Res 90-02 RESOLUTION NO. R-90-02
CITY OF DELRAY BEACH, FLORIDA
Utilities Tax Revenue Refunding Bonds, Series 2002
Utilities Tax Revenue Refunding Bond Resolution
Adopted December 3, 2002
\\wpb-srv01~SANFORDS~399246v10\l 1/25/02\16787 OlllO0 Resolution No. 90-02
TABLE OF CONTENTS
SECTION 1. DEFINITIONS ......................................................................................................... 6
SECTION 2. PURPOSE AND BOND DESIGNATION .............................................................. 8
SECTION 3.
SECTION 4.
SECTION 5.
SECTION 6.
SECTION 7.
SECTION 8.
SECTION 9.
SECTION 10.
SECTION 11.
SECTION 12.
SECTION 13.
SECTION 14.
SECTION 15.
SECTION 16.
SECTION 17.
SECTION 18.
SECTION ! 9.
SECTION 20.
SECTION 21.
SECTION 22.
TERMS AND DETAILS OF BONDS .................................................................... 8
APPLICATION OF BOND PROCEEDS ................................................................ 8
COVENANTS OF THE CITY .............................................................................. 10
RULE 15C2-12 UNDERTAKING ........................................................................ 11
REDEMPTION PROVISIONS ............................................................................. 15
NEGOTIATED SALE ........................................................................................... 18
APPOINTMENT OF UNDERWRITER ............................................................... 18
PARAMETERS FOR THE SALE OF THE BONDS ......................................... 19
PRELIMINARY AND OFFICIAL STATEMENT ............................................. 20
PAYING AGENT AND REGISTRAR ............................................................... 20
BOOK ENTRY BONDS ..................................................................................... 21
APPOINTMENT OF ESCROW AGENT ........................................................... 21
APPROVAL AND EXECUTION OF THE ESCROW AGREEMENT ............. 21
BOND INSURANCE POLICY AND RESERVE POLICY ............................... 22
INSURANCE AGREEMENT ............................................................................. 22
AMENDMENTS AND SUPPLEMENTS TO ORIGINAL RESOLUTION ...... 22
AMENDMENT TO ORIGINAL RESOLUTION AND 1994 RESOLUTION.. 23
SEVERABILITY OF INVALID PROVISIONS ................................................. 24
FURTHER AUTHORIZATIONS; RATIFICATION OF PRIOR ACTS ........... 25
REPEALER ......................................................................................................... 25
\\wpb-srv01~SANFORDS~399246v10\ll/25/02\16787 011100 Resolution No. 90-02
RESOLUTION NO. R-90-02
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF
DELRAY BEACH, FLORIDA, AUTHORIZING THE NEGOTIATED
SALE OF CITY OF DELRAY BEACH, FLORIDA, UTILITIES TAX
REVENUE REFUNDING BONDS, SERIES 2002, IN THE INITIAL
AGGREGATE PRINCIPAL AMOUNT OF NOT EXCEEDING $16,500,000
FOR THE PURPOSE OF PAYING AND DEFEASING THE CITY'S
UTILITIES TAX REVENUE REFUNDING AND IMPROVEMENT
BONDS, SERIES 1992, ITS UTILITIES TAX REVENUE REFUNDING
AND IMPROVEMENT BONDS, SERIES 1994, ITS UTILITIES TAX
REVENUE BONDS, SERIES 1995, ITS UTILITIES TAX REVENUE
BONDS, SUBORDINATE SERIES 1996 AND ITS UTILITIES TAX
REVENUE BONDS, SUBORDINATE SERIES 1998 (COLLECTIVELY,
THE "REFUNDED BONDS"); DETERMINING CERTAIN DETAILS OF
SAID BONDS; APPOINTING THE UNDERWRITER; PROVIDING FOR
THE APPLICATION OF THE BOND PROCEEDS; APPROVING THE
FORM OF, AND AUTHORIZING THE EXECUTION AND DELIVERY
OF A BOND PURCHASE AGREEMENT TO EFFECT THE
NEGOTIATED SALE OF THE BONDS AND SETTING THE
PARAMETERS BY WHICH THE MAYOR OR VICE MAYOR SHALL BE
AUTHORIZED TO EXECUTE AND DELIVER THE BOND PURCHASE
AGREEMENT; APPROVING THE FORM OF AND AUTHORIZING THE
EXECUTION OF AN OFFICIAL STATEMENT IN CONNECTION WITH
THE OFFERING AND SALE OF THE BONDS AND AUTHORIZING THE
DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT AND
THE OFFICIAL STATEMENT BY THE UNDERWRITER; APPOINTING
A PAYING AGENT; APPOINTING A REGISTRAR; PROVIDING FOR A
BOND INSURANCE POLICY FOR THE BONDS PROVIDED BY
FINANCIAL SECURITY ASSURANCE, INC. AND AUTHORIZING AND
AGREEING TO ANY NECESSARY SUPPLEMENTS OR AMENDMENTS
TO THE BOND RESOLUTION IN CONNECTION THEREWITH; IF
APPLICABLE, APPROVING THE FORM OF AND AUTHORIZING THE
EXECUTION AND DELIVERY OF AN INSURANCE AGREEMENT IN
CONNECTION WITH THE ISSUANEE OF THE RESERVE POLICY BY
FINANCIAL SECURITY ASSURANCE, INC. PROVIDING FOR THE
UNDERTAKING BY THE CITY REGARDING SECONDARY MARKET
DISCLOSURE AS REQUIRED BY RULE 15c2-12 OF THE SECURITIES
AND EXCHANGE COMMISSION; AMENDING RESOLUTION NO. 98-91
IN CONNECTION WITH THE SECURITY FOR THE BONDS AND
AMENDING RESOLUTION NO. 98-91 AND RESOLUTION NO. 27-94 IN
CONNECTION WITH THE DEBT SERVICE RESERVE ACCOUNT FOR
THE BONDS; AUTHORIZING THE PROPER OFFICERS OF THE CITY
TO DO ALL OTHER THINGS DEEMED NECESSARY OR ADVISABLE
AS TO THE SALE AND DELIVERY OF THE BONDS; AND PROVIDING
FOR AN EFFECTIVE DATE.
\\wpb-srv01~ANFOKDSk399246v10\l 1/25/02\16787 011100 Resolution No. 90-02
WHEREAS, the City Commission (the "Commission") of the City of Delray
Beach, Florida (the "City") did, on December 3, 1991, adopt Resolution No. 98-91, as amended
and supplemented (herein, the "Original Resolution"), for the purpose, among other things, of
authorizing the issuance from time to time of Utilities Tax Revenue Bonds to finance and
refinance municipal projects; and
WHEREAS, any term not otherwise defined in this Resolution shall have the
meaning ascribed to such term in the Bond Resolution (as defined below); and
WHEREAS, pursuant to the terms and provisions of the Original Resolution, the
City did, on February 5, 1992, issue its first series of obligations under the Original Resolution
designated as Utilities Tax Revenue Refunding and Improvement Bonds, Series 1992, in the
aggregate principal amount of $14,800,000 for the purposes authorized thereunder (herein, the
"1992 Bonds"); and
WHEREAS, the Commission did, on November 10, 1994, issue its second series
of obligations under the Original Resolution, as such resolution was amended and supplemented
by Resolution No. R-27-94 (the "1994 Resolution") designated as Utilities Tax Revenue
Refunding and Improvement Bonds, Series 1994, in the aggregate principal amount of
$5,810,000 for the purposes authorized in the 1994 Resolution (herein, the "1994 Bonds"); and
WHEREAS, pursuant to the terms and provisions of the Original Resolution, the
1994 Resolution and Resolution No. R-54-95 (the "1995 Resolution"), the City did, on August
17, 1995, issue its third series of obligations designated as Utilities Tax Revenue Bonds, Series
1995, in the aggregate principal amount of $2,405,000 for the purposes authorized in the 1995
Resolution (herein, the "1995 Bonds"); and
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WHEREAS, for the purpose of this Resolution, the Original Resolution, the 1994
Resolution and the 1995 Resolution are sometimes collectively referred to as the "Bond
Resolution"; and
WHEREAS, pursuant to the Bond Resolution and Resolution No. 79-96 (the
"1996 Resolution") the City did, on November 12, 1996, enter into that certain Line of Credit
Agreement with SunTrust Bank, South Florida, N.A. (now known as SunTrust Bank) whereby
the City was authorized to issue up to $3,300,000 of its Utilities Tax Revenue Bonds,
Subordinate Series 1996 (the "1996 Bonds") for the purposes authorized in the 1996 Resolution;
and
WHEREAS, pursuant to the Bond Resolution and Resolution No. 56-98 (the
"1998 Resolution") the City did, on September 25, 1998, enter into that certain Line of Credit
Agreement with SunTrust Bank, South Florida, N.A. (now known as SunTrust Bank) whereby
the City was authorized to issue up to $350,000 of its Utilities Tax Revenue Bonds, Subordinate
Series 1998 (the "1998 Bonds") for the purposes authorized in the 1998 Resolution; and
WHEREAS, the outstanding 1992 Bonds, 1994 Bonds, 1995 Bonds, 1996 Bonds
and 1998 Bonds are collectively referred to as the "Refunded Bonds"; and
WHEREAS, pursuant to Article III, Section 4.G of the Original Resolution, the
Commission hereby determines it to be in the best economic interest of the City to pay and
defease the Refunded Bonds through the issuance of its not to exceed $16,500,000 in initial
aggregate principal amount of Utilities Tax Revenue Refunding Bonds, Series 2002 (herein, the
"Bonds"); and
WHEREAS, effective July 3, 1995, Rule 15c2-12 of the Securities and Exchange
Commission (the "Rule"), provides that it is unlawful for a broker dealer or municipal securities
\\wpb-srv01\SANFORDS~399246v10\l 1/25/02\16787 011100 3 Resolution No. 90-02
dealer to purchase or sell municipal securities, which includes the Bonds, unless the issuer,
which includes the City, has undertaken in a written agreement (herein, the "Undertaking") to
provide to specified information repositories annual financial information and operating data
relevant to the municipal securities and notice of certain specified material events; and
WHEREAS, the Commission hereby determines to provide its Undertaking with
respect to the Bonds in this Resolution; and
WHEREAS, in connection with the payment and defeasance of all or a portion of
the Refunded Bonds, the City will enter into that certain Escrow Deposit Agreement, expected to
be dated as of December 1, 2002, with Wells Fargo Bank, National Association, as escrow agent
(the "Escrow Agent") in substantially the form attached hereto as Exhibit A (herein, the "Escrow
Agreement"); and
WHEREAS, subject to the terms and conditions of this Resolution, the City will
enter into a Bond Purchase Agreement with Bear Steams & Co., Inc., hereby designated by the
Commission to be the underwriter of the Bonds (herein the "Underwriter"), setting forth the
terms and conditions of the City's agreement to sell and the Underwfiter's agreement to purchase
the Bonds, in substantially the form attached hereto as Exhibit B (herein, the "Purchase
Contract"); and
WHEREAS, based upon current market conditions, the complex nature of the
financing, the need to issue the Bonds upon the most favorable market conditions and the advice
of the City's financial advisor, the Commission hereby finds it is necessary and advisable to
negotiate the sale of the Bonds; and
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WHEREAS, the Commission hereby determines that it is in the best interest of
the City to accept the Purchase Contract and to award the Bonds to the Underwriter pursuant to a
negotiated sale and pursuant to the parameters set forth in Section 10 herein; and
WHEREAS, the City will be, prior to the execution of the Purchase Contract,
provided by the Underwriter with the disclosure statements required by Section 218.385, Florida
Statutes, a copy of which is attached as an exhibit to the Purchase Contract; and
WHEREAS, there have been also prepared and submitted to the Commission a
draft Preliminary Official Statement, attached hereto as Exhibit C.
WHEREAS, the City's financial advisor has recommended in a letter, attached
hereto as Exhibit D, that the principal and interest on the Bonds be insured by a financial
guaranty insurance policy (the "Bond Insurance Policy") to be issued by Financial Security
Assurance, Inc. or any successor thereto (the "Bond Insurer") and that, subject to final pricing of
the Bonds, in lieu of any required deposits into the Debt Service Reserve Account for the Bonds,
a Reserve Account Credit Facility Substitute, in the form of a municipal bond debt service
reserve fund insurance policy to be issued by the Bond Insurer (the "Reserve Policy") may be
provided with the coverage which will be equal to the Debt Service Reserve Requirement for the
Bonds as evidenced by the commitment of the Bond Insurer attached hereto as Exhibit E (the
"Commitment"); and
WIIEREAS, the Commission has been advised that as a condition for the City to
receive the Reserve Policy from the Bond Insurer, it is necessary for the City to enter into an
Insurance Agreement with the Bond Insurer, the form of which is attached hereto as Exhibit F;
and
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WHEREAS, the Commission hereby adopts the recommendations of the City's
financial advisor regarding the Bond Insurance Policy and, subject to final pricing of the Bonds,
the Reserve Policy; and
WHEREAS, as a condition of obtaining the Bond Insurance Policy and Reserve
Policy, if any, for the Bonds, the Commission has been advised that it may be necessary to
amend and/or supplement the Bond Resolution and the Commission hereby determines that
agreeing to any such amendments and/or supplements is in the best interest of the City; and
WHEREAS, the Commission hereby determines it to be in the best financial
interest of the City to amend the definition of"Utilities Tax" set forth in Section 3 of Article I of
the Original Resolution; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION
OF THE CITY OF DELRAY BEACH, FLORIDA, AS FOLLOWS:
SECTION 1. DEFINITIONS. That, except as provided below, all capitalized
terms used in this Resolution not otherwise defined shall have the meanings ascribed to such
terms in the Bond Resolution, unless the context clearly indicates otherwise.
A. "Beneficial Owner" shall mean, for purposes of Section 6 of this
Resolution only, any person which (i) has the power, directly or indirectly, to vote or consent
with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds
through nominees, depositories or other intermediaries), or (ii) is treated as the owner of any
Bonds for federal income tax purposes.
B. "NRMSIR" shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule. The NRMSIRs currently approved by the
Securities and Exchange Commission as of the date of adoption of this Resolution are as follows:
\\wpb-$rv01\SANFORDS',.399246vI0[I1/25/02\16787 011100 6 Resolution No. 90-02
Bloomberg Municipal Repositories
P.O. Box 840
Princeton, NJ 08542-0840
Phone: (609) 279-3225
Fax: (609) 279-5962
Internet: Munis~Bloomberg.com
DPC Data Inc.
One Executive Drive
Fort Lee, NJ 07024
Phone: (201) 346-0701
Fax: (201) 947-0107
Intemet: Nrmsir~dpcdata.com
Interactive Data
Attn: Repository
100 Williams Street
New York, NY 10038
Phone: (212) 771-6899
Fax: (212) 771-7390
E-mail: NRMSlR~interactivedata.com
Standard & Poor's J. J. Kenny Repository
55 Water Street
New York, NY 10041
Phone: (212) 438-4595
Fax: (212) 438-3975
E-mail: nrmsir_repository~sandp, com
C. "Tax Certificate" shall mean the Arbitrage Certificate executed by the City
on the date of initial issuance and delivery of the Bonds, as such Tax Certificate may be amended
from time to time, a source of guidance for achieving compliance with the Code.
D. "Utilities Tax" shall mean the tax imposed by the City on each and every
purchase in the City of electricity, metered and bottled gas (natural liquified petroleum gas or
manufactured). Said term shall also apply to all taxes imposed by the City on the purchase of
utility services other than water and communication services, whether levied in the amounts
prescribed by the Utilities Tax Ordinance or in any other amounts and whether imposed on the
purchase of the same utilities services or any other or additional utilities services, by amendment
\\wpb-srvOl\SANFORDSX399246v10\l 1/25/02\16787011100 7 Resolution No. 90-02
to the Utilities Tax Ordinance. This definition shall be applicable to the Bonds and all pad passu
additional Bonds issued pursuant to Article III, Section G of the Original Resolution.
SECTION 2. PURPOSE AND BOND DESIGNATION. That the City hereby
determines at this time (i) to issue not exceeding $16,500,000 in the initial aggregate principal
amount of its Bonds for the purpose of (a) paying and defeasing the Refunded Bonds, (b) to pay
the costs of issuance of the Bonds, including paying the premium for the Bond Insurance Policy
and, if applicable, the Reserve Policy, and (ii) to designate such Bonds as its "Utilities Tax
Revenue Refunding Bonds, Series 2002."
SECTION 3. TERMS AND DETAILS OF BONDS. The terms and details of
the Bonds, including but not limited to the principal amounts, interest rates, maturity dates and
redemption provisions, shall be determined by the Mayor or Vice Mayor in accordance with the
parameters set forth in Section 10 herein.
SECTION 4. APPLICATION OF BOND PROCEEDS. All moneys received
by the City from the sale of the Bonds originally authorized and issued pursuant to this
Resolution, shall be disbursed as follows:
A. The accrued interest, if any, derived from the sale of the Bonds, shall be
deposited into the Interest Account, created and established under the Bond Resolution and
continued hereunder, and used for the purpose of paying interest on the Bonds, as the same
becomes due and payable.
B. There is hereby created and established in the Acquisition/Construction
Fund created and established under the 1994 Resolution, a separate line item to be known as the
"2002 Cost of Issuance Cost Center," into which shall be deposited an amount of the proceeds of
the Bonds sufficient to pay the costs of issuance of Bonds, including, but not limited to, payment
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of the premium for the Bond Insurance Policy and, if applicable, the payment of the premium for
the Reserve Policy. The City is hereby authorized to permit the Underwriter to pay directly to
the Bond Insurer, from the proceeds of the Bonds, the cost of the Bond Insurance Policy and
Reserve Policy, if any. If, for any reason, any of the moneys allocated to 2002 Cost of Issuance
Cost Center, are not necessary for or are not applied to pay the costs of issuing the 2002 Bonds,
then such surplus proceeds shall be deposited in the following order:
established
First, to the Debt Service Reserve Account in the Sinking Fund created and
under the Original Resolution and, pursuant to the terms of this Resolution,
continued for the Bonds, to the full extent necessary, either to reinstate any Reserve Account
Credit Facility Substitute on deposit therein, including, but not limited to the Reserve Policy, if
applicable, or, to deposit additional moneys so that such deposit, together with such moneys
already on deposit therein, equals the Debt Service Reserve Requirement for the Bonds;
Second, to the Interest Account, Principal Account or Bond Redemption Account
in the Sinking Fund in the amounts, if any, determined by subsequent proceedings of the
Commission; and
Third, the balance, if any, to be used by the City for any lawful municipal
purpose.
C. From the proceeds of the Bonds, an amount which, together with any other
moneys lawfully available therefor shall be deposited in the escrow deposit trust fund to be held
by the Escrow Agent (as herein defined), under the terms and provisions of the Escrow
Agreement, and such proceeds shall be held irrevocably in trust in the escrow deposit trust fund
under the terms and provisions of the Escrow Agreement; such moneys shall be invested at the
time of deposit in U. S. Obligations, which are not callable prior to maturity except by the holder
\\Wb'srvOI\SANFORDSk399246vlO\ll/25/02\I6787011100 9 Resolution No. 90-02
thereof, the principal and interest of which shall be sufficient to pay the principal of and interest
on the Refunded Bonds (other than the 1996 Bonds and 1998 Bonds) pursuant to the terms of the
Escrow Agreement as provided therein.
D. Unless, upon the advice of the Underwriter, the Debt Service Reserve
Requirement (to the extent not satisfied with the moneys, investment securities and Reserve
Account Credit Facility Substitute currently on deposit in the Debt Service Reserve Account in
the Sinking Fund for the Bonds) shall be satisfied with a Reserve Account Credit Facility
Substitute in the form of the Surety, from the proceeds of the Bonds there shall be deposited in
the Debt Service Reserve Account in the Sinking Fund, an amount equal to the Debt Service
Reserve Requirement for the Bonds, which requirement shall be determined at the time of the
pricing of the Bonds.
E. The balance of the proceeds derived from the sale of the Bonds shall be
immediately applied on the date of issuance and delivery of the Bonds to pay in full the
outstanding 1996 Bonds and 1998 Bonds plus accrued interest to the date of payment.
The proceeds of the sale of the Bonds other than amounts deposited in the Escrow
Deposit Agreement and used to pay the 1996 Bonds and the 1998 Bonds pursuant to paragraph E
above shall be and constitute trust funds for the purposes hereinabove provided, and there is
already created a lien upon such moneys, until so applied, in favor of the Holders of the Bonds.
SECTION 5. COVENANTS OF THE CITY. Except as provided herein, the
Bonds authorized by this Resolution shall be deemed to have been issued pursuant to the Bond
Resolution (to which this Resolution is supplemental) and all of the covenants and agreements
contained in the Bond Resolution shall be deemed to have been made for the benefit of the
Owners of the Bonds issued pursuant to this Resolution.
\\wpb-srv01LSANFORDS~399246vI0\I 1/25/02\16787011100 1 0 Resolution No. 90-02
The Sinking Fund, the Principal Account, the Interest Account, the Bond
Redemption Account therein and each Debt Service Reserve Account, all created and established
under the Bond Resolution, shall be continued and maintained as provided in the Bond
Resolution as long as any of the Bonds, issued pursuant to the terms and provisions of the Bond
Resolution and this Resolution, are Outstanding.
SECTION 6. RULE 15C2-12 UNDERTAKING. That in order to assist the
initial purchasers of the Bonds with respect to compliance with the Rule, the City undertakes and
agrees to provide the information described below to the persons so indicated. The City's
Undertaking set forth in this Section 6 shall be for the benefit of the registered owners and
Beneficial Owners of the Bonds.
A. The City undertakes and agrees to provide to each NRMSIR and to the
State of Florida information depository (herein, the "SID") if and when such a SID is created (i)
the City's general purpose financial statements generally consistent with the financial statements
presented in Appendix B to the official statement relating to the Bonds (herein the "Official
Statement"), and (ii) the information concerning the Utilities Tax collections within the City with
respect to electricity, gas and fuel oil, the Utilities Tax rate or rates, exemptions from the Utilities
Tax and amendments to the Utilities Tax Ordinance generally consistent with the information set
forth in the Official Statement under the heading "UTILITIES TAXES." The information
referred to in clauses (i) and (ii) is herein collectively referred to as the "Annual Information."
B. The Annual Information described in clause (i) of paragraph A above in
audited form (for as long as the City provides such financial information in audited form) is
expected to be available on or before March 31 of each year for the Fiscal Year ending on the
preceding September 30, commencing March 31, 2003 for the Fiscal Year ending on the
\\Wb'srv01\SANFORDS~399246v10\llF25/02\16787 011100 11 Resolution No. 90-02
preceding September 30, 2002. The Annual Information referred to in clause (i) of paragraph A
above in unaudited form (if the audited financial statements are not available or if the City no
longer provides such financial information in audited form) will be available on or before
March 31 for the Fiscal Year ending on the preceding September 30. The City also agrees to
provide the Annual Information to each registered owner and Beneficial Owner of the Bonds
who request such information and pays to the City its costs of reproduction and transmission of
such Annual Information. The City agrees to provide to each NRMSIR and the SID, if any,
timely notice of its failure to provide the Annual Information. Such notice shall also indicate the
reason for such failure and when the City reasonably expects such Annual Information will be
available.
C. The Annual Information referred to in clause (i) of paragraph A above and
presented as an appendix to the Official Statement has been prepared in accordance with
governmental accounting standards promulgated by the Government Accounting Standards
Board, as in effect from time to time, as such principles are modified by generally accepted
accounting principles, promulgated by the Financial Accounting Standards Board, as in effect
from time to time, and such other State mandated accounting principles as in effect from time
to time.
D. If, as authorized by paragraph F below, the City's undertaking with
respect to paragraph C above requires amending, the City undertakes and agrees that the Annual
Information described in clause (i) of paragraph A above for the Fiscal Year in which the
amendment is made will, to the extent possible, present a comparison between the Annual
Information prepared on the basis of the new accounting principles and the Annual Information
prepared on the basis of the accounting principles described in paragraph C above. The City
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agrees that such a comparison will, to the extent possible, include a qualitative discussion of the
differences in the accounting principles and the impact of the change on the presentation of the
Annual Information.
E. The City undertakes and agrees to provide, in a timely manner, to each
NRMSIR or to the Municipal Securities Rulemaking Board and to the SID, if any, notice of the
occurrence of any of the following events with respect to the Bonds, if material:
1. principal and interest payment delinquencies;
2. non-payment related defaults;
3. unscheduled draws on any reserve account reflecting financial
difficulties;
4. unscheduled draws on credit enhancements reflecting financial
difficulties;
5. substitution of credit or liquidity providers, or their failure to
perform;
6. adverse tax opinions or events affecting the tax-exempt status of
the Bonds;
7. modifications to rights of Bondholders;
8. Bond calls (other than scheduled mandatory sinking fund
redemptions);
9. defeasance of the Bonds;
10. release, substitution, or sale of property securing repayment of the
Bonds;
1 I. rating changes; and
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12. any failure to comply with the provisions of this Section 6, which
in all cases, such failure will be deemed material.
Notwithstanding the foregoing, notice of the events described in clauses (8) and
(9) above need not be given any earlier than the time notice is required to be given to the
registered owners of the Bonds.
F. Notwithstanding any other provision of this Resolution or the Bond
Resolution to the contrary regarding amendments or supplements, the City undertakes and agrees
to amend and/or supplement this Section 6 (including the amendments referred to in paragraph D
above) only if:
1. The amendment or supplement is made only in connection with a
change in circumstances existing at the time the Bonds were
originally issued that arises from (i) a change in law, (ii) SEC
pronouncements or interpretations, (iii) a judicial decision
affecting the Rule or (iv) a change in the nature of the City's
operations or the activities that generate the Utilities Taxes.
2. The City's Undertaking, as amended, would have complied with
the requirements of the Rule at the time the Bonds were originally
issued after taking into account any amendments or interpretations
of the Rule, as well as any change in circumstances; and
3. The amendment or supplement does not materially impair the
interests of the registered owners and Beneficial Owners of the
Bonds as determined by Bond Counsel or by a majority of the
registered owners of the Bonds.
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In the event of an amendment or supplement under this Section 6, the City shall
describe the same in the next report of Annual Information and shall include, as applicable, a
narrative explanation of the reason for the amendment or supplement and its impact, if any, on
the financial information and operating data being presented in the Annual Information.
G. The City's Undertaking as set forth in this Section 6 shall terminate if and
when the Bonds are paid or deemed paid within the meaning of this Resolution.
H. The City acknowledges that its Undertaking pursuant to the Rule set forth
in this Section 6 is intended to be for the benefit of the registered holders and Beneficial Owners
of the Bonds and shall be enforceable by such holders and Beneficial Owners; provided that, the
holder's and Beneficial Owners' right to enforce the provisions of this Undertaking shall be
limited to a right to obtain specific enforcement of the City's obligations hereunder, and any
failure by the City to comply with the provisions of this Undertaking shall not be or constitute a
covenant or monetary default with respect to the Bonds under this Resolution or the Bond
Resolution.
I. The City reserves the right to satisfy its obligations under this Section 6
through agents; and the City may appoint such agents without the necessity of amending this
Resolution. The City may also appoint one or more employees of the City to monitor and be
responsible for the City's Undertaking hereunder.
SECTION 7. REDEMPTION PROVISIONS. The Bonds maturing on June 1,
2012, and thereafter are redeemable at the option of the City from any legally available source, in
part, in any order of maturity selected by the City, at its discretion, and by lot within a maturity if
less than an entire maturity is to be redeemed, on June 1,2011, or at any time thereafter, or as a
whole, on June 1, 2011, or at any time thereafter, in either case, at the redemption prices
\\wpb-srv01\SANFORDS~399246v10\ll/25/02\16787 011100 15 Resolution No. 90-02
(expressed as percentages of the principal amount to be redeemed) set forth below, together with
accrued interest to the date fixed for redemption:
Redemption Period
(Both dates inclusive)
June 1,2011 to May 31, 2012
June 1, 2012 and thereafter
Redemption
Price
101%
100%
Notwithstanding the foregoing, if the City's Underwriter, upon consultation with
the Finance Director of the City, determines that market conditions require different or no
optional redemption provisions for the Bonds or for certain maturities of the Bonds, such
different optional redemption provisions or the exclusion of certain or all maturities of the Bonds
from such optional redemption provisions will be deemed approved by the City upon the
execution of the Purchase Contract so long as the maximum redemption premium does not
exceed 2% and the first optional redemption period is not more than eleven (11) years from the
date of issuance of the Bonds.
That the Bonds which are Term Bonds shall also be subject to mandatory sinking
fund redemption prior to maturity by lot, in such manner as the Registrar (as defined herein) may
deem appropriate, on June 1, in such years, at a price of par plus accrued interest to the date of
redemption, in the annual amounts established pursuant to the parameter set forth in Section 10
hereof.
Notice of redemption of the Bonds shall be mailed, postage prepaid, by the
Registrar not less than thirty (30) days before the date fixed for redemption to the registered
owners of any Bonds or portions of Bonds which are to be redeemed, at their addresses as they
appear fifteen (15) days prior to the date such notice is mailed on the registration books of the
City kept by the Registrar.
\\wpb-srv0BSANFORDS~399246vI0\11125/02\16787 011100 1 6 Resolution No. 90-02
The Registrar also shall mail (by certified mail, return receipt requested) a copy of
such notice for receipt not less than the second business day prior to the date notice of
redemption is mailed to the Bondholders to the following (or most current address): The
Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530; Midwest
Securities Trust Company, Capital Structures - Call Notification, 440 South LaSalle Street,
Chicago, Illinois 60605; Philadelphia Depository Trust Company, Reorganization Division, 1900
Market Street, Philadelphia, Pennsylvania 19103; Attention: Bond Department; provided,
however, that such mailing shall not be a condition precedent to such redemption and failure to
t ·
mail any such notme shall not affect the validity of any proceedings for the redemption of the
Bonds. The Registrar shall also provide notice, at the same time notice of redemption is given to
the Bondholders, to Kenny Information Systems Notification Service, 65 Broadway, 16th Floor,
New York, New York 10006, and Standard & Poor's Called Bond Record, 25 Broadway, New
York, New York 10004; provided, however, that such mailing shall not be a condition precedent
to such redemption and failure to mail any such notice shall not affect the validity of any
proceedings for the redemption of the Bonds.
A second notice of redemption shall be given sixty (60) days after the redemption
date in the manner required above to the registered owners of redeemed Bonds which have not
been presented for payment within thirty (30) days after the redemption date.
Such notice of redemption shall set forth (i) the date fixed for redemption, (ii) the
redemption price to be paid, (iii) that such Bonds will be redeemed at the designated corporate
trust office of the Paying Agent (as herein defined), and the name, address and telephone number
of a contact person, (iv) if less than all of the Bonds shall be called for redemption, the
distinctive numbers, letters and CUS~ identification numbers, if any, of such Bonds to be
\\Wb-$rv01\SANFORDS~399246vI0~I 1/25/02\16787011100 17 Resolution No. 90-02
redeemed, (v) in the case of Bonds to be redeemed in part only, the portion of the principal
amount thereof to be redeemed, and (vi) any other information the City or the Registrar deems
relevant. In case any Bond is to be redeemed in part only, the notice of redemption that relates to
such Bond shall state also that on or after the redemption date, upon surrender of the Bond, a
new Bond or Bonds of the same maturity, bearing interest at the same rate and in aggregate
principal amount equal to the unredeemed portion of such Bond, will be issued. Failure of the
registered owner of any Bonds which are to be redeemed to receive any such notice shall not
affect the validity of the proceedings for the redemption of Bonds for which proper notice has
been given. Interest shall cease to accrue on any of the Bonds duly called for prior redemption if
payment of the redemption price has been duly made or provided for.
Notwithstanding any of the foregoing, no notice of redemption that relates to the
Bonds shall be given unless there are sufficient moneys for such redemption on deposit in the
Principal Account, Interest Account or Bond Redemption Account, as applicable, of the Sinking
Fund or unless such redemption shall be paid for with the proceeds of refunding Bonds or from
amounts provided by the Bond Insurer in its sole discretion.
SECTION 8. NEGOTIATED SALE. That the City hereby finds that, due to
the complicated nature of the financing, volatile market conditions, the need to issue the Bonds
upon the most favorable market conditions and the advice of its financial advisor that it would be
in the best interest of the City that the Bonds be sold on a negotiated basis.
SECTION 9. APPOINTMENT OF UNDERWRITER. That the City hereby
appoints Bear Steams & Co., Inc. as the Underwriter of the Bonds pursuant to the terms and
provisions of the Purchase Contract.
~w~-sr~s^Nvo~s~99246,,m~/25/o2~,~svomoo 18 Resolution No. 90-02
SECTION 10. PARAMETERS FOR THE SALE OF THE BONDS. That the
proposal submitted by the Underwriter offering to purchase the Bonds at a purchase price for the
Bonds established pursuant to the parameters set forth below and on the terms and conditions set
forth in the Purchase Contract (substantially in the form attached hereto as Exhibit B), is hereby
approved and adopted by the City. Subject to the last sentence of this Section 6, the Mayor (or,
in his absence, the Vice Mayor) is hereby authorized to execute and deliver on behalf of the City,
and the City Clerk is hereby authorized (if so required) to affix the Seal of the City and attest to
the execution of the Purchase Contract in substantially the form presented at this meeting. The
disclosure statements of the Underwriter, as required by Section 218.385 of the Florida Statutes,
to be delivered to the City prior to the execution of the Purchase Contract, a form of which is
attached as an exhibit to the Purchase Contract, will be entered into the official records of the
City as part of the Purchase Contract. The Purchase Contract, when in final form as determined
by the City Attorney and Bond Counsel, may be executed by the City without further action of
the City, provided the Underwriter confirms in writing to the Finance Director, or in his absence,
the Treasurer of the City that (i) the true interest cost on the Bonds does not exceed five percent
(5%) per annum, (ii) the underwriting discount (exclusive of any original issue discount or
original issue premium) is not greater than $6.00 per $1,000 of the original principal amount of
the Bonds, (iii) the initial principal amount of Bonds sold thereunder does not exceed the
principal amount authorized under this Resolution, (iv) the final maturity of the Bonds does not
extend beyond June 1, 2016, and (v) the net present value savings for paying and defeasing the
Refunded Bonds shall not be less than three percent (3%).
