clearing house funds in the amount of $ . In the event you accept this offer, such check shall be held uncashed by you until the time of Closing, at which time such check shall be returned uncashed to the Underwriter. In the event that the Issuer does not accept this Agreement, such check will be immediately returned to the Underwriter. Should the Issuer fail to deliver the Bonds at the Closing, or should the Issuer be unable to satisfy the conditions of the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds, as set forth in this Agreement (unless waived by the Underwriter), or should such obligations of the Underwriter be terminated for any reason permitted by this Agreement, such check shall immediately be returned to the Underwriter. In the event that the Underwriter fails (other than for a reason permitted hereunder) to purchase, accept delivery of and pay for the Bonds at the Closing as herein provided, such check shall be cashed and the amount thereof retained by the Issuer as and for fully liquidated damages for such failure of the Underwriter, and, except as set forth in Sections 9 and 11 hereof, no party shall have any further rights against the other hereunder. The Underwriter and the Issuer understand that in such event the Issuer's actual damages may be greater or may be less than such amount. Accordingly, the Underwriter hereby waive any right to claim that the Issuer's actual damages are less than such amount, and the Issuer's acceptance of this offer shall constitute a waiver of any right the Issuer may have to additional damages from the Underwriter. 2. Public Offering. The Underwriter agrees to make a bona fide public offering of all of the Bonds at a price not to exceed the public offering price set forth on the cover of the Official Statement and may subsequently change such offering price without any requirement of prior notice. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower than the public offering price stated on the cover of the Official Statement. 3. The 0 cial Statement. (a) Attached hereto as Exhibit A is either a draft of the final Official Statement or a copy of the Preliminary Official Statement dated (the "Preliminary Official Statement"), including the cover page and Appendices thereto, of the Issuer relating to the Bonds. Such draft of the final Official Statement or copy of the Preliminary Official Statement, as amended to reflect the changes marked or otherwise indicated on Exhibit A hereto, is hereinafter called the "Official Statement." (b) The Preliminary Official Statement has been prepared for use by the Underwriter in connection with the public offering, sale and distribution of the Bonds. The Issuer hereby represents and warrants that the Preliminary Official Statement was deemed final by the Issuer as of its date, except for the omission of such information which is dependent upon the final pricing of the Bonds for completion, all as permitted to be excluded by Section (b)(1) of Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule "). (c) The Issuer hereby authorizes the Official Statement and the information therein contained to be used by the Underwriter in connection with the public offering and the sale of the Bonds. The Issuer consents to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement in connection with the public offering of the Bonds. The Issuer shall provide, or cause to be provided, to the Underwriter as soon as practicable after the date of the Issuer's acceptance of this Agreement (but, in any event, not later than within seven business days after the Issuer's acceptance of this Agreement {OR726765;1 } 2 and in sufficient time to accompany any confirmation that requests payment from any customer) copies of the Official Statement which is complete as of the date of its delivery to the Underwriter in such quantity as the Underwriter shall request in order for the Underwriter to comply with Section (b)(4) of the Rule and the rules of the Municipal Securities Rulemaking Board. (d) If, after the date of this Agreement to and including the date the Underwriter is no longer required to provide an Official Statement to potential customers who request the same pursuant to the Rule (the earlier of (i) 90 days from the "end of the underwriting period" (as defined in the Rule) and (ii) the time when the Official Statement is available to any person from a nationally recognized municipal securities repository, but in no case less than 25 days after the "end of the underwriting period" for the Bonds), the Issuer becomes aware of any fact or event which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or if it is necessary to amend or supplement the Official Statement to comply with law, the Issuer will notify the Underwriter (and for the purposes of this clause provide the Underwriter with such information as it may from time to time request), and if, in the opinion of the Underwriter, such fact or event requires preparation and publication of a supplement or amendment to the Official Statement, the Issuer will forthwith prepare and furnish, at the Issuer's own expense (in a form and manner approved by the Underwriter), a reasonable number of copies of either amendments or supplements to the Official Statement so that the statements in the Official Statement as so amended and supplemented will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or so that the Official Statement will comply with law. If such notification shall be subsequent to the Closing, the Issuer shall furnish such legal opinions, certificates, instruments and other documents as the Underwriter may deem necessary to evidence the truth and accuracy of such supplement or amendment to the Official Statement. (e) The Underwriter hereby agrees to file the Official Statement with a nationally recognized municipal securities information repository. Unless otherwise notified in writing by the Underwriter, the Issuer can assume that the "end of the underwriting period" for purposes of the Rule is the date of the Closing. 4. Representations, Warranties, and Covenants of the Issuer. The Issuer hereby represents and warrants to and covenants with the Underwriter that: (a) The Issuer is a municipal corporation of the State of Florida (the "State") duly created, organized and existing under the laws of the State, specifically the Constitution of the State, Chapter 166, Florida Statutes, as amended, the municipal charter of the Issuer and other applicable provisions of law, as amended and supplemented (the "Act"), and has full legal right, power and authority under the Act, and at the date of the Closing will have full legal right, power and authority under the Act and the Bond Resolution (i) to enter into, execute and deliver this Agreement, the Bond Resolution and the Continuing Disclosure Undertaking (the "Undertaking") as defined in Section 60)(3) hereof and all documents required hereunder and thereunder to be executed and delivered by the Issuer (this Agreement, the Bond Resolution, the Undertaking and the other (oR726765;1 ) 3 documents referred to in this clause are hereinafter referred to as the "Issuer Documents"), (ii) to sell, issue and deliver the Bonds to the Underwriter as provided herein, and (iii) to carry out and consummate the transactions contemplated by the Issuer Documents and the Official Statement, and the Issuer has complied, and will at the Closing be in compliance in all respects, with the terms of the Act and the Issuer Documents as they pertain to such transactions; (b) By all necessary official action of the Issuer prior to or concurrently with the acceptance hereof, the Issuer has duly authorized all necessary action to be taken by it for (i) the adoption of the Bond Resolution and the issuance and sale of the Bonds, (ii) the approval, execution and delivery of, and the performance by the Issuer of the obligations on its part, contained in the Bonds and the Issuer Documents and (iii) the consummation by it of all other transactions contemplated by the Official Statement, and the Issuer Documents and any and all such other agreements and documents as may be required to be executed, delivered and/or received by the Issuer in order to carry out, give effect to, and consummate the transactions contemplated herein and in the Official Statement; (c) The Issuer Documents constitute legal, valid and binding obligations of the Issuer, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws and principles of equity relating to or affecting the enforcement of creditors' rights; the Bonds, when issued, delivered and paid for, in accordance with the Bond Resolution and this Agreement, will constitute legal, valid and binding obligations of the Issuer entitled to the benefits of the Bond Resolution and enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws and principles of equity relating to or affecting the enforcement of creditors' rights; upon the issuance, authentication and delivery of the Bonds as aforesaid, the Bond Resolution will provide, for the benefit of the holders, from time to time, of the Bonds, the legally valid and binding pledge of and lien it purports to create as set forth in the Bond Resolution; (d) The Issuer is not in breach of or default in any material respect under any applicable constitutional provision, law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Issuer is a party or to which the Issuer is or any of its property or assets are otherwise subject, and no event has occurred and is continuing which constitutes or with the passage of time or the giving of notice, or both, would constitute a default or event of default by the Issuer under any of the foregoing; and the execution and delivery of the Bonds, the Issuer Documents and the adoption of the Bond Resolution and compliance with the provisions on the Issuer's part contained therein, will not conflict with or constitute a breach of or default under any constitutional provision, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Issuer is a party or to which the Issuer is or to which any of its property or assets are otherwise subject nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Issuer to be pledged to secure the Bonds or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the Bond Resolution (OR726765;1) 4 (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization of, which would constitute a condition precedent to, or the absence of which would materially adversely affect the due perfonnance by the Issuer of its obligations under the Issuer Documents, and the Bonds or with respect to the Project have been duly obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any jurisdiction in connection with the offering and sale of the Bonds; (f) The Bonds conform to the descriptions thereof contained in the Official Statement under the caption "DESCRIPTION OF THE SERIES 2004 BONDS"; the Bond Resolution conforms to the description thereof contained in the Official Statement under the caption SECURITY FOR THE SERIES 2004 BONDS; the proceeds of the sale of the Bonds will be applied generally as described in the Official Statement under the caption "ESTIMATED SOURCES AND USES OF FUNDS" and the Undertaking conforms to the description thereof contained in the Official Statement under the caption "CONTINUING DISCLOSURE." (g) There is no legislation, action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or, to the best knowledge of the Issuer after due inquiry, threatened against the Issuer, affecting the existence of the Issuer or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the receipt, levying or collection of the Pledgable Non -Ad Valorem Revenues (as defined in the Bond Resolution) or the construction or operation of the Project pursuant to the Bond Resolution or in any way contesting or affecting the validity or enforceability of the Bonds, the Issuer Documents, or contesting the exclusion from gross income of interest on the Bonds for federal income tax purposes or state tax purposes, or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto, or contesting the powers of the Issuer or any authority for the issuance of the Bonds, the adoption of the Bond Resolution or the execution and delivery of the Issuer Documents, nor, to the best knowledge of the Issuer, is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Bonds or the Issuer Documents; (h) As of the date thereof, the Preliminary Official Statement did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (i) At the time of the Issuer's acceptance hereof and (unless the Official Statement is amended or supplemented pursuant to paragraph (d) of Section 3 of this Agreement) at all times subsequent thereto during the period up to and including the date of Closing, the Official Statement does not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; {OR726765;11 5 0) If the Official Statement is supplemented or amended pursuant to paragraph (d) of Section 3 of this Agreement, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto during the period up to and including the date of Closing the Official Statement as so supplemented or amended will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which made, not misleading; (k) The Issuer will apply, or cause to be applied, the proceeds from the sale of the Bonds as provided in and subject to all of the terms and provisions of the Bond Resolution and not to take or omit to take any action which action or omission will adversely affect the exclusion from gross income for federal income tax purposes or state tax purposes of the interest on the Bonds; (1) The Issuer will furnish such information and execute such instruments and take such action in cooperation with the Underwriter as it may reasonably request (A) to (y) qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions in the United States as the Underwriter may designate and (z) determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions and (B) to continue such qualifications in effect so long as required for the distribution of the Bonds (provided, however, that the Issuer will not be required to qualify as a foreign corporation or to file any general or special consents to service of process under the laws of any jurisdiction) and will advise the Underwriter immediately of receipt by the Issuer of any notification with respect to the suspension of the qualification of the Bonds for sale in any jurisdiction or the initiation or threat of any proceeding for that purpose; (m) The financial statements of, and other financial information regarding the Issuer, in the Official Statement fairly present the financial position and results of the Issuer as of the dates and for the periods therein set forth. Prior to the Closing, there will be no adverse change of a material nature in such financial position, results of operations or condition, financial or otherwise, of the Issuer. The Issuer is not a party to any litigation or other proceeding pending or, to its knowledge, threatened which, if decided adversely to the Issuer, would have a materially adverse effect on the financial condition of the Issuer; (n) Prior to the Closing the Issuer will not offer or issue any bonds, notes or other obligations for borrowed money or incur any material liabilities, direct or contingent, payable from or secured by any of the revenues or assets which will secure the Bonds without the prior approval of the Underwriter; (o) Any certificate, signed by any official of the Issuer authorized to do so in connection with the transactions contemplated by this Agreement, shall be deemed a representation and warranty by the Issuer to the Underwriter as to the statements made therein; 5. Closing. {OR726765;11 6 (a) At 11 a.m. Eastern Daylight Time time, on April ______ , 2004, or at such other time and date as shall have been mutually agreed upon by the Issuer and the Underwriter (the "Closing"), the Issuer will, subject to the terms and conditions hereof, deliver the Bonds to the Underwriter duly executed and authenticated, together with the other documents hereinafter mentioned, and the Underwriter will, subject to the terms and conditions hereof, accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 of this Agreement by a certified or bank cashier's check or checks or wire transfer payable in immediately available funds to the order of the Issuer. Payment for the Bonds as aforesaid shall be made at the offices of Bond Counsel, or such other place as shall have been mutually agreed upon by the Issuer and the Underwriter. (b) Delivery of the Bonds shall be made to The Depository Trust Company, New York, New York. The Bonds shall be delivered in definitive fully registered form, bearing CUSIP numbers without coupons, with one Bond for each maturity of the Bonds, registered in the name of Cede & Co., all as provided in the Bond Resolution, and shall be made available to the Underwriter at least one business day before the Closing for purposes of inspection. 6. Closing Conditions. The Underwriter has entered into this Agreement in reliance upon the representations, warranties and agreements of the Issuer contained herein, and in reliance upon the representations, warranties and agreements to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Issuer of its obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly, the Underwriter's obligations under this Agreement to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the Issuer of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing, and shall also be subject to the following additional conditions, including the delivery by the Issuer of such documents as are enumerated herein, in form and substance reasonably satisfactory to the Underwriter: (a) The representations and warranties of the Issuer contained herein shall be true, complete and correct on the date hereof and on and as of the date of the Closing, as if made on the date of the Closing; (b) The Issuer shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing; (c) At the time of the Closing, (i) the Issuer Documents and the Bonds shall be in full force and effect in the form heretofore approved by the Underwriter and shall not have been amended, modified or supplemented, and the Official Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Underwriter; and (ii) all actions of the Issuer required to be taken by the Issuer shall be performed in order for Bond Counsel, Issuer's Counsel and Disclosure Counsel to deliver their respective opinions referred to hereafter; (d) At or prior to the Closing, the Bond Resolution shall have been duly executed and delivered by the Issuer and the Issuer shall have duly executed and delivered and the registrar shall have duly authenticated the Bonds; {OR726765; I } 7 (e) At or prior to the Closing, the Insurance Policy shall have been duly executed, issued and delivered by the Insurer; (f) At the time of the Closing, there shall not have occurred any change or any development involving a prospective change in the condition, financial or otherwise, or in the revenues or operations of the Issuer, from that set forth in the Official Statement that in the judgment of the Underwriter, is material and adverse and that makes it, in the judgment of the Underwriter, impracticable to market the Bonds on the terms and in the manner contemplated in the Official Statement; (g) The Issuer shall not have failed to pay principal or interest when due on any of its outstanding obligations for borrowed money; (h) All steps to be taken and all instruments and other documents to be executed, and all other legal matters in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in legal form and effect to the Underwriter; (i) At or prior to the Closing, the Underwriter shall have received copies of each of the following documents: (1) The Official Statement, and each supplement or amendment thereto, if any, executed on behalf of the Issuer by its Mayor and City Manager, or such other officials as may have been agreed to by the Underwriter, and the reports and audits referred to or appearing in the Official Statement; (2) The Bond Resolution with such supplements or amendments as may have been agreed to by the Underwriter; (3) The Undertaking of the Issuer which satisfies the requirements of section (b)(5)(1) of the Rule; (4) the approving opinion of Bond Counsel with respect to the Bonds, in substantially the form attached to the Official Statement; (5) a supplemental opinion of Bond Counsel addressed to the Underwriter, substantially to the effect that: (i) the Bond Resolution has been duly adopted and is in full force and effect, (ii) the Bonds are exempted securities under the Securities Act of 1933, as amended (the "1933 Act"), and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and it is not necessary, in connection with the offering and sale of the Bonds, to register the Bonds under the 1933 Act or to qualify the Bond Resolution under the Trust Indenture Act; (iii) the statements and information contained in the Official Statement under the captions "DESCRIPTION OF THE SERIES 2004 BONDS" (excepting the subcaption entitled 'Book -Entry System" as to which no {OR726765;1 } 8 opinion need be expressed), "SECURITY FOR THE SERIES 2004 BONDS" and "TAX EXEMPTION" fairly and accurately summarized the matters purported to be summarized therein; and (iv) based on the examinations which they have made as Bond Counsel and their participation at conferences at which the Official Statement was discussed, but without having undertaken to determine independently the accuracy or completeness of the statements in the Official Statement other than those described in subparagraph (iii) of this subsection above, such counsel has no reason to believe that the Official Statement as of its date and as of the date hereof contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except for any financial, forecast, technical and statistical data included in the Official Statement and except for information regarding the Depository and its book -entry system and information regarding the Insurer, in each case as to which no view need be expressed); (6) An opinion, dated the date of the Closing of Akerman Senterfitt ( "Disclosure Counsel") addressed to the Issuer with a reliance letter addressed to the Underwriter substantially to the effect that: (1) the Bonds are exempt securities under the 1933 Act and the Trust Indenture Act and it is not necessary, in connection with the offering and sale of the Bonds, to register the Bonds under the 1933 Act and the Bond Resolution need not be qualified under the Trust Indenture Act; and (11) based upon their participation in the preparation of the Official Statement as Disclosure Counsel and their participation at conferences at which the Official Statement was discussed, but without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, such counsel has no reason to believe that the Official Statement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except for any financial, forecast, technical and statistical statements and data included in the Official Statement and the information regarding the Depository and its book -entry system and information regarding the Insurer, in each case as to which no view need be expressed); (7) An opinion of Mitchell S. Kraft, Esq. ( "Issuer's Counsel") addressed to the Underwriter, to the effect that: (1) The Issuer is a municipal corporation of the State of Florida (the ", 'tate ") duly created, organized and existing under the laws of the State, specifically the Constitution of the State, Chapter 166, Florida Statutes and the municipal charter of the Issuer, as amended and supplemented (the "Act"), and has full legal right, power and authority under the Act and the {OR726765;11 9 Bond Resolution (A) to enter into, execute and deliver the Issuer Documents and all documents required hereunder and thereunder to be executed and delivered by the Issuer, (B) to sell, issue and deliver the Bonds to the Underwriter as provided herein, and (C) to carry out and consummate the transactions contemplated by the Issuer Documents, and the Official Statement, and the Issuer has complied, and will at the Closing be in compliance in all respects, with the terms of the Act and the Issuer Documents as they pertain to such transactions; (ii) By all necessary official action of the Issuer prior to or concurrently with the acceptance hereof, the Issuer has duly authorized all necessary action to be taken by it for (A) the adoption of the Bond Resolution and the issuance and sale of the Bonds, (B) the approval, execution and delivery of, and the performance by the Issuer of the obligations on its part, contained in the Bonds, the Issuer Documents, and (C) the consummation by it of all other transactions contemplated by the Official Statement, the Issuer Documents and any and all such other agreements and documents as may be required to be executed, delivered and/or received by the Issuer in order to carry out, give effect to, and consummate the transactions contemplated herein and in the Official Statement; (iii) The Bond Resolution was duly and validly adopted by the Issuer and is in full force and effect; the Bond Resolution and all other proceedings pertinent to the validity and enforceability of the Bonds and the collection, levying and receipt of the Pledgable Non -Ad Valorem Revenues have been duly and validly adopted or undertaken in compliance with all applicable procedural requirements of the Issuer and in compliance with the Constitution and laws of the State, including the Act; (iv) The Issuer Documents have been duly authorized, executed and delivered by the Issuer, and constitute legal, valid and binding obligations of the Issuer enforceable against the Issuer in accordance with their respective terms, except to the extent limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws and equitable principles of general application relating to or affecting the enforcement of creditors' rights; and the Bonds, when issued, delivered and paid for, in accordance with the Bond Resolution and this Agreement, will constitute legal, valid and binding obligations of the Issuer entitled to the benefits of the Bond Resolution and enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws and principles of equity relating to or affecting the enforcement of creditors' rights; upon the issuance, authentication and delivery of the Bonds as aforesaid, the Bond Resolution will provide, for the benefit of the holders, from time to time, of the Bonds, the legally valid and binding pledge of and lien it purports to create as set forth in the Bond Resolution; (v) The distribution of the Preliminary Official Statement and the Official Statement has been duly authorized by the Issuer; {OR726765;I 1 10 (vi) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization of, which would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the Issuer of its obligations under the Issuer Documents and the Bonds have been obtained; (vii) There is no legislation, action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or, to the best knowledge of the Issuer, after due inquiry threatened against the Issuer, affecting the corporate existence of the Issuer or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the levying, receipt and collection of the Pledgable Non -Ad Valorem Revenues (as defined in the Bond Resolution) pursuant to the Bond Resolution or in any way contesting or affecting the validity or enforceability of the Bonds, the Issuer Documents, or contesting the exclusion from gross income of interest on the Bonds for federal income tax purposes or state tax purposes, or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto, or contesting the powers of the Issuer or any authority for the issuance of the Bonds, the adoption of the Bond Resolution or the execution and delivery of the Issuer Documents, nor, to the best knowledge of the Issuer, is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Bonds, or the Issuer Documents; (viii) The execution and delivery of the Issuer Documents and compliance by the Issuer with the provisions hereof and thereof, under the circumstances contemplated herein and therein, will not conflict with or constitute on the part of the Issuer a material breach of or a default under any agreement or instrument to which the Issuer is a party, or violate any existing law, administrative regulation, court order, or consent decree to which the Issuer is subject; and (ix) Based on the examination which such counsel has caused to be made and its participation at conferences at which the Preliminary Official Statement and the Official Statement were discussed, such counsel has no reason to believe that the Official Statement as of its date and as of the date hereof contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading in any material respect (except for any financial forecast, technical and statistical data included in the Official Statement and except for information regarding the Depository and its book -entry system and information regarding the Insurer, in each case as to which no view need be expressed; (oR726765;1) I I (8) A certificate, dated the date of Closing, of the Issuer to the effect that (i) the representations and warranties of the Issuer contained herein are true and correct in all material respects on and as of the date of Closing as if made on the date of Closing; (ii) no litigation or proceeding against it is pending or, to its knowledge, threatened in any court or administrative body nor is there a basis for litigation which would (a) contest the right of the commissioners or officials of the Issuer to hold and exercise their respective positions, (b) contest the due organization and valid existence of the Issuer, (c) contest the validity, due authorization and execution of the Bonds or the Issuer Documents or (d) attempt to limit, enjoin or otherwise restrict or prevent the Issuer from functioning and collecting revenues, including payments on the Bonds, pursuant to the Bond Resolution, and other income or the anticipated receipt of the Pledgable Non -Ad Valorem Revenues or the pledge under the Bond Resolution; (iii) the resolutions of the Issuer authorizing the execution, delivery and/or performance of the Official Statement, the Bonds and Issuer Documents have been duly adopted by the Issuer, are in full force and effect and have not been modified, amended or repealed, and (iv) to the best of its knowledge, no event affecting the Issuer has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein, in light of the circumstances under which made, not misleading in any respect as of the time of Closing, and the information contained in the Official Statement is correct in all material respects and, as of the date of the Official Statement did not, and as of the date of the Closing does not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (9) A certificate of the Issuer in form and substance satisfactory to Bond Counsel (a) setting forth the facts, estimates and circumstances in existence on the date of the Closing, which establish that it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code "), and any applicable regulations (whether final, temporary or proposed), issued pursuant to the Code, and (b) certifying that to the best of the knowledge and belief of the Issuer there are no other facts, estimates or circumstances that would materially change the conclusions, representations and expectations contained in such certificate; (10) Any other certificates and opinions required by the Bond Resolution for the issuance thereunder of the Bonds; (11) A consent letter from the Issuer's Auditor with respect to the performance of certain agreed upon procedures requested by the Underwriter; (12) Evidence satisfactory to the Underwriter that the Bonds have been rated by the rating agencies, all as described in the Official Statement, and that all such ratings are in effect as of the date of Closing; and {OR726765;1 } 12 (13) Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Closing, of the Issuer's representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Issuer on or prior to the date of the Closing of all the respective agreements then to be performed and conditions then to be satisfied by the Issuer. (14) A copy of the Insurance Policy and Reserve Account Policy together with an opinion of counsel to the Insurer in form and substance satisfactory to the Underwriter; (1 S) A certificate of the Insurer with respect to the accuracy of statements contained in the Official Statement regarding the Insurance Policy and Reserve Account Policy and the Insurer and the due authorization execution issuance and delivery of the Insurance Policy and Reserve Account Policy; All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriter. If the Issuer shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds contained in this Agreement, or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Agreement, this Agreement shall terminate and neither the Underwriter nor the Issuer shall be under any further obligation hereunder, except that the respective obligations of the Issuer and the Underwriter set forth in Sections 4, 7 and 9(c) hereof shall continue in full force and effect. 