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Item R4BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: February 19 2003 Division: County Administrator Bulk Item: Yes _ No X Department: County Administrator AGENDA ITEM WORDING: Approval of two resolutions: 1) Resolution authorizing the issuance not exceeding $25,000,000 in aggregate principal amount of Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2003, to finance the acquisition, construction and equipping of certain capital improvements within the County. 2) Resolution supplementing a resolution adopted by the Board on February 19, 2003, and entitled, "A resolution authorizing the issuance of not exceeding $25,000,000 in aggregate principal amount of Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2003, to finance the acquisition, construction and equipping of certain capital improvements within the County." ITEM BACKGROUND: On Nov. 20, 2002, the Board directed and authorized the County's financial advisor and the County Administrator to solicit proposals from financial institutions to provide financing to the County in order to finance various Capital Improvements. The resolutions authorize the issuance of Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2003. The 2003 note will be secured by and payable from the One Cent Infrastructure Sales Surtax revenue. Proceeds will be used to finance capital projects as stated in Exhibit A of Resolution 1. PREVIOUS RELEVANT BOCC ACTION: On January 15, 2003, Board granted approval to advertise an Ordinance authorizing the issuance of its Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2003, in an aggregate principal amount not to exceed $25,000,000 secured by and payable from the pledged funds described herein for the principal purposes of financing the acquisition, construction and equipping of various capital improvements within the County; providing for various rights and remedies of the bondholders; providing that the bonds authorized hereunder will not create a general debt or obligation of the County; providing for severability; and providing an effective date. On January 15, 2003, the Board approved the revised capital improvement plan contingent upon the issuance of bonds and approval of revised allocation percentages for the capital improvement plan. On Nov. 20, 2002, Board approved resolution 542-2002 authorizing and directing the County Administrator and the County's financial advisor to solicit proposals from various financial institutions to provide financing to the County in order to finance various Capital Improvements CONTRACT/AGREEMENT CHANGES: N/A STAFF RECOMMENDATIONS: Approval as stated above. TOTAL COST: BUDGETED: Yes _ No COST TO COUNTY: SOURCE OF FUNDS: REVENUE PRODUCING: Yes _ No _ AMOUNT PER MONTH Year APPROVED BY: County Atty _ OMB/Purchasing Risk Management DIVISION DIRECTOR APPROVAL: .17 y James L. Roberts DOCUMENTATION: Included X To Follow Not Required DISPOSITION: AGENDA ITEM # -,5? Revised 1/03 MONROE COUNTY, FLORIDA INFRASTRUCTURE SALES SURTAX REVENUE BOND RESOLUTION ADOPTED FEBRUARY 19, 2003 TABLE OF CONTENTS ARTICLE I P age GENERAL SECTION 1.01. DEFINITIONS I SECTION 1.02. AUTHORITY FOR RESOLUTION 14 SECTION 1.03: RESOLUTION TO CONSTITUTE CONTRACT ............. 14 SECTION 1.04. FINDINGS 14 SECTION 1.05. AUTHORIZATION OF THE 2003 PROJECT ............... 15 ARTICLE II AUTHORIZATION, TERMS, SALE, EXECUTION AND REGISTRATION OF BONDS SECTION 2.01. AUTHORIZATION OF BONDS SECTION 2.02. .......................... AUTHORIZATION AND DESCRIPTION OF THE 16 SERIES 2003 BONDS SECTION 2.03. ............................ APPLICATION OF SERIES 2003 BOND PROCEEDS 16 SECTION 2.04. ........ EXECUTION OF BONDS 17 SECTION2.05. ............................... '-••••••••••••••• AUTHENTICATION 18 SECTION 2.06. .................. TEMPORARY BONDS 19 SECTION 2.07. ........ BONDS MUTILATED, DESTROYED, STOLEN OR LOST 19 19 SECTION 2.08. ... INTERCHANGEABILITY, NEGOTIABILITY AND TRANSFER ............. 20 SECTION 2.09. FULL BOOK ENTRY FOR SERIES 2003 BONDS SECTION 2.10. ........... FORM OF BONDS 21 .................................... 23 ARTICLE III REDEMPTION OF BONDS SECTION 3.01. PRIVILEGE OF REDEMPTION .......................... 32 SECTION 3.02. SELECTION OF BONDS TO BE REDEEMED .............. 32 SECTION 3.03. NOTICE OF REDEMPTION ............................. 32 SECTION 3.04. REDEMPTION OF PORTIONS OF BONDS ................ 34 SECTION 3.05. PAYMENT OF REDEEMED BONDS ..................... 34 I ARTICLE IV SECURITY, SPECIAL FUNDS AND APPLICATION THEREOF SECTION 4.01. BONDS NOT TO BE INDEBTEDNESS OF ISSUER SECTION 4.02. ......... SECURITY FOR BONDS 35 SECTION 4.03. ............................... CONSTRUCTION FUND 35 SECTION 4.04. ............................... FUNDS AND ACCOUNTS 36 SECTION 4.05. .............................. DISPOSITION OF INFRASTRUCTURE SALES 37 SURTAX REVENUES ..... 37 SECTION 4.06. REBATE FUND SECTION 4.07. ....................................... INVESTMENTS 45 SECTION 4.08. ................ SEPARATE ACCOUNTS 45 ............................... 46 ARTICLE V SUBORDINATED INDEBTEDNESS, ADDITIONAL BONDS AND COVENANTS OF ISSUER SECTION 5.01. SUBORDINATED INDEBTEDNESS SECTION 5.02. ..................... ISSUANCE OF ADDITIONAL BONDS 47 SECTION 5.03. ................... BOND ANTICIPATION NOTES 47 SECTION 5.04. ......................... ACCESSION OF SUBORDINATED INDEBTEDNESS TO 49 PARITY STATUS WITH BONDS ................... 49 SECTION 5.05. BOOKS AND RECORDS SECTION 5.06. ............................... NO IMPAIRMENT; LIMITATION ON MATURITY OF 49 SECTION 5.07. BONDS .. ......... FEDERAL INCOME TAX COVENANTS 49 SECTION 5.08. . ................. RECEIPT OF INFRASTRUCTURE SALES SURTAX 49 SECTION 5.09. REVENUES ................... OBLIGATIONS UNDER PRIOR RESOLUTION ............ 50 50 ARTICLE VI DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT ................................ 51 SECTION 6.02. REMEDIES 51 SECTION 6.03. DIRECTIONS TO RECEIVER AS TO REMEDIAL PROCEEDINGS ............ • • • ... . • . . . . . • . .. • 52 SECTION 6.04. REMEDIES CUMULATIVE ........... 52 SECTION 6.05. WAIVER OF DEFAULT ................................ 52 ii SECTION 6.06. APPLICATION OF MONEYS AFTER DEFAULT ........... 53 SECTION 6.07. CONTROL BY CREDIT FACILITY PROVIDER ............ 54 ARTICLE VII SUPPLEMENTAL RESOLUTIONS SECTION 7.01. SUPPLEMENTAL RESOLUTION WITHOUT BONDHOLDERS' CONSENT ...................... 55 SECTION 7.02. SUPPLEMENTAL RESOLUTION WITH BONDHOLDERS' AND CREDIT FACILITY PROVIDER'S CONSENT ... 56 SECTION 7.03. AMENDMENT WITH CONSENT OF CREDIT FACILITY PROVIDER ONLY ..................... 57 ARTICLE VIII DEFEASANCE; MISCELLANEOUS SECTION 8.01. DEFEASANCE........................................ 59 SECTION 8.02. CAPITAL APPRECIATION BONDS 60 SECTION 8.03. SALE OF BONDS .. • .. • . . . ... • .... • • . . 60 SECTION 8.04. GENERAL AUTHORITY ..........60 SECTION 8.05. SEVERABILITY OF INVALID PROVISIONS .............. 61 SECTION 8.06. REPEAL OF INCONSISTENT RESOLUTIONS ............. 61 SECTION 8.07. EFFECTIVE DATE .................................... 62 iii RESOLUTION NO. A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA AUTHORIZING THE ISSUANCE OF NOT EXCEEDING $25,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF MONROE COUNTY, FLORIDA INFRASTRUCTURE SALES SURTAX REVENUE BONDS, SERIES 2003, TO FINANCE THE ACQUISITION, CONSTRUCTION AND EQUIPPING OF CERTAIN CAPITAL IMPROVEMENTS WITHIN THE COUNTY; PLEDGING MONEYS RECEIVED BY THE COUNTY FROM THE ONE CENT LOCAL GOVERNMENT INFRASTRUCTURE SALES SURTAX TO SECURE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON SAID BONDS; PROVIDING FOR THE RIGHTS OF THE HOLDERS OF SAID BONDS; MAKING CERTAIN OTHER COVENANTS AND AGREEMENTS IN CONNECTION WITH THE ISSUANCE OF SUCH BONDS; PROVIDING CERTAIN TERMS AND DETAILS OF SAID BONDS; AND PROVIDING FOR AN EFFECTIVE DATE FOR THIS RESOLUTION. BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA: ARTICLE I GENERAL SECTION 1.01. DEFINITIONS. When used in this Resolution, the following terms shall have the following meanings, unless the context clearly otherwise requires: "Accreted Value" shall mean, as of any date of computation with respect to any Capital Appreciation Bond, an amount equal to the principal amount of such Capital Appreciation Bond (the principal amount at its initial offering) plus the interest accrued on such Capital Appreciation Bond from the date of delivery to the original purchasers thereof to the Interest Date next preceding the date of computation, or the date of computation if an Interest Date, such interest to accrue at a rate not exceeding the legal rate, compounded semiannually, plus, with respect to matters related to the payment upon redemption or acceleration of the Capital Appreciation Bonds, if such date of computation shall not be an Interest Date, a portion of the difference between the Accreted Value as of the immediately preceding Interest Date and the Accreted Value as of the immediately succeeding Interest Date, calculated based on the assumption that Accreted Value accrues during any semi-annual period in equal daily amounts on the basis of a 360-day year. "Act" shall mean Chapter 125, Florida Statutes, Chapter 212, Florida Statutes, the Monroe County Code, the Infrastructure Sales Surtax Ordinance, the Ordinance, and other applicable provisions of law. "Additional Bonds" shall mean the obligations (including, but not limited to, bond anticipation notes or other similar short-term indebtedness) issued at any time under the provisions of Section 5.02 hereof on a parity with the Series 2003 Bonds. "Amortization Installment" shall mean an amount designated as such by, or provided for pursuant to, Supplemental Resolution of the Issuer and established with respect to the Term Bonds. "Annual Debt Service" shall mean, at any time, the aggregate amount in the then current Fiscal Year of (1) interest required to be paid on the Outstanding Bonds during such Fiscal Year, except to the extent that such interest is to be paid from deposits in the Interest Account or Construction Fund from Bond proceeds for such purpose, (2) principal of Outstanding Serial Bonds maturing in such Fiscal Year, (3) the Amortization Installments with respect to such Fiscal Year, and (4) any amounts owing to the issuer of a Reserve Account Insurance Policy or Reserve Account Letter of Credit. For purposes of this definition, (A) all amounts payable on a Capital Appreciation Bond shall be considered a principal payment due in the year of its maturity or date of redemption by Amortization Installment, (B) with respect to debt service on any Bonds which are subject to a Qualified Hedge Agreement, interest on such Bonds during the term of such Qualified Hedge Agreement shall be deemed to be the Hedge Payments coming due during such period of time, and (C) the amount on deposit in the Reserve Account (or any subaccount thereof) on any date of calculation of Annual Debt Service shall be deducted from the amount of principal due at the final maturity of the Bonds which are secured by such Reserve Account (or subaccount thereof) and in each preceding year until such amount is exhausted. "Authorized Investments" shall mean any of the following, if and to the extent that the same are at the time legal for investment of funds of the Issuer: A. Direct obligations of the United States ofAmerica (including obligations issued or held in book -entry form on the books of the Department of the Treasury, and CATS and 2 TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. U.S. Export -Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership 2. Farmers Home Administration (FmHA) Certificates of beneficial ownership 3. Federal Financin,2 Bank 4. Federal Housing Administration Debentures (FHA) 5. General Services Administration Participation certificates 6. Government National Mortgage Association (GNMA or "Ginnie Mae") GNMA - guaranteed mortgage -backed bonds GNMA - guaranteed pass -through obligations 7. U.S. Maritime Administration Guaranteed Title XI financing 8. U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non -full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): 3 1. Federal Home Loan Bank System Senior debt obligations 2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") Participation Certificates Senior debt obligations 3. Federal National Mortgage Association (FNMA or "Fannie Mae") Mortgage -backed securities and senior debt obligations 4. Student Loan Marketing Association (SLMA or "Sallie Mae") Senior debt obligations 5. Resolution Fundin COm. (REFCORP) obligations 6. Farm Credit System Consolidated systemwide bonds and notes D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G; AAA-m; or AA-m and if rated by Moody's rated Aaa, Aa1 or Aa2. E. Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF. G. Investment Agreements, including Guaranteed Investment Contracts, Forward Purchase Agreements and Reserve Fund Put Agreements acceptable to the Insurers (Investment Agreement criteria is available upon request). H. Commercial paper rated, at the time of purchase, "Prime - I" by Moody's and "A-1 " or better by S&P. I. Bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of the two highest rating categories assigned by such agencies. KI J. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - 1 " or "A3" or better by Moody's and "A-1 " or "A" or better by S&P. K. Repurchase Agreements for 30 days or less must follow the following criteria. Repurchase Agreements which exceed 30 days must be acceptable to the Insurers (criteria available upon request) Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date. Repos must be between the municipal entity and a dealer bank or securities firm a. Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by Standard & Poor's and Moody's, or b. Banks rated "A" or above by Standard & Poor's and Moody's. 2. The written repo contract must include the following - a. Securities which are acceptable for transfer are: (i) Direct U.S. governments, or (ii) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC) b. The term of the repo may be up to 30 days C. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities). d. Valuation of Collateral 5 (i) The securities must be valued weekly, marked -to -market at current market price Plus accrued interest (ii) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by municipality, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%. 3. Legal opinion which must be delivered to the Issuer to the effect that the repo meets guidelines under state law for legal investment of public funds. L. Units of participation in the Local Government Surplus Funds Trust Fund established pursuant to Part IV, Chapter 218, Florida Statutes, or any similar common trust fund which is established pursuant to law as a legal depository of public moneys and for which the State Board of Administration acts as custodian. M. Other investments that are approved in writing by the Insurers. Rating categories when referred to herein shall be without regard to gradations within such categories, such as "plus" or "minus." "Authorized Issuer Officer" shall mean the Mayor, the County Administrator, the Clerk or their designee(s), and when used in reference to any act or document also means any other person authorized by resolution of the Issuer to perform such act or sign such document. "Bond Amortization Account" shall mean the separate account in the Debt Service Fund established pursuant to Section 4.04 hereof. "Bond Counsel" shall mean Nabors, Giblin & Nickerson, P.A. or any other attorney at law or firm of attorneys, of nationally recognized standing in matters pertaining to the federal tax exemption of interest on obligations issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of the United States of America. n "Bond Insurance Policy" shall mean a municipal bond insurance policy issued by an Insurer insuring the payment, when due, of the principal of and interest on a Series of Bonds as provided therein. With respect to the Series 2003 Bonds, "Bond Insurance Policy" shall mean the municipal bond insurance policy issued by MBIA Insurance Corporation guaranteeing, when due, the scheduled principal of and interest on the Series 2003 Bonds. "Bond Year" shall mean the period commencing on October 1 of each year and ending on September 30 of each year. "Bondholder" or "Holder" or "holder of Bonds" or any similar term, when used with reference to a Bond or Bonds, shall mean any Person who shall be the registered owner of any Outstanding Bond or Bonds as provided in the registration books of the Issuer. "Bonds" shall mean the Series 2003 Bonds, together with any Additional Bonds, issued pursuant to this Resolution and any Subordinated Indebtedness which accedes to the status of Bonds pursuant to Section 5.04 hereof. "Capital Appreciation Bonds" shall mean those Bonds, if any, so designated by Supplemental Resolution of the Issuer, which may be either Serial Bonds or Term Bonds and which shall bear interest payable at maturity or redemption. In the case of Capital Appreciation Bonds that are convertible to Bonds with interest payable prior to maturity or prior to redemption of such Bonds, such Bonds shall be considered Capital Appreciation Bonds only during the period of time prior to such conversion. "Clerk" shall mean the Clerk of the Circuit Court for Monroe County, Florida and Ex-Officio Clerk of the Board of County Commissioners of Monroe County, Florida, and such other person as may be duly authorized to act on his or her behalf. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the regulations and rules promulgated thereunder. "Construction Fund" shall mean the Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds Construction Fund established pursuant to Section 4.03 hereof. "Cost" when used in connection with a Project and permitted by the Act, shall mean (1) the Issuer's cost of physical construction; (2) costs of acquisition by or for the Issuer of such Project or any portion thereof; (3) any costs of land and interests therein and the costs of the Issuer incidental to such acquisition (including, without limitation, title insurance and related costs and costs associated with the examination, survey and any remediation required with respect to such land); (4) the cost of any indemnity and surety bonds and premiums for 7 insurance during construction; (5) all interest due to be paid on the Bonds and other obligations relating to the Project during the period of construction of the Project and a reasonable period subsequent to completion of construction as the Issuer shall determine; (6) engineering, architectural, legal, financial advisory and other consultant fees and expenses; (7) costs and expenses of the financing incurred for the Project, including fees and expenses of any Paying Agent, Registrar, Credit Facility Provider or depository; (8) payments, when due (whether at the maturity of principal or the due date of interest or upon redemption) on any interim or temporary indebtedness of the Issuer incurred for the Project; (9) costs of machinery, equipment, technology, supplies, spare parts, furniture and any other items required by the Issuer for the commencement of operation of the Project; and (10) any other costs properly attributable to such construction or acquisition or to the issuance of the Bonds which finance the Project, as determined by generally accepted accounting principles applicable to the Project, and shall include reimbursement to the Issuer for any such items of Cost paid by the Issuer prior to the issuance of the Bonds or other obligations issued to finance the Project. "Counterparty" shall mean the entity entering into a Hedge Agreement with the Issuer. Counterparty would also include any guarantor of such entity's obligations under such Hedge Agreement. "Credit Facility" shall mean as to any particular Series of Bonds, a Bond Insurance Policy, a letter of credit, a line of credit or another credit or liquidity enhancement facility, as approved herein or in the Supplemental Resolution providing for the issuance of such Series of Bonds. With respect to the Series 2003 Bonds, "Credit Facility" shall mean the Bond Insurance Policy issued by MBIA Insurance Corporation. "Credit Facility Provider" shall mean the Insurer, bank or other financial institution issuing a Credit Facility for a particular Series of Bonds. "Debt Service Fund" shall mean the Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds Debt Service Fund established pursuant to Section 4.04 hereof. "Fiscal Year" shall mean the period commencing on October 1 of each year and continuing through the next succeeding September 30, or such other period as may be prescribed by law. "Fitch" shall mean Fitch Ratings and any assigns or successors thereto. "Hedge Agreement" shall mean an agreement in writing between the Issuer and the Counterparty pursuant to which (1) the Issuer agrees to pay to the Counterparty an amount, either at one time or periodically, which may, but is not required to, be determined by reference to the amount of interest (which may be at a fixed or variable rate) payable on a notional amount specified in such agreement in the period specified in such agreement and (2) the Counterparty agrees to pay to the Issuer an amount, either at one time or periodically, which may, but is not required to, be determined by reference to the amount of interest (which may be at a fixed or variable rate) payable on all or a portion of a notional amount specified in such agreement during the period specified in such agreement. "Hedge Payments" shall mean any amounts payable by the Issuer as interest on the related notional amount under a Qualified Hedge Agreement; excluding, however, any payments due as a penalty or a fee or by virtue of termination of a Qualified Hedge Agreement or any obligation of the Issuer to provide collateral. "Hedge Receipts" shall mean any amounts receivable by the Issuer on the related notional amount under a Qualified Hedge Agreement. "Infrastructure Sales Surtax Ordinance" shall mean, collectively, Ordinance No. 013-1989 adopted by the Board on May 23, 1989, and Ordinance No. 01-2000 adopted by the Board on January 19, 2000, authorizing the levy of a one cent local government infrastructure surtax, as each Ordinance may be amended and supplemented. "Infrastructure Sales Surtax Revenues" shall mean the proceeds received by the Issuer from the levy of the one cent local government infrastructure sales surtax pursuant to Section 212.055(2), Florida Statutes and other applicable provisions of law. "Insurer" shall mean with respect to the Series 2003 Bonds, MBIA Insurance Corporation and with respect to any other Series of Bonds, the Credit Facility Provider, if any, issuing a Bond Insurance Policy with respect to such Series of Bonds. "Interest Account" shall mean the separate account in the Debt Service Fund established pursuant to Section 4.04 hereof. "Interest Date" or "interest payment date" shall be such date or dates for the payment of interest on the Bonds as provided pursuant to Sections 2.01 or 2.02 hereof. "Issuer" or "County" shall mean Monroe County, Florida, a political subdivision of the State of Florida. "Maximum Annual Debt Service" shall mean the largest aggregate amount of the Annual Debt Service becoming due in any Fiscal Year in which Bonds are Outstanding, 7 excluding all Fiscal Years which shall have ended prior to the Fiscal Year in which the Maximum Annual Debt Service shall at any time be computed. "Maximum Interest Rate" shall mean, with respect to any particular Variable Rate Bonds, a numerical rate of interest, which shall be set forth in the Supplemental Resolution of the Issuer delineating the details of such Bonds, that shall be the maximum rate of interest such Bonds may at any particular time bear in the future in accordance with the terms of such Supplemental Resolution. "Mayor" shall mean the Chairman or the Mayor of the Board of County Commissioners of the Issuer, and such other person as may be duly authorized to act on his or her behalf. "Moody's" shall mean Moody's Investors Service, and any assigns or successors thereto. "Ordinance" shall mean the ordinance adopted by the Board on February 19, 2003, authorizing the issuance of the Series 2003 Bonds. "Outstanding" when used with reference to the Bonds and as of any particular date, shall describe all of the Bonds theretofore and thereupon being authenticated and delivered except, (1) any Bond in lieu of which another Bond or Bonds have been issued under agreement -to replace lost, mutilated or destroyed Bonds, (2) any Bond surrendered by the Holder thereof in exchange for another Bond or Bonds under Sections 2.07 and 2.08 hereof, (3) Bonds deemed to have been paid pursuant to Section 8.01 hereof, and (4) Bonds cancelled after purchase in the open market or because of payment at maturity. "Paying Agent" shall mean for each Series of Bonds, the paying agent appointed by the Issuer for such Series of Bonds and its successors and assigns, if any. "Person" shall mean an individual, a corporation, a partnership, an association, a joint stock company, a trust, any unincorporated organization or governmental entity. "Pledged Funds" shall mean (1) the Infrastructure Sales Surtax Revenues, and (2) until applied in accordance with the provisions of this Resolution, all moneys, including investments thereof, in the funds and accounts established hereunder except (A) for the Unrestricted Revenue Account and the Rebate Fund and (B) any moneys set aside in a particular subaccount of the Reserve Account if such moneys shall be pledged solely for the payment of a different Series of Bonds for which it was established in accordance with the provisions hereof. 