The final terms and provisions of the Bonds shall be affixed as an exhibit to this
Resolution and entered into the records of the Commission.
\[wpb-$rv01\SANFORDS~399246v10\l 1/25/02\16787 011100 19 Resolution No. 90-02
SECTION 11. PRELIMINARY AND OFFICIAL STATEMENT. That the
form of the Preliminary Official Statement in substantially the form attached hereto as Exhibit C
with such changes as shall be approved by the Mayor or the City manager and the City's Bond
Counsel, be and the same is hereby approved, and the Commission hereby approves the use of
the final printed Official Statement by the Underwriter in connection with the offering and sale
of the Bonds in substantially the same form as the attached Preliminary Official Statement. The
Commission hereby further approves the use by the Underwriter of any supplement or
amendment to the Official Statement which is necessary so that the Official Statement does not
include any untrue statement of a material fact and does not omit to state any material fact
necessary to make the statements therein not misleading. The Mayor (or, in his absence, the
Vice Mayor) is each hereby authorized and directed to execute the Official Statement and any
amendment or supplement thereto, in the name and on behalf of the City, and thereupon to cause
the Official Statement and any such amendment or supplement to be delivered to the Underwriter
with such approval to be conclusively evidenced by his execution and delivery thereof. The
Underwriter is hereby authorized to use the Preliminary Official Statement in connection with
the marketing of the Bonds. The Mayor, the Vice Mayor, the City Manager, the Director of
Finance and the Treasurer are each authorized to execute a certificate deeming the Preliminary
Official Statement "final" within the meaning of the Rule. Notwithstanding the foregoing, the
Official Statement with respect to the Bonds shall not be executed prior to the date the Purchase
Contract, is executed in the manner contemplated in Section 10 herein and the form thereof is
approved by Bond Counsel and the City Attorney.
SECTION 12. PAYING AGENT AND REGISTRAR. That Wells Fargo
Bank, National Association is hereby appointed as paying agent (the "Paying Agent") and
\\wpb-srv0BSANFORDS~399246vI0\I1/25/02\16787011100 20 Resolution No. 90-02
registrar (the "Registrar") for the Bonds. By the acceptance of such appointment, Wells Fargo
Bank, National Association agrees to comply with the terms of the Paying Agent and Registrar
Agreement (as herein defined), the Bond Resolution, this Resolution, and the Bond Insurance
Policy and the Reserve Policy, if any, applicable to it. The Paying Agent and Registrar agree to
provide to the Bond Insurer copies of all notices and reports relating to the City or the Bonds
received by it or which either is required to be sent to the City or the registered owners of the
Bonds.
SECTION 13. BOOK ENTRY BONDS. That the Commission hereby
determines that the registration of the Bonds be by the Book Entry System of registration.
SECTION 14. APPOINTMENT OF ESCROW AGENT. That Wells Fargo
Bank, National Association, having its designated corporate trust office in Coral Springs,
Florida, is hereby as Escrow Agent under the Escrow Agreement.
SECTION 15. APPROVAL AND EXECUTION OF THE ESCROW
AGREEMENT. That the form of the Escrow Deposit Agreement (the "Escrow Agreement")
expected to be dated as of December 1, 2002, by and between the City and the Escrow Agent,
and in substantially the form presented at this meeting (and attached hereto as Exhibit A) is
hereby approved, subject to and with such changes therein as shall be approved by the Mayor (or
in his absence, the Vice Mayor), such approval to be evidenced conclusively by the execution of
said Escrow Agreement; either the Mayor or the Vice Mayor of the City is hereby authorized and
directed on behalf of the City to execute and deliver said Escrow Agreement; that the City Clerk
hereby is authorized, on behalf of the City, to attest and impress the seal of the City on, said
Escrow Agreement; and that said officers and all other officers of the City are hereby authorized
\\wpb-srv01XSANFORDS~399246vI0\I 1/25/02\16787011100 2 1 Resolution No. 90-02
and directed to carry out or cause to be carried out all obligations of the City under said Escrow
Agreement.
SECTION 16. BOND INSURANCE POLICY AND RESERVE POLICY.
That, based on the recommendations of the City's financial advisor, set forth in a letter attached
hereto as Exhibit D with respect to the Bonds, the Commission finds that obtaining the Bond
Insurance Policy and Reserve Policy (to be determined on or before the Purchase Contract is
executed) from the Bond Insurer is in the best interests of the City, and the Commission hereby
directs that the premium due on the Bond Insurance Policy and the Reserve Policy, if applicable,
be paid in accordance with the terms thereof. The City covenants to comply with the terms and
provisions of the Bond Insurer's commitment to provide the Bond Insurance Policy and Reserve
Policy and covenants to comply with the payment procedures with respect to the Bond Issuance
Policy.
SECTION 17. INSURANCE AGREEMENT. That the form, terms and
provisions of the Insurance Agreement between the City and Financial Security Assurance, Inc.
substantially in the form attached hereto as Exhibit F, as submitted to this meeting, be and the
same are hereby approved and accepted. If the Surety is purchased by the City, the Mayor of the
City or, in his absence, the Vice Mayor, is hereby authorized and directed to execute and deliver
the Insurance Agreement on behalf of the City in substantially the form submitted to this
meeting, with such changes, insertions and deletions thereto as are necessary or desirable for
carrying out the purposes thereof as may be approved by the City Attorney and Bond Counsel,
the execution of said Insurance Agreement being conclusive evidence of such approval.
SECTION 18. AMENDMENTS AND SUPPLEMENTS TO ORIGINAL
RESOLUTION. Notwithstanding any provision in the Original Resolution to the contrary, as a
\\wpb-SIV01\SANFORDS~399246vI0\II/25/02\I6787011100 22 Resolution No. 90-02
condition of obtaining the Bond Insurance and Reserve Policy, if applicable, and for as long as
the Bond Insurer is not in default under the Bond Insurance Policy and/or Reserve Policy, if
applicable, the City covenants as follows: (i) not to issue pari passu additional Bonds pursuant to
Article III, Section 4.G. of the Original Resolution, that bear interest at a variable rate without
the express written consent of the Bond Insurer, (ii) not to optionally redeem the Bonds or use
any portion of the proceeds of the Utilities Tax for general municipal purposes if amounts are
due and owing the Bond Insurer under the Insurance Agreement, if applicable. In the event that
the City obtains more than one Reserve Account Credit Facility Substitute for the Bonds, one of
which is the Reserve Policy, the Paying Agent shall, if moneys are required therefrom, to draw
on such Reserve Account Credit Facility Substitutes on a pro rata basis. At any time amounts on
deposit in the Debt Service Reserve Account is less than the Debt Service Reserve Requirement
and the Reserve Policy has been drawn on, the City covenants to apply the first available
proceeds of the Utilities Tax to reimburse the Bond Insurer thereby reinstating the Reserve
Policy prior to making any cash deposits to the Debt Service Reserve Account to cure such
deficiency. In addition, to the extent that the terms and provisions of the Commitment attached
hereto as Exhibit E are not reflected in the Bond Resolution or this Resolution, the City agrees to
comply with such terms as if set forth herein.
SECTION 19. AMENDMENTS TO ORIGINAL RESOLUTION AND 1994
RESOLUTION.
(a) The definition of "Permitted Investments" set forth in the Original
Resolution is hereby amended to read as follows: "Permitted Investments" shall mean (i) to the
extent permitted by law, U.S. Obligations and (ii) all other investments permitted under the laws
\\wb-srv01\SANFORDS~399246v10\11/25/02\16787011100 23 Resolution No. 90-02
of Florida that are permitted under the City's adopted investment policies and acceptable to any
Credit Facility Issuer.
(b) The Commission hereby determines to treat the Debt Service
Reserve Account established under the Original Resolution and continued under the 1994
Resolution for the 1992 Bonds and the 1994 Bonds as the Debt Service Reserve Account for the
Bonds, notwithstanding anything to the contrary set forth in the Bond Resolution.
(c) Any amount necessary to satisfy the Debt Service Reserve
Requirement for any pad passu additional Bonds issued pursuant to the Original Resolution
which will share in the Debt Service Reserve Account relating to the Bonds shall be funded in
full at the time such pad passu additional Bonds are issued, notwithstanding any provision in the
Original Resolution to the contrary.
(d) The amount of the Debt Service Reserve Requirement for the
Bonds and any pail passu additional Bonds issued pursuant to the Original Resolution which will
share in the Debt Service Reserve Account relating to the Bonds shall be determined pursuant to
the first sentence of the definition of the Debt Service Reserve Requirement set forth in the
Original Resolution.
SECTION 20. SEVERABILITY OF INVALID PROVISIONS. If any one or
more of the covenants, agreements or provisions of this Resolution should 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 separate from the
remaining covenants, agreements or provisions, and shall in no way affect the validity of any of
the other provisions of this Resolution or of the Bonds.
\\Wb-arv01~SANFORDSX399246v10\l 1/25/02\16787 011100 24 Resolution No. 90=02
SECTION 21. FURTHER AUTHORIZATIONS; RATIFICATION OF
PRIOR ACTS. That the Mayor, the Vice Mayor, the City Manager, the Finance Director, the
Treasurer, the City Clerk, the City Attorney and any other authorized official of the City, be and
each of them is hereby authorized and directed to execute and deliver any and all documents and
instruments, including, but not limited to, any paying agent and registrar agreement, and to do
and cause to be done any and all acts and things necessary or proper for carrying out the
transactions contemplated by this Resolution, including, but not limited to, complying with any
conditions to obtain the Bond Insurance Policy or Reserve Account Credit Facility Substitute.
All actions heretofore taken and documents prepared or executed by or on behalf of the City by
any of its authorized officers in connection with the transactions contemplated hereby including,
without limitation, the subscription for the purchase of United States Treasury Obligations -
State and Local Government Series ("SLGs") for deposit and application to effect the payment
and defeasance of the Refunded Bonds, are hereby ratified, confirmed, approved and adopted.
SECTION 22. REPEALER.
thereof, in conflict with the provisions of this
hereby repealed.
SECTION 23. EFFECTIVE DATE.
immediately upon its passage.
That all resolutions or proceedings, or parts
Resolution are to the extent of such conflict
That this Resolution shall take effect
\\wpb-srv01~SANFORDSL3992~,6v10\l 1/25/02\16787011100 25 Resolution No. 90-02
PASSED AND ADOPTED in regular session on this the 3rd day of December,
2002.
City Clerk
CITY OF DELRAY BEACH~FL~
By:
Mayor
Date of Adoption: December 3, 2002
The foregoing Resolution is hereby
eaPxPe: ~tvi;dn~~ ~; °off; errS; lmban~ 27d
\\wpb-srv01\SANFORDS~399246v10\ll/25/02\16787011100 26 Resolution No. 90-02
PASSED AND ADOPTED in regular session on this the 3rd day of December,
2002.
CITY OF DELRAY BEACH, FLORIDA
Attest:
By:
Mayor
City Clerk
Date of Adoption:
December 3, 2002
The foregoing Resolution is hereby
approved by me as to form, language and
execution this 3rd day of December, 2002.
By:
City Attomey
\\wpb-srv01\SANFORDS~399246v10\11/25/02\16787 011100 26 Resolution No. 90-02
City of Delray Beach, Florida
Utilities Tax Revenue Refunding Bonds, Series 2002
LIST OF EXHIBITS TO RESOLUTION NO. 90-02
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Escrow Deposit Agreement
Bond Purchase Agreement
Draft Preliminary Official Statement
Letter of Recommendation from Public Financial Management
Commitment for Bond Insurance and Reserve Policy from Financial
Security Assurance, Inc.
Insurance Agreement
\\wpb-srv01~SANFORDS~399246v10\l 1/26/02\16787 011100 Resolution No. 90-02
Exhibit A
CITY OF DELRAY BEACH, FLORDA
and
Wells Fargo Bank, National Association
as Escrow Agent
ESCROW DEPOSIT AGREEMENT
DATED AS OF DECEMBER 1, 2002
~,\wpb-srvOl~SANFORDSk399656v08\l 1/25/02\16787 011100
THIS ESCROW DEPOSIT AGREEMENT, made and entered into as of December 1,
2002, by and between the CITY OF DELRAY BEACH, FLORIDA, a municipal corporation of
the State of Florida, and its successors and assigns (the "City"), and Wells Fargo Bank, National
Association, a national banking association duly organized and existing under the laws of the
United States with a corporate trust office in Coral Springs, Florida, as escrow agent hereunder,
and its successors and assigns (the "Escrow Agent"):
WITNESSETH:
WHEREAS, any term not defined in the following recitals shall have the meaning
ascribed to such term in Article I hereof; and.
WHEREAS, the City Commission of the City of Delray Beach, Florida (the
"Commission") did, on December 3, 1991, adopt Resolution No. 98-91, as amended and
supplemented by Resolution No. R-27-94 and Resolution No. R-54-95 (collectively, the
"Original Resolution"); and
WHEREAS, the Original Resolution was supplemented by the Commission on
December 3, 2002, by the adoption of Resolution No. 90-02 (the "2002 Bond Resolution"), for
the purpose of authorizing a Series of Bonds under the Original Resolution and the 2002 Bond
Resolution entitled "City of Delray Beach, Florida Utilities Tax Revenue Refunding Bonds,
Series 2002 (the "Series 2002 Bonds"), in the initial aggregate principal amount of not exceeding
$16,500,000; and
WHEREAS, the Commission has determined it to be in its best interest to issue the
Series 2002 Bonds in an initial aggregate principal amount of $ for the purpose of
paying and defeasing the 1992 Bonds, the 1994 Bonds and the 1995 Bonds, as such terms are
defined in the 2002 Bond Resolution (herein, collectively, the "Refunded Bonds") pursuant to
the terms of the Original Resolution, the 2002 Bond Resolution and this Agreement; and
WHEREAS, the Original Resolution provides that, among other things, all Refunded
Bonds shall, prior to the maturity or redemption date thereof, be deemed to have been paid
within the meaning of such resolution if there is deposited moneys or Defeasance Obligations (as
such term is defined in the Original Resolution) which such term includes direct obligations, the
payment of principal and interest on which is fully and unconditionally guaranteed by the United
States of America (the "U.S. Obligations"), the principal of and the interest on which when due
will provide moneys which, together with any other moneys deposited with the Escrow Agent,
shall be sufficient to pay such Refunded Bonds, the interest thereon and the redemption
premium, if any, as the same shall become due on the Refunded Bonds on or prior to the
redemption date or maturity date thereof; and
WHEREAS, the Commission has determined it to be in the best economic interest of the
City to pay and defease the Refunded Bonds as more particularly described on Schedule A
attached hereto, all in accordance with the terms and provisions of the Original Resolution, the
2002 Bond Resolution and this Agreement; and
\[wpb-srv01 \SANFORDS~399656v08\ 11/25/02\16787 011100
WHEREAS, the City has determined to provide for the payment of the Refunded Bonds
by depositing a portion of the proceeds from the Series 2002 Bonds, together with certain other
lawfully available moneys, which shall be used in part to purchase U.S. Obligations, which U.S.
Obligations and money shall be sufficient, as verified by Causey Demgen & Moore, Inc. in a
letter dated December __, 2002, to pay the interest on the Refunded Bonds, as the same becomes
due and payable from the date of this Agreement, and to pay the outstanding principal amounts
of the then outstanding Refunded Bonds on such dates, together with interest thereon and a
redemption premium of two percent (2%) of the principal amount of the Refunded Bonds, which
are subject to optional redemption pursuant to the Original Resolution and this Agreement; and
WHEREAS, in order to provide for the proper and timely application of the moneys
deposited in the trust created herein, the maturing principal amount of the U.S. Obligations
purchased thereby, and investment income and earnings derived therefrom to the payment of the
Refunded Bonds, it is necessary for the City to enter into this Escrow Deposit Agreement with
the Escrow Agent on behalf of the holders from time to time of the Refunded Bonds.
NOW, THEREFORE, the City, in consideration of the foregoing and the mutual
covenants herein set forth and in order to secure the payment of the principal of, redemption
premium, if any, and interest on all of the Refunded Bonds, according to their tenor and effect,
does by these presents hereby grant, warrant, demise, release, convey, assign, transfer, alienate,
pledge, set over and confirm, unto the Escrow Agent, and to its successors in the trusts hereby
created, and to it and its assigns forever, all and singular the property hereinafter described to
wit:
DIVISION I
All right, title and interest of the City in and to $ derived from the proceeds
of the sale of the Series 2002 Bonds and $__ derived from the liquidation of certain moneys
currently reserved to pay the Refunded Bonds (the "Transferred Moneys").
DIVISION II
All right, title and interest of the City in and to all income, earnings and increment
derived from or accruing to the U.S. Obligations purchased from the money (except for certain
uninvested cash balances) described in Division I hereof and more particularly described in
Schedule B attached hereto and made a part hereof.
DIVISION III
Any and all other property of every kind and nature from time to time hereafter, by
delivery or by writing of any kind, conveyed, pledged, assigned or transferred as and for
additional security hereunder by the City or by anyone in its behalf to the Escrow Agent, which
is hereby authorized to receive the same at any time as additional security hereunder.
\\wpb--srv01 \SANFORDS~399656v08\ 11/25/02\16787 011100 2
DIVISION IV
All property which is by the express provisions of this Agreement required to be subject
to the pledge hereof and any additional property that may, from time to time hereafter, by
delivery or by writing of any kind, be subject to the pledge hereof, by the City or by anyone in its
behalf, and the Escrow Agent is hereby authorized to receive the same at any time as additional
security hereunder.
TO HAVE AND TO HOLD, all and singular, the Trust Estate (as such term is
hereinafter defined), including all additional property which by the terms hereof has or may
become subject to the encumbrances of this Agreement, unto the Escrow Agent, and its
successors and assigns, forever in trust, however, for the benefit and security of the holders from
time to time of the Refunded Bonds; but if the Refunded Bonds shall be fully and promptly paid
when due in accordance with the terms thereof and hereof and all other obligations are
performed hereunder, then this Agreement shall be and become void and of no further force and
effect; otherwise, the same shall remain in full force and effect, and upon the trusts and subject to
the covenants and conditions hereinafter set forth.
ARTICLE I
DEFINITIONS; FINDINGS AND DETERMINATIONS BY THE AUTHORITY
SECTION 1.01 Definitions. In addition to words and terms elsewhere defined in
this Agreement, the following words and terms as used in this Agreement shall have the
following meanings, unless some other meaning is plainly intended.
"Act" shall have the meaning ascribed to such term in the Original Resolution.
"Agreement" shall mean this Escrow Deposit Agreement, dated as of December 1, 2002,
between the City and the Escrow Agent.
"Annual Debt Service" shall mean, as to the Refunded Bonds, principal called,
redemption premium and interest coming due in each year, as shown on Schedule C attached
hereto and hereby made a part hereof.
"Paying Agent for the Refunded Bonds" shall mean the entity identified as such in
Section 3.08 hereof.
"Total Debt Service" shall mean, as of any date during the period from the date of this
Agreement until June 1, 2004, the sum of the Annual Debt Service then remaining unpaid with
respect to the Refunded Bonds, all as shown on Schedule C attached hereto and hereby made a
part hereof.
"Trust Estate," "mist estate" or "pledged property" shall mean 'the property, rights and
interest of the City which are subject to the lien of this Agreement.
"U.S. Obligations" shall mean non-callable, non-prepayable, direct obligations of, or
non-callable, non-prepayable obligations the principal of and interest on which are fully and
unconditionally guaranteed by, the United States of America, constituting part of the Trust
~\wpb-srv0 BSANFORDSL399656v08\l 1/25/02\16787 011100 3
Estate. The initial U.S. Obligations are described in Schedule B attached hereto. U.S. Obligations
shall not include investments in mutual funds or unit investment trusts.
Words of the masculine gender shall be deemed and construed to include correlative
words of the feminine and neuter genders. Words importing the singular number shall include
the plural number and vice versa unless the context shall otherwise indicate. The word "person"
shall include corporations, associations, natural persons and public bodies unless the context
shall otherwise indicate. Reference to a person other than a natural person shall include its
successors.
ARTICLE II
ESTABLISHMENT OF TRUST FUND; FLOW OF FUNDS
SECTION 2.01 Creation of Escrow Deposit Trust Fund. There is hereby
created and established with the Escrow Agent a special and irrevocable trust fund designated the
Escrow Deposit Trust Fund (the "Trust Fund"), to be held in the custody of the Escrow Agent
and accounted for separate and apart from other funds of the City or of the Escrow Agent.
SECTION2.02 Deposit of Moneys and Payment of Refunded Bonds.
Concurrently with the execution of this Agreement, the City herewith deposits or causes to be
deposited with the Escrow Agent into the Trust Fund, and the Escrow Agent acknowledges
receipt of $__ derived from a portion of the proceeds of the Series 2002 Bonds and the
Transferred Moneys, to be used in part to purchase the U.S. Obligations, as described on
Schedule B in the maturing principal amount of $ ., and the balance of such deposit in
the amount of $ shall be held as immediately available moneys. The purchase of the
U.S. Obligations and cash being derived from a portion of the proceeds of the Series 2002 Bonds
and the Transferred Moneys deposited into the Trust Fund will, according to the opinion of
Causey Demgen & Moore, Inc., set forth in its letter dated December __, 2002, provide moneys
sufficient to pay the Total Debt Service on the Refunded Bonds. Money representing beginning
cash balances and any other moneys not directed to be invested hereunder shall remain
uninvested until applied in accordance with the terms hereof.
SECTION 2.03 Irrevocable Trust Created. The deposit of the cash and U.S.
Obligations in the Trust Fund shall constitute an irrevocable deposit of said cash and U.S.
Obligations for the benefit of the holders of the Refunded Bonds, except as provided herein with
respect to substitutions permitted under Section 2.05 hereof and amendments permitted under
Section 4.01 hereof. The holders of the Refunded Bonds shall have a lien on the principal of and
earnings on the U.S. Obligations and the cash deposited in the Trust Fund until applied in
accordance with this Agreement and the applicable terms and provisions of the Original
Resolution.
SECTION 2.04 Purchase of U.S. Obligations. The City hereby directs the
Escrow Agent to immediately purchase and the Escrow Agent hereby acknowledges the
purchase of the U.S. Obligations listed on Schedule B from the moneys transferred to the Escrow
Agent from the City in the manner described in Section 2.02 hereof. The Escrow Agent shall
apply the moneys deposited in the Trust Fund and the aforementioned U.S. Obligations, together
with all income or earnings thereon, if any, in accordance with the provisions hereof and the
\\wpb-m'v01 ~SANFORDS~399656v08\ 11/25/02\16787 011100 4
Original Resolution. The Escrow Agent shall have no power or duty to invest or reinvest any
moneys held hereunder or to make substitutions of the U.S. Obligations held hereunder or to sell,
transfer or otherwise dispose of the U.S. Obligations acquired hereunder except as provided in
this Agreement.
SECTION 2.05 Failure to Deliver Initial U.S. Obligations. In the event that the
underwriter for the Series 2002 Bonds (the "Underwriter") shall be unable to deliver any of the
U.S. Obligations, as set forth in Schedule B (the "Initial U.S. Obligations") hereto, at the time of
delivery of the Series 2002 Bonds, the Escrow Agent is hereby authorized to accept other U.S.
Obligations (the "Substitute Securities") and/or cash in substitution for the Initial U.S.
Obligations. Such substitution is subject to receipt by the City and the Escrow Agent of an
independent verification by a nationally recognized certified public accounting firm acceptable
to Greenberg Traurig, P.A. that the Substitute Securities and/or cash, together with any other
U.S. Obligations and cash on deposit with the Escrow Agent, will be sufficient, without
reinvestment, to meet the requirements for payment of the principal of, premium, if any, and
interest on the Refunded Bonds in accordance with the terms of this Agreement. At any time
prior to maturity of the Substitute Securities and/or cash, the City shall have the ability in writing
to direct the Escrow Agent to exchange any of the Substitute Securities and/or cash delivered by
the Underwriter for all or any part of the Initial U.S. Obligations. However, such exchange will
be subject to the receipt by the City and the Escrow Agent of an independent verification by a
nationally recognized independent certified public accounting firm acceptable to Greenberg
Traurig, P.A. to the effect that the substitution of the Substitute Securities and/or cash for the
Initial U.S. Obligations will be sufficient, without reinvestment, to meet the requirements for
payments of principal of, premium, if any, and interest on the Refunded Bonds in accordance
with the terms of this Agreement and the applicable provisions of the Original Resolution.
Further, such independent verification report must indicate that the return of monies (generated
by such Substitute Securities), in excess of the monies that would have been received on the
Initial U.S. Obligations, to the Underwriter for the Series 2002 Bonds are not needed to pay the
principal of, premium, if any, and interest on the Refunded Bonds when due in accordance with
this Agreement and the applicable provisions of the Original Resolution. In addition, such return
of the Substitute Securities and/or cash and any excess monies will not, as evidenced by an
opinion from Greenberg Traurig, P.A. to the effect that, under the statutes, rules and regulations
then in force and applicable to obligations issued on the date of issuance of the Refunded Bonds
and under the Internal Revenue Code of 1986, as amended (the "Code"), cause the interest on the
Series 2002 Bonds or the Refunded Bonds not to be excluded from gross income for federal
income tax purposes and such investment is not inconsistent with the statutes and regulations
applicable to the Series 2002 Bonds or the Refunded Bonds.
SECTION2.06 Transfers from Trust Fund. As the principal of the U.S.
Obligations listed in Schedule B matures and is paid, and the investment income and earnings
thereon, if any, are paid, the Escrow Agent shall, no later than each interest payment date and
principal payment date for the Refunded Bonds transfer from the Trust Fund, in accordance with
the schedule of payments described in Schedule C attached hereto, to the Paying Agent for the
Refunded Bonds an amount sufficient to pay the principal of, redemption premium and interest
on the Refunded Bonds coming due on such interest payment date or principal payment date.
The Escrow Agent has relied on the opinion of Causey Demgen & Moore, Inc., set forth in its
letter dated ,2002, that the amount of money and securities on deposit herein and as
\\wpb-srv01XSANFORDS',399656v08\l 1/25/02\16787 011100 5
reinvested in accordance with the terms hereof will be sufficient to pay Total Debt Service on the
Refunded Bonds, and the Escrow Agent shall have no responsibility for an insufficiency of such
amounts to pay Total Debt Service, provided the Escrow Agent performs in accordance with the
provisions hereof.
SECTION 2.07 Investment of Moneys remainine in Trust Fund. Subject to the
requirements of this Section 2.07, the Escrow Agent shall, as directed in writing by the City,
invest and reinvest any moneys remaining from time to time in the Trust Fund, until such time as
they are needed. Such moneys shall be reinvested in direct obligations of, or obligations fully
guaranteed by, the United States of America for such periods or at such interest rates or yields
that the Escrow Agent shall be directed in writing to invest by the City, which securities or
periods or interest rates or yields shall be set forth in an opinion to the City from Greenberg
Traurig, P.A., which opinion shall also be to the effect that such reinvestment of such moneys
will not, under the statutes, rules and regulations then in force and applicable to obligations
issued on the dates of issuance of the Refunded Bonds and the Series 2002 Bonds and under the
Code, cause the interest on the Series 2002 Bonds or the Refunded Bonds not to be excluded
from gross income for federal income tax purposes and that such investment is not inconsistent
with the statutes and regulations applicable to the Series 2002 Bonds or the Refunded Bonds.
Such reinvestment of moneys is subject to receipt by the City of an independent verification by a
nationally recognized independent certified public accounting firm acceptable to Greenberg
Traurig, P.A. Any interest income resulting from reinvestment of moneys, pursuant to this
Section 2.07 shall be promptly transferred to the City and used for any purpose permitted under
the Original Resolution, if such verification report indicates that such interest income is not
needed for the purposes contemplated by this Agreement, provided that the Escrow Agent shall
have no responsibility for the proper use by the City of money transferred to the City by the
Escrow Agent.
SECTION 2.08 Trust Fund. The Trust Fund created and established pursuant to
this Agreement shall be and constitute a trust fund for the purposes provided in this Agreement
and shall be kept separate and distinct from all other funds of the City and the Escrow Agent and
used only for the purposes and in the manner provided in this Agreement.
SECTION 2.09 Transfer of Funds after all Payments Required by this
Aureement are Made. After all of the transfers by the Escrow Agent to the Paying Agent for
the Refunded Bonds for the payment of the Total Debt Service on the Refunded Bonds have
been made, all remaining moneys and U.S. Obligations, together with any income and interest
thereon, in the Trust Fund shall be transferred to the City by the Escrow Agent; provided,
however, that no such transfer (except transfers made in accordance with Sections 2.07 and 4.01
hereof) to the City shall be made until the Total Debt Service on the Refunded Bonds has been
paid.
ARTICLE III
CONCERNING THE ESCROW AGENT
SECTION 3.01 Appointment of Escrow Agent. The City hereby appoints Wells
Fargo Bank, National Association, having a corporate trust office in Coral Springs, Florida, as
Escrow Agent under this Agreement.
\\wpb-$rv01~SANFORDS~399656v08\l 1/25/02\16787 011100 6
SECTION 3.02 Acceptance by Escrow Agent. By execution of this Agreement,
the Escrow Agent accepts the duties and obligations as Escrow Agent hereunder. The Escrow
Agent further represents that it has all requisite power, and has taken all corporate actions
necessary, to execute the trust hereby created.
SECTION 3.03 Liability of Escrow Agent. The Escrow Agent shall not be liable
in connection with the performance of its duties hereunder except for its own negligence or
willful misconduct. The Escrow Agent shall not be liable for any loss resulting from any
investment made pursuant to the terms and provisions of this Agreement. The Escrow Agent
shall have no lien, security interest or right of set-off whatsoever upon any of the moneys or
investments in the Trust Fund for the payment of fees and expenses for services rendered by the
Escrow Agent under this Agreement.
As long as the Escrow Agent applies (by transfer to the Paying Agent for the Refunded
Bonds) any moneys, the U.S. Obligations and the interest earnings, if any, therefrom to pay the
Refunded Bonds, as provided herein, and complies fully with the terms of this Agreement, the
Escrow Agent shall not be liable for any deficiencies in the amounts necessary to pay the
Refunded Bonds. Further, the Escrow Agent shall not be liable for the accuracy of the
calculations as to the sufficiency of moneys and of the principal amount of the U.S. Obligations,
and the earnings, if any, thereon, to pay the Refunded Bonds.
In the event of the Escrow Agent's failure to account for any of the U.S. Obligations or
moneys received by it, said U.S. Obligations or moneys shall be and remain the property of the
City in trust for the holders of the Refunded Bonds, as herein provided, and if for any improper
reason such U.S. Obligations or moneys are not applied as herein provided, the Escrow Agent
shall be liable for the amount thereof until the required application shall be made.
Whenever the Escrow Agent shall deem it necessary or desirable that a matter be proved
or established prior to taking, suffering or omitting any action under this Agreement, such matter
may be deemed to be conclusively established by a certificate signed by an authorized officer of
the City. The Escrow Agent may conclusively rely, as to the correctness of statements,
conclusions and opinions therein, upon any certificate, report, opinion or other document
furnished to the Escrow Agent pursuant to any provision of this Agreement; the Escrow Agent
shall be protected and shall not be liable for acting or proceeding, in good faith, upon such
reliance; and the Escrow Agent shall be under no duty to make any investigation or inquiry as to
any statements contained or matters referred to in any such instrument. The Escrow Agent may
consult with counsel, who may be counsel to the City or independent counsel, with regard to
legal questions, and the opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken or suffered by it hereunder in good faith in accordance
herewith. Prior to retaining such independent counsel, the Escrow Agent shall notify the City of
its intention.
The Escrow Agent and its successors, agents and servants shall not be held to any
personal liability whatsoever, in tort, contract or otherwise, by reason of the execution and
delivery of this Agreement, the establishment of the Trust Fund, the acceptance and disposition
of the various moneys and funds described herein, the purchase, retention or disposition of the
U.S. Obligations or the proceeds thereof, any payment, transfer or other application of funds or
\\wpb-srv01~ANFORDSX399656v08\I 1/25/02\16787 011100 7
securities by the Escrow Agent in accordance with the provisions of this Agreement, or any
non-negligent act, omission or error of the Escrow Agent made in good faith in the conduct of its
duties. The Escrow Agent shall, however, be liable to the City and to holders of the Refunded
Bonds to the extent of their respective damages for negligent or willful acts, omissions or errors
of the Escrow Agent which violate or fail to comply with the terms of this Agreement. The duties
and obligations of the Escrow Agent shall be determined by the express provisions of this
Agreement.
SECTION 3.04 Permitted Acts. The Escrow Agent and its affiliates may become
the owner of or may deal in the Refunded Bonds as fully and with the same rights as if it were
not the Escrow Agent.
SECTION 3.05 Successor Escrow Agent. The Escrow Agent, at the time acting
hereunder, may at any time resign and be discharged from the trusts hereby created by giving not
less than sixty (60) days' written notice to the City, the Paying Agent for the Refunded Bonds
and any rating agency which is then rating the Refunded Bonds, but no such resignation shall
take effect unless a successor Escrow Agent shall have been appointed by the holders of the
Refunded Bonds or by the City as hereinafter provided and such successor Escrow Agent shall
have accepted such appointment, in which event such resignation shall take effect immediately
upon the appointment and acceptance of a successor Escrow Agent.
The Escrow Agent may be removed at any time by an instrument or concurrent
instruments in writing, delivered to the Escrow Agent, and to the City, and signed by the holders
of a majority in principal amount of each series of the Refunded Bonds then outstanding.
In the event the Escrow Agent hereunder shall resign or be removed, or be dissolved, or
shall be in the course of dissolution or liquidation, or otherwise become incapable of acting
hereunder, or in case the Escrow Agent shall be taken under the control of any public officer or
officers, or of a receiver appointed by a court, a successor may be appointed by the holders of a
majority in principal amount of each series of the Refunded Bonds then outstanding by an
instrument or concurrent instruments in writing, signed by such holders, or by their attorneys in
fact, duly authorized in writing; provided, nevertheless, that in any such event, the City shall
appoint a temporary Escrow Agent to fill such vacancy until a successor Escrow Agent shall be
appointed by the holders of a majority in principal amount of the Refunded Bonds then
outstanding in the manner above provided, and any such temporary Escrow Agent so appointed
by the City shall immediately and without further act be superseded by the Escrow Agent so
appointed by such holders. The City shall promptly notify the Escrow Agent of any change in
the identity of the Paying Agent for the Refunded Bonds.