7. Reserved. 8. Termination. The Underwriter shall have the right to cancel their obligation to purchase the Bonds if, between the date of this Agreement and the Closing, the market price or marketability of the Bonds shall be materially adversely affected, in the sole judgment of the Underwriter, by the occurrence of any of the following: (a) legislation shall be enacted by or introduced in the Congress of the United States or recommended to the Congress for passage by the President of the United States, or the Treasury Department of the United States or the Internal Revenue Service or any member of the Congress or the State legislature or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary or proposed), press release, statement or other form of notice by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made or proposed, the effect of any or all of which would be to impose, directly or indirectly, federal income taxation or state taxation, upon (OR726765;1 ) 13 revenues or other income of the general character to be derived by the Issuer pursuant to the Bond Resolution, or upon interest received on obligations of the general character of the Bonds or, with respect to state taxation, of the interest on the Bonds as described in the Official Statement, or other action or events shall have transpired which may have the purpose or effect, directly or indirectly, of changing the federal income tax consequences or state tax consequences of any of the transactions contemplated herein; (b) legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree, or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary, or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the 1933 Act, or that the Bond Resolution is not exempt from qualification under or other requirements of the Trust Indenture Act, or that the issuance, offering, or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation of the federal securities law as amended and then in effect; (c) any state blue sky or securities commission or other governmental agency or body shall have withheld registration, exemption or clearance of the offering of the Bonds as described herein, or issued a stop order or similar ruling relating thereto; (d) a general suspension of trading in securities on the New York Stock Exchange or the American Stock Exchange, the establishment of minimum prices on either such exchange, the establishment of material restrictions (not in force as of the date hereof) upon trading securities generally by any governmental authority or any national securities exchange, a general banking moratorium declared by federal, State of New York, or State officials authorized to do so; (e) the New York Stock Exchange or other national securities exchange or any governmental authority, shall impose, as to the Bonds or as to obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, Underwriter; (f) any amendment to the federal or state Constitution or action by any federal or state court, legislative body, regulatory body, or other authority materially adversely affecting the tax status of the Issuer, its property, income securities (or interest thereon), or the validity or enforceability of the Issuer covenants under the Bond Resolution; (g) any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; {OR726765;1 } 14 (h) there shall have occurred since the date of this Agreement any materially adverse change in the affairs or financial condition of the Issuer, except for changes which the Official Statement discloses are expected to occur; (1) the United States shall have become engaged in hostilities which have resulted in a declaration of war or a national emergency or there shall have occurred any other outbreak or escalation of hostilities or a national or international calamity or crisis, financial or otherwise; 0) any fact or event shall exist or have existed that, in the Underwriter's judgment, requires or has required an amendment of or supplement to the Official Statement; (k) there shall have occurred any downgrading, or any notice shall have been given of any intended or potential downgrading; and (1) the purchase of and payment for the Bonds by the Underwriter, or the resale of the Bonds by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission. 9. Expenses. (a) The Underwriter shall be under no obligation to pay, and the Issuer shall pay, any expenses incident to the performance of the Issuer's obligations hereunder, including, but not limited to (i) the cost of preparation and printing of the Bonds, (ii) the fees and disbursements of Bond Counsel, Issuer's Counsel and Disclosure Counsel; (iii) the fees and disbursements of the Financial Advisor to the Issuer; (iv) the fees and disbursements of any other engineers, accountants, and other experts, consultants or advisers retained by the Issuer; and (v) the fees for bond ratings and Insurance Policy and Reserve Account Policy. (b) The Underwriter shall pay (i) the cost of preparation and printing of this Agreement, the Blue Sky Survey and Legal Investment Memorandum; (ii) all advertising expenses in connection with the public offering of the Bonds; and (iii) all other expenses incurred by them in connection with the public offering of the Bonds. (c) If this Agreement shall be terminated by the Underwriter because of any failure or refusal on the part of the Issuer to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Issuer shall be unable to perform its obligations under this Agreement, the Issuer will reimburse the Underwriter for all out-of-pocket expenses reasonably incurred by the Underwriter in connection with this Agreement or the offering contemplated hereunder. 10. Notices. Any notice or other communication to be given to the City under this Agreement may be given by delivering the same to the City Manager of the City of Tamarac, Florida at City Hall, 7525 N.W. 881h Avenue, Tamarac, Florida 33321, and any such notice or other communication to be given to the Underwriter may be mailed to RBC Dain Rauscher, Inc., 100 2nd Avenue South, Suite 800, St. Petersburg, Florida 33701, Attention: Kevin Conitz. 11. Parties in Interest. This Agreement as heretofore specified shall constitute the entire agreement between us and is made solely for the benefit of the Issuer and the Underwriter (including successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. This Agreement may not be assigned by the Issuer. All {OR726765;1 } 15 of the Issuer's representations, warranties and agreements contained in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigations made by or on behalf of any of the Underwriter; (ii) delivery of and payment for the Bonds pursuant to this Agreement; and (iii) any termination of this Agreement. 12. Effectiveness. This Agreement shall become effective upon the acceptance hereof by the Issuer and shall be valid and enforceable at the time of such acceptance. 13. Choice of Law. This Agreement shall be governed by and construed in accordance with the law of the State. 14. Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provisions of any Constitution, statute, rule of public policy, or any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatever. 15. Business Day. For purposes of this Agreement, "business day" means any day on which the New York Stock Exchange is open for trading. 16. Section Headings. Section headings have been inserted in this Agreement as a matter of convenience of reference only, and it is agreed that such section headings are not a part of this Agreement and will not be used in the interpretation of any provisions of this Agreement. 17. Counterparts. This Agreement may be executed in several counterparts each of which shall be regarded as an original (with the same effect as if the signatures thereto and hereto were upon the same document) and all of which shall constitute one and the same document. If you agree with the foregoing, please sign the enclosed counterpart of this Agreement and return it to the Underwriter. This Agreement shall become a binding agreement between you and the Underwriter when at least the counterpart of this letter shall have been signed by or on behalf of each of the parties hereto. Respectfully submitted, RBC Dain Rauscher Inc. By Name Title Date {oR726765;1 } 16 ACCEPTANCE ACCEPTED this (SEAL) ATTEST: day of April, 2004. Marion Swenson, CMC, City Clerk Approved as to form: Mitchell S. Kraft, City Attorney THE CITY OF TAMARAC, FLORIDA Joe Schreiber, Mayor Jeffrey L. Miller, City Manager {OR726765;1 } 17 Schedule I [insert principal amount, dated date, maturities, interest rates, sinking fund, and optional redemption provisions of the Bonds] {oR726765;1 } (On Page Following) [attach Official Statement] {OR726765; I } Temp. Reso. #10368, March 15, 2004 Page 8 EXHIBIT B Bond Insurance Commitment February 24, 2004 Ambac Assurance Corporation One State Street Plaza New York, NY 10004 212,668.0340 A member of the Ambac Financial Groin{ Inc. AMBAC ASSURANCE STANDARD PACKAGE FOR AMBAC-INSURED TRANSACTIONS [NOT FOR USE WITH GENERAL OBLIGATION/L]MITED OR UNLIMITED TAX TRANSACTIONS] TO: Obligor, Obligor's Counsel, Managing Underwriter, Obligation Counsel and Underwriter's Counsel RE: Preparation of Financing Documents for Ambac Assurance Insured Issues The attached materials have been prepared to assist you in the preparation of documents for your Ambac Ambac Assurance Corporation ("Ambac Assurance") insured issue. Please modify the attached exhibits where appropriate and notify us as to any proposed modifications. If desired, these provisions can be incorporated into one section entitled "Financial Guaranty Insurance" within the applicable Indenture, Resolution, Ordinance, Order or any other operative financing document (such applicable financing document will be referred to herein as the "Financing Document'). Please be advised that the provisions contained in this package are in addition to the conditions listed in the Commitment for Financial Guaranty Insurance and any other comments or changes that may be required by the Ambac Assurance personnel working on this financing. If you have any questions, please call one of the following persons: Eileen L. Kirchoff, Stephen M. Ksenak or David N. Abramowitz (Public Finance) and Lee Ann Duffy, Jean Kim, Juan B. Roman or Kevin J. Doyle (Specialized Finance). • Definitions (Exhibit A). • Ambac Assurance consent required for changes to underlying documentation and exercise of remedies upon default (Exhibit B). • Notices/information to be given to Ambac Assurance (Exhibit Q. • Permitted Investments and Valuation Provisions (Exhibit D). • Defeasance Language (Exhibit E). • Description of Ambac Assurance Payment Procedure (Exhibit F). • 'Trustee -related provisions (Exhibit G). • Ambac Assurance as a third -party beneficiary (Exhibit H). • Suggested language for (1) Ambac Assurance Official Statement Disclosure, (ii) Notice of Sale, (iii) Bond Legend, and (iv) Cover page of Official Statement (Exhibit I). • Form of Ambac Assurance Legal Opinion (Exhibit J). • Form of Ambac Assurance Certificate of Insurer (Exhibit K). • Anibac Assurance Wiring Instructions (Exhibit Q. • Representations, Warranties and Covenants for Revised Article 9 Collateral (Exhibit M) EXHIBIT A DEFINITIONS The following definitions are those which Ambac Assurance recommends for the Financing Document: "Ambac Assurance" shall mean Ambac Assurance Corporation, a Wisconsin -domiciled stock insurance company. "Financial Guaranty Insurance Policy" shall mean the financial guaranty insurance policy issued by Arnbac Assurance insuring the payment when due of the principal of and interest on the Obligations as provided therein. EXHIBIT B AMBAC ASSURANCE CONSENT LANGUAGE Ainbac Assurance requires that the Financing Document include the following consent provisions: A. Consent of Ambac Assurance. Any provision of this [Financing Document] expressly recognizing or granting rights in or to Ambac Assurance may not be amended in any manner which affects the rights of Ambac Assurance hereunder without the prior written consent of Ambac Assurance. Ambac Assurance reserves the right to charge the Obligor* a fee for any consent or amendment to the Financing Document while the Financial Guaranty Insurance Policy is outstanding. B. Consent of Ambac Assurance in Addition to Holder Consent. Unless otherwise provided in this Section, Ambac Assurance's consent shall be required in addition to Holder consent, when required, for the following purposes: (1) execution and delivery of any supplemental [Financing Document] or any amendment, supplement or change to or modification of the [Loan Agreement, Lease Agreement, etc.] (ii) removal of the Trustee or Paying Agent and selection and appointment of any successor trustee or paying agent [required in those transactions in which the Financing Document provides for a trustee or paying agent]; and (Ili) initiation or approval of any action not described in (i) or 00 above which requires Holder consent. C. Consent of Ambac Assurance in the Event of Insolvency Any reorganization or liquidation plan with respect to the [Obligor or obligor] must be acceptable to Ambac Assurance. In the event of any reorganization or liquidation, Ambac Assurance shall have the right to vote on behalf of all Holders who hold Ambac Assurance -insured Obligations absent a default by Ambac Assurance under the applicable Financial Guaranty Insurance Policy insuring such Obligations. 1In transactions for which acceleration is not a remedy for an event of default, the following provision is to be included in the Financing Document.] 1). Consent of Ambac Assurance Upon Default. Anything in this [Financing Document] to the contrary notwithstanding, upon the occurrence and continuance of an event of default as defined herein, Ambac Assurance shall be entitled to control and direct the enforcement of all rights and remedies granted to the Holders or the Trustee for the benefit of the lJolders under this [Financing Document]. * or appropriate obligor on the Obligations. 2 [In transactions for which acceleration is a remedy for an event of default, the following two provisions must be included in the Financing Document in lieu of paragraph D above.] D. Consent of Ambac Assurance Upon Default. Anything in this [Financing Document] to the contrary notwithstanding, upon the occurrence and continuance of an event of default as defined herein, Ambac Assurance shall be entitled to control and direct the enforcement of all rights and remedies granted to the Holders or the Trustee for the benefit of the Ilolders under this [Financing Document], including, without limitation: (i) the right to accelerate the principal of the Obligations as described in this [Financing Document], and (ii) the right to annul any declaration of acceleration, and Ambac Assurance shall also be entitled to approve all waivers of events of default. E. Acceleration Rights Upon the occurrence of an event of default, the Trustee may, with the consent of Ambac Assurance, and shall, at the direction of Ambac Assurance or —% of the Holders with the consent of Ambac Assurance, by written notice to the Obligor and Ambac Assurance, declare the principal of the Obligations to be immediately due and payable, whereupon that portion of the principal of the Obligations thereby coming due and the interest thereon accrued to the date of payment shall, without further action, become and be immediately due and payable, anything in this [Financing Document] or in the Obligations to the contrary notwithstanding. 3 Temp. Reso. 910368, March 15, 2004 Page 9 EXHIBIT C Reserve Surety Commitment EXHIBIT C NOTICES/INFORMATION TO BE GIVEN TO AMBAC ASSURANCE Ambac Assurance requires that the following notice provisions be incorporated in the Financing Document: Notices to be sent to the attention of the SURVEILLANCE DEPARTMENT: A. While the Financial Guaranty Insurance Policy is in effect, the Obligor* or the Trustee [as appropriate] shall furnish to Ambac Assurance, upon request, the following: (a) a copy of any financial statement, audit and/or annual report of the Obligor* (b) such additional information it may reasonably request. Upon request, such information shall be delivered at the Obligor's* expense to the attention of the Surveillance Department, unless otherwise indicated. B. a copy of any notice to be given to the registered owners of the Obligations, including, without linvtation, notice of any redemption of or defeasance of Obligations, and any certificate rendered pursuant to tlus [Financing Document] relating to the security for the Obligations. C. To the extent that the Obligor has entered into a continuing disclosure agreement with respect to the Obligations, Ambac Assurance shall be included as party to be notified. Notices to be sent to the attention of the GENERAL COUNSEL OFFICE: A. The Trustee or Obligor* [as appropriate] shall notify Ambac Assurance of any failure of the Obligor* to provide relevant notices, certificates, etc. B. Notwithstanding any other provision of this [Financing Document], the Trustee or Obligor* [as appropriate] shall immediately notify Ambac Assurance if at any time there are insufficient moneys to make any payments of principal and/or interest as required and immediately upon the occurrence of any event of default hereunder. Other Information to be given to Ambac Assurance: The Obligor* will permit Ambac Assurance to discuss the affairs, finances and accounts of the Obligor* or any information Ambac Assurance may reasonably request regarding the security for the Obligations with appropriate officers of the Obligor*. The Trustee or Obligor* [as appropriate] will permit Ambac Assurance to [have access to the Project and] have access to and to make copies of all books and records relating to the Obligations at any reasonable time. *or appropriate obligor on the Obligations 4 Temp. Reso. #10368, March 15, 2004 Page 10 EXHIBIT D Form of Continuing Disclosure Certificate Ambac Assurance shall have the right to direct an accounting at the Obligor's* expense, and the Obligor's failure to comply with such direction within thirty (30) days after receipt of written notice of the direction from Ambac Assurance shall be deemed a default hereunder; provided, however, that if compliance cannot occur within such period, then such period will be extended so long as compliance is begun within such period and diligently pursued, but only if such extension would not materially adversely affect the interests of any registered owner of the Obligations. [FOR CALIFORNIA AND INDIANA (ABATEMENT STYLE) LEASES] The Trustee or Obligor [as appropriate] shall annually certify to Ambac that the insurance policies required by Section _ of the [Lease/Indenture] are in full force and effect, and will provide Ambac with copies of such policies upon request. EXHIBIT D AMBAC ASSURANCE CORPORATION Permitted Investmei:t Guidelines: Permitted Investments A. Ambac Assurance will allow the following obligations to be used as Permitted Investments for all purposes, including defeasance investments in refunding escrow accounts. (Ambac Assurance does not give a premium credit for the investment of accrued and/or capitalized interest). (1) Cash (insured at all times by the Federal Deposit Insurance Corporation), (2) Obligations of, or obligations guaranteed as to principal and interest by, the U.S. or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the U.S. including: • U.S. treasury obligations • All direct or fully guaranteed obligations • Farmers Home Administration • General Services Administration • Guaranteed Title XI financing • Government National Mortgage Association (GNMA) • State and Local Government Series Any security used for defeasance must provide for the timely payment of principal and interest and cannot be callable or prepayable prior to maturity or earlier redemption of the rated debt (excluding securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date). B. Ambac will allow the following Obligations to be used as Permitted Investments for all purposes other than defeasance investments in refunding escrow accounts. (1) Obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including: -Export-Impart Bank -Rural Economic Community Development Administration -U.S. Maritime Administration -Small Business Administration -U.S. Department of Housing & Urban Development (PHAs) -Federal Housing Administration -Federal Financing Bank (2)Direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: -Senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC). -Obligations of the Resolution Funding Corporation (REFCORP) -Senior debt obligations of the Federal Home Loan Bank System -Senior debt obligations of other Government Sponsored Agencies approved by Ambac (3)U.S. dollar denominated deposit accounts, federal funds and bankers' acceptances with domestic commercial banks which have a rating on their short tenn certificates of deposit on the date of purchase of "P-l" by Moody's and "A-1" or "A-1+" by S&P and maturing not more than 360 calendar days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank); (4) Commercial paper which is rated at the time of purchase in the single highest classification, "P-1" by Moody's and "A-1+" by S&P and which matures not more than 270 calendar days after the date of purchase; MI.nvestments in a money market fund rated "AAAm" or "AAAm-G" or better by S&P; (6)Pre-refunded Municipal Obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (A) which are rated, based on an irrevocable escrow account or fund (the "escrow"), in the highest rating category of Moody's or S&P or any successors thereto; or (13) 0) which are fully secured as to principal and interest and redemption premium, if any, by'an escrow consisting only of cash or obligations described in paragraph A(2) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate; (Pre -refunded Municipal Obligations meeting the requirements of subsection (B) hereof may be used as Permitted Investments for annual appropriation lease transactions. (7) Municipal Obligations rated "Aaa/AAA" or general obligations of States with a rating of "A2/A" or higher by both Moody's and S&P. (8) Investment Agreements approved in writing by Ambac Assurance Corporation (supported by appropriate opinions of counsel); and (9) other forms of investments (including repurchase agreements) approved in writing by Ambac. C. The value of the above investments shall be determined as follows: a) For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued at fair market value. The Trustee shall detennine the fair market value based on accepted industry standards and from accepted industry providers. Accepted industry providers shall include but are not limited to pricing services provided by Financial Times Interactive Data Corporation, Merrill Lynch, Salomon Smith Barney, Bear Stearns, or Lehman Brothers. b) As to certificates of deposit and bankers' acceptances: the face amount thereof, plus. accrued interest thereon; and c) As to any investment not specified above: the value thereof established by prior agreement among the Issuer, the Trustee, and Ambac. [ei Temp. Reso. #10367 — March 15, 2004 Page 11 EXHIBIT E Form of Preliminary Official Statement J:\Bonds\City of Tamarac (441501) \ Award Reso-5.doc C:\Documents and Settings\junew\Local Sell ingsJemporary Internet Files\OLK30\10368 Award Iteso t1 4'Mm uIil_— bond Ldoc EXHIBIT E DEFEASANCE LANGUAGE A. The definition of "Outstanding" Obligations or obligations, or any like concept, should specifically include Obligations or obligations which fall into the category described below. B. The defeasance section of the Financing Document should include the following language: Notwithstanding anything herein to the contrary, in the event that the principal and/or interest due on the Obligations shall be paid by Ambac Assurance Corporation pursuant to the Financial Guaranty Insurance Policy, the Obligations shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Obligor, and the assignment and pledge of the Trust Estate and all covenants, agreements and other obligations of the Obligor to the registered owners shall continue to exist and shall run to the benefit of Ambac Assurance, and Ambac Assurance shall be subrogated to the rights of such registered owners. EXHIBIT F PAYMENT PROCEDURE PURSUANT TO THE FINANCIAL GUARANTY INSURANCE POLICY The following language sets out the applicable procedure for payments under the Financial Guaranty Insurance Policy and should be incorporated into the Financing Document: As long as the Obligation insurance shall be in full force and effect, the Obligor, the Trustee and any Paying Agent agree to comply with the following provisions: (a) At least one (1) day prior to all Interest Payment Dates the Trustee or Paying Agent, if any, will determine whether there will be sufficient funds in the Funds and Accounts to pay the principal of or interest on the Obligations on such Interest Payment Date. If the Trustee or Paying Agent, if any, determines that there will be insufficient funds in such Funds or Accounts, the Trustee or Paying Agent, if any, shall so notify Ambac Assurance. Such notice shall specify the amount of the anticipated deficiency, the Obligations to which such deficiency is applicable and whether such Obligations will be deficient as to principal or interest, or both. If the Trustee or Paying Agent, if any, has not so notified Ambac Assurance at least one (1) day prior to an Interest Payment Date, Ambac Assurance will make payments of principal or interest due on the Obligations on or before the first (1 st) day next following the date on which Ambac Assurance shall have received notice of nonpayment from the Trustee or Paying Agent, if any. (b) the Trustee or Paying Agent, if any, shall, after giving notice to Ambac Assurance as provided in (a) above, make available to Ambac Assurance and, at Ambac Assurance's direction, to The Bank of New York, in New York, New York, as insurance trustee for Ambac Assurance or any successor insurance trustee (the "Insurance Trustee"), the registration books of the Obligor maintained by the Trustee or Paying Agent, if any, and all records relating to the Funds and Accounts maintained under this [Financing Document]. (c) the Trustce or Paying Agent, if any, shall provide Ambac Assurance and the Insurance Trustee with a list of registered owners of Obligations entitled to receive principal or interest payments from Ambac Assurance under the terms of the Financial Guaranty Insurance Policy, and shall make arrangements with the Insurance Trustee (1) to mail checks or drafts to the registered owners of Obligations entitled to receive full or partial interest payments from Ambac Assurance and (ii) to pay principal upon W Obligations surrendered to the Insurance Trustee by the registered owners of Obligations entitled to receive full or partial principal payments from Ambac Assurance. (d) the Trustee or Paying Agent, if any, shall, at the time it provides notice to Ambac Assurance pursuant to (a) above, notify registered owners of Obligations entitled to receive the payment of principal or interest thereon from Ambac Assurance (i) as to the fact of such entitlement, (ii) that Ambac Assurance will remit to them all or a part of the interest payments next coming due upon proof of Holder entitlement to interest payments and delivery to the Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate assignment of the registered owner's right to payment, (iii) that should they be entitled to receive full payment of principal from Ambac Assurance, they must surrender their Obligations (along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to permit ownership of such Obligations to be registered in the name of Ambac Assurance) for payment to the Insurance 'Trustee, and not the Trustee or Paying Agent, if any, and (iv) that should they be entitled to receive partial payment of principal from Ambac Assurance, they must surrender their Obligations for payment thereon first to the Trustee or Paying Agent, if any, who shall note on such Obligations the portion of the principal paid by the Trustee or Paying Agent, if any, and then, along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid portion of principal. (e) in the event that the Trustee or Paying Agent, if any, has notice that any payment of principal of or interest on an Obligation which has become Due for Payment and which is made to a Holder by or on behalf of the Obligor has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee.or Paying Agent, if any, shall, at the time Ambac Assurance is notified pursuant to (a) above, notify all registered owners that in the event that any registered owner's payment is so recovered, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available, and the Trustee or Paying Agent, if any, shall furnish to Ambac Assurance its records evidencing the payments of principal of and interest on the Obligations which have been made by the Trustee or Paying Agent, if any, and subsequently recovered from registered owners and the dates on which such payments were made. (f) in addition to those rights granted Ambac Assurance under this [Financing Document], Ambac Assurance shall, to the extent it makes payment of principal of or interest on Obligations, become subrogated to the rights of the recipients of such payments in accordance with the terns of the Financial Guaranty Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as to claims for past due interest, the Trustee or Paying Agent, if any, shall note Ambac Assurance's rights as subrogee on the registration books of the Obligor maintained by the Trustee or Paying Agent, if any, upon receipt from Ambac Assurance of proof of the paynnent of interest thereon to the registered owners of the Obligations, and (ii) in the case of subrogation as to claims for past due principal, the Trustee or Paying Agent, if any, shall note Ambac Assurance's rights as subrogee on the registration books of the Obligor maintained by the Trustee or Paying Agent, if any, upon surrender of the Obligations by the registered owners thereof together with proof of the payment of principal thereof. EXHIBIT G TRUSTEE -RELATED PROVISIONS With respect to ti-ansactions involving a trustee or paying agent, Ambac requires that the following provisions be incorporated into the Financing Document. Please note that unless otherwise required by Ambac, if the financing at hand does not contemplate a trustee or paying agent, these provisions may be disregarded. 