10 "Prerefunded Obligations" shall mean any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state (1) which are (A) not callable at the option of the obligor prior to maturity or (B) as to which irrevocable instructions have been given to the fiduciary for such bonds or other obligations by the obligor to give due notice of redemption and to call such bonds for redemption on the date or dates specified in such instructions, (2) which are fully secured as to principal, redemption premium, if any, and interest by a fund consisting only of cash or Refunding Securities, secured in the manner set forth in Section 8.01 hereof, which fund may be applied only to the payment of such principal of, redemption premium, if any, and interest on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as the case may be, (3) as to which the principal of and interest on the Refunding Securities, which have been deposited in such fund along with any cash on deposit in such fund, are sufficient, as verified by an independent certified public accountant, to pay principal of, redemption premium, if any, and interest on the bonds or other obligations on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in clause (1) above, and (4) which are rated in the highest rating category of Standard & Poor's, Fitch or Moody's. "Principal Account" shall mean the separate account in the Debt Service Fund established pursuant to Section 4.04 hereof. "Prior Bonds" shall mean the Issuer's outstanding Monroe County, Florida Sales Tax Refunding Revenue Bonds, Series 1998, dated as of January 1, 1998. "Prior Resolution" shall mean the Issuer's Resolution No. 206-1990, adopted on March 10, 1980, as amended and supplemented. "Project" shall mean the 2003 Project and the acquisition, construction and equipping of such additional properties and facilities that are subsequently approved by the Issuer and which may be lawfully financed with Infrastructure Sales Surtax Revenues pursuant to the Act. "Qualified Hedge Agreement" shall mean a Hedge Agreement with a Counterparty which at the time it enters into such Qualified Hedge Agreement is rated "A-" or better by Standard & Poor's and "A3" or better by Moody's. "Rebate Fund" shall mean the Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Rebate Fund established pursuant to Section 4.04 hereof. 11 "Redemption Price" shall mean, with respect to any Bond or portion thereof, the principal amount or portion thereof, plus the applicable premium, if any, payable upon redemption thereof pursuant to such Bond or this Resolution. "Refunding Securities" shall mean any of the items listed in paragraph A or B (excluding paragraphs B(4) and B(6)) of the definition of Authorized Investments, and Prerefunded Obligations. "Registrar" shall mean for each Series of Bonds, any registrar appointed by the Issuer for such Series of Bonds and its successors and assigns, if any. "Reserve Account" shall mean the separate account in the Debt Service Fund established pursuant to Section 4.04 hereof. "Reserve Account Insurance Policy" shall mean an insurance policy or surety bond deposited in the Reserve Account in lieu of or in partial substitution for cash on deposit therein pursuant to Section 4.05(A)(4) hereof. "Reserve Account Letter of Credit" shall mean an unconditional irrevocable letter of credit or line of credit (other than a Reserve Account Insurance Policy) deposited in the Reserve Account in lieu of or in partial substitution for cash on deposit therein pursuant to Section 4.05(A)(4) hereof. "Reserve Account Requirement" shall mean, as of any date of calculation for the Reserve Account or any subaccount thereof, an amount equal to the lesser of (1) Maximum Annual Debt Service for all Outstanding Bonds secured thereby, (2) one hundred twenty-five percent (125%) ofthe average annual debt service for all Outstanding Bonds secured thereby, or (3) such other amount as shall be designated by Bond Counsel as the maximum amount of Bond proceeds which may be deposited in the Reserve Account without subjecting the same to yield restriction under the Code, or causing interest on any of the Bonds (other than Taxable Bonds) to be included in gross income for purposes of federal income taxation. For the purpose of determining the Reserve Account Requirement on any Variable Rate Bonds, the interest rate on the Variable Rate Bonds shall be assumed to be the rate calculated in accordance with Section 5.02(B) hereof. "Resolution" shall mean this Infrastructure Sales Surtax Revenue Bond Resolution, as the same may from time to time be amended, modified or supplemented by Supplemental Resolution. 12 "Restricted Revenue Account" shall mean the separate account in the Revenue Fund established pursuant to Section 4.04 hereof. "Revenue Fund" shall mean the Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds Revenue Fund established pursuant to Section 4.04 hereof. "Serial Bonds" shall mean all of the Bonds other than Term Bonds. "Series" shall mean all the Bonds delivered on original issuance in a simultaneous transaction and identified pursuant to Sections 2.01 and 2.02 hereof or a Supplemental Resolution authorizing the issuance by the Issuer as a separate Series, regardless ofvariations in maturity, interest rate, amortization installments or other provisions. "Series 2003 Bonds" shall mean the Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2003, authorized and issued pursuant to Section 2.02 of this Resolution. "Standard & Poor's" shall mean Standard and Poor's Ratings Group, and any assigns and successors thereto. "State" shall mean the State of Florida. "Subordinated Indebtedness" shall mean that indebtedness of the Issuer, subordinate and junior to the Bonds, issued in accordance with the provisions of Section 5.01 hereof. "Supplemental Resolution" shall mean any resolution of the Issuer amending or supplementing this Resolution enacted and becoming effective in accordance with the terms of Sections 7.01, 7.02 and 7.03 hereof. "Taxable Bonds" shall mean any Bonds which state, in the body thereof, that the interest income thereon is includable in the gross income of the Holder thereof for federal income taxation purposes or that such interest is subject to federal income taxation. "Term Bonds" shall mean Bonds which shall be designated as Term Bonds by Supplemental Resolution of the Issuer and which are subject to mandatory redemption by Amortization Installment. "2003 Project" shall mean the acquisition, construction and equipping of various capital improvements within the County, all as more particularly described in the capital 13 improvement program and the plans and specifications on file or to be on file with the Issuer, as the same may be modified or amended from time to time. A general description of the 2003 Project is set forth in Exhibit A attached hereto. "Unrestricted Revenue Account" shall mean the separate account in the Revenue Fund established pursuant to Section 4.04 hereof. "Variable Rate Bonds" shall mean Bonds issued with a variable, adjustable, convertible or other similar rate which is not fixed in percentage for the entire term thereof at the date of issue. The terms "herein," "hereunder," "hereby," "hereto," "hereof," and any similar terms, shall refer to this Resolution; the term "heretofore" shall mean before the date of adoption of this Resolution; and the term "hereafter" shall mean after the date of adoption of this Resolution. Words importing the masculine gender include every other gender. Words importing the singular number include the plural number, and vice versa. SECTION 1.02. AUTHORITY FOR RESOLUTION. This Resolution is adopted pursuant to the provisions of the Act. SECTION 1.03. RESOLUTION TO CONSTITUTE CONTRACT. In consideration of the purchase and acceptance of any or all of the Bonds by those who shall hold the same from time to time, the provisions of this Resolution shall be a part of the contract of the Issuer with the Holders of the Bonds and the Insurer and shall be deemed to be and shall constitute a contract between the Issuer and the Holders from time to time of the Bonds and the Credit Facility Provider(s). The pledge made in this Resolution and the provisions, covenants and agreements herein set forth to be performed by or on behalf of the Issuer shall be for the equal benefit, protection and security of the Holders of any and all of said Bonds and for the benefit, protection and security of the Insurer. All of the Bonds, regardless of the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof except as expressly provided in or pursuant to this Resolution. SECTION 1.04. FINDINGS. It is hereby ascertained, determined and declared: 14 (A) That the Issuer has heretofore enacted the Infrastructure Sales Surtax Ordinance providing for the levy of a one cent local government infrastructure sales surtax pursuant to Section 212.055(2), Florida Statutes. (B) That the Issuer deems it desirable and in the best interest of the Issuer to acquire, construct and equip the 2003 Project. (C) That the most efficient and cost-effective method of acquiring, constructing and equipping the 2003 Project is by the issuance of the Series 2003 Bonds secured by the Pledged Funds. (D) That the Pledged Funds are not pledged or encumbered in any manner, except as provided in the Prior Resolution. Such Pledged Funds shall secure the payment of the Series 2003 Bonds, in accordance with the terms hereof. (E) That the estimated Pledged Funds will be sufficient to pay the principal of and interest on the Series 2003 Bonds and the Prior Bonds, as the same become due, and all other payments provided for in the Resolution and the Prior Resolution. (F) The 2003 Project constitutes "infrastructure" within the meaning of Section 212.055(2), Florida Statutes. (G) That the principal of and interest on the Bonds to be issued pursuant to this Resolution, and all other payments provided for in this Resolution will be paid solely from the Pledged Funds and any moneys received from Credit Facility Providers; and the ad valorem taxing power of the Issuer will never be necessary or authorized to pay the principal of and interest on the Bonds to be issued pursuant to this Resolution and, except as otherwise provided herein, the Bonds shall not constitute a lien upon any property of the Issuer. SECTION 1.05. AUTHORIZATION OF THE 2003 PROJECT. The Issuer hereby authorizes and empowers the acquisition, construction and equipping of the 2003 Project. 15 ARTICLE II AUTHORIZATION, TERMS, SALE, EXECUTION AND REGISTRATION OF BONDS SECTION 2.01. AUTHORIZATION OF BONDS. This Resolution creates an issue of Bonds ofthe Issuer to be designated as "Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds" which may be issued in one or more Series as hereinafter provided. The aggregate principal amount of the Bonds which may be executed and delivered under this Resolution is not limited except as is or may hereafter be provided in this Resolution or as limited by the Act or by law. The Bonds may, if and when authorized by the Issuer pursuant to this Resolution, be issued in one or more Series, with such further appropriate particular designations added to or incorporated in such title for the Bonds of any particular Series as the Issuer may determine and as may be necessary to distinguish such Bonds from the Bonds of any other Series. Each Bond shall bear upon its face the designation so determined for the Series to which it belongs. The Bonds shall be issued for such purpose or purposes; shall bear interest at such rate or rates not exceeding the maximum rate permitted by law; and shall be payable in lawful money of the United States of America on such dates; all as determined hereby or by Supplemental Resolution of the Issuer. The Bonds shall be issued in such denominations and such form, whether coupon or registered; shall be dated such date; shall bear such numbers; shall be payable at such place or places; shall contain such redemption provisions; shall have such Paying Agents and Registrars; shall mature in such years and amounts; and the proceeds shall be used in such manner; all as determined by Supplemental Resolution of the Issuer in accordance with the provisions of the Act. The Issuer may issue Bonds which may be secured by a Credit Facility all as shall be determined hereby or by Supplemental Resolution of the Issuer. SECTION 2.02. AUTHORIZATION AND DESCRIPTION OF THE SERIES 2003 BONDS. In accordance with the Act and the terms of this Resolution, this Resolution hereby creates an issue of bonds of the Issuer to be designated as "Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2003," to be issued in the aggregate principal amount of not exceeding $25,000,000. The Series 2003 Bonds shall be issued for the principal purposes of financing the acquisition, construction and equipping of the 2003 Project, funding the Reserve Account (whether with cash, investments, Reserve Account 16 Letter of Credit or Reserve Account Insurance Policy) and paying certain costs and expenses incurred in connection with the issuance of the Series 2003 Bonds, including the Bond Insurance Policy premium. The exact principal amount of the Series 2003 Bonds to be issued by the Issuer shall be determined by Supplemental Resolution. The Series 2003 Bonds shall be dated as of the first or fifteenth day of the month or months in which occurs the delivery of the Series 2003 Bonds to the purchaser or purchasers thereof, or such other date or dates as may be established or provided for by Supplemental Resolution of the Issuer; shall initially be issued as one fully registered Bond for each maturity; shall be numbered one preceded by the letter "R"; shall have such terms and shall bear interest at a rate or rates not exceeding the maximum rate permitted by law, shall be payable in such manner and on such dates; shall consist of such amounts of Serial Bonds, Term Bonds, Variable Rate Bonds and Capital Appreciation Bonds; shall, subject to Section 5.06(2) hereof, mature in such installments and amounts and in such years not exceeding forty (40) years from their date; shall be payable in such place or places; shall have such Paying Agents and Registrars; and shall contain such redemption provisions; all as the Issuer shall provide hereafter by Supplemental Resolution. The principal of or Redemption Price, if applicable, on the Series 2003 Bonds is payable upon presentation and surrender ofthe Series 2003 Bonds at the designated corporate trust office of the Paying Agent. Interest payable on the Series 2003 Bonds on any Interest Date will be paid by check or draft to the Holder in whose name such Bond shall be registered at the close of business on the date which shall be the fifteenth day (whether or not a business day) of the calendar month next preceding such Interest Date, or, at the request of such Holder, by bank wire transfer for the account of such Holder. All payments of principal of, Redemption Price, if applicable, and interest on the Series 2003 Bonds shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. SECTION 2.03. APPLICATION OF SERIES 2003 BOND PROCEEDS. (a) Except as otherwise provided by Supplemental Resolution of the Issuer, the proceeds derived from the sale of the Series 2003 Bonds, including accrued interest and premium, if any, shall be applied by the Issuer as follows: (i) Accrued and any capitalized interest shall be deposited to the Interest Account and shall be used only for the purpose of paying the interest which shall thereafter become due on the Series 2003 Bonds. Accrued and any capitalized interest shall be held in trust solely for the payment of the Series 2003 Bonds. 17 (ii) A sufficient amount of Series 2003 Bond proceeds shall be deposited in the Reserve Account or used to pay the premium or fee for a Reserve Account Insurance Policy and/or Reserve Account Letter of Credit the face amount of which, together with any other moneys and securities on deposit therein and Reserve Account Insurance Policies and/or Reserve Account Letters of Credit obtained in accordance with Section 4.05(A)(4) hereof, shall equal the Reserve Account Requirement for the Series 2003 Bonds. (iii) A sufficient amount of the Series 2003 Bond proceeds shall be applied to the payment of the premium of any Bond Insurance Policy applicable to the Series 2003 Bonds or reserves established therefor and to the payment of costs and expenses relating to the issuance of the Series 2003 Bonds. Such amount or any portion thereof may, at the option of the Issuer, be deposited in and disbursed from the Construction Fund. (iv) The balance of the Series 2003 Bond proceeds shall be deposited to an account in the Construction Fund and shall be used to pay the Costs of the 2003 Project. (b) The proceeds of any Series of Additional Bonds shall be applied by the Issuer in accordance with the provisions of the Supplemental Resolution authorizing such Series of Bonds. SECTION 2.04. EXECUTION OF BONDS. The Bonds shall be executed in the name of the Issuer with the manual or facsimile signature of the Mayor and the official seal of the Issuer shall be imprinted thereon, attested and countersigned with the manual or facsimile signature of the Clerk. In case any one or more of the officers who shall have signed or sealed any of the Bonds or whose facsimile signature shall appear thereon shall cease to be such officer of the Issuer before the Bonds so signed and sealed have been actually sold and delivered, such Bonds may nevertheless be sold and delivered as herein provided and may be issued as if the person who signed or sealed such Bonds had not ceased to hold such office. Any Bond may be signed and sealed on behalf of the Issuer by such person who at the actual time of the execution of such Bond shall hold the proper office of the Issuer, although at the date of such Bond such person may not have held such office or may not have been so authorized. The Issuer may adopt and use for such purposes the facsimile signatures of any such persons who shall have held such offices at any time after the date of the adoption of this Resolution, notwithstanding that either or both shall have ceased to hold such office at the time the Bonds shall be actually sold and delivered. 18 SECTION 2.05. AUTHENTICATION. No Bond shall be secured hereunder or entitled to the benefit hereof or shall be valid or obligatory for any purpose unless there shall be manually endorsed on such Bond a certificate of authentication by the Registrar or such other entity as may be approved by the Issuer for such purpose. Such certificate on any Bond shall be conclusive evidence that such Bond has been duly authenticated and delivered under this Resolution. The form of such certificate shall be substantially in the form provided in Section 2.10 hereof. SECTION 2.06. TEMPORARY BONDS. Until the definitive Bonds are prepared, the Issuer may execute, in the same manner as is provided in Section 2.04 hereof, and deliver, upon authentication by the Registrar pursuant to Section 2.05 hereof, in lieu of definitive Bonds, but subject to the same provisions, limitations and conditions as the definitive Bonds, except as to the denominations thereof, one or more temporary Bonds substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued, in denominations authorized by the Issuer by subsequent resolution, and with such omissions, insertions and variations as may be appropriate to temporary Bonds. The Issuer, at its own expense, shall prepare and execute definitive Bonds, which shall be authenticated by the Registrar. Upon the surrender of such temporary Bonds for exchange, the Registrar, without charge to the Holder thereof, shall deliver in exchange therefor definitive Bonds, of the same aggregate principal amount and maturity as the temporary Bonds surrendered. Until so exchanged, the temporary Bonds shall in all respects be entitled to the same benefits and security as definitive Bonds issued pursuant to this Resolution. All temporary Bonds surrendered in exchange for another temporary Bond or Bonds or for a definitive Bond or Bonds shall be forthwith cancelled by the Registrar. SECTION 2.07. BONDS MUTILATED, DESTROYED, STOLEN OR LOST. In case any Bond shall become mutilated, or be destroyed, stolen or lost, the Issuer may, in its discretion, issue and deliver, and the Registrar shall authenticate, a new Bond of like tenor as the Bond so mutilated, destroyed, stolen or lost, in exchange and substitution for such mutilated Bond upon surrender and cancellation of such mutilated Bond or in lieu of and substitution for the Bond destroyed, stolen or lost, and upon the Holder furnishing the Issuer and the Registrar proof of his ownership thereof and satisfactory indemnity and complying with such other reasonable regulations and conditions as the Issuer or the Registrar may prescribe and paying such expenses as the Issuer and the Registrar may incur. All Bonds so surrendered or otherwise substituted shall be cancelled by the Registrar. If any of the Bonds shall have matured or be about to mature, instead of issuing a substitute Bond, the Issuer may pay the same or cause the Bond to be paid, upon being indemnified as aforesaid, and if such Bonds be lost, stolen or destroyed, without surrender thereof. 