In the event that no appointment of a successor Escrow Agent or a temporary successor
Escrow Agent shall have been made by such holders or the City pursuant to the foregoing
provisions of this Section within sixty (60) days after written notice of resignation of the Escrow
Agent has been given to the City, the holder of any of the Refunded Bonds or any retiring
Escrow Agent may apply to any court of competent jurisdiction for the appointment of a
successor Escrow Agent and such court may thereupon, after such notice, if any, as it shall deem
proper, appoint such successor Escrow Agent.
\\wpb-srv0 I\SANFORDSX399656v08\l 1/25/02\16787 011100 8
No successor Escrow Agent shall be appointed unless such successor Escrow Agent shall
be a corporation with trust powers organized under the banking laws of the United States or any
state, and shall have at the time of appointment capital and surplus of not less than $50,000,000
or is a member of a bank group or bank holding company with aggregate capital and surplus of
not less than $50,000,000.
Every successor Escrow Agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor, and to the City, an instrument in writing accepting such appointment
hereunder and thereupon such successor Escrow Agent, without any further act, deed or
conveyance, shall become fully vested with all the fights, immunities, powers, trusts, duties and
obligations of its predecessor; but such predecessor shall, nevertheless, on the written request of
such successor Escrow Agent or the City, execute and deliver an instrument transferring to such
successor Escrow Agent all the estates, properties, rights, powers and trusts of such predecessor
hereunder; and every predecessor Escrow Agent shall deliver all securities and moneys held by it
to its successor; provided, however, that before any such delivery is required to be made, all fees,
advances and expenses of the retiring or removed Escrow Agent shall be paid in full. Should any
transfer, assignment or instrument in writing from the City be required by any successor Escrow
Agent for more fully and certainly vesting in such successor Escrow Agent the estates, rights,
powers and duties hereby vested or intended to be vested in the predecessor Escrow Agent, any
such transfer, assignment and instruments in writing shall, on request, be executed,
acknowledged and delivered by the City.
Any corporation into which the Escrow Agent, or any successor to it in the trusts created
by this Agreement, may be merged or converted, or to which substantially all of its corporate
assets have been sold or assigned, or with which it or any successor to it may be consolidated, or
any corporation resulting from any merger, conversion, consolidation or reorganization to which
the Escrow Agent or any successor to it shall be a party, shall be the successor Escrow Agent
under this Agreement without the execution or filing of any paper or any other act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
SECTION 3.06 Receipt of Proceedings. Receipt of true and correct copies of the
proceedings authorizing the issuance of the Refunded Bonds, including the Original Resolution,
are hereby acknowledged by the Escrow Agent, and reference herein to or citation herein of any
provision of said documents shall be deemed to incorporate the same as a part hereof in the same
manner and with the same effect as if they were fully set forth herein.
SECTION 3.07 City Indemnity. The City agrees to indemnify and save the
Escrow Agent, its agents and employees, harmless, to the extent allowed by law, against any
liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and
disbursements of whatsoever kind or nature which it may incur in the exercise and performance
of its powers and duties hereunder, including legal expenses, and which are not due to its own
negligence or willful misconduct. Indemnification provided under this section shall survive the
termination of this Agreement.
SECTION 3.08 Payment to Escrow Agent and PayinR ARent. The City hereby
agrees to provide for the payment, from its own legally available funds, the costs, charges,
services and expenses of the Escrow Agent incurred in connection with its duties under this
\\wpDsrv01\SANFORDS~399656v08~I 1/25/02\16787 011100 9
Agreement. The Escrow Agent hereby acknowledges that it has agreed to accept, and the City
agrees to pay, on the date of execution of this Agreement, the compensation under this
Agreement, as shown on the attached Exhibit C, plus reasonable expenses. The City hereby
agrees to pay the fees and expenses of the Paying Agent referred to below and any publication
costs borne by such Paying Agent for the Refunded Bonds or by the Escrow Agent from the
City's own legally available moneys.
The paying agent for the Refunded Bonds is The Bank of New York, having a
representative office in Jacksonville, Florida.
SECTION 3.09 Notices of Redemption and Defeasance. The City hereby
irrevocably instructs the Escrow Agent to file a copy of the notice of redemption with the Paying
Agent for the Refunded Bonds not less than thirty-five (35) days prior to January 23, 2003 with
respect to the 1992 Bonds, June 1, 2003 with respect to the 1995 Bonds and June 1, 2004 with
respect to the 1994 Bonds, with instructions to such Paying Agent to mail such notice of optional
redemption to the registered owners of such Refunded Bonds not less than thirty (30) days prior
to January 23, 2003 with respect to the 1992 Bonds, June 1, 2003 with respect to the 1995 Bonds
and June 1, 2004 with respect to the 1994 Bonds. Such notices of redemption, with respect to the
Refunded Bonds shall be in substantially the forms attached hereto as Exhibit A. The cost of
mailings shall be borne by the City.
The City hereby instructs the Escrow Agent to publish the applicable notice of
defeasance, set forth on Exhibit B attached hereto, and then file the same with the Paying Agent
for the Refunded Bonds, all in accordance with the instructions set forth thereon. The cost of
such filings and publication shall be borne by the City. The notice of redemption for the 1992
Bonds shall also constitute the notice of defeasance for such 1992 Bonds.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01 Amendments to this Agreement. This Agreement is made for the
benefit of the City and the holders from time to time of the Refunded Bonds and it shall not be
repealed, revoked, altered or amended in whole or in part without the written consent of all
affected holders, the Escrow Agent and the City if such amendment adversely affects its rights;
provided, however, that the City and the Escrow Agent may, without the consent of, or notice to,
such holders, enter into such agreements supplemental to this Agreement as shall not adversely
affect the rights of such holders and as shall not be inconsistent with the terms and provisions of
this Agreement, for any one or more of the following purposes:
(a) to cure any ambiguity or formal defect or omission in this Agreement;
(b) to grant to, or confer upon, the Escrow Agent, for the benefit of the
holders of the Refunded Bonds, any additional rights, remedies, powers or authority that
may lawfully be granted to, or conferred upon, such holders or the Escrow Agent; and
(c) to subject to this Agreement additional funds, securities or properties.
\\wpb-srvO 1 \SANFORDSX399656v08\ 11/25/02\16787 011100 1 0
The Escrow Agent shall be entitled to rely exclusively upon an unqualified opinion of
nationally recognized attorneys on the subject of municipal bonds with respect to compliance
with this Section, including the extent, if any, to which any change, modification, addition or
elimination affects the rights of the holders of the Refunded Bonds or that any instrument
executed hereunder complies with the conditions and provisions of this Section.
Notwithstanding the foregoing or any other provision of this Agreement other than
Sections 2.05 and 2.07 hereof at the written request of the City and upon compliance with the
conditions hereinafter stated, the Escrow Agent shall have the power to and shall, in
simultaneous transactions, sell, transfer, otherwise dispose of or request the redemption of the
U.S. Obligations held hereunder and to substitute therefor direct obligations of, or obligations
fully guaranteed by the United States of America, subject to the conditions that such moneys or
securities held by the Escrow Agent shall be verified to be sufficient, without reinvestment, to
pay Annual Debt Service on the Refunded Bonds, as the same shall become due, until the Total
Debt Service on the Refunded Bonds has been paid in accordance with Schedule C attached
hereto. The City hereby covenants and agrees that it will not request the Escrow Agent to
exercise any of the powers described in the preceding sentence (i) in any manner which will
cause the Series 2002 Bonds or the Refunded Bonds to be "arbitrage bonds" within the meaning
of Section 148 of the Code, and the regulations thereunder in effect on the date of such request
and applicable to obligations issued on the issue date of the Series 2002 Bonds and the Refunded
Bonds, and (ii) without payment of reasonable expenses of the Escrow Agent in connection
therewith. The Escrow Agent shall, as directed in writing by the City, purchase such substituted
securities with the proceeds derived from the maturity, sale, transfer, disposition or redemption
of the U.S. Obligations held hereunder or from other moneys available. The transactions may be
effected only if there shall have been obtained: (1) an independent verification by a nationally
recognized independent certified public accounting firm retained by the City concerning the
adequacy of such substituted securities with respect to principal and the interest thereon and any
other moneys or securities held for such purpose to pay Annual Debt Service on the Refunded
Bonds when due, until the Total Debt Service on the Refunded Bonds has been paid in
accordance with Schedule C attached hereto; and (2) an opinion from Greenberg Traurig, P.A.,
or from any other nationally recognized attorneys on the subject of municipal bonds, to the City
and the Escrow Agent to the effect that the disposition and substitution or purchase of such
securities will not, under the statutes, rules and regulations then in force and applicable to
obligations issued on the date of issuance of the Series 2002 Bonds and Refunded Bonds, cause
the interest on such Series 2002 Bonds or Refunded Bonds not to be excluded from gross income
for Federal income tax purposes and that such disposition and substitution or purchase is not
inconsistent with the statutes and regulations applicable to the Series 2002 Bonds and the
Refunded Bonds. Any surplus moneys, identified as such in the then applicable verification
report, resulting from the sale, transfer, other disposition or redemption of the U.S. Obligations
held hereunder and the substitutions therefor of direct obligations of, or obligations the principal
of and interest on which is fully guaranteed by, the United States of America, shall be released
from the Trust Estate and shall be transferred to the City. The City shall provide written notice of
any such amendment to the rating agencies then rating the Bonds prior to the effective date
thereof.
The City shall give prior written notice to Moody's Investors Service, Inc. (herein,
"Moody's"), together with draft copies, of any proposed amendment, alteration, revocation,
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severance or repeal of this Agreement pursuant to this Section. Such notice shall be given in
writing to: Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007,
Attention: Public Finance Ratings Desk - Refunded Bonds.
SECTION 4.02 Severability. If any one or more of the covenants or agreements
provided in this Agreement on the part of the City or the Escrow Agent to be performed should
be determined by a court of competent jurisdiction to be contrary to law, such covenant or
agreement shall be deemed and construed to be severable from the remaining covenants and
agreements herein contained and shall in no way affect the validity of the remaining provisions
of this Agreement. The Escrow Agent shall notify Moody's as soon as practicable if any portion
of this Agreement becomes severable.
SECTION 4.03 Agreement Binding,. All the covenants, promises and agreements
in this Agreement contained by or on behalf of the City or by or on behalf of the Escrow Agent
shall bind and inure to the benefit of their respective successors and assigns, whether so
expressed or not.
SECTION 4.04 Termination. This Agreement shall terminate when all transfers
and payments required to be made by the Escrow Agent under the provisions hereof shall have
been made.
SECTION 4.05 Governing Law. This Agreement shall be governed by the
applicable laws of the State of Florida.
SECTION 4.06 Execution by Counterparts. This Agreement may be executed in
several counterparts, all or any of which shall be regarded for all purposes as one original and
shall constitute and be but one and the same instrument.
SECTION 4.07 Notices. Until otherwise directed in writing by any person named
below, all notices, reports, or other communications required or permitted to be given in
accordance with the terms of this Agreement shall be in writing and sent by registered or
certified mail addressed as follows:
(a) As to the City:
Rebecca S. O'Connor
City of Delray Beach
100 N.W. 1st Avenue
Delray Beach, FL 33444
(561) 243-7120
(561) 243-7166 - Fax
(b)
As to the Escrow Agent:
Wells Fargo Bank, National Association
210 North University Drive
Suite 302
Coral Springs, FL 33071
Attention: Corporate Trust Department
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(c)
As to the Paying Agent:
The Bank of New York
c/o The Bank of New York
Trust Company of Florida, N.A.
10161 Centurion Parkway
Jacksonville, Florida 32256
Attention: Corporate Trust Department
\[wpb-srvO 1 \SANFORDSX399656v08\ 11/25/02\16787 011100 13
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its duly authorized officers and its corporate seal to be hereunto affixed and attested
as of the date of execution set forth below.
CITY OF DELRAY BEACH, FLORIDA
By:
(SEAL) Title: Mayor
Date of Execution: December __, 2002
Attest:
City Clerk
Wells Fargo Bank, National Association, as
Escrow Agent
(SEAL) By:
Authorized Officer
Date of Execution: December __, 2002
\\wpb-srv01 ~SANFORDSk399656v08\ 11/25/02\16787 011 t00 14
SCHEDULE A
REFUNDED BONDS
Series 1992 Bonds
Maturity
Date
6/01/03
6/01/04
6/01/07
Principal
Amount
$ 855,OOO
905,000
3,050,000
$4,810,000
Interest
Rate
5.90%
6.00%
6.25%
Series 1994 Bonds
Maturity
Date
6/01/03
6/01/04
6/01/05
6/01/06
6/01/07
6/01/08
6/01/12
6/01/16
Principal
Amount
$340,000
365,000
385,000
410,000
430,000
1,580,000
1,010,000
1,290,000
$5,810,000
Interest
Rate
5.45%
5.55%
5.65%
5.75%
5.85%
6.00%
6.25%
6.35%
Series 1995 Bonds
Maturity
Date
6/01/03
6/01/04
6/01/05
6/01/06
6/01/07
6/01/08
6/01/09
6/01/16
Principal
Amount
$95 000
100 000
105 000
110 000
115 000
120 000
125 000
1,105,000
$1,875,000
Interest
Rate
4.700%
4.875%
5.000%
5.000%
5.250%
5.250%
5.300%
6.000%
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SCHEDULE B
U.S. OBLIGATIONS
Purchased from Proceeds of the
Series 2002 Bonds and Transferred Moneys
Maturity Principal Interest
Date Amount Rate
6/01/03
12/01/03
6/01/04
Type
SLGst
SLGs~
SLGs1
Purchase Price
u.s. Treasury Securities - State and Local Government Series
\~wpb-$rvO l \SANFORDS',399656v08\ I 1/25/02~16787 O l I
Redemption
Date
January 23, 2003
SCHEDULE C
Annual Debt Service and Total Debt Service for Refunded Bonds
payable as indicated below
Series 1992 Bonds
Called Redemption
Principal Premium Interest
$4,810,000 $96,200
Total
Interest Payment
Dme
June 1,2003
Decemberl, 2003
June 1, 2004
Mmudng
Principal
$34O,0OO
$365,000
Series 1994 Bonds
Called Redemption
Principal Premium
$5,105,000 $102,100
Interest
Total
Interest Maturing Called
Payment Principal Principal
Date
June 1,2003 $95,000
Series 1995 Bonds
$1,780,000
Redemption
Premium
$35,600
Interest
Total
\\wpb-srv0 l\SANFORDSk399656v08\I 1/25/02\16787 011100
EXHIBIT A-1
NOTICE OF DEFEASANCE AND CALL FOR REDEMPTION
$
CITY OF DELRAY BEACH, FLORIDA
Utilities Tax Revenue Refunding and Improvement Bonds, Series 1992
Maturing on June 1, 2003 through and including June 1, 2007
NOTICE IS HEREBY GIVEN that, pursuant to Resolution No. 98-91, adopted by the
City of Delray Beach, Florida (the "City"), on December 3, 1991, as amended and supplemented
(collectively, the "Resolution"), the City has irrevocably deposited with Wells Fargo Bank,
National Association, as escrow agent (the "Escrow Agent"), in trust, and irrevocably set aside
for such payment, cash and Defeasance Obligations (as such term is defined in the Resolution)
(collectively, the "Deposits"), maturing as to principal and interest in such amounts and at such
times as will ensure the availability of sufficient moneys to pay the principal of and interest
thereon to the redemption date of certain of the outstanding City of Delray Beach, Florida
Utilities Tax Revenue Refunding and Improvement Bonds, Series 1992 (the "Defeased Bonds"),
as described below, and that the Defeased Bonds are deemed to have been paid in accordance
with the terms and provisions of the Resolution and that the Defeased Bonds are hereby called
for optional redemption on January 23, 2003 (the "Redemption Date"), at a price of 102% of the
principal amount thereof plus accrued interest to the Redemption Date.
In the opinion of Causey Demgen & Moore, Inc., set forth in their report dated December
__, 2002, the Deposits are fully sufficient to pay and refund the Defeased Bonds on the
Redemption Date.
Pursuant to the defeasance provisions set forth in the Resolutions, the Defeased Bonds
are deemed paid within the meaning thereof.
The maturities and principal amounts per maturity and CUSIP numbers of the Defeased
Bonds to be redeemed are as follows:
Maturity Principal
Date Amount CUSIP No.
06/01/03 $ 855,000
06/01/04 905,000
06/01/07 $3,050,000
\\wpb-srv01 \SANFORDS~399656v08g 11/25/02\16787 011100 A- 1 - 1
The Defeased Bonds subject to optional redemption on the Redemption Date shall be
presented for payment at the designated corporate trust office of The Bank of New York,
Attention: Corporate Trust Department (the "Paying Agent"). On or after the Redemption Date,
no interest shall accrue on said Defeased Bonds.
This notice is given in conformity with the provisions of the Defeased Bonds and the
Resolution providing for their issuance, and the owners of said Defeased Bonds are hereby
notified and requested to present such Defeased Bonds for redemption and payment as provided
above. The Defeased Bonds which have been called for redemption will be paid from funds
irrevocably deposited for this purpose in an Escrow Deposit Trust Fund established with Wells
Fargo Bank, National Association, as Escrow Agent for the Defeased Bonds.
CITY OF DELRAY BEACH, FLORIDA
The Bank of New York, as Paying Agent and
Bond Registrar for the Defeased Bonds.
Dated ., 2002
\\wpb-srv01 \SANFORDS~399656v08\ 11/25/02\16787 O11100 A- 1-2
Withholding of 31% of gross redemption proceeds of any payment made within the
United States is required by the Interest and Dividend Tax Compliance Act of 1983, as amended,
unless the Paying Agent has the correct taxpayer identification number (social security or
employer identification number) or exemption certificate of the payee. Please furnish a properly
completed Form W-9 or exemption certificate or equivalent when presenting your bonds for
payment.
CUSIP numbers have been assigned by Standard & Poor's Corporation and are included
solely for the convenience of the holders. Neither the City nor the Escrow Agent shall be
responsible for the selection or use of the CUSIP numbers nor is any representation made
as to their correctness on the Defeased Bonds or as indicated in any redemption notice.
Instructions to Escrow Agent:
This notice must be filed, by the Escrow Agent, with the Paying Agent, as provided in Section
3.09 of the Escrow Deposit Agreement.
\\wpb-srv01 \SANFORDS~399656v08\ 11/25/02\16787 011100 A- 1-3
EXHIBIT A-2
NOTICE OF CALL FOR REDEMPTION
$
CITY OF DELRAY BEACH, FLORIDA
Utilities Tax Revenue Refunding and Improvement Bonds, Series 1994
Maturing on June 1, 2005 through and including June 1, 2016
NOTICE IS HEREBY GIVEN that, pursuant to Resolution No. 98-91, adopted by the
City of Delray Beach, Florida (the "City"), on December 3, 1991, as amended and supplemented
(collectively, the "Resolution'), the City has irrevocably deposited with Wells Fargo Bank,
National Association, as escrow agent (the "Escrow Agent"), in trust, and irrevocably set aside
for such payment, cash and Defeasance Obligations (as such term is defined in the Resolution),
maturing as to principal and interest in such amounts and at such times as will ensure the
availability of sufficient moneys to pay the principal of and interest thereon to the redemption
date of certain of the outstanding City of Delray Beach, Florida Utilities Tax Revenue Refunding
and Improvement Bonds, Series 1994 (the "Defeased Bonds"), as described below, and that the
Defeased Bonds are deemed to have been paid in accordance with the terms and provisions of
the Resolution and that the Defeased Bonds, other than the Defeased Bonds maturing on June 1,
2003 and June 1, 2004, are hereby called for optional redemption on June 1, 2004 (the
"Redemption Date"), at a price of 102% of the principal amount thereof plus accrued interest to
the Redemption Date.
The maturities and principal amounts per maturity and CUSIP numbers of the Defeased
Bonds to be redeemed are as follows:
Maturity Principal
Date Amount CUSIP No.
06/01/05 $ 385,000
06/01/06 410,000
06/01/07 430,000
06/01/08 1,580,000
06/01/12 1,010,000
06/01/16 1,290,000
The Defeased Bonds subject to optional redemption on the Redemption Date shall be
presented for payment at the designated corporate trust office of The Bank of New York,
Attention: Corporate Trust Department (the "Paying Agent"). On or after the Redemption Date,
no interest shall accrue on said Defeased Bonds.
\',wpb-srv01\SANFORDSX399656v08[l 1/25/02\16787 011100 A-2-1
This notice is given in conformity with the provisions of the Defeased Bonds and the
Resolution providing for their issuance, and the owners of said Defeased Bonds are hereby
notified and requested to present such Defeased Bonds for redemption and payment as pro*ided
above. The Defeased Bonds which have been called for redemption will be paid from funds
irrevocably deposited for this purpose in an Escrow Deposit Trust Fund established with Wells
Fargo Bank, National Association, as Escrow Agent for the Defeased Bonds.
CITY OF DELRAY BEACH, FLORIDA
The Bank of New York, as Paying Agent and
Bond Registrar for the Defeased Bonds.
Dated ,2004
\\wpb-srv01 \SANFORDS~399656v08\ l 1/25/02\16787 011100 A-2-2
Withholding of 31% of gross redemption proceeds of any payment made within the
United States is required by the Interest and Dividend Tax Compliance Act of 1983, as amended,
unless the Paying Agent has the correct taxpayer identification number (social security or
employer identification number) or exemption certificate of the payee. Please furnish a properly
completed Form W-9 or exemption certificate or equivalent when presenting your bonds for
payment.
CUSIP numbers have been assigned by Standard & Poor's Corporation and are included
solely for the convenience of the holders. Neither the City nor the Escrow Agent shall be
responsible for the selection or use of the CUSIP numbers nor is any representation made
as to their correctness on the Defeased Bonds or as indicated in any redemption notice.
Instructions to Escrow Agent:
This notice must be filed, by the Escrow Agent, with the Paying Agent, as provided in Section
3.09 of the Escrow Deposit Agreement.
\\wpb-srv0 l\SANFORDS~399656v08\I 1/25/02~16787 011100 A-2-3
EXHIBIT A-3
NOTICE OF CALL FOR REDEMPTION
$
CITY OF DELRAY BEACH, FLORIDA
Utilities Tax Revenue Bonds, Series 1995
Maturing on June 1, 2004 through and including June 1, 2016
NOTICE IS HEREBY GIVEN that, pursuant to Resolution No. 98-91, adopted by the
City of Delray Beach, Florida (the "City"), on December 3, 1991, as amended and supplemented
(collectively, the "Resolution"), the City has irrevocably deposited with Wells Fargo Bank,
National Association, as escrow agent (the "Escrow Agent"), in trust, and irrevocably set aside
for such payment, cash and Defeasance Obligations (as such term is defined in the Resolution),
maturing as to principal and interest in such amounts and at such times as will ensure the
availability of sufficient moneys to pay the principal of and interest thereon to the redemption
date of certain of the outstanding City of Delray Beach, Florida Utilities Tax Revenue Bonds,
Series 1995 (the "Defeased Bonds"), as described below, and that the Defeased Bonds are
deemed to have been paid in accordance with the terms and provisions of the Resolution and that
the Defeased Bonds, other than the Defeased Bonds maturing on June 1, 2003, are hereby called
for optional redemption on June 1, 2003 (the "Redemption Date"), at a price of 102% of the
principal amount thereof plus accrued interest to the Redemption Date.
The maturities and principal amounts per maturity and CUSIP numbers of the Defeased
Bonds to be redeemed are as follows:
Maturity Principal
Date Amount CUSIP No.
06/01/04 $ 100,000
06/01/05 105,000
06/01/06 110,000
06/01/07 115,000
06/01/08 120,000
06/01/09 125,000
06/01 / 16 1,105,000
The Defeased Bonds subject to optional redemption on the Redemption Date shall be
presented for payment at the designated corporate trust office of The Bank of New York,
Attention: Corporate Trust Department (the "Paying Agent"). On or after the Redemption Date,
no interest shall accrue on said Defeased Bonds.
This notice is given in conformity with the provisions of the Defeased Bonds and the
Resolution providing for their issuance, and the owners of said Defeased Bonds are hereby
\\wpb-$tv01 \SANFORDS~399656v08[ 11/25/02\[6787 011100 A-3-1
notified and requested to present such Defeased Bonds for redemption and payment as provided
above. The Defeased Bonds which have been called for redemption will be paid from funds
irrevocably deposited for this purpose in an Escrow Deposit Trust Fund established with Wells
Fargo Bank, National Association, as Escrow Agent for the Defeased Bonds.
CITY OF DELRAY BEACH, FLORIDA
The Bank of New York, as Paying Agent and
Bond Registrar for the Defeased Bonds.
Dated ,2003
\[wpb-srv01 \SANFORDSX399656v08\ 11/25/02\16787 011100 A-3-2
Withholding of 31% of gross redemption proceeds of any payment made within the
United States is required by the Interest and Dividend Tax Compliance Act of 1983, as amended,
unless the Paying Agent has the correct taxpayer identification number (social security or
employer identification number) or exemption certificate of the payee. Please furnish a properly
completed Form W-9 or exemption certificate or equivalent when presenting your bonds for
payment.
CUSIP numbers have been assigned by Standard & Poor's Corporation and are included
solely for the convenience of the holders. Neither the City nor the Escrow Agent shall be
responsible for the selection or use of the CUSIP numbers nor is any representation made
as to their correctness on the Defeased Bonds or as indicated in any redemption notice.
Instructions to Escrow Agent:
This notice must be filed, by the Escrow Agent, with the Paying Agent, as provided in Section
3.09 of the Escrow Deposit Agreement.
\\wpb-srv01 ~SANFORDS~399656v08\ 11/25/02\16787 011100 A-3 -3
EXHIBIT B-1
NOTICE OF DEFEASANCE
CITY OF DELRAY BEACH, FLORIDA
Utilities Tax Revenue Refunding and Improvement Bonds,
Series 1994
NOTICE IS HEREBY GIVEN that the City of Delray Beach, Florida (the "City"), has
caused to be deposited with Wells Fargo Bank, National Association, having a designated
corporate trust office in Coral Springs, Florida (the "Escrow Agent"), pursuant to the terms and
provisions of a certain Escrow Deposit Agreement, dated as of December 1, 2002 (the "Escrow
Agreement"), by and between the City and the Escrow Agent, bond proceeds and other legally
available moneys which have been invested (except for a small initial cash balance which will
remain uninvested) in direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by the United States of America (collectively, the "Deposits"), to
pay and defease the City's outstanding Utilities Tax Revenue Refunding and Improvement
Bonds, Series 1994 (the "Defeased Bonds"), maturing on June 1, 2003 through and including
June 1, 2016.
The Defeased Bonds, other than the Defeased Bonds maturing on June 1, 2003 and June
1, 2004, will be called for optional redemption on June 1, 2004, at a price of 102% of the
principal amount thereof, plus accrued interest to the redemption date.
In the opinion of Causey Demgen & Moore, Inc., set forth in their report dated December
__, 2002, the Deposits are fully sufficient to pay and refund the Defeased Bonds on their
respective payment or redemption dates.
Pursuant to the defeasance provisions set forth in the resolutions authorizing the issuance
of the Defeased Bonds (the "Bond Resolution"), the Defeased Bonds are deemed paid within the
meaning thereof.
\\wpb-srv01 \SANFORDSX399656v08\ 11/25/02\16787 011100 B- 1-1
The Paying Agent for the Defeased Bonds shall provide notice of redemption in
accordance with the provisions of the Bond Resolution.
CITY OF DELRAY BEACH, FLORIDA
Dated:
Instructions to Escrow Agent:
This notice must be published once in The Bond Buyer as soon as practicable after
December __, 2002, and filed with the Paying Agent for the Refunded Bonds as soon as
practicable after December __, 2002, with instructions to mail the same to the registered holders
of the Defeased Bonds.
\\wpb- srvO 1 \SANFORDSX399656v08\ 11/25/02\16787 0111 O0 B- 1-2
EXHIBIT B-2
NOTICE OF DEFEASANCE
CITY OF DELRAY BEACH, FLORIDA
Utilities Tax Revenue Bonds,
Series 1995
NOTICE IS HEREBY GIVEN that the City of Delray Beach, Florida (the "City"), has
caused to be deposited with Wells Fargo Bank, National Association, having designated
corporate trust office in Coral Springs, Florida (the "Escrow Agent"), pursuant to the terms and
provisions of a certain Escrow Deposit Agreement, dated as of December 1, 2002 (the "Escrow
Agreement"), by and between the City and the Escrow Agent, bond proceeds and other legally
available moneys which have been invested (except for a small initial cash balance which will
remain uninvested) in direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by the United States of America (collectively, the "Deposits"), to
pay and defease the City's outstanding Utilities Tax Revenue Bonds, Series 1995 (the "Defeased
Bonds"), maturing on June 1, 2003 through and including June 1, 2016.
The Defeased Bonds, other than the Defeased Bonds maturing on June 1, 2003, will be
called for optional redemption on June 1, 2003, at a price of 102% of the principal amount
thereof, plus accrued interest to the redemption date.
In the opinion of Causey Demgen & Moore, Inc., set forth in their report dated December
~, 2002, the Deposits are fully sufficient to pay and refund the Defeased Bonds on their
respective payment or redemption dates.
Pursuant to the defeasance provisions set forth in the resolutions authorizing the issuance
of the Defeased Bonds (the "Bond Resolution"), the Defeased Bonds are deemed paid within the
meaning thereof.
\\wpb-srv01~SANFORDS~399656v08\l 1/25/02\16787 011100 B-2-1
The Paying Agent for the Defeased Bonds shall provide notice of redemption in
accordance with the provisions of the Bond Resolution.
CITY OF DELRAY BEACH, FLORIDA
Dated:
Instructions to Escrow Agent:
This notice must be published once in The Bond Buyer as soon as practicable after
December m, 2002, and filed with the Paying Agent for the Refunded Bonds as soon as
practicable after December __, 2002, with instructions to mail the same to the registered holders
of the Defeased Bonds.
\\wpb-srv0 BSANFORDS~J 99656v08\ 11/25/02\16787 011100 B-2-2
EXHIBIT C
Acceptance Fee -0-
Escrow Agent Administration Fee
(One time up front due at Closing) $450.00
Reimbursement of out-of-pocket costs including postage, publication and legal fees, if necessary,
at cost.
\[wpb-srvOl\SANFORDS~399656v08\l 1/25/02\16787 Ol 1100 C- l
Exhibit B
BOND PURCHASE AGREEMENT
December __, 2002
$
City of Delray Beach, Florida
Utilities Tax Revenue Refunding Bonds, Series 2002
The City Commission of the
City of Delray Beach, Florida
100 N.W. First Avenue
Dekay Beach, Florida 33444
Ladies and Gendemen:
Bear Stearns & Co., Inc. (the "Underwriter") offers to enter into the folloxving agreement
(the "Purchase Contract") wxth the C~ty of Delray Beach, Florida (the "C~ty"), wl'nch, upon your
acceptance of this offer, will be b~nding upon the Cxty and upon the Underwriter. Thxs offer is made
sublect to your acceptance on or before 5:00 p.m., Eastern time, on the date hereof and ff not so
accepted, will be subject to w~thdra~val by the Underwriter upon nonce to the City at any nme prior
to your acceptance hereof.
1. Purchase and Sale. Upon the terms and conchtions and upon the bas~s of the
representations, warranues and agreements set forth hereto, the Underxvnter hereby agrees to
purchase from the CiD, for offenng to the pubhc, and the C~ty hereby agrees to sell and dehver to
the Under~vnter for such purpose, all (but not less than all) of the C~ty's $ Uulines Tax
Revenue Refunding Bonds, Series 2002 (the "Bonds"). The Bonds shall be dated as of December 1,
2002, and shall be issued in such principal amounts, bear such rates of interest, and be redeemable
upon such terms as set forth m ExNbit A attached hereto. Interest on the Bonds shall be payable on
June 1, 2003, and on each December 1 and June 1 thereafter. The aggrei~ate purchase price of the
Bonds is $_ (xvhich takes into account a net original ~ssue prermur, of $ and
an Underxvnter's d~scount of $ ) plus accrued interest from December 1, 2002 to the
Closing Date (as hereinafter defined). The Bonds shall mmally be offered to the pubhc at such prices
or y~elds as ~ndicated on Exh~bxt A attached hereto. The Bonds are bmng ~ssued pursuant to the
Consutufion and Laxvs of the State of Florida, particularly, Chapter 166, Florida Statutes, as
amended, and other apphcable provm~ons of la,v, and Resolution No. 98-91 of the City duly adopted
on December 3, 1991 and Resolunon No. R-90-02 duly adopted on December 3, 2002 (Resolution
No. 98-91 and Resoluuon No. R-90-02 are sometimes, collecuvely, referred to hereto as the
"Resolution"). The Bonds are specml and hnuted obligauons of the C~ty, payable solely from and
secured by the Pledged Funds (de£med bcloxv).
The Cxty is proposing to ~ssue the Bonds to finance the cost of 0) refunding, on a
current bas~s, the C~D"s outstanding Uuhnes Tax Revenue Refunchng and Improvement Bonds,
Series 1992 (the "Series 1992 Bonds"); (u) advance refunding the C%?s outstanding Unhfies Tax
Revenue Refunding and Improvement Bonds, Series 1994 (the "Series 1994 Bonds"); 0fi) advance
refunding the C~ty's outstanding Urines Tax Revenue Bonds, Series 1995 (the "Series 1995
Bonds"), 0v) refunchng, on a current bas~s, the C%es Uuhnes Tax Revenue Bonds, Subordinate
017005 00304~1078415v3
Series 1996 (the "Series 1996 Bonds"); (v) ~efundmg, on a current basis, the City's Utilities Tax
Revenue Bonds, Suborchnate Series 1998 (the "Series 1998 Bonds"); (v~) providing a Reserve
Account Credit Facility Subsutute (as defined m the Resolution) issued by the Insurer (as defined
below); and (vn) paying certain costs of issuing the Bonds, including payment of the premium for a
municipal bond insurance pohcy (the "Bond Insurance Policy") to be purchased from Financial
Security Assurance Inc. (the "Insurer"). The Bonds will be secured by a first lien on and pledge of
the proceeds of the UttliUes Tax deposited in the Sinking Fund created and estabhshed under the
Resolution, in the manner and to the extent described m the Resolution (collectively, the "Pledged
Funds").