1. The Trustee (or Paying Agent) may be removed at any time, at the request of Ambac Assurance, for any breach of the Trust set forth herein. 2. Ambac Assurance shall receive prior written notice of any Trustee (or Paying Agent) resignation. 3. Every successor Trustee appointed pursuant to this Section shall be a trust company or bank in good standing located in or incorporated under the laws of the State, duly authorized to exercise trust powers and subject to examination by federal or state authority, having a reported capital and surplus of not less than $75,000,000 and acceptable to Ambac Assurance. Any successor Paying Agent, if applicable, shall not be appointed unless Ambac approves such successor in writing. 4. Notwithstanding any other provision of this [Financing Document], in determining whether the rights of the Holders will be adversely affected by any action taken pursuant to the terms and provisions of this [Financing Document], the Trustee (or Paying Agent) shall consider the effect on the Holders as if there were no Financial Guaranty Insurance Policy. 5. Notwithstanding any other provision of this [Financing Document], no removal, resignation or termination of the Trustee (or Paying Agent) shall take effect until a successor, acceptable to Ambac, shall be appointed. EXHIBIT H INTERESTED PARTIES In addition to the provisions listed above, Ambac also requires the following provision be incorporated into the Financing Document: A. Ambac As Third Party BenePciary. To the extent that this [Financing Document] confers upon or gives or grants to Ambac any right, remedy or claim under or by reason of this [Financing Document], Ambac is hereby explicitly recognized as being a third -party beneficiary hereunder and may enforce any such right remedy or claim conferred, given or bn anted hereunder. B. Parties Interested Herein. Nothing in this [Financing Document] expressed or implied is intended or shall be construed to confer upon, or to give or grant to, any person or entity, other than the Obligor, the Trustee, Ambac Assurance, the Paying Agent, if any, and the registered owners of the Obligations, any right, remedy or claim under or by reason of this [Financing Document] or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this [Financing Document] contained by and on behalf of the Obligor shall be for the sole and exclusive benefit of the Obligor, the Trustee, Ambac Assurance, the Paying Agent, if any, and the registered owncrs of the Obligations. im EXHIBIT I AMBAC ASSURANCE OFFICIAL STATEMENT DISCLOSURE AND SUGGESTED LANGUAGE FOR TI-IE NOTICE OF SALE, OBLIGATION LEGEND, COVER PAGE OF OFFICIAL STATEMENT AMBAC ASSURANCE OFFICIAL STATEMENT DISCLOSURE Payment Pursuant to Financial Guaranty Insurance Policy Ambac Assurance has made a convnitment to issue a financial guaranty insurance policy (the "Financial Guaranty Insurance Policy") relating to the Obligations effective as of the date of issuance of the Obligations. Under the terms of the Financial Guaranty Insurance Policy, Ambac Assurance will pay to The Bank of New York, New York, New York or any successor thereto (the "Insurance Trustee") that portion of the principal of and interest on the Obligations which shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor (as such terms are defined in the Financial Guaranty Insurance Policy). Ambac Assurance will make such payments to the Insurance Trustee on the later of the date on which such principal and interest becomes Due for Payment or within one business day following the date on which Ambac Assurance shall have received notice of Nonpayment from the [Trustee/Paying Agent/Bond Registrar]. The insurance will extend for the term of the Obligations and, once issued, cannot be canceled by Ambac Assurance. The Financial Guaranty Insurance Policy will insure payment only on stated maturity dates and on mandatory sinking fund installment dates, in the case of principal, and on stated dates for payment, in the case of interest. If the Obligations become subject to mandatory redemption and insufficient funds are available for redemption of all outstanding Obligations, Ambac Assurance will remain obligated to pay principal of and interest on outstanding Obligations on the originally scheduled interest and principal payment dates including mandatory sinking fund redemption dates. In the event of any acceleration of the principal of the Obligations, the insured payments will be made at such times and in such amounts as would have been made had there not been an acceleration. In the event the [Trustee/Paying Agent/Bond Registrar] has notice that any payment of principal of or interest on an Obligation which has become Due for Payment and which is made to a Holder by or on behalf of the Obligor has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court of competent jurisdiction, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available. The Financial Guaranty Insurance Policy does not insure any risk other than Nonpayment, as defined in the Policy. Specifically, the Financial Guaranty Insurance Policy does not cover: 1. payment on acceleration, as a result of a call for redemption (other than mandatory sinking fund redemption) or as a result of any other advancement of maturity. 2. payment of any redemption, prepayment or acceleration premium. 3. nonpayment of principal or interest caused by the insolvency or negligence of any Trustee, Paying Agent or Bond Registrar, if any. If it becomes necessary to call upon the Financial Guaranty Insurance Policy, payment of principal requires surrender of Obligations to the Insurance 'Trustee together with an appropriate instrument of assignment so as to permit ownership of such Obligations to be registered in the name of Ambac Assurance to the extent of the payment under the Financial Guaranty Insurance Policy. Payment of interest pursuant to the Financial Guaranty Insurance Policy requires proof of Ilolder entitlement to interest payments and an appropriate assignment of the I loldea's right to payment to Ambac Assurance. Upon payment of the insurance benefits, Ambac Assurance will become the owner of the [Obligation], appurtenant coupon, if any, or right to payment of principal or interest on such [Obligation] and will be fully subrogated to the surrendering Holder's rights to payment. FOR TRANSACTIONS INVOLVING AUCTION RATE SECURITES: The Financial Guaranty Insurance Policy does not insure against loss relating to payments made in connection with the sale of [Obligations] at Auctions or losses suffered as a result of a Holder's inability to sell [Obligations]. FOR TRANSACTIONS INVOLVING VARIABLE RATE OBLIGATIONS: The Financial Guaranty Insurance Policy does not insure against loss relating to payments of the purchase price of [Obligations] upon tender by a registered owner thereof or any preferential transfer relating to payments of the purchase price of [Obligations] upon tender by a registered owner thereof. ADDITIONAL PARAGRAPH FOR CALIFORNIA TRANSACTIONS: In the event that Ambac Assurance were to become insolvent, any claims arising under the Policy would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California. ADDITIONAL PARAGRAPH FOR NEW YORK TRANSACTIONS: The insurance provided by the Financial Guaranty Insurance Policy is not covered by the property/casualty insurance security fund specified by the insurance laws of the State of New York. ADDITIONAL PARAGRAPH FOR FLORIDA TRANSACTIONS: The insurance provided by the Financial Guaranty Insurance Policy is not covered by the Florida Insurance Guaranty Association. ADDITIONAL PARAGRAPH FOR CONNECTICUT TRANSACTIONS: In the event that Ambac were to become insolvent, any claims arising under the Financial Guaranty Insurance Policy would be excluded from coverage by the Connecticut Insurance Guaranty Association. ADDITIONAL PARAGRAPH FOR OKLAHOMA TRANSACTIONS: WARNING: Any person who knowingly, and with intent to injure, defrauds or deceives any insurer, makes any claim for the proceeds of an insurance policy containing any false, incomplete or misleading information is guilty of a felony. ADDITIONAL PARAGRAPH FOR VIRGINIA TRANSACTIONS: The Policy shall not be decmed invalid due to the absence of the required signature or countersignature. Ambac Assurance Corporation Ambac Assurance Corporation ("Ambac Assurance") is a Wisconsin -domiciled stock insurance corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin and licensed to do business in 50 states, the District of Columbia, the Territory of Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, with admitted assets of approximately $7,278,000,000 (audited) and statutory 11 capital of $4,4905000,000 (audited) as of December 31, 2003. Statutory capital consists of Ambac Assurance's policyholders' surplus and statutory contingency reserve. Standard & Poor's Credit Markets Services, a Division of The McGraw -Bill Companies, Moody's Investors Service and Fitch Ratings have each assigned a triple-A financial strength rating to Ambac Assurance. Ambac Assurance has obtained a ruling from the Internal Revenue Service to the effect that the insuring of an obligation by Ambac Assurance will not affect the treatment for federal income tax purposes of interest on such obligation and that insurance proceeds representing maturing interest paid by Ambac Assurance under policy provisions substantially identical to those contained in its Financial Guaranty insurance policy shall be treated for federal income tax purposes in the same manner as if such payments were made by the Obligor of the [Obligations]. [THE FOLLOWING MUST BE INCLUDED IN ANNUAL APPROPRIATION LEASE TRANSACTIONS: No representation is made by Ambac Assurance regarding the federal income tax treatment of payments that are made by Ambac Assurance under the terms of the Policy due to non appropriation of funds by the Lessee.] Ambac Assurance makes no representation regarding the [Obligations] or the advisability of investing in the [Obligations] and makes no representation regarding, nor has it participated in the preparation of, the Official Statement other than the information supplied by Ambac Assurance and presented under the heading Available Information The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the "Company"), is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). These reports, proxy statements and other information can be read and copied at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800- SEC-0330 for further information on the public reference room. The SEC maintains an internet site at h t t p : / /www . s e c , 9 ov that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC, including the Company. These reports, proxy statements and other information can also be read at the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New York 10005. Copies of Ambac Assurance's financial statements prepared in accordance with statutory accounting standards are available from Ambac Assurance. The address of Ambac Assurance's administrative offices and its telephone number are One State Street Plaza, 19th Floor, New York, New York, 10004 and (212) 668-0340. Incorporation of Certain Documents by Reference The following documents filed by the Company with the SEC (File No. 1-10777) are incorporated by reference in this Official Statement: 1) The Company's Current Report on Form 8-K dated January 23, 2003 and filed on January 24, 2003; 2) The Company's Current Report on Form 8-K dated February 25, 2003 and filed on February 28, 2003; 3) The Company's Current Report on Form 8-K dated February 25, 2003 and filed on March 4, 2003; 4) The Company's Current Report on Forni 8-K dated March 18, 2003 and filed on March 20, 2003; 12 5) The Company's Current Report on Form 8-K dated March 19, 2003 and filed on March 26, 2003; 6) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and filed on March 28, 2003; 7) The Company's Current Report on Form 8-K dated March 25, 2003 and filed on March 31, 2003; 8) The Company's Current Report on Form, 8-K dated April 17, 2003 and filed on April 21, 2003; 9) The Company's Quarterly Report on Form 10- for the fiscal quarterly period ended March 31, 2003 and filed on May 15, 2003; 10) The Company's Current Report on Form 8-K dated July 17, 2003 and filed on July 18, 2003; 11) The Company's Quarterly Report on Form I O-Q for the fiscal quarterly period ended June 30, 2003 and filed on August 14, 2003; 12) The Company's Current Report on Form 8-K dated October 16, 2003 and filed on October 17, 2003; 13) The Company's Quarterly Report on Form 10- for the fiscal quarterly period ended September 30, 2003 and filed on November 14, 2003; ... 14) The Company's Annual Report amendment No. I on Form 10-K/A for the fiscal year ended December 31, 2002 and filed on November 19, 2003; and 15) The Company's Current Report on Form 8-K dated January 28, 2004 and filed on January 30, 2004. All documents subsequently filed by the Company pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in the same manner as described above in "Available Information". NOTICE OF SALE Ambac Assurance Corporation ("Ambac Assurance") has issued a commitment for a financial guaranty insurance policy relating to the Obligations. All bids may be conditioned upon the issuance, effective as of the date on which the Obligations are issued, of a policy of insurance by Ambac Assurance, insuring the payment when due of principal of and interest on the Obligations. Each Obligation will bear a legend referring to the insurance. The purchaser, holder or owner is not authorized to make any statements concerning the insurance beyond those set out here and in the Bond Legend without the approval of Ambac Assurance. BOND LEGEND Financial Guaranty Insurance Policy No.— (the "Policy") with respect to payments due for principal of and interest on this Bond has been issued by Ambac Assurance Corporation ("Ambac Assurance"). The Policy has been delivered to The Bank of New York, New York, New York, as the Insurance Trustee under said Policy and will be held by such Insurance Trustee or any successor insurance trustee. The Policy is on file and available for inspection at the principal office of the Insurance Trustee and a copy thereof may be secured from Ambac 13 Assurance or the Insurance Trustee. All payments required to be made under the Policy shall be made in accordance with the provisions thereof. The owner of this Bond acknowledges and consents to the subrogation rights of Ambac Assurance as more fully set forth in the Policy. COVER PAGE OF OFFICIAL STATEMENT Payment of the principal of and interest on the [Obligations] when due will be insured by a financial guaranty insurance policy to be issued by Ambac Assurance Corporation simultaneously with the delivery of the Obligations. 14 EXHIBIT J FORM OF THE AMBAC LEGAL OPINION Date: Ladies and Gentlemen: This opinion has been requested of the undersigned, a Vice President and an Assistant General Counsel of Ambac Assurance Corporation, a Wisconsin stock insurance company ("Ambac Assurance"), in connection with the issuance by Ambac Assurance of a certain Financial Guaranty Insurance Policy and endorsement thereto, effective as of the date hereof (the "Policy"), insuring $> in aggregate principal amount of the > (the "Obligor"), > dated > (the "Obligations"). In connection with my opinion herein, I have examined the Policy, such statutes, documents and proceedings as I have considered necessary or appropriate under the circumstances to render the following opinion, including, without limiting the generality of the foregoing, certain statements contained in the Official Statement of the Obligor dated >, relating to the Obligations (the "Official Statement") under the headings ">" and "�". Based upon the foregoing and having regard to legal considerations I deem relevant, I am of the opinion that: Ambac Assurance is a stock insurance company duly organized and validly existing under the laws of the State of Wisconsin and duly qualified to conduct an insurance business in the State of >. Ambac Assurance has full corporate power and authority to execute and deliver the Policy and the Policy has been duly authorized, executed and delivered by Ambac Assurance and constitutes a legal, valid and binding obligation of Ambac Assurance enforceable in accordance with its terms except to the extent that the enforceability (but not the validity) of such obligation may be limited by any applicable bankruptcy, insolvency, liquidation, rehabilitation or other similar law or enactment now or hereafter enacted affecting the enforcement of creditors' rights. The execution and delivery by Ambac Assurance of the Policy will not, and the consummation of the transactions contemplated thereby and the satisfaction of the terms thereof will not, conflict with or result in a breach of any of the terms, conditions or provisions of the Certificate of Authority, Articles of Incorporation or By -Laws of Ambac Assurance, or any restriction contained in any contract, agreement or instrument to which Ambac Assurance is a party or by which it is bound or constitute a default under any of the foregoing. 4. Proceedings legally required for the issuance of the Policy have been taken by Ambac Assurance and licenses, orders, consents or other authorizations or approvals of any governmental boards or bodies legally required for the enforceability of the Policy have been obtained; any proceedings not taken and any licenses, authorizations or approvals not obtained are not material to the enforceability of the Policy. S. The statements contained in the Official Statement under the heading "5," insofar as such statements constitute summaries of the matters referred to therein, accurately reflect and fairly present the information purported to be shown and, insofar as such statements describe Ambac Assurance, fairly and accurately describe Ambac Assurance. IN 6. The form of Policy contained in the Official Statement under the heading ">" is a true and complete copy of the form of Policy. The opinions expressed herein are solely for your benefit, and may not be relied upon by any other person. Very truly yours, Vice President and Assistant General Counsel 16 EXHIBIT K CERTIFICATE OF OBLIGATION INSURER In connection with the issuance of > in aggregate principal amount of (tile "Obligor") > (the "Obligations"), Ambac Assurance Corporation ("Ambac") is issuing a Financial Guaranty insurance policy (tire "Insurance Policy") guaranteeing the payment of principal and interest when due on the Obligations, all as more fully set out in the Insurance Policy. On behalf of Ambac, the undersigned hereby certifies that: (1) the Insurance Policy is an unconditional and recourse obligation of Ambac (enforceable by or on behalf of the holders of the Obligations) to pay the scheduled payments of interest and principal on the Obligations in the event of a Nonpayment as defined in the Insurance Policy; (ii) the insurance premium of $ was determined in arm's length negotiations in accordance with our standard procedures, is required to be paid as a condition to the issuance of the Insurance Policy and represents a reasonable charge for the transfer of credit risk; (iii) no portion of such premium represents a payment for any direct or indirect services other than the transfer of credit risk, including costs of underwriting or remarketing the Obligations or the cost of insurance for casualty of Obligation financed property; (iv) we are not co -obligors on the Obligations and do not reasonably expect that we will be called upon to make any payment under the Insurance Policy; (v) the Obligor is not entitled to a refund for the Insurance Policy in the event that the Obligations are retired prior to their stated maturity; and (vi) we would not have issued the Insurance Policy in the absence of a debt service reserve fund of the size and type established by the documents pursuant to which the Obligations are being issued, and it is normal and customary to require a debt service reserve fund of such a size and type in similar transactions. IN WITNESS WHEREOF, Ambac Assurance Corporation has caused this certificate to be executed in its name on this > day of >, 200_ by one of its officers duly authorized as of such date. AMBAC ASSURANCE CORPORATION Vice President and Assistant General Counsel 17 EXHIBIT L AMBAC ASSURANCE CORPORATION WIRING INSTRUCTIONS Citibank N.A. ABA NO.021000089 For: Ambac Assurance Corporation A/C No. 40609486 Attention: [Closing Coordinator], 212-208-3— *** Please indicate Policy Number on wire and call your closing coordinator with your wire reference number on the morning of closing*** EXHIBIT M REPRESENTATIONS, WARRANTIES AND COVENANTS FOR REVISED ARTICLE 9 COLLATERAL I. This [Financing Agreement] creates a valid and binding [pledge of/assignment of/lien on and/or security interest in] the [described collateral] in favor of the [Trustee/Bondholders] as security for payment of the [Obligations], enforceable by the [Trustee/Bondholders] in accordance with the terms hereof 2. Under the laws of the [state of issuer], (1) such [pledge of assignment/lien and/or security interest], (2) and each pledge, assignment, lien, or other security interest made to secure any prior obligations of [Obligor] which, by the terms hereof, ranks on a parity with or prior to the [pledge/assignment/lien and/or security interest] granted hereby, is and shall be prior to any judicial lien hereafter imposed on such collateral to enforce a judgment against the [Obligor] on a simple contract. By the date of issue of the [Obligations] the [Obligor] will have filed all financing statements describing, and transferring such possession or control over, such collateral (and for so long as any [Obligation] is outstanding the [Obligor] will file, continue, and amend all such financing statements and transfer such possession and control) as may be necessary to establish and maintain such priority in each jurisdiction in which the [Obligor] is organized or such collateral may be located or that may otherwise be applicable pursuant to Uniform Commercial Code §§9.301--9.306 of such jurisdiction. 3. The [Obligor] has not heretofore made a pledge of, granted a lien on or security interest in, or made an assignment or sale of such collateral that ranks on a parity with or prior to the [pledge/assignment/lien and/or security interest] granted hereby [, except for the [pledge/assignment/lien and/or security interest] granted to secure the [Parity Obligations.] The [Obligor] shall not hereafter make or suffer to exist any pledge or assignment of, lien on, or security interest in such collateral that ranks prior to or on a parity with the [pledge/assignment/lien and/or security interest] granted hereby, or file any financing statement describing any such pledge, assignment, lien or security interest, except as expressly permitted hereby. 110 Temp. Reso. #10367, March 15, 2004 Page 9 EXHIBIT C Reserve Surety Commitment Ambac February 24, 2004 Ambac Assurance Corporation One State Street Plaza New York, NY 10004 212.668.0340 A mrmher of lhe,4mbar Financial Group, Inr, AMBAC ASSURANCE STANDARD PACKAGE FOR TRANSACTIONS SUPPORTED BY AN AMBAC ASSURANCE CORPORATION SURETY BOND WITHOUT DEPOSIT AGREEMENT TO: Obligor, Obligor's Counsel, Managing Underwriter, Bond Counsel and Underwriter's Counsel RE: Preparation of Financing Documents for Issues the Debt Service Reserve Fund of which is to be supported by an Arnbac Assurance Corporation ("Ambac Assurance") Surety Bond The attached materials have been prepared to assist you in the preparation of documents for issues the Debt Service Reserve Fund of which is to be supported by an Ambac Assurance Surety Bond. Please modify the attached exhibits where appropriate. If desired, these provisions can be incorporated into one section entitled "Debt Service Reserve Fund Ambac Assurance Surety Bond" within the applicable Indenture, Resolution, Ordinance, Order or any other operative financing document (such applicable financing document will be referred to herein as the "Financing Document"). Please be advised that the provisions contained in this package are in addition to the conditions listed on the commitment for the Ambac Surety Bond and any other... comments or changes that may be required by the Ambac Assurance personnel working on this financing. This package and the documents contained herein are not for use in Virginia financings. If you have any questions, please call one of the following persons: David N. Abramowitz, Eileen L. Kirchoff or Stephen M. Ksenak (Public Finance) and Kevin J. Doyle, Lee Ann Duffy, Jean Kim, Juan B. Roman or Nicola J. Ryan (Specialized Finance). • Definitions (Exhibit A). • Arnbac Assurance consent required for changes to underlying documentation and exercise of remedies upon default (Exhibit B). • Notices/Information to be given to Ambac Assurance (Exhibit Q. • Description of Ambac Assurance payment procedure (Exhibit D). • Ambac Assurance Official Statement Disclosure (Exhibit E). • Fonn of Ambac Assurance Opinion (Exhibit F). • Fonn of Surety Certificate of Insurer (Exhibit G) • Form of Surety Bond (Exhibit H). • Form of"Guaranty Agreement (Exhibit I). • Ambac Assurance Coij)oration Wiring Instructions (Exhibit J). EXHIBIT A DEFINITIONS The following definitions are those which Ambac Assurance recommends for the Financing Document: "Ambac Assurance" shall mean Ambac Assurance Corporation, a Wisconsin domiciled stock insurance company. "Surety Bond" shall mean the surety bond issued by Ambac Assurance guaranteeing certain payments into the Debt Service Reserve Fund with respect to the Obligations as provided therein and subject to the limitations set forth therein. EXHIBIT B AMBAC ASSURANCE CONSENT LANGUAGE Ambac Assurance requires that the Financing Document contain the following consent language: A. Consent of Ambac Assurance. Any provision of this [Financing Document] expressly recognizing or granting rights in or to Ambac Assurance may not be amended in any manner which affects the rights of Ambac Assurance hereunder without the prior written consent of Ambac Assurance, Ambac Assurance reserves the right to charge the Obligor* a fee for any consent or amendment to the Financing Document while the Surety Bond is outstanding. B. Consent of Ambac Assurance in Addition to Holder Consent. Unless otherwise provided in this Section, Ambac Assurance's consent shall be required in addition to Holder consent, when required, for the following purposes. (i) execution and delivery of any supplemental [Financing Document] or any amendment, supplement or change to or modification of the [Loan Agreement, Lease Agreement, etc.] (ii) removal of the Trustee or Paying Agent or selection and appointment of any successor trustee or paying agent; and (iii) initiation or approval of any action not described in (i) or (ii) above which requires Holder consent. * or appropriate obligor on the Obligations. 2 EXHIBIT C NOTICES/INFORMATION TO BE GIVEN TO AMBAC ASSURANCE Ambac Assurance requires that the following notice provisions be incorporated into the Financing Document: Notices to be sent to the attention of the SURVEILLANCE DEPARTMENT: A. While the Surety Bond is in effect, the Obligor* or the Trustee, as appropriate, shall furnish to Ambac Assurance, upon request, the following: (a) a copy of any financial statement, audit and/or annual report of the Obligor* (b) such additional information it may reasonably request. Upon request, such information shall be delivered at the Obligor's* expense to the attention of the Surveillance Department, unless otherwise indicated. B. A copy of any notice to be given to the registered owners of the Obligations, including, without limitation, notice of any redemption of or defeasance of Obligations, and any certificate rendered pursuant to this [Financing Document] relating to the security of the Obligations.. C. To the extent that the Obligor* has entered into a continuing disclosure agreement with respect to the Obligations, Ambac Assurance shall be included as party to be notified. Notices to be sent to the attention of the GENERAL COUNSEL OFFICE: A. The Trustee or Obligor* [as appropriate] shall notify Ambac Assurance of any failure of the Obligor* to provide relevant notices, certificates, etc. B. Notwithstanding any other provision of this [Financing Document], the Trustee shall immediately notify Ambac Assurance if at any time there are insufficient moneys to make any payments of principal and interest as required and immediately upon the occurrence of (i) any event of default hereunder or (ii) any payment default under any related security agreement. Other Information to be given to Ambac Assurance: The Obligor will permit Ambac Assurance to discuss the affairs, finances and accounts of the Obligor or any information Ambac Assurance may reasonably request regarding the security for the Obligations with appropriate officers of the Obligor. The Trustee or Obligor, as appropriate, will permit Ambac Assurance to [have access to the Project and] have access to and to make copies of all books and records relating to the Obligations at any reasonable time. *or appropriate obligor on the Obligations. EXHIBIT D PAYMENT PROCEDURE PURSUANT TO THE SURETY BOND The following language sets out standard procedure for payments under the Surety Bond. Modifications should be made to take into account definitions used in the Financing Document (e.g. Debt Service Reserve Fund, Revenues, Additional Funding Instrument). Specific or different payment procedure required by the Financing Document must be discussed with Ambac Assurance. A. As long as the Surety Bond shall be in full force and effect, the Obligor, Trustee and Paying Agent, if appropriate, agree to comply with the following provisions: (a) In the event and to the extent that moneys on deposit in the Fund/ Account, plus all amounts on deposit in and credited to the [Debt Service Reserve Fund] in excess of the amount of the Surety Bond, are insufficient to pay the amount of principal and interest coming due, then upon the later of: (i) one (1) day after receipt by the General Counsel of Ambac of a demand for payment in the form attached to the Surety Bond as Attachment I (the "Demand for Payment"), duly executed by the Paying Agent certifying that payment due under the [Financing Document] has not been made to the Paying Agent; or (ii) the payment date of the Obligations as specified in the Demand for Payment presented by the Paying Agent to the General Counsel of Ambac, Ambac will make a deposit of funds in an account with the Paying Agent or its successor, in New York, New York, sufficient for the payment to the Paying Agent, of amounts which are then due to the Paying Agent under the [Financing Document] (as specified in the Demand for Payment) up to but not in excess of the Surety Bond Coverage, as defined in the Surety Bond; provided, however, that in the event that the amount on deposit in, or credited to, the [Debt Service Reserve Fund], in addition to the amount available under the Surety Bond, includes amounts available under a letter of credit, insurance policy, Surety Bond or other such funding instrument (the "Additional Funding Instrument"), draws on the Surety Bond and the Additional Funding Instrument shall be made on a pro rata basis to fund the insufficiency. (b) the Trustee, or Paying Agent, if appropriate, shall, after submitting to Ambac Assurance the Demand for Payment as provided in (a) above, make available to Ambac Assurance all records relating to the Funds and Accounts maintained under this [Financing Document]. (c) the Trustee, or Paying Agent, if appropriate, shall, upon receipt of moneys received from the draw on the Surety Bond, as specified in the Demand for Payment, credit the Debt Service Reserve Fund to the extent of moneys received pursuant to such Demand. (d) the [Debt Service Reserve Fund] shall be replenished in the following priority: (i) [principal and interest on the Surety Bond shall be paid from first available Revenues] [principal and interest on the Surety Bond and on the Additional Funding Instrument shall be paid from first available Revenues on a pro rata basis]; (ii) after all such amounts are paid in full, amounts necessary to fund the [Debt Service Reserve Fund] to the required level, after taking into account the amounts available under the Surety Bond [and the Additional Funding Instrument] shall be deposited from next available Revenues. 