19 Any such duplicate Bonds issued pursuant to this Section 2.07 shall constitute original contractual obligations on the part of the Issuer whether or not the lost, stolen or destroyed Bond be at any time found by anyone, and such duplicate Bond shall be entitled to equal and proportionate benefits and rights as to lien on the Pledged Funds to the same extent as all other Bonds issued hereunder. SECTION 2.08. INTERCHANGEABILITY, NEGOTIABILITY AND TRANSFER. Bonds, upon surrender thereof at the office of the Registrar with a written instrument of transfer satisfactory to the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing, may, at the option of the Holder thereof, be exchanged for an equal aggregate principal amount of registered Bonds of the same maturity of any other authorized denominations. The Bonds issued under this Resolution shall be and have all the qualities and incidents of negotiable instruments under the law merchant and the Uniform Commercial Code of the State of Florida, subject to the provisions for registration and transfer contained in this Resolution and in the Bonds. So long as any of the Bonds shall remain Outstanding, the Issuer shall maintain and keep, at the office of the Registrar, books for the registration and transfer of the Bonds. The transfer of any Bond shall be registered only upon the books of the Issuer, at the office of the Registrar, under such reasonable regulations as the Issuer may prescribe, by the Holder thereof in person or by his attorney duly authorized in writing upon surrender thereof together with a written instrument of transfer satisfactory to the Registrar duly executed and guaranteed by the Holder or his duly authorized attorney. Upon the registration or transfer of any such Bond, the Issuer shall issue, and cause to be authenticated, in the name of the transferee a new Bond or Bonds of the same aggregate principal amount and maturity as the surrendered Bond. The Issuer, the Registrar and any Paying Agent or fiduciary of the Issuer may deem and treat the Person in whose name any Outstanding Bond shall be registered upon the books of the Issuer 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 and interest on such Bond and for all other purposes, and all such payments so made to any such Holder 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 Issuer nor the Registrar nor any Paying Agent or other fiduciary of the Issuer shall be affected by any notice to the contrary. The Registrar, in any case where it is not also the Paying Agent with respect to the Bonds, forthwith (A) following the fifteenth day prior to an Interest Date for the Bonds, and (B) at any other time as reasonably requested by the Paying Agent, certify and furnish to the 20 Paying Agent the names, addresses and holdings of the Bondholders and any other relevant information reflected in the registration books. Any Paying Agent of any fully registered Bond shall effect payment of interest on such Bonds by mailing a check to the Holder entitled thereto or may, in lieu thereof, upon the request and at the expense of such Holder, transmit such payment by bank wire transfer for the account of such Holder. In all cases in which the privilege of exchanging Bonds or the transfer of Bonds shall be registered, the Issuer shall execute and the Registrar shall authenticate and deliver such Bonds in accordance with the provisions of this Resolution. Execution of Bonds by the Mayor and Clerk for purposes of exchanging, replacing or registering the transfer of Bonds may occur at the time of the original delivery of the Bonds. All Bonds surrendered in any such exchanges or registration of transfer shall be held by the Registrar for safekeeping until directed by the Issuer to be cancelled by the Registrar. For every such exchange or registration of transfer, the Issuer or the Registrar may make a charge sufficient to reimburse it for any tax, fee, expense or other governmental charge required to be paid with respect to such exchange or registration of transfer. The Issuer and the Registrar shall not be obligated to make any such exchange or transfer of the Bonds during the period commencing on the fifteenth day of the month immediately preceding an Interest Date on the Bonds and ending on such Interest Date, or, in the case of any proposed redemption of Bonds of such Series, then, for the Bonds subject to redemption, during the 15 days next preceding the date of the first mailing of notice of such redemption and continuing until such redemption date. The Issuer may elect to issue any Bonds as uncertificated registered public obligations (not represented by instruments), commonly known as book -entry obligations, provided it shall establish a system of registration therefor by Supplemental Resolution. In accordance with Section 2.09 hereof, the Issuer elects to initially provide for a book entry only system of registration for the Series 2003 Bonds. SECTION 2.09. FULL BOOK ENTRY FOR SERIES 2003 BONDS. Notwithstanding the provisions set forth in Section 2.08 hereof, the Series 2003 Bonds shall be initially issued in the form of a separate single certificated fully registered Bond for each of the maturities of the Series 2003 Bonds. Upon initial issuance, the ownership of each such Bond shall be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). All of the Outstanding Series 2003 Bonds shall be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC. As long as the Series 2003 Bonds shall be registered in the name of Cede & Co., all payments of principal on the Series 2003 Bonds shall be made by the Paying Agent by check or draft or by bank wire transfer to Cede & Co., as Holder of the Series 2003 Bonds, upon presentation of the Series 2003 Bonds to be paid, to the Paying Agent. 21 With respect to the Series 2003 Bonds registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, the Issuer, the Registrar and the Paying Agent shall have no responsibility or obligation to any direct or indirect participant in the DTC book -entry program (the "Participants"). Without limiting the immediately preceding sentence, the Issuer, the Registrar and the Paying Agent shall have no responsibility or obligation with respect to (A) the accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership interest on the Series 2003 Bonds, (B) the delivery to any Participant or any other Person other than a Bondholder, as shown in the registration books kept by the Registrar, of any notice with respect to the Series 2003 Bonds, including any notice of redemption, or (C) the payment to any Participant or any other Person, other than a Bondholder, as shown in the registration books kept by the Registrar, of any amount with respect to principal of, redemption premium, if any, or interest on the Series 2003 Bonds. The Issuer, the Registrar and the Paying Agent may treat and consider the Person in whose name each Bond is registered in the registration books kept by the Registrar as the Holder and absolute owner of such Bond for the purpose of payment of principal, redemption premium, if any, and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Paying Agent shall pay all principal of, redemption premium, if any, and interest on the Series 2003 Bonds only to or upon the order of the respective Holders, as shown in the registration books kept by the Registrar, or their respective attorneys duly authorized in writing, as provided herein and all such payments shall be valid and effective to fully satisfy and discharge the Issuer's obligations with respect to payment of principal, redemption premium, if any, and interest on the Series 2003 Bonds to the extent of the sum or sums so paid. No Person other than a Holder, as shown in the registration books kept by the Registrar, shall receive a certificated Bond evidencing the obligation of the Issuer to make payments of principal, redemption premium, if any, and interest pursuant to the provisions of the Resolution. Upon delivery by DTC to the Issuer of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to transfers during the 15 days next preceding an Interest Date or mailing of notice of redemption, the words "Cede & Co." shall refer to such new nominee of DTC; and upon receipt of such notice, the Issuer shall promptly deliver a copy of the same to the Registrar and the Paying Agent. Upon (A) receipt by the Issuer of written notice from DTC (i) to the effect that a continuation of the requirement that all of the Outstanding Series 2003 Bonds be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, is not in the best interest of the beneficial owners of the Series 2003 Bonds or (ii) to the effect that DTC is unable or unwilling to discharge its responsibilities and no substitute depository willing to undertake the functions of DTC hereunder can be found which is 22 willing and able to undertake such functions upon reasonable and customary terms, or (B) determination by the Issuer that such book -entry only system is burdensome to the Issuer, the Series 2003 Bonds shall no longer be restricted to being registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or names Holders shall designate, in accordance with the provisions of this Resolution. In such event, the Issuer shall issue, and the Registrar shall authenticate, transfer and exchange the Series 2003 Bonds of like principal amount and maturity, in denominations of $5,000 or any integral multiple thereof to the Holders thereof. The foregoing notwithstanding, until such time as participation in the book -entry only system is discontinued, the provisions set forth in the Blanket Letter of Representations previously executed by the Issuer and delivered to DTC shall apply to the payment of principal of and interest on the Series 2003 Bonds. SECTION 2.10. FORM OF BONDS. The text of the Bonds, except for Capital Appreciation Bonds and Variable Rate Bonds, the form of which shall be provided by Supplemental Resolution of the Issuer, shall be in substantially the following form with such omissions, insertions and variations as may be necessary and/or desirable and approved by the Mayor or the Clerk prior to the issuance thereof (which necessity and/or desirability and approval shall be presumed by such officer's execution of the Bonds and the Issuer's delivery of the Bonds to the purchaser or purchasers thereof): 23 No. R- UNITED STATES OF AMERICA STATE OF FLORIDA MONROE COUNTY, FLORIDA INFRASTRUCTURE SALES SURTAX REVENUE BOND, SERIES Interest Maturity Date of Rate Date Ori2inalIssue CUSIP Registered Holder: Principal Amount: KNOW ALL MEN BY THESE PRESENTS, that Monroe County, Florida, a political subdivision of the State of Florida (the "Issuer"), for value received, hereby promises to pay, solely from the Pledged Funds hereinafter described, to the Registered Holder identified above, or registered assigns as hereinafter provided, on the Maturity Date identified above, the Principal Amount identified above and to pay interest on such Principal Amount from the Date of Original Issue identified above or from the most recent interest payment date to which interest has been paid at the Interest Rate identified above on 1 and 1 of each year commencing 1, until such Principal Amount shall have been paid, except as the provisions hereinafter set forth with respect to redemption prior to maturity may be or become applicable hereto. Such Principal Amount and interest on this Bond are payable in any coin or currency of the United States of America which, on the respective dates of payment thereof, shall be legal tender for the payment of public and private debts. Such Principal Amount on this Bond is payable, upon presentation and surrender hereof, at the designated corporate trust office of , as Paying Agent. Payment of each installment of interest shall be made to the person in whose name this Bond shall be 24 registered on the registration books of the Issuer maintained by , as Registrar, at the close of business on the date which shall be the fifteenth day (whether or not a business day) of the calendar month next preceding each interest payment date and shall be paid by a check or draft of such Paying Agent mailed to such Registered Holder at the address appearing on such registration books or, at the request and expense of such Registered Holder, by bank wire transfer for the account of such Holder. This Bond is one of an authorized issue of Bonds in the aggregate principal amount of $ (the "Bonds") of like date, tenor and effect, except as to maturity date, interest rate, denomination and number, issued for the principal purpose ofproviding moneys for (all as more particularly described in the hereinafter defined Resolution), under the authority of and in full compliance with the Constitution and laws of the State of Florida, particularly Chapter 125, Florida Statutes, Chapter 212, Florida Statutes, the Monroe County Code, the Ordinance, the Infrastructure Sales Surtax Ordinance (as such terms are defined in the hereinafter defined Resolution), and other applicable provisions of law (collectively, the "Act"), and an Infrastructure Sales Surtax Revenue Bond Resolution of the Issuer adopted on February 19, 2003 (as amended and supplemented from time to time, the "Resolution"), and is subject to all the terms and conditions of the Resolution. This Bond and the interest hereon are payable from and secured by a pledge of and lien upon (1) the Infrastructure Sales Surtax Revenues (as defined in the Resolution) and (2) until applied in accordance with the provisions of the Resolution, all moneys, including investments thereof, in certain of the funds and accounts established by the Resolution, all in the manner and to the extent described in the Resolution (collectively, the "Pledged Funds"); provided, however, the pledge of and lien upon the Infrastructure Sales Surtax Revenues in favor of the Bonds (including this Bond) shall be junior and subordinate in all respects to the pledge thereof and lien thereon granted with respect to the Issuer's Monroe County, Florida Sales Tax Refunding Revenue Bonds, Series 1998, so long as such Series 1998 Bonds are outstanding under the Prior Resolution (as defined in the Resolution). The Issuer hereby agrees not to issue any additional bonds or other obligations pursuant to the Prior Resolution. IT IS EXPRESSLY AGREED BY THE REGISTERED HOLDER OF THIS BOND THAT THE FULL FAITH AND CREDIT OF THE ISSUER, THE STATE OF FLORIDA, OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF, ARE NOT PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THIS BOND AND THAT SUCH HOLDER SHALL NEVER HAVE THE RIGHT TO REQUIRE OR COMPEL THE EXERCISE OF ANY TAXING POWER OF THE ISSUER, THE STATE OF FLORIDA, ORANYPOLITICAL SUBDIVISION ORAGENCY THEREOF, TO THE 25 PAYMENT OF SUCH PRINCIPAL AND INTEREST. THIS BOND AND THE OBLIGATION EVIDENCED HEREBY SHALL NOT CONSTITUTE ALIEN UPON ANY PROPERTY OF THE ISSUER, BUT SHALL CONSTITUTE A LIEN ONLY ON, AND SHALL BE PAYABLE SOLELY FROM, THE PLEDGED FUNDS TO THE EXTENT PROVIDED IN THE RESOLUTION. The transfer of this Bond is registrable in accordance with the terms of the Resolution only upon the books of the Issuer kept for that purpose at the designated corporate trust office -of the Registrar by the Registered Holder hereof in person or by his attorney duly authorized in writing, upon the surrender of this Bond together with a written instrument of transfer satisfactory to the Registrar duly executed by the Registered Holder or his attorney duly authorized in writing, and thereupon a new Bond or Bonds in the same aggregate principal amount shall be issued to the transferee in exchange therefor, and upon the payment of the charges, if any, therein prescribed. For every such exchange or registration of transfer, the Issuer or the Registrar may make a charge sufficient to reimburse it for any tax, fee, expense or other governmental charge required to be paid with respect to such exchange or registration of transfer. The Bonds are issuable in the form of fully registered Bonds in the denomination of $5,000 and any integral multiple thereof, not exceeding the aggregate principal amount of the Bonds. The Issuer, the Registrar and any Paying Agent may treat the Registered Holder of this Bond as the absolute owner hereof for all purposes, whether or not this Bond shall be overdue, and shall not be affected by any notice to the contrary. The Issuer and the Registrar shall not be obligated to make any exchange or transfer of the Bonds during the period commencing on the 15th day of the month immediately preceding an interest payment date on the Bonds and ending on such interest payment date, or, in the case of any proposed redemption of Bonds of such Series, then, for the Bonds subject to redemption, during the 15 days next preceding the date of the first mailing of notice of such redemption and continuing until such redemption date. [Insert Redemption Provisions] Redemption of this Bond under the preceding paragraphs shall be made as provided in the Resolution upon notice given by first class mail sent at least 30 days prior to the redemption date to the Registered Holder hereof at the address shown on the registration books maintained by the Registrar; provided, however, that failure to mail notice to the Registered Holder hereof, or any defect therein, shall not affect the validity of the proceedings for redemption of other Bonds as to which no such failure or defect has occurred. In the event that less than the full principal amount hereof shall have been called for redemption, the Registered Holder hereof shall surrender this Bond in exchange for one 26 or more Bonds in an aggregate principal amount equal to the unredeemed portion of principal, as provided in the Resolution. Reference to the Resolution and any and all resolutions supplemental thereto and modifications and amendments thereof and to the Act is made for a description of the pledge and covenants securing this Bond, the nature, manner and extent of enforcement of such pledge and covenants, and the rights, duties, immunities and obligations of the Issuer. It is hereby certified and recited that all acts, conditions and things required to exist, to happen and to be performed precedent to and in the issuance of this Bond, exist, have happened and have been performed, in regular and due form and time as required by the laws and Constitution of the State of Florida applicable thereto, and that the issuance of the Bonds does not violate any constitutional or statutory limitations or provisions. Neither the members of the Board of County Commissioners of the Issuer nor any person executing this Bond shall be liable personally hereon or be subject to any personal liability or accountability by reason of the issuance hereof. This Bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Registrar. [Remainder of page intentionally left blank] 27 IN WITNESS WHEREOF, the Monroe County, Florida has issued this Bond and has caused the same to be executed by the manual or facsimile signature of the Mayor of the Board of County Commissioners and countersigned and attested by the manual or facsimile signature of the Clerk of such Board, and its official seal or a facsimile thereof to be affixed or reproduced hereon, all as of the Date of Original Issue. (SEAL) ATTESTED AND COUNTERSIGNED: Clerk, Board of County Commissioners APPROVED AS TO FORM AND LEGAL SUFFICIENCY: County Attorney's Office MONROE COUNTY, FLORIDA Mayor, Board of County Commissioners 28 CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the Issue described in the within -mentioned Resolution. DATE OF AUTHENTICATION: Authorized Signatory 29 Registrar ASSIGNMENT FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto Insert Social Security or Other Identifying Number of Assignee (Name and Address of Assignee) the within Bond and does hereby irrevocably constitute and appoint as attorneys to register the transfer of the said Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature guaranteed: NOTICE: Signature(s) must be guaranteed by an institution which is a participant in the Securities Transfer Agent Medallion Program (STAMP) or similar program. 30 NOTICE: The signature to this assignment must correspond with the name of the Registered Holder as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever and the Social Security or other identifying number of such assignee must be supplied. The following abbreviations, when used in the inscription on the face of the within Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common TEN ENT -- as tenants by the entireties JT TEN -- as joint tenants with right of survivorship and not as tenants in common UNIF TRANS MIN ACT -- (Cust.) Custodian for under Uniform Transfers to Minors Act of (State) Additional abbreviations may also be used though not in list above. 31 ARTICLE III REDEMPTION OF BONDS SECTION 3.01. PRIVILEGE OF REDEMPTION. The terms of this Article III shall apply to redemption of Bonds other than Capital Appreciation Bonds or Variable Rate Bonds. The terms and provisions relating to redemption of Capital Appreciation Bonds and Variable Rate Bonds shall be provided by Supplemental Resolution. SECTION 3.02. SELECTION OF BONDS TO BE REDEEMED. The Bonds shall be redeemed only in the principal amount of $5,000 each and integral multiples thereof. The Issuer shall, at least forty-five (45) days prior to the redemption date (unless a shorter time period is satisfactory to the Registrar, but in no event less than thirty-five (35) days) notify the Registrar of such redemption date and of the principal amount of Bonds to be redeemed. For purposes of any redemption of less than all of the Outstanding Bonds of a single maturity, the particular Bonds or portions of Bonds to be redeemed shall be selected not more than forty-five (45) days and not less than thirty-five (35) days prior to the redemption date by the Registrar from the Outstanding Bonds of the maturity or maturities designated by the Issuer or by such method as the Registrar shall deem fair and appropriate and which may provide for the selection for redemption of Bonds or portions of Bonds in principal amounts of $5,000 and integral multiples thereof. If less than all of the Outstanding Bonds of a single maturity are to be redeemed, the Registrar shall promptly notify the Issuer and Paying Agent (if the Registrar is not the Paying Agent for such Bonds) in writing of the Bonds or portions of Bonds selected for redemption and, in the case of any Bond selected for partial redemption, the principal amount thereof to be redeemed. SECTION 3.03. NOTICE OF REDEMPTION. Notice of such redemption, which shall specify the Bond or Bonds (or portions thereof) to be redeemed and the date and place for redemption, shall be given by the Registrar on behalf of the Issuer, and (A) shall be filed with the Paying Agent of such Bonds and (B) shall be mailed first class, postage prepaid, at least thirty (30) days prior to the redemption date to all Holders of Bonds to be redeemed at their addresses as they appear on the registration books kept by the Registrar as of the date of mailing of such notice. Failure to mail notice to the Holders of the Bonds to be redeemed, or any defect therein, shall not affect the proceedings for redemption of Bonds as to which no such failure or defect has occurred. 