Concurrently with the execunon and delivery of the Bonds, there are to be executed
and delivered, among other things: (a) Escrow Deposit Agreement dated as of December __, 2002
(the "Escroxv Agreement"), between the City and Wells Fargo Bank, Nauonal Association, as
registrar and paying agent for the Bonds (the "Registrar and Paying Agent" or the "Escrow Agent"),
(b) the Tax Ceruficate of the Issuer dated as of December _~, 2002 (the "Tax Cernficate") and (c)
any other documents related to the transactions contemplated in the Officml Statement in
connection ~vith the public offering, sale and distribution of the Bonds. This Purchase Contract, the
Escrow Agreement and the Tax Certificate are somenmes collecuvely referred to herein as the "City
Documents".
2. Good Faith Deposit; Underwriter's Liability. Delivered to you herewith, as a good
faith deposit, ~s a corporate check of the Underwnte~: payable to the order of the City in the amount
of $__ (1% of the principal amount of the Bonds) as security for the performance by the
Under, vnter of ~ts obhgauon to accept and pay for the Bonds at Closing in accordance with the
provisions hereof. In the event that you accept this offer, sa~d check will be held uncashed by the
C~ty as a good faith deposit. At the Closing, the check will be returned to the Underwriter. In the
event you do not accept this offer, the check shall be Lmmediately returned to the Underwriter. If
the Underxvnter fats (other than for a reason perrmtted hereunder) to accept and pay for the Bonds
at the Closing as provided herein, the check may be cashed by the City and the proceeds retained by
the C~ty as full hqtudated damages for the failure of the Underxvnter to accept and pay for the Bonds
at closing and for any and all defaults hereunder on the part of the Underxvnter, and the retention of
such amounts shall consntute a full release and discharge of all clauns and damages for such failure
and for any and all such defaults hereunder on the part of the Undet~vnter, ~t being understood by
both the C~ty and the Underwriter that actual damages in such cu:cumstances may be difficult or
impossible to compute.
In the event that the C~ty fats to dchver the Bonds at thc Closing, or if the City is
unable at or prior to the Closing Date to satisfy or cause to be satisfied the conchtions to the
obliganons of the Underxvntcr contained m this Purchase Contact, or ~f the obligauons of the
Underwriter contained hereto shall be cancelled or terminated for any reason perrnttted by this
Purchase Contract, the City shall be obligated to unmedmtely return the check to the Underwriter
and such return shall constitute a full release and d~scharge of all clan'ns by the C~ty and the
Underxvnter arising out of the transacuon contemplated hereto except for the respecuve obhgations
of the C~ and the Undcrxvnter set forth in Secnon 8 hereof.
3 Offering. The Underwriter agrees to make a public offering of the Bonds at the iniual
offenng puces set forth ~n Exhibit A attached hereto; provided, however, the Underxvnter reserves
the right to make concessions to dealers and to change such initial offering prices as the Underwriter
shall deem necessary in connecnon with the marketing of the Bonds.
It shall be a con&non of your obligation to sell and deliver the Bonds to the
Underwriter, and the obligation of the Underwriter to purchase and accept dehvery of the Bonds,
that the entire initial aggregate principal amount of the Bonds shall be sold and dehvered by you and
accepted and paid for by the Underwriter at the Closing.
4. Preliminary Official Statement and Official Statement. The City hereby confa-ms
that it has heretofore made available to the Underwriter a Prelirmnary Officml Statement of the City
relating to the Bonds dated December 4, 2002 (which, together with the cover page and appendices
contained therein, is hereto called the "Prehrninary Official Statement"). Within seven business days
of the acceptance hereof by the C~ty, the City shall deliver to the Underwriter, at the C~ty's expense
such reasonable number of conformed copies of the Official Statement (winch, together with the
official cover page and appendices contained therein, is herein called the "Official Statement"), as
the Underwriter shall reasonably request, wl'uch shall be sufficient m number to permit the
Underwriter to comply with paragraph (b)(4) of Rule 15c2-12 of the Securities and Exchange
Commission ("SEC") under the Secunues Exchange Act of 1934 and w~th Rule G-32 and all other
applicable rules of the Mumclpal Securities Rulemakmg Board. The City, by ~ts acceptance hereof
rarities and approves the deeming final of the Prelirmnary Official Statement as of its date and the
distribution thereof by the Underwriter and approves and authorizes the Underwriter to use the
Official Statement and all documents described therein in connecuon with the pubhc offenng and
the sale of the Bonds. The City agrees to make no amendments to the Official Statement without
the prior written consent of the Underwriter, which consent shall not be unreasonably withheld. In
addition, the C~ty will undertake, pursuant to the Resoluuon, to provide cern'tm annual financial and
operating informanon and nonces of the occurrence of certain events, if material. A description of
this undertaking ~s set forth m the Prelinunary Official Statement and xvfll also be set forth in the
final Official Statement.
In accordance xv~th Secnon 218.385(6), Florida Statutes, the Underwriter hereby chscloses the
required mformauon as provided in Exhibit B attached hereto. In accordance xv~th 218.385(2) and
(3), Florida .;tatutes, the Underxvnter has delivered to the C~ty the Truth-ih Bonding statement,
which statement ~s attached hereto as Exhibit C.
5. Representations, Warranties and Agreements. The C~ty hereby represents, warrants
and agrees as follows:
a. As of the date of the Prelirmnary Official Statement and the date of this Purchase
Contract and at the nme of Closing, the statements and lnformauon contained in the Preliminary
Official Statement and Official Statement are and xvfll be true, correct and complete in all material
respects and the Prehmmarv Offlcml Statement and Official Statement xvfll not omit any statement
or ~nformation xvh~ch should be included thereto for the purposes for xvh~ch the Prelnmnary Officml
Statement and Officml Statement are to be used or xvh~ch ~s necessary' to make the statements or
~nformation contmned thereto, in hght of the circumstances under which they ~vere made, not
rmslea&ng (provided, hoxvever, that no representauon or warrant3' is being provided w~th respect to
the Bond Insurance Pohcy or the Depositor).' Trust Company ("DTC") and ~ts book-entu~ system).
b. Between the date of this Purchase Contract and the time of Closing, the City will
not execute any bonds, notes or obligations for borrowed money, other than the Bonds, which
pledge the Pledged Funds, without g~vmg prior written nonce thereof to the Underwriter.
c. The City is, and will be at the Closing Date, duly organized and validly eyasting as
a municipal corporation of the State of Florida, with the powers and authority set forth in the Act
(as defined in the Resoluuon).
d. The City has full legal right, power and authority to: (i) enter into the City
Documents, (ii) adopt the Resolution, (ii1) sell, issue and dehver the Bonds to the Underwriter under
the Act as provided hereto and (iv) carT out and consummate the transacuons contemplated by the
City Documents, the Resolution and the Official Statement, and the City has complied, and at the
Closing will be in comphance, m all respects, with the terms of the Act and with the obhgauons on
its part in connection xvlth the issuance of the Bonds contained in the Resoluuon, the Bonds, the
Paying Agent Agreement, the Tax Cernficate and this Purchase Contract.
e. By all necessary official action, the City has (i) duly adopted the Resolunon, (ii)
duly authorized and approved the Official Statement, and (in) duly authorized and approved the
execution and dehvery of, and the performance by the C~ty of, the Bonds, the C~ty Documents, the
Resolunon and all other obhgations on ~ts part in connecnon xv~th the issuance of the Bonds and the
consummation by it of all other transactions contemplated by the City Documents and the Official
Statement m connection with the issuance of the Bonds; and upon delivery of the Bonds at the
Closing, the Resolunon, the C~ty Documents, will, assurmng the due authorization, execution and
dehve~ of the C~ty Documents by the other parues thereto, ~onsutute legal, vahd and binding
obligauons of the C~ty, enforceable in accordance with thetr terms, sublect to apphcable bankruptcy,
~nsolvency, and sunilar laws affecnng creditors' rights generally and sublect, as to enforceability, to
general principles of eqmty.
f. When dehvered to and paid for by the Underxvnter at the Closing in accordance
with the provisions of th~s Purchase Contract, the Bonds shall be enntled to the benefits of the
Resoluuon in accordance with the provisions of the Resoluuon, sublect to bankruptcy, insolvency,
reorganization, moratorium and other smatlar laxvs affecting creditors' rights generally and sublect, as
to enforceabxhty, to general pnnc~ples of equity.
g. To the best knoxvledge of the C~ty, the adoption of the Resolution and the
authorization, execunon and dehvery of the C~ty Documents and the Bonds, and compliance w~th
the provisions hereof and thereof, xv~ll not confhct with, or consutute a material breach of or default
under any law, admimstranve regulation, consent decree, ordinance, resoluuon or any agreement or
other instrument to xvh~ch the City was or ~s sublect, as the case may be, nor xvfll such adopuon,
executton, deliver?-, authonzauon or comphance result in the creation or ~mpos~fion of any lien,
charge or other security interest or encumbrance of any nature xvhatsoever upon any of the property
or assets of the C~ty, or under the terms of any law, adn'umstranve regulauon, ordinance, resolution
or instrument, except as expressly provided by the Resoluuon.
h. At the nme of Closing, the City ~vfll be in compliance in all respects with the
covenants and agreements contained in the Resolunon and no event of default and no event which,
w~th the lapse of nme or gav~ng of nonce, or both, xvould consutute an event of default under the
Resolunon, xvlll have occurred or be connnumg.
4
i. Except as provided in the Official Statement, all approvals, consents,
authorizations and orders of any governmental authority or agency having junsdicuon in any matter
which would consutute a condmon precedent to the performance by the City of ~ts obligations
hereunder and its obhgauons under the Resoluuon have been obtained and are in full force and
effect, except that no representataon is made with respect to compliance w~th any state blue sky or
other legal investment laws.
j. The C~ty ~s lawfully empowered to pledge and grant a hen on the Pledged Funds
for payment of the pnnc~pal of and interest on the Bonds.
k. Except as expressly disclosed m the Official Statement, there is no action, suit,
proceeding, inquiry or invesfigauon, at law or m equity., before or by any court, government agency
or pubhc board or body pending or, to the best knowledge of the City, threatened against the City,
affecting or see 'king to prohtbit, restrain or enlotn the sale, tssuance or delivery of the Bonds or the
collecuon of the Pledged Funds or the pledge of and lien on the Pledged Funds or contesting or
affecung as to the C~ty the validity or enforceabihty in any respect of the Bonds, the Resolution, the
C~ty Documents, or contesting the tax-exempt status of interest on the Bonds, or contesting the
completeness or accuracy of the Official Statement or any supplement or amendment thereto, or
contesting the po~vers of the City or the Ctty Commisston (the "Comnusston") or any authority for
the issuance of the Bonds, the adoption of the Resoluuon or the execuuon and dehvery by the City
of the Bonds, the Ctty Documents.
1. The City will furnish such informauon, execute such instruments and take such
other action ~n cooperatton wtth the Underwriter as the Under~vnter may reasonably request in
order to 0) quah~' the Bonds for offer and sale under the "blue sky" or other securlues laws and
regulanons of such states and other junschcuons of the United States as the Underwriter may
designate and (n) deterrmne the ehgibthty of the Bonds for ~nvestment under the laws of such states
and other jurischcuons, and xvill use xts best efforts to conunue such qualificauons tn effect so long
as required for the d~stnbution of the Bonds; provided, hoxvever, that the City shall not be reqmred
to execute a general or special consent to servtce of process or quahfy to do bustness or register as a
broker/deaier tn connecuon w~th any such quahfication or deterrmnauon tn any lunsdiction.
m. The C~ty xvill not take or on-ut to take any action xvhich action or omission will in
any way cause the proceeds from the sale of the Bonds to be applied tn a manner contrary to that
provtded for tn the Resoluuon, the Tax Certtficate, and as described m the Offictal Statement.
n The C%, nmther is nor has been in default at any nme after December 31, 1975,
as to pnncipal or tnterest xv~th respect to an obligation ~ssued or guaranteed by the C~ty.
o. As of its date, the PrehtrunaDr Officml Statement ~vas deemed "final" by the C~ty
for the purposes of SEC Rule 15c2-1200)(1) except for the omasston of certatn matters permitted
thereby.
p. If, after the date of th~s Purchase Contract and until the earher of (0 ninety (90)
days from the end of the "under~vrmng period" (as defined tn SEC Rule 15c2-12) or (ii) the time
xvhen the Official Statement ~s available to any person from a nauonaHy recogmzed reposxtory, but
in no case less than txventy-five (25) days folloxvtng the end of the underwrmng penod, any event
shall occur xvh~ch mtght or xvould cause the Offictal Statement, as then supplemented or amended,
to contain any untrue statement of a material fact or to omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading, the City shall, if it has knowledge of such event, notify' the Underwriter thereof and, if in
the opinion of the Underwriter such event requLtes the preparation and pubhcatton of a supplement
or amendment to the Official Statement, the City will at its own expense forthwith prepare and
furnish to the Underwriter a sufficient number of copies of an amendment of or supplement to the
Official Statement On form and substance satisfactory to the Underwriter) which wdl supplement or
amend the Official Statement so that it will not contain an untrue statement of a material fact or
ormt to state a material fact necessary in order to make the statements therein, m light of the
circumstances existtng at such time, not nusleading.
q. Any cernficate signed by any official of the City and delivered to the Underwriter
shall be deemed a representation and warranty by the City to the Underwriter as to the truth of the
statements therein contained.
r. The City has never faded to comply with any prior conunuing disclosure
obliganon arising out of SEC Rule 15c2-12.
6. Closing. At noon, local tune, on December 19, 2002 (the "Closing Date"), or at such
time on such earlier or later date as shall be agreed upon, the City will, sublect to the terms and
condinons hereof dehver to DTC in the City of New York, New York or such other location as
shall be acceptable to the City and DTC, the Bonds in permanent form, duly executed, and wdl
deliver the other documents herein menuoned at a locauon mutually agreed upon by the City and
the Underwriter; and the Underwriter will pay the purchase price of the Bonds as set forth in
Section 1 hereof plus accrued interest on the Bonds from December 1, 2002 to the Closing Date, by
mame&ately avadable funds, payable to the order of the City. This dehvery and payment is hereto
called the "Closing."
7. Closing Conditions. The Underwriter has entered into this Purchase Contract in
reliance upon the representations and warranues of the City herein contained and the performance
by the City of its obhganons hereunder, both as of the date hereof and as of the time of Closing.
The obhgafions of the Underxvnter under this l'urchase Contract are and shall be sublect to each of
the following con&nons, and the obhgauons of the City shall be sublect to the City receiving the
items described in con&nons (f)(n), (f)0v), (f)(v0 through (f)(x):
a. The representanons and warranttes of the C~ty contained herein shall be true and
correct as of the date hereof and as of the Closing Date, as if made on the Closing Date.
b. The CIU' shall have performed all agreements of the City reqmred to be
performed under the Resolutton and this Purchase Agreement prior to or on the Closing Date.
c. At the ume of the Closing, the Resolunon shall be in full force and effect in
accordance ~vlth Its terms and shall not have been amended, mo&fled 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.
d At the time of the Closing, all official acuon of the City relaung to the City
Documents, the Resoluuon, the Official Statement and the Bonds shall be in full force and effect in
accordance with their respective terms and shall not have been amended, modified or supplemented
in any material respect, except in each case as may have been agreed to by the Underwriter.
e. The Underwriter shall have the right to cancel the agreement contained herein to
purchase, to accept delivery of and to pay for the Bonds by notifying you in writing of their
intention to do so if
i. between the date hereof and the Closing Date, leg~slauon shall have
been enacted by the Congress of the United States ("Congress"), or recommended to the Congress
for passage by the President of the United States, or favorably reported for passage to either House
of Congress by any Comrmttee of such House, or passed by either Hduse of Congress, or a decision
shall have been rendered by a court of the United States or the United States Tax Court, or a ruling
shall have been made or a regulauon shall have been proposed or made by the Treasury Department
of the United States or the Internal Revenue Service, with respect to the federal taxauon of interest
received on obliganons of the general character of the Bonds, which, in the opinion of Counsel for
the Underwriter has, or will have, the effect of making such interest subject to inclusion in gross
income for purposes of federal income taxation, or
n. between the date hereof and the Closing Date, legislation shall be
enacted or any action shall be taken by the Securities and Exchange Commission wbach has the
effect of requn:ing the contemplated issuance or chstnbution of the Bonds to be registered under the
Securiues Act of 1933, as amended, or of requrrmg the Resolution to be quahfied under the Trust
Indenture Act of 1939, as amended, or
hi. an event descnbed in paragraph (p) of Section 5 hereof shall have
occurred which requires an amendment or supplement to the Official Statement and which, in the
reasonable opinion of the Underwriter, adversely affects the marketab~ty of the Bonds or the
market price thereof, or
iv. in the reasonable opinion of the Underwriter, payment for the
delivery of :he Bonds is rendered mapracucable or inadvisable because (A) trading in securities
generally shall have been suspended on the New York Stock Exchange, Inc or (13) a general
banking moratorium shall have been estabhshed by Federal, New York or Florida authorities, or (C)
a war or terrorist act revolving the United States or other nanonal calamity shall have occurred or
been declared, or
v. an order, decree or injuncnon of any court of competent lurisdiction,
or any order, ruhng, regulation or admamstrauve proceeding by any governmental body or board,
shall have been issued or commenced, or any legislauon, enacted, ~vlth the purpose or effect of
prohlbiung the issuance, offenng or sale of the Bonds as contemplated hereby or by the Official
Statement or prohlbiung the adopuon or performance of the Resolution, or
vt. the City has, xvlthout the prior xvritten consent of the Underwriter,
offered or issued any bonds, notes or other obligations for borrowed money, or incurred any
material liabgtties, direct or connngent, other than as described in the Official Statement, in either
case payable from the Pledged Funds, or
vn. the President of the United States, the Office of Management and
Budget, the Department of Treasury, the Internal Revenue Service or any other governmental body,
department, agency or commission of the Umted States or the State of Florida shall take or propose
to take any acuon or implement or propose regulations, rules or leg~slauon winch, tn the reasonable
ludgment of the Underwriter, materially adversely affects the market price or marketability of the
Bonds or causes any material mforrnation tn the Official Statement, tn light of the circumstances
under which it appears, to be rmsleading m any material respect, or
vhi. any executive order shall be announced, or any legislation, ordinance,
rule or regulauon shall be proposed by or tntroduced in, or be enacted by any governmental body,
department, agency or commission of the United States or the State of Florida or the State of New
York, having lunschcuon over the sublect matter, or a decision by any court of competent
lunsdlcuon within the United States or within the State of Florida or the State of Nexv York shall be
rendered xvinch, in the reasonable ludgment of the Underwriter, materially adversely affects the
market price or marketability, of the Bonds or causes any informauon in the Officml Statement to be
misleachng m any material respect, or
prior to Closing, Moody's Investor's Service, Inc. ("Moody's") and
Standard & Poor's Rating Sen-ices, a &vision of The McGraw-Htll Compames ("Standard &
Poor's"), shall inform the City or the Underwriter that the Bonds will not be rated at least "Aaa" and
"AAA," respectively, or the Insurer shall inform the City or the Underxvriter that it will not deliver
its Bond Insurance Policy on the Closing Date.
f. At or prior to the Closing Date, the Underwriter shall receive the following
documents:
i. The Resoluuon certified by the City Clerk under seal as having been
duly adopted by the City and as being in effect, with such supplements, mo&ficaUons or
amendments as may have been agreed to by the Underwriter.
h. A final appro,lng opimon of Greenburg Traung, P.A., Bond
Counsel, addressed to the City, dated the date o:' the Closing, tn substantially the form included in
the Official Statement as Appenchx D.
th A letter of Bond Counsel addressed to the Underxvrlter and the
Insurer, and dated the Clostng Date, to the effect that theft final approvtng opinion referred to tn
Section 7(f)0i) hereof may be rehed upon by the Underxvnter and the Insurer to the same extent as if
such opinion were addressed to the Underwriter and the Insurer.
iv. An opm_ton of Susan A. Ruby, Esquire, City Attorney, addressed to
the Clt37, the Undertvnter and the Insurer, and dated the date of the Closing, substanually to the
effect that:
(1) the City is a municipal corporauon duly exisung under the
Consutuuon and laxvs of the State of Florida and has good right and lawful authority to adopt the
Resoluuon, execute and deliver the Cit~, Documents, and issue the Bonds, to secure the Bonds tn the
manner provided in the Resolution, to carD' out its powers under the Act and to perform all of its
obligauons under the Resolution, the Bonds and the City Documents;
(2) the Resolution has been duly adopted by the City and the Bonds,
the City Documents have been duly authorized, executed and delivered by the City, and the
Resolutton and the Bonds, when duly authenticated, and the City Documents, xvhen duly executed
by the other parties thereto consutute yard, legal and binding agreements of the City enforceable in
accordance with their respective terms; provided, however, the enforceaNhty thereof may be subject
to bankruptcy, insolvency, reorganization, moratorium and other similar laws affectmg creditors'
rights generally;
(3) no consent, waiver or any other action by any person, board or
body, public or private, other than the approval of the City which has been duly and validly
obtained, is required as of the date hereof for the City to issue the Bonds or adopt the Resolution, or
to execute and dehver the C~ty Documents, or to perform its obligations under any of the foregoing,
except she need not express any opinion regarding any blue sky or legal investment laws;
(4) to the best of her knowledge, the adoption of the Resolution and
the execution and delive~ of the City Documents and the Bonds and compliance with the
provisions of each do not and will not conflict with or consutute a breach of or default under any
applicable law or administrative regulauon of the State of Florida, or any apphcable ludgment or
decree or any trust agreement, loan agreement, bond, note, resoluuon, ordmance, agreement or
other instrument to which the City is a part or Is otherwise subject;
(5) except as otherwise disclosed in the Official Statement, there is
no litigation or proceeding, pending or, to the best of her knowledge, threatened, challenging the
creation, organization or existence of the City or the vahdity of the Bonds or the City Documents or
seeking to restrain or enjoin any of the transacuons referred to therein or contemplated thereby, or
which, m any manner, quesuons the right of the CiD' to issue the Bonds or to pledge the Pledged
Funds for repayment of the Bonds;
(6) there is no litigation or proceeding pending to which the City is a
party, the ultimate disposition of which would have a material adverse effect on the finances or
operations of the City or 1ts abihty to meet its obligauons with respect to the Bo~.,ls;
(7) nothing has come to her attenuon that xvould lead her to believe
that the Official Statement as of its date or as of the date hereof contains any untrue statement of a
material fact or ormts to state a material fact necessary to make the statements thermn, in the hght of
the czrcumstances under xvhlch they were made, not n'nsleachng;
(8) the Official Statement has been duly authorized, executed and
dehvered by the CiD', and the City has consented to the use thereof by the Underwriter; and
(9) the City is lawfully empoxvered to pledge and grant a hen on the
Pledged Funds, for the payment of the pnnclpal of and interest on the Bonds.
v. A ceruficate, xvhich shall be true and correct at the ume of Closing,
signed by the City Manager and the Finance Director or such other officials sausfactory to the
Underwriter, and m form and substance sattsfactoU' to the Underwriter, to the effect that, to the
best of their kn()xvledge and behef
(1) the representations, warranties and covenants of the City
contained herein are true and correct m all material respects as of the Closing Date and that the City
has satisfied all condiuons to be performed or saUsfied hereunder at or prior to Closing;
(2) the Official Statement did not as of its date, and does not as of
the Closing Date, contain any untrue statement of a material fact or omit to state a material fact
which should be included therein for the purposes for which the Official Statement is to be used, or
which is necessary in order to make the statements contained thereto, m hght of the circumstances in
which they were made, not rmsleadmg (provided, that no opinion need be expressed regarding the
information contained therein relating to the Insurer, the Bond Insurance Pohcy, DTC and its book-
entry system);
(3) that, except as disclosed in the Official Statement, no littgafion or
other proceedings are pending or, to his or her knowledge, threatened against the City in any court
or other tribunal of competent lunsdicuon, State or Federal, in any way (i) restraining or enjoining
the issuance, sale or delivery of any of the Bonds, or (h) questioning or affecting the validity of the
City Documents, the Bonds, the Resoluuon or the pledge by the City, to the Bondholders of the
Pledged Funds, or (th) questioning or affecting the vahchty of any of the proceechngs for the
authorization, sale, execution, issuance or dehvery of the Bonds or 0v) questioning or affecting (A)
the organizauon or e~stence of the City or the title to office of the officers thereof or (13) the power
or authority of the City to receive the Pledged Funds or (v) asserung that the Prehminary Official
Statement or the Official Statement contains any untrue statement of a material fact or omits any
material fact necessary to make the statements therein, in hght of the circumstances under which
they xvere made, not rmsleading;
(4) that except as disclosed in the Official Statement, the City is not
in default nor has been m default at anytime after December 31, 1975 as to pnnclpal or interest with
respect to any obligauon issued or guaranteed by the City;
(5) that no event affecting the City has occurred since the date of the
Official Statement that should be disclosed in tt2e Official Statement for the purposes for winch it is
to be used or that is necessary to be dlsclosec, therein in order to make the statements and
information thereto not mlsleachng in any material respect; and
(6) that since the date of the f'mancial statements included m the
Official Statement, 0) no material adverse change has occurred m the financial condiuon of the City
and 01) the City has not incurred any material liabflafies other than in the ordinary course of business,
except as set forth ua or contemplated by the Official Statement.
vi. An opinion of Greenburg Traurig, P.A., as Bond Counsel, addressed
to the City and the Underxvriter, and dated the Closing Date, to the effect that:
(1) with respect to the information ~n the Official Statement and
based upon sa~d firm's revmxv of the Official Statement, as Bond Counsel: (A) it is of the opinion
that the lnformatton in the Official Statement under the heachngs "INTRODUCTION,"
"DESCRIPTION OF THE BONDS -- General," "DESCRIPTION OF THE BONDS -
Redemption Provisions," "SOURCE OF PAYMENT AND SECURFIW FOR THE BONDS,"
"CONTINUING DISCLOSURE UNDERTAKING," (except for the financial and stanstical data
10
contained in any such headings, as to which no v~ew need be expressed), and "APPENDIX C - The
Resolunon" insofar as such information purports to be descriptions or summaries of the
Resolunons, the Bonds or state and federal laws to the extent mchcated thereto, are accurate and fair
statements or summaries of the matters set forth or the documents referred to therein; and (f3) the
statements on the cover page and under the secnon captioned "TAX EXEMPTION" insofar as
such statements summarize certain prov~stons of the tax law, regulations, rulings and nonces, are fair
and accurate statements of the provisions so summarized; and
(2) the Bonds are exempt from registranon under the Securities Act
of 1933, as amended, and the Resolution ~s exempt from quahficanon as an indenture under the
Trust Indenture Act of 1939, as amended.
vfi. A cernficate of an authorized representanve of the Registrar, as
Paying Agent to the effect that:
(1) the Registrar and Paying Agent ts a national banking association
duly orgamzed, vahdly ex, sung and m good standing under the laws of the Umted States of America
and ts duly authorized to exerctse trust powers;
(2) the Registrar and Paymg Agent has all the requisite authority,
power, licenses, perrmts and franchises, and has full corporate power and legal authority to execute
and perform its funcnons under the Resolunon and any other documents to xvbach xt ~s a party
(herein, the "Bond Documents");
(3) the performance by the Registrar and Paying Agent of its
funcnons under the Resoluuon and the Bond Documents xvfll not result m any violation of the
Arncles of Assoc~auon or Bylaws of the Registrar and Paying Agent, any court order to winch the
Regtstrar and Paytng Agent is subject or any agreement, tndenture or other obhganon or instrument
to which the Registrar and Paying Agent ts a party or by which the Registrar and Paying Agent is
bound, and no approval or other act_ton by any governmental authority or agency havtng supervisory
authority over :he Registrar and Paying Agent is requu:ed ~n order for the Rt~gtstrar and Paying
Agent to perform .ts funcnons under the Resoluuon and the Bond Documents;
(4) the Bond Documents consntute valid and binchng obhganons of
the Registrar and Paying Agent in accordance wtth tts terms, subject to apphcable bankruptcy,
insolvency, reorgamzatton, moratorium and other smular laws affecung credttors' rights generally
and sublect, as to enforceabfltty, to general pnnc~ples of eqmty; and
(5) to the best of such authorized representauve's knowledge, there
is no action, stat, proceeding, or invesugauon at la~v or tn eqmty before any court, public board or
body pending or, to h~s or her knoxvledge, threatened against or affecung the Registrar and Paying
Agent xvherein an unfavorable decision, ruhng or finding on an ~ssue ratsed by any party thereto is
hkely to materially and adversely affect the ab~huT of the Registrar to perform ~ts obhgauons under
the Resolunon and the Bond Documents.
vm. Letters of Moody's and Standard & Poor's to the effect that the
Bonds have been ass~gmed a ranng no less favorable than "Aaa" and "AAA," respecuvely, which
raungs shall be tn effect as of the Closing Date.
11
ix. Duly executed copies of the Bond Insurance Pohcy, the City
Documents and the Bond Documents in form acceptable to the Underxvnter and bond counsel.
x. An opinion of general counsel to the Insurer and a certificate of an
officer of the Insurer dated the date of the Closing and addressed to the Underwriter and the City,
concerning the Insurer, the Policy, and the lnformauon relaung to the Insurer and the Bond
Insurance Policy, contained in the Official Statement, in form and substance satisfactory to the
Underwriter.
xi. A ceruficate executed by the Finance D~rector dated the Closing'
Date, sausfactory to Bond Counsel setting forth the facts, estimates and c~rcumstances which
establish that it is not expected that the proceeds of the Bonds xvill be used in a manner that would
cause the Bonds to be "arbitrage bonds" xvithm the meaning of the Internal Revenue Code of 1986,
as amended, and to the best of the knowledge and behef of such officer, such expectations are
reasonable.
xu. A letter of representations of the Issuer to DTC.
X1V.
Internal Revenue Service Form 8038~G.
State of Florida Division of Bond Finance Form BF2003/2004-B.
xv. Such addiuonal legal opinions, ceruficates, instruments and other
documents as the Underxvnter may reasonably request.
If the City shall be unable to satisfy the condtuons to the obligauons of the Underwriter to
purchase, to accept delivery of and to pay for the Bonds contained m this Purchase Contract and the
Underwriter does not xvaive such mabthty in ~vriting, or if the obhgafions of the Underwriter to
purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason
pernutted by this Purchase Contract, th~s Purchase Contract shall terrmnate, the good faith deposit
described m Secuon 2 hereof shall be returned tc the Underxvnter and neither the Underwriter nor
the City shall be under any further obligation hereunder, except that the respecuve obhgations of the
Ctty and the Underwriter set forth tn Secnon 8 hereof shall conunue m full force and effect.
8. Expenses. The Under~vnter shall be under no obhgauon to pay, and the City shall pay,
any expense incident to the performance of the City's obhgations hereunder including, but not
limited to: (a) the cost of preparation, pnnung and dehvery of the Resolution; (b) the cost of
preparauon and pnntmg of the Bonds; (c) the fees and expenses of Bond Counsel; (d) the fees and
expenses of Pubhc Financial Management, Inc., the City's financial advisor for the Bonds; (e) the
fees and d~sbursements of any other experts, consultants or advisors retained by the City; (f) fees for
bond ratings; (lq) the fees and expenses of the Registrar and Paying Agent; and (h) the costs of
prepanng, prinung and delivering the Prehminary Official Statement and the Official Statement and
any supplements or amendments thereto. The Underwriter shall pay: (a) the cost of printing and
dehvery of this Purchase Contract; (b) the cost of all "Blue Sky" and legal investment memoranda
and related fihng fees; (c) all adverustng expenses; and (d) all other expenses incurred by it in
connecuon xvlth the pubhc offering of the Bonds including the fees and disbursements of counsel
for the Underwriter In the event that e~ther party shall have paid obhgauons of the other as set
forth m th~s Sect_ton 8, adlustment shall be made at the time of the Closing.
12
9. Notices. Any notice or other communication to be given to you under this Purchase
Contract may be gaven by mailing the same to the attenuon of the City Manager, at the address set
forth on the first page hereof, and any such notice or other communicauon to be given to the
Underwriter may be mailed to Bear Stearns, 225 N.E. Mlzner Blvd., Boca Raton, Florida 33483,
Attention: J.W. Howard.
10. Parties in Interest. This Purchase Contract is made solely for the benefit of the City
and the Undev, vriter and no other party or person shall acqun:e or have any right hereunder or by
virtue hereof. Ail of the City's representations, warranties and agreements tn this Purchase Contract
shall remain operaUve and tn full force and effect and shall survive the delivery of the Bonds.
11. Waiver. Notwithstandmg any provision herein to the contrary, the performance of any
and all obhgations of the City hereunder and the performance of any and all condinons contained
herein for the benefit of the Underwriter may be waived by the Underwriter, and the approval of the
Underwriter when requn:ed hereunder or the determination of then: safisfacuon as to any document
referred to herein shall be evidenced by its purchase of the Bonds.
12. No Liability. Neither the Commission, nor any of the members thereof, nor any officer,
agent or employee thereof shall be charged personally by the Underwriter with any liability, or held
hable to the Underwriter under any term or provision of th~s Purchase Contract because of its
execution or attempted execuuon, or because of any breach or attempted or alleged breach thereof.
13. Governing Law. Tins Purchase Contract, and the terms and conchuons herein, shall
consntute the full and complete agreement between the City and the Underxvnter with respect to the
purchase and sale of the Bonds. Tins Purchase Contract shall be governed by and construed in
accordance xvlth the laws of the State of Florida.
14. Operation of Warranties, Etc. All the representauons, xvarranfies, covenants and
agreements of the City in tins Purchase Contract shall remain operative and in full force and effect
as if made on the date hereof and the Closing Date, regardless of 0) any investigation made by or on
behalf of the Un,~'erxvriter or Counsel to the Underxvnters or (n) dehvery of and an) payment for the
Bonds hereunder.
15. Section Headings. Secuon heachngs have been inserted in this Purchase Contract as a
matter of convemence of reference only, and it ~s agreed that such secuon headings are not a part of
this Purchase Contract and xvfll not be used in the mterpretauon of any provisions of this Purchase
Contract.