4 EXHIBIT E OFFICIAL STATEMENT DISCLOSURE FOR AMBAC ASSURANCE CORPORATION SURETY BOND Security For The Obligations Debt Service Reserve Fund Ambac Assurance Surety Bond The [Financing Document] requires the establishment of a Debt Service Reserve Fund in an amount equal to $ >. The [Financing Document] authorizes the Obligor to obtain a Surety Bond in place of fully funding the Debt Service Reserve fund. Accordingly, application has been made to Ambac Assurance Corporation ("Ambac Assurance") for the issuance of a Surety Bond for the purpose of funding [a portion of] the Debt Service Reserve Fund (see the "[Financing Document]" herein). The Obligations will only be delivered upon the issuance of such Surety Bond. The premium on the Surety Bond is to be fully paid at or prior to the issuance and delivery of the Obligations. The Surety Bond provides that upon the later of (i) one (1) day after receipt by Ambac Assurance of a demand for payment executed by the [Trustee/Paying Agent/Obligation Registrar] certifying that provision for the payment of principal of or interest on the Obligations when due has not been made or 00 the interest payment date specified in the Demand for Payment submitted to Ambac Assurance, Ambac Assurance will promptly deposit funds with the Paying Agent sufficient to enable the Paying Agent to make such payments due on the Obligations, but in no event exceeding the Surety Bond Coverage, as defined in the Surety Bond. Pursuant to the terms of the Surety Bond, the Surety Bond Coverage is automatically reduced to the extent of each payment made by Ambac Assurance under the terms of the Surety Bond and the Obligor is required to reimburse Ambac Assurance for any draws under the Surety Bond with interest at a market rate. Upon such reimbursement, the Surety Bond is reinstated to the extent of each principal reimbursement up to but not exceeding the Surety Bond Coverage. The reimbursement obligation of the Obligor is subordinate to the Obligor's obligations with respect to the Obligations. In the event the amount on deposit, or credited to the Debt Service Reserve Fund, exceeds the amount of the Surety Bond, any draw on the Surety Bond shall be made only after all the funds in the Debt Service Reserve Fund have been expended. In the event that the amount on deposit in, or credited to, the [Debt Service Reserve Fund], in addition to the amount available under the Surety Bond, includes amounts available under a letter of credit, insurance policy, Surety Bond or other such funding instrument (the "Additional Funding Instrument"), draws on the Surety Bond and the Additional Funding Instrument shall be made on a pro rata basis to fund the insufficiency. The [Financing Document] provides that the [Debt Service Reserve Fund] shall be replenished in the following priority: (i) [principal and interest on the Surety Bond shall be paid from first available Revenues] [principal and interest on the Surety Bond and on the Additional Funding Instrument shall be paid from first available Revenues on a pro rata basis]; (ii) after all such amounts are paid in full, amounts necessary to fund the [Debt Service Reserve Fund] to the required level, after taking into account the amounts available under the Surety Bond [and the Additional Funding Instrument] shall be deposited from next available Revenues. The Surety Bond does not insure against nonpayment caused by the insolvency or negligence of the Trustee or the Paying Agent. In addition,_one of the following paragraphs may a 1 ADDITIONAL PARAGRAPH FOR CALIFORNIA TRANSACTIONS: In the event that Ambac Assurance were to become insolvent, any claims arising under the Surety Bond would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California. 5 ADDITIONAL PARAGRAPH FOR CONNECTICUT TRANSACTIONS: In the event that Ambac were to become insolvent, any claims arising under the Surety Bond would be excluded from coverage by the Connecticut Insurance Guaranty Association, ADDITIONAL PARAGRAPH FOR FLORIDA TRANSACTIONS: The insurance provided by the Surety Bond is not covered by the Florida Insurance Guaranty Association. ADDITIONAL PARAGRAPH FOR NEW YORK TRANSACTIONS: The insurance provided by the Surety Bond is not covered by the property/casualty insurance security fund specified by the insurance laws of the State of New York. FOR OKLAHOMA TRANSACTIONS, AN ENDORSEMENT TO THE SURETY BOND IS REQUIRED, WHICH SPECIFIES THE FOLLOWING; WARNING: Any person who knowingly, and with intent to injure, defrauds or deceives any insurer, makes any claim for the proceeds of an insurance policy containing any false, incomplete or misleading information, is guilty of a felony. Ambac Assurance Corporation Ambac Assurance Corporation ("Ambac Assurance") is a Wisconsin -domiciled stock insurance corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin and licensed to do business in 50 states, the District of Columbia, the Tenitory of Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, with admitted assets of approximately $7,278,000,000 (audited) and statutory capital of approximately $4,490,000,000 (audited) as of December 31, 2003. Statutory capital consists of Ambac Assurance's policyholders' surplus and statutory contingency reserve. Standard & Poor's Credit Markets Services, a Division of The McGraw- flill Companies, Moody's Investors Service and Fitch Ratings have each assigned a triple-A financial strength rating to Ambac Assurance. Ambac Assurance has obtained a ruling from the Internal Revenue Service to the effect that the insuring of an [obligation] by Ambac Assurance will not affect the treatment for federal income tax purposes of interest on such [obligation] and that insurance proceeds representing maturing interest paid by Ambac Assurance under policy provisions substantially identical to those contained in its financial guaranty insurance policy shall be treated for federal income tax purposes in the same manner as if such payments were made by the Obligor of the [Obligations]. [THE FOLLOWING MUST BE INCLUDED IN ANNUAL APPROPRIATION LEASE TRANSACTION: No representation is made by Ambac Assurance regarding the federal income tax treatment of payments that are made by Ambac Assurance under the terms of the Policy due to nonappropriation of funds by the Lessee] Ambac Assurance makes no representation regarding the [Obligations] or the advisability of investing in the [Obligations] and makes no representation regarding, nor has it participated in the preparation of, the Official Statement other than the information supplied by Ambac Assurance and presented under the heading Ca Available information The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the "Company"), is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). These reports, proxy statements and other information can be read and copied at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC, including the Company. These reports, proxy statements and other information can also be read at the offices of the New York Stock Exchange, Inc. (the "NYSE'), 20 Broad Street, New York, New York 10005. Copies of Ambac Assurance's financial statements prepared in accordance with statutory accounting standards are available from Ambac Assurance. The address of Ambac Assurance's administrative offices and its telephone number are One State Street Plaza, 19th Floor, New York, New York, 10004 and (212) 668-0340. Incorporation of Certain Documents by Reference The following documents filed by the Company with the SEC (File No. 1-10777) are incorporated by reference in this Official Statement: 1. The Company's Current Report on Form 8-K dated January 23, 2003 and filed on January 24, 2003; 2. The Company's Current Report on Form 8-K dated February 25, 2003 and filed on February 28, 2003; 3. The Company's Current Report on Form 8-K dated February 25, 2003 and filed on March 4, 2003; 4. The Company's Current Report on Form 8-K dated March 18, 2003 and filed on March 20, 2003; 5. The Company's Current Report on Form 8-K dated March 19, 2003 and filed on March 26, 2003; 6, The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and filed on March 28, 2003; 7. The Company's Current Report on Form 8-K dated March 25, 2003 and filed on March 31, 2003; 8. The Company's Current Report on Form 8-K dated April 17, 2003 and filed on April 21, 2003; 9. The Company's Quarterly Report on Form I O-Q for the fiscal quarterly period ended March 31, 2003 and filed on May 15, 2003; 10. The Company's Current Report on Form 8-K dated July 17, 2003 and filed on July 18, 2003; 11. The Company's Quarterly Report on Form 10- for the fiscal quarterly period ended June 30, 2003 and filed on August 14, 2003; 12. The Company's Current Report on Form 8-K dated October 16, 2003 and filed on October 17, 2003; 13. The Company's Quarterly Report on Form I O-Q for the fiscal quarterly period ended September 30, 2003 and filed on November 14, 2003; and 7 14. The Company's Annual Report amendment No. 1 on Form 10-KJA for the fiscal year ended December 31, 2002 and filed on November 19, 2003; and 15. The Company's Current Report on Form 8-K dated January 28, 2004 and filed on January 30, 2004. All documents subsequently filed by the Company pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in the same manner as described above in "Available Information". EXHIBIT F FORM OF AMBAC ASSURANCE OPINION >, 200 Ladies and Gentlemen: This opinion has been requested of the undersigned, a Vice President and an Assistant General Counsel of Ambac Assurance Corporation, a Wisconsin stock insurance company ("Ambac Assurance"), in connection with the issuance by Ambac Assurance of a certain Surety Bond, effective as of the date hereof (the "Surety"), guaranteeing payment of an amount equal to $> into the Debt Service Reserve Fund for the >, dated > (the "[Obligations]"). In connection with my opinion herein, I have examined the Surety, such statutes, documents and proceedings as I have considered necessary or appropriate under the circumstances to render the following opinion, including, without limiting the generality of the foregoing, certain statements contained in the Official Statement of the Obligor dated >, 200_, relating to the [Obligations] (the "Official Statement") under the headings "5" and "5". Based upon the foregoing and having regard to legal considerations I deem relevant, I am of the opinion that: 1. Ambac Assurance is a stock insurance company duly organized and validly existing under the laws of the State of Wisconsin and duly qualified to conduct an insurance business in the State of >. 2. Ambac Assurance has full corporate power and authority to execute and deliver the Surety and the Surety has been duly authorized, executed and delivered by Ambac Assurance and constitutes a legal, valid and binding obligation of Ambac Assurance enforceable in accordance with its terms except to the extent that the enforceability (but not the validity) of such obligation may be limited by any applicable bankruptcy, insolvency, liquidation, rehabilitation or other similar law or enactment now or hereafter enacted affecting the enforcement of creditors' rights. 3. The execution and delivery by Ambac Assurance of the Surety will not, and the consummation of the transactions contemplated thereby and the satisfaction of the terms thereof will not, conflict with or result in a breach of any of the terms, conditions or provisions of the Certificate of Authority, Articles of Incorporation or By -Laws of Ambac Assurance, or any restriction contained in any contract, agreement or instrument to which Ambac Assurance is a party or by which it is bound or constitute a default under any of the foregoing. 4. Proceedings legally required for the issuance of the Surety have been taken by Ambac Assurance and licenses, orders, consents or other authorizations or approvals of any governmental boards or bodies legally required for the enforceability of the Surety have been obtained; any proceedings not taken and any licenses, authorizations or approvals not obtained are not material to the enforceability of the Surety. 5_ The statements contained in the Official Statement under the heading ">," insofar as such statements constitute summaries of the matters referred to therein, accurately reflect and fairly present the information 0 G. purported to be shown and, insofar as such statements describe Ambac Assurance, fairly and accurately describe Ambac Assurance. The opinions expressed herein are solely for your benefit, and may not be relied upon by any other person. Very truly yours, Vice President and Assistant General Counsel EXHIBIT G SURETY CERTIFICATE OF OBLIGATION INSURER Ambac Assurance Corporation ("Ambac") is issuing a Surety Bond (the "Surety Bond") guaranteeing payment of an amount equal to $> to fund the Obligation Reserve Requirement (as defined in the Surety Bond) established with regard to > (the "Obligor") >, dated > (the "Obligations"). On behalf of Ambac, the undersigned hereby certifies that: (i) the Surety Bond is an unconditional and recourse obligation of Ambac to pay the scheduled payments of interest and principal on the Obligations in the event a draw on the Reserve Fund is required under the {Resolution/Indenture} and the amount credited to such Fund is insufficient to make such payment (up to but not in excess of the Surety Bond Coverage as defined in the Surety Bond); (ii) the premium of $> for the Surety Bond was determined in an-n's length negotiations in accordance with our standard procedures, is required to be paid as a condition to the issuance of the Surety Bond, and represents a reasonable charge for the transfer of credit risk; (iii)no portion of such premium represents a payment for any direct or indirect services other than the transfer of credit risk, including costs of underwriting or remarketing the Obligations or the cost of insurance for casualty of Obligation financed property; (iv) we are not co -obligors on the Obligations and we do not reasonably expect that we will be called upon to make any payment under the Surety Bond; and (v) the Obligor is not entitled to a refund of any portion of the premium for the Surety Bond in the event that the Obligations are retired prior to their stated maturity. IN WITNESS WHEREOF, Ambac Assurance Corporation has caused this certificate to be executed in its name on this > day of >, > by one of its officers duly authorized as of such date. AMBAC ASSURANCE CORPORATION By: Vice President and Assistant General Counsel EXHJBIT H SURETY BOND Ambac Assurance Corporation Statutory Office: c/o CT Corporation 44 East Mifflin Street Madison, Wisconsin 53703 Administrative Office: One State Street Plaza New York, New York 10004 Telephone: (212) 668-0340 Policy No. SB_BE Ambac Assurance Corporation ("Ambac"), in consideration of the payment of the premium and subject to the terins of this Surety Bond, hereby unconditionally and irrevocably guarantees the full and complete payments which are to be applied to payment of principal of and interest on the [Obligations] (as hereinafter defined) and which are required to be made by or on behalf of the (the "Obligor") to (the "Paying Agent/Trustee") as such payments are due by the Obligor but shall not be so paid pursuant to a resolution of the City Council of the Obligor authorizing the issuance of $ (the "[Obligations]") of said city and providing the terms and conditions for the issuance of said [Obligations] (the "Resolution/Indenture/Ordinance"); provided that the amount available at any particular time to be paid to the Paying Agent under the terms hereof shall not exceed the Surety Bond Coverage, defined herein as the lesser of $ or the [Debt Service Reserve Fund Requirement for the [Obligations], as that term is defined in the Resolution] (the `Reserve Requirement"). The Surety Bond Coverage shall be reduced and may be reinstated from time to time as set forth herein. 1. As used herein, the term "Owner" shall mean the registered owner of any [Obligation] as indicated in the books maintained by the applicable paying agent, the Obligor or any designee of the Obligor for such purpose. The term "Owner" shall not include the Obligor or any person or entity whose obligation or obligations by agreement constitute the underlying security or source of payment of the [Obligations]. 2. Upon the later of: (i) one(]) day after receipt by the General Counsel of Ambac of a demand for payment in the form attached hereto as Attachment 1 (the "Demand for Payment"), duly executed by the Paying Agent certifying that payment due as required by the Resolution has not been made to the Paying Agent; or (ii) the payment date of the [Obligations] as specified in the Demand for Payment presented by the Paying Agent to the General Counsel of Ambac, Ambac will make a deposit of funds in an account with the Paying Agent or its successor, in [City/State] sufficient for the payment to the Paying Agent, of amounts which are then due to the Paying Agent (as specified in the Demand for Payment) up to but not in excess of the Surety Bond Coverage. 3. Dernand for Payment hereunder may be made by prepaid telecopy, telex, or telegram of the executed Demand for Payment c/o the General Counsel of Ambac. If a Demand for Payment made hereunder does not, in any instance conform to the terms and conditions of this Surety Bond, Ambac shall give notice to the Paying Agent, as promptly as reasonably practicable that such Demand for Payment was not effected in accordance with the terms and conditions of this Surety Bond and briefly state the reason(s) therefor. Upon being notified that such Demand for Payment was not effected in accordance with this Surety Bond, the Paying Agent may attempt to correct any such nonconfonning Demand for Payment if, and to the extent that, the Paying Agent is entitled and able to do so. 4. The amount payable by Ambac under this Surety Bond pursuant to a Demand for Payment shall be limited to the Surety Bond Coverage. The Surety Bond Coverage shall be reduced automatically to the extent of each payment made by Ambac hereunder and will be reinstated to the extent of each reimbursement of Ambac by the Obligor pursuant to Article 11 of the Guaranty Agreement, dated as of the date of the [Obligations], by and between Ambac and the Obligor (the "Guaranty Agreement"); provided, that in no event shall such reinstatement exceed the Surety Bond Coverage, Ambac will notify the Paying Agent, in writing within five (5) days of such reimbursement, that the Surety Bond Coverage has been reinstated to the extent of such reimbursement pursuant to the Guaranty Agreement and such I[ol reinstatement shall be effective as of the date Ambac gives such notice. The notice to the Paying Agent will be substantially in the form attached hereto as Attachment 2. The Surety Bond Coverage shall be automatically reduced to the extent that the Reserve Requirement for the [Obligations] is lowered or reduced pursuant to the terms of the Resolution. 5. Any service of process on Ambac may be made to Ambac or the office of the General Counsel of Ambac and such service of process shall be valid and binding as to Ambac. During the term of its appointment, General Counsel will act as agent for the acceptance of service of process and its offices are located at One State Street Plaza, New York, New York 10004, G. This Surety Bond is noncancelable for any reason. The term of this Surety Bond shall expire on the earlier of (i) (the maturity date of the [Obligations]) or (ii) the date on which the Obligor, to the satisfaction of Ambac, has made all payments required to be made on the [Obligations] pursuant to the Resolution. The premium on this Surety Bond is not refundable for any reason, including the payment prior to maturity of the[Obligations]. 7. This Surety Bond shall be governed by and interpreted under the laws of the State of Wisconsin [or Minnesota, Nebraska, North Carolina, South Carolina, Utah, Vermont, Washington or Commonwealth of Pennsylvania, for financings in those states], and any suit hereunder [seeking specific performance (for Florida)] in connection with any payment may be brought only by the Paying Agent within one year [two years in Minnesota, three years in Maryland and Utah, five years in Kansas] after (i) a Demand for Payment, with respect to such payment, is made pursuant to the terms of this Surety Bond and Ambac has failed to make such payment or (ii) payment would otherwise have been due hereunder but for the failure on the part of the Paying Agent to deliver to Ambac a Demand for Payment pursuant to the terms of this Surety Bond, whichever is earlier. . . 8. One of the following paragraphs may apply: ADDITIONAL PARAGRAPH FOR CALIFORNIA TRANSACTIONS: In the event that Ambac Assurance were to become insolvent, any claims arising under the Surety Bond would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California. ADDITIONAL PARAGRAPH FOR CONNECTICUT TRANSACTIONS: In the event that Ambac were to become insolvent, any claims arising under the Surety Bond would be excluded from coverage by the Connecticut Insurance Guaranty Association. ADDITIONAL PARAGRAPH FOR FLORIDA TRANSACTIONS: The insurance provided by the Surety Bond is not covered by the Florida Insurance Guaranty Association. ADDITIONAL PARAGRAPH FOR NEW YORK TRANSACTIONS: The insurance provided by the Surety Bond is not covered by the property/casualty insurance security fund specified by the insurance laws of the State of New York. FOR OKLAHOMA 7RANSACTIONS — MUST USE OKLAHOMA ENDORSEMENT IN WITNESS WHEREOF, Ambac has caused this Surety Bond to be executed and attested on its behalf this day of, 200 . Ambac Assurance Corporation Attest: By: Assistant Secretary Vice President and Assistant General Counsel Un [Countersignature Agent, if applicable] fha Attachment 1 Surety Bond No. SB—BE DEMAND FOR PAYMENT Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Attention: General Counsel , 200_ Reference is made to the Surety Bond No, SB BE (the "Surety Bond") issued by Ambac Assurance Corporation ("Ambac"). The terms which are capitalized herein and not otherwise defined have the meanings specified in the Surety Bond unless the context otherwise requires. The Trustee hereby certifies that: (a) Payment by the Obligor to the Trustee was due on [a date not less than one (1) day prior to the applicable payment date for the [Obligations] under the Ordinance attached hereto as Exhibit A, in an amount equal to $ (the "Amount Due"). The Amount Due is payable to the Owners of the [Obligations] on (b) $ has been deposited in the [fund/account) from moneys paid by the Obligor or from other funds legally available to the Trustee for payment to the Owners of the [Obligations], which amount is $ less than the Amount Due (the "Deficiency"). (c) The Trustee has not heretofore made demand under the Surety Bond for the Amount Due or any portion thereof. The Trustee hereby requests that payment of the Deficiency (up to but not in excess of the Surety Bond Coverage) be made by Ambac under the Surety Bond and directs that payment under the Surety Bond be made to the following account by bank wire transfer of federal or other immediately available funds in accordance with the terms of the Surety Bond: [Trustee] By: Its: [Trustee's Account] For New York Policies add. "Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information, or conceals for the purpose of misleading, information concerning any fact material thereto, commits a fraudulent insurance act, which is a crime and shall also be subject to a civil penalty not to exceed five thousand dollars and the stated value of the claim for each such violation." For Florida Policies add. "Any person who knowingly and with intent to injure, defraud, or deceive any insurance company files a statement of claim containing any false, incomplete or misleading information is guilty of a felony of the third degree." 13 Attachment 2 Surety Bond No. SB BE NOTICE OF REINSTATEMENT [Paying Agent] [Address] , 200 Reference is made to the Surety Bond No. SB BE (the "Surety Bond") issued by Ambac Assurance Corporation ("Ambac"). The terns which are capitalized herein and not otherwise defined have the meanings specified in the Surety Bond unless the context otherwise requires. Ambac hereby delivers notice that it is in receipt of payment from the Obligor pursuant to Article II of the Guaranty Agreement and as of the date hereof the Surety Bond Coverage is $ , subject to a reduction as the Reserve Requirement for the [Obligations] is lowered or reduced pursuant to the terms of the Resolution. AMBAC ASSURANCE CORPORATION Attest: By: Title: Title: 14 EXHIBIT I GUARANTY AGREEMENT GUARANTY AGREEMENT dated as of , 200 by and between , a public body corporate organized and existing under the laws of the State of (the "Obligor"); and AMBAC ASSURANCE CORPORATION ("Ambac"), a Wisconsin domiciled stock insurance company. WITNESSETH: WHEREAS, the Obligor has or will issue -(the "[Obligations]"); and WHEREAS, Ambac will issue its Surety Bond (the "Surety Bond"), substantially in the form set forth in Annex A to this Agreement, guaranteeing certain payments by the Obligor subject to the terms and limitations of the Surety Bond; and WHEREAS, to induce Ambac to issue the Surety Bond, the Obligor has agreed to pay the premium for such Surety Bond and to reimburse Ambac for all payments made by Ambac under the Surety Bond from Legally Available Funds, all as more fully set forth in this Agreement; and WHEREAS, the Obligor understands that Ambac expressly requires the delivery of this Agreement as part of the consideration for the execution by Ambac of the Surety Bond; and NOW, THEREFORE, in consideration of the premises and of the agreements herein contained and of the execution of the Surety Bond, the Obligor and Ambac agree as follows: ARTICLE I DEFINITIONS; SURETY BOND Section 1.01. Definitions. Except as otherwise expressly provided herein or unless the context otherwise requires, the terms which are capitalized herein shall have the meanings specified in Annex B hereto. Section 1.02. Surety Bond. (a) Ambac will issue the Surety Bond in accordance with and subject to the terms and conditions of the Commitment. (b) The maximum liability of Ambac under the Surety Bond and the coverage and term thereof shall be subject to and limited by the Surety Bond Coverage and the terms and conditions of the Surety Bond. (c) Payments made under the Surety Bond will reduce the Surety Bond Coverage to the extent of that payment, provided that the Surety Bond Coverage shall be automatically reinstated to the extent of the reimbursement of principal by the Obligor of any payment made by Ambac. Ambac shall notify the Paying Agent in writing no later than the fifth (5th) day following the reimbursement by the Obligor that the Surety Bond has been reinstated to the extent of such reimbursement. Section 1.03. Premium. In consideration of Ambac agreeing to issue the Surety Bond hereunder, the Obligor hereby agrees to pay or cause to be paid from Legally Available Funds the premium set forth in the Commitment. Section 1.04. Certain Other Expenses, The Obligor will pay all reasonable fees and disbursements of Arnbac's counsel related to any modification of this Agreement or the Surety Bond. 15 ARTICLE II REIMBURSEMENT OBLIGATIONS OF OBLIGOR AND SECURITY THEREFORE Section 2.01. Reimbursement for Payments Under the Surety Bond and Expenses. (a) The Obligor will reimburse Ambac, from Legally Available Funds within the Reimbursement Period, without demand or notice by Ambac to the Obligor or any other person, to the extent of each Surety Bond Payment with interest on each Surety Bond Payment from and including the date made to the date of the reimbursement by the Obligor at the Effective Interest Rate. The Obligor agrees that it shall make monthly level principal repayments for each Surety Bond Payment during the Reimbursement Period. Interest on each Surety Bond Payment shall be paid monthly during the Reimbursement Period. To the extent that interest payments due hereunder are not paid on a monthly basis, or are not paid as each principal repayment is made, interest shall accrue on such unpaid amounts at a rate equal to the Effective Interest Rate. (b) The Obligor also agrees to reimburse Ambac, from Legally Available Funds, immediately and unconditionally upon demand for all reasonable expenses incurred by Ambac in connection with the Surety Bond and the enforcement by Ambac of the Obligor's obligations under this Agreement together with interest on all such expenses from and including the date which is 30 days from the date a statement for such expenses is received by the Obligor incurred to the date of payment at the rate set forth in subsection (a) of this Section 2.01. Section 2.02. Allocation of Payments. Ambac and the Obligor hereby agree that each repayment of principal received by Ambac from or on behalf of the Obligor as a reimbursement to Ambac as required by Section 2.01(a) hereof shall be applied to reinstate all or a portion of the Surety Bond Coverage to the extent of such repayment. Any interest payable pursuant to Section 2.01(a) hereof shall not be applied to the reinstatement of any portion of the Surety Bond Coverage. Section 2.03. Securi for Payments, Instruments of Further Assurance. To the extent, but only to the extent, that the Resolution pledges to the Owners or any paying agent therefor, or grants a security interest or lien in or on any collateral property, revenue or other payments ("Collateral and Revenues") in order to secure the [Obligations] or provide a source of payment for the [Obligations], the Obligor hereby grants to Ambac a security interest in or lien on, as the case may be, and pledges to Ambac all such Collateral and Revenues as security for payment of all amounts due hereunder, which security interest, lien and/or pledge created or granted under this Section 2.03 shall be subordinate only to the interests of the Owners and any paying agent therefor in such Collateral and Revenues. The Obligor agrees that it will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all financing statements, if applicable, and all other further instruments as may be required by law or as shall reasonably be requested by Ambac for the perfection of the security interest, if any, granted under this Section 2.03 and for the preservation and protection of all rights of Ambac under this Section 2.03. Section 2.04. _Unconditional Obligation. The