32 Each notice of redemption shall state: (1) the CUSIP numbers of all Bonds being redeemed, (2) the original issue date of such Bonds, (3) the maturity date and rate of interest borne by each Bond being redeemed, (4) the redemption date, (5) the Redemption Price, (6) the date on which such notice is mailed, (7) if less than all Outstanding Bonds are to be redeemed, the certificate number (and, in the case of a partial redemption of any Bond, the principal amount) of each Bond to be redeemed, (8) that on such redemption date there shall become due and payable upon each Bond to be redeemed the Redemption Price thereof, or the Redemption Price of the specified portions of the principal thereof in the case of Bonds to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such date interest thereon shall cease to accrue and be payable, (9) that the Bonds to be redeemed, whether as a whole or in part, are to be surrendered for payment of the Redemption Price at the designated office of the Paying Agent at an address specified, and (10) unless sufficient funds have been set aside by the Issuer for such purpose prior to the mailing of the notice of redemption, that such redemption is conditioned upon the deposit of sufficient funds for such purpose on or prior to the date set for redemption; and provided, further, that such notice and the redemption set forth therein may be subject to the satisfaction of one or more additional conditions set forth therein. Within sixty (60) days of the date of redemption, the Registrar shall give a second notice of redemption by mailing another copy of the redemption notice to the registered Holders of Bonds called for redemption but which have not been presented for payment within thirty (30) days after the date set for redemption; provided, however, the failure to provide such further notice of redemption or to comply with the terms of this paragraph shall not in any manner defeat the effectiveness of a call for redemption if notice thereof is given as prescribed above. In addition to the mailing of the notice described above, each notice of redemption and payment of the redemption price shall meet the following requirement; provided, however, the failure to provide such further notice of redemption or to comply with the terms of this paragraph shall not in any manner defeat the effectiveness of a call for redemption if notice thereof is given as prescribed above: Each further notice of redemption shall be sent by certified mail or overnight delivery service or telecopy to all registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds (such depositories now being The Depository Trust Company, New York, New York and Midwest Securities Trust Company, Chicago, Illinois) and to two or more national information services which disseminate notices ofprepayment or redemption of obligations such as the Bonds (such information services now being Financial Information, Inc.'s "Daily Called Bond Service," Jersey City, New Jersey, Kenny 33 Information Services "Called Bond Service," New York, New York, Moody's "Municipal and Government," New York, New York and Standard & Poor's "Called Bond Record," New York, New York). SECTION 3.04. REDEMPTION OF PORTIONS OF BONDS. Any Bond which is to be redeemed only in part shall be surrendered at any place of payment specified in the notice of redemption (with due endorsement by, or written instrument of transfer in form satisfactory to the Registrar duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Issuer shall execute and the Registrar shall authenticate and deliver to the Holder of such Bond, without service charge, a new Bond or Bonds, of the same interest rate and maturity, and of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bonds so surrendered. SECTION 3.05. PAYMENT OF REDEEMED BONDS. Notice of redemption having been given substantially as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Issuer shall default in the payment of the Redemption Price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Registrar and/or Paying Agent at the appropriate Redemption Price, plus accrued interest. Each check or other transfer of funds issued by the Paying Agent to pay the Redemption Price of Bonds being redeemed shall bear the CUSIP number or numbers of such Bonds and identify the payments applicable to each CUSIP number. All Bonds which have been redeemed shall be cancelled by the Registrar and shall not be reissued. 34 ARTICLE IV SECURITY, SPECIAL FUNDS AND APPLICATION THEREOF SECTION 4.01. BONDS NOT TO BE INDEBTEDNESS OF ISSUER. The Bonds shall not be or constitute general obligations or indebtedness of the Issuer as bonds within the meaning of any constitutional or statutory provision, but shall be special obligations of the Issuer, payable solely from and secured by a lien upon and pledge of the Pledged Funds and moneys payable pursuant to the Bond Insurance Policy, with and to the extent set forth in this Resolution. No Holder of any Bond or the Insurer shall ever have the right to compel the exercise of any ad valorem taxing power to pay such Bond, or be entitled to payment of such Bond from any moneys of the Issuer except from the Pledged Funds in the manner provided herein. SECTION 4.02. SECURITY FOR BONDS. Except as otherwise provided herein or by Supplemental Resolution, the payment of the principal of and interest on the Bonds shall be secured forthwith equally and ratably by a pledge of and lien upon the Pledged Funds; provided, however, (i) a Series of Bonds may be further secured by a Credit Facility in addition to the security provided herein; and (ii) a Series of Bonds may be secured independently of any other Series of Bonds by the establishment of a separate subaccount in the Reserve Account for such Series of Bonds. The Issuer does hereby irrevocably pledge the Pledged Funds to the payment of the principal of and interest on the Bonds in accordance with the provisions hereof. In addition, the Issuer does hereby irrevocably pledge and grant a lien upon the Pledged Funds to the payment of any amounts owing to an issuer of a Credit Facility in accordance with the provisions hereof, provided, however, such pledge and lien shall be junior and subordinate in all respects to the pledge and lien upon such Pledged Funds granted hereby to the Bondholders. The Pledged Funds shall immediately be subject to the lien of this pledge without any physical delivery thereof or further act, and the lien of this pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the Issuer. Notwithstanding the foregoing, the pledge of and lien upon the Infrastructure Sales Surtax Revenues for the benefit of the Bonds shall be junior and subordinate in all respects to the pledge thereof and lien thereon granted with respect to the Prior Bonds under the Prior Resolution. Except as otherwise provided by Supplemental Resolution, the obligation of the Issuer to make Hedge Payments to a Counterparty pursuant to a Qualified Hedge Agreement shall be on parity with the Bonds as to lien on and pledge of the Pledged Funds in accordance with the terms hereof (any other payments related to a Qualified Hedge Agreement, including fees, penalties and termination 35 payments and the obligation of the Issuer to collateralize, shall be Subordinated Indebtedness of the Issuer). SECTION 4.03. CONSTRUCTION FUND. The Issuer covenants and agrees to establish a special fund to be known as the "Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds Construction Fund," which shall be used only for payment of the Costs of Projects. Moneys in the Construction Fund, until applied to payment of any item of the Costs of a Project in the manner hereinafter provided, shall be held in trust by the Issuer and shall be subject to a lien and charge in favor of the Holders of the Bonds and for the further security of such Holders. The Issuer shall establish within the Construction Fund a separate account for each Project (including the 2003 Project), the Costs of which are to be paid in whole or in part out of the Construction Fund. The Issuer covenants that the acquisition, construction and equipping of each Project will be completed without delay and in accordance with sound engineering practices. The Issuer shall only make disbursements or payments from the applicable account of the Construction Fund to pay Costs of the Project for which such account was established, except as provided below with respect to any surplus proceeds in a particular account. The Issuer shall keep records of such disbursements and payments and shall retain all such records for six (6) years from the dates of such records. Notwithstanding any of the other provisions of this Section 4.03, to the extent that other moneys are not available therefor, amounts in an account of the Construction Fund shall be applied to the payment of principal and interest on the Series of Bonds for which such account was established or to reimburse a Credit Facility Provider for the payment of such principal and interest. The date of completion of acquisition, construction and equipping of a Project shall be filed by the Clerk with the Issuer. Promptly after the date of the completion of a Project, and after paying or making provisions for the payment of all unpaid items of the Costs of such Project, the Issuer shall deposit in the following order of priority any balance of moneys remaining in the Construction Fund in (A) any other account established in the Construction Fund for which the Clerk certifies that there are insufficient moneys to pay the Costs of the Project for which such account was established, (B) the Reserve Account to the extent of any deficiency therein and (C) such other fund or account established hereunder as shall be determined by the Issuer, provided the Issuer has received an opinion of Bond Counsel to the effect that such transfer shall not adversely affect the exclusion, if any, of interest on the 36 Bonds (other than Taxable Bonds) from gross income for purposes of federal income taxation. SECTION 4.04. FUNDS AND ACCOUNTS. The Issuer covenants and agrees to establish the following funds and accounts: (A) The "Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds Revenue Fund." The Issuer shall maintain two separate accounts in the Revenue Fund, the "Restricted Revenue Account" and the "Unrestricted Revenue Account." (B) The "Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds Debt Service Fund." The Issuer shall maintain four separate accounts in the Debt Service Fund, the "Interest Account," the "Principal Account," the 'Bond Amortization Account" and the "Reserve Account." (C) The "Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds Rebate Fund." Moneys in the aforementioned funds and accounts, other than the Rebate Fund and the Unrestricted Revenue Account, until applied in accordance with the provisions hereof, shall be subject to a lien and charge in favor of the Holders of the Bonds and for the further security of such Holders. The Issuer may at any time and from time to time appoint one or more depositories to hold, for the benefit of the Bondholders, any one or more of the funds, accounts and subaccounts established hereby. Such depository or depositories shall perform at the direction of the Issuer the duties of the Issuer in depositing, transferring and disbursing moneys to and from each of such funds and accounts as herein set forth, and all records of such depositary in performing such duties shall be open at all reasonable times to inspection by the Issuer and its agent and employees. Any such depositary shall be a bank or trust company duly authorized to exercise corporate trust powers and subject to examination by federal or state authority, of good standing, and be qualified under applicable State law as a depository. SECTION 4.05. DISPOSITION OF INFRASTRUCTURE SALES SURTAX REVENUES. (A) Prior to payment or defeasance of the Prior Bonds in accordance with the Prior Resolution, the Issuer shall deposit into the Restricted Revenue Account all Infrastructure Sales Surtax Revenues received by the Issuer after the Issuer has made the required monthly deposits to the sinking fund, bond amortization account and reserve account established by the Prior Resolution, in accordance with the Prior Resolution. 37 Subsequent to payment or defeasance of the Prior Bonds in accordance with the Prior Resolution. the Issuer shall promptly deposit upon receipt from the State all of the Infrastructure Sales Surtax Revenues into the Restricted Revenue Account. The moneys in the Restricted Revenue Account shall be deposited or credited on or before the 25th day of each month, commencing in the month immediately following delivery of any of the Bonds to the purchasers thereof, or such later date as hereinafter provided, in the following manner and in the following order of priority: (1) Interest Account. The Issuer shall deposit or credit to the Interest Account the sum which, together with the balance in said Account, shall equal the interest on all of the Outstanding Bonds accrued and unpaid and to accrue to the end of the then current calendar month (assuming that a year consists of twelve (12) equal calendar months of thirty (30) days each). All Hedge Receipts shall be deposited directly to the Interest Account upon receipt. With respect to interest on Bonds which are subject to a Hedge Payment, interest on such Bonds during the term of the Qualified Hedge Agreement shall be deemed to include the corresponding Hedge Payments. Moneys in the Interest Account shall be applied by the Issuer (a) for deposit with the Paying Agent to pay the interest on the Bonds on or prior to the date the same shall become due, whether by maturity, redemption or otherwise, and (b) for Hedge Payments. The Issuer shall adjust the amount of the deposit to the Interest Account not later than a month immediately preceding any Interest Date so as to provide sufficient moneys in the Interest Account to pay the interest on the Bonds coming due on such Interest Date. No further deposit need be made to the Interest Account when the moneys therein are equal to the interest coming due on the Outstanding Bonds on the next succeeding Interest Date. With respect to debt service on any Bonds which are subject to a Qualified Hedge Agreement, any Hedge Payments due to the Counterparty to such Qualified Hedge Agreement relating to such Bonds shall be paid to the Counterparty to such Qualified Hedge Agreement on a parity basis with the aforesaid required payments into the Debt Service Fund. (2) Principal Account. Commencing in the month which is one year prior to the first principal due date (or if the first principal due date is less than one year from the date of issuance of the Bonds, the month immediately following the issuance of the Bonds), the Issuer shall next deposit into the Principal Account the sum which, together with the balance in said Account, shall equal the principal amount on the Outstanding Bonds due and unpaid and that portion of the principal next due which would have accrued on such Bonds during the then current calendar month if such principal amounts were deemed to accrue monthly (assuming that a year consists of twelve (12) equal calendar months having thirty (30) days each) in equal amounts from the next preceding principal payment due date, or, if there is no such preceding payment due date from a date one year preceding the due date of such principal amount. Moneys in the Principal Account shall be applied by the Issuer for deposit 38 with the Paying Agent to pay the principal of the Bonds on or prior to the date the same shall mature, and for no other purpose. The Issuer shall adjust the amount of the deposit to the Principal Account not later than the month immediately preceding any principal payment date so as to provide sufficient moneys in the Principal Account to pay the principal on the Bonds becoming due on such principal payment date. No further deposit need be made to the Principal Account when the moneys therein are equal to the principal coming due on the Outstanding Bonds on the next succeeding principal payment date. (3) Bond Amortization Account. Commencing in the month which is one year prior to any Amortization Installment due date, there shall be deposited or credited to the Bond Amortization Account an amount which, together with the balance in said Account, shall equal the Amortization Installments of all Bonds Outstanding due and unpaid and that portion of the Amortization Installment next due which would have accrued on said Bonds during the then current calendar month if such Amortization Installment were deemed to accrue daily (assuming that a year consists of twelve (12) months of thirty (30) days each), in equal amounts from the next preceding Amortization Installment due date, or if there is no such preceding Amortization Installment due date, from a date one year preceding the due date of such Amortization Installment. Moneys in the Bond Amortization Account shall be used to purchase or redeem Term Bonds in the manner herein provided or as provided by Supplemental Resolution, and for no other purpose. The Issuer shall adjust the amount of the deposit into the Bond Amortization Account not later than the month immediately preceding any date for payment of an Amortization Installment so as to provide sufficient moneys in the Bond Amortization Account to pay the Amortization Installments on the Bonds coming due on such date. No further deposit need be made to the Bond Amortization Account when the moneys therein are equal to the Amortization Installments coming due on the Outstanding Bonds on the next succeeding Amortization Installment due date. Payments to the Bond Amortization Account shall be on a parity with payments to the Principal Account. Amounts accumulated in the Bond Amortization Account with respect to any Amortization Installment (together with amounts accumulated in the Interest Account with respect to interest, if any, on the Term Bonds for which such Amortization Installment was established) may be applied by the Issuer, on or prior to the sixtieth (60th) day preceding the due date of such Amortization Installment, (a) to the purchase of Term Bonds of the Series and maturity for which such Amortization Installment was established at a price not exceeding par plus accrued interest, or (b) to the redemption at the applicable Redemption Prices of such Term Bonds, if then redeemable by their terms at a price not exceeding par plus accrued interest. The applicable Redemption Price (or principal amount of maturing Term Bonds) of any Term Bonds so purchased or redeemed shall be deemed to constitute part of the Bond Amortization Account until such Amortization Installment date, for the purposes of calculating the amount of such Account. As soon as practicable after the sixtieth (60th) day preceding the due date of any such Amortization Installment, the Issuer shall proceed to call for redemption on such due date, by causing notice to be given as provided in Section 3.03 hereof, Term Bonds of the Series and maturity for which such Amortization Installment was established (except in the case of Term Bonds maturing on an Amortization Installment date) in such amount as shall be necessary to complete the retirement of the unsatisfied balance of such Amortization Installment. The Issuer shall pay out of the Bond Amortization Account and the Interest Account to the appropriate Paying Agents, on or before the day preceding such redemption date (or maturity date), the amount required for the redemption (or for the payment of such Term Bonds then maturing), and such amount shall be applied by such Paying Agents to such redemption (or payment). All expenses in connection with the purchase or redemption of Term Bonds shall be paid by the Issuer from the Restricted Revenue Fund. (4) Reserve Account. There shall be deposited to the Reserve Account an amount which shall not be less than one twelfth (1/12) of the amount which would enable the Issuer to restore the funds on deposit in the Reserve Account to an amount equal to the Reserve Account Requirement applicable thereto in one (1) year from the date of any deficiency caused by decreased market value of the investments on deposit therein or withdrawal therefrom. On or prior to each principal payment date and Interest Date for the Bonds, moneys in the Reserve Account shall be applied by the Issuer to the payment of the principal of or Redemption Price, if applicable, and interest on the Bonds to the extent moneys in the Interest Account, the Principal Account and the Bond Amortization Account shall be insufficient for such purpose. Whenever there shall be surplus moneys in the Reserve Account by reason of (i) investment income, shall be deposited into the Interest Account as provided in Section 4.07 hereof and (ii) a decrease in the Reserve Account Requirement, such surplus moneys shall be deposited by the Issuer into the Unrestricted Revenue Account, subject to receiving an opinion of Bond Counsel that such application will not have an adverse effect on the tax-exempt status on the Bonds (other than Taxable Bonds), and otherwise to the Debt Service Fund. The Issuer shall inform each Credit Facility Provider of any draw upon the Reserve Account for purposes of paying the principal of and interest on the Bonds. Upon the issuance of any Series of Bonds under the terms, limitations and conditions as herein provided, the Issuer shall, on the date of delivery of such Series of Bonds, fund the Reserve Account in an amount at least equal to the Reserve Account Requirement, if so required. Such required amount may be paid in full or in part from the proceeds of such Series of Bonds. .E Notwithstanding the foregoing provisions, in lieu or substitution of the required deposits into the Reserve Account, the Issuer may cause to be deposited into the Reserve Account a Reserve Account Insurance Policy and/or Reserve Account Letter of Credit for the benefit of the Bondholders in an amount equal to the difference between the Reserve Account Requirement applicable thereto and the sums then on deposit in the Reserve Account, if any. The Issuer may also substitute a Reserve Account Insurance Policy and/or Reserve Account Letter of Credit for cash on deposit in the Reserve Account upon compliance with the terms of this Section 4.05(A)(4). Such Reserve Account Insurance Policy and/or Reserve Account Letter of Credit shall be payable to the Paying Agent (upon the giving of notice as required thereunder) on any principal payment date or Interest Date on which a deficiency exists which cannot be cured by moneys in any other fund or account held pursuant to this Resolution and available for such purpose. The issuer providing such Reserve Account Insurance Policy shall be an insurer whose municipal bond insurance policies insuring the payment, when due, of the principal of and interest on municipal bond issues results in such issues being rated in the highest rating category (without regard to gradations, such as "plus" or "minus" of such category) by Standard & Poor's and Moody's, and, if rated by A.M. Best & Company, in the highest rating category of A.M. Best & Company. The issuer providing such Reserve Account Letter of Credit shall be a commercial bank, insurance company or other financial institution the obligations payable or guaranteed by which have been assigned a rating by each rating agency rating the Bonds secured by such Account in one of the two highest rating categories (without regard to gradations, such as "plus" or "minus" of such categories); provided, that notwithstanding the foregoing, such insurer or commercial bank must be rated by any rating agency or agencies providing a rating on the Bonds secured by such Reserve Account Insurance Policy or Reserve Account Letter of Credit. In the event the Reserve Account contains both a Reserve Account Insurance Policy or Reserve Account Letter of Credit and cash and separate subaccounts have not been established in the Reserve Account, the cash shall be drawn down completely prior to any draw on the Reserve Account Insurance Policy or Reserve Account Letter of Credit. In the event more than one Reserve Account Insurance Policy or Reserve Account Letter of Credit is on deposit in the Reserve Account, amounts required to be drawn thereon shall be done on a pro-rata basis. The Issuer agrees to pay all amounts owing in regard to any Reserve Account Insurance Policy or Reserve Account Letter of Credit from the Pledged Funds. Pledged Funds shall be applied in accordance with this Section 4.05(A)(4), first, to reimburse the issuer of the Reserve Account Insurance Policy or Reserve Account Letter of Credit for amounts advanced under such instruments, second, replenish any cash deficiencies in the Reserve Account, and third, to pay the issuer of the Reserve Account Insurance Policy or Reserve Account Letter of Credit interest on amounts advanced under such instruments. This Resolution shall not be discharged or