16. Severability. If any provision of this Purchase Contract shall be held or deemed to be,
or shall in fact be, tnvahd, inoperative or unenforceable as apphed in any particular case tn any
jurisdiction or junsdlcuons, or in all junschcuons because it conflicts with any provisions of any
consntuuon, statute, or rule of public policy, or for any other reasons, such c~rcumstances shall not
have the effect of rendenng the provision in question lnvahd, moperauve or unenforceable in any
other case or cn:cumstances, or of rendering any other provision or provls~ons of this Purchase
Contract lnvahd, moperauve or unenforceable to any extent xvhatever.
17. Execution of Counterparts. Tins Purchase Contract may be executed in any number of
counterparts, all of xvinch taken together shall be one and the same msu-ument, and any parues
13
hereto may execute this Purchase Contract by signing any such counterpart. The execution of this
Purchase Contract has been duly authorized by the Commission.
18. Effectiveness. This Purchase Contract shall become effective upon the execution by the
appropriate City officials of the acceptance hereof by the City and shall be vahd and enforceable at
the time of such acceptance.
Very truly yours,
BEAR STEARNS & CO., INC.
By:
J.W. Howard, Associate Director
Accepted this __ day of December, 2002
by the City Comrmss~on of the
City of Delray Beach, Florida
By:
(V~ce) Mayor
14
EXHIBIT A
MATURITIES, AMOUNTS, INTEREST RATES, AND PRICES OR YIELDS
$. SERIAL BONDS
Maturities Interest
0une 1) Amounts Rates Yield
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Redemption
A-1
EXHIBIT B
DISCLOSURE STATEMENT
The City Comnussion of the
City of Delray Beach, Florida
100 N.W. Ftrst Avenue
Delray Beach, Florida 33444
Re:
$. ., City of Dekay Beach, Florida
Utihties Tax Revenue Refunding Bonds, Series 2002
Ladies and Gentlemen:
In connectaon with the proposed issuance by the City of Delray Beach, Florida of
$. of its Utihues Tax Revenue Refunding Bonds, Series 2002 (the "Bonds"), Bear
Stearns (the "Underwriter") is underwriung a public offering of the Bonds. The purpose of this
letter is to furmsh, pursuant to the provisions of Secuon 218.385(6), Florida Statutes, certain
information tn respect of the arrangements contemplated for the underxvnfing of the Bonds as
follows:
A. The nature and estimated amount of expenses to be incurred by the Underwriter
in connection w~th the purchase and reoffermg of the Bonds are set forth m Schedule I attached
hereto.
B. No person has entered into an understanding with the Underwriter, or to the
knowledge of the Underwriter, with the C~ty, for any paid or prormsed compensauon or valuable
consideration, directly or indtrectly, expressly or imphed, to act solely as an lntermedmry between the
City and the Underwriter or to exercise or attempt to exercise any ~nfluence to effect any transaction
in the purchase of the Bonds.
C. The unde/xvntmg spread, the difference between tl~e price at xvhich the Bonds
will be miually offered to the pubhc by the Underwriter and the price to be prod to the City for the
Bonds, exclusive of accrued interest, xvfll be $__ per $1,000 of Bonds ~ssued.
D. As part of the esttmated under~vriting spread set forth in Paragraph (c) above,
the Underxvnter wdl charge a management fee of $__ per $1,000 of Bonds issued.
E. No other fee, bonus or other compensanon ~s estimated to be pa~d b'y the
Under~vnter in connecuon xvith the issuance of the Bonds to any person not regularly employed or
retained by the Underwriter 0ncluding any "finder" as defined in Secuon 218.386(1)(a), Florida
Statutes), except as specifically enumerated as expenses to be recurred bv the Underwriter, as set
forth in Paragraph (a) above.
B-1
We understand that you do not requtre any further disclosure from
pursuant to Section 218.385(6), Florida Statutes.
BEAR STEARNS & CO., INC.
225 N.E. Mizner Boulevard
Delray Beach, Florida 33484
the Underwriter,
By:.
J.W. Howard, Associate Director
B-2
SCHEDULE I
UNDERWRITERS ESTIMATED EXPENSES
MSRB, CUSIP, DTC, PSA
Travel, Closing
Communications/Advertising
Day Loan
Counsel Fees
Miscellaneous
Total Expenses
(_Der $1.000)
B-3
EXHIBIT C
TRUTH-IN BONDING STATEMENT
The following tmth4n-bonding statement is prepared pursuant to Section 218.385(2) and
(3), Florida Statutes, and is for informational purposes only. It shall not affect or control the actual
terms and conchtions of the debt or obligations.
The City of De[ray Beach, Florida (the "City") ~s proposing to issue $. of City of
De[ray Beach, Florida, Utthties Tax Revenue Refunding Bonds, Series 2002 (the "Bonds") for the
purpose of providing funds to: (i) refund, on a current bas~s, the City's outstanding Uuhfies Tax
Revenue Refunding and Improvement Bonds, Series 1992 (the "Series 1992 Bonds"); (n) advance
refund the City's outstanding Uuhfies Tax Revenue Refunding and Improvement Bonds, Series 1994
(the "Series 1994 Bonds"); (ih) advance refund the C~ty's outstanding Uuliues Tax Revenue Bonds,
Series 1995 (the "Series 1995 Bonds"); (iv) refund, on a current basis, the City's Utthfies Tax
Revenue Bonds, Subordinate Series 1996 (the "Series 1996 Bonds"); (v) refund, on a current basis,
the C~ty's Utiliues Tax Revenue Bonds, Subordinate Series 1998 (the "Series 1998 Bonds"); (vi)
provide a Reserve Account Credit Facxhty Substitute (as defined in the Resoluuon); and (vii) pay
certain costs of lsstfing the Bonds, including payment of the prenuum for a municipal bond
insurance pohcy (the "Bond Insurance Pohcy") to be purchased from Financial Security Assurance,
Inc. (the "Insurer"). The Bonds are expected to be repaid over a period of approximately 14 years.
At the Interest rates set forth m Exhibit A of the Purchase Contract, total interest paid over the life
of the Bonds reclusive of accrued :nterest will be $
The Bonds are secured by a first lien upon and a pledge of the proceeds of the C~ty's Utiliues
Tax deposited m the Sinking Fund (as defined m the Resoluuon) and all moneys on depostt to the
credit of certain funds and accounts created under the Resolution and the earnings on the
investment thereof, all in the manner and to the extent described in the Resolution (collectively, the
"Pledged Funds"). Because the Bonds xvdl refund the bonds set forth above and will result m a
lower debt servuce o~, such bonded indebtedness, authonmng the Bonds will not ~csult in any
additional such Pledged 1 unds not being available to finance other projects of the C~ty
PRELIMINARY OFFICIAL STATEMENT DATED DECEMBER 4, 2002
Exhibit C
NEW ISSUE
RATINGS: (see ~Ratings" herein)
Borda ard the imer~t dx, mm are e~empt frvm taxation urder exutirtg la~ of the State of Flonda, ocoept as to estate taxes ard taxes vrt~M by Cbapter
220, Florida Statutes, on imem~ wa~re or tr, t~s on&bt ddtgations ow~d by cortzmtu~, barks ard saffng assodauons.
CITY OF DELRAY BEACH, FLORIDA
$16,500,000'
Utilities Tax Revenue Refunding Bonds
Series 2002
Dated: December 1, 2002
Due: June 1, as shown on the inside cover
The City of Delray Beach, Florida Utilities Tax Revenue Refunding Bonds, Series 2002 (the "Bonds") will be issued as fully
registered bonds without coupons in principal denominations of $5,000 or any integral multiples thereof. The Bonds will be registered
in the name of Cede & Co., as nominee for the Depository Trust Company, New York, New York ("DTC'), and DTC will act as
securities deposkory for the Bonds. So long as Cede & Co is the registered owner of the Bonds, principal of and premium, if any, and
interest on the Bonds will be paid directly to Cede & CO., as nominee for DTC, by Wells Fargo Bank, National Association, having a
designated corporate trust office in Coral Springs, Florida as Paying Agent for the Bonds (the "Paying Agent"). Interest on the Bonds is
payable semi-annually, commencing June 1, 2003, and each December 1 and June 1 thereafter.
The Bonds are subject to optional redemption and mandatory sinking fund redemption prior to their stated maturity under
the terms and conditions described herein.
This cover page contains certain information for quick reference only. It is not a summary of the issue. Investors must read
the entire Official Statement to obtain information essential to making an inform, ed investment decision.
The Bonds will be issued by the City of Delray Beach, Florida (the "Gty") to (i) refund, on a current basis, the Gty's
outstanding Utilities Tax Revenue Refunding and Improvement Bonds, Series 1992; (h) advance refund the City's outstanding Utilities
Tax Revenue Refunding and Improvement Bonds, Series 1994; (ih) advance refund the City's outstanding Utilities Tax Revenue Bonds,
Series 1995; (iv) refund, on a current basis, the City's Utilities Tax Revenue Bonds, Subordinate Series 1996; (v) refund, on a current
basis, the City's Utfliues Tax Revenue Bonds, Subordinate Series 1998; (vi) provide a Reserve Account Credit Facility Substitute (as
hereinafter defined); and (vfi) paythe costs of issuing the Bonds.
The Bonds are limited obligations of the City, payable solely from and secured solely by a pledge of and first priority lien
upon the Pledged Revenues (which consist of the proceeds of the City's Utih'ties Tax deposited in the Sinking Fund), in the manner
herein described. The Bonds and the interest thereon shall not be and shall not comtitute an indebtedness of the City or of the State of
Florida or any political subdivision thereof within the meaning of any Constitutional, statutory, charter or other limitation of
indebtedness, and neither the full faith and credit nor the taxing powers of the State of Florida or the City are pledged as security for the
payment of the principal of, redemption premium, if any, or interest on the Bonds and no holder or holders of any Bonds shall ever
have the right to compel the exercise of the ad valorem taxing powers of the City, or taxation in any form of any real property therein to
pay the Bonds or the interest thereon.
The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an imurance
policy to be issued concurrently with the delivery of the Bonds b)q
FINANCIAL SECURITY ASSURANCE lNG
For a discussion of the terms and provisions of such policy, including the limitations, see "MUNICIPAL BOND
INSURANCE" hereim
The Bords ~ll be g[femd xda~ as and ~C issued ard ddizered to the Urdemam, r, sublea to pnor sale, wd~dr~ or nzdificatu~ of the qfer ~th
~aton notwe and to the ~Vprtnal of legality by Gmmbog Traunb PA., West Palm Bamb, Florida, Bond Cour~d to the Ca3 ard certasn other ooMaim~.
Underrmaxr by thecr counsel Blank Rome Conmky & McC_auley LLP, Boca Raton, Florida and Phdaddphla, Permsylwazta. Publw Fwandal
Managorem, Inc, Odard~ Florida serud as fimmal adusor to the CuT in eonmmon mth the issuame of the Bor~. It ~ expemd that the Bond~ vall be
avadab!e for ddnery throu~ the fadu~ of D TC m New York, New York on or about Dmrrt~ 19, 2002
· Prehmmas~, subiect to change
Bear Steams & Co., Inc.
017005.00304/21081865v3
AMOUNTS, MATURITIES, INTEREST RATES,
PRICES OR YIELDS AND CUSIP NUMBERS
Serial Bonds
Principal Interest Price or Cusip
Amount Maturity Rate Yield Numbers
CITY OF DELRAY BEACH, FLORIDA
100 N.W. 1st Avenue
Delray Beach, Florida 33444
CITY COMMISSION
David W. Schmidt, Mayor
Jeff Peflman, Vice Mayor
Patricia Langley Archer, Vice Mayor
Jon R. Levinson, Commissioner
Aberta Perry McCarthy, Commissioner
CITY OFFICIALS
David T. Harden, City Manager
Joseph M. Safford, Finance Director
Rebecca S. O'Connor, Treasurer
Richard C, Hasko, Director of Environmental Services
Randal Krejcarek, City Engineer
Barbara Garito, City Clerk
CITY ATTORNEY
Susan A. Ruby, Esquire
BOND COUNSEL
Greenburg Taurig, P.A.
West Palm Beach, Florida
UNDERWRITER'S COUNSEL
Blank Rome Comisky & McCauley LLP
Boca Raton, Florida and Philadelphia, Pennsylvania
FINANCIAL ADVISOR
Public Financial Management, Inc.
Orlando, Florida
No dealer, broker, salesperson or other person has been authorized by the City or the Underwriter to
give any information or to make any representations with respect to the Bonds other than those contained in
the Official Statement, and, if given or made, such information or representations must not be relied upon as
having been authorized by any of the foregoing. This Official Statement is not to be construed as a contract
with the purchasers of the Bonds. 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 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, Financial Security Assurance Inc.
("Financial Security"), DTC and other sources which are believed to be reliable but it is not guaranteed as to
accuracy or completeness by, and is not to be construed as a representation of, the Underwriter. The City
makes no representation as to any information from sources other than the information provided bythe City.
The information and expressions of opinion herein are subject to change without notice, and neither the
delivery of this Official Statement nor any sale of the Bonds, under any circumstances, create any implication
that there has been no change in any information set forth herein since the date hereof or the date as of
which particular information is given, if earlier. This Official Statement is not to be construed as a contract
or agreement between the City or the Underwriter and the purchasers or owners, from time to time, of any of
the Bonds.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The following Official Statement contains a general description of the Bonds and sets forth certain
information about the City. All summaries and descriptions herein of documents, instruments and
agreements, including the Bonds, are qualified in their entirety by reference to the complete, definitive forms
of the Bonds and such documents, instruments and agreements, copies of which are on file at the office of
the Paying Agent.
THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCt-tANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN
RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACT. THE REGISTRATION OR
QUALIFICATION OF THE BONDS IN ACC/DRDANCE WITH APPLICABLE PROVISIONS OF
THE SECURITIES LAWS OF CERTAIN STATES, IF ANY, IN WHICH THE BONDS HAVE BEEN
REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR
QUALIFICATION IN CERTAIN OTHER STATES CANNOT BE REGARDED AS A
RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES
HAVE PASSED UPON THE MERITS OF THE BONDS OR THE ACCURACY OR COMPLETENESS
OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A
CRIMINAL OFFENSE.
Other than with respect to information concerning Financial Security contained under the caption
"BOND INSURANCE" and Appendix E specimen "Municipal Bond Insurance Policy" herein, none of the
information in this Official Statement has been supplied or verified by Financial Security and Financial
Security makes no representation or warranty, express or implied, as to (i) the accuracy or completeness of
such information; (ii) the validityof the Bonds; or (ih') the tax-exempt status of the interest on the Bonds.
TABLE OF CONTENTS
Page No.
INTRODUCTION .......................................................................................................................................... 1
PURPOSE OF BONDS .................................................................................................................................. 1
PLAN OF REFUNDING .............................................................................................................................. 2
Current Refunding ...................................................................................................................................... 2
Advance Refunding .................................................................................................................................... 2
Deposit to Escrow Agreement ................................................................................................................. 2
ESTIMATED SOURCES AND USES OF FUNDS ................................................................................. 3
DESCRIPTION OF THE BONDS .............................................................................................................. 4
General ......................................................................................................................................................... 4
Book-Entry Only System .......................................................................................................................... 4
Discontinuance of Book-Entry Only System ......................................................................................... 7
Redemption ................................................................................................................................................. 8
Notice of Redemption ............................................................................................................................... 8
SOURCE OF PAYMENT AND SECURITY FOR THE BONDS ....................................................... 9
General ......................................................................................................................................................... 9
Covenant Concerning Utilities Taxes ...................................................................................................... 9
Reserve Account ....................................................................................................................................... 10
Flow of Funds ........................................................................................................................................... 10
Additional Bonds ...................................................................................................................................... 12
UTILITIES TAXES ....................................................................................................................................... 12
BOND INSURANCE ................................................................................................................................... 15
Bond Insurance Policy ............................................................................................................................. 15
Financial Security Assurance Inc ............................................................................................................ 15
THE CITY ....................................................................................................................................................... 15
DEBT SERVICE REQUIREMENTS FOR THE BONDS ................................................................... 16
RATINGS ........................................................................................................................................................ 16
LEGALITY ...................................................................................................................................................... 17
TAX EXEMPTION ....................................................................................................................................... 17
UNDERWRITING ........................................................................................................................................ 18
CONTINUING DISCLOSURE UNDERTAKING .............................................................................. 19
ENFORCEABILITY OF REMEDIES ...................................................................................................... 21
LITIGATION ................................................................................................................................................. 22
GENERAL PURPOSE FINANCIAL STATEMENTS .......................................................................... 22
FINANCIAL ADVISOR .............................................................................................................................. 22
VERIFICATION OF MATHEMATICAL COMPUTATIONS ........................................................... 22
MISCELLANEOUS ....................................................................................................................................... 23
AUTHORIZATION OF AND CERTIFICATION CONCERNING OFFICIAL STATEMENT23
APPENDIX A -
APPENDIX B -
APPENDIX C-
APPENDIX D -
APPENDIX E --
APPENDIX F --
General Information Concerning the City of DelrayBeach and Palm Beach
County
General Purpose Financial Statements of the City of Delray Beach
Summary of Certain Provisions of the Bond Resolution
Form of Bond Counsel Opinion
Specimen Municipal Bond Insurance Policy
Specimen Municipal Bond Debt Service Reserve Insurance Policy
OFFICIAL STATEMENT
$16,500,000'
City of Delray Beach, Florida
Utilities Tax Revenue Refunding Bonds
Series 2002
INTRODUCTION
The purpose of this Official Statement, which includes its cover page and certain enclosed
Appendices, is to furnish information with respect to the issuance by the City of Delray Beach,
Florida (the "City') of its Utilities Tax Revenue Refunding Bonds, Series 2002 (the "Bonds") in the
aggregate principal amount of $16,500,000.
The Bonds are being issued under the authority of and in full compliance with the
Constitution and laws of the State of Florida, including Chapter 166, Florida Statutes, as amended
and supplemented, the City Charter, as amended and supplemented, and other applicable provisions
of law. The Bonds are being issued more specifically pursuant to Resolution No. 98-91, adopted by
the City Commission of the City (the "Commission") on December 3, 1991, as amended and
supplemented which authorized the issuance from time to time of Utilities Tax Revenue Bonds in
one or more series (the "Original Resolution") and Resolution No. 90-02 adopted on December 3,
2002 authorizing the issuance of the Bonds and amending certain provisions of the Original
Resolution (the "Supplemental Resolution"). The Original Resolution and the Supplemental
Resolution are referred to herein as the "Bond Resolution".
The Bonds are special, limited obligations of the City payable solely from and secured solely
by a pledge of and first priority lien upon the Utilities Tax revenues levied and collected by the City
and deposited in the Sinking Fund created and established pursuant to the terms and provisions of
the Bond Resolution (sometimes hereinafter referred to as the "Pledged Revenues"), as further
described under the heading "Utilities Taxes" herein.
Capkalized terms not otherwise defined in this Official Statement shall have the same
meanings assigned to such terms in the Summary of the Bond Resolution, which is set forth in
Appendix "C". The description of the Bonds, the Bond Resolution, and certain statutory provisions
as well as the information from various reports and statements contained in this Official Statement
are not comprehensive or definitive. All references to such documents, reports and statements are
qualified by the actual content of such documents, reports and statements, copies of which may be
obtained by contacting the Director of Finance, City of Delray Beach, Florida, 100 N.W. First
Avenue, Delray Beach, FL 33444, (561) 243-7115 or during the offering period of the Bonds from
Public Financial Management, Inc., financial advisor to the City (407) 648-2208.
PURPOSE OF BONDS
The Bonds shall be issued by the City to (~ refund, on a current basis, the City's outstanding
Utilities Tax Revenue Refunding and Improvement Bonds, Series 1992 (the "Series 1992 Bonds");
(ii) advance refund the City's outstanding Utilities Tax Revenue Refunding and Improvement
Bonds, Series 1994 (the "Series 1994 Bonds"); (iii) advance refund the City's outstanding Utilities
Preliminary, subject to change.
Tax Revenue Bonds, Series 1995 (the "Series 1995 Bonds"); (iv) refund, on a current basis, the
City's Utilities Tax Revenue Bonds, Subordinate Series 1996 (the "Series 1996 Bonds"); (v) refund,
on a current basis, the City's Utilities Tax Revenue Bonds, Subordinate Series 1998 (the "Series 1998
Bonds"); (vi) provide a Reserve Account Credit Facility Substitute in an amount equal to the Debt
Service Reserve Requirement for the Bonds; and (vit) pay certain costs incurred in connection with
the issuance of the Bonds including the premium for Bond Insurance.
PLAN OF REFUNDING
Current Refunding
A portion of the proceeds of the Bonds along with other legally available funds, will be used
to refund, on a current basis: (i) $4,810,000 aggregate principal amount of the Series 1992 Bonds;
$2,567,000 aggregate principal amount of the Series 1996 Bonds; and (ii,) $277,000 aggregate
principal amount of the Series 1998 Bonds. The current refunding is being undertaken for the
purpose of effectuating debt service cost savings to the City.
The monies required to refund the Series 1996 Bonds and the Series 1998 Bonds will be
derived from certain of the proceeds of the sale of the Bonds. On December 19, 2002', the City will
make the payment of the principal of and accrued interest on the Series 1996 Bonds and the 1998
Bonds to SunTrust Bank, South Florida, N.A. (now known as SunTrust Bank).
Advance Refunding
A portion of the proceeds of the Bonds and other available moneys of the City will be used
to advance refund: (i) $5,810,000 aggregate principal amount of the Series 1994 Bonds; and
$1,875,000 aggregate principal amount of the Series 1995 Bonds. The advance refunding is being
undertaken for the purpose of effectuating debt service cost savings to the City.
Deposit to Escrow Agreement
Certain of the proceeds of the sale of Bonds, along with other legally available funds, will be
irrevocably deposited with Wells Fargo Bank, National Association, as escrow agent for the Series
1992 Bonds, the Series 1994 Bonds and the Series 1995 Bonds (the "Escrow Agent") pursuant to an
Escrow Deposit Agreement (the "Escrow Deposit Agreement"), by and between the City and the
Escrow Agent. The Escrow Deposit Agreement requires the Escrow Agent to use certain of the
monies held in escrow thereunder to purchase direct obligations of the United States of America
(such direct obligations are collectively referred to as "Government Obligations"). The
Government Obligations will mature at such times in such amounts so that sufficient monies will be
available from such maturing principal, together with interest income from the Government
Obligations, and cash balances, if any, to make scheduled debt service payments on the Series 1994
Bonds and the Series 1995 Bonds and to redeem the Series 1992 Bonds, the Series 1994 Bonds and
the Series 1995 Bonds at the respective first optional redemption dates. See "VERIFICATION OF
MATHEMATICAL COMPUTATIONS", herein.
Preliminary, subject to change.
2
ESTIMATED SOURCES AND USES OF FUNDS
The proceeds to be received from the sale of the Bonds are expected to be applied as
follows:
Sources of Funds
Principal Amount of Bonds
Less Original Issue Discount
Accrued Interest
Other Legally Available Funds
Total Sources of Funds
Uses of Funds
Deposit to Interest Account (1)
Deposit to Escrow Fund
Payment to SunTrust Bank for the Series
and the Series 1998 Bonds
Underwriter's Discount
Costs of Issuance (2)
1996 Bonds
Total Uses of Funds
O)
(~)
Represents Accrued Interest.
Includes the premium for the Municipal Bond Insurance Policy [and the premium for the Reserve Account
Credit Facility Substitute.]
DESCRIPTION OF THE BONDS
The Bonds shall be issued in fully registered form in denominations of $5,000 and integral
multiples thereof and shall be dated December 1, 2002, shall bear interest (payable semi-ann-ally on
June 1 and December 1 of each year commencing June 1, 2003) at the rates per annum and shall
mature on the dates and in the amounts, all as set forth on the inside cover page of this Official
Statement. Wells Fargo Bank, National Association having a designated corporate trust office in
Coral Springs, Florida will serve as bond registrar (the "Bond Registrar") and paying agent (the
"Paying Agent") for the Bonds. The Bonds will be registered in the name of Cede & Co., as
nominee of the Depository Trust Company, New York, New York ("DTC').
So long as the Bonds shall be in book-entry form, the principal of and interest on such
Bonds is payable by check or draft mailed or wire transfer to Cede & CO., as nominee of DTC and
registered owners thereof for redistribution by DTC to the DTC Participants (as herein defined) and
in turn to Beneficial Owners (as herein defined) as described below under "Book-Entry Only
System". If the book-entry system should be discontinued, certificated Bonds will be issued to the
Beneficial Owners, who will then become the registered owners thereof. See "Discontinuance of
Book-Entry Only System" below.
Book-Entry Only System
The Depository Trust Company ("DTC'), New York, New York, will act as securities
deposkory for the Bonds under a book-entry system with no physical distribution of the Bonds
made to the public. The Bonds will initially be issued as fully-registered securities registered in the
name of Cede & CO. (DTC's partnership nominee), or such other name as may be requested by an
authorized representative of DTC. One fully-registered Bond certificate will be issued for the
aggregate principal amount of each maturity of the Bonds and will be deposked with DTC.
DTC, the world's largest deposkory, is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the
New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section I?A of the Securities Exchange Act of 1934, as amended. DTC holds and provides asset
servicing for over 2 million issues of U.S. and non-U.S, equity issues, corporate and 'municipal debt
,ssues, and money market instruments from over 85 countries that DTC's participants ("Direct
Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct
Participants of securities transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Direct Participants' accounts, thereby eliminating 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 Deposkory Trust & Clearing Corporation
("DTCC'). DTCC, in turn, is owned by a number of its Direct Participants and members of the
National Securities Gearing Corporation, Government Securities Clearing Corporation, MBS
Clearing Corporation, and Emerging Markets Cleating 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
4
system is also available to others such as both U.S. and non-U.S, securities brokers and dealers,
banks and trust companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and
its Direct and Indirect Participants are on file with the Securities and Exchange Commission. More
information about DTC can be found at www. dtcc.com.
Purchases of the Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credk for the Bonds on DTC's records. The ownership interest of
each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of
their purchase, but Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Bonds are to be accomplished by entries made on the books of Direct
and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Bonds, except in the event that use of the
book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposk of Bonds with DTC and their
registration in the name of Cede & Co., or such other DTC nominee, does not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's
records reflect only the identity of the Direct Participants to whose accounts such Bonds are
credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may
wish ,to take certain steps to augment transmission to them of notices of significant events with
respect to the Bonds, such as redemptions, tenders, defaults and proposed amendments to the Bond
documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee
holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners,
or in the alternative, Beneficial Owners may wish to provide their names and addresses to the Paying
Agent and request that copies of the notices be provided directly to them.
Redemption notices shall be sent to DTC If less than all of the Bonds within an issue are
being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with
respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's
Procedures. Under its usual procedures, DTC mails an Omnibus Proxyto the Paying Agent as soon
as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the Bonds are credked on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the 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 credk Direct Participants' accounts upon DTC's receipt of funds and corresponding
detail information from the City or Paying Agent, on the payable date in accordance with their
respective holdings shown on DTC's records. Payments by Direct and Indirect Participants to
Beneficial Owners will be governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Direct and Indirect Participants and not of DTC (or its nominee),
the City or the Paying Agent subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal, premium, if any, and interest to Cede & Co. (or such other
nominee as may be requested by an authorized represemative of DTQ is the responsibility of the
Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility of
DTC, and disbursemem of such payments to the Beneficial Owners shall be the responsibility of
Direct and Indirect Participants.
DTC may discontinue providing its services as securities deposkory with respect to the
Bonds at any time by giving reasonable notice to the City or the Paying Agent. Under such
circumstances, in the event that a successor securities deposkory is not obtained, Bond certificates
are required to be prepared, executed 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, either a successor securities deposkory will be
selected by the City or Bond certificates will be prepared, executed and delivered.
In the event of insolvency of DTC, if DTC has insufficient securities in its custody (e.g., due
to theft or loss) to satisfy the claims of its Direct Participants with respect to deposited securities
and is unable by application of (i) cash deposits and securities pledged to DTC to protect DTC
against losses and liabilities, (h) the proceeds of insurance maintained by DTC and/or its Direct
Participants or Indirect Participants, or (iii) other resources, to obtain securities necessary to
eliminate the insufficiency, no assurances can be given that Direct Participants will be able to obtain
all of their deposited securities.
THE CITY, THE BOND REGISTRAR AND THE PAYING AGENT WILL NOT
HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS,
BENEFICIAL OWNERS OR OTHER NOMINEES OF SUCH BENEFICIAL OWNERS
FOR (A) SENDING TRANSACTION STATEMENTS; (B) MAINTAINING,
SUPERVISING OR REVIEWING THE ACCURACY OF ANY RECORDS
MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR OTHER NOMINEES OF
SUCH BENEFICIAL OWNERS; (C) PAYMENT OR THE TIMELINESS OF
PAYMENT BY DTC TO ANY DTC PARTICIPANT, OR BY ANY DTC PARTICIPANT
OR OTHER NOMINEES OF BENEFICIAL OWNERS TO ANY BENEFICIAL
OWNER, OF ANY AMOUNT DUE IN RESPECT OF THE PRINCIPAL OF OR
REDEMPTION PREMIUM, IF ANY, OR INTEREST ON BOOK-ENTRY BONDS;
(D) DELIVERY OR TIMELY DELIVERY BY DTC TO ANY DTC PARTICIPANT, OR
BY ANY DTC PARTICIPANT OR OTHER NOMINEES OF BENEFICIAL OWNERS
TO ANY BENEFICIAL OWNERS, OF ANY NOTICE (INCLUDING NOTICE OF
REDEMPTION) OR OTHER COMMUNICATION WHICH IS REQUIRED OR
PERMITTED UNDER THE TERMS OF THE BOND RESOLUTION TO BE GIVEN
6
TO HOLDERS OR OWNERS OF BOOK-ENTRY BONDS; (E) THE SELECTION OF
THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY
PARTIAL REDEMPTION OF BOOK-ENTRY BONDS, OR (F) ANY ACTION TAKEN
BY DTC OR ITS NOMINEE AS THE REGISTERED OWNER OF THE BOOK-
ENTRY BONDS.
The information in this section conceming DTC and DTC's book-entry system has been
obtained from DTC and other sources that the City believes to be reliable, but the City takes no
responsibility for the accuracy thereof.
Discontinuance of Book-Entry Only System
General. In the event that the book-entry system is discontinued and the Beneficial Owners
become the registered owners of the Bonds, interest on each Bond will be paid by check or draft of
the Paying Agent mailed to the person in whose name the Bond is registered, on the fifteenth (15~)
day of the month next preceding each interest payment date (the "Record Date"), provided,
however at the request of any holder of at least $1,000,000 aggregate principal amount of a Bond,
interest may be payable by wire transfer to the bank account number on file with the Paying Agent
on or before the Record Date. Principal of, and redemption premium, if any; on the Bonds will be
payable upon presentation and surrender of the Bonds at the designated corporate trust office of the
Paying Agent.
Negotiability, Registration and Cancellation. At the option of any registered owner of
the Bonds and upon surrender at the designated corporate trust office of the Bond Registrar with a
written instrument of transfer satisfactory to the Bond Registrar duly executed by the registered
owner or his or her duly authorized attorney, the Bonds may be exchanged for Bonds of the same
maturity of any authorized denominations.
The Bond Registrar shall keep books for the registration of Bonds and for the
registration of transfers of Bonds as provided in the Resolution. The Bonds shall be transferable by
the registered owner thereof in person or by his attorney duly authorized in writing only upon the
books of the City kept by the Bond Registrar and only upon surrender thereof together with a
written instrument of transfer satisfactory to the Bond Registrar duly executed by the registered
owner or his or her authorized attorney. Upon the transfer of any such Bonds, the City shall issue in
the name of the transferee a new Bond or Bonds.
The City, the Paying Agent and the Bond Registrar shall deem and treat the person
whose name any Bond shall be registered upon the books kept bythe Bond Registrar as the absolute
owner of such bond, whether such Bond shall be overdue or not, for the purpose of receiving
payment of, or on account of, the principal of and interest on such Bond as the same becomes due
and for all other purposes. All such payments so made to any such registered owner or upon his
order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent
of the sum or sums so paid, and neither the City, the Paying Agent, nor the Bond Registrar shall be
affected by any notice to the contrary.
Transfer and Exchange. In all cases in which the privilege of exchanging Bonds or
transferring Bonds is exercised, the City shall execute and the Bond Registrar shall authenticate and
deliver Bonds in accordance with the provision of the Resolution. All Bonds surrendered in any
7
such exchanges or transfers shall forthwith be delivered to the Bond Registrar and cancelled by the
Bond Registrar in the manner provided by the Resolution. There shall be no charge for any such
exchange or transfer of Bonds, but the City or the Bond Registrar may require payment of a sum
sufficient to pay tax, fee or other governmental charges required to be paid with respect to such
exchange or transfer. Neither the City nor the Bond Registrar shall be required (a) to transfer or
exchange Bonds for a period from the Record Date to the next ensuing payment date on such
Bonds or fifteen (15) days next preceding any selection of Bonds to be redeemed or thereafter until
after the mailing of any notice of redemption; or (b) to transfer or exchange any Bonds called for
redemption.
Redemption
Optional Redemption. The Bonds maturing in the years __. through __, inclusive,
shall not be subject to redemption prior to their stated dates of maturity. The Bonds maturing on
, __, are subject to redemption prior to their stated maturity at the option of the City,
from any funds legally available for such purpose, in part in any order of maturity selected by the
City, and by lot within a maturity if less than an entire maturity is to be redeemed, on 1,
20__, or at any time thereafter, or as a whole on ,1, 20__, or at any time thereafter, at the
redemption prices (expressed as percentages of the principal amount of such Bonds to be redeemed)
as set forth below if redeemed in the following redemption periods, plus accrued interest to the
redemption date:
Redemption Periods (Both Dates Inclusive)
Redemption Price
[, ,200_ through ,200_
[ ,200_ through ,200_
[ ,200_ and thereafter
Mandatory Sinking Fund Redemption of the Bonds. The Bonds maturing on __,
20__ are subject to mandatory sinking fund redemption prior to maturity in part, by lot, on each
__ 1 in the years and amounts set forth below at a redemption price equal to 100% of the
principal amount of such Bonds being redeemed plus accrued interest thereon to the date fixed for
redemption:
Principal
Year Amount
Notice of Redemption
Notice of redemption of the Bonds shall be mailed, postage prepaid, by the Bond Registrar
not less than thirty (30) days and not more than sixty (60) days, before the date fixed for redemption
8
to all registered owners of the Bonds (or any portions thereot) to be redeemed, to their addresses, as
they appear fifteen (15) days prior to the date such notice is mailed on the registration books for the
Bonds or to such other address as shall be furnished to the Bond Registrar by such Bondholder.
The Bond Registrar shall also mail (by certified mail, return receipt requested) a copy of such notice
for receipt not less than the second (2"~) business day prior to the date the notice of redemption is
mailed to the Bondholders to: DTC, Midwest Securities Trust Company and the Philadelphia
Depository Trust Company. Failure of any registered owner of Bonds that are to be redeemed to
receive such notice of redemption, or any defect in such notice, shall not affect the validity of the
proceedings for such redemption of any other Bonds for which proper notice has been given.
When notice of redemption is given, the Bonds called for redemption will become due and
payable on the redemption date at the redemption price stated in the notice, interest on any Bond
duly called for redemption will ceased to accrue after the date fixed for redemption if funds
sufficient for payment of the redemption price has been deposited with the Paying Agent.
SOURCE OF PAYMENT AND SECURITY FOR THE BONDS
The principal of, redemption premium, if any, and interest on the Bonds are payable from
the Pledged Revenues and secured by a first lien on and pledge of the Pledged Revenues, which are
the proceeds of the Utilities Tax deposited in the Sinking Fund created and established under the
Bond Resolution.
The Bonds shall not be and shall not constitute an indebtedness of the City or the
State of Florida or any political subdivision thereof within the meaning of any Constitution,
statutory, charter or other limitation of indebtedness, and neither the full faith and credit nor
the taxing power of the City, the State of Florida, or any political subdivision thereof, are
pledged or obligated as security for the payment of the principal of or interest on any Bond.
The holders of the Bonds shall have no right to compel the exercise of the ad valorem taxing
power of the City or taxation in any form of real property therein to pay the Bonds or the
interest thereon.
Covenant Conceming Utilities Taxes
The City covenants under the Bond Resolution that, so long as any of the Bonds or any
other bonds issued on parity therewith under the Bond Resolution remain Outstanding, it shall take
all lawful action necessary or required to continue to entitle the City to receive the Utilities Tax
proceeds and will not take any action which would impair or adversely affect its receipt of such
proceeds. The City further covenants under the Bond Resolution that it shall not repeal the Utilities
Tax Ordinance. To the extent necessary to meet its obligations under the provisions of the Bond
Resolution, the City shall increase the rate of such Utilities Tax up to the highest rate permitted by
law and shall enact every substitute or supplemental ordinance that may for any reason become
legally necessary, or necessary to comply with the provisions of the Bond Resolution. The City is
required under the Bond Resolution to keep proper books and records regarding the collection and
uses made of the proceeds of the Utilities Tax, and that all records with respect thereto shall be
available for inspection at all reasonable times by the holders of any of the Bonds. For a more
detailed description of the requirements concerning the City's covenant as to the Utilities Taxes,
9
please refer to the Summary of Certain Provisions of the Bond Resolution contained in Appendix C
attached to this Official Statement.
Reserve Account
The Bond Resolution provides for the establishment and maintenance of a Debt Service
Reserve Account for each series of Bonds issued pursuant to the terms of the Bond Resolution in an
amount equal to the Debt Service Reserve Requirement for such series of Bonds. Unless provided
otherwise by resolution of the City, each such separate Debt Service Reserve Account shall
constitute security only for the series of Bonds to which it rehtes. The City has established a Debt
Service Reserve Account for the Bonds.
The Bond Resolution provides that the Debt Service Reserve Requirement may be satisfied,
in whole or in part, by a Reserve Account Credit Facility Substitute. A Reserve Account Credit
Facility Substitute may consist of a surety bond, an unconditional direct pay letter of credit issued by
any bank, a reserve account line of credit or a municipal bond insurance policy, and must be issued
by such institutions whose credk enhancement facilities have resulted in a rating on similar
obligations in the highest credk rating category by any Rating Agency and, in the case where such
Reserve Account Credk Facility Substitute is provided by an insurance company, such insurer holds
the highest policyholder rating accorded to insurers by any Rating Agency or Agencies then rating
the Bonds and by A. M. Best & Company or any comparable service. For a general description of
the restrictions and requirements relating to such Reserve Account Credit Facility Substitutes, please
refer to the Summary of Certain Provisions of the Bond Resolution contained in Appendix C
hereto.
The Debt Service Reserve Requirement for the Bonds shall be in an amount equal to the
lesser of (a) the maximum amount of the principal of and interest on the Bonds becoming due in
any succeeding fiscal year, (b) one hundred twenty-five percent (125%) of the average annual
amount of principal of and interest on the Bonds becoming due in any succeeding fiscal year, or (c)
ten percent (10%) of the "net proceeds" (as such-term is defined under the Internal Revenue Code
of 1986, as amended ("Code") for such purpose) of the Bonds. The Debt Service Reserve
Requirement with respect to the Bonds will be satisfied in full at the time of issuance of the Bonds.
The Debt Service Reserve Requirement for any other series of Bonds shall be determined by
subsequent proceedings of the City.
The Debt Service Reserve Account shall be funded, with respect to the Bonds, with a
Reserve Account Credit Facility Substitute in the form of a Municipal Bond Debt Service Reserve
Insurance Policy ("Reserve Account Policy") to be issued by Financial Security Assurance, Inc.,
which together with the moneys already on deposit therein, shall equal the Debt Service Reserve
Requirement for the Bonds. The form of the Reserve Account Policy is as set forth in Appendix
"F" to this Official Statement. Information about Financial Security Assurance Inc. is hereinafter
set forth on page 15 under the heading "BOND INSURANCE--Financial Security Assurance
Inc.".
Flow of Funds
A brief summary of the deposits required to be made to the various funds and accounts
established under the Bond Resolution is provided below. For a more detailed description of such
10
deposits, reference should be made to the Summary of Certain Provisions of the Bond Resolution
contained in Appendix C attached hereto.
All or a portion of the Utilities Tax proceeds collected by the Gty each month will be
deposked in the Sinking Fund in the following manner and amounts (such Utilities Tax proceeds
deposited in the Sinking Fund are referred to herein as the "Pledged Revenues"):
On the fifteenth (15th) day of each month, beginning with the fifteenth (15~) day of
the first full calendar month following the date of issuance of any series of bonds, to
the credk of the Interest Account, an amount equal to the sum of one-sixth (1/6th)
of the interest becoming due on the bonds on the next succeeding Interest Payment
Date;
0)
On the fifteenth (15~) day of each month in each year, to the credit of the Principal
Account, an amount equal to one-twelfth (1/12th) of the principal of all bonds,
payable by their respective stated terms within the next succeeding twelve (12)
months;
On the fifteenth (15th) day of each month in each year, to the credit of the Bond
Redemption Account, one-twelfth (1/12th) of the amount required for the payment
of any Term Bonds required to be paid on the next succeeding installment payment
date;
To the extent not funded from the proceeds of bonds or covered by a Reserve
Account Credk Facility Substitute, to the full extent necessary, for deposit into each
of the Debt Service Reserve Accounts on the fifteenth (15th) day of each month in
each year beginning with the fifteenth (15th) day of the first full calendar month
following the date of issuance of any series of bonds, such sums as shall be sufficient
to payan amount equal to one-twelfth (1/12th) of twenty percent (20%) of the Debt
Service Reserve Account Requirement applicable to each series of bonds;
To the repayment of any obligations owed to the provider(s) of a Reserve Account
Credk Facility Substitute (pro rata, if necessary) and then to the payment of any
subordinated indebtedness issued by the City pursuant to the Bond Resolution; and
The balance, if any, remaining in the Sinking Fund after making the deposits
described in clauses (a) through (e) above and after all deficiencies thereof have been
remedied, may be released by the City from the lien of the Bond Resolution and used
for any lawful municipal purpose.
If the amount deposited in any month to the credk of any of the accounts mentioned in (a)
through (d), inclusive, above shall be less than the amount required to be deposited therein under
the Bond Resolution, the requirement therefor shall nevertheless be cumulative and the amount of
any deficiency in any month shall be added to the amount otherwise required to be deposked in
each month thereafter until such time as all such deficiencies have been made up. Any interest
earned on the amounts held to the credk of the Principal Account, Bond Redemption Account and
Debt Service Reserve Accounts shall be transferred to the credit of the Interest Account and
credited against the amount required to be deposited therein as described in clause (a) above.
11
Notwithstanding the foregoing provisions of the Bond Resolution described in chuses (a)
through (d) above, if there shall be to the credk of the Interest Account, Principal Account or Bond
Redemption Account the amount required to be on deposit in such accounts on the next succeeding
Interest Payment Date, principal payment date, or due date of any term bonds called for
redemption, respectively, no further deposit to any such account, as the case may be, shall then be
required on account of the requirements described in said chuses (a) through (c) above.
Additional Bonds
The City is authorized under the Bond Resolution to issue pari passu additional bonds,
payable and secured equally and ratably with the Bonds, for any lawful purposes. Each such series
of pari passu addkional bonds shall be on parity with and shall be entitled to the same benefits and
security under the Bond Resolution as the Bonds (except as to any Debt Service Reserve Account
established solely for any one or more series of Bonds); provided, however, that in addition to
compliance with certain other conditions as set forth under the Bond Resolution, the following
conditions are complied with:
(4
The City must be current in all deposits required to be made into the various funds
and accounts established under the Bond Resolution and all payments required to
have been theretofore deposited or made by the City under the provisions of the
Bond Resolution and any supplemental resolution hereafter adopted for the issuance
of additional bonds. The City must also comply with the covenants and provisions
of the Bond Resolution and any resolution supplemental thereto adopted for the
purpose of the issuance of such additional bonds.
The Utilities Tax proceeds collected by the City in any consecutive twelve (12)
month period during the eighteen (18) month period immediately preceding the
month in which the pari passu additional bonds are being issued, as certified by the
City's Finance Director, shall be equal to at least one hundred twenty-five per
centum (125%) of the Maximum Annual Debt Service Requirements on the bonds
then outstanding, any pari passu additional bonds then outstanding and the pari
passu additional bonds then proposed to be issued.
In the event any pari passu additional bonds are issued for the purpose of refunding
the Bonds, or any other pari passu additional bonds then outstanding, the provisions
of the Resolution described in the foregoing paragraph shall not apply, provided that
the issuance of such pari passu addkional bonds shall resuk in a reduction in, or shall
not increase, the total annual debt service payments over the life of the series of
Bonds being refunded.
UTILITIES TAXES
Section 166.231, Florida Statutes, as amended, authorizes any Florida municipality to levy a
tax on the purchase within such municipality of electricity, metered natural gas, liquefied petroleum
gas either metered or bottled, manufactured gas either metered or bottled and water sen4ce.
Currently, the tax on the foregoing services may not exceed ten percent (10%) of the payments
received by the sellers of such utilities service from purchasers, except in the case of fuel oil for
which the maximum tax is four (4) cents per gallon. However, for municipalities levying less than
12
the maximum rate of ten percent (10%), the maximum tax on fuel oil shall bear the same proportion
to four (4) cents per gallon which the tax rate actually levied for the utilities with a maximum rate of
ten percent (10%) bears to ten percent (10%). Utilities taxes must be collected by the seller of the
utilities service from purchasers at the time of sale and remitted to the taxing municipality as
prescribed by ordinance of the municipality.
The purchase of natural gas or fuel oil by a public or private utility for resale or for use as a
fuel in the generation of electricity, or the purchase of fuel oil or kerosene for use as an aircraft
engine fuel or propellant or for use in internal combustion engines is exempt from the levy of the
utilities tax.
A municipality may exempt from the utilities tax the purchase of metered or bottled gas
(natural liquefied petroleum gas or manufactured) or fuel oil for agricultural purposes.
A municipality may exempt from the utilities tax any amount up tO the first 500 kilowatts
hours of electricity purchased per month for residential use. A municipality may also exempt
purchases by the United States Government, the State of Florida, or other public bodies from the
levy of such tax as well as certain nonprofk corporations, cooperative associations and any
recognized church in Florida, if used exclusively for church purposes. In addkion, a municipality
may exempt not less than fifty percent (50%) of the utilities tax imposed on purchasers of electrical
energy for businesses located within an emerprise zone. All businesses located within an enterprise
zone which have satisfied the requirements of Section 166.231(8), Florida Statutes prior to
December 31, 2005 shall continue to be exempt from the utilities tax (subject to the limitations set
forth therein) from and after that date. However, from and after January 2006, a municipality may
not exempt any utilities tax imposed on purchasers of electrical energy for businesses located within
an enterprise zone which have not satisfied the requirements of Section 166.231(8) prior to
December 31, 2005.
A municipality may exempt from the utilities tax any amount up to, and including, the total
amount of electricity, metered natural gas, liquefied petroleum gas either metered or bottled, or
manufactured gas either metered or bottled purchased per month, or reduce the rate of taxation on
the purchase of such electricity or gas when purchased by an industrial consumer which uses the
electricity or gas directly in industrial manufacturing, processing, compounding or a production
process, at a fixed location in such municipality, of items of tangible personal property for sale.
As used in the Bond Resolution and herein, the term "Utilities Tax'" means the taxes
imposed and levied by the City as authorized by Section 166.231, Florida Statutes. The City has
covenanted in the Bond Resolution that it will take all action permitted by law to collect the Utilities
Tax proceeds in the amount necessary to meet the requirements under the Bond Resolution.
Chapter 50 of Title V entitled "Public Works" of the City's Code of Ordinances, as
amended, contains the terms of the City's levyof its Utilities Tax (the "Utility Tax Ordinance"). The
City currently levies the Utility Tax at the rate of 9.7% on sales of electricity and 8.7% on the sale of
metered or bottled gas (natural liquefied petroleum gas or manufactured). The City also levies a tax
on the sale of fuel oil. The Utility Tax Ordinance states that because the City imposes a tax which is
less than the maximum rate of ten percent (10%) allowable by Florida Statute Section 166.231(1),
the maximum tax on fuel oil shall bear the same proportion to $.04 per gallon which the tax rate of
8.7% levied as described above on the sale of metered or bottled gas bears to 10%.
13
Residential dwelling units are exempted from the electricity portion of the Utih'ty Tax for the
first ninety (90) kilowatt hours per month, then such residence will be subject to the tax on the sale
of electricity. Also, the Utilities Tax is not charged with respect to any fuel adjustment charge on the
bill.
The purchase of natural gas or fuel oil by a public or private utility, either for resale or for
use as fuel in the generation of electricity, or the purchase of fuel oil or kerosene for use as an
aircraft engine fuel or propellant or for use in internal combustion engines is exempt from the City's
Utilities Tax. Also exempted from the City's Utilities Tax are: Federal, the State of Florida and local
governments and agencies thereof and any recognized church if used exclusively for church
purposes. The City Commission is solely responsible for setting or revising the Utilities Tax k levies,
which it accomplishes through amendments and supplements to the Utih'ties Tax Ordinance.
The following table sets forth information about Utilities Tax proceeds collected by the City
in each of the City's last four (4) full fiscal years, and the anticipated Utilities Tax proceeds budgeted
for fiscal year 2003 as compared with debt service requirements. This table does not include
proceeds of the tax on telecommunications, the legal authority for which expired June 1, 2001,
received in the years 199%2001. Nor does the table include proceeds of the Communication Service
Tax ("CST") enacted effective October 1, 2001, received in 2002, because such proceeds are not
pledged to the Bonds.
City of Delray Beach
Utilities Tax Collections/Debt Service Coverage
Year Ended September 30
1999 2000 2001 2002 2003
Actual Actual Actual Actual Budget
Electric $3,776,866 $3,623,094 $3,659,792 $3,796,778 3,700,000
Gas & Fuel 113,674 125,919 .!48,405 144,234 144,000
Total $3.890.54~0 $3.749.01~3 $3.808.19~7 $3.941.01~2 $3:844:000
Debt Service (2)
Annual 2,403,600 2,399,041 2,407,224 2,393,900 2,059,977
lVlaySmum 2,407,224 2,407,224 2,407,224 2,401,171 2,300,000
Debt Service Coverage
Annual 1.62 1.56 1.58 1.65 1.87
Maximum 1.62 1.56 1.58 1.64 1.67
(1)
(1)
Source: Comprehensive Annual Financial Reports of the C~ty for Fiscal Years 1999 through 2001; Unaudited financial
report for Fiscal Year 2002; budget for Fiscal Year 2003.
(1) Estimated Debt Service on the Bonds offered by this Official Statement. Until the Bonds are priced, these
amounts are preliminary and subject to change.
(2) The debt service payments for the years 1999 through 2002 include interest on the Series 1996 Bonds and
Series 1998 Bonds which have a lien upon the Utilities Tax subordinate to the lien in favor of the Series 1992
Bonds, the Series 1994 Bonds and the Series 1995 Bonds.
14
BOND INSURANCE
Bond Insurance Policy
Concurrently with the issuance of the Bonds, Financial Security Assurance Inc. ("Financial
Security") will issue its Municipal Bond Insurance Policy for the Bonds (the "Policy"). The Policy
guarantees the scheduled payment of principal of and interest on the Bonds when due as set forth in
the form of the Policy included as in Appendix E to this Official Statement.
The Policy is not covered by any insurance security or guaranty fund established under New
York, California, Connecticut or Florida insurance law.
Financial Security Assurance Inc.
Financial Security is a New York domiciled insurance company and a wholly owned
subsidiary of Financial Security Assurance Holdings Ltd. ("Holdings"). Holdings is an indirect
subsidiary of Dexia, S.A., a publicly held Belgian corporation. Dexia, S.A., through its bank
subsidiaries, is primarily engaged in the business of public finance in France, Belgium and other
European countries. No shareholder of Holdings or Financhl Security is liable for the obligations
of Financial Security.
At September 30, 2002 Financial Security's total policyholders' surplus and contingency
reserves were approximately $1,728,433,000 and its total unearned premium reserve was
approximately $972,390,000 in accordance with statutory accounting principles. At September 30,
2002, Financial Security's total shareholder's equity was approximately $1,928,564,000 and its total
net unearned premium reserve was approximately $814,684,000 in accordance with generally
accepted accounting principles.
The financial statements included as exhibits to the annual and quarterly repons filed by
Holdings with the Securities and Exchange Commission are hereby incorporated herein by
reference. Also incorporated herein by reference are any such financhl statements so filed from the
date of this Official Statement until the termination of the offering of the Bonds. Copies of
materials incorporated by reference will be provided upon request to Financial Security Assurance
Inc.: 350 Park Avenue, New York, New York 10022, Attention: Communications Department
(telephone (212) 826-0100).
The Policy does not protect investors against changes in market value of the Bonds, which
market value may be impaired as a result of changes in prevailing interest rates, changes in applicable
ratings or other causes. Financial Security makes no representation regarding the Bonds or the
advisability of investing in the Bonds. Financial Security makes no representation regarding the
Official Statement, nor has it participated in the preparation thereof, except that Financial Security
has provided to the Issuer the information presented under this caption for inclusion in the Official
Statement.
THE CITY
The City is a municipal corporation organized and existing under the hws of the State of
Florida. The City, located on Florida's Gold Coast, is the third largest city in Palm Beach County
with a population of 61,527 (estimated as of 2002) and 14.9 square miles within its municipal
boundaries, lying approximately eighteen miles south of West Palm Beach and approximately fifty
miles north of Miami along the-Atlantic Ocean, the City has been able to participate in the growth
of South Florida and benefit from the economic growth of this area in general.
The City is governed by a City Commission and operates under a Commission Manager
form of government. The City Commission appoints a full-time City Manager, and a full-time City
Attorney. The City employs a full-time Director of Finance, who has the responsibility for all
intemal auditing and financial record keeping operations of the City.
The City is primarily a resort and residential community of well-kept homes and recem
developments of condominium apartments. The City has many recreational facilities including
tennis, golf, boating, fishing, water sports, and lawn bowling. During the winter months, the hotels,
motels, and restaurants and winter residents. The City's famous mile-long public beach is an
attraction for residents and tourists. The Intracoastal Waterway provides boat dockage, and the
Boynton inlet gives access to the Atlantic Ocean for sak water drift fishing Lake Ida, within the City,
also provides fishing and water skiing.
Further information on the City is contained in Appendix A - "General Information
Concerning the City of Delray Beach and Palm Beach County".
DEBT SERVICE REQUIREMENTS FOR THE BONDS
Set forth below are the total debt service requirements for the Bonds.
Bond Year Ending
September 30 Principal Interest Debt Service
Total $ $
RATINGS
It is expected that Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's, a
division of McGraw-Hill Companies ("S&P') will give the Bonds ratings of "Aaa" and "AAA",
respectively, on the understanding that the standard policy of municipal bond insurance insuring the
total payment of the principal of an interest on the Bonds will be issued by Financial Security upon
the issuance of the Bonds. Moodys and S&P have assigned the Bonds underlying ratings of "A2"
and "A", respectively.
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Such ratings reflect the view only of the aforesaid credit rating organizations, and an
explanation of the significance of these ratings may be obtained only from such, rating
organizations. There is no assurance that such ratings will continue for any given period of time, or
that such ratings may not be lowered or withdrawn entirely by the respective rating agency if, in its
judgment, circumstances so warrant. Any such downward change or withdrawal of either or both
such ratings may have an adverse effect on the market price of the Bonds.
LEGALITY
Certain legal matters in connection with the issuance of the Bonds are subject to the
approval of Greenberg Traurig, P.A., West Palm Beach, Florida, Bond Counsel, whose Bond
Counsel opinion will be available at the time of delivery of the Bonds. The proposed form of such
opinion of Bond counsel is attached to this Official Statement as Exhibit D certain legal matters will
be passed upon for the City by its City Attorney, Susan A. Ruby, Esquire, and for the Underwriter
by Blank Rome Comisky & McCauley LLP, Boca Raton, Florida and Philadelphia, Pennsylvania.
TAX EXEMPTION
The Intemal Revenue code of 1986 (the ~code") imposes certain requirements that must be
met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain
excluded from gross income for federal income tax purposes. Noncompliance with such
requirements could cause the interest on the Bonds to be included in gross income for federal
income tax purposes retroactive to the date of issue of the Bonds. The City has covenanted in the
Bond Resolution to comply with each requirement of the Code necessary to maintain the exclusion
of the interest on the Bonds from gross income for federal income tax purposes pursuant to Section
103(a) of the Code.
In the opinion of Bond Counsel, under existing hw, and assuming continuing compliance
with the aforementioned covenant, interest on the Bonds is excluded from gross income for federal
income tax purposes. Bond Counsel is also of the opinion that the Bonds are not "specified private
activity bonds" within the meaning of Section 57(a)(5) of the Code and, therefore, interest on the
Bonds will not be treated as a preference item for purposes of computing the alternative minimum
tax imposed by Section 55 of the Code. Interest on the Bonds owned by corporations will,
however, be taken into account in determining the akemative minimum tax imposed by Section 55
of the Code on seventy-five percent (75%) of the excess of adjusted current earnings, over
akemative minimum taxable income (determined without regard to this adjustment and the
akemative tax net operating loss deduction).
Bond Counsel is also of the opinion that the Bonds and interest thereon are exempt from
taxation under the existing laws of the State of Florida, except as to estate taxes and taxes imposed
by Chapter 220, Florida Statutes, on interest, income and profits on debt obligations owned by
corporations, banks and savings associations.
Bond Counsel is further of the opinion that the difference between the principal amount of
the Bonds maturing on through , and on ,
(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 constitutes
17
original issue discount which is excluded from gross income for federal income tax purposes to the
same extent as interest on the Bonds. Further, such original issue discount accrues actuarially on a
constant interest rate basis over the term of each Discount Bond and the basis of each Discount
Bond acquired at such initial offering price by an initial purchaser thereof will be increased by the
amount of such accrued original issue discount. The accrual of original issue discount may be taken
into account as an increase in the amount of tax-exempt income for purposes of determining
various other tax consequences of owning the Discount Bonds, even though there will not be a
corresponding cash payment. Owners of the Discount Bonds are advised that they should consult
with their own advisors with respect to the state and local tax consequences of owning such
Discount Bonds.
Bond Counsel has not undertaken to advise in the future whether any events after the date
of issuance of the Bonds may affect the tax status of interest on the Bonds. No assurance can be
given that future legislation, or amendments to the Code, if enacted into law, will not contain
provisions which could directly or indirectly reduce the benefit of the exclusion of the interest on
the Bonds from gross income for federal income tax purposes.
Furthermore, Bond Counsel expresses no opinion as to any federal, State or local tax law
consequences with respect to the Bonds, or the interest thereon, if any action is taken with respect
to the Bonds or the proceeds thereof upon the advice or approval of bond counsel other than Bond
Counsel.
Although Bond Counsel has rendered an opinion that interest on the Bonds is excluded
from gross income for federal income tax purposes, a Bondholder's federal, State or local tax
liability may otherwise be affected by the ownership or disposition of the Bonds. The nature and
extent of these other tax consequences will depend upon the Bondholder's other items of income
or deduction. Without limiting the generality of the foregoing, prospective purchasers of the Bonds
should be aware that (i) Section 265 of the Code denies a deduction for interest on indebtedness
incurred or continued to purchase or carry the Bonds or, in the case of a financial institution, that
portion of a holder's interest expense allocated to interest on the Bonds; (h') with respect to
insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i)
reduces the deduction for loss reserves by 15 percent (15%) of the sum of certain items; including
interest on the Bonds, (iii) interest on the 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 investment income, including interest on the 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 corporation is passive investment income, and (v)
Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement
benefits to take into account, in determining the taxability of such benefits, receipts or accruals of
interest on the Bonds. Bond Counsel has expressed no opinion regarding any such other tax
consequences.
UNDERWRITING
The Bonds are being purchased by the Underwriter pursuant to a purchase contract between
the City and the Underwriter as shown on the cover page hereof, from the City at an aggregate
18
purchase price of $ (the face amount of the Bonds less underwriters
discount and original issue discount) plus accrued interest on Bonds.
The Bonds may be offered and sold to certain dealers (including underwriters and other
dealers depositing such Bonds into investment trusts) and others at prices lower than the public
offering prices set forth on the cover page of this Official Statement.
CONTINUING DISCLOSURE UNDERTAKING
In accordance with the continuing disclosure requirements of Rule 15c2-12 (the "Rule")
promulgated by the Securities and Exchange Commission (the "SEC"), the City has agreed pursuant
to the terms of the Bond Resolution as follows:
(a) The City undertakes and agrees to provide to each nationally recognized municipal
securities information reposkory (each a "NRMSIR") and to the State of Florida information
deposkory (the "SID") if and when such a SID is created 0) the City's general purpose financial
statements generally consistent with the financial statements presented in Appendix B to this
Official Statement, and (h) the information concerning the Utilities Tax collections within the City
with respect to electricity, gas and fuel oil, the Utilities Tax rate or rates, exemptions from the
Utilities Tax and amendments to the Utilities Tax Ordinance generally consistent with the
information described herein under the heading "Utilities Tax". The information referred to in
clauses (~ and (ii) is herein collectively referred to as the "Annual Information."
(b) The Annual Information described in clause (~ of paragraph (a) above in audited
form (for as long as the Gty provides such financial information in audited form) is expected to be
available on or before March 31 of each year for the fiscal year ending on the preceding September
30, commencing March 31, 2003 for the fiscal year ending on the preceding September 30, 2002.
The Annual Information referred to in clause (i) of paragraph (a) above in unaudited form (if the
audited financial statements are not available or if the City no longer provides such financial
information in audited form) will be available on or before March 31 for the fiscal year ending on
the preceding September 30. The City also agrees to provide the Annual Information to each
registered owner and Beneficial Owner of the Bonds who request such information and pays to the
City its costs of reproduction and transmission of such Annual Information. The Gty agrees to
provide to each NRMSIR and the SID, if any, timely notice of its failure to provide the Annual
Information. Such notice shall also indicate the reason for such failure and when the City
reasonably expects such Annual Information will be available.
(c) The Annual Information referred to in clause (~) of paragraph (a) above and
presented in Appendix B to this Official Statement has been prepared in accordance with
governmental accounting standards promulgated by the Government Accounting Standards Board,
as in effect from time to time, as such principles are modified by generally accepted accounting
principles, promulgated by the Financial Accounting Standards Board, as in effect from time to time,
and such other State of Florida mandated accounting principles as in effect from time to time.
(d) If, as authorized by paragraph (f) below, the City's undertaking with respect to
paragraph (c) above requires amending, the Gty undertakes and agrees that the Annual Information
described in clause (i) of paragraph (a) above for the fiscal year in which the amendment is made
will, to the extent possible, present a comparison between the Annual Information prepared on the
19
basis of the new accounting principles and the Annual Information prepared on the basis of the
accounting principles described in paragraph (c) above. The City agrees that such a comparison will,
to the extent possible, include a qualitative discussion of the differences in the accounting principles
and the impact of the change on the presentation of the Annual Information.
(e) The City undertakes and agrees to provide in a timely manner, to each NRMSIR or
to the Municipal Securities Rulemaking Board and to the SID, if any, notice of the occurrence of any
of the following events with respect to the Bonds, if material:
Principal and interest payment delinquencies;
(ii) Non-payment related defaults;
Unscheduled draws on any reserve account reflecting financial
difficulties;
(iv) Unscheduled draws on credit enhancements reflecting financial
difficulties;
(v) Substitution of credk or liquidity providers; or their failure to
perform;
Adverse tax opinions or events affecting the tax-exempt status of the
Bonds;
(vh) Modifications to rights of Bondholders;
(viii) Bond calls (other than scheduled mandatory sinking fund
redemptions);
(ix) Defeasances of the Bonds;
Release, substitution, or sale of property securing repayment of the
Bonds; and
(xi) Rating changes.
Notwithstanding the foregoing, notice of the events described in clauses (8) and (9) above
need not be given any earlier than the time notice is required to be given to the registered owners of
the Bonds.
(0 Notwithstanding any provision of the Bond Resolution to the contrary regarding
amendments or supplements, the City undertakes and agrees to amend ancL/or supplement the City's
undertaking (including the amendments referred to in paragraph (d) above) only if:
The amendment or supplement is made only in connection with a
change in circumstances existing at the time the Bonds were
originally issued that arises from (i) a change in law, (ii) SEC
pronouncements or interpretations, (ih') a judicial decision affecting
2O
the Rule or (iv) a change in the nature of the City's operations or the
activities that generate the Utilities Tax;
The City's undertaking, as amended, would have complied with the
requirements of the Rule at the time the Bonds were originally issued
after taking into account any amendments or interpretations of the
Rule, as well as any change in circumstances; and
The amendment or supplement does not materially impair the
interest of the registered owners and Beneficial Owners of the Bonds
as determined by Bond Counsel or by a majority of the registered
owners of the Bonds.
In the event of an amendment or supplement under the City's undertaking, the City shall
describe the same in the next report of Annual Information and shall include, as applicable, a
narrative explanation of the reason for the amendment or supplement and its impact, if any, on the
financial information and operating data being presented in the Annual Information.
(g) The City's undertaking as set forth in the Bond Resolution and described herein shall
terminate if and when the Bonds are paid or deemed paid within the meaning of the Bond
Resolution.
(h) The City acknowledges that its undertaking pursuant to the Rule set forth in the
Bond Resolution and described herein is intended to be for the benefit of the registered holders and
Beneficial Owners of the Bonds and shall be enforceable by such holders and Beneficial Owners;
provided that, the holder's and Beneficial Owners' right to enforce the provisions of the City's
undertaking shall be limited to a right to obtain specific enforcement of the City's obligations under
the Bond Resolution and described herein, and any failure by the City to comply with the provisions
of its undertaking shall not be or constitute a covenant or monetary default with respect to the
Bonds under the Bond Resolution.
(i) The City reserves the right to satisfy its undertaking under the Bond Resolution
through agents; and the City may appoint such agents without the necessity of amending the Bond
Resolution. The City may also appoint one or more employees of the City to monitor and be
responsible for the City's undertaking under the Bond Resolution.
(j) "Beneficial Owner" shall mean, for purposes of the City's undertaking, any person
which (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of
ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other
intermediaries), or (h) is treated as the owner of any Bonds for federal income tax purposes.
The City has not failed to comply with any previous undertaking in a written contract or
agreement to provide continuing disclosure pursuant to the Rule.
ENFORCEABILITY OF REMEDIES
The remedies available to the owners of the Bonds under the Bond Resolution and any
policy of municipal bond insurance referred to herein are in many respects depended upon judicial
21
actions which are often subject to discretion and-delay. Under existing constitutional and statutory
law and judicial decisions, including specifically Tide 11 of the United States Code, the remedies
specified by the Federal Bankruptcy Code, the Bond Resolution and any policy of municipal 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 Bonds (including Bond Counsel's
approving opinion) will be qualified as to the enforceability of the various legal instruments, by
limitations imposed by bankruptcy, reorganization, insolvency, or other similar laws affecting the
fights of creditors or by such principles of equity as the court having jurisdiction may impose with
respect to certain remedies which require or may require enforcement by a court of equity.
LITIGATION
There is no litigation or controversy of any nature now pending or threatened (i) to restrain
or enjoin the issuance, sale, execution or delivery of the Bonds or (ii) in any way questioning or
affecting the validity of the Bonds, the Bond Resolution, any proceedings of the city taken with
respect to the authorization, sale or issuance of the Bonds or the pledge or application of any
moneys provided for the payment of the Bonds.
The City is a party from time to time in various law suits incident to its operations. In the
opinion of Susan A. Ruby, Esquire, City Attorney, there are no pending legal proceedings to which
the City is a party, the ultimate disposkion of which would have a material adverse effect on the
finances or operations of the City or its ability to meet its obligations with respect to the Bonds.
GENERAL PURPOSE FINANCIAL STATEMENTS
The General Purpose Financial Statements and other information of the City for the fiscal
year ended September 30, 2001 are included in Appendix B to this Official Statement. Such
excerpts from the City's Comprehensive Annual Financial Report, including the auditor's report
thereon, have been included in this Official Statement as public documents and consent from the
auditors was not requested. The auditors have not performed any services relating to, and are
therefore not associated with, the issuance of the Bonds.
FINANCIAL ADVISOR
The City has retained Public Financial Management, Inc., Orhndo, Florida, as financial
advisor (the "Financial Advisor") to the Cityin connection with the preparation of the City's phn of
financing and with respect to the authorization and issuance of the Bonds. Although the Financial
Advisor assisted in the preparation of this Official Statement, the Financial Advisor has not
undertaken to make an independent verification or to assume responsibility for the accuracy;
completeness or faimess of the information contained in this Official Statement. Public Financial
Management, Inc. is a financial advisory consulting organization and is not engaged in the business
of underwriting, marketing or trading of municipal securities or any other negotiable instruments.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
The accuracy of (1) the mathematical computations of the adequacy of maturing principal of
and interest earned on the Government Obligations to be held under the Escrow Deposit
Agreement for the Series 1992 Bonds, Series 1994 Bonds and the Series 1995 Bonds to pay, when
22
due or redeemed the principal of, premium, if any, and interest on the Series 1992 Bonds, Series
1994 Bonds and the Series 1995 Bonds, and (2) the mathematical computations supporting the
conclusion that the Bonds are not "arbitrage bonds" under Section 148 of the Code will be verified
for the City by Causey Derngen & Moore, Inc., independent certified public accountants. Such
verification of mathematical computations will be based upon information supplied by the City and
the Underwriter and on interpretation of Section 148 of the Code provided byBond Counsel.
MISCELLANEOUS
All information included herein has been provided by the City, except where attributed to
other sources. The summaries of and references to all documents, statutes, reports and other
instruments referred to herein do not purport to be complete, comprehensive or definitive, and each
such reference or su~mry is qualified in its entirety by reference to each such document, statute,
report or other instrument. Copies of all such documents referred to herein are on file with the City
Clerk of the City at 100 N.W. First Avenue, Delray Beach, Florida 33444. The information herein
has been compiled from official and other sources and, while not guaranteed by the City, is believed
to be correct. As far as any statements made in this Official Statement and the appendices attached
hereto involve matters of opinion or of estimates, whether or not expressly stated, they are set forth
as such and not as representatives of fact and no representation is made that any of the estimates
will be realized.
AUTHORIZATION OF AND CERTIFICATION
CONCERNING OFFICIAL STATEMENT
The delivery of this Official Statement has been authorized by the City Commission.
Concurrently with the delivery of the Bonds, the undersigned will furnish their certificate to the
effect that, to the best of their knowledge, this Offichl Statement other than information provided
by DTC and the Bond Insurer, did not as of its date, and does not as of the date of delivery of the
Bonds, contain any untrue statement of a material fact or omit to state a material fact which should
be included therein for the purpose for which this Official Statement is to be used, or which is
necessary in order to make the statements contained therein, in the light of the circumstances in
which they were made, not misleading.
CITY OF DELRAY BEACH, FLORIDA
By:
Mayor
By:
City Manager
23
APPENDIX A
General Information Concerning
the City of Delray Beach and Palm Beach County
GENERAL INFORMATION CONCERNING THE CITY OF DELRAY BEACH
AND PALM BEACH COUNTY
The following ~nformation concerning City of Dekay Beach, Florida (the "City"), Palm
Beach County, Florida (the "County"), and the State of Florida is included only for the purposes of
providing general background information. The information has been compiled by the City and on
behalf of the C~ty, and such compilation revolved oral and written commumcation with various
sources as indicated. The information in th~s Appendix A is subject to change.
CITY OF DELRAY BEACH
Introduction
The City, approxwnately 16 square rmles in area, xs located ~n the southeast portion of the
State of Florida, in the southeast section of the County. Incorporated in 1911, the City has an
esttrnated population of 61,527 (2002) and an esttmated seasonal population of 10,694 (2000) based
on prolections by the City's Planning and Zoning Department.
Climate
The climate of the City ~s best described as subtropical marine. The average year-round
temperature is 74.1 degrees w~th the mean winter temperature at 65.9 degrees and the summer mean
temperature at 82.3 degrees. Rainfall occurs year-round, but is heaviest m the summer; the average
annual rainfall is 64.26 roches. The rmld chmate ~s primarily a result of the proxm'nty to the Gulf
Stream and the prevailing ocean breezes.
City Government
The C~ty Commassion of the City (the "Commission") is the principal legislative and
govermng body of the Cra,;. The Comnusslon's marling address xs 100 N.W. Frrst Avenue, Delray
Beach, Florida 33444. The Clt3~ operates under a comrmsslon-manager form of government. The
Mayor, elected evexy txvo years, presides over a board of four commission members xvho are elected
to txvo-year altcrnatmg terms by the community at large. The City Comrnission appoints the City
Manager, City Attorney and certain, general advisory boards. Major departments of the C~ty include:
Parks and Recreation, Pubhc Ufiliues, Engmeenng, Pubhc Works, C~ty Clerk, Finance, Commumty
Improvement, Human Resources, Pohce, F~re and Planning & Zoning.
The City Manager
The chief admimstrauve official of the City ~s the C~ty Manager. Th~s official ~s directly
responsible to the Comrmss~on for adrmmstrauon and operauon of various divisions under the
Comrmssion and for execuuon of all Comrmssion pohc~es. The (hty Manager ~s also responsible to
the Commission for preparauon of the C~'s budget and for control of expenditures throughout the
budget year.
A-1
0170o51~1~,03/21077928~ 2
Education
The City is served by four elementary schools, one middle school, and one high school, all
operated by the Palm Beach County School Board. Higher education xs available at Palm Beach
Community College (11 miles to the north), Florida Atlantic Umversity (11 males to the south), and
South County Technical Center (just north of the C~ty). Florida Atlanuc University is a four year and
graduate umversity, accepting lumor college transfers for their last two years. It has s~x colleges:
Business and Public Administrauon, Education, Engineering, Humaniues, Natural Science and
Social Science. Masters degrees are offered in all fields.
The Palm Beach County School Board operates 74 elementary schools, 20 middle schools,
16 senior high schools and 10 special schools.
Transportation
Lying along Florida's Gold Coast between Miamt and West Palm Beach, the City has
benefited greatly from well-developed transportation systems servicing all of Florida's southeast
coast.
There are mght north-south highways which run through Palm Beach County, including U.S.
Highway 1, Congress Avenue, State Road A1A, the Florida Turnpike and Interstate 95. U.S.
Highway 1 and Congress Avenue are the main arteries through the City runmng north and south.
The Florida Turnptke and Interstate 95 have entrance access at Delray Beach. There are also two
rarlroads, Florida East Coast Railway and Seaboard Coast Line, and four east-west h~ghways to
accommodate surface transportauon in Palm Beach County. Bus transportation ~s also available in
the City through the Count), operated bus system.
The Port of Palm Beach, located xv~th~n 30 miles of the Cit-3,, operates ship terminal facilities
on approxn'nately 90 acres of land located m Rtv~era Be. :h, Florida and fronung on Lake Worth,
Florida. A 35-foot deep channel to the Lake Worth Inlet pr..vtdes access to the port facihties. Port
Everglades, xvith~n 50 maes of the Ctty is a major port for cruise and cargo transportation.
Commercial air servtce is provided at Palm Beach International Airport ("PBIA") by major
mr carriers and commuter azrhnes. PBIA ts fifteen rmles to the north of the C~ty. The volume of
passenger traffic at PBIA tncreased from 5,842,594 in 2000 to 5,934,904 tn 2001. PBIA also serves
general avtauon traffic, and there are five general avmuon au'ports m the Count3,.
The Fort Lauderdale-Hollywood International Arrport and the Miarm International Airport
are xvithtn 50 maes to the South of the
The C~ty ~s served by Greyhound Bus Ltnes which provides transportauon to most major
Florida cities. Amtrak provides passenger raft accommodauons and has a station stop located in the
City.
The City is also served by the Tri-County Raft System ("Tn-Rail"). Tri-Rail, is a highspeed
commuter rail line which operates regularly scheduled sen, ice between Mmmi and West Palm Beach.
Tri-Rail has a station stop located in the C~ty.
CITY OF DELRAY BEACH
POPULATION ESTIMATES
The following table shows the City populanon and the annual average percentage changes
from 1980 to 1990 and from year to year from 1990 through 2002.
Year
City Annual
Population Percentage Change
1980 34,329
1990 47,181 37.4%
1991 48,206 2.2
1992 48,346 0.3
1993 48,644 0.6
1994 49,298 1.3
1995 50,195 1.8
1996 52,039 3.7
1997 52,920 1.7
1998 53,471 1.0
1999 53,589 0.2
2000 60,020 12.0
2001 60,645 1.0
2002 61,527 1.5
Sources U S. Bureau of the Census as of April 1, for the years 1980 and 1990 through 2000; Umverstty of Florida,
Bureau of Econotmc Business Research for the years 2001 and 2002, Cttx; Planmng and Zomng Department for City
populanon estimates for all other years.
A-3
CITY OF DELRAY BEACH
BUILDING PERMIT ACTIVITY
The number of budding permits issued for industrial, commercial and residential
construction within the City from 1991 through 2002 and the value of such construction is shown
below:
Industrial and
Commercial Construction
Residential
Construction
FiscalYear Ended Number of
September30 Number of Permits Value Units Value
1991 27 $11,767,551 203 $21,348,434
1992 13 8,405,390 403 32,160,179
1993 18 8,193,527 172 20,894,643
1994 8 3,224,875 364 39,818,084
1995 16 5,006,576 242 27,963,390
1996 31 17,796,738 800 52,207,344
1997 34 6,852,230 489 58,382,613
1998 24 9,343,455 291 39,461,414
1999 26 7,850,092 350 39,407,811
2000 42 16,897,724 343 39,410,536
2001 55 27,106,834 536 55,920,946
2002 36 19,886,320 599 59,890,130
Source C~q, of Delray Beach Comprehensive Annual Fmancxal Report for the year ended September 2001 for years
1991 through 2001, Commumty Improvement Department esumates fo: 2002
[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
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PALM BEACH COUNTY, FLORIDA
General Introduction
Palm Beach County, Florida was founded m 1909 and encompasses an area of 2,023 square
miles. It is located on the south lower east coast of the Florida penmsula, w~th 46 miles of Atlantic
Ocean frontage and 25 nules of frontage on Lake Okeechobee. The County has a semi-tropical
chmate w~th an average temperature of 74.5F degrees and an average rainfall of 60.77 roches. These
and other natural amenities, including 88 local, State and Federal recreauonal areas of more than 10
acres and 163 golf courses, have enabled the Count)' to develop a year-around tourist industry.
There are 38 incorporated mumc~paliues within the County, nme of which have a population
m excess of 25,000. West Palm Beach ~s the County seat and ~s the largest city in the County, with a
2001 U.S. Census populanon of 1,154,464.
POPULATION GROWTH
Population
In 2001, Palm Beach County was the thtrd largest county m the State of Florida in terms of
population. Its population increased 65.3% m the 1970-1980 decade, 49.7% m the 1980-1990 decade
and 23.1% in the 1990-2000 decade.
Palm Beach County Florida United States
Year Populations Change Population Change Population Change
1994 937,190 2.1% 13,878,905 2.0% 259,718,000 1.0%
1995 962,802 2.7 14,149,317 1.9 262,176,000 .9
1996 981,793 2.0 14,411,563 1.9 266,538,000 1.7
1997 1,003,798 2.2 14,712,365 2.1 267,636,000 .4
1998 1,020,521 1.7 15,475,000 5.2 270,733,000 1.2
1999 1,042,196 2.1 15,322,000 (1.0) 272,190,000 .5
2000~) 1,131,184 8.5 15,982,378 4 3 275,860,949 1.3
2001 1,154,464 2.1 16,331,739 2.2 285,371,621 3.4
Duc to the census, there was an adlustment for the population of Pakn Beach County.
Source Umvers~ty of Florida, Bureau of Econmmc and Busaness Research and the U S Bureau of Census. Palm Beach
Counq' and Florida data as as of April I Umted States data as as of October 1
A-5
Age Distribution
The age distribution in the County- is sm'filar to that of Florida, but differs s~gnificantly with
that of the nation. Both the County and Florida have a considerably larger proportion of persons 65
years and olden than the rest of the nation.
PALM BEACH COUNTY
POPULATION DISTRIBUTION BY AGE GROUP(°
Age Group 2000 1999 1998 1997 1996 1995 1994
0-14 18% 18% 18% 18% 18% 18% 18%
15-64 59 59 58 58 58 58 58
65+ 23 23 24 24 24 24 24
(~) Totals may not add to 100% because of rounding
Source. Umversity of Florida, Bureau of Economic and Business Research and the U.S Bureau of Census.
Income
The folloxvmg table shows the per capita personal income reported for Palm Beach County,
the State of Florida and the Umted States.
PER CAPITA PERSONAL INCOME
Palm Beach County Florida U.S.
Year Dollars % of Fla. % of U.S Dollars % of U.S. Dollars
1992 $31,028 156.7% 154.3% $19,797 98.5% $20,105
1993 32,230 156.1 155.0 20,650 99.3 20,800
1994 33,862 155.5 153.6 21,777 98.8 22,044
1995 36,213 156.5 155.0 23,139 99.1 23,359
1996 38,081 157.4 155.8 24,198 99.0 24,436
1997 38,772 156.3 153.3 24,799 98.1 25,288
1998 40,044 149.2 147.2 26,845 98.7 27,203
1999 41,907 150.8 146.8 27,781 97.3 28,546
Source: UmvcrsltT of Florida, Bureau of Economic and Business Research
Note Data for 2000 ,md 2001 is not avvalable.
A-6
Employment
Tourism and agriculture, together w~th the service ~ndustries related to these activities, are
the leading sources of income for the County's residents. Manufacturing, primarily electronics and
other high technology products, also play an wnportant role in the County's economy. The table that
follows shows the County's estimated average annual non-farm employment by economic sector.
PALM BEACH COUNTY
ESTIMATED AVERAGE ANNUAL NON-AGRICULTURAL EMPLOYMENT
BY ECONOMIC SECTOR
2000 1999 1998 1997 1996
All Industries 424,501 406,123 396,371 378,679 367,398
Agriculture Forestry
and Fisheries 17,328 18,070 18,590 18,308 17,850
Mmmg 18 13 14 23 24
Construcuon 30,415 27,054 26,157 24,789 24,068
Manufacturing 30,715 32,542 30,638 29,926 28,980
Transportation
Communicauons
and Pubhc Utilities 16,481 15,916 15,692 15,184 15,316
Wholesale Trade 23,044 21,920 21,821 20,375 19,132
Retail Trade 94,608 92,027 92,112 89,028 88,086
Finance Insurance and
Real Estate 33,333 32,312 32,050 29,296 27,830
Sen4ces 176,641 164,098 156,819 149,769 143,853
Other 1,918 2,171 2,478 1,982 2,259
Source: Umvers~ty of Florida, Bureau of Economic and Bus~ness Research, based upon data from U.S Bureau of the
Census; 1998-2001 Florida Stansucal Abstracts
A-7
The data on County unemployment Lq the following table represents annual averages.
PALM BEACH COUNTY
ANNUAL AVERAGE LABOR FORCE AND UNEMPLOYMENT ESTIMATES
Unemployment Rates
C~vflian Palm Beach United
Year Labor Force County. Florida States
1995 454,852 6.2% 5.4% 5.6%
1996 461,526 7.0 5.2 5.4
1997 482,486 6.3 4.8 4.9
1998 507,754 5.5 4.3 4.5
1999 543,006 4.8 4.0 3.8
2000 524,708 4.1 3.6 3.8
2001 541,377 5.9 4.5 4.7
Source' Florida Department of Labor and Employment Security; Bureau of Labor Market Unemployment Informauon,
Labor Stausucs Department.
Largest Employers
The folloxvmg table shoxvs employment at the ten largest private employers in the County.
Employees
Apphed Cards (Financml - Credit Cards)
Florida Power & Light Company (Uulines)
Boca Raton Resort & Club (Hotel)
Office Depot (Retail - Office Supphes)
The Breakers (Hotel)
Siemens Companies (PBX Systems)
Palm Beach Newspapers, Inc (Nexvspaper Pubhshing)
Pratt & Whitney A~rcraft (Jet Engines)
Motorola Inc. (Electromc Pagers)
Bell South (Utflmes)
2,500
2 300
I 850
1 500
1. 500
1 500
1.300
1300
1 300
1,200
Source' Bus~ness Development Board of Palm Beach Count),
A-8
Tourism
Visitors to the Palm Beaches have a significant economic impact on the County. According
to the Florida Department of Business Regulatton, there were 231 licensed hotels and motels in the
County, having a total of over 15,000 rooms. The Tourism Development Council of Palm Beach
County esUmates that over three (3) mflhon people visit the County annually and spend
approximately $1.1 bilhon.
Agriculture
Agriculture, together with the related service industries, is the leading source of income for
the County's residents. The "Glades" region of the County is one of the nauon's most productive
agricultural areas. Palm Beach County is the largest agricultural county in Florida and the fourth
largest m the United States, with annual sales in excess of $2 billion.
Banking
The total deposits of banking mstituuons m the County as of September 30 of each of the
years indicated below were as follows:
Total Bank Deposits
(m thousands)
F1scal
Year
Federal Savings and
Commercial Banks Loan Associations
1994 $8,601,035 $7,805,278
1995 9,055,476 7,606,601
1996 9,545,424 6,578,158
1997 9,911,930 5,941,909
1998 10,715,881 6,949,839
19990) 13,283,898 7,243,923
2000 12,843,897 7,646,519
2001 13,841,347 8,571,953
0) FDIC Webs~te Florida League of Financial Insmut~ons data was not available for 1999
Source' Florida League of Fmancml Insutunons.
A-9
Construction
Building permit activity 111 the County has been reported as follows:
BUILDING PERMIT ACTIVITY
COUNTY OF PALM BEACH, FLORIDA
(DOLLARS IN THOUSANDS)
1996 - 2001
Value of Building Permits Issued
Fiscal Residential Commercial Total Permit
Year Units Value Value Other(i) Valuation
1996 9,311 $ 932,675 $143,940 323,503 1,400,118
1997 6,060 979,247 188,227 451,299 1,618,773
1998 10,677 1,159,302 227,318 752,374 2,138,994
1999 10,242 1,217,582 394,868 776,015 2,388,465
2000 10,026 1,507,878 360,271 918,780 2,786,929
2001 10,091 1,377,870 484,771 798,827 2,661,467
0) Hotels, motels, mobile home parks, and miscellaneous.
Source The Palm Beach County Department of Planmng, Zomng and Bmldmg.
Retail Sales
Total retail sales in the County for the last seven calendar years have been as follows for the
years lnchcated:
Retail Sales
Year Retail Sales
1994 $21,680,285,125
1995 23,746,717,448
1996 24,818,102,000
1997 27,600,033,550
1998 27,828,417,249
1999 30,213~35,156
2000 34,393,336,408
Source: State of Florida, Department of Revenue.
A-10
APPENDIX B
General Purpose Financial
Statements of the City of Delray Beach
APPENDIX C
Summary of Certain Provisiom of the Bond Resolution
APPENDIX D
Form of Bond Counsel Opinion
APPENDIX E
Specimen Municipal Bond Insurance Policy
Public Financial Management
Fln.lncla~ and In~e~tmen~ ~vl~om
Suite 720
201 ~il3 Orange Avenue
Odando, FL
32801-3470
407 648-~38
407-648-1323 fax
Exhibit D
Dccembex 3, 2002
The City Commission of
The City of Dekay Beach, Florida
100 N.W. 1 '~ Avenue
Delray Beach, Florida 33444
Dear Ladies and Gentleman:
In serving in our capacity as Financial Advisor to the City of Delray Beach, Florida on the City's
Utilities Tax Revenue Refunding Bonds, Series 2002, Public Financial Management, Inc. is
zecommending the use of the negotiated sale process as opposed to the competitive sale format. We
believe that given the cu~ent volatility of the tax-exempt munidpal market, the negotiated sale
process is most beneficial to the City.
Additionally, we are of the opinion that the use of bond insurance to insure the pfirtcipal and
interest payments on the Bonds and a surety bond in lieu of the debt service reserve fund provides
economic benefit to the City, and are therefore recommending its use.
Sincerely,
Public Financial Management, Inc.,
Senior Managing Consultant
Exhibit E
November 25, 2002
VIA FEDEX
Mr. Joe Safford, Finance Director
City of Delray Beach
100 NW First Avenue
Delray Beach, Florida 33444
Re: Not to Exceed $15,505,000 aggregate principal amount of City of Delray Beach,
Florida Utilities Tax Refunding Revenue Bonds, Series 2002
Dear Mr. Safford:
Please find attached two originals each of our commitment letter and debt service reserve commitment letter in
respect of the above-referenced issue. Please return one fully executed copy of each to Ms. Lillie Santana of
our office, prior to any reference to Financial Security as insurer of the issue being made in marketing efforts in
respect of the issue.
Please note that a blacklined copy of each draft of each financing document and opinion, each draft of the
preliminary and final official statements and the bond proof should be dehvered to us via e-mail, if possible, for
review and comment.
Please note that Financial Security's website may be accessed at www.fsa.com/products/municipaledoc.php.
The logo, statement of insurance, disclosure language, specimen policy, procedures for premium payment,
form of opinion and form of disclosure, no default and tax certificate may be accessed and downloaded as
needed. Financial Security will require, prior to closing, six hard copies of the final official statement.
We will deliver to Bond Counsel, at the preliminary closing, assuming the requirements of the
commitment letter have been met, an opinion of counsel as to the enforceability of the policy, a
disclosure, no default and tax certificate of Financial Security and the executed policy. Prior to the
closing, Financial Security will obtain rating letters from the rating agencies indicated in the official
statement. Note that any questions with regard to rating agency fees should be directed to the
respective rating agency.
Please ensure the following people are added to the Distribution List for this Financing:
Francis J. Coughlin, Jr., Associate General Counsel
Juliet Kong, Analyst
Lillie Santana, Assistant Vice President
Documentation and Closing Supervisor
Telephone:
Telecopier:
E-Mad:
Telephone:
Telecopier:
E-Mail:
Telephone:
Telecopier:
E-Mail:
(212) 339-3411
(212) 339-3529
FCoughlin@FSA.com
(212) 893-9659
(212) 339-3450
JKong@FSA.com
(212) 339-3537
(212) 339-0872 or (212) 339-3588
LSantana@FSA.com
Financial Security requires one original and two copies of the final closing transcript of proceedings and it may
be in the form of either hard copies or three CD-ROMs.
Yours truly,
CC:
Francis J. Coughlin, Jr.
Associate General Counsel
Stephen D. Sanford, Esq.; Greenberg Traurig, LLP
Mr. J.W. Howard, Managing Underwriter; Bear Stearns & Co., Inc.
Jeffrey Blumenfeld, Esq.; Blank Rome Comisky & McCauley LLP
Mr. Jay Glover; Public Financial Management, Inc.
MUNICIPAL BOND INSURANCE COMMITMENT
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security" or "FSA") hereby commits to issue its Municipal Bond Insurance
Policy (the "Policy") relating to whole maturities of the debt obligations described in Exhibit A attached hereto (the "Bonds"), subject to
the terms and conditions set forth in this Commitment, of which Commitment Exhibit A is an integrated part, or added hereto (the
"Commitment"). To keep this Commitment in effect after the Exp~rabon Date set forth in Exhibit A attached hereto, a request for
renewal must be submitted to Financial Security prior to such Expiration Date. F~nancial Security reserves the right to refuse wholly or
in part to grant a renewal.
THE MUNICIPAL BOND INSURANCE POLICY SHALL BE ISSUED iF THE FOLLOWING CONDITIONS ARE SATISFIED:
1. The documents to be executed and delivered in connection with the issuance and sale of the Bonds shall not contain any
untrue or misleading statement of a material fact and shall not fail to state a material fact necessary in order to make the information
contained therein not misleading.
2. No event shall occur which would permit any underwriter or purchaser of the Bonds, otherwise required, not to be required to
underwrite or purchase the Bonds on the date scheduled for the issuance and delivery thereof ("Closing Date").
3. There shall be no material change in or affecting the Bonds (including, without limitation, the security for the Bonds) or the
financing documents or the Official Statement (or any similar disclosure documents) to be executed and delivered in connection with
the issuance and sale of the Bonds from the descriptions or forms thereof approved by F~nanc~al Security.
4. The Bonds shall contain no reference to Financial Security, the Policy or the insurance evidenced thereby except as may be
approved by Financial Security. BOND PROOFS SHALL HAVE BEEN APPROVED BY FINANCIAL SECURITY PRIOR TO
PRINTING. The Bonds shall bear a Statement of Insurance in the form provided by Financial Secunty.
5. Financial Security shall be provided with'
(a) Executed copies of all financing documents, any disclosure document (the "Official Statement") and the various legal
opinions delivered ~n connecbon with the issuance and sale of the Bonds (which shall be dated the Closing Date and which, except for
the opimons of counsel relating to the adequacy of d~sclosure, shall be addressed to Financial Secunty or accompanied by a letter of
such counsel permitting Financial Security to rely on such opinion as if such opinion were addressed to Financial Secunty), including,
w~thout limitation, the approving opinion of bond counsel. Each of the foregoing shall be in form and substance acceptable to Financial
Security. Copies of all drafts of such documents prepared subsequent to the date of the Commitment (blacklined to reflect all revisions
from previously reviewed drafts) shall be furnished to Financial Security for rewew and approval. Final drafts of such documents shall
be provided to Financial Security at least three (3) business days prior to the issuance of the Pohcy, unless F~nancial Security shall
agree to some shorter period.
(b) Evidence of wire transfer in federal funds of an amount equal to the insurance premium, unless alternative
arrangements for the payment of such amount acceptable to Financial Security have been made prior to the delivery date of the
Bonds.
(c) Standard & Poor's Credit Market Services, Moody's Investors Service Inc. and Fitch IBCA, Inc. will separately
present bills for their respective fees relating to the Bonds. Payment of such bills should be made directly to such rating agency.
Payment of the rating fee is not a condition to release of the Policy by F~nancial Secunty.
6. Promptly after the closing of the Bonds, Financial Security shall receive three completed sets of executed documents (one
original and either (0 two photocopies (each unbound) or (10 three compact discs).
7. The Official Statement shall contain the language prowded by Financial Security and only such other references to Financial
Security or otherwise as Financial Security shall supply or approve. FINANCIAL SECURITY SHALL BE PROVIDED WITH SIX
PRINTED COPIES OF THE OFFICIAL STATEMENT.
EXHIBITA
MUNICIPAL BOND INSURANCE COMMITMENT
TERM SHEET
Issuer: City of Delray Beach, Florida
Name of Bonds Insured: Utilities Tax Refunding Revenue Bonds, Series 2002
Principal Amount of Bonds Insured: Not to Exceed $15,505,000
Date of Commitment: November 25, 2002 Expiration Date: Friday, January 24, 2003*
Premium: .325% of total debt service on the Bonds Insured
Additional Conditions:
The amortization schedule for, and final maturity date of, the Bonds shall be acceptable to
Financial Security.
The Issuer shall covenant not to issue any other limited tax bonds that are secured by a lien that is
senior to the lien securing the Bonds.
3. See attached Exhibits B-C.
Terms used in this Commitment and not otherwise defined shall have the meanings ascribed to them in the
document authorizing the issuance of and setting forth the terms for the Bonds described above (the "Resolution").
FINANCIAL SECURITY ASSURANCE INC.
Authorized Officer
*To keep the Commitment in effect to the Expiration Date set forth above, Financial Secudty must receive a
duplicate of this Exhibit A executed by an authorized officer by the earlier of the date on which the Official Statement
containing disclosure language about Financial Security ~s c~rculated and ten days from the date of this Commitment.
The undersigned agrees that if the Bonds are insured by a policy of municipal bond insurance, such insurance shall
be provided by Financial Security in accordance with the terms of the Commitment.
CITY OF DELRAY BEACH, FLORIDA
Authorized Officer
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OPINION REQUIREMENTS
EXHIBIT B
Page 1 of 1
The Bond Resolution, as supplemented, is a legal, valid and binding obligation of the parties thereto, has
been duly authorized, executed and delivered and is enfomeable in accordance with its terms.
There does not exist any action, suit, proceeding or investigation pending, or to the best of such counsel's
knowledge, threatened which if adversely determined, could materially adversely affect (a) the financial
condition of the Issuer, (b) the ability of the Issuer to perform its obligations under the Related Documents, (c)
the security for the Bonds, or (d) the transactions contemplated by the Bond Resolution.
Nothing has come to the attention of disclosure counsel which would cause them to believe that the final
Official Statement (excluding information provided by Financial Security), as of its date and the date of
~ssuance of the Policy, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The Bonds are special, limited obligations of the Issuer payable solely from and secured solely by a pledge of
and first priority lien upon the Utilities Tax revenue levied and collected by the Issuer and deposited in the
Sinking Fund created and established pursuant to the terms and provisions of the Bond Resolution.
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BOND RESOLUTION REQUIREMENTS
EXHIBIT C
Page 1 of 4
The Resolution shall incorporate the following requirements either in one section or article entitled "Provisions Relating
to Bond Insurance" (or the like), the provisions of which section or article shall be stated in the Resolution to
govern, notwithstanding anything to the contrary set forth in the Resolution, or indwidually in the appropriate
sections:
(a)
"Insurance Policy" shall be defined as follows: "the insurance policy issued by the Insurer guaranteeing the
scheduled payment of principal of and interest on the Bonds when due". "Insurer" shall be defined as follows:
"Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto or
assignee thereof".
(b) In the definition of Permitted Investments delete the capacity of the Credit Facility Issuer to approve
investments.
(c)
The Insurer shall be deemed to be the sole holder of the Insured Bonds for the purpose of exercising any
voting right or privilege or giving any consent or direction or taking any other action that the holders of the
Bonds insured by it are entitled to take pursuant to paragraph H of Section 4 of Resolution R-98-91.
(d) The Insurer shall be included as a third party beneficiary to the Resolution.
(e)
Upon the occurrence of an extraordinary optional or special or extraordinary mandatory redemption in part, the
selection of Bonds to be redeemed shall be subject to the approval of the Insurer. The exercise of any
provision of the Resolubon which permits the purchase of Bonds in lieu of redemption shall requIre approval of
the Insurer wherein any Bond so purchased is not extinguished.
(f)
No modification or amendment to the Resolution or any other transaction document including any underlying
secunty agreement (each a "Related Document") may become effective except upon obtaining the prior written
consent of the Insurer. Copies of any modification or amendment to the Resolution or any other Related
Document shall be sent to Standard & Poor's Credit Market Services and Moody's Investors Service, Inc. at
least 10 days prior to the effective date thereof.
(g)
Unless the Insurer otherwise directs, upon the occurrence and continuance of an Event of Default or the
occurrence and continuance of an event which with notice or lapse of time or both would constitute an Event of
Default amounts on deposit in the Construcbon Fund shall not be d~sbursed but shall instead be apphed to the
payment of debt service or redemption price of the Bonds.
(h)
The rights granted to the Insurer under the Resolution or any other Related Document to request, consent to or
direct any action are rights granted to the Insurer in consideration of its issuance of the Insurance Policy. Any
exercise by the Insurer of such rights is merely an exercise of the Insurer's contractual rights and shall not be
construed or deemed to be taken for the benefit or on behalf of the Bondholders nor does such action evidence
any position of the Insurer, positive or negative, as to whether Bondholder consent is required in addition to
consent of the Insurer.
(i)
To accomplish defeasance the Issuer shall cause to be delivered (i) a report of an independent firm of
nationally recognized certified public accountants or such other accountant as shall be acceptable to the
Insurer ("Accountant") verifying the sufficiency of the escrow established to pay the Bonds ~n full on the maturity
or redemption date {"Verification"), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and
substance to the Insurer), (iii) an opimon of nationally recognized bond counsel to the effect that the Bonds are
no longer "Outstanding" under the Resolution and (iv) ~f there is a Paying Agent for the Bonds a certificate of
discharge of the Paying Agent with respect to the Bonds; each Verification and defeasance opinion shall be
acceptable in form and substance, and addressed, to the Issuer, the Paying Agent and the Insurer. The Insurer
shall be provided with final drafts of the above-referenced documentation not less than five business days prior
to the funding of the escrow.
Bonds shall be deemed "Outstanding" under the Resolution unless and until they are in fact paid and retired or
the above criteria are met
0)
Amounts paid by the Insurer under the Insurance Policy shall not be deemed paid for purposes of the
Resolubon and shall remain Outstanding and continue to be due and owing until pa~d by the Issuer in
accordance w~th the Resolution. The Resolution shall not be discharged unless all amounts due or to become
due to the Insurer have been paid in full or duly prowded for
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EXHIBIT C
Page 2 of 4
Each of the Issuer and the Paying Agent covenant and agree to take such action (including, as applicable, filing
of UCC financing statements and continuations thereof) as is necessary from time to time to perfect or
otherwise preserve the priority of the pledge of Trust Estate under applicable law.
Claims Upon the Insurance Policy and Payments by and to the Insurer.
If, on the third Business Day prior to the related scheduled interest payment date or principal payment date
("Payment Date") there is not on deposit with the Paying Agent, after making all transfers and deposits required
under the Resolution, moneys sufficient to pay the pnncipal of and interest on the Bonds due on such Payment
Date, the Paying Agent shall give notice to the Bond Insurer and to its designated agent (if any) (the "Insurer's
F~scal Agent") by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time,
on such Business Day. If, on the second Business Day pdor to the related Payment Date, there continues to be
a deficiency in the amount available to pay the pnncipal of and interest on the Bonds due on such Payment
Date, the Paying Agent shall make a claim under the Insurance Policy and give notice to the Insurer and the
Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such
deficiency between the amount required to pay interest on the Bonds and the amount required to pay principal
of the Bonds, confirmed in writing to the Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City
time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the
Insurance Policy.
In the event the claim to be made is for a mandatory sinking fund redemption installment, upon receipt of the
moneys due, the Paying Agent shall authenticate and deliver to affected Bondholders who surrender their
Bonds a new Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond
surrendered. The Paying Agent shall designate any portion of payment of principal on Bonds paid by the
Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on
its books as a reduction in the principal amount of Bonds registered to the then current Bondholder, whether
DTC or its nominee or otherwise, and shall issue a replacement Bond to the Insurer, registered in the name of
Financial Security Assurance Inc., in a pnncipal amount equal to the amount of principal so paid (without
regard to authorized denominations); prowded that the Paying Agent's failure to so designate any payment or
issue any replacement Bond shall have no effect on the amount of principal or interest payable by the Issuer on
any Bond or the subrogation rights of the Insurer.
The Paying Agent shall keep a complete and accurate record of all funds deposited by the Insurer into the
Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and
principal paid in respect of any Bond. The Insurer shall have the right to inspect such records at reasonable
times upon reasonable notice to the Paying Agent.
Upon payment of a claim under the Insurance Policy the Paying Agent shall establish a separate special
purpose trust account for the benefit of Bondholders referred to herein as the "Policy Payments Account" and
over which the Paying Agent shall have exclusive control and sole right of withdrawal. The Paying Agent shall
receive any amount paid under the Insurance Policy in trust on behalf of Bondholders and shall deposit any
such amount in the Pohcy Payments Account and d~stribute such amount only for purposes of making the
payments for which a claim was made. Such amounts shall be d~sbursed by the Paying Agent to Bondholders
in the same manner as principal and interest payments are to be made with respect to the Bonds under the
sections hereof regarding payment of Bonds. It shall not be necessary for such payments to be made by
checks or w~re transfers separate from the check or wire transfer used to pay debt service with other funds
available to make such payments. Notwithstanding anything to the contrary otherwise set forth in the
Resolution, and to the extent permitted by law, in the event amounts pa~d under the Insurance Policy are
applied to claims for payment of principal of or interest on the Bonds, interest on such principal of and interest
on such Bonds shall accrue and be payable from the date of such payment at the greater of (~) the per annum
rate of interest, publicly announced from time to time by JPMorgan Chase Bank or its successor at its principal
office in the C~ty of New York, as its prime or base lending rate plus 3%, and (ii) the then applicable rate of
interest on the Bonds provided that in no event shall such rate exceed the maximum rate permissible under
applicable usury or similar laws limiting interest rates.
Funds held in the Policy Payments Account shall not be invested by the Paying Agent and may not be applied
to sabsfy any costs, expenses or liabihties of the Paying Agent. Any funds remaining in the Pohcy Payments
Account following a Bond payment date shall promptly be remitted to the Insurer.
The Insurer shall, to the extent it makes any payment of principal of (or, in the case of Capital Appreciation
Bonds, accreted value) or interest on the Bonds, become subrogated to the rights of the recipients of such
payments in accordance with the terms of the Insurance Policy. The obligations to the Insurer shall survive
discharge or termination of the Related Documents.
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EXHIBIT C
Page 3 of 4
The Issuer shall pay or reimburse the Insurer any and all charges, fees, costs and expenses which the Insurer
may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of
any rights or security in any Related Document; (ii) the pursuit of any remedies under the Resolution or any
other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with
respect to, or related to, the Resolution or any other Related Document whether or not executed or completed,
(iv) the violation by the Issuer or the Obligor of any law, rule or regulation, or any judgment, order or decree
applicable to it or (v) any litigation or other dispute in connection with the Resolution or any other Related
Document or the transactions contemplated thereby, other than amounts resulting from the failure of the
Insurer to honor its obligations under the Insurance Policy. The Insurer reserves the right to charge a
reasonable fee as a condition to execubng any amendment, waiver or consent proposed ~n respect of the
Resolution or any other Related Document.
After payment of reasonable expenses of the Paying Agent, the application of funds realized upon default shall
be applied to payment of expenses of the Issuer or rebate only after the payment of debt service due and past
due on the Bonds, together with replenishment of the Debt Service Reserve Fund.
The Insurer shall be entitled to pay principal (or, in the case of Capital Appreciation Bonds, accreted value) or
interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the
Issuer (as such terms are defined in the Insurance Policy) and any amounts due on the Bonds as a result of
acceleration of the maturity thereof in accordance with the Resolution, whether or not the Insurer has received
a Notice of Nonpayment (as such terms are defined in the Insurance Pohcy) or a claim upon the Insurance
Policy.
The notice address of the Insurer is: Financial Security Assurance Inc., 350 Park Avenue, New York, New York
10022-6022, Attention: Managing Director-Surveillance, Re: Policy No , Telephone: (212) 826-0100;
Telecopier: (212) 339-3556. In each case in which notice or other communication refers to an Event of Default,
then a copy of such notice or other communication shall also be sent to the attention of the General Counsel
and shall be marked to indicate "URGENT MATERIAL ENCLOSED."
The Insurer shall be provided with the following information:
(i)
Annual audited financial statements within 150 days after the end of the Issuer's fiscal
year (together with a certification of the Issuer that it is not aware of any default or Event
of Default under the Resolution), and the Issuer's annual budget within 30 days after the
approval thereof together with such other information, data or reports as the Insurer shall
reasonably request from time to bme;
(~)
Notice of any draw upon the Debt Service Reserve Fund within two Business Days after
knowledge thereof other than (i) withdrawals of amounts in excess of the Debt Service
Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds;
Notice of any default known to the Paying Agent or the Issuer within five Business Days
after knowledge thereof;
(iv)
Prior notice of the advance refunding or redemption of any of the Bonds, including the
principal amount, maturities and CUSIP numbers thereof;
(v)
(vi)
(vii)
Notice of the resignation or removal of the Paying Agent and Bond Registrar and the
appointment of, and acceptance of duties by, any successor thereto;
Notice of the commencement of any proceeding by or against the Issuer commenced
under the United States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding");
Notice of the making of any claim in connection with any Insolvency Proceeding seeking
the avoidance as a preferential transfer of any payment of principal of, or interest on, the
Bonds;
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EXHIBIT C
Page 4 of 4
(s)
(t)
(u)
(v)
(viii)
A full original transcript of all proceedings relating to the execution of any amendment or
supplement to the Related Documents; and
(ix)
All reports, notices and correspondence to be delivered to Bondholders under the terms
of the Related Documents,
Notwithstanding satisfaction of other conditions to the issuance of Additional Bonds contained in the
Resolution, no such issuance may occur (1) should any Event of Default (or any event which, once all notice or
grace periods have passed, would constitute an Event of Default) have occurred and be continuing unless such
default shall be cured upon such issuance and (2) unless the Debt Service Reserve Fund is fully funded at its
requirement (~ncluding the new issue) upon the issuance of such Additional Bonds, in either case unless
otherwise permitted by the Insurer. For tax-backed transactions, subordinate debt shall be subject to the
Insurer's consent.
In determining whether any amendment, consent or other action to be taken, or any failure to act, under the
Resolution would adversely affect the security for the Bonds or the rights of the Bondholders, the Paying Agent
shall consider the effect of any such amendment, consent, action or inaction as if there were no Insurance
Policy.
No contract shall be entered into nor any action taken by which the rights of the Insurer or security for or
sources of payment of the Bonds may be impaired or prejudiced in any material respect except upon obtaining
the prior written consent of the Insurer.
If the proceeds of the Bonds include a refunding there shall be delivered an opinion of Bond Counsel
addressed to the Insurer (or a reliance letter relating thereto) or a certificate of discharge of the Paying Agent
for the Refunded Bonds to the effect that, upon the making of the required deposit to the escrow, the legal
defeasance of the Refunded Bonds shall have occurred. If the Refunded Bonds are FSA-insured, at least
three business days prior to the proposed date for delivery of the Policy with respect to the Refunding Bonds,
the Insurer shall also receive (i) the verification letter, of which Financial Security shall be an addressee, by an
independent firm of certified public accountants which ~s either nationally recognized or otherwise acceptable to
the Insurer, of the adequacy of the escrow established to prowde for the payment of the Refunded Bonds in
accordance w~th the terms and provisions of the Escrow Deposit Agreement, and (ii) the form of an opinion of
Bond Counsel addressed to the Insurer (or a rehance letter relating thereto) to the effect that the Escrow
Deposit Agreement is a valid and binding obligation of the parbes thereto enforceable in accordance w~th its
terms (such Escrow Deposit Agreement to provide that only with the Insurer consent may an amendment
occur). An executed copy of each of such opinion and reliance letter, if applicable, or Paying Agent's discharge
certificate, as the case may be, shall be forwarded to the Insurer prior to delivery of the Bonds.
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MUNICIPAL BOND DEBT SERVICE RESERVE
INSURANCE COMMITMENT
Issuer:
Bonds Insured:
Premium:
Policy Limit:
City of Delray Beach, Florida
Bonds
2.00% of Policy Limit
Date of Commitment: November 25, 2002
Expiration Date: Friday, January 24, 2003
A dollar amount equal to the Debt Service Reserve Requirement, as specified under the Resolution
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), a stock insurance company, hereby commits to
issue its Municipal Bond Debt Service Reserve Insurance Policy (the "Reserve Policy"), in the form attached hereto
as Exhibit A, relating to the above-described debt obligations (the "Bonds"), subject to the terms and conditions
contained herein or added hereto. All terms used herein and not otherwise defined shall have the meanings
ascribed to them in the document setting forth the security for and authorizing the issuance of the Bonds (the
"Resolution").
To keep this Commitment in effect after the Expiration Date set forth above, a request for renewal must be submitted
to Financial Security prior to such expiration date. Financial Secunty reserves the right to refuse wholly or in part to
grant a renewal To keep the Commitment in effect to the Expiration Date set forth above, Financial Security must
receive a duplicate of this Commitment executed by an appropriate officer of the Issuer by the date which is ten days
from the date of this Commitment.
THE RESERVE POLICY SHALL BE ISSUED UPON SATISFACTION OF THE FOLLOWING CONDITIONS:
The documents to be executed and delivered in connection w~th the issuance and sale of the Bonds shall not
contain any untrue or misleading statement of a material fact and shall not fail to state a material fact
necessary in order to make the information contained therein not misleading.
The Resolution shall provide: that the DSRF will be fully funded upon the issuance of any additional bonds
and that the draws on the Reserve Fund shall be restored from the first available Revenues with not less than
1/12t' paid per month.
There shall be no material change in or affecting the Bonds (including, w~thout limitation, the security for the
Bonds) or the financing documents or the Official Statement (or any similar disclosure documents) to be
executed and delivered in connection w~th the issuance and sale of the Bonds from the descnpbons or forms
thereof approved by Financial Security.
4. Financial Security shall be provided with:
(a) A letter from Greenberg Traurig, LLP ("Bond Counsel") addressed to Financial Security to the effect
that Financial Security may rely on the approving opinion(s) of Bond Counsel as if such opinion(s) were
addressed to Financial Security.
(b) An opinion(s) of Bond Counsel, addressed to and ~n form and substance satisfactory to Financial
Security, as to the (i) due authorizabon, validity and enforceability of the Resolution, the Insurance Agreement
and the document which incorporates the requirements set forth in Paragraph 5 hereof and (ii) the Policy
consbtuting a debt service reserve ~nsurance policy under the applicable provisions of the Resolution.
Page I of 3
(c) Evidence of wire transfer in federal funds in an amount equal to the insurance premium, unless
alternative arrangements for the payment of such amount acceptable to Financial Security have been made
prior to the delivery date of the Reserve Policy.
The Resolution shall include the following terms and conditions and shall be in form and substance
acceptable to Financial Security:
(a) The Issuer shall repay any draws under the Reserve Policy and pay all related reasonable expenses
incurred by Financial Security. Interest shall accrue and be payable on such draws and expenses frem the
date of payment by Financial Security at the Late Payment Rate. "Late Payment Rate" means the lesser of
(a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase
Bank at its principal office in the City of New York, as its prime or base lending rate ("Prime Rate") (any
change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank)
plus 3%, and 0i) the then applicable highest rate of interest on the Bonds and (b) the maximum rate
permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be
computed on the basis of the actual number of days elapsed over a year of 365 days. In the event JPMorgan
Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or
base lending rate of such national bank as Financial Security shall specify.
Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate
(collectively, "Policy Costs") shall commence in the first month following each draw, and each such monthly
payment shall be m an amount at least equal to 1/12 of the aggregate of Policy Costs related to such draw.
Amounts in respect of Policy Costs paid to Financial Security shall be credited first to interest due, then
to the expenses due and then to principal due. As and to the extent that payments are made to Financial
Security on account of principal due, the coverage under the Reserve Policy will be increased by a like
amount, subject to the terms of the Reserve Policy.
All cash and investments in the debt service reserve fund established for the Bonds (the "Reserve
Fund") shall be transferred to the debt service fund for payment of debt service on Bonds before any drawing
may be made on the Reserve Policy or any other credit facility credited to the Reserve Fund in lieu of cash
("Credit Facility"), Payment of any Pohcy Costs shall be made prior to replenishment of any such cash
amounts. Draws on all Credit Facilities (including the Reserve Policy) on which there is available coverage
shall be made on a pre-rata basis (calculated by reference to the coverage then available thereunder) after
applying all available cash and investments in the Reserve Fund. Payment of Policy Costs and
reimbursement of amounts with respect to other Credit Facilities shall be made on a pro-rata basis prior to
replenishment of any cash drawn from the Reserve Fund.
(b) If the Issuer shall fail to pay any Policy Costs in accordance with the requirements of Paragraph 5(a)
hereof, Financial Security shall be entitled to exercise any and all legal and equitable remedies available to it,
including those provided under the Resolution other than (i) acceleration of the maturity of the Bonds or (ii)
remedies which would adversely affect owners of the Bonds.
(c) The Resolution shall not be discharged until all Policy Costs owing to Financial Security shall have
been paid in full. The Issuer's obligation to pay such amounts shall expressly survive payment in full of the
Bonds.
(d) The additional bonds test and the rate covenant in the Resolution shall expressly provide for at least
one times coverage of the Policy Costs then due and owing.
(e) The Resolution shall require the Paying Agent to ascertain the necessity for a claim upon the Reserve
Policy and to provide notice to Financial Security in accordance with the terms of the Reserve Policy at least
five business days prior to each date upon which interest or principal is due on the Bonds. Where deposits
Page 2 of 3
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are required to be made by the Issuer with the Paying Agent to the debt service fund for the Bonds more often
than semi-annually, the Paying Agent shall be instructed to give notice to Financial Security of any failure of
the Issuer to make timely payment in full of such deposits w~thin two business days of the date due.
The Reserve Policy shall expire on the earlier of the date the Utilities Tax Revenue Refunding Bonds, Series
2002 are no longer outstanding and the final maturity date of the Bonds.
The Issuer shall deliver to Financial Security an executed Insurance Agreement in substantially the form of
Exhibit B hereto.
Any official statement or similar disclosure document relating to the Bonds shall contain only such references
to the Reserve Policy and Financial Security as we shall supply or approve.
Financial Security shall insure the Bonds pursuant to its Commitment Letter dated November 25, 2002.
Promptly after the issuance of the Reserve Policy, Financial Security shall receive a complete set of executed
documents implementing the requirements of this Commitment.
FINANCIAL SECURITY ASSURANCE INC.
Authorized Officer
To keep this commitment in effect to the Expiration Date set forth on the first page, Financial Security must receive
by the date which is ten days from the date of this Commitment a duplicate of this Commitment executed by an
appropriate officer of the Issuer.
The undersigned agrees that if the debt service reserve fund requirement for the Bonds is met in whole or in part by
credit instrument, such credit instrument shall be a Reserve Pohcy provided by Financial Secunty in accordance with
the terms of this Commitment.
CITY OF DELRAY BEACH, FLORIDA
Authorized Officer
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EXHIBIT B
FINANCIAL
SECURITY
ASSURANCE®
MUNICIPAL BOND DEBT SERVICE
RESERVE INSURANCE POLICY
ISSUER: City of Delray Beach, Flodda
Policy No.:
BONDS:
$[total par amount of bonds insured] in aggregate
principal amount of Bonds
Effective Date: December 19, 2002
Premium: $
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for consideration received, hereby
UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the 'q'rustee") or paying agent (the
"Paying Agent'') as set forth in the documentation (the "Bond Document'') providing for the issuance of and
secudng the Bonds, for the benefit of the Owners, subject only to the terms of this Policy (which includes each
endorsement hereto), that portion of the pnnc~pal of and interest on the Bonds that shall become Due for
Payment but shall be unpaid by reason of Nonpayment by the Issuer
Financial Secudty wdl make payment as provided in this Policy to the Trustee or Paying Agent on the later
of the Business Day on which such principal and interest becomes Due for Payment or the Business Day next
following the Business Day on which F~nancial Security shall have received Notice of Nonpayment, in a form
reasonably satisfactory to it. A Notice of Nonpayment will be deemed received on a g~ven Business Day if it is
received prior to 1.00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the
next Business Day. If any Notice of Nonpayment received by F~nancial Secunty ~s incomplete, it shall be
deemed not to have been received by Financial Secudty for purposes of the preceding sentence and Financial
Secunty shall promptly so advise the Trustee, Paying Agent or Issuer, as appropriate, who may submit an
amended Notice of Nonpayment. Payment by Financial Secunty to the Trustee or Paying Agent for the benefit
of the Owners shall, to the extent thereof, discharge the obligation of Financial Security under this Policy. Upon
such payment, Financial Secudty shall become entitled to reimbursement of the amount so paid (together with
interest and expenses) pursuant to the [Bond Document or][Insurance Agreement]. Upon disbursement in
respect of a Bond, Financial Security shall become the owner of the Bond, any appurtenant coupon to the
Bond or right to receipt of payment of principal of or interest on the Bond and shall be fully subrogated to
the rights of the Owner, including the Owner's right to receive payments under the Bond and all insurance
policies m respect of the Bond, to the extent of any payment by Financial Security hereunder.
The amount available under this Policy for payment shall not exceed the Policy Limit. The amount available
at any particular time to be paid to the Trustee or Paying Agent under the terms of this Policy shall automatically
be reduced by any payment under this Policy. However, after such payment, the amount available under this
Pohcy shall be reinstated ~n full or in part, but only up to the Policy Limit, to the extent of the reimbursement of
such payment (exclusive of ~nterest and expenses) to Financial Secudty by or on behalf of the Issuer. Within
three Business Days of such reimbursement, Financial Secudty shall provide the Trustee, the Paying Agent and
the Issuer with notice of the reimbursement and reinstatement.
Payment under this Pohcy shall not be available with respect to (a) any Nonpayment that occurs pdor to the
Effective Date or after the Termination Date of this Policy or (b) Bonds that are not outstanding under the Bond
Document. If the amount payable under this Policy is also payable under another insurance policy or surety
bend ~nsudng the Bonds, payment first shall be made under th~s Policy to the extent of the amount available
under this Policy up to the Policy L~mit. In no event shall Financial Secunty incur duplicate liabdity for the same
amounts owing with respect to the Bonds that are covered under th~s Policy and any other insurance policy or
surety bond that Financial Secudty has issued.
Except to the extent expressly modified by an endorsement hereto, the following terms shall have the
meanings specified for all purposes of this Policy. "Business Da~/' means any day other than (a) a Saturday or
Sunday or (b) a day on which banking institutions in the State of New York are, or the Insurer's Fiscal Agent is,
authorized or reequlred by law or executive order to remain closed. "Due for Payment" means (a) when referring
to the pnncipal of a Bond, payable on the stated matudty date thereof or the date on which the same shall have
been duly called for mandatory sinking fund redemption and does not refer to any eadier date on which payment
is due by mason of call for redemption ((~ther than by mandato~j sinking fund redemption), acceleration or olher
advancement of maturity unless Financial Security shall elect, in its sole discretion, to pay such principal due
Page2of2
Policy No.
upon such acceleration together with any accrued interest to the date of acceleration and (b) when referring to
interest on a Bond, payable on the stated date for payment of interest. "Insurance Agreement" means the
Insurance Agreement dated as of the effective date hereof in respect of th~s Policy, as the same may be
amended or supplemented from time to time. "Nonpayment" means, in respect of a Bond, the failure of the
Issuer to have provided sufficient funds to the Paying Agent for payment in full of all principal and interest that is
Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond, any payment of
principal or interest that is Due for Payment made to an Owner by or on behaff of the Issuer that has been
recovered from such Owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in
accordance with a final, nonappealable order of a court having competent jurisdiction. "Notice" means
telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or
certified mail, from the Issuer, the Trustee or the Paying Agent to Financial Security which notice shall specify (a)
the person or entity making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such
claimed amount became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at
the t~me of Nonpayment, is entitled under the terms of such Bond to payment of principal or interest thereunder,
except that "Owner" shall not include the Issuer or any person or entity whose direct or indirect obligation
constitutes the underlying secudty for the Bonds. "Policy Limit" shall be the dollar amount of the debt service
reserve fund required to be maintained for the Bonds by the Bond Document from time to time (the "Debt
Service Reserve Requirement"), but in no event shall the Policy Limit exceed $1,300,000. The Policy Limit shall
automatically and irrevocably be reduced from time to time by the amount of each reduction in the Debt Service
Reserve Requirement, as provided in the Bond Document. "Termination Date" means the earlier of June 1,
2016 and the date the Bonds are no longer outstanding under the Bond Document.
Financial Secudty may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of this Policy by
giwng written notice to the Trustee and the Paying Agent specifying the name and notice address of the Insurer's
Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the Paying Agent, (a) copies
of all notices required to be delivered to Financial Secunty pursuant to this Policy shall be simultaneously
delivered to the Insurer's F~scal Agent and to Financial Secudty and shall not be deemed received until received
by both and (b) all payments required to be made by Financial Secudty under this Policy may be made directly
by Financial Secudty or by the Insurer's Fiscal Agent on behalf of F~nancial Secunty. The Insurer's Fiscal Agent
~s the agent of Financial Seoudty only and the Insurer's F~scal Agent shall in no event be liable to any Owner for
any act of the Insurer's Fiscal Agent or any fadure of Financial Secunty to deposit or cause to be deposited
sufficient funds to make payments due under this Policy.
To the fullest extent permitted by applicable law, Financial Security agrees not to assert, and hereby waives,
only for the benefit of each Owner, all dghts (whether by countemlaim, setoff or otherwise) and defenses
0ncluding, w~thout limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to
the extent that such dghts and defenses may be available to Financial Security to avoid payment of its
obligations under this Policy in accordance with the express provisions of this Policy.
This Policy sets forth in full the undertaking of Financial Security, and shall not be modified, altered or
affected by any other agreement or instrument, including any modification or amendment thereto Except to the
extent expressly modified by an endorsement hereto, (a) any premium paid in respect of this Policy is
nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the
Bonds prior to maturity and (b) this Policy may not be canceled or revoked. THIS POLICY IS NOT COVERED
BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this Policy to be executed on
its behalf by its Authorized Officer.
[Countersignature]
FINANCIAL SECURITY ASSURANCE INC.
By By
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022
Form 501B NY (8/96)
Authorized Officer
(212) 826-0100
Exhibit F
INSURANCE AGREEMENT
INSURANCE AGREEMENT, dated as of , by and between City of Delray Beach (the
"Issuer") and Financial Security Assurance Inc. (the "Insurer") (the "Agreement").
In consideration of the issuance by the Insurer of its Municipal Bond Debt Service Reserve Insurance Policy
(the "Reserve Policy") with respect to the Issuer's Bonds (the "Bonds") issued under the Resolution dated (the
"Resolution") and the Issuer's payment to the Insurer of the insurance premium for the Reserve Policy, the Insurer
and the Issuer hereby covenant and agree as follows:
Upon any payment by the Insurer under the Reserve Policy, the Insurer shall furnish to the Issuer
written instructions as to the manner in which payment of amounts owed to the Insurer as a result
of such payment under the Reserve Policy shall be made.
The Issuer shall pay the Insurer the principal amount of any draws under the Reserve Policy and
pay all related reasonable expenses incurred by the Insurer and shall pay interest thereon from the
date of payment by Financial Secudty at the Late Payment Rate. "Late Payment Rate" means the
lesser of Ia) the greater of Ii) the per annum rate of interest, publicly announced from time to time
by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base
lending rate ("Prime Rate") (any change in such Prime Rate to be effective on the date such
change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate
of interest on the Bonds and (b) the maximum rate permissible under applicable usury or similar
laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual
number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to
announce its Prime Rate, the Prime Rate shall be the prime or base lending rate of such national
bank as the Insurer shall designate.
Repayment of draws and payment of expenses and the interest accrued thereon at the Late
Payment Rate (collectively, "Policy Costs") shall commence in the first month following each draw,
and each such monthly payment shall be in an amount at least equal to 1/12th of the aggregate of
Policy Costs related to such draw.
Amounts in respect of Policy Costs paid to the Insurer shall be credited first to interest due, then to
the expenses due and then to principal due.
As and to the extent that payments are made to the insurer on account of principal due, the
coverage under the Reserve Policy will be increased by a like amount, subject to the terms of the
Reserve Policy.
All cash and investments in the Reserve Fund shall be transferred to the debt service fund for
payment of debt service on the Bonds before any drawing may be made on the Reserve Policy or
on any alternative credit instrument. Payment of any Policy Costs shall be made prior to
replenishment of any such cash amounts. Draws on all alternative credit instruments (including
the Reserve Policy) on which there is available coverage shall be made on a pro rata basis
(calculated by reference to coverage then available under each such alternative credit instrument)
after applying available cash and investments in the Reserve Fund. Payment of Policy Costs and
reimbursement of amounts with respect to alternative credit instruments shall be made on a pro-
rata bas~s prior to replenishment of any cash drawn from the Reserve Fund.
If the Issuer shall fail to pay any Policy Costs in accordance with the requirements of the
Resolution and th~s Agreement, the Insurer shall be entitled to exercise any and all legal and
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equitable remedies available to it, including those provided under the Resolution, other than (i)
acceleration of the maturity of the Bonds or (ii) remedies which would adversely affect owners of
the Bonds.
The Resolution shall not be discharged until all Policy Costs owing to the Insurer shall have been
paid in full. The Issuer's obligation to pay such amounts shall expressly survive payment in full of
the Bonds.
In order to secure the Issuer's payment obligations with respect to the Policy Costs, there is hereby
granted and perfected in favor of the Insurer a security interest (subordinate only to that of the
owners of the Bonds) in all revenues and collateral pledged as security for the Bonds.
10. Policy Costs due and owing shall be included in debt service requirements for purposes of
calculation of the additional bonds test and the rate covenant in the Resolution.
11.
The Paying Agent shall ascertain the necessity for a claim upon the Reserve Policy and provide
notice to the Insurer in accordance with the terms of the Reserve Policy at least five business days
prior to each date upon which interest or principal is due on the Bonds. Where deposits are
required to be made by the Issuer with the Paying Agent to the debt service fund for the Bonds
more often than semi-annually, the Paying Agent shall give notice to the Insurer of any failure of
the Issuer to make timely payment in full of such deposits within two business days of the date
due.
12.
Notices to the Insurer shall be sent to the following address (or such other address as the Insurer
may designate in writing): Financial Security Assurance Inc., 350 Park Avenue, New York, New
York 10022-6022 Attention: Managing Director- Surveillance.
13. This Agreement may be executed in counterparts, each of which alone and all of which together
shall be deemed one original Agreement.
14.
If any one or more of the agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such agreements, provisions or terms shall be deemed
severable from the remaining agreements, provisions or terms of this Agreement and shall in no
way affect the validity or enforceability of the other provisions of this Agreement.
15. All capitalized terms used herein and not otherwise defined shall have the meanings ascdbed to
them in the Resolution.
16. This Agreement and the rights and obligations of the parties of the Agreement shall be governed
by and construed and interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date written above.
CITY OF DELRAY BEACH, FLORIDA
FINANCIAL SECURITY ASSURANCE INC.
By: By:
Title: Title: Managing Director
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To:
From:
Subject:
Date:
MEMORANDUM
City Commission
David T. Harden, City Manager~'J~
Resolution # 90-02, 91-02, and 92-02
November 25, 2002
In connection with proposed bond refundings, I recommend approval of the attached
Resolution# 90-02, #91-02, and #92-02. A brief description of each resolution is as
follows:
Resolution #90-02
Resolution #90-02 authorizes the issuance and negotiated sale of up to $16,500,000 in
Utility Tax Bonds. The proposed bonds will be issued for the purpose of refunding or
refinancing City of Delray Beach Bonds, Series 1992, 1994, 1995, 1996, and 1998.
The resolution stipulates that certain parameters must be met in order to effectuate the
sale. These parameters are 1.) the true interest cost does not exceed 5% per annum,
2.) the Underwriter's fee or discount paid is not more than $6.00 per thousand of the
original principal amount of the Bonds, 3.) the principal amount does not exceed
$16,500,000, 4.) the final maturity of the Bonds does not extend beyond June 1, 2016
and 5.) the net present value savings for paying and defeasing a portion of the
Refunded Bonds shall not be less than three percent (3%). The resolution also
authorizes the Mayor, or in his absence, the Vice-Mayor, to execute the documents to
effectuate the sale if these parameters have been met.
RESOLUTION #91-02 and #92-02
Resolution #91-02 authorizes the issuance of up to $18,000,000 in General Obligation
Bonds. The Bonds will be issued for the purpose of refunding the outstanding General
Obligation Bonds, Series A & B. The resolution provides for the form and terms of the
bonds as well as provides for City's undertaking regarding secondary market disclosure
as required by the Securities and Exchange Commission.
Resolution #92-02 authorizes the negotiated sale and sets the parameters to effectuate
the sale. The parameters are 1 .) the principal amount does not exceed $18,000,000, 2.)
the true interest cost does not exceed 5%, 3.) the final maturity is not later than
February 1,2013, 4.) the underwriter's discount is not greater than $6.00 per $1,000 of
the principal amount of the bonds and the 5.) the net present value savings for paying
and defeasing the refunded bonds is not less than 3%. The resolution also authorizes
the Mayor, or in his absence, the Vice-Mayor, to execute documents to effectuate the
sale of bonds.
MEMORANDUM
To:
David T. Harden, City Manager
From:
Joseph M. Safford, Director of Finance
Subject:
Resolution # 90-02, 91-02, and 92-02
Date:
November 25, 2002
We have attached for Commission approval Resolution# 90-02, #91-02, and #92-02. A
brief description of each resolution is as follows:
Resolution #90-02
Resolution #90-02 authorizes the issuance and negotiated sale of up to $16,500,000 in
Utility Tax Bonds. The proposed bonds will be issued for the purpose of refunding or
refinancing City of Delray Beach Bonds, Series 1992, 1994, 1995, 1996, and 1998.
The resolution stipulates that certain parameters must be met in order to effectuate the
sale. These parameters are 1.) the true interest cost does not exceed 5% per annum,
2.) the Underwriter's fee or discount paid is not more than $6.00 per thousand of the
original principal amount of the Bonds, 3.) the principal amount does not exceed
$16,500,000,4.) the final maturity of the Bonds does not extend beyond June 1,2016
and 5.) the net present value savings for paying and defeasing a portion of the
Refunded Bonds shall not be less than three percent (3%). The resolution also
authorizes the Mayor, or in his absence, the Vice-Mayor, to execute the documents to
effectuate the sale if these parameters have been met.
Total net present value savings, which takes into consideration the time value of money,
is estimated at $931,000 over the term of the bonds or 6.07% of the refunded bonds.
RESOLUTION #91-02 and #92-02
Resolution #91-02 authorizes the issuance of up to $18,000,000 in General Obligation
Bonds. The Bonds will be issued for the purpose of refunding the outstanding General
Obligation Bonds, Series A & B. The resolution provides for the form and terms of the
bonds as well as provides for City's undertaking regarding secondary market disclosure
as required by the Securities and Exchange Commission.
Resolution #92-02 authorizes the negotiated sale and sets the parameters to effectuate
the sale. The parameters are 1.) the principal amount does not exceed $18,000,000, 2.)
the true interest cost does not exceed 5%, 3.) the final maturity is not later than
February 1,2013, 4.) the underwriter's discount is not greater than $6.00 per $1,000 of
the principal amount of the bonds and the 5.) the net present value savings for paying
and defeasing the refunded bonds is not less than 3%. The resolution also authorizes
the Mayor, or in his absence, the Vice-Mayor, to execute documents to effectuate the
sale of bonds.
Total net present value savings is estimated at $738,000 over the term of the bonds or
4.35% of the refunded bonds.
A presentation from Public Financial Management, the City's financial advisor, will
precede the motion to approve the above referenced resolutions. PFM will explain the
background and discuss expected results relative to refunding or refinancing of the
City's prior bond issues.
Request to be placed on:
x
Regular Agenda
When: December 3, 2002
Agenda Item No.:q~;~?
AGENDA REQUEST
Date: 11/25/02
Special Agenda
Workshop Agenda
Description of agenda item (who., what, where, how much):
.. Approve Resolution # 90-02 ~,,~hnr~g the i_~suancc and ~cgoti&tad sale uf up tu
$16.500.000 ........... in lle{l{ev. T=~ n~m~ Approvc ..~o~." ...... ,r~ ~i-02 authrizing Uhe
........................... *s~a K~fundlng Bonds. Approve
-' - ........................ ~ the n=$utiaLed sale of che General Obligation Refunding
O~I~4CE/ ~SOLUTION ~QUI~D: YE~'/N~~' D~aft Attached: YES/NO
Bonds and to set the parameters to effectuate the sale.
Recommendation:
App~-nxro the ~beYe rcfcranccd rasolutlons.
Department Head Signature:
Determination of Consistency with Comprehensive Plan:
City Attorney Review/ Recommendation (if applicable):
Budget Director Review (required on all items involving expenditure
of funds):
Funding available: YES/ NO
Funding alternatives:
Account No. & Description:
Account Balance:
(if applicable)
City Manager Review:
Approved for agenda:
Hold Until:
Agenda Coordinator Review:
Received:
Action: Approved/Disapproved
Request to be placed on:
x
Regular Agenda
When: December 3, 2002
Agenda Item
AGENDA REQUEST
Date: 11/25/02
Special Agenda
Workshop Agenda
Description of agenda item (who., what, where, how much):
Approve Resolution # 90-02 ~,,thn~no ~ho ~ .......... .., .............
$16 ° - ................... 6 ......... ~= u~ up to
~ - ........... ~ .............. m ~ ~z-u~ ~uLh~izing the
iss~an~ n~ ,,n_~ ~__ ~]~,nnn,nnn~__ ~.. .~ in ~.~=~ ~=~ut~ ...... Rufunding Bonds. Approve
.......................... ~ ~-= ~u~i~Led sale of ~he ~enera~ Obligation Refunding
O~I~4CE/ ~SOLUTION ~QUI~D: YE~'/N~'- D~aft Attached: YES/NO
Bonds and to set the parameters to effectuate the sale.
Recommendation:
Department Head Signature:
Determination of Consistency with Comprehensive Plan:
City Attorney Review/ Recommendation (if applicable):
Budget Director Review (required on all items involving expenditure
of funds):
Funding available: YES/ NO
Funding alternatives:
Account No. & Description:
Account Balance:
(if applicable)
City Manager Review:
Approved for agenda:
Hold Until:
Ag%nda Coordinator Review:
Received:
Action: Approved/Disapproved