obligations of the Obligor hereunder are absolute and unconditional and will be paid or performed strictly in accordance with this Agreement, irrespective of. (a) any lack of validity or enforceability of, or any amendment or other modification of, or waiver with respect to the Resolution or the [Obligations]; (b) any exchange, release or nonperfection of any security interest in property securing the [Obligations] or this Agreement or any obligations hereunder; (c) any circumstances which might otherwise constitute a defcnse available to, or discharge of, the Obligor with respect to the [Obligations]; 16 (d) whether or not such obligations are contingent or matured, disputed or undisputed, liquidated or unliquidated. ARTICLE III EVENTS OF DEFAULT; REMEDIES Section 3.01. Events of Default. The following events shall constitute Events of Default hereunder: (a) The Obligor shall fail to pay to A►nbac any amount payable under Sections 1.04 and 2.01 hereof and such failure shall have continued for a period in excess of the Reimbursement Period; (b) Any material representation or warranty made by the Obligor hereunder or under the Resolution or any statement in the application for the Surety Bond or any report, certificate, financial statement or other instrument provided in connection with the Commitment, the Surety Bond or herewith shall have been materially false at the time when made; (c) Except as otherwise provided in this Section 3.01, the Obligor shall fail to perform any of its other obligations under this Agreement, provided that such failure continues for more than thirty (30) days after receipt by the Obligor of notice of such failure to perform; (d) The Obligor shall (i) voluntarily commence any proceeding or file any petition seeking relief under the United States Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency or similar law, (ii) consent to the institution of, or fail to controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the appointment of a receiver, paying agent, custodian, sequestrator or similar official for the Obligor or for a substantial part of its property, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take action for the purpose of effecting any of the foregoing; or (e) An involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Obligor, or of a substantial part of its property, under the United States Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency or similar law or (ii) the appointment of a receiver, paying agent, custodian, sequestrator or similar official for the Obligor or for a substantial part of its property; and such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall continue unstayed and in effect for thirty (30) days. Section 3.02. Remedies. if an Event of Default shall occur and be continuing, then Ambac may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due under this Agreement or any related instrument and enforce any obligation, agreement or covenant of the Obligor under this Agreement; provided, however, that Ambac may not take any action to direct or require acceleration or other early redemption of the [Obligations] or adversely affect the rights of the Owners. All rights and remedies of Ambac under this Section 3.02 are cumulative and the exercise of any one remedy does not preclude the exercise of one or more of the other available remedies. ARTICLE IV SETTLEMENT 17 Ambac shall have the exclusive right to decide and determine whether any claim, liability, suit or judgment made or brought against Ambac, the Obligor or any other party on the Surety Bond shall or shall not be paid, compromised, resisted, defended, tried or appealed, and Ambac's decision thereon, if made in good faith, shall be final and binding upon the Obligor. An itemized statement of payments made by Ambac, certified by an officer of Ambac, or the voucher or vouchers for such payments, shall be prima facie evidence of the liability of the Obligor, and if the Obligor fails to reimburse Ambac, pursuant to subsection (b) of Section 2.01 hereof, upon the receipt of such statement of payments, interest shall be computed on such amount from the date of any payment made by Ambac at the rate set forth in subsection (a) of Section 2.01 hereof. ARTICLE V MISCELLANEOUS Section 5.01. Computations. All computations of premium, interest and fees hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days. Section 5.02. Exercise of Rights, No failure or delay on the part of Ambac to exercise any right, power or privilege under this Agreement and no course of dealing between Ambac and the Obligor or any other party shall operate as a waiver of any such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which Ambac would otherwise have pursuant to law or equity. No notice to or demand on any party in any case shall entitle such party to any other or further notice or demand in similar or other circumstances, or constitute a waiver of the right of the other party to any other or further action in any circumstances without notice or demand. Section 5.03. Amendment and Waiver. Any provision of this Agreement may be amended, waived, supplemented, discharged or terminated only with the prior written consent of the Obligor and Ambac. The Obligor hereby agrees that upon the written request of the Paying Agent, Ambac may make or consent to issue any substitute for the Surety Bond to cure any ambiguity or formal defect or omission in the Surety Bond which does not materially change the terms of the Surety Bond nor adversely affect the rights of the Owners, and this Agreement shall apply to such substituted Surety Bond. Ambac agrees to deliver to the Obligor and to the company or companies, if any, rating the [Obligations], a copy of such substituted Surety Bond. Section 5.04..Successors and Assigns; Descriptive Headings. (a) This Agreement shall bind, and the benefits thereof shall inure to, the Obligor and Ambac and their respective successors and assigns; provided, that the Obligor may not transfer or assign any or all of its rights and obligations hereunder without the prior written consent of Ambac. (b) The descriptive headings of the various provisions of this Agreement are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof. Section 5.05. Other Sureties. If Ambac shall procure any other surety to reinsure the Surety Bond, this Agreement shall inure to the benefit of such other surety, its successors and assigns, so as to give to it a direct right of action against the Obligor to enforce this Agreement, and "Ambac," wherever used herein, shall be deemed to include such reinsuring surety, as its respective interests may appear. Section 5.06. Signature on Obligation. The Obligor's liability shall not be affected by its failure to sign the Surety Bond nor by any claim that other indemnity or security was to have been obtained nor by the release of any indemnity, nor the return or exchange of any collateral that may have been obtained. Section 5.07. Waiver. The Obligor waives any defense that this Agreement was executed subsequent to the date of the Surety Bond, admitting and covenanting that such Surety Bond was executed pursuant to the Obligor's request and in reliance on the Obligor's promise to execute this Agreement. 18 Section 5.08. Notices Reguests,, Demands. Except as otherwise expressly provided herein, all written notices, requests, demands or other communications to or upon the respective parties hereto shall be deemed to have been given or made when actually received, or in the case of telex or telecopier notice sent over a telex or a telecopier machine owned or operated by a party hereto, when sent, addressed as specified below or at such other address as either of the parties hereto or the Paying Agent may hereafter specify in writing to the others: If to the Obligor: > If to the Paying Agent: > If to Ambac: Ambac Assurance Corporation One State Street Plaza 17th Floor New York, New York 10004 Attention: General Counsel Section 5,09. Survival of Representations and Warranties. All representations, warranties and obligations contained herein shall survive the execution and delivery of this Agreement and the Surety Bond. Section 5.10. Governing Law, This Agreement and the rights and obligations of the parties under this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State. Section 5.11. Counten2arts. This Agreement may be executed in any number of copies and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument. Complete counterparts of this Agreement shall be lodged with the Obligor and Ambac. Section 5.12. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written. (Seal) JOBLIGOR] Attest: By Title: Title: AMBAC ASSURANCE CORPORATION Attest: By Title: Title: 19 ANNEX A - SURETY BOND 20 ANNEX B DEFINITIONS For all purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, all capitalized terms shall have the meaning as set out below. "Agreement" means this Guaranty Agreement. "Ambac" has the same meaning as set forth in the first paragraph of this Agreement. "Collateral and Revenues" has the same meaning as set forth in Section 2.03 hereof. "Commitment" means the Ambac Commitment for Surety Bond in the form attached hereto as Annex C. "Debt Service Payments" means those payments required to be made by the Obligor which will be applied to payment of principal of and interest on the [Obligations]. "Effective Interest Rate" means the lesser of the Reimbursement Rate or the maximum rate of interest permitted by then applicable law; provided, however, that the Effective Interest Rate shall in no event be less than the interest rate on the [Obligations] "Event of Default" shall mean those events of default set forth in Section 3.01 of this Agreement. "Legally Available Funds" means any moneys legally available to the Obligor for the payment of its obligations. "[Obligations]" has the same meaning as set forth in the second paragraph of this Agreement "Obligor" has the same meaning as set forth in the first paragraph of this Agreement. "Owners" means the registered owner of any [Obligation] as indicated in the books maintained by the applicable paying agent, the Obligor or any designee of the Obligor for such purpose. The term "Owner" shall not include the Obligor or any person or entity whose obligation or obligations by agreement constitute the underlying security or source of payment for the [Obligations]. "Paying Agent" means "Reimbursement Period" means, with respect to a particular Surety Bond Payment, the period commencing on the date of such Surety Bond Payment and ending 12 months following such Surety Bond Payment. "Reimbursement Rate" means Citibank's prime rate plus two (2) percent per annum, as of the date of such Surety Bond Payment, said "prime rate" being the rate of interest announced from time to time by Citibank, New York, New York, as its prime rate. The rate of interest shall be calculated on the basis of a 360 day year. 41 "Resolution" means "State" means the State of "Surety Bond" means the Surety Bond issued by Ambac substantially in the form attached to this Agreement as Annex A. "Surety Bond Coverage" means the amount available at any particular time to be paid to the Paying Agent under the terms of the Surety Bond, which amount shall never exceed $ "Surety Bond Payment" means an amount equal to the Debt Service Payment less (i) that portion of the Debt Service Payment paid by the Obligor, and (ii) other funds legally available to the Paying Agent for payment to the Owners, all as certified by the Paying Agent in a demand for payment rendered pursuant to the terms of the Surety Bond. KPa ANNEX C COMMITMENT 23 EXHIBIT J AMBAC ASSURANCE CORPORATION WIRING INSTRUCTIONS Citibank N.A. ABA NO. 021000089 For: Ambac Assurance Corporation A/C No. 40609486 Attention: [Closing Coordinator], 212-208-3--- *** Please indicate Policy Number on wire and call your closing coordinator with your wire reference number on the morning of closing*** 24 Temp. Reso. #10367, March 15, 2004 Page 10 EXHIBIT D Form of Continuing Disclosure Certificate EXHIBIT J AMBAC ASSURANCE CORPORATION WIRING INSTRUCTIONS Citibank N.A. ABA NO. 021000089 For: Ambac Assurance Corporation A/C No. 40G0948G Attention: [Closing Coordinator], 212-208-3--- *** Please indicate Policy Number on wire and call your closing coordinator with your wire reference number on the morning of closing*** 24 Temp. Reso. #10367 — March 15, 2004 Page 11 EXHIBIT E Form of Preliminary Official Statement J: \ Bonds \ City of Tamarac (441501) \ Award Reso-5.doc U:\RE5_0RD\10000 Resolutions\ 10368 Award Resofi $10m util_sw bond.doc g PRELIMINARY OFFICIAL STAITMENT I)ATED 2004 NEW ISSUE - BOOK -ENTRY ONLY RATINGS: See "BOND INSURANCE" and "RATINGS" herein E o o In the opinion of Bond Counsel, assuming continuing compliance by the City with various covenants in the Resolution, under existing ° r statutes, regulations, and judicial decisions, the interest on the Series 2004 Bonds will be excluded from gross income for Federal income tax purposes of the holders thereof and is not an item of tax preference for purposes of the Federal alternative minimum tax imposed on k -5 individuals and corporations. The Series 2004 Bonds are, under existing laws and regulations, also exempt from intangible taxes imposed a g pursuant to Chapter 199, Florida Statutes, as amended. Furthermore, in the opinion of Bond Counsel, based on representation of the City, the Series 2004 Bonds are "qualified tax-exempt obligations" (within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986). N 312 8 See "TAX EXEMPTION" herein for a description of alternative minimum tax treatment and certain other tax consequences to holders of the Series 2004 Bonds. $9,500,000* . CITY OF TAMARAC, FLORIDA a ° CAPITAL IMPROVEMENT REVENUE BONDS, SERIES 2004 N O � , NE o Dated: April 1, 2004 Due: October 1, as shown below o K a N The City of Tamarac, Florida (the "City") is issuing its Capital Improvement Revenue Bonds, Series 2004 (the "Series 2004 Bonds") only in the form of fully registered bonds in the denomination of $5,000 principal amount or any integral multiple thereof. The Series 2004 Bonds will bear interest n5 d at the fixed rates set forth below payable semi-annually on each April 1 and October 1, commencing October 1, 2004. The Series 2004 Bonds, when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC") which will act as .o o securities depositary for the Series 2004 Bonds. Purchases of beneficial interests in the Series 2004 Bonds will be made in book -entry form. Purchasers .Y o of the Series 2004 Bonds ("Beneficial Owners") will not receive physical delivery of Series 2004 Bonds. Accordingly, principal and interest on the Series 2004 Bonds will be paid by J.P. Morgan Trust Company, N.A., as paying agent directly to DTC as the registered owner thereof. Disbursements of such payments to the Direct Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of c Direct Participants and Indirect Participants, as more fully described herein. See "DESCRIPTION OF THE SERIES 2004 BONDS - Book -Entry Only F System" herein. Certain of the Series 2004 Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as set forth herein. The Series 2004 Bonds are being issued pursuant to Chapter 166, Florida Statutes, the municipal charter of the City, and other applicable o provisions of law, and, pursuant to City Resolutions No. R-2004- and No. R-2004- (collectively, the "Resolution"). The Series 2004 Bonds 3243 °� are being issued to finance a portion of the construction of certain capital improvements to the City's water and wastewater utility system and 53 o stormwater utility system described herein (the "Project"), and to pay certain costs of issuance of the Series 2004 Bonds including the municipal bond -2 T d insurance and Reserve Policy premiums. € The Series 2004 Bonds and the interest thereon are secured by and payable solely from (1) Non Ad Valorem Revenues budgeted and appropriated N by the City in accordance with the Resolution and deposited into the Debt Service Fund, and (2) until applied in accordance with the provisions of the a Resolution, all moneys, including the investments thereof, in the funds and accounts established under the Resolution, with the exception of the Rebate Fund (collectively, the "Pledged Funds"). See "SECURITY FOR THE SERIES 2004 BONDS" and "DEBT SERVICE REQUIREMENTS" herein. n The Series 2004 Bonds do not constitute general obligations of the City. The City is not obligated to pay the principal of, redemption premium, if g any, or interest on the Series 2004 Bonds, except from the Pledged Funds. No holder of any Series 2004 Bond shall ever have the right to compel the nr exercise of any ad valorem taxing power to pay such Series 2004 Bond, or in order to maintain any services or programs that generate non ad valorem d revenues, or be entitled to payment of such Series 2004 Bond from any moneys of the City except from the Pledged Funds in the manner provided in ne`+ the Resolution. N Payment of the principal of and interest on the Series 2004 Bonds, when due will be insured by a financial guaranty insurance policy to be issued by Ambac Assurance Corporation simultaneously with the delivery of the Series 2004 Bonds. Anabac 0 0 o For discussion of the terms and provisions of such policy, including the limitations thereof, see "BOND INSURANCE" herein and Appendix D z } hereto. E O C S ; 9 This cover page contains certain information for quick reference only. It is not a summary of the Series 2004 Bonds. Investors must read the entire di,b a Official Statement to obtain information essential to the making of an informed investment decision. .o MATURITIES, AMOUNTS, INTEREST RATES, AND PRICES OR YIELDS AND INITIAL CUSIP NUMBERS $5,910,000 * SERIAL BONDS o Price Price Maturities Interest or INITIAL Maturities Interest or INITIAL o � (October D* Amounts* Rates Yield CUSIP NO.** (October D* tents* Rates Yieid CUSIP NO.**. 2004 $170,000 2011 $395,000 2005 345,000 2012 405,000 2006 350,000 2013 420,000 2007 355,000 2014 435,000 T 2008 365,000 2015 450,000 2009 370,000 2016 470,000 $ g ` 2010 380,000 2017 490,000 2018 510,000 '4 d L $3,590,000* % Term Bonds, due October 1, 2024, Price ____%, INITIAL CUSIP NO, ** m .2 _ The Series 2004 Bonds are offered when, as and if issued and accepted by the Underwriter subject to the approval of legality by Bryant Miller & rOlive PA,, Tampa, Florida, Bond Counsel. Certain other legal matters will be passed on for the City by its counsel, Mitchell S. Kraft, Esquire, City o Attorney and by Akerman Senterfitt, Orlando, Florida, Disclosure Counsel. Kirkpatrick, Pettis, Smith, Polian Inc, Orlando, Florida is serving as financial advisor to the City in connection with the issuance of the Series 2004 Bonds. The Series 2004 Bands are expected to be delivered through the P facilities of DTC in New York, New York on or about April _ 200C E j =-E RBC w ' = Dain Rauscher EF' Dated 2004 " Preliminary, subject to change a •• The City shall not be responsible for the use of CUSIP numbers, nor is any representation made as to their correctness. They are included solely for the 'a v o convenience of the readers of this Official Statement. 0 RwydW POW - PwMW by MAGEMASTER ow,452.5152 E PRI?LIMINARYOFT70.41 S7A11itilE.N"7'DA7El) 2004 G 3 . E . 'E NEW ISSUE - BOOK -ENTRY ONLY RATINGS: See "BOND INSURANCE" and "RATINGS" herein c In the opinion of Bond Counsel, assuming continuing compliance by the City with various covenants in the Resolution, under existing statutes, regulations, and judicial decisions, the interest on the Series 2004 Bonds will be excluded from gross income for Federal income tax purposes o of the holders thereof and is not an item of tax preference for purposes of the Federal alternative minimum tax imposed on individuals and 's F corporations. The Series 2004 Bonds are, under existing laws and regulations, also exempt from intangible taxes imposed pursuant to Chapter 199, ° Florida Statutes, as amended. Furthermore, in the opinion of Bond Counsel, based on representation of the City, the Series 2004 Bonds are '4ictlified tax-exempt obligations" (within the meaning of Section 265(b)(3) of the Internal Revenue Code of ]986). See "TAX EXEMPTION" herein for a s description of alternative minimum lax treatment and certain other tax consequences to holders of the Series 2004 Bonds. ,y b [CITY LOGO] $9,500,000* [DAC Logo] CITY OF TAMARAC, FLORIDA p CAPITAL IMPROVEMENT REVENUE BONDS, SERIES 2004 v Dated: April 1, 2004 o p Due: October 1, as shown below M G The City of Tamarac, Florida (the "City") is issuing its Capital Improvement Revenue Bonds, Series 2004 (the "Series 2004 Bonds") only in the foam offully registered bonds in the denomination of $5,000 principal amount or any integral multiple thereof. The Series 2004 Bonds will bear interest at the fixed rates set forth below ' Y payable semi-annually on each April I and October 1, commencing October 1, 2004. The Series 2004 Bonds, when issued, will be registered in the name of Cede & Co., as �. nominee for The Depository Trust Company, New York, New York ("DTC") which will act as securities depository for the Series 2004 Bonds. Purchases of beneficial interests in the Series 2004 Bonds will be made in book -entry form. Purchasers of the Series 2004 Bonds ("Beneficial Owners") will not receive physical delivery of Series 2004 Bonds. Accordingly, principal and interest on the Series 2004 Bonds will be paid by J.P, Morgan Trust Company, N.A., as paying agent directly to DTC as the a 5 registered owner thereof. Disbursements of such payments to the Direct Participants is the responsibility of DTC and disbursements of such payments to the Beneficial ? Owners is the responsibility of Direct Participants and Indirect Participants, as more fully described herein. See "DESCRIPTION OF THE SERIES 2004 BONDS — Book -Entry Only System" herein. v: w Certain of the Series 2004 Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as set forth herein. a ; The Series 2004 Bonds are being issued pursuant to Chapter 166, Florida Statutes, the municipal charter of the City, and other applicable provisions of law, and, pursuant to City Resolutions No. R-2004-� and No. R-2004- (collectively, the "Resolution"). The Series 2004 Bonds are being issued to finance ap*md' the construction of certain capital improvements to the City's water and wastewater utility system and stormwater utility system described herein (the "Pmjed'aadtopay certain costs of issuance of the Series 2004 Bonds including the municipal bond insurance and Reserve Policy premiums. r� o i v The Series 2004 Bonds and the interest thereon are secured by and payable solely from (1) Nan Ad Valorem Revenues budgeted and appropriated by the City in I a accordance with the Resolution and deposited into the Debt Service Fund, and (2) until applied in accordance with the provisions of the Resolution, all moneys, including the investments thereof, in the funds and accounts established under the Resolution, with the exception of the Rebate Fund (collectively, the "Pledged Funds"). See F- "SECURITY FOR THE SERIES 2004 BONDS" and "DEBT SERVICE REQUIREMENTS" herein, .v y The Series 2004 Bonds do not constitute general obligations of the City. The City is not obligated to pay the principal of, redemption premium, if any, or Interest on the Series 2004 Bonds, except from the Pledged Funds. No holder of any Series 2004 Bond shall ever have the right to compel the exercise of any ad valorem taxing power to pay such Series 2004 Bond, or in order to maintain any services or programs that generate non ad valorem revenues, or be m F ° entitled to payment of such Series 2004 Bond from any moneys of the City except from the Pledged Funds in the manner provided in the Resolution. o ' b ti Payment of the principal of and Interest on the Series 2004 Bonds, when due will be Insured by a financial guaranty Insurance policy tobeIssued by t Ambac Assurance Corporation simultaneously with the delivery of the Series 2004 Bonds. E (INSURER'S LOGO] ` « For discussion of the terms and provisions of such policy, including the limitations thereof, see "BOND INSURANCE" herein and Appendix D hereto. c This cover page contains certain information for quick reference only. It is not a summary p 8 q y of the Series 2004 Bonds. Investors must read the entire Official M Statement to obtain information essential to the making of an informed investment decision. MATURITIES, AMOUNTS, INTEREST RATES, AND PRICES OR YIELDS AND INITIAL CUSIP NUMBERS U $5,910,000 " SERIAL BONDS Price Price Q Maturities Interest or INITIAL Maturities Interest or INITIAL O n (October I)•Amounts* Rates Yield CUSIP NO.** (October 1)' AmounlE• Rates Yield CUSIP NO."" o 2004 $170,000 2011 $395,000 'E 2005 345,000 2012 405,000 g w 2006 350,000 2013 420,000 a o p 2007 355,000 2014 435,000 a c a 2008 365,000 2015 450,000 U c au 2009 370,000 2016 470,000 c , 2010 380,000 2017 490,000 w. ° T 5 c> 3 2018 510,000 E r 0. b N $3,590,000" % Term Bonds, due October 1, 2024, Price �%, INITIAL CUSIP NO. •• W w � 6 .0 The Series 2004 Bonds are offered when, as and if issued and accepted by the Underwriter subject to the approval of legality by Bryant 3 x Miller & Olive P.A., Tampa, Florida, Bond Counsel. Certain other legal matters will be passed on for the City by its counsel, Mitchell S. Kraft, Esquire, N c 15 c City Attorney and by Akerman Senterfitt, Orlando, Florida, Disclosure Counsel. Kirkpatrick, Pettis, Smith, Polian Inc. Orlando. Florida is serving as c o financial advisor to the City in connection with the issuance of the Series 2004 Bonds. The Series 2004 Bands are expected to be delivered through . L the facilities of DTC in New York, New York on or about April 2004. ro [RBC DAIN RAUSCHER LOGO] � c w o Dated , 2004 a o p *Preliminary, subject to change F 2 •' The City shall not be responsible for the use of CUSIP numbers, nor is any representation made as to their correctness. They are included solely for the convenience of the readers of this Official Statement, CITY OF TAMARAC, FLORIDA OFFICIALS CITY COMMISSION Joe Schreiber — Mayor Karen L. Roberts - Vice -Mayor Beth FlansbaunrTalabisco Marc L. Sultanof Edward C. Portner CITY MANAGER Jeffrey L. Miller CITY ATTORNEY Mitchell S. Kraft, Esq. ASSISTANT CIU MANAGER Michael C. Cernech DIRECTOR QF FINANCE Dona J. Newman, CPA FINANCE AND POLICY OFFICER Leanne Williams, CPA CITY AUDITORS Gau & Co., P.A. Miami, Florida BOND COUNSEL Bryant Miller & Olive P.A. Tampa, Florida FINANCIAL,_,tMVISOR Kirkpatrick, Pettis, Smith, Polian Inc. Orlando, Florida DISCLOSURE COUNSEL Akerman Senterfitt Orlando, Florida tOR717885;51 No dealer, broker, salesman or other person has been authorized by the City, the Insurer or the Underwriter to give any information or to make any representation with respect to the Series 2004 Bonds other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Series 2004 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the City, DTC, the Insurer, and other sources which are believed to be reliable. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information herein is subject to change without notice and neither the delivery hereof nor any sale hereunder at any time implies that information herein is correct as of any time subsequent to its date. 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. IN CONNECTION WITH THE OFFERING OF THE SERIES 2004 BONDS, THE UNDERWRITER MAY OVER -ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2004 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. NO REGISTRATION STATEMENT RELATING TO THE SERIES 2004 BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR WITH ANY STATE SECURITIES COMMISSION. IN MAKING ANY INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATIONS OF THE CITY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SERIES 2004 BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. References herein to laws, rules, regulations, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to this Official Statement, they may be obtained from the City of Tamarac, Florida, City Hall, 7525 N.W. 88th Avenue, Tamarac, Florida 33321, (954) 724-1318, Attention: Finance and Policy Officer, upon prepayment of reproduction costs, postage and handling expenses. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 1QR717885;51 TABLE OF CONTENTS Pave SUMMARYSTATEMENT............................................................................................................................................................ v TheCity............................................................................................................................................................................. v TheSeries 2004 Bonds.................................................................................................................................................... v Purpose of the Series 2004 Bonds................................................................................................................................. v Security for the Series 2004 Bonds................................................................................................................................ v RedemptionProvisions.................................................................................................................................................. vi Future Debt Payable from Non Ad Valorem Revenues............................................................................................. vi MunicipalBond Insurance............................................................................................................................................ vi Professionals.................................................................................................................................................................. vii Delivery of the Series 2004 Bonds ............................................................................................................................... vii Continuing Disclosure Additional Information ............... Miscellaneous................................................................................................................................................................ vii INTRODUCTION.............................................................................................................................................................................. l PURPOSEOF THE SERIES 2004 BONDS......................................................................................................................................2 THEPROJECT...................................................................................................................................................................................2 DESCRIPTION OF THE SERIES 2004 BONDS.............................................................................................................................2 GeneralDescription..........................................................................................................................................................2 Book -Entry Only System.................................................................................................................................................2 RedemptionProvisions....................................................................................................................................................4 SECURITY FOR THE SERIES 2004 BONDS.................................................................................................................................5 General................................................................................................................................................................................5 Pledged Funds, Covenant to Budget and Appropriate..............................................................................................5 Anti-Dilution...................................................................................................................................................................... 