defeased while any obligations are owing in regard to 41 a Reserve Account Insurance Policy or Reserve Account Letter of Credit on deposit in the Reserve Account. The Issuer agrees not to optionally redeem or refund Bonds unless all amounts owing in regard to a Reserve Account Insurance Policy or Reserve Account Letter of Credit on deposit in the Reserve Account have been paid in full. If two (2) business days prior to an interest payment or redemption date or such other period of time as shall be established pursuant to Supplemental Resolution, the Issuer shall determine that a deficiency exists in the amount of moneys available to pay in accordance with the terms hereof interest and/or principal due on the Bonds on such date, the Issuer shall immediately notify (a) the issuer of the applicable Reserve Account Insurance Policy and/or the issuer of the Reserve Account Letter of Credit and submit a demand for payment pursuant to the provisions of such Reserve Account Insurance Policy and/or Reserve Account Letter of Credit, (b) the Paying Agent, and (c) the Insurer, if any, of the amount of such deficiency and the date on which such payment is due, and shall take all action to cause such Issuer or Insurer to provide moneys sufficient to pay all amounts due on such Interest Date including, if necessary, directing the Paying Agent to draw on the Reserve Account Insurance Policy or Reserve Account Letter of Credit. The Issuer may evidence its obligation to reimburse the issuer of any Reserve Account Letter of Credit or Reserve Account Insurance Policy by executing and delivering to such issuer a promissory note or agreement therefore; provided, however, any such note (a) shall not be a general obligation of the Issuer the payment of which is secured by the full faith and credit or taxing power of the Issuer, and (b) shall be payable solely from the Pledged Funds in the manner provided herein. To the extent the Issuer causes to be deposited into the Reserve Account, a Reserve Account Insurance Policy and/or a Reserve Account Letter of Credit for a term of years shorter than the life of the Series of Bonds so insured or secured, then the Reserve Account Insurance Policy and/or the Reserve Account Letter of Credit shall provide, among other things, that the issuer thereof shall provide the Issuer with notice as of each anniversary of the date of the issuance of the Reserve Account Insurance Policy and/or the Reserve Account Letter of Credit of the intention of the issuer thereof to either (a) extend the term of the Reserve Account Insurance Policy and/or the Reserve Account Letter of Credit beyond the expiration dates thereof, or (b) terminate the Reserve Account Insurance Policy and/or the Reserve Account Letter of Credit on the initial expiration dates thereof or such other future date as the issuer thereof shall have established. If the issuer of the Reserve Account Insurance Policy and/or the Reserve Account Letter of Credit notifies the Issuer pursuant to clause (b) of the immediately preceding sentence or if the Issuer terminates the Reserve Account Letter of Credit and/or Reserve Account Insurance Policy, then the Issuer shall deposit into the Reserve Account, on or prior to the end of the first full calendar month 42 following the date on which such notice is received by the Issuer, such sums as shall be sufficient to pay an amount equal to a fraction, the numerator of which is one (1) and the denominator of which is equal to the number of months remaining in the term of the Reserve Account Insurance Policy and/or the Reserve Account Letter of credit of the Reserve Account Requirement on the date such notice was received (the maximum amount available, assuming full reimbursement by the Issuer, under the Reserve Account Letter of Credit and/or the Reserve Account Insurance Policy to be reduced annually by an amount equal to the deposit to the Reserve Account during the previous twelve (12) month period) until amounts on deposit in the Reserve Account, as a result of the aforementioned deposits, and no later than upon the expiration of such Reserve Account Insurance Policy and/or such Reserve Account Letter of Credit, shall be equal to the Reserve Account Requirement applicable thereto. If any Reserve Account Letter of Credit or Reserve Account Insurance Policy shall terminate prior to the stated expiration date thereof, the Issuer agrees that it shall fund the Reserve Account over a period not to exceed twenty-four (24) months during which it shall make consecutive equal monthly payments in order that the amount on deposit in the Reserve Account shall equal the Reserve Account Requirement; provided, the Issuer may obtain a new Reserve Account Letter of Credit or a new Reserve Account Insurance Policy in lieu of making the payments required by this paragraph. Whenever the amount of cash or securities in the Reserve Account, together with the other amounts in the Debt Service Fund, are sufficient to fully pay all Outstanding Bonds in accordance with their terms (including principal or applicable Redemption Price and interest thereon), the funds on deposit in the Reserve Account may be transferred to the other Accounts of the Debt Service Fund for the payment of the Bonds. The Issuer may also establish a separate subaccount in the Reserve Account for any Series of Bonds and provide a pledge of such subaccount to the payment of such Series of Bonds apart from the pledge provided herein. To the extent a Series of Bonds is secured separately by a subaccount of the Reserve Account, the Holders of such Bonds shall not be secured by any other moneys in the Reserve Account. Moneys in a separate subaccount of the Reserve Account shall be maintained at the Reserve Account Requirement applicable to such Series of Bonds secured by the subaccount unless otherwise provided by Supplemental Resolution. Moneys shall be deposited to separate subaccounts in the Reserve Account on a pro-rata basis. In the event the Issuer shall maintain a Reserve Account Insurance Policy or Reserve Account Letter of Credit and moneys in such subaccount, the moneys shall be used prior to making any disbursements under such Reserve Account Insurance policy or Reserve Account Letter of Credit. 43 (5) Unrestricted Revenue Account. The balance of any moneys after the deposits required by Sections 4.05(A)(1) through (A)(4) hereof may be transferred, at the discretion of the Issuer, to the Unrestricted Revenue Account or any other appropriate fund and account of the Issuer and may be used for any lawful purpose including, without limitation, the early redemption of Bonds. In the event moneys on deposit in the Interest Account and the Principal Account on the third day prior to an Interest Date are not sufficient to pay the principal of and interest on the Bonds coming due on such Interest Date, the Issuer shall transfer moneys from the Unrestricted Revenue Account, if any, to the appropriate Account of the Debt Service Fund to provide for such payment. Any moneys remaining in the Unrestricted Revenue Account on each Interest Date may be used for any lawful purpose. (B) The Issuer, in its discretion, may use moneys in the Principal Account, the Bond Amortization Account and the Interest Account to purchase or redeem Outstanding Bonds coming due on the next principal payment date, provided such purchase does not adversely affect the Issuer's ability to pay the principal or interest coming due on such principal payment date on the Bonds not so purchased. (C) At least two business days prior to the date established for payment of any principal of or interest on the Bonds, the Issuer shall withdraw from the appropriate Account of the Debt Service Fund sufficient moneys to pay such principal or interest and deposit such moneys with the Paying Agent. Such deposits with the Paying Agent shall be made in moneys available to make payments of the principal of and interest on the Bonds as the same becomes due. (D) In the event the Issuer shall issue a series of Bonds secured by a Credit Facility, the Issuer may establish such separate subaccounts in the Interest Account, the Principal Account and the Bond Amortization Account to provide for payment of the principal of and interest on such Series as may be required by the Credit Facility Provider; provided one Series of Bonds shall not have preference in payment from Pledged Funds over any other Series of Bonds. The Issuer may also deposit moneys in such subaccounts at such other times and in such other amounts from those provided in this Section 4.05 as shall be necessary to pay the principal of and interest on such Bonds as the same shall become due, all as provided by the Supplemental Resolution authorizing such Bonds. In the case of Bonds secured by a Credit Facility, amounts on deposit in any subaccounts established for such Bonds may be applied as provided in the applicable Supplemental Resolution to reimburse the Credit Facility Provider for amounts drawn under such Credit Facility to pay the principal of or redemption price, if applicable, and interest on such Bonds or to pay the purchase price of any such Bonds which are tendered by the Holders thereof for payment. (E) The Issuer agrees that at the time of issuing any Variable Rate Bonds it shall establish the Maximum Interest Rate with respect thereto and a Maximum Interest Rate with respect to amounts owed to the Credit Facility Provider which provides liquidity for such Bonds. Any Credit Facility Provider which provides a Credit Facility for liquidity purposes must be rated in one of the two highest short-term rating categories assigned by each rating agency rating the Bonds secured by such Credit Facility. Any accelerated principal payments due to a Credit Facility Provider or any interest due in excess of the interest rate on the Variable Rate Bonds to a Credit Facility Provider must be subordinate to the payment of the scheduled debt service on the Bonds. SECTION 4.06. REBATE FUND. Amounts on deposit in the Rebate Fund shall be held in trust by the Issuer and used solely to make required rebates to the United States (except to the extent the same may be transferred to the Issuer) and the Bondholders shall have no right to have the same applied for debt service on the Bonds. If the rebate requirements of Section 148(f) of the Code are applicable, the Issuer agrees to undertake all actions required of it in its arbitrage certificate related to the Bonds, including, but not limited to: (A) making a determination in accordance with the Code of the amount required to be deposited in the Rebate Fund; (B) depositing the amount determined in clause (A) above into the Rebate Fund; (C) paying on the dates and in the manner required by the Code to the United States Treasury from the Rebate Fund and any other legally available moneys of the Issuer such amounts as shall be required by the Code to be rebated to the United States Treasury; and (D) keeping such records of the determinations made pursuant to this Section 4.06 as shall be required by the Code, as well as evidence of the fair market value of any investments purchased with proceeds of the Bonds. The provisions of the above -described arbitrage certificate may be amended without the consent of any Holder or the Credit Facility Provider from time to time as shall be necessary, in the opinion of Bond Counsel, to comply with the provisions of the Code. SECTION 4.07. INVESTMENTS. Moneys on deposit in the Construction Fund, the Restricted Revenue Account and the Debt Service Fund shall be continuously secured in the manner by which the deposit of public funds are authorized to be secured by the laws of the State. Moneys on deposit in the Construction Fund, the Restricted Revenue Account and the Debt Service Fund, other than the Reserve Account, may be invested and reinvested in 45 Authorized Investments maturing not later than the date on which the moneys therein will be needed for the purposes of such Fund or Account. Moneys on deposit in the Reserve Account may be invested and reinvested in Authorized Investments which mature no later than ten (10) years from the date of investment. All investments shall be valued at market at least semi-annually. Any and all income received by the Issuer from the investment of moneys in the Construction Fund, the Interest Account, the Principal Account, the Bond Amortization Account, the Restricted Revenue Account and the Reserve Account (to the extent such income and the other amounts in the Reserve Account does not exceed the Reserve Account Requirement) shall be retained in such respective Fund or Account. Any and all income received by the Issuer from the investment of moneys in the Reserve Account (only to the extent such income and other amounts in the Reserve Account exceeds the Reserve Account Requirement) shall be deposited in the Interest Account. Nothing contained in this Resolution shall prevent any Authorized Investments acquired as investments of or security for funds held under this Resolution from being issued or held in book -entry form on the books of the Department of the Treasury of the United States. SECTION 4.08. SEPARATE ACCOUNTS. The moneys required to be accounted for in each of the foregoing funds, accounts and subaccounts established herein may be deposited in a single, non-exclusive bank account, and funds allocated to the various funds, accounts and subaccounts established herein may be invested in a common investment pool, provided that adequate accounting records are maintained to reflect and control the restricted allocation of the moneys on deposit therein and such investments for the various purposes of such funds, accounts and subaccounts as herein provided. The designation and establishment of the various funds, accounts and subaccounts in and by this Resolution shall not be construed to require the establishment of any completely independent, self -balancing funds as such term is commonly defined and used in governmental accounting, but rather is intended solely to constitute an earmarking of certain revenues for certain purposes and to establish certain priorities for application of such revenues as herein provided. 46 ARTICLE V SUBORDINATED INDEBTEDNESS, ADDITIONAL BONDS AND COVENANTS OF ISSUER SECTION 5.01. SUBORDINATED INDEBTEDNESS. The Issuer will not issue any other obligations payable from the Pledged Funds or voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or other charge having priority to or being on a parity with the lien thereon in favor of the Bonds and the interest thereon except in compliance with the provisions of Section 5.02. The Issuer may at any time or from time to time issue evidences of indebtedness payable in whole or in part out of the Pledged Funds and which may be secured by a pledge of the Pledged Funds; provided, however, that such pledge shall be, and shall be expressed to be, subordinated in all respects to the pledge of the Pledged Funds created by this Resolution and shall not be subject to acceleration prior to maturity. The Issuer shall have the right to covenant with the holders from time to time of any Subordinated Indebtedness to add to the conditions, limitations and restrictions under which any Additional Bonds may be issued pursuant to Section 5.02 hereof. The Issuer agrees to pay promptly any Subordinated Indebtedness as the same shall become due. SECTION 5.02. ISSUANCE OF ADDITIONAL BONDS. No Additional Bonds, payable on a parity with the Bonds then Outstanding pursuant to this Resolution, shall be issued except upon the conditions and in the manner herein provided. The Issuer may issue one or more Series of Additional Bonds for any one or more of the following purposes: financing or refinancing the Costs of a Project, or the completion thereof, or refunding any or all Outstanding Bonds or of any Subordinated Indebtedness of the Issuer. No such Additional Bonds shall be issued unless (1) no Event of Default (as specified in Section 6.01 hereof) shall have occurred and be continuing hereunder and (2) the following conditions are complied with: (A) Except as otherwise provided in Section 5.02(D) hereof, there shall have been obtained and filed with the Issuer a statement of the Clerk or his/her designee: (1) stating that he or she has examined the books and records of the Issuer relating to the Infrastructure Sales Surtax Revenues which have been received by the Issuer for deposit to the Restricted Revenue Account; (2) setting forth the amount of such Infrastructure Sales Surtax Revenues during any twelve (12) consecutive months designated by the Issuer within the twenty-four (24) months immediately preceding the date of delivery of such Additional Bonds with respect to which such statement is made; and (3) stating that the amount of such 47 Infrastructure Sales Surtax Revenues received during the aforementioned 12-month period equals at least 1.30 times the Maximum Annual Debt Service on the Prior Bonds and all Bonds then Outstanding and such Additional Bonds with respect to which such statement is made. Such report may be partially based upon a certification of certain matters related to the calculation of the Maximum Annual Debt Service by the Issuer's financial advisor. (B) For the purpose of determining the Maximum Annual Debt Service under Section 5.02(A) hereof and for determining the Reserve Account Requirement for any Variable Rate Bonds, the interest rate on any Variable Rate Bonds then proposed to be issued and on any Outstanding Variable Rate Bonds shall be deemed to be the lesser of (1) the interest rate for 20-year revenue bonds published by The Bond Buyer no more than two weeks prior to the sale of the Variable Rate Bonds, or (2) the Maximum Interest Rate. (C) Additional Bonds shall be deemed to have been issued pursuant to this Resolution the same as the Outstanding Bonds, and all of the other covenants and other provisions of this Resolution (except as to details of such Additional Bonds inconsistent therewith) shall be for the equal benefit, protection and security of the Holders of all Bonds issued pursuant to this Resolution. Except as provided in Sections 4.02 and 4.05 hereof, all Bonds, regardless of the time or times of their issuance, shall rank equally with respect to their lien on the Pledged Funds and their sources and security for payment therefrom without preference of any Bonds over any other; provided, however, that the Issuer shall include a provision in any Supplemental Resolution authorizing the issuance of Variable Rate Additional Bonds pursuant to this Section 5.02 that in the event the principal thereof is accelerated due to such Bonds being held by the Credit Facility Provider, the lien of any accelerated debt due and owing such Credit Facility Provider on the Pledged Funds shall be subordinate in all respects to the pledge of the Pledged Funds created by this Resolution. (D) In the event any Additional Bonds are issued for the purpose of refunding any Bonds then Outstanding, the conditions of Section 5.02 hereof shall not apply, provided that the issuance of such Additional Bonds shall result in a reduction of aggregate debt service. The conditions of Section 5.02(A) hereof shall apply to Additional Bonds issued to refund Subordinated Indebtedness and to Additional Bonds issued for refunding purposes which cannot meet the conditions of this paragraph. (E) In the event the Act is amended to provide for additional Infrastructure Sales Surtax Revenues to be distributed to the Issuer, the Issuer may, by Supplemental Resolution, extend the pledge of the Infrastructure Sales Surtax Revenues created pursuant to the terms of this Resolution to include such additional Infrastructure Sales Surtax Revenues and may then for the purpose of determining whether there are sufficient Infrastructure Sales Surtax Revenues to meet the coverage tests specified in Section 5.02(A), assume that such additional 48 Infrastructure Sales Surtax Revenues were in effect during the applicable twelve (12) consecutive month period. SECTION 5.03. BOND ANTICIPATION NOTES. The Issuer may issue notes in anticipation of the issuance of Bonds which shall have such terms and details and be secured in such manner, not inconsistent with this Resolution, as shall be provided by resolution of the Issuer. SECTION 5.04. ACCESSION OF SUBORDINATED INDEBTEDNESS TO PARITY STATUS WITH BONDS. The Issuer may provide for the accession of Subordinated Indebtedness to the status of complete parity with the Bonds, if (A) the Issuer shall meet all the requirements imposed upon the issuance of Additional Bonds by Section 5.02 hereof, assuming, for purposes of said requirements, that such Subordinated Indebtedness shall be Additional Bonds and (B) the Reserve Account, upon such accession, shall contain an amount equal to the Reserve Account Requirement in accordance with Section 4.05(A)(4) hereof. If the aforementioned conditions are satisfied, the Subordinated Indebtedness shall be deemed to have been issued pursuant to this Resolution the same as the Outstanding Bonds, and such Subordinated Indebtedness shall be considered Bonds for all purposes provided in this Resolution. SECTION 5.05. BOOKS AND RECORDS. The Issuer will keep books and records of the receipt of the Infrastructure Sales Surtax Revenues in accordance with generally accepted accounting principles, and any Credit Facility Provider, or Holder or Holders of at least $1,000,000 aggregate principal amount of Bonds shall have the right at all reasonable times to inspect the records, accounts and data of the Issuer relating thereto. SECTION 5.06. NO IMPAIRMENT; LIMITATION ON MATURITY OF BONDS. The pledging of the Pledged Funds in the manner provided herein shall not be subject to repeal, modification or impairment by any subsequent ordinance, resolution, agreement or other proceedings of the Issuer. The Issuer shall not (1) permit the Infrastructure Sales Surtax Ordinance to be terminated or expire while any Bonds remain Outstanding or (2) issue any Bonds maturing after the stated expiration date of the one -cent local government infrastructure sales surtax authorized by the Infrastructure Sales Surtax Ordinance, as the same may be extended in accordance with the Act. SECTION 5.07. FEDERAL INCOME TAX COVENANTS. (A) The Issuer covenants with the Holders of the Bonds (other than Taxable Bonds) that it shall not use the proceeds of the Bonds in any manner which would cause the interest on the Bonds to be or become includable in gross income for purposes of federal income taxation. (B) The Issuer covenants with the Holders of the Bonds (other than Taxable Bonds) that neither the Issuer nor any Person under its control or direction will make any use of the proceeds of the Bonds (or amounts deemed to be proceeds under the Code) in any manner which would cause the Bonds to be "arbitrage bonds" within the meaning of the Code and neither the Issuer nor any other Person shall do any act or fail to do any act which would cause the interest on the Bonds to become includable in gross income for purposes of federal income taxation. (C) The Issuer hereby covenants with the Holders of the Bonds (other than Taxable Bonds) that it will comply with all provisions of the Code necessary to maintain the exclusion of interest on the Bonds from gross income for purposes of federal income taxation, including, in particular, the payment of any amount required to be rebated to the U.S. Treasury pursuant to the Code. SECTION 5.08. RECEIPT OF INFRASTRUCTURE SALES SURTAX REVENUES. The Issuer covenants to do all things necessary or required on its part by the Act or otherwise to maintain the levy and receipt of the Infrastructure Sales Surtax Revenues. The Issuer shall exercise all legally available remedies to enforce such levy, collection and receipt now or hereafter available under law. The Issuer will not take any action, including amending or supplementing the Infrastructure Sales Surtax Ordinance, or enter into any agreement that shall result in reducing the level of Infrastructure Sales Surtax Revenues received by the Issuer from that level prevailing at the time the Issuer takes such action or enters into such agreement. SECTION 5.09. OBLIGATIONS UNDER PRIOR RESOLUTION. The Issuer hereby agrees to issue no bonds or other obligations pursuant to the Prior Resolution that have a lien on the Infrastructure Sales Surtax Revenues which is senior to the lien thereto granted hereunder with respect to the Bonds. 