6 PaymentofBonds.............................................................................................................................................................7 ReserveAccount..............................................................................................................................................................7 ReservePolicy...................................................................................................................................................................7 NoImpairment...................................................................................................................................................................8 Investments.......................................................................................................................................................................8 BONDINSURANCE.........................................................................................................................................................................9 Payment Pursuant to Financial Guaranty Insurance Policy.......................................................................................9 Ambac Assurance Corporation....................................................................................................................................10 AvailableInformation.....................................................................................................................................................10 Incorporation of Certain Documents by Reference...................................................................................................10 DEBT SERVICE REQUIREMENTS...............................................................................................................................................12 OTHER OBLIGATIONS PAYABLE FROM NON -AD VALOREM FUNDS..........................................................................12 1111111I1»1MW61l►L42.2KI R ESTIMATED SOURCES AND USES OF FUNDS......................................................................................................................13 THECITY.........................................................................................................................................................................................13 l OR717885;51 iii GENERAL INFORMATION REGARDING NON -AD VALOREM REVENUES.....................................................................13 General..............................................................................................................................................................................13 [Pension or Self Insurance Discussion]......................................................................................................................15 FLORIDA CONSTITUTIONAL AMENDMENTS.....................................................................................................................15 General..............................................................................................................................................................................15 SaveOur Homes Amendment.......................................................................................................................................15 Limitation on State Revenues Amendment.................................................................................................................16 LITIGATION....................................................................................................................................................................................16 LEGALMATTERS.........................................................................................................................................................................16 TAXEXEMPTION.........................................................................................................................................................................17 General..............................................................................................................................................................................17 Tax Treatment of Original Issue Discount.................................................................................................................. is Tax Treatment of Bond Premium..................................................................................................................................18 Qualified Tax -Exempt Obligations................................................................................................................................18 Proposed Regulations — Possible Change in Form of Bond Counsel Opinion.....................................................19 UNDERWRITING...........................................................................................................................................................................19 INVESTMENTPOLICY..................................................................................................................................................................19 RATINGS.........................................................................................................................................................................................20 FINANCIAL STATEMENTS........................................................................................................................................................20 CONTINUINGDISCLOSURE........................................................................................................................................................20 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS..................................................................................21 ENFORCEABILITY OF REMEDIES.............................................................................................................................................21 FINANCIALADVISOR.................................................................................................................................................................21 CONTINGENTFEES.......................................................................................................................................................................21 FORWARD -LOOKING STATEMENTS......................................................................................................................................21 MISCELLANEOUS.........................................................................................................................................................................21 CERTIFICATE AS TO OFFICIAL STATEMENT......................................................................................................................23 APPENDIX A City of Tamarac, Florida General Information. APPENDIX B The Resolution APPENDIX C General Purpose Financial Statements and Independent Auditors' Report for the Fiscal Year Ended September 30, 2003 APPENDIX D Specimen Municipal Bond Insurance Policy APPENDIX E Form of Opinion of Bond Counsel APPENDIX F Form of Continuing Disclosure Agreement APPENDIX G Form of the Reserve Policy 1 OR717885;51 iv 6 J�L3 �11 5t1 This Summary Statement, being part of the Official Statement, is subject to the more complete information contained herein and should not be considered to be a complete statement of the facts material to making an investment decision. The offering by the City of Tamarac, Florida, of its $9,500,000* Capital Improvement Revenue Bonds, Series 2004 (the "Series 2004 Bonds") to potential investors is made only by means of the entire Official Statement. No person is authorized to detach this Summary Statement from the Official Statement or otherwise use it without the entire Official Statement. Capitalized terms used but not defined in this Summary Statement shall have the same meaning as in the Resolution (as hereinafter defined), unless the context would clearly indicate otherwise. See "The Resolution" -Appendix B hereto. The City The City of Tamarac, Florida (the "City") located in Broward County, Florida, had an estimated 2003population of 56,881. The City was incorporated in 1963 and operates under its own charter. The governing body of the City consists of a five member commission of which four members are elected by district, and a mayor is elected at large. The City provides a full range of municipal services, including police and fire protection, highways and streets, planning, zoning, parks, recreation, water, sewer, sanitation and general administrative services. The Series 2004 Bonds The City is issuing the Series 2004 Bonds only in the form of fully registered bonds in the denomination of $5,000 principal amount or any integral multiple thereof. The Series 2004 Bonds will bear interest at the fixed rates set forth on the cover page hereof payable semi-annually on each April 1 and October 1, commencing October 1, 2004. The Series 2004 Bonds, when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Camp any, New York, New York ("DTC") which will act as securities depository for the Series 2004 Bonds. Purchases of beneficial interests in the Series 2004 Bonds will be made in book -entry form. Purchasers of the Series 2004 Bonds ("Beneficial Owners") will not receive physical delivery of Series 2004 Bonds. Accordingly, principal and interest on the Series 2004 Bonds will be paid by J.P. Morgan Trust Company, N.A., as paying agent directly to DTC as the registered owner thereof. Disbursements of such payments to the Direct Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of Direct Participants and Indirect Participants, as more fully described herein. See "DESCRIPTION OF THE SERIES 2004 BONDS - Book -Entry -Only System" herein. Certain of the Series 2004 Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as set forth herein. See "DESCRIPTION OF THE SERIES 2004 BONDS - Redemption Provisions" herein. Purpose of the Series 2004 Bonds The Series 2004 Bonds are being issued pursuant to Chapter 166, Florida Statutes, the municipal charter of the City, and other applicable provisions of law, and City Resolutions No. R-2004-_ _ __ and No. R-2004- (collectively the "Resolution"). The Series 2004 Bonds are being issued to finance the acquisition, construction and equipping of certain capital improvements to the City's water and wastewater utility system and stormwater utility system described herein (the "Project") and to pay certain costs of issuance of the Series 2004 Bonds including the municipal bond insurance and Reserve Policy (hereinafter defined) premiums. Security for the Series 2004 Bonds The Series 2004 Bonds and the interest thereon are secured by and payable solely from (1) Non -Ad Valorem Revenues budgeted and appropriated by the City in accordance with the Resolution and deposited into the Debt Service Fund, and (2) until applied in accordance with the provisions of the Resolution, all moneys, including the investments thereof, in the funds and accounts established under the Resolution, with the exception of the Rebate Fund (collectively the "Pledged Funds"). Pursuant to the Resolution, the City covenants and agrees to appropriate in its annual budget, by *Preliminary, Subject to Change (OR717885;5) v amendment if necessary, for each Fiscal Year sufficient amounts of Non -Ad Valorem Revenues for the payment of principal of and interest on the Series 2004 Bonds and to make certain other payments required under the Resolution in each such Fiscal Year. Such covenant to budget and appropriate does not create any lien upon or pledge of such Non -Ad Valorem Revenues until such funds are deposited in the Debt Service Fund, nor does it preclude the City from pledging in the future or covenanting to budget and appropriate in the future its Non -Ad Valorem Revenues, nor does it require the City to levy and collect any particular Non -Ad Valorem Revenues, nor does it give the Holders of the Series 2004 Bonds a prior claim on the Non -Ad Valorem Revenues as opposed to claims of general creditors of the City. The City does not covenant to maintain any services or programs now maintained or provided by the City including those which generate Non -Ad Valorem Revenues. The Resolution defines Non -Ad Valorem Revenues as all legally available non -ad valorem revenues of the City (excluding revenues of any enterprise fund of the City), which are legally available to make the payments required by the Resolution, but only after provision has been made by the City for payment of services and programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated by applicable law. See" SECURITY FOR THE SERIES 2004BONDS" and"DEBT SERVICE REQUIREMENTS" herein. The Series 2004 Bonds do not constitute general obligations of the City. The City is not obligated to pay the principal of, redemption premium, if any, or interest on the 2004 Bonds, except from the Pledged Funds. No holder of any Series 2004 Bond shall ever have the right to compel the exercise of any ad valorem taxing power to pay such Series 2004 Bond, or in order to maintain any services or programs that generate non -ad valorem revenues, or be entitled to payment of such Series 2004 Bond from any moneys of the City except from the Pledged Funds in the manner provided in the Resolution. The City will, in connection with the issuance of the Series 2004 Bonds, deposit to the Reserve Account the surety bond (the "Reserve Policy") of Ambac Assurance Corporation ("Ambac Assurance"), in an amount equaltothe Reserve Account Requirement for the Series 2004 Bonds. Amounts in the Reserve Account shall be used only for the purpose of making payments of maturing principal or interest or Amortization Installments when the other moneys in the Debt Service Fund are insufficient therefor. The "Reserve Account Requirement" is the lesser of (i) the Maximum Annual Debt Service for all Outstanding Series 2004 Bonds, (ii) one hundred twenty-five percent (125%) of average annual debt service for all Outstanding Series 2004 Bonds, or (iii) the maximum amount allowed under the Code to be funded with proceeds of the Series 2004 Bonds without adversely affecting the exclusion of interest on the Outstanding Series 2004 Bonds, and without yield restriction. See "SECURITY FOR THE 2004 BONDS - Funds and Accounts" and "SECURITY FOR THE SERIES 2004 BONDS - Reserve Policy" herein. Redemption Provisions The Series 2004 Bonds maturing on or after October 1, ____ are subject to optional redemption on or after October 1, at the redemption price(s) described herein. Certain of the Series 2004 Bonds are subject to mandatory sinking fund redemption as described herein. See "DESCRIPTION OF THE SERIES 2004 BONDS - Redemption Provisions" herein. Future Debt Payable from Non Ad Valorem Revenues The City may issue additional obligations in the future payable from specific Non -Ad Valorem Revenues ofthe City or the City's covenant to budget and appropriate legally available Non -Ad Valorem Revenues subject to certain restrictive covenants set forth in the Resolution. See "FUTURE DEBT PAYABLE FROM NON -AD VALOREM FUNDS" and "SECURITY FOR THE SERIES 2004 BONDS - Anti -Dilution" herein. Municipal Bond Insurance Payment of the principal of and interest on the Series 2004 Bonds, when due will be insured by a financial guaranty insurance policy to be issued by Ambac Assurance simultaneously with the delivery of the Series 2004Bonds. See "BOND INSURANCE" herein and Appendix D hereto. 1oR717885;51 vl Professionals J.P. Morgan Trust Company, N.A. will serve as Registrar and Paying Agent pursuant to the Resolution. Bryant Miller & Olive P,A., Tampa, Florida, is serving as Bond Counsel. Mitchell S. Kraft, Esquire is the City Attorney, and Akerman Senterfitt, Orlando, Florida, is serving as Disclosure Counsel. Kirkpatrick, Pettis, Smith, PolieA Orlando, Florida, is the City's Financial Advisor. Delivery of the Series 2004 Bonds It is anticipated that the Series 2004 Bonds in fully registered form will be available for delivery through the facilities of DTC on or about April __, 2004. Continuing Disclosure The City has agreed and undertaken for the benefit of the Holders and beneficial owners of Series 2004 Bonds, to provide certain financial information and operating data relating to the City and the Series 2004 Bonds and notice of certain enumerated events pursuant to Rule 15c2-12 of the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934. See "CONTINUING DISCLOSURE" herein and Appendix F hereto. Additional Information This Official Statement speaks only as of its date and the information contained herein is subject to change. Descriptions of the Series 2004 Bonds, and other agreements and documents contained herein constitute summaries of certain provisions thereof and do not purport to be complete. Reference is made to the Resolution, and such other agreements and documents for a more complete description of such provisions. Investors should contact the Finance and Policy Officer (954) 724-1318 at City Hall, 7525 N.W. 88th Avenue, Tamarac, Florida 33321, to obtain copies of basic documentation referred to herein or with questions concerning this Official Statement or the Series 2004 Bonds. Except to the extent otherwise indicated, information contained in this Official Statement was compiled by the City. Miscellaneous The references, excerpts and summaries of all documents referred to herein do not purport to be complete statements of the provisions of such documents, and reference is directed to all such documents for full and complete statements of all matters of fact relating to the Series 2004 Bonds, the security for the payment of the Series2004Bonds, and the rights and obligations of holders thereof. The information contained in the Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the holders or beneficial owners of the Series 2004 Bonds. [END OF SUMMARY STATEMENT] l OR717885;51 Vll 19) y U c I�nA .070-1 WLH $9,500,000* CITY OF TAMARAC, FLORIDA CAPITAL IMPROVEMENT REVENUE BONDS, SERIES 2004 INTRODUCTION The purpose of this Official Statement, including the cover page, Summary Statement and all appendices, is to set forth certain information in connection with the sale by the City of Tamarac, Florida (the City") of its $9,500,000* aggregate principal amount of Capital Improvement Revenue Bonds, Series 2004 (the "Series 2004 Bonds"). The Series 2004 Bonds are issued under and pursuant to Chapter 166 Florida Statutes, the municipal charter of the City and other applicable provisions of law, and Resolutions No. R-2004- and R-2004 (collectively, the Resolution"). See Appendix B, "The Resolution." The Series 2004 Bonds and the interest thereon are secured by and payable solely from (1) Non Ad Valorem Revenues budgeted and appropriated by the City in accordance with the Resolution and deposited into the Debt Service Fund, and (2) until applied in accordance with the provisions of the Resolution, all moneys, including the investments thereof, in the funds and accounts established under the Resolution, with the exception of the Rebate Fund (collectively, the "Pledged Funds"). See "SECURITY FOR THE SERIES 2004 BONDS" and "DEBT SERVICEREQUIRIIvIENTS" herein. The Series 2004 Bonds do not constitute general obligations of the City. The City is not obligated to pay the principal of, redemption premium, if any, or interest on the 2004 Bonds, except from the Pledged Funds. No holderof any Series 2004 Bond shall ever have the right to compel the exercise of any ad valorem taxing power to pay such Series 2004 Bond, or in order to maintain any services or programs that generate non ad valorem revenues, or be entitled to payment of such Series 2004 Bond from any moneys of the City except from the Pledged Funds in the manner provided in the Resolution. The Series 2004 Bonds are issuable only in the form of fully registered bonds in denominations of $5,000 principal amount or any integral multiple thereof. The Series 2004 Bonds, when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC") which will act as securities depository for the Series 2004 Bonds. Purchases of beneficial interests in the Series 2004 Bonds will be made in book-entryform. Purchasers of the Series 2004 Bonds ("Beneficial Owners") will not receive physical delivery of Series 2004 Bonds. Accordingly, principal and interest on the Series 2004 Bonds will be paid by J.P. Morgan Trust Company, N.A., as paying agent directly to DTC as the registered owner thereof. Disbursements of such payments to the Direct Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of Direct Participants and Indirect Participants, as more fully described herein. See "DESCRIPTION OF THE SERIES 2004 BONDS - Book -Entry -Only System" herein. Certain of the Series 2004 Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as set forth herein. See "DESCRIPTION OF THE SERIES 2004 BONDS - Redemption Provisions" herein. This Official Statement speaks only as of its date and the information contained herein is subject to change. Capitalized terms used herein but not defined herein have the same meanings as when used in the Resolution unless the context clearly indicates otherwise. Complete descriptions of the terms and conditions of the Series 2004 Bonds are set forth in the Resolution, which is attached to this Official Statement as Appendix B. The description of the Series 2004 Bonds, the documents authorizing and securing the same, and the information from various reports and statements contained herein are not comprehensive or definitive. All references herein to such *Preliminary, Subject to Change fOR717885;51 documents, reports and statements are qualified by the entire, actual content of such documents, reports and statements. Copies of such documents, reports and statements referred to herein that are not included in their entirety in this Official Statement may be obtained, after payment of applicable copying and mailing and handling costs, from the City of Tamarac, at City Hall, 7525 N.W. 88th Avenue, Tamarac, Florida 33321, Attention: Finance and Policy Officer, (954) 724-1318. PURPOSE OF THE SERIES 2004 BONDS The Series 2004 Bonds are being issued to finance the acquisition, construction and equipping ofcenaincapital improvements to the City's water and wastewater utility system and stormwater utility system described herein (the "Project") and to pay certain costs of issuance of the Series 2004 Bonds including the municipal bond insurance and Reserve Policy (hereinafter defined) premiums. THE PROJECT The Project consists of the acquisition, construction and equipping of certain capital improvements to theCitys water and wastewater utility system and stormwater utility system and related capital expenditures. More specifically the City currently intends to expend the proceeds of the Series 2004 Bonds deposited in the Construction Fund to construct the following: Water and Wastewater Two (2) million gallon Ground Water Storage Tank and Pump Station Water Treatment Disinfection Alternative C-14 Stormwater Pump Stations Stormwater Master Plan Boulevards Drainage Improvements Woodlands Subdivision Internal Roads Drainage Study Northwest 57's Street Drainage Construction The City may from time to time amend the Project list. DESCRIPTION OF THE SERIES 2004 BONDS General Description The Series 2004 Bonds will be issued as fully registered bonds in the denominations of $5,000 principal amount or integral multiples thereof and will be initially registered in the name of Cede & Co., as nominee of DTC, which will act as securities depository for the Series 2004 Bonds. Unless the book -entry system is discontinued as described herein, individual purchases of the Series 2004 Bonds will be made in book -entry form only, and the purchasers will not receive physical delivery of the Series 2004 Bonds or any certificate representing their beneficial ownership interests in the Series 2004 Bonds. See "Book -Entry Only System" below. Interest on the Series 2004 Bonds is payable on October 1, 2004 and on each April I and October 1 thereafter until maturity or redemption. Amounts due on the Series 2004 Bonds will be paid to Cede & Co., as nominee for DTC, as registered owner of the Series 2004 Bonds, to be subsequently disbursed to Direct Participants and Indirect Participants and thereafter to the Beneficial Owners of the Series 2004 Bonds. Book -Entry Only System The information set forth under this caption concerning DTC and DTCa book -entry system has been obtained from sources the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. 1OR717885;51 The Series 2004 Bonds will be issued as fully registered bonds without coupons. DTC will act as securities depository for the Series 2004 Bonds. The Series 2004 Bonds will be issued as fully regis tered securities registered in the name of Cede & Co. (DTC;s partnership nominee). One fully registered Series 2004 Bond will be issued for each maturity of the Series 2004 Bonds. Individual purchases of beneficial ownership interests will be made in book -entry form only, in the principal amount of $5,000 or any integral multiple thereof. Beneficial owners of the Series 2004 Bonds will not receive physical delivery of Series 2004 Bonds. DTC, the world's largest depository, is a limited purpose trust comp any organized under the New York Banking Law, a Abanking organization@ within the meaning of the New York Banking Law, a member of the Federal Reserve System, a Wearing corporation@ within the meaning of the New York Uniform Commercial Code, and a Aclearingagency0wgisteTed pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over two (2) million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues and money market investments from over eighty-five (85) countries that Participants (ADirect Participants#)depositwith DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants= accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC" � DTCC,in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. 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 Series 2004 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2004 Bonds on DTC:s records. The ownership interest of each actual purchaser of each Series 2004 Bond (ABeneficial Owner@) is in turn to be recorded on the Direct and Indirect Participant=srecords. Beneficial Owners will not receive written confirmation from DTC of their transaction, but Beneficial Owners are expected to receive written confirmation providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2004 Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in Series 2004 Bonds, except in the event that use of the book -entry system for the Series 2004 Bonds is discontinued. To facilitate subsequent transfers, all Series 2004 Bonds deposited by Participants with DTC are registeredinthe name of DTGs partnership nominee, Cede & Co. The deposit of Series 2004 Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2004 Bonds, DTGs records reflect only the identity of the Direct Participants to whose accounts such Series 2004 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 Owner; 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 Series 2004 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2004 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Series 2004 Bonds may wish to ascertain that the nominee holding the Series 2004 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 registrar and request that copies of notices be provided directly to them. 1 OR717885;51 Redemption notices shall be sent to DTC. If less than all of the Series 2004 Bonds are being redeemed, DTa practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2004 Bonds. Under its usual procedures, DTC will mail an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Cors consenting or voting rights to those Direct Participants to whose accounts the Series 2004 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Series 2004 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 DTCs receipt of funds and corresponding detail information from the City or the Paying Agent on the payable date in accordance with their respective holdings shown on DTC-s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in Astreet name,@ and will be the responsibility of such Participant and not of DTC, DTC's nominee, the Paying Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Series 2004 Bonds at any time by giving reasonable notice to City or paying agent. Under such circumstances, in the event that a successor depository is not obtained, Series 2004 Bonds 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 Series 2004 Bonds certificates will be printed and delivered. SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE SERIES 2004 BONDS, AS NOMINEE OF DTC, REFERENCES IERE1N TO THE HOLDER OF THE SERIES 2004 BOND OR REGISTERED OWNERS OF THE SERIES 2004 BONDS SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE SERIES 2004 BONDS. The City can make no assurances that DTC will distribute payments of principal of, redemption price, if any, or interest on the Series 2004 Bonds to the Direct Participants, or that Direct and Indirect Participants will distribute payments of principal of, redemption price, if any, or interest on the Series 2004 Bonds or redemption notices to the Beneficial Owners of such Series 2004 Bonds or that they will do so on a timely basis, or that DTC or any of its Participants will act in a manner described in this Official Statement. The City is not responsible or liable for the failure of DTC to make any payment to any Direct Participant or failure of any Direct or Indirect Participant to give any notice or make any payment to a Beneficial Owner in respect to the Series 2004 Bonds or any error or delay relating thereto. The rights of holders of beneficial interests in the Series 2004 Bonds and the manner of transferring or pledging those interests is subject to applicable state law. Holders of beneficial interests in the Series 2004 Bonds may want to discuss the manner of transferring or pledging their interest in the Series 2004 Bonds with their legal advisors. In the event the book -entry system is terminated, the transfer and exchange of Series 2004 Bonds shall be accomplished as described in Appendix B "The Resolution." Redemption Provisions Optional Redemption The Series 2004 Bonds maturing on or prior to October 1, __, shall not be subject to redemption prior to maturity. The Series 2004 Bonds maturing on October 1, __, or thereafter may be redeemed prior to maturity at the option of the City, as a whole or in part on October 1, __, or on any date thereafter, if in part, from such maturity or 1OR717885;51 4 maturities as the City shall designate and by lot within a maturity at the redemption price of one hundred percent (100%) of the principal amount of the Series 2004 Bonds to be redeemed, plus accrued interest to the redemption date. Mandatory Redemption The Series 2004 Bonds maturing in the year ___ are subject to mandatory redemption in part by the City on October I in the years and in the principal amounts, plus accrued interest to the redemption date, as set forth below. Year Amoun *maturity Notice of redemption, unless waived, is to be given by the Registrar by mailing an official redemption notice by registered or certified mail at least 30 days and not more than 60 days prior to the date fixed for redemption to the Registered Owners of the Series 2004 Bonds to be redeemed at such Owners' addresses shown on the registration books maintained by the Registrar or at such other addresses as shall be furnished in writing by such Registered Owners to the Registrar; provided, however, that no defect in any such notice to any Registered Holder of Series 2004 Bonds to be redeemed not failure to give such notice to any such Registered Holder nor failure of any such Registered Holder to receive such notice shall in any manner defeat the effectiveness of a call for redemption as to all other Registered Owners of Series 2004 Bonds to be redeemed. Notice Of redemption having been given substantially as aforesaid, the Seties2004 Bonds or portions of Series 2004 Bonds to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price), such Series 2004 Bonds or portions of Series 2004 Bonds shall cease to bear interest. SECURITY FOR THE SERIES 2004 BONDS General The Series 2004 Bonds and the interest thereon are secured by and payable solely from (1) Non Ad Valorem Revenues budgeted and appropriated by the City in accordance with the Resolution and deposited into the Debt Service Fund, and (2) until applied in accordance with the provisions of the Resolution, all moneys, including the investments thereof, in the funds and accounts established under the Resolution, with the exception of the Rebate Fund (collectively, the "Pledged Funds"). The Series 2004 Bonds do not constitute general obligations of the City, but shall be special obligations of the City, payable solely from and secured by a lien upon and pledge of the Pledged Funds. The City is not obligated to pay the principal of, redemption premium, if any, or interest on the 2004 Bonds, except from the Pledged Funds. No holder of any Series 2004 Bond shall ever have the right to compel the exercise of any ad valorem taxing power to pay such Series 2004 Bond, for payment of any amount payable under the Resolution, or in order to maintain any services or programs that generate non ad valorem revenues, or be entitled to payment of such Series 2004 Bond from any moneys of the City except from the Pledged Funds in the manner provided in the Resolution. Pledged Funds, Covenant to Budget and Appropriate (1) The City covenants and agrees to appropriate in its annual budget, by amendment if necessary, for each Fiscal Year in which the Series 2004 Bonds remain outstanding, sufficient amounts of Non Ad Valorem Revenues for the payment of principal of and interest on the Series 2004 Bonds and to make certain other payments required under the Resolution in each such Fiscal Year. Such covenant and agreement on the part of the City is cumulative and shall continue until all payments of principal of and interest on the Series 2004 Bonds shall have been budgeted, appropriated and actually paid. The City agrees in the Resolution that this covenant and agreement shall be deemed to be entered into for the benefit of the holders of the Series 2004 Bonds and the Insurer and that this obligation may be enforced in a court {oa71rass;s} of competent jurisdiction. Notwithstanding any provision of this Resolution to the contrary, the City does not covenant to maintain any services or programs now maintained or provided by the City, including those programs and services which generate Non Ad Valorem Revenues. This covenant and agreement shall not be construed as a limitation on the ability of the City to pledge all or a portion of such Non -Ad Valorem Revenues or to covenant to budget and appropriate Non -Ad Valorem Revenues for other legally permissible purposes. Nothing in the Resolution shall be deemed to pledge ad valorem tax revenues or to permit or constitute a mortgage or lien upon any assets owned by the CityandnoHoklerof Series 2004 Bonds or other person may compel the levy of ad valorem taxes on real or personal property within the boundaries of the City for the payment of the City's obligations under the Resolution. However, this covenant to budget and appropriate in its annual budget for the purposes and in the manner stated in the Resolution has the effect of making available for the payment of the Series 2004 Bonds theNonAd Valorem Revenues of the City in the manner provided in the Resolution and placing on the City a positive duty to appropriate and budget, by amendment if necessary, amounts sufficient to meet its obligations under the Resolution; subject, however, in all respects to the restrictions of Section 166.241, Florida Statutes, which make it unlawful for any municipality to expend moneys not appropriated and in excess of such municipality's current budgeted revenues. The obligation of the Cityto make such payments from its Non Ad Valorem Revenues is subject in all respects to the payment of obligations secured by a pledge of such Non -Ad Valorem Revenues or a covenant to budget and appropriate Non -Ad Valorem Revenues heretofore or hereafter entered into (including the payment of debt service on bonds and other debt instruments), and funding requirements for essential public purposes affecting health, welfare and safety of the inhabitants of the City; however, such obligation is cumulative and would carry over from Fiscal Year to Fiscal Year. The Resolution provides that such covenant to budget and appropriate does not create any lien upon orpledge of such Non -Ad Valorem Revenues until such funds are deposited in the Debt Service Fund, nor does it preclude the City from pledging in the future or covenanting to budget and appropriate in the future its Non -Ad Valorem Revenues, nor does it require the City to levy and collect any particular Non -Ad Valorem Revenues, nor does it give the Holders of the Series 2004 Bonds a prior claim on the Non -Ad Valorem Revenues as opposed to claims of general creditors of the City. The City does pursuant to the Resolution irrevocably pledge the Pledged Funds to the payment of the principal of and interest on the Series 2004 Bonds, and the City irrevocably agrees to the deposit of Non -Ad Valorem Revenues into the Debt Service Fund at the times provided of the sums required to secure to the Holders of the Series 2004 Bonds, and the payment of the principal of and interest thereon when due. The Resolution further provides that Pledged Funds shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the City. Until applied in accordance with this Resolution, the Non Ad Valorem Revenues deposited by the City in the Debt Service Fund, plus any earnings thereon, shall be pledged to the repayment of the Series 2004 Bonds. Anti -Dilution Pursuant to the Resolution the City agrees as a condition precedent to the issuance of any debt or the incurrence of any other obligations which are secured by and/or payable solely from Pledgable Non -Ad Valorem Revenues, to deliver to the Insurer a certificate setting forth the calculations of the financial ratios provided below and certifying that it is in compliance with the following; (i) the average of the Pledgable Non -Ad Valorem Revenues for the two most recent Fiscal Years for which audited financial statements of the City are available is equal to or greater than 2.Ox the projected maximum annual debt service on the proposed debt or obligations and the other debt and obligations secured by and/or payable solely from all or a portion of such Pledgable Non -Ad Valorem Revenue to be outstanding following the issuance of the proposed debt or obligations; and (ii) the remainder of (A) the Pledgable Non -Ad Valorem Revenues for the most recent Fiscal Year for which audited financial statements of the City are available, less (B) the product of (I) the quotient of such Pledgable Non -Ad Valorem Revenues divided by the Non -Enterprise Fund Revenues for such Fiscal Year, multiplied by (II) the Costs of Essential Services for such Fiscal Year, and less (C) the maximum annual debt service on debt and obligations secured by an express lien on all or a portion of the Pledgable Non -Ad Valorem Revenues to be outstanding following the {oR717885;51 6 issuance of the proposed debt or obligations is equal to or greater than 1.1 x the Maximum Annual Covenant Debt Service with respect to debt and obligations to be outstanding following the issuance of the proposed debt or obligations. [Pledgable Non-Advalorem Revenues — ((Pledgable Non -Ad Valorem Revenues - Non -Enterprise Fund Revenues) x (Costs of Essential Services)) — maximum annual debt service secured by lien on Pledgable Non -Ad Valorem Revenues 1. lx Maximum Annual Covenant Debt Service]. For purposes of such covenants, "maximum annual debt service" (including, without limitation, as used in the definition of "Maximum Annual Covenant Debt Service") shall mean the lesser of the actual maximum annual debt service on such debt and obligations, or 15% of the original par amount thereof. For the purpose of calculating maximum annual non -ad valorem debt service on any indebtedness which bears interest at a variable rate, such indebtedness shall be deemed to bear interest at the greater of (i) 1.25 times the most recently published Bond Buyer Bond 30 Year Index or (ii) 1.25 times actual average interest rate during the Prior Fiscal Year of the City. Notwithstanding anything in the Resolution to the contrary, the foregoing provisions may be amended, supplemented, or waived from time to time only with the prior written consent of the Insurer, but without the consent of the Bondholders if all the Bonds Outstanding are insured by the Insurer. Pledgable Non -Ad Valorem Revenues are defined as all legally available non -ad valorem revenues of the City (excluding revenues of any enterprise fund of the City), which are legally available to make the payments required the Resolution. Non -Enterprise Fund Revenues means all available revenues and receipts of the City (excluding revenues of any enterprise fund of the City), which are legally available for the payment of Costs of Essential Services. Costs of Essential Services means the cost of services and programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated by applicable law, Maximum Annual Covenant Debt Service is defined as the maximum annual debt service on debt and obligations secured by a covenant to budget and appropriate Pledgable Non -Ad Valorem Revenues for the payment thereof, or that are unsecured and expected by the City to be paid from Pledgable Non -Ad Valorem Revenues. Payment of Bonds Pursuant to the Resolution, the City has covenanted that Non -Ad Valorem Revenues shall be deposited or credited to the Interest Account, Prepayment Account and Bond Amortization Account at least five (5) business days prior to the applicable due date in amounts sufficient to pay the interest, principal and amortization installments next coming due. Reserve Account The Resolution creates a Reserve Account within the Debt Service Fund and provides that, on the date of delivery of the Series 2004 Bonds, the City will fund it in an amount equal to the Reserve Account Requirement. The City will at the time of delivery of the Series 2004 Bonds deposit the Reserve Policy (hereinafter defined) to the Reserve Account. The form of the Reserve Policy is attached as Appendix G hereto. Amounts in the Reserve Account shall be used only for the purpose of the payment of amortization installments, principal of and interest on the Series 2004 Bonds when the amounts in the other accounts in the Debt Service Fund are insufficient therefor. Reserve Policy The Resolution establishes the Reserve Account and requires that it be maintained in an amount equal to the Reserve Amount Requirement. The Resolution authorizes the City to obtain a Reserve Account Policy in place offillly funding the Reserve Account. Accordingly, application has been made to Ambac Assurance Corporation ("Ambac Assurance") for the issuance of a surety bond for the purpose of funding the Reserve Account in an amount equal to the Reserve Account Requirement for the Series 2004 Bonds. The Series 2004 Bonds will only be delivered upon the issuance of such surety bond, The premium on the surety bond is to be fully paid at or prior to the issuance and delivery of the Series 2004 Bonds. The surety bond provides that upon the later of (i) one (1) day after receipt by Ambac Assurance of demand for payment executed by the Paying Agent certifying that provision for the payment of principal ofor interest on 1 OR717885;51 7 the Series 2004 Bonds when due has not been made or (ii) the interest payment date specified in the Demand for Payment submitted to Ambac Assurance, Ambac Assurance will promptly deposit funds with the Paying Agent sufficient to enable the Paying Agent to make such payments due on the Series 2004 Bonds, but in no event exceeding the Surety Bond Coverage, as defined in the surety bond. Pursuant to the terms of the surety bond, the Surety Bond Coverage is automatically reduced to the extent of each payment made by Ambac Assurance under the terms of the surety bond and the City is required to reimburse Ambac Assurance for any draws under the surety bond with interest at a market rate. Upon such reimbursement the surety bond is reinstated to the extent of each principal reimbursement up to but not exceeding the Surety Bond Coverage. The reimbursement obligation of the City is subordinate to the City's obligations with respect to the Series 2004 Bonds. In the event the amount on deposit, or credited to the Reserve Account, exceeds the amount of the surety bond, any draw on the surety bond shall be made only after all the funds in the Reserve Account have been expended. In the event that the amount on deposit in, or credited to, the Reserve Account, in addition to the amount available under the surety bond, includes amounts available under a letter of credit, insurance policy, surety bond or other such funding instrument (the "Additional Funding Instrument"), draws on the surety bond and the Additional Funding Instrument shall be made on a pro rata basis to fund the insufficiency. The Reserve Account shall be replenished in the following priority: (i) principal and interest on the surety bond shall be paid from first available Non -Ad Valorem Revenues, principal and interest on the surety bond and on any Additional Funding Instrument shall be paid from first available Non -Ad Valorem Revenues on a pro rata basis, (ii) after all such amounts are paid in full, amounts necessary to fund the Reserve Account to the required level, after taking into account the amounts available under the surety bond and any Additional Funding Instrument shall be deposited from the next Non -Ad Valorem Revenues. The surety bond does not insure against nonpayment caused by the insolvency or negligence of anytrusteeor the Paying Agent. The insurance provided by the surety bond is not covered by the Florida Insurance Guaranty Association. For information regarding Ambac Assurance, please refer to "BOND INSURANCE" below. No Impairment The City has covenanted in the Resolution that the pledging of the Pledged Funds in the manner provided therein shall not be subject to repeal, modification or impairment by any subsequent ordinance, resolution or other proceedings of the City Commission of the City. Investments The Construction Fund and the Debt Service Fund shall be continuously secured in the manner by which the deposit of public funds are authorized to be secured by the laws of the State. Moneys on deposit in the Construction Fund and the Debt Service Fund may be invested and reinvested in Permitted Investments maturing not later than the date on which the moneys therein will be needed. Any and all income received by the City from the investment of moneys in each account of the Construction Fund, the Interest Account, the Principal Account, the Bond Amortization Account, and the Reserve Account (but only to the extent that the amount therein is less than the Reserve Account Requirement) shall be retained in such respective Fund or Account unless otherwise required by applicable law. To the extent that the amount in the Reserve Account is equal to or greater than the Reserve Account Requirement, any and all income received by the City from the investment of moneys therein shall be transferred, upon receipt, and deposited into the Interest Account. Nothing contained in the Resolution shall prevent any Permitted Investments acquired as investments of or security for funds held under the Resolution from being issued or held in book -entry form on the books of the Department of the Treasury of the United States. {OR717885;51 8 BONDINSURANCE Payment Pursuant to Financial Guaranty Insurance Policy Ambac Assurance has made a commitment to issue a financial guaranty insurance policy (the "Financial Guaranty Insurance Policy") relating to the Series 2004 Bonds effective as of the date of issuance of the Series 2004 Bonds. Under the terms of the Financial Guaranty Insurance Policy, Ambac Assurance will pay to The Bank of New York, New York, New York or any successor thereto (the "Insurance Trustee") that portion of the principal of and interest on the Series 2004 Bonds which shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor (as such terms are defined in the Financial Guaranty Insurance Policy). Ambac Assurance will make such payments tothe Insurance Trustee on the later of the date on which such principal and interest becomes Due for Payment or within one business day following the date on which Ambac Assurance shall have received notice of Nonpayment from the Paying Agent. The insurance will extend for the term of the Series 2004 Bonds and, once issued, cannot be canceled by Ambac Assurance. The Financial Guaranty Insurance Policy will insure payment only on stated maturity dates and on mandatory sinking fund installment dates, in the case of principal, and on stated dates for payment, in the case of interest. If the Series 2004 Bonds become subject to mandatory redemption and insufficient funds are available for redemption of all outstanding Series 2004 Bonds, Ambac Assurance will remain obligated to pay principal of and interest on outstanding Series 2004 Bonds on the originally scheduled interest and principal payment dates including mandatory sinking fund redemption dates. In the event of any acceleration of the principal of the Series 2004 Bonds, the insured payments will be made at such times and in such amounts as would have been made had there not been an acceleration. In the event the Paying Agent has notice that any payment of principal of or interest on a Series 2004 Bond which has become Due for Payment and which is made to a Holder by or on behalf of the City has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court of competent jurisdiction, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available. The Financial Guaranty Insurance Policy does not insure any risk other than Nonpayment, as defined in the Policy. Specifically, the Financial Guaranty Insurance Policy does not cover: 1. payment on acceleration, as a result of a call for redemption (other than mandatory sinking fund redemption) or as a result of any other advancement of maturity. 2. payment of any redemption, prepayment or acceleration premium. 3. nonpayment of principal or interest caused by the insolvency or negligence of any trustee, Paying Agent or Bond Registrar, if any. If it becomes necessary to call upon the Financial Guaranty Insurance Policy, payment of principal requires surrender of Series 2004 Bonds to the Insurance Trustee together with an appropriate instrument of assignment so as to permit ownership of such Series 2004 Bonds to be registered in the name of Ambac Assurance to the extent of the payment under the Financial Guaranty Insurance Policy. Payment of interest pursuant to the Financial Guaranty Insurance Policy requires proof of Holder entitlement to interest payments and an appropriate assignment of the Holder's right to payment to Ambac Assurance. Upon payment of the insurance benefits, Ambac Assurance will become the owner of the Series 2004 Bond, appurtenant coupon, if any, or right to payment of principal or interest on such Series 2004 Bond and will be fully subrogated to the surrendering Holder's rights to payment. The insurance provided by the Financial Guaranty Insurance Policy is not covered by the Florida Insurance Guaranty Association. l OR717885;51 Ambac Assurance Corporation. Ambac Assurance Corporation ("Ambac Assurance") is a Wisconsin -domiciled stock insurance corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin and licensed to do business in 50 states, the District of Columbia, the Territory of Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, with admitted assets of approximately $7,278,000,000 (audited) and statutory capital of $4,490,000,000 (audited) as of December 31, 2003. Statutory capital consists of Amb ac Assurance's policyholders' surplus and statutory contingency reserve. Standard & Poor's Credit Markets Services, a Division of The McGraw-Hill Companies, Moody's Investors Service and Fitch Ratings have each assigned a triple-A financial strength rating to Ambac Assurance. Ambac Assurance has obtained a ruling from the Internal Revenue Service to the effect that the insuring of an obligation by Ambac Assurance will not affect the treatment for federal income tax purposes of interest on such obligation and that insurance proceeds representing maturing interest paid by Ambac Assurance under policy provisions substantially identical to those contained in its Financial Guaranty insurance policy shall be treated for federal income tax purposes in the same manner as if such payments were made by the Obligor of the Series 2004 Bonds, Ambac Assurance makes no representation regarding the Series 2004 Bonds or the advisability of investing in the Series 2004 Bonds and makes no representation regarding, nor has it participated in the preparation of, the Official Statement other than the information supplied by Ambac Assurance and presented under the headings "BOND INSURANCE" and "SECURITY FOR THE SERIES 2004 BONDS -- Reserve Policy." Available Information The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the "Company"), is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). These reports, proxy statements and other information can be read and copied at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains an intereet site athttp://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC, includingthe Company. These reports, proxy statements and other information can also be read at the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New York 10005. Copies of Ambac Assurance's financial statements prepared in accordance with statutory accounting standards are available from Ambac Assurance. The address of Ambac Assurance's administrative offices and its telephone number are One State Street Plaza, 19th Floor, New York, New York, 10004 and (212) 668-0340. Incorporation of Certain Documents by Reference The following documents filed by the Company with the SEC (File No. 1-10777) are incorporated by reference in this Official Statement: 1) The Company's Current Report on Form 8-K dated January 23, 2003 and filed on January 24, 2003; 2) The Company's Current Report on Fonn 8-K dated February 25, 2003 and filed on February 28, 2003; 3) The Company's Current Report on Form 8-K dated February 25, 2003 and filed on March 4, 2003; 4) The Company's Current Report on Form 8-K dated March 18, 2003 and filed on March 20, 2003; 5) The Company's Current Report on Form 8-K dated March 19, 2003 and filed on March 26, 2003; 6) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and filed on March 28, 2003; {OR717885;51 10 7) The Company's Current Report on Form 8-K dated March 25, 2003 and filed on March 31, 2003; 8) The Company's Current Report on Form 8-K dated April 17, 2003 and filed on April 21, 2003; 9) The Company's Quarterly Report on Form 10-Q for the fiscal quartcrly period ended March 31, 2003 and filed on May 15, 2003; 10) The Company's Current Report on Form 8-K dated July 17, 2003 and filed on July 18, 2003; 11) The Company's Quarterly Report on Form 10-0 for the fiscal quarterly period ended June 30, 2003 and filed on August 14, 2003; 12) The Company's Current Report on Form 8-K dated October 16, 2003 and filed on October 17, 2003; 13) The Company's Quarterly Report on Form 10-0, for the fiscal quarterly period ended September30,2003 and filed on November 14, 2003; 14) The Company's Annual Report amendment No. 1 on Form 10-IUA for the fiscal year ended December 31, 2002 and filed on November 19, 2003; and 15) The Company's Current Report on Form 8-K dated January 28, 2004 and filed on January 30, 2004. All documents subsequently filed by the Company pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in the same manner as described above in "Available Information". 1OR717885;51 I I DEBT SERVICE REQUIREMENTS The following table shows the scheduled annual principal and interest requirements for the Series 2004Bonds, total annual debt service on the Series 2004 Bonds, total debt service for the Parity Bonds and combined debt service for all such Bonds. Year Ending Total Debt (October l) principal Interes SeTvice 2004 $ $ $ 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total OTHER OBLIGATIONS PAYABLE FROM NON -AD VALOREM FUNDS The City has debt issues outstanding which are secured by and payable from specific Non -Ad Valorem Revenues. The City also has entered into certain capital leases which arc secured by a covenant to budget and appropriate Non -Ad Valorem Revenues, which is the same source of security as for the Series 2004 Bonds. The City's outstanding indebtedness secured by specific Non -Ad Valorem Revenues or a covenant to budget and appropriate from Non -Ad Valorem Revenue is summarized below: Principal Amount Maximum Outstanding Final AnnjW 12escri to ion Sourcas3 03 MaturityMaturijy Debt Service Sales Tax Revenue Local Government Half Cent Sales Tax . $7,550,000 4/1/19 $698,063 Bonds, Series 1999 Sales Tax Revenue Local Government Half Cent Sales Tax $13,025,000 4/11/22 $1,055,340 Bonds, Series 2002 Capital Leases Covenant to Budget and Appropriate $1,284,049 1/30/08 $473,986 from Non -Ad Valorem Funds { OR717885;5) 12 Source; City Finance Department The City also has two (2) series of outstanding general obligation debt, secured by ad valorem taxes, and two (2) series of water and sewer bonds outstanding in the principal amount of $ as of October 1, 2003 payable from water and sewer revenues. For additional information regarding the outstanding debt of the City, please refer to Appendix C hereto. FUTURE FINANCING PLANS Subject to the provisions of the Resolution, the City may in the future issue additional debt payable from a covenant to budget and appropriate Non -Ad Valorem Revenues, which is the security for the Series 2004 Bonds or issue debt payable from a specific source of Non -Ad Valorem Revenues. The City does not expect during the next three (3) years to issue debt payable from a covenant to budget and appropriate Non -Ad Valorem Revenues or debt payable from a specific source of Non -Ad Valorem Revenues. f-1lIIu/:40al1IM111101Dili eIfly Romm4 T,TI� Principal Amount of Series 2004 Bonds $_ Less/Plus Net Original Issue Discount/Premium _ _) Plus Accrued Interest Total Estimated Sources of Funds $ Deposit to Construction Fund for Project Costs of Issuance(t) Deposit to Interest Account Total Estimated Uses of Funds Includes costs of issuance including underwriters discount, legal fees and expenses, and other fees and expenses including the municipal bond insurance and Reserve Policy premiums associated with the issuance of the Series 2004 Bonds. The City of Tamarac, Florida (the "City") located in Broward County, Florida, had an estimated 2003population of 56,881. The City was incorporated in 1963 and operates under its own charter. The governing body of the City consists of a five member commission of which four members are elected by district, and a mayor is elected at large. The City provides a full range of municipal services, including police and fire protection, highways and streets, planning, zoning, parks, recreation, water, sewer, sanitation and general administrative services. For additional information concerning the City see Appendices A and C hereto. GENERAL INFORMATION REGARDING NON -AD VALOREM REVENUES General The City generally receives two primary sources of revenue. These are ad valorem tax revenues and non -ad valorem revenues. The Resolution excludes from the Non -Ad Valorem Revenues the revenues of any enterprisefimdof the City. Ad valorem tax revenues may not be pledged for the payment of debt obligations of the City without approval of the electorate of the City. 1oR717885;51 13 The City is permitted by the Constitution of the State of Florida to levy ad valorem taxes at a rate of up to $10 per $1,000 of assessed valuation for general governmental services (other than the payment of principal and interest on general obligation long-term debt). The general fund tax rate to finance general governmental services (other than the payment of principal and interest on general obligation long-term debt) for the year ended September 30, 2003 was $5.9999 per $ 1,000. Such rate for the period ending September 30, 2004 is $5.9999 per $1,000. The table below, which has been prepared by the City, lists historical Non -Ad Valorem Revenues ofthe Cityfor each of the indicated years. Certain of the Non -Ad Valorem Revenues have heretofore or may hereinafter be specifically pledged to secure revenue bonds issued by the City. Such bonds are and/or will be payable from such specific non -ad valorem revenue source prior to such funds being available for payment of debt service on the Series 2004 Bonds. See "OTHER OBLIGATIONS PAYABLE FROM NON -AD VALOREM FUNDS" for a listing of revenue bonds heretofore issued which are secured by specific non -ad valorem revenue sources. Additionally, amounts in particular categories of legally available non -ad valorem revenues may increase or decrease in the future, or certain categories may cease to exist altogether, and new sources may occur from time to time. Non Ad Valorem Taxes and Franchise Fees Charges for Services Payment in Lieu of Taxes Intergovernmental Licenses and Permits Fines and Forfeitures Investment Income Miscellaneous Total Legally Available Non Ad Valorem Revenue FYE FYE 9/30/01 91391� $4,619,147 $7,058,629 1,393,841 1,304,794 -- 550,230 4,527,275 4,737,572 1,742,023 1,792,720 480,744 500,849 358,812 4,897,282 3,772,308 $17,660,312 1 $20,075,914 UNAUDITED FYE 9/30/03 $7,317,256 1,579,033 561,207 4,950,911 1,862,250 526,531 240,443 3,974,237 011 Pursuant to the Resolution the City has covenanted not to issue or incur debt or obligations which are secured by and/or payable solely from Pledgable Non -Ad Valorem Revenues unless the City prior to such issuance orincu=ce delivers a certificate to the Insurer certifying that certain financial ratios have been complied with. See "SECURITY FOR THE SERIES 2004 BONDS — Anti -Dilution" herein. The information in the following table indicates the coverage provided by Non -Ad Valorem Revenues (average of actual receipts for the City's Fiscal Years 2002 and 2003) of maximumannual debt service on the debt of the City secured by a payable from such Pledgable Non -Ad Valorem Revenues. Average Pledgable Non -Ad Valorem Revenues $20,543,891 Maximum Annual Debt Service on Non -Ad Valorem Revenue Debt(l) $ Coverage 11) City's Sales Tax Revenue Bonds, Series 1999 and Sales Tax Revenue Bonds, Series 2002, City Outstanding Capital Leases and Series 2004 Bonds. The information in the following table indicates how the City would have complied with, for its fiscal year ended September 30, 2003, the second financial ratio that the City must comply with prior to the issuance or incurrence of debt or obligations secured by or payable solely from Pledgable Non -Ad Valorem Revenues. Pledgable Non -Ad Valorem Revenues Non -Enterprise Fund Revenues {OR717885;51 14 $21,011,868 $33,744,927 Costs of Essential Services $18,293,006 Maximum Annual Debt Service Secured by a lien on Pledgable $ 1,751,682 Non -Ad Valorem Revenues Maximum Annual Covenant Debt Service $ 1,177,973* Estimated Maximum Annual Debt Service on Series 2004 Bonds $ 703,987 [$21,011,868 — (($21,011,868 - $33,744,927) x $18,293,006)) - $1,751,682 = $7,869,726 $7,869.726 = 6.68 $1,177,973 The ability of the City to appropriate Non -Ad Valorem Revenues in sufficient amounts to pay the principal of and the interest on the Series 2004 Bonds is subject to a variety of factors, including the responsibility to provide essential governmental services, and the obligation of the City to have a balanced budget. No representation is being made by the City that any particular Non -Ad Valorem Revenue sources will be available for future years, or if available, will be budgeted to pay debt service on the Series 2004 Bonds. For further information regarding Non -Ad Valorem Revenues of the City, reference is made to Appendix C attached hereto. Continued consistent receipt of Non -Ad Valorem Revenues is dependent upon a variety of factors, including formulas specified under Florida law for the distribution of certain of such funds which take into consideration the ratio of residents in the City to total County residents. More rapid population growth in the unincorporated areas of Broward County or in other incorporated areas in Broward County as compared to population growth within the City limits could have an adverse effect on certain Non -Ad Valorem Revenues of the City. The amounts and availability of any of the Non -Ad Valorem Revenues to the City are also subject to change, including reduction or elimination by change of State law or changes in the facts or circumstances according to which certain of the Non -Ad Valorem Revenues are allocated. In addition, the amount of certain of the Non -Ad Valorem Revenues collected by the City is directly related to the general economy of the City. Accordingly, adverse economic conditions could have a material adverse effect on the amount of Non -Ad Valorem Revenues collected by the City. The City may also pledge certain of the Non -Ad Valorem Revenues to future obligations that it issues. Such Non -Ad Valorem Revenues would be required to be applied to such obligations prior to paying the principal of and interest on the Series 2004 Bonds. [Pension or Self Insurance Discussion] a r : i►_ r. rr yr r.:_ 0011011WW General The Series 2004 Bonds are secured by the City's covenant to budget and appropriate Non AdValaremRevenues as described herein, and are not payable from ad valorem taxation, However, the ability of the City to pay the Series 2004 Bonds is subject to a variety of factors, including the obligations of the City to provide governmental services and the provisions of Florida law which require the City to have a balanced budget. Although the Series 2004 Bonds are not payable from ad valorem taxation, approximately 37% of general fund revenues for the City's fiscal year ended September 30, 2003 come from ad valorem taxes. To the extent that the future collection of ad valorem tax revenues or Non -Ad Valorem Revenues is adversely affected, a larger portion of Non -Ad Valorem Revenues would be required to balance the budget and provide governmental services. Save Our Homes Amendment In 1992, the voters of the State of Florida amended Article VII, Section 4 of the Florida Constitution to modify the manner in which homesteads are assessed for purposes of ad valorem taxation. The amendment provides that, in each (OR717885;51 15 year, the change in assessments will not exceed the lower of (i) three percent (3 %) of the assessment for the prior year, or (ii) the percentage change in the Consumer Price Index. Such amendment also provides that after any change in ownership, as provided by general law, homestead property shall be assessed at just value as of January I of the following year and that new homestead property shall be assessed at just value as of January I of the year following the establishment of the homestead. The effective date of the Save Our Homes Amendment was January 15, 1993, and the base year for determining compliance with the restrictions is 1994. The 1995 tax roll year was the first year such limitations were effective. Limitation on State Revenues Amendment As part of the November 8, 1994 general election, Florida voters approved an amendment to Article VU, Section 1(e) of the Florida Constitution, which is commonly referred to as the "Limitation on State Revenues Amendment". This amendment provides that state revenues collected for any fiscal year shall be limited to state revenues allowed under the amendment for the prior fiscal year plus an adjustment for growth. Growth is defined as an amount equal to the average annual rate of growth in Florida personal income over the most recent twenty quarters times the state revenues allowed under the amendment for the prior fiscal year. State revenues collected for any fiscal year in excess of this limitation are required to be transferred to the budget stabilization fund until the fund reaches ten percent (10%) of the General Revenue Fund, and thereafter is required to be refunded to taxpayers as provided by general law. The limitation on state revenues imposed by the amendment may be increased by the Legislature by a two-thirds vote in each house. The term "state revenues", as used in the amendment, means taxes, fees, licenses, and charges for services imposed by the Legislature on individuals, businesses, or agencies outside state government. However, the term "state revenues" does not include: (1) revenues that are necessary to meet the requirements set forth in documents authorizing the issuance of bonds by the State; (2) revenues that are used to provide matching funds for the federal Medicaid program with the exception of the revenues used to support the Public Medical Assistance Trust Fund or its successor program and with the exception of State matching funds used to fund elective expansion made after July 1, 1994; (3) proceeds from the State lottery return as prizes; (4) receipts of the Florida Hurricane Catastrophe Fund; (5) balances carried forward from prior fiscal years; (6) taxes, licenses, fees and charges for services imposed by local, regional, or school district governing bodies, or (7) revenue from taxes, licenses, fees and charges for services required to be imposed by any amendment or revision to the Florida Constitution after July 1, 1994. The amendment took effect on January 1, 1995, and was to first be applicable to State fiscal year 1995-1996. To the extent that Non -Ad Valorem Revenues include revenues from the State which are subject to, and limited by, the amendment, the future distribution of increases in such State revenues to the City may be adversely affected by the amendment. LITIGATION There is no pending litigation restraining or enjoining the issuance or delivery of the Series 2004 Bonds or questioning or affecting the validity of the Series 2004 Bonds or the proceedings and authority under which they are to be issued. Neither the creation, organization or existence of the City, nor the title of the present City Commission membersor other officials of the City to their respective offices is being contested. There is no litigation pending which in any manner questions the right of the City to issue the Series 2004 Bonds in accordance with the provisions of the Resolution and the laws of the State of Florida or to receive and pledge the Sales Tax Revenues. The City experiences routine litigation and claims incidental to the conduct of its affairs. The City carries substantial insurance for most of these exposures, and any pending claims are defended by and, if necessary, are anticipated to be paid by the insurance carriers less the applicable insurance deductible amounts. LEGAL MATTERS Certain legal matters incident to the validity of the Series 2004 Bonds and the issuance thereof by the City are subject to the approval of Bryant Miller & Olive P.A., Tampa, Florida, Bond Counsel, whose approving opinion will be (OR717885;51 16 available at the time of delivery of the Series 2004 Bonds. Certain legal matters will be passed upon for the City by Mitchell S. Kraft, Esquire, City Attorney, and by Akerman, Senterfitt, Orlando, Florida, Disclosure Counsel. The proposed text of the opinion of Bond Counsel is set forth as "APPENDIX E - Form of Opinion of Bond Counsel" attached hereto. The actual legal opinion to be delivered may vary from that text if necessary to reflect facts and law on the date of delivery. The opinion will speak only as of its date, and subsequent distribution of it by recirculation of the Official Statement or otherwise shall create no implication that Bond Counsel has reviewed or expresses any opinion concerning any of the matters referenced in the opinion subsequent to its date. Bond Counsel has not been engaged to, nor has it undertaken to, review (1) the accuracy, completeness or sufficiency of this Official Statement or any other offering material relating to the Series 2004 Bonds; provided, however, that Bond Counsel will render an opinion to the underwriter of the Series 2004 Bonds relating to the accuracy of certain statements contained herein and under the heading "TAX EXEMPTION" and certain statements which summarize provisions of the Resolution and the Series 2004 Bonds, or (2) the compliance with any federal or state securities law with regard to the sale or distribution of the Series 2004 Bonds. Regarding this Official Statement, the City Attorney will render an opinion only as to the accuracy and sufficiency of the information set forth herein regarding legal matters relating to the City. TAX EXEMPTION General The Internal Revenue Code of 1986, as amended (the "Code") establishes certain requirements which must be met subsequent to the issuance and delivery of the Series 2004 Bonds in order that interest on the Series 2004Bonds be and remain excluded from gross income for purposes of Federal income taxation. Noncompliance may cause interest on the Series 2004 Bonds to be included in federal gross income retroactive to the date of issuance of the Series 2004Bonds, regardless of the date on which such noncompliance occurs or is ascertained. These requirements include, but are not limited to, provisions which prescribe yield and other limits within which the proceeds of the Series 2004 Bonds and the other amounts are to be invested and require that certain investment earnings on the foregoing must be rebated on a periodic basis to the Treasury Department of the United States. The City has covenanted in the Resolution to comply with such requirements in order to maintain the exclusion from Federal gross income of the interest on the Series 2004 Bonds. In the opinion of Bond Counsel, assuming compliance with the aforementioned covenants, under existing statutes, regulations and judicial decisions, interest on the Series 2004 Bonds is excluded from gross income for purposes of Federal income taxation, interest on the Series 2004 Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and the Series 2004 Bonds are exempt from all present intangible personal property taxes imposed pursuant to Chapter 199, Florida Statutes. However, the interest on the Series 2004 Bonds may be subject to the alternative minimum tax when any Series 2004 Bond is held by a corporation. The alternative minimum taxable income of corporation must be increased by seventy-five percent (75%) ofthe excess of such corporations adjusted current earnings over its alternative minimum taxable income (before this adjustment and the alternative tax net operating loss deduction). "Adjusted current earnings" will include interest on the Series 2004Bonds. Except as described above, Bond Counsel expresses no opinion regarding other federal tax consequences resulting from ownership of, receipt or accrual of interest on, or disposition of the Series 2004 Bonds. Prospective purchasers of the Series 2004 Bonds should be aware that (i) except as may be hereafter described, Section 265 of the Code denies a deduction for interest or indebtedness incurred or continued to purchase and carry the Series2004Bonds, (ii) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(13)(i) reduces the deduction for loss reserves by fifteen percent (15%) of the sum of certain items, including interest on the Series 2004 Bonds; (iii) interest on the Series 2004 Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code; (iv) passive investments income, including interest on the Series 2004 Bonds, may be subject to federal income taxation under Section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than twenty-five percent (25%) of the gross receipts of such Subchapter S corporations is passive investment income; and (v) Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to tOR717885;51 17 take into account, in determining the taxability of such benefits, receipts or accruals of interest on the Series 2004Bonds. Other provisions of the Code may give rise to adverse federal income tax consequences to particular Series 2004 Bondholders. Holders of the Series 2004 Bonds should consult their own tax advisers with respect to the tax consequences to them of owning the Series 2004 Bonds. During recent years, legislative proposals have been introduced in Congress, and in some cases enacted, that altered certain federal tax consequences resulting from the ownership of obligations that are similar to the Series 2004 Bonds. In some cases, these proposals have contained provisions that altered these consequences on a retroactive basis. Such alteration of federal tax consequences may have affected the market value of obligations similar to the Series 2004 Bonds. From time to time, legislative proposals are pending which could have an effect on both the federal tax consequences resulting from ownership of the Series 2004 Bonds and their market value. No assurance can be given that additional legislative proposals will not be introduced or enacted that would or might apply to, or have an adverse effect upon, the Series 2004 Bonds. Tax Treatment of Original ]Issue Discount Under the Code, the difference between the maturity amounts of the Series 2004 Bonds maturing on October I in the years ___ and __, and in the years and thereafter (collectively the "Discount Bonds"), and the initial Offering price to the public, excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers, at which price a substantial amount of such Discount Bonds of the same maturity was sold is "original issue discount." Original issue discount will accrue over the term of such Discount Bonds at a constant interest rate compounded periodically. A purchaser who acquires such Discount Bonds in the initial public offering at a price equal to the initial offering price thereof to the public will be treated as receiving an amount of interest excludable from gross income for federal income tax purposes equal to the original issue discount accruing during the period he or she holds such Discount Bonds, and will increase his or her adjusted basis in such Discount Bonds by the amount of such accruing discount for purposes of determining taxable gain or loss on the sale or other disposition such Discount Bonds. The federal income tax consequences of the purchase, ownership, sale, or other disposition of such Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those above. Owners of such Discount Bonds should consult their own tax advisors with respect to the precise determination for federal income tax purposes of interest accrued upon sale or other disposition of Discount Bonds and with respect to the state and local tax consequences of owning and disposing of Discount Bonds. Tax Treatment of Bond Premium The difference between the principal amount of the Series 2004 Bonds maturing in years — and (collectively, the "Premium Bonds") and the initial offering price to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of such Premium Bonds of the same maturity was sold constitutes to an initial purchaser amortizable bond premium which is not deductible from gross income for Federal income tax purposes. The amount of amortizable bond premium for a taxable year is determined actuarially on a constant interest rate basis over the term of each of the Premium Bonds which term ends on the earlier of the maturity or call date for each of the Premium Bonds which minimizes the yield on said Series 2004 Bonds to the purchaser. For purposes of determining gain or loss on the sale or other disposition of a Premium Bond, an initial purchaser who acquires such obligation in the initial offering to the public at the initial offering price is required to decrease such purchaser's adjusted basis in such Premium Bond annually by the amount of amortizable bond premium for the taxable year. The amortization of bond premium may be taken into account as a reduction in the amount of taxexerrlpt income for purposes of determining various other tax consequences of owning such Series 2004 Bonds. Owners of the Premium Bonds are advised that they should consult with their own advisors with respect to the state and local tax consequences of owning such Premium Bonds. Qualified Tax -Exempt Obligations The Tax Reform Act of 1986 revised Section 265 of the Code so as to generally deny financial institutions 100% of the interest deductions that are allocable to tax-exempt obligations acquired after August7, 1986. However, an exception is permitted under the Tax Reform Act of 1986 for certain qualified tax-exempt obligations which allows financial institutions to continue to treat the interest on such obligations as being subject to the 20% disallowance provisions {OR717885;51 18 under prior law if the City, together with certain subordinate entities, reasonably expects that it will not issue more than $10,000,000 of governmental purpose bonds in a calendar year and designates such bonds as "qualified tax-exempt obligations" pursuant to the provisions of Section 265(b)(3)(B) of the Code. Based on representations of the City, the Series 2004 Bonds will be "qualified tax-exempt obligations" pursuant to Section 265(b)(3)(B) of the Code. Proposed Regulations— Possible Change in Form of Bond Counsel Opinion The U.S. Department of the Treasury has proposed regulations, contained in Circular 230, governing the practice of attorneys and other tax advisors before the Internal Revenue Service. These proposed regulations can be interpreted to classify opinions regarding federal tax treatment of interest on state or local government bonds as tax shelter opinions and, consequently, subject to certain mandatory requirements applicable to tax shelter opinions. The proposed regulations provide that the final regulations may apply to opinions delivered on or after the date final regulations are published in the Federal Register which could occur in time to apply to the Series 2004 Bonds. It is not possible to predict whether or when final regulations might be promulgated, or whether the provisions of any final regulations will be consistent with the proposed regulations. If final regulations are adopted in the present form of the proposed regulations, and with an effective date that is applicable to Bond Counsel's opinion relating to the Series 2004 Bonds, Bond Counsel currently expects to deliver an opinion that contains the same overall conclusion regarding the exclusion of interest on the Series 2004 Bonds from federal gross income as described herein, but which may differ from the form set forth in Appendix E hereto in order to comply with the requirements of the new regulations. There can be no assurance that the market value of the Series 2004 Bonds will not be adversely affected if the opinion of Bond Counsel delivered at the time of issuance of the Series 2004 Bonds is different from the form attached hereto as Appendix E as a result of the requirements of the new regulations. LIK117 al.�l I R11.4.10p] RBC Dain Rauscher Inc. (the "Underwriter") has agreed, subject to certain conditions, to purchase the Series 2004 Bonds from the City at a purchase price of $ ($� _ original par amount, less Underwriter's discount of $ and less net original issue discount of$� _), plus accrued interest from the dated date to the date of delivery of the Series 2004 Bonds. The Underwriter's obligation is subject to certain conditions precedent, and it will be obligated to purchase all of the Series 2004 Bonds if any Series 2004 Bonds are purchased. The Series 2004 Bonds may be offered and sold to certain dealers (including dealers depositing such Series 2004 Bonds into investment trusts) at prices lower than the public offering price, and such public offering prices maybe changed from time to time by the Underwriter. INVESTMENT POLICY The City investment policy applies to all the funds held by the City, with the exception of Pension Fund assets and Funds whose uses are restricted by debt covenants, prior contracts, legal, regulatory or other constraints. Permitted investments of the City funds pursuant to the City investment policy include the following: 1. The Florida Local Government Surplus Trust Fund (administered by the State Board of Administration and commonly referred to as the "SBA"). 2. Direct obligations of the U.S. Government which include but are not limited to Treasury Bills, Treasury Notes, Treasury Bonds and Treasury Strips. 3. Obligations guaranteed by the U.S. Government as to principal and interest which include, but are not limited to, Government National Mortgage Association (GNMA), Farmers Home Administration (FmHA), Small Business Administration (SBA), General Services Administration (GSA), Federal Housing Administration (FHA), Housing and Urban Development (HUD), Tennessee Valley Authority (TVA). 4. Time deposits and savings accounts in banks and savings and loan associations, under the laws of Florida and the United States, doing business in and situated in -state and collateralized as provided for by Florida Statutes Chapter 280. {oR717885;51 19 5. Securities issued and guaranteed by a federally sponsored corporation which are backed by, or the entity is capable of borrowing from, the U.S. Treasury. These securities carry the "implied guarantee" of the U.S. Government and include the Federal Farm Credit Banks (FFCB), Federal Home Loan Bank Mortgage Corporation (FHLMC) (participation certificates), Federal National Mortgage Association (FNMA), Federal Home Loan Bank (FHLB) or its banks. 6. Commercial Paper of any United States corporation provided such notes have a rating of A 1/PI by at least two of the five rating agencies. 7. Bankers Acceptance eligible for purchase by the Federal Reserve System issued by banks having a Moody's or Standard and Poot's commercial paper rating of at least A1/PL 8. Securities and Exchange Commission registered money market funds shares that are open-ended, no-load funds registered under the Federal Investment Company Act of 1940 Rule 2a-7 - Money Market Funds. The City may revise the aforementioned investment policy from time to time. Amounts on deposit in the various funds and accounts created pursuant to the Resolution will be invested as provided in the Resolution; see Appendix B hereto and "SECURITY FOR THE SERIES 2004 BONDS - Investments" herein. RATINGS Moody's Investors Service, Inc. ("Moody's") and Fitch, Inc. ("Fitch") are expected to assign ratings of"Aaa" and "AAA", respectively, to the Series 2004 Bonds, with the understanding that, upon delivery of the Series 200413onds a municipal bond new issue insurance policy will be issued by Ambac Assurance. Moody's has assigned an underlying rating of A2 and Fitch has assigned an underlying rating of A+to the Series 2004 Bonds if the Series 20WBondswereto be issued without credit enhancement. Such ratings reflect only the views of such organizations and any desired explanation of the significance of such ratings should be obtained from the rating agency furnishing the same, at the following addresses; Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007-2796 and Fitch, Inc., One State Street Plaza, New York, New York 10004. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Series 2004 Bonds. FINANCIAL STATEMENTS The City's general purpose financial statements for its fiscal year ended September 30, 2003 appearing in Appendix C hereto have been audited by Grau & Co., P.A. Miami, Florida, (the "Independent Auditor")asstated in their report included as part of Appendix C hereto. The Independent Auditor has consented to the use of such report herein. CONTINUING DISCLOSURE The City has agreed and undertaken for the benefit of Series 2004 Bondholders and in order to assist the Underwriter in complying with the continuing disclosure requirements of Securities and Exchange Commission ("SEC.') Rule 15c2-12 (the "Rule"), to provide certain financial information and operating data relating to the City, the Acquired System and the Series 2004 Bonds in each year (the "Annual Report"), and to provide notices of the occurrence of certain enumerated events, if material. Such undertaking shall only apply so long as the Series 2004 Bonds remain outstanding under the Resolution. In order to provide continuing disclosure with respect to the Series 2004 Bonds in accordance with the Rule, the City will enter into a Disclosure Dissemination Agent Agreement ("Continuing Disclosure Agreement") for the benefit of the Holders of the Series 2004 Bonds with Digital Assurance Certification, L.L.C. ("DAC"), under which the City will designate DAC as Disclosure Dissemination Agent. The specific nature of the information tobe contained in the Annual Report and the notices of material events are described in APPENDIX F hereto. (OR717885;5) 20 With respect to the Series 2004 Bonds, no party other than the City is obligated to provide, nor is expected to provide, any continuing disclosure information with respect to the aforementioned Rule. The City has never failed to timely comply with an undertaking pursuant to the provisions of the Rule. DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS Pursuant to Section 517.051, Florida Statutes, no person may directly or indirectly offer or sell securities of the City except by an offering circular containing full and fair disclosure of all defaults as to principal or interest on its obligations since December 31, 1975, as provided by rule of the Florida Department of Banking and Finance (the "Department"). Pursuant to Rule 3E-400.003, Florida Administrative Code, the Department has required the disclosure of the amounts and types of defaults, any legal proceedings resulting from such defaults, whether a trustee or receiver has been appointed over the assets of the City, and certain additional financial information, unless the City believes in good faith that such information would not be considered material by a reasonable investor. The City is not and has not been in default on any bond issued since December 31, 1975 which would be considered material by a reasonable investor in the.Series 2004 Bonds. ENFORCEABILITY OF REMEDIES The remedies available to the owners of the Series 2004 Bonds upon an event of default under the Resolution and any policy of bond insurance referred to herein are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, the remedies specified by the federal bankruptcy code, the Resolution, the Series 2004 Bonds and any policy of bond insurance referred to herein may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2004 Bonds (including Bond Counsel's approving opinion) will be qualified, as to the enforceability of the remedies provided in the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. FINANCIAL ADVISOR Kirkpatrick, Pettis, Smith, Polian Inc., Orlando, Florida, is serving as Financial Advisor to the City with respect to the issuance and sale of the Series 2004 Bonds. CONTINGENT FEES The City has retained Bond Counsel, the Financial Advisor and Disclosure Counsel with respect to authorization, sale, execution and delivery of the Series 2004 Bonds. Payment of certain of the fees of such professionals and a discount to the Underwriter are each contingent upon the issuance of the Series 2004 Bonds. FORWARD -LOOKING STATEMENTS This Official Statement contains certain "forward -looking statements" concerning the City's operations, performance and financial condition, including future economic performance, plans and objectives and the likelihood of success in developing and expanding. These statements are based upon a number of assumptions and estimates which are subject to significant uncertainties, many of which are beyond the control of the City. The words "may," "would," "could," it "expect," "anticipate," "believe," "intend,' "plan," "estimate" and similar expressions are meant to identify these forward -looking statements. Actual results may differ materially from those expressed or implied by these forward -looking statements. INN 080111.1Wj3191W Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The information contained above is neither guaranteed as to accuracy or completeness nor to be construed as a representation by the City or the Underwriter. The information and expressions of opinion herein are subject to change {OR717885;51 21 without notice and neither the delivery of this Official Statement nor any sale made hereunder is to create, under any circumstances, any implication that there has been no change in the affairs of the City from the date hereof. This Official Statement is submitted in connection with the sale of the securities referred to herein and may not be reproduced or used, as a whole or in part, for any other purpose. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers orthe Holden of any of the Series 2004 Bonds. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] {OR717885;5 } 22 CERTIFICATE AS TO OFFICIAL STATEMENT The execution and delivery of this Official Statement has been duly authorized by the City Commission of the City. At the time of delivery of the Series 2004 Bonds to the Underwriter, the City will provide to the Underwriter a certificate (which may be included in a consolidated closing certificate of the City) signed by those City officials who signed this Official Statement, relating to the accuracy and completeness of certain materials in this Official Statement and to its being a final official statement in the judgment of the undersigned for the purposes of SEC Rule 15c2-12(b)(3). CITY OF TAMARAC, FLORIDA By: Joe Schreiber, Mayor By: Jeffrey L. Miller, City Manager 1OR717885;51 23 APPENDIX A City of Tamarac, Florida General Information. (OR7I7885;5 ) APPENDIX B The Resolution {OR717885;5 } 25 APPENDIX C General Purpose Financial Statements and Independent Auditors' Report for the Fiscal Year Ended September 30, 2003 (OR717885;5 } 26 Specimen Municipal Bond Insurance Policy {OR717885;5 } 27 Form of Opinion of Bond Counsel {OR717885;5} 28 APPENDIX F Form of Continuing Disclosure Agreement {ox717885;5} 29 Form of the Reserve Policy {OR717885;5} 30