50 ARTICLE VI DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. The following events shall each constitute an "Event of Default": (A) Default shall be made in the payment of the principal of or interest on any Bond when due. In determining whether a payment default has occurred, no effect shall be given to payment made under a Bond Insurance Policy. (B) There shall occur the dissolution or liquidation of the Issuer, or the filing by the Issuer of a voluntary petition in bankruptcy, or the commission by the Issuer of any act of bankruptcy, or adjudication of the Issuer as bankrupt, or assignment by the Issuer for the benefit of its creditors, or appointment of a receiver for the Issuer, or the entry by the Issuer into an agreement of composition with its creditors, or the approval by a court of competent jurisdiction of a petition applicable to the Issuer in any proceeding for its reorganization instituted under the provisions of the Federal Bankruptcy Act, as amended, or under any similar act in any jurisdiction which may now be in effect or hereafter enacted. (C) The Issuer shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in this Resolution on the part of the Issuer to be performed, and such default shall continue for a period of thirty (30) days after written notice of such default shall have been received from the Holders of not less than twenty-five percent (25%) of the aggregate principal amount of the Outstanding Bonds or the Insurer. Notwithstanding the foregoing, the Issuer shall not be deemed in default hereunder if such default can be cured within a reasonable period of time and if the Issuer in good faith institutes curative action and diligently pursues such action until the default has been corrected. SECTION 6.02. REMEDIES. Any Holder ofthe Bonds or any trustee or receiver acting for such Bondholders may either at law or in equity, by suit, action, mandamus or other proceedings in any court of competent jurisdiction, protect and enforce any and all rights under the laws of the State of Florida, or granted and contained in this Resolution, and may enforce and compel the performance of all duties required by this Resolution or by any applicable statutes to be performed by the Issuer or by any officer thereof, provided, however, that no Holder, Credit Facility Provider, trustee or receiver shall have the right to declare the Bonds immediately due and payable. 51 The Holder or Holders of Bonds in an aggregate principal amount of not less than twenty-five per cent (25%) of the Bonds then Outstanding may by a duly executed certificate in writing appoint a trustee for Holders of Bonds issued pursuant to this Resolution with authority to represent such Bondholders in any legal proceedings for the enforcement and protection of the rights of such Bondholders and such certificate shall be executed by such Bondholders or their duly authorized attorneys or representatives, and shall be filed in the office of the Clerk. Notice of such appointment, together with evidence of the requisite signatures of the Holders of not less than twenty-five percent (25%) in aggregate principal amount of Bonds Outstanding and the trust instrument under which the trustee shall have agreed to serve shall be filed with the Issuer and the trustee and notice of appointment shall promptly be given to all Holders of Bonds by first class mail, postage prepaid. After the appointment of the first trustee hereunder, no further trustees may be appointed; however, the holders of a majority in aggregate principal amount of all the Bonds then Outstanding may remove the trustee initially appointed and appoint a successor and subsequent successors at any time. SECTION 6.03. DIRECTIONS TO RECEIVER AS TO REMEDIAL PROCEEDINGS. The Holders of a majority in principal amount of the Bonds then Outstanding (or the Credit Facility Provider for any Series of Outstanding Bonds) have the right, by an instrument or concurrent instruments in writing executed and delivered to any receiver, to direct the method and place of conducting all remedial proceedings to be taken by any receiver hereunder, provided that such direction shall not be otherwise than in accordance with law or the provisions hereof, and that the trustee shall have the right to decline to follow any such direction which in the opinion of such receiver would be unjustly prejudicial to Holders of Bonds not parties to such direction. SECTION 6.04. REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to the Bondholders is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. SECTION 6.05. WAIVER OF DEFAULT. No delay or omission of any Bondholder to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default, or an acquiescence therein; and every power and remedy given by this Section 6.05 to the Bondholders may be exercised from time to time, and as often as may be deemed expedient. No Event of Default may be waived without the consent of each Credit Facility Provider, which has honored all its obligations under its Credit Facility. 52 SECTION 6.06. APPLICATION OF MONEYS AFTER DEFAULT. If an Event of Default shall happen and shall not have been remedied, the Issuer or a trustee or receiver appointed for the purpose shall apply all Pledged Funds as follows and in the following order: A. To the payment of the reasonable and proper charges, expenses and liabilities of the trustee or receiver, Registrar and Paying Agent hereunder; and B. To the payment of the interest and principal then due on the Bonds (provided such payments are made in accordance with applicable law), as follows: (1) Unless the principal of all the Bonds shall have become due and payable, all such moneys shall be applied: FIRST: to the payment to the Persons entitled thereto of all installments of interest then due, in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto, without any discrimination or preference; and SECOND: to the payment to the Persons entitled thereto of the unpaid principal of any of the Bonds which shall have become due at maturity in the order of their due dates, with interest upon such Bonds from the respective dates upon which they became due, and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the payment first of such interest, ratably according to the amount of such interest due on such date, and then to the payment of such principal, ratably according to the amount of such principal due on such date, to the Persons entitled thereto without any discrimination or preference. (2) If the principal of all the Bonds shall have become due and payable, all such moneys shall be applied first, to payment of any unfunded rebatable arbitrage, and second, to the payment of the principal and interest then due and unpaid upon the Bonds, with interest thereon as aforesaid, without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or preference. 53 SECTION 6.07. CONTROL BY CREDIT FACILITY PROVIDER. To the extent a Credit Facility Provider makes any payment of principal of or interest on Bonds in accordance with its Bond Insurance Policy, such Credit Facility Provider shall become subrogated to the rights of the recipients of such payments in accordance with the terms of its Bond Insurance Policy. Upon the occurrence and continuance of an Event of Default, a Credit Facility Provider of a Series of Bonds, if such Credit Facility Provider shall not be in payment default under its Bond Insurance Policy, shall be deemed to be the sole owner of such Bonds for purposes of (A) directing and controlling the enforcement of all rights and remedies with respect to such Series of Bonds, including any waiver of an Event of Default and removal of any trustee, and (B) exercising any voting right or privilege or giving any consent or direction or taking any other action that the Holders of such Bonds are entitled to take pursuant to this Article VI hereof. No provision expressly recognizing or granting rights in or to a Credit Facility Provider shall be modified without the consent of such Credit Facility Provider. A Credit Facility Provider's rights under this Section 6.07 shall be suspended during any period in which such Credit Facility Provider is in default in its payment obligations under its Bond Insurance Policy (except to the extent of amounts previously paid by such Credit Facility Provider and due and owing to such Credit Facility Provider) and shall be of no force or effect if its Bond Insurance Policy is no longer in effect or if the Credit Facility Provider asserts that its Bond Insurance Policy is not in effect or if the Credit Facility Provider waives such rights in writing. The rights granted to a Credit Facility Provider under this Section 6.07 are granted in consideration of such Credit Facility Provider issuing its Bond Insurance Policy. The Issuer shall provide each Credit Facility Provider immediate notice of any Event of Default described in Section 6.01(A) hereof and notice of any other Event of Default occurring hereunder within five days of the occurrence thereof. Each Credit Facility Provider of any Bonds hereunder shall be considered a third - party beneficiary to the Resolution with respect to such Bonds. 54 ARTICLE VII SUPPLEMENTAL RESOLUTIONS SECTION 7.01. SUPPLEMENTAL RESOLUTION WITHOUT BONDHOLDERS' CONSENT. The Issuer, from time to time and at any time, may adopt such Supplemental Resolutions without the consent of the Bondholders (which Supplemental Resolution shall thereafter form a part hereof) for any of the following purposes: (A) To cure any ambiguity or formal defect or omission or to correct any inconsistent provisions in this Resolution or to clarify any matters or questions arising hereunder. (B) To grant to or confer upon the Bondholders any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the Bondholders. (C) To add to the conditions, limitations and restrictions on the issuance of Bonds under the provisions ofthis Resolution other conditions, limitations and restrictions thereafter to be observed. (D) To add to the covenants and agreements of the Issuer in this Resolution other covenants and agreements thereafter to be observed by the Issuer or to surrender any right or power herein reserved to or conferred upon the Issuer. (E) To specify and determine any matters and things relative to such Bonds which are not contrary to or inconsistent with this Resolution as theretofore in effect, or to amend, modify or rescind any such authorization, specification or determination at any time prior to the first delivery of such Bonds. (F) To specify and determine the matters and things referred to in Sections 2.01, 2.02, 2.10 or 5.02 hereof, and also any other matters and things relative to such Bonds which are not contrary to or inconsistent with this Resolution as theretofore in effect, or to amend, modify or rescind any such authorization, specification or determination at any time prior to the first delivery of such Bonds. (G) To authorize Additional Bonds or Projects. M, (H) To provide for the establishment of a separate subaccount or subaccounts in the Reserve Account which shall independently secure one or more Series of Bonds issued hereunder. (I) To make any other change that, in the opinion of the Issuer, would not materially adversely affect the security for the Bonds. SECTION7.02. SUPPLEMENTAL RESOLUTION WITH BONDHOLDERS' AND CREDIT FACILITY PROVIDER'S CONSENT. Subject to the terms and provisions contained in this Section 7.02 and Sections 7.01 and 7.03 hereof, the Holder or Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, anything contained in this Resolution to the contrary notwithstanding, to consent to and approve the adoption of such Supplemental Resolution or Resolutions hereto as shall be deemed necessary or desirable by the Issuer for the purpose of supplementing, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Resolution; provided, however, that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any maturity remain Outstanding, the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Outstanding Bonds under this Section 7.02. Any Supplemental Resolution which is adopted in accordance with the provisions of this Section 7.02 shall also require the written consent of the Insurer. No Supplemental Resolution may be approved or adopted which shall permit or require (A) an extension of the maturity of the principal of or the payment of the interest on any Bond issued hereunder, (B) reduction in the principal amount of any Bond or the rate of interest thereon, (C) the creation of a lien upon or a pledge of the Pledged Funds other than the lien and pledge created by this Resolution or as otherwise permitted hereby, (D) a preference or priority of any Bond or Bonds over any other Bond or Bonds (except as to the establishment of separate subaccounts in the Reserve Account as permitted hereby), or (E) a reduction in the aggregate principal amount of the Bonds required for consent to such Supplemental Resolution. Nothing herein contained, however, shall be construed as making necessary the approval by Bondholders or a Credit Facility Provider of the adoption of any Supplemental Resolution as authorized in Section 7.01 hereof. If at any time the Issuer shall determine that it is necessary or desirable to adopt any Supplemental Resolution pursuant to this Section 7.02, the Clerk shall cause the Registrar to give notice of the proposed adoption of such Supplemental Resolution and the form of consent to such adoption to be mailed, postage prepaid, to all Bondholders at their addresses as they appear on the registration books and to all Insurers of Bonds Outstanding. Such notice shall briefly set forth the nature of the proposed Supplemental Resolution and shall 56 state that copies thereof are on file at the offices of the Clerk and the Registrar for inspection by all Bondholders. The Issuer shall not, however, be subject to any liability to any Bondholder by reason of its failure to cause the notice required by this Section 7.02 to be mailed and any such failure shall not affect the validity of such Supplemental Resolution when consented to and approved as provided in this Section 7.02. Whenever the Issuer shall deliver to the Clerk an instrument or instruments in writing purporting to be executed by the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding, which instrument or instruments shall refer to the proposed Supplemental Resolution described in such notice and shall specifically consent to and approve the adoption thereof in substantially the form of the copy thereof referred to in such notice, thereupon, but not otherwise, the Issuer may adopt such Supplemental Resolution in substantially such form, without liability or responsibility to any Holder of any Bond, whether or not such Holder shall have consented thereto. If the Holders of not less than a majority in aggregate principal amount of the Bonds Outstanding at the time of the adoption of such Supplemental Resolution shall have consented to and approved the adoption thereof as herein provided, no Holder of any Bond shall have any right to object to the adoption of such Supplemental Resolution, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the adoption thereof, or to enjoin or restrain the Issuer from adopting the same or from taking any action pursuant to the provisions thereof. Upon the adoption of any Supplemental Resolution pursuant to the provisions of this Section 7.02, this Resolution shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Resolution of the Issuer and all Holders of Bonds then Outstanding shall thereafter be determined, exercised and enforced in all respects under the provisions of this Resolution as so modified and amended. SECTION 7.03. AMENDMENT WITH CONSENT OF CREDIT FACILITY PROVIDER ONLY. For purposes of amending the Resolution pursuant to Section 7.02 hereof, a Credit Facility Provider of a Series of Bonds shall be considered the Holder thereof, provided such Series of Bonds, at the time of the adoption of the amendment, shall be rated by the rating agencies which shall have rated the Bonds no lower than the initial ratings assigned thereto by such rating agencies. The consent of the Holders of Bonds shall not be required if the Credit Facility Provider shall consent to the amendment as provided by this Section 7.03. The foregoing right of amendment, however, does not apply to any amendment to Section 5.07 hereof with respect to the exclusion of interest on the Bonds from gross income for purposes of federal income taxation. Prior to adoption of any amendment made pursuant to this Section 7.03, notice of such amendment shall be delivered to the rating 57 agencies rating the Bonds. Upon filing with the Clerk of evidence of such consent of a Credit Facility Provider as aforesaid, the Issuer may adopt such Supplemental Resolution. After the adoption by the Issuer of such Supplemental Resolution, notice thereof shall be mailed in the same manner as notice of an amendment under Section 7.02 hereof. 58 ARTICLE VIII DEFEASANCE; MISCELLANEOUS SECTION 8.01. DEFEASANCE. If (A) the Issuer shall pay or cause to be paid or there shall otherwise be paid to the Holders of any Series of Bonds the principal and interest or redemption price due or to become due thereon, at the times and in the manner stipulated therein and in this Resolution, and (ii) the Issuer shall pay all amounts owing to any Credit Facility Provider issuing a Credit Facility with respect to such Series of Bonds, and all covenants, agreements and other obligations of the Issuer to the holders of such Series of Bonds, shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Paying Agents shall pay over or deliver to the Issuer all money or securities held by them pursuant to the Resolution which are not required for payment or redemption of any Series of Bonds not theretofore surrendered for such payment or redemption. Any Bonds or interest installments appertaining thereto shall be deemed to have been paid within the meaning of this Section 8.01 if there shall have been deposited in irrevocable trust with a banking institution or trust company by or on behalf of the Issuer either moneys in an amount which shall be sufficient, or Refunding Securities verified by an independent certified public accountant to be in such amount that the principal of and the interest on or redemption price which when due will provide moneys which, together with the moneys, if any, deposited with such banking institution or trust company at the same time shall be sufficient, to pay the principal of and interest due and to become due on said Bonds on and prior to the maturity date thereof. Except as hereafter provided, neither the Refunding Securities nor any moneys so deposited with such banking institution or trust company nor any moneys received by such bank or trust company on account ofprincipal of or redemption price, if applicable, or interest on said Refunding Securities shall be withdrawn or used for any purpose other than, and all such moneys shall be held in trust for and be applied to, the payment, when due, of the principal of or redemption price of the Bonds for the payment of which they were deposited and the interest accruing thereon to the date of maturity. Upon any such defeasance, the Issuer shall provide an opinion of Bond Counsel to the Credit Facility Provider of such Bonds, if any, that the Bonds have been defeased in accordance with this Section 8.01. For purposes of determining whether variable rate Bonds shall be deemed to have been paid prior to the maturity or the redemption date thereof, as the case may be, by the deposit of moneys, or specified Refunding Securities and moneys, if any, in accordance with this Section 8.01, the interest to come due on such variable rate Bonds on or prior to the maturity or redemption date thereof, as the case may be, shall be calculated at the Maximum 59 Interest Rate; provided, however, that if on any date, as a result of such variable rate Bonds having borne interest at less than the Maximum Interest Rate for any period, the total amount of moneys and specified Refunding Securities on deposit for the payment of interest on such variable rate Bonds is in excess of the total amount which would have been required to be deposited on such date in respect of such variable rate Bonds in order to satisfy this Section 9.01, such excess shall be paid to the Issuer free and clear of any trust, lien, pledge or assignment securing the Bonds or otherwise existing under this Resolution. If Bonds are not to be redeemed within 60 days after any such defeasance described in this Section 8.01, the Issuer shall cause the Registrar to mail a notice to the Holders of such Bonds that the deposit required by this Section 8.01 of moneys or Refunding Securities has been made and said Bonds are deemed to be paid in accordance with the provisions of this Section 8.01 and stating such maturity date upon which moneys are to be available for the payment of the principal of and interest on or redemption price of said Bonds. Failure to provide said notice shall not affect the Bonds being deemed to have been paid in accordance with the provisions of this Section 8.01. Notwithstanding anything herein to the contrary, in the event that the principal of or interest due on the Bonds shall be paid by a Credit Facility Provider, such Bonds shall remain Outstanding, shall not be defeased or otherwise satisfied and shall not be considered paid by the Issuer, and the pledge of the Pledged Funds and all covenants, agreements and other obligations of the Issuer to the Bondholders shall continue to exist and Credit Facility Provider shall be subrogated to the rights of such Bondholders. SECTION 8.02. CAPITAL APPRECIATION BONDS. For the purposes of (A) receiving payment of the Redemption Price if a Capital Appreciation Bond is redeemed prior to maturity, or (B) receiving payment of a Capital Appreciation Bond if the principal of all Bonds becomes due and payable under the provisions of this Resolution, or (C) computing the amount of Bonds held by the Holder of a Capital Appreciation Bond in giving to the Issuer or any trustee or receiver appointed to represent the Bondholders any notice, consent, request or demand pursuant to this Resolution for any purpose whatsoever, the principal amount of a Capital Appreciation Bond shall be deemed to be its Accreted Value. SECTION 8.03. SALE OF BONDS. The Bonds shall be issued and sold at public or private sale at one time or in installments from time to time and at such price or prices as shall be consistent with the provisions of the Act, the requirements of this Resolution and other applicable provisions of law. SECTION 8.04. GENERAL AUTHORITY. The members of the Board of County Commissioners of the Issuer and the officers, attorneys and other agents or employees of the Issuer are hereby authorized to do all acts and things required of them by this Resolution or the Bond Insurance Policy or which are desirable or consistent with the requirements of the Resolution or the Bond Insurance Policy for the full punctual and complete performance of all the terms, covenants and agreements contained herein or in the Bonds and the Resolution, including the execution of any documents or instruments relating to insuring payment of the Bonds, and each member, employee, attorney and officer of the Issuer or the Issuer are hereby authorized and directed to execute and deliver any and all papers and instruments and to be and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated hereunder. SECTION 8.05. SEVERABILITY OF INVALID PROVISIONS. If any one or more of the covenants, agreements or provisions of this Resolution shall be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separable from the remaining covenants, agreements and provisions of this Resolution and shall in no way affect the validity of any of the other covenants, agreements or provisions hereof or of the Bonds issued hereunder. SECTION 8.06. REPEAL OF INCONSISTENT RESOLUTIONS. All ordinances, resolutions or parts thereof in conflict herewith are hereby superseded and repealed to the extent of such conflict. [Remainder of page intentionally left blank] 61 SECTION 8.07. EFFECTIVE DATE. This Resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED by the Board of County Commissioners of Monroe County, Florida, at a regular meeting of said Board held on the 19th day of February, 2003. Mayor Spehar Mayor Pro Tern Nelson Commissioner McCoy Commissioner Neugent Commissiner Rice (SEAL) Attest: DANNY L. KOLHAGE, Clerk Deputy Clerk BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA 62 Mayor/Chairperson EXHIBIT A GENERAL DESCRIPTION OF THE 2003 PROJECT The Project generally includes the acquisition, constructing, equipping and/or renovation, as the case may be, of all or a portion of the following: • Stock Island Fire Rescue Facility Storage • Big Pine Fire/EMS Facility • Conch Key Fire/EMS Facility • CudJoe Key Fire/EMS Facility • Key Largo North Fire Station • Tovernier Fire Rescue Facility • Ocean Reef Fire/Ambulance Replacement • Upper Keys Government Center • Plantation Key Courtroom • Marathon Courtroom Renovations • Medical Examiner Facility • Crawl Key Fire Rescue Training Facility Additions • Dedicated EOC AUTHORIZING MUNICIPAL BOND INSURANCE FOR THE BONDS; AUTHORIZING A RESERVE ACCOUNT INSURANCE POLICY WITH RESPECT TO THE BONDS; AND PROVIDING AN EFFECTIVE DATE. BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA: SECTION 1. FINDINGS AND AUTHORIZATIONS. It is hereby found and determined that: (A) On the date hereof, the Board of County Commissioners (the "Board") of Monroe County, Florida (the "Issuer") duly adopted an ordinance (the "Bond Ordinance") and a resolution, the title of which resolution is quoted in the title of this supplemental resolution (as supplemented, the "Resolution"), for the purposes described therein, each of which authorized, among other things, the issuance of the Issuer's Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2003 (the "Series 2003 Bonds"), for the principal purpose of financing the acquisition, construction and equipping ofthe 2003 Project (as defined in the Resolution). (B) In accordance with Section 218.385, Florida Statutes, and pursuant to this Resolution, the Series 2003 Bonds shall be advertised for competitive bids pursuant to the Official Notice of Sale, the form of which is attached hereto as Exhibit A. (C) Pursuant to the Official Notice of Sale, competitive bids received in accordance with the Official Notice of Sale on or prior to 10:00 a.m., local time, on March 4, 2003 or such other date or time as is determined by the Mayor in accordance with the terms and provisions of the Official Notice of Sale, shall be publicly opened and announced. (D) Due to the present volatility and uncertainty of the market for tax-exempt obligations such as the Series 2003 Bonds, it is desirable for the Issuer to be able to advertise and award the Series 2003 Bonds at the most advantageous time and date which shall be determined by the Mayor; and, accordingly, the Issuer hereby determines to delegate the advertising and awarding of the Series 2003 Bonds to the Mayor, and in her absence or unavailability, to the Mayor Pro Tern of the Board, within the parameters described herein. (E) It is necessary and appropriate that the Board determine certain parameters for the terms and details of the Series 2003 Bonds and to delegate certain authority to the Mayor, 2 RESOLUTION NO. A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA SUPPLEMENTING A RESOLUTION ADOPTED BY THE BOARD ON FEBRUARY 19, 2003 AND ENTITLED "A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA AUTHORIZING THE ISSUANCE OF NOT EXCEEDING $25,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF MONROE COUNTY, FLORIDA INFRASTRUCTURE SALES SURTAX REVENUE BONDS, SERIES 2003, TO FINANCE THE ACQUISITION, CONSTRUCTION AND EQUIPPING OF CERTAIN CAPITAL IMPROVEMENTS WITHIN THE COUNTY; PLEDGING MONEYS RECEIVED BY THE COUNTY FROM THE ONE CENT LOCAL GOVERNMENT INFRASTRUCTURE SALES SURTAX TO SECURE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON SAID BONDS; PROVIDING FOR THE RIGHTS OF THE HOLDERS OF SAID BONDS; MAKING CERTAIN OTHER COVENANTS AND AGREEMENTS IN CONNECTION WITH THE ISSUANCE OF SUCH BONDS; PROVIDING CERTAIN TERMS AND DETAILS OF SAID BONDS; AND PROVIDING FOR AN EFFECTIVE DATE FOR THIS RESOLUTION;" MAKING CERTAIN COVENANTS AND AGREEMENTS IN CONNECTION WITH THE ISSUANCE OF SUCH SERIES 2003 BONDS; AUTHORIZING THE AWARDING OF SAID SERIES 2003 BONDS PURSUANT TO A PUBLIC BID; DELEGATING CERTAIN AUTHORITY TO THE MAYOR FOR THE AWARD OF THE SERIES 2003 BONDS AND THE APPROVAL OF THE TERMS AND DETAILS OF SAID SERIES 2003 BONDS; APPOINTING THE PAYING AGENT AND REGISTRAR FOR SAID SERIES 2003 BONDS; AUTHORIZING THE DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT AND THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT WITH RESPECT THERETO; AUTHORIZING THE EXECUTION AND DELIVERY OF A CONTINUING DISCLOSURE CERTIFICATE; and in her absence or unavailability, to the Mayor Pro Tern of the Board for the award of the Series 2003 Bonds and the approval of the terms of the Series 2003 Bonds in accordance with the provisions hereof, of the Resolution and of the Official Notice of Sale. (F) In the event Bond Counsel shall determine that the Series 2003 Bonds have not been awarded competitively in accordance with the provisions of Section 218.385, Florida Statutes, the Board shall adopt such resolutions and make such findings as shall be necessary to authorize and ratify a negotiated sale of the Series 2003 Bonds in accordance with said Section 218.385. (G) The covenants, pledges and conditions in the Resolution shall be applicable to the Series 2003 Bonds herein authorized and said Series 2003 Bonds shall be on a parity with and rank equally as to the lien on and source and security for payment from the Pledged Funds (as defined in the Resolution) and in all other respects with all Additional Bonds (as defined in the Resolution) hereafter issued pursuant to the Resolution, and shall constitute "Bonds" within the meaning of the Resolution; provided, however, the pledge of and lien on the Infrastructure Sales Surtax Revenues (as defined in the Resolution) for the benefit of the Series 2003 Bonds shall be junior and subordinate in all respects to the pledge thereof and lien thereon granted with respect to the Prior Bonds (as defined in the Resolution) under the Prior Resolution (as defined in the Resolution). (H) The Resolution provides that the Series 2003 Bonds shall mature on such dates and in such amounts, shall bear such rates of interest, shall be payable in such places and shall be subject to such redemption provisions as shall be determined by, or provided for in, a Supplemental Resolution adopted by the Issuer; and it is now appropriate that the Issuer set forth the parameters and mechanism to determine such terms and details through a competitive sale in accordance with the provisions herein and in the hereinafter described Official Notice of Sale. SECTION 2. DEFINITIONS. When used in this Supplemental Resolution, the terms defined in the Resolution shall have the meanings therein stated, except as such definitions shall be hereinafter amended and defined. SECTION 3. AUTHORITY FOR THIS SUPPLEMENTAL RESOLUTION. This Supplemental Resolution is enacted pursuant to the provisions of the Resolution and the Act. SECTION 4. AUTHORIZATION AND DESCRIPTION OF THE SERIES 2003 BONDS. The Issuer has heretofore determined pursuant to the Bond Ordinance and the Resolution to issue a Series of Bonds in the aggregate principal amount of not exceeding 3 $25,000,000 to be known as the "Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2003," for the purposes of providing moneys to (i) fund the acquisition, construction and equipping of the 2003 Project, and (ii) paying costs associated with the issuance of the Series 2003 Bonds, including the purchase of a Bond Insurance Policy and the hereinafter described Reserve Account Insurance Policy. The exact initial aggregate principal amount of Series 2003 Bonds to be issued shall be determined by the Mayor, provided such initial aggregate principal amount does not exceed $25,000,000. The Series 2003 Bonds shall be dated as of their date of delivery (or such earlier or later date as may be determined by the Mayor), shall be issued in the form of fully registered Bonds in the denomination of $5,000 principal amount or any integral multiple thereof, shall be numbered consecutively from one upward in order of maturity preceded by the letter "R," and shall bear interest from their date of delivery (or such other earlier or later date as may be determined by the Mayor), payable semi-annually on each October 1 and April 1 (each date an "Interest Date"), commencing on October 1, 2003 (or such later date as may be determined by the Mayor). The Series 2003 Bonds shall bear interest at such rates and yields, shall mature on April 1 of each of the years and in the principal amounts corresponding to such years as determined by the Mayor subject to the provisions set forth in Section 5 hereof and the provisions of the Official Notice of Sale. The final maturity of the Series 2003 Bonds shall not be later than April 1, 2018. All of the terms of the Series 2003 Bonds will be included in a certificate to be executed by the Mayor following the award of the Series 2003 Bonds (the "Award Certificate") and shall be set forth in the final Official Statement as described herein. SECTION 5. AWARD OF SERIES 2003 BONDS. The Mayor, on behalf of the Issuer and only in accordance with the terms hereof and of the Official Notice of Sale, shall award the Series 2003 Bonds to the underwriter or underwriters that submit a bid proposal which complies in all respects with the Resolution and the Official Notice of Sale and offers to purchase the Series 2003 Bonds at the lowest true interest cost to the Issuer, as calculated by the Issuer's Financial Advisor in accordance with the terms and provisions of the Official Notice of Sale; provided, however, the Series 2003 Bonds shall not be awarded to any bidder unless the true interest cost set forth in the winning bid (as calculated by the Issuer's Financial Advisor) is equal to or less than 6.00%. In accordance with the provisions of the Official Notice of Sale, the Mayor may, in her sole discretion, reject any and all bids. SECTION 6. REDEMPTION PROVISIONS. The Series 2003 Bonds may be redeemed prior to their respective maturities from any moneys legally available therefor, upon notice as provided herein, upon the terms and provisions as may be determined by the Mayor, in her discretion and upon the advice of the Issuer's Financial Advisor; provided, 11 however, with respect to optional redemption terms for the Series 2003 Bonds, if any, the first optional redemption date may be no later than April 1, 2013 and no call premium may exceed 2.00% of the par amount of that portion of the Series 2003 Bonds to be redeemed. Term Bonds may be established with such Amortization Installments as the Mayor deems appropriate and upon the advice of the Issuer's Financial Advisor. The Mayor may determine, in her discretion and upon the advice of the Issuer's Financial Advisor, that the Series 2003 Bonds shall not be subject to any optional or mandatory redemption provisions. The redemption provisions for the Series 2003 Bonds, if any, shall be set forth in the Award Certificate and in the final Official Statement. SECTION 7. OFFICIAL NOTICE OF SALE. The form of the Official Notice of Sale attached hereto as Exhibit A and the terms and provisions thereof are hereby authorized and approved. The Mayor is hereby authorized to make such changes, insertions and modifications as she shall deem necessary prior to the advertisement of such Official Notice of Sale. The Mayor is hereby authorized to advertise and publish the Official Notice of Sale or a summary thereof at such time as she shall deem necessary and appropriate, upon the advice of the Issuer's Financial Advisor, to accomplish the competitive sale of the Series 2003 Bonds. SECTION 8. PRELIMINARY OFFICIAL STATEMENT. The Issuer hereby authorizes the distribution and use of a Preliminary Official Statement in substantially the form attached hereto as Exhibit B in connection with offering the Series 2003 Bonds for sale. If between the date hereof and the mailing of the Preliminary Official Statement, it is necessary to make insertions, modifications or changes in the Preliminary Official Statement, the Mayor and the County Administrator are hereby authorized to approve such insertions, changes and modifications. The Mayor and the County Administrator (or either's designee) are hereby authorized to deem the Preliminary Official Statement "final" within the meaning of Rule 15c2-12(b) under the Securities Exchange Act of 1934 (the "Rule") in the form as mailed. Execution of a certificate by the Mayor or County Administrator deeming the Preliminary Official Statement "final" as described above shall be conclusive evidence of the approval of any insertions, changes or modifications. SECTION 9. OFFICIAL STATEMENT. Subject in all respects with the award of the Series 2003 Bonds in accordance with Section 5 hereof, the Mayor and the County Administrator are hereby authorized and directed to execute and deliver a final Official Statement, dated the date of the award of the Series 2003 Bonds, which shall be in substantially the form of the Preliminary Official Statement, in the name and on behalf of the Issuer, and thereupon to cause such Official Statement to be delivered to the underwriter or underwriters with such changes, amendments, modifications, omissions and additions as may be approved by the Mayor and the County Administrator. Said Official Statement, including 61 any such changes, amendments, modifications, omissions and additions as approved by the Mayor and the County Administrator, and the information contained therein are hereby authorized to be used in connection with the sale of the Series 2003 Bonds to the public. Execution by the Mayor and the County Administrator of the Official Statement shall be deemed to be conclusive evidence of approval of such changes. SECTION 10. APPOINTMENT OF PAYING AGENT AND REGISTRAR. Subject in all respects with the award of the Series 2003 Bonds in accordance with Section 5 hereof, Wells Fargo Bank, National Association, Minneapolis, Minnesota, is hereby designated Registrar and Paying Agent for the Series 2003 Bonds. The Mayor and the County Administrator are hereby authorized to enter into any agreement which may be necessary to effect the transactions contemplated by this Section 10 and by the Resolution. SECTION 11. SECONDARY MARKET DISCLOSURE. Subject in all respects with the award of the Series 2003 Bonds in accordance with Section 5 hereof, the Issuer hereby covenants and agrees that, in order to provide for compliance by the Issuer with the secondary market disclosure requirements of the Rule, it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate to be executed by the Issuer and dated the dated date of the Series 2003 Bonds, as it may be amended from time to time in accordance with the terms thereof. The Continuing Disclosure Certificate shall be substantially in the form of Exhibit C hereto with such changes, amendments, modifications, omissions and additions as shall be approved by the Mayor who is hereby authorized to execute and deliver such Certificate. Notwithstanding any other provision of the Resolution, failure of the Issuer to comply with such Continuing Disclosure Certificate shall not be considered an Event of Default under the Resolution; provided, however, to the extent permitted by law, the sole and exclusive remedy of any Series 2003 Bondholder for the enforcement of the provisions of the Continuing Disclosure Certificate shall be an action for mandamus or specific performance, as applicable, by court order, to cause the Issuer to comply with its obligations under this Section 11 and the Continuing Disclosure Certificate. For purposes of this Section 11, "Series 2003 Bondholder" shall mean any person who (A) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2003 Bonds (including persons holding such Bonds through nominees, depositories or other intermediaries), or (B) is treated as the owner of any such Bond for federal income tax purposes. SECTION 12. MUNICIPAL BOND INSURANCE; RESERVE ACCOUNT INSURANCE POLICY. (A) Subject in all respects with the award of the Series 2003 Bonds in accordance with Section 5 hereof, the Issuer hereby authorizes the payment of the principal of and interest on the Series 2003 Bonds to be insured pursuant to a municipal bond insurance policy (the 'Bond Insurance Policy") to be issued by MBIA Insurance Corporation 0 ("MBIA"). The Mayor and the County Administrator are hereby authorized to execute such documents and instruments necessary to cause MBIA to insure the Series 2003 Bonds. (B) Subject in all respects with the award of the Series 2003 Bonds in accordance with Section 5 hereof, the Issuer shall deposit to the Reserve Account a reserve account insurance policy purchased from MBIA (the "Reserve Account Insurance Policy") the face amount of which, together with any other cash amounts and the face amounts of any other reserve policies or surety bonds on deposit in the Reserve Account, is equal to the Reserve Account Requirement for the Series 2003 Bonds. The Reserve Account Insurance Policy is a "Reserve Account Insurance Policy" for purposes of the Resolution. The Mayor is hereby authorized to enter into a financial guaranty agreement substantially in the form attached hereto as Exhibit D (the "Debt Service Reserve Fund Policy Agreement") in order to cause MBIA to issue such Reserve Account Insurance Policy. The provisions of such Debt Service Reserve Fund Policy Agreement, when executed and delivered, shall be incorporated herein by reference and to the extent there are any conflicts between the Debt Service Reserve Fund Policy Agreement and the Resolution, the provisions of the Debt Service Reserve Fund Policy Agreement shall control. SECTION 13. PROVISIONS RELATING TO BOND INSURANCE POLICY AND RESERVE ACCOUNT INSURANCE POLICY. (A) The commitments from MBIA to issue its Bond Insurance Policy and Reserve Account Insurance Policy on the Series 2003 Bonds are hereby approved and authorized and payment for the premiums for such insurance is hereby authorized from proceeds of the Series 2003 Bonds. A statement of insurance is hereby authorized to be printed on or attached to the Series 2003 Bonds for the benefit and information of the Holders of the Series 2003 Bonds. (B) Subject in all respects with the award of the Series 2003 Bonds in accordance with Section 5 hereof, so long as the Bond Insurance Policy issued by MBIA is in full force and effect and MBIA has not defaulted in its payment obligations under the Bond Insurance Policy or the Reserve Account Insurance Policy, the Issuer agrees to comply with the following provisions: (1) In the event that, on the second business day, and again on the business day, prior to an Interest Date on the Series 2003 Bonds, the Paying Agent has not received sufficient moneys to pay all principal of and interest on the Series 2003 Bonds due on the second following or following, as the case may be, business day, the Paying Agent shall immediately notify MBIA or its designee on the same business day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. 7 (2) If the deficiency is made up in whole or in part prior to or on the Interest Date, the Paying Agent shall so notify MBIA or its designee. (3) In addition, if the Paying Agent has notice that any Series 2003 Bondholder has been required to disgorge payments of principal or interest on a Series 2003 Bond to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Series 2003 Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent shall notify MBIA or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. (4) The Paying Agent is hereby irrevocably designated, appointed, directed and authorized to act as attorney -in -fact for Series 2003 Bondholders as follows: (A) If and to the extent there is a deficiency in amounts required to pay interest on the Series 2003 Bonds, the Paying Agent shall (i) execute and deliver to State Street Bank and Trust Company, N.A., or its successors under the Bond Insurance Policy (the "Insurance Paying Agent"), in form satisfactory to the Insurance Paying Agent, an instrument appointing MBIA as agent for such Series 2003 Bondholders in any legal proceeding related to the payment of such interest and an assignment to MBIA of the claims for interest to which such deficiency relates and which are paid by MBIA, (ii) receive as designee of the respective Series 2003 Bondholders (and not as Paying Agent) in accordance with the tenor of the Bond Insurance Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (iii) disburse the same to such respective Series 2003 Bondholders; and (B) If and to the extent of a deficiency in amounts required to pay principal of the Series 2003 Bonds, the Paying Agent shall (i) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing MBIA as agent for such Series 2003 Bondholder in any legal proceeding relating to the payment of such principal and an assignment to MBIA of any of the Series 2003 Bonds surrendered to the Insurance Paying Agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (ii) receive as designee of the respective Series 2003 Bondholders (and not as Paying Agent) in accordance with the tenor of the Bond Insurance Policy payment therefor from the Insurance Paying Agent, and (iii) disburse the same to such Series 2003 Bondholders. (5) Payments with respect to claims for interest on and principal of Series 2003 Bonds disbursed by the Paying Agent from proceeds of the Bond Insurance Policy shall not be considered to discharge the obligation of the Issuer with respect to such Series 2003 Bonds, and MBIA shall become the owner of such unpaid Series 2003 Bond and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. (6) Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent agree for the benefit of MBIA that: (A) They recognize that to the extent MBIA makes payments, directly or indirectly (as by paying through the Paying Agent), on account of principal of or interest on the Series 2003 Bonds, MBIA will be subrogated to the rights of such Series 2003 Bondholders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in the Resolution and the Series 2003 Bonds; and (B) They will accordingly pay to MBIA the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Bond Insurance Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in the Resolution and the Series 2003 Bonds, but only from the sources and in the manner provided in the Resolution for the payment of principal of and interest on the Series 2003 Bonds to Series 2003 Bondholders, and will otherwise treat MBIA as the owner of such rights to the amount of such principal and interest. (7) In connection with the issuance of Additional Bonds, the Issuer shall deliver to MBIA a copy of the disclosure document, if any, circulated with respect to such Additional Bonds. (8) Copies of any amendments made to the documents executed in connection with the issuance of the Series 2003 Bonds which are consented to by MBIA shall be sent to Standard & Poor's Corporation. E (9) The Issuer shall provide MBIA with notice of the resignation or removal of the Paying Agent and the appointment of a successor thereto. (10) The Issuer shall provide MBIA with copies of all notices required to be delivered to Series 2003 Bondholders under the Resolution and, on an annual basis, copies of the Issuer's audited financial statements and annual budget. (11) Any notice required to be given to or by any party, including, but not limited to, a Series 2003 Bondholder or the Paying Agent, pursuant to the Resolution shall also be provided to MBIA. All notices required to be given to MBIA shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention: Surveillance. (12) The Issuer agrees to reimburse MBIA immediately and unconditionally upon demand, to the extent permitted by law, for all reasonable expenses, including attorneys' fees and expenses, incurred by MBIA in connection with (a) enforcement by MBIA of the Issuer's obligations, or the preservation or defense of any rights of MBIA, under the Resolution and any other document executed in connection with the issuance of the Series 2003 Bonds, and (b) any consent, amendment, waiver or other action with respect to the Resolution or any related document, whether or not granted or approved, together with interest on all such expenses from and including the date incurred to the date of payment of Citibank's prime rate plus 3% or the maximum interest rate permitted by law, whichever is less. In addition, MBIA reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. (13) The Resolution may not be terminated until all amounts owed to MBIA under the terms of the Debt Service Reserve Fund Policy Agreement have been satisfied. (14) There may be no optional redemption of the Series 2003 Bonds or distribution of funds to the Issuer unless all amounts owed to MBIA under the terms of the Debt Service Reserve Fund Policy Agreement have been paid in full. SECTION 14. GENERAL AUTHORITY. The Mayor, the County Administrator, the Clerk, the County Attorney, and the other officers, attorneys and other agents or employees of the Issuer are hereby authorized to do all acts and things required of them by this Supplemental Resolution, the Resolution, the Official Statement, the Continuing Disclosure Certificate, the Debt Service Reserve Fund Policy Agreement or the Official 10 Notice of Sale or desirable or consistent with the requirements hereof or of the Resolution, the Official Statement, the Continuing Disclosure Certificate, the Debt Service Reserve Fund Policy Agreement or the Official Notice of Sale for the full punctual and complete performance of all the terms, covenants and agreements contained herein or in the Series 2003 Bonds, the Resolution, the Official Statement, the Continuing Disclosure Certificate, the Debt Service Reserve Fund Policy Agreement and the Official Notice of Sale and each member, employee, attorney and officer of the Issuer is hereby authorized and directed to execute and deliver any and all papers and instruments and to be and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated hereunder. If the Mayor is unavailable or unable at any time to perform any duties or functions hereunder, the Mayor Pro Tern is hereby authorized to act on her behalf. SECTION 15. SEVERABILITY AND INVALID PROVISIONS. If any one or more of the covenants, agreements or provisions herein contained shall be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separable from the remaining covenants, agreements or provisions and shall in no way affect the validity of any of the other provisions hereof or of the Series 2003 Bonds. SECTION 16. CONFLICTS; RESOLUTION TO CONTINUE IN FORCE. Except as herein expressly provided, the Resolution and all the terms and provisions thereof are and shall remain in full force and effect; provided, however, that in the event of a conflict between the terms of this Supplemental Resolution and the Resolution, the terms of this Supplemental Resolution shall govern. SECTION 17. EFFECTIVE DATE. This Supplemental Resolution shall become effective immediately upon its adoption. [Remainder of page intentionally left blank] 11 PASSED AND ADOPTED by the Board of County Commissioners of Monroe County, Florida, at a regular meeting of said Board held on the 19th day of February, 2003. Mayor Spehar Mayor Pro Tern Nelson Commissioner McCoy Commissioner Neugent Commissiner Rice (SEAL) Attest: DANNY L. KOLHAGE, Clerk Deputy Clerk BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA 12 Mayor/Chairperson EXHIBIT A FORM OF OFFICIAL NOTICE OF SALE OFFICIAL NOTICE OF SALE $21,400,000* Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2003 Electronic Bids, as Described Herein Will Be Accepted Until 10:00 a.m., Eastern Time, March 4, 2003 * 'Subject to change as provided herein. OFFICIAL NOTICE OF SALE $21,400,000* Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2003 NOTICE IS HEREBY GIVEN that electronic bids will be received in the manner, on the date and up to the time specified below: DATE: Tuesday, March 4, 2003* TIME: 10:00 a.m. Eastern Time* ELECTRONIC BIDS: May be submitted only through Bidcomp/Parity Competitive Bidding System ("PARITY') as described below. No other form of bid or provider of electronic bidding services will be accepted. GENERAL Bids will be received for the purchase of all, but not less than all, of the $21,400,000* Infrastructure Sales Surtax Revenue Bonds, Series 2003 (the "Bonds") to be issued by Monroe County, Florida (the "County") pursuant to the terms and conditions of a resolution adopted by the County's Board of Commissioners (the "Board") on February 19, 2003, as supplemented (the "Bond Resolution"). The Bond proceeds will be used to finance the acquisition, construction and equipping of various capital improvements within the County and pay certain costs and expenses related to the issuance of the Bonds. The Bonds are more particularly described in the Preliminary Official Statement dated February _, 2003 relating to the Bonds, available at I-Deal's website, www. i-dealprospectus. com. This Official Notice of Sale contains certain information for quick reference only. It is not, and is not intended to be, a summary of the Bonds. Each bidder is required to read the entire Preliminary Official Statement to obtain information essential to making an informed investment decision. Prior to accepting bids, the County reserves the right to change the principal amount of the Bonds being offered and the terms of the Bonds, to postpone the sale to a later date or time, or cancel the sale based upon market conditions. Notice of a change or cancellation will be announced via The Bond Buyer news service at the internet website address www. tm3. com not later than Noon, Eastern Time, on the day preceding the bid opening or as soon as *Subject to change as provided herein. 1 practicable. Such notice will specify the revised principal amount or terms, if any, and any later date or time selected for the sale, which may be postponed or cancelled in the same manner. If the sale is postponed, a later public sale may be held at the hour, in the manner, and on such date as communicated upon at least forty-eight hours notice via The Bond Buyer news service at the internet website address www.tm3.com. The County reserves the right, after the bids are opened, to adjust the principal amount of the Bonds, to eliminate maturities, or to cancel the sale of the Bonds, as further described herein. See "ADJUSTMENT OF AMOUNTS AND MATURITIES." To the extent any instructions or directions set forth in PARITY conflict with this Official Notice of Sale, the terms of this Official Notice of Sale shall control. For further information about PARITY and to subscribe in advance of the bid, potential bidders may contact PARITY at (212) 404-8102. Each prospective electronic bidder must be a subscriber to PARITY. Each qualified prospective electronic bidder shall be solely responsible to make necessary arrangements to view the bid form on PARITY and to access PARITY for the purposes of submitting its bid in a timely manner and in compliance with the requirements of the Official Notice of Sale. Neither the Issuer nor PARITY shall have any duty or obligation to provide or assure access to PARITY to any prospective bidder, and neither the County nor PARITY shall be responsible for a bidder's failure to register to bid or for proper operation of, or have any liability for any delays or interruptions of, or any damages caused by, PARITY. The County is using PARITY as a communication mechanism, and not as the County's agent, to conduct the electronic bidding for the Bonds. The County is not bound by any advice and determination of PARITYto the effect that any particular bid complies with the terms of this Official Notice of Sale and, in particular, the bid specifications hereinafter set forth. All costs and expenses incurred by prospective bidders in connection with their registration and submission of bids via PARITY are the sole responsibility of such bidders and the County shall not be responsible, directly or indirectly, for any such costs or expenses. If a prospective bidder encounters any difficulty in submitting, modifying or withdrawing a bid for the Bonds, the prospective bidder should immediately telephone PARITY at (212) 404- 8102 and notify the Issuer's Financial Advisor, Hal Canary, at (239) 939-3009 or by facsimile at (239) 939-1220. The Issuer shall have no responsibility for technological or transmission errors that any bidder may experience in transmitting a bid. [Remainder of page intentionally left blank] 2 Terms of the Bonds Dated Date Anticipated Delivery Date • Interest Payment Dates • Principal Payment Dates (April 1)**: Year Principal Amount 2004 $1,105,000 2005 1,140,000 2006 1,170,000 2007 1,200,000 2008 1,240,000 2009 1,280,000 2010 1,330,000 2011 1,385,000 • Interest Calculation Ratings Bidding, Parameters Sale Date • Bidding Method • All or none? • Bid Award Method • Bid Confirmation • Bid Award • Good Faith Deposit Summary Table* Date of Delivery March 26, 2003 October 1 and April 1, commencing October 1, 2003 Year Principal Amount 2012 $ 1,440,000 2013 1,500,000 2014 1,570,000*** 2015 1,640,000*** 2016 1,715,000*** 2017 1,800,000*** 2018 1,885,000*** 360-day year of twelve 30-day months Moody's - A3 Standard & Poor's - A March 4, 2003 Bidcomp/Parity Competitive Bidding System ("PARITY') Yes Lowest true interest cost Fax signed PARITY screen As soon as practicable $214,000; Surety bond required prior to bid * If numerical or date references contained in the body of this Official Notice of Sale conflict with this Summary Table, the body of this Official Notice of Sale shall control. Consult the body of this Official Notice of Sale for a detailed explanation of the items contained in the Summary Table, including interpretation of such items and methodologies used to determine such items. PROSPECTIVE PURCHASERS OF THE BONDS MUST READ THE ENTIRE OFFICIAL NOTICE OF SALE. ** The County reserves the right to adjust the maturities of the Bonds as provided herein. *** May be designated as part of a Term Bond, as provided herein. 3 Coupon Multiples • Maximum Coupon • Minimum Coupon • Optional Redemption • Term Bonds • Maximum Reoffering Price Maturity Unlimited Aggregate Unlimited • Minimum Reoffering Price Maturity 98.0% Aggregate 99.0% • Insurance Adiustment Parameters • Principal Increases Maturity None Aggregate None • Principal Reductions Maturity None Aggregate None 1 /8 or I /20 of 1 % 6.00% None Yes, as provided herein Yes, as provided herein Yes, MBIA Insurance Corporation; premium to be paid by the County. El THE BONDS The Bonds will be issued in fully registered, book -entry only form, without coupons, will be dated as of their date of delivery (currently anticipated to be March 26, 2003), will be issued in denominations of $5,000 or integral multiples thereof, will bear interest from their date until paid or duly called for redemption at the annual rate or rates specified by the successful bidder, subject to the limitations specified below, payable as shown on the Summary Table. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Bonds must meet the minimum and maximum coupon and reoffering price criteria shown in the Summary Table on a maturity and aggregate basis. The Bonds will mature on the month and day, in the years and principal amounts shown on the Summary Table as either serial bonds or as a term bond with sinking fund installments as described below under "Designation of Term Bond." Designation of Term Bond Bidders in their bids may specify that the annual principal amounts coming due in any two or more consecutive years on and after April 1, 2014 may be combined into one term bond (the "Term Bond"), with mandatory sinking fund redemptions occurring prior to the maturity of such Term Bond on each April 1 of the preceding consecutive years. Bidders may only specify one such Term Bond for the Bonds. All principal amounts due before April 1, 2014 shall be serial Bonds. In the event a bidder chooses to designate a Term Bond, the form of mandatory redemption provision provided below will be utilized. The Bonds maturing on April 1, 20_, are subject to mandatory sinking fund redemption, prior to maturity in part, by lot on April 1, 20_ and on each April 1 thereafter, at a redemption price equal to the principal amount of such Bonds or portions thereof to be redeemed, plus interest accrued thereon to the date of redemption, on April 1 in the following years and in the following amounts: * Maturity. Year Amount 5 Optional Redemption The Series 2003 Bonds maturing on or before April 1, 2013 are not subject to optional redemption prior to maturity. The Series 2003 Bonds maturing on or after April 1, 2014 are subject to redemption at the option of the Issuer in whole or in part, at any time, on or after April 1, 2013 in such order of maturities as may be determined by the Issuer (less than all of a single maturity to be selected by lot) at a redemption price equal to 100.0% of the Series 2003 Bonds to be redeemed, together with accrued interest to the date set for redemption. SECURITY Payment of the principal of and interest on the Bonds will be payable solely from and secured by a lien upon and pledge of the Pledged Funds, as described in the Bond Resolution. Pledged Funds include the County's proceeds of the local government one cent infrastructure sales surtax defined and described in and distributed pursuant to Section 212.055(2), Florida Statutes, as amended (the "Infrastructure Sales Surtax Revenues"). Additionally, until applied in accordance with the provisions of the Bond Resolution, Pledged Funds include all moneys, including investments thereof, in certain funds and accounts designated in the Bond Resolution. The County currently intends to fully fund a reserve account with a reserve account insurance policy to be issued by MBIA Insurance Corporation. Notwithstanding the foregoing, the lien on and pledge ofthe Infrastructure Sales Surtax Revenues granted in favor of the Bonds shall be junior and subordinate in all respects to the pledge thereof and lien thereon granted with respect to the Prior Bonds under the Prior Resolution (as such terms are defined in the Bond Resolution and described in the Preliminary Official Statement). ADJUSTMENT OF AMOUNT AND MATURITIES The aggregate principal amount of each maturity of Bonds is subject to adjustment by the County after the receipt and opening of the bids for their purchase. Changes to be made after the opening of the bids will be communicated to the successful bidder directly prior to 8:00 a.m., Eastern Time on the date following the sale date. The County may cancel the sale of the Bonds or adjust the aggregate principal amount. The County may increase or decrease the principal amount of the Bonds or any maturity thereof by no more than the individual maturity or aggregate principal percentages, if any, shown in the Summary Table. The County will consult with the successful bidder before adjusting the amount of any maturity of the Bonds or canceling the Bonds; however, the County reserves the sole right to make adjustments, within the limits described above, or cancel the sale of the Bonds. 0 Adjustment to the size of the Bonds within the limits described above does not relieve the purchaser from its obligation to purchase all of the Bonds offered by the County. Each bid must specify the initial reoffering prices to the public of each maturity of Bonds. Adjustments may be made to the principal amounts based on the reoffering prices shown on PARITY. In determining whether there will be any revision to the principal amount of or maturity of the Bonds subsequent to the bid opening and award, the County expects that changes may be made that are necessary to increase or decrease the principal amount of the Bonds to meet the County's capital improvement funding objectives, all subject to the limitations set forth above. In the event that the principal amount of any maturity of the Bonds is revised after the award, the interest rate and reoffering price for each maturity and the Underwriter's Discount on the Bonds as submitted by the successful bidder shall be held constant. The "Underwriter's Discount" shall be defined as the difference between the purchase price of the Bonds submitted by the bidder and the price at which the Bonds will be issued to the public, calculated from information provided by the bidder, divided by the par amount of the Bonds bid. FORM AND PAYMENT The Bonds will be issued in fully registered, book -entry only form and a bond certificate for each maturity will be issued to The Depository Trust Company, New York, New York ("DTC"), registered in the name of its nominee, Cede & Co. A book -entry system will be employed, evidencing ownership of the Bonds, with transfers of ownership effected on the records of DTC and its participants pursuant to rules and procedures adopted by DTC and its participants. The successful bidder, as a condition to delivery of the Bonds, will be required to deposit the Bond certificates with DTC or the Registrar (as defined below), registered in the name of Cede & Co. Principal of, premium, if any, and interest on the Bonds will be payable by Wells Fargo Bank, National Association, the paying agent and registrar (the "Registrar") for the Bonds by wire transfer or in clearinghouse funds to DTC or its nominee as registered owner of the Bonds. Transfer of principal, premium, if any, and interest payments to the beneficial owners by participants of DTC will be the responsibility of such participants and other nominees of beneficial owners. Neither the County nor the Registrar will be responsible or liable for payments by DTC to its participants or by DTC participants to beneficial owners or for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. Principal of, and premium, if any, on the Bonds will be payable on surrender thereof at the principal office of the Registrar on the month and day, in the years and amounts established in accordance with the award of the Bonds. Interest on the Bonds is payable on 7 the dates shown in the Summary Table. The Registrar will mail interest payments on the Bonds on each interest payment date to the owners of the Bonds at the addresses listed on the registration books maintained by the Registrar for such purpose on the fifteenth day of the month prior to payment, as described in the Bond Resolution. So long as DTC or its nominee is the registered owner of the Bonds, payments of principal, interest and any redemption premium on the Bonds will be made to DTC or its nominee. PRELIMINARY OFFICIAL STA TEMENT AND FINAL OFFICIAL STATEMENT The County has authorized the preparation and distribution of a Preliminary Official Statement dated February _, 2003 (the "Preliminary Official Statement") containing information relating to the Bonds. The Preliminary Official Statement has been deemed final by the County as required by Rule 15c2-12 of the Securities and Exchange Commission. The County will furnish the successful bidder on the date of closing, with its certificate as to the completeness and accuracy of the Official Statement. The Preliminary Official Statement, this Official Notice of Sale and the official written confirmation of bid form and any other information concerning the proposed financing will be available electronically at I-Deal's website, www.i-dealprospectus.com. Assistance in obtaining the documents will be provided by I-Deal's customer service at (212) 404-8102 or from Public Financial Management, Inc., Financial Advisor to the County, 10100 Deer Run Farms Road, Suite 201, Ft. Myers, FL 33912-1045, (239) 939-3009, (239) 939-1220 fax, canaryh@publicfm.com. The Preliminary Official Statement, when amended to reflect the actual amount of the Bonds sold, the interest rates specified by the successful bidder and the price or yield at which the successful bidder will reoffer the Bonds to the public, together with any other information required by law, will constitute a "Final Official Statement" with respect to the Bonds as that term is defined in Rule 15c2-12. No more than seven business days after the date of the sale, the County will provide without cost to the respective successful bidder up to 200 copies of the Final Official Statement. If the Bonds are awarded to a syndicate, the County will designate the senior managing underwriter of the syndicate as its agent for purposes of distributing copies of the Final Official Statement to each participating underwriter. Any underwriter submitting a bid with respect to the Bonds agrees thereby that if its bid is accepted, it shall accept such designation and shall enter into a contractual relationship with all participating underwriters for the purpose of assuring the receipt and distribution by each participating underwriter of the Final Official Statement. LEGAL OPINIONS The Bonds will be sold subject to the opinion of Nabors, Giblin & Nickerson, P.A., the County's Bond Counsel, as to the legality thereof and such opinion will be furnished without cost to the purchaser and all bids will be so conditioned. A form of Bond Counsel's opinion is attached to the Preliminary Official Statement as Appendix E. Certain matters will be passed on for the County by John R. Collins, County Attorney. A legal opinion (or reliance letter thereon) of Bryant, Miller and Olive, P.A., Tampa, Florida, Disclosure Counsel, and a legal opinion of John R. Collins, County Attorney, with respect to certain matters concerning the Final Official Statement will be furnished without charge to the successful bidder at the time of delivery of the Bonds. BIDDING PROCEDURE; OFFICIAL BID FORMS Only electronic bids submitted via PARITY will be accepted. No other provider of electronic bidding services will be accepted. No bid delivered in person or by facsimile directly to the County will be accepted. Bidders are permitted to submit bids for the Bonds during the bidding time period, provided they are eligible to bid as described under "GENERAL" above. Each electronic bid submitted via PARITY shall be deemed an irrevocable offer in response to this Official Notice of Sale and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the County. All bids remain firm until an award is made. The successful bidder must confirm the details of such bid by a signed PARITY Bid Form delivered by fax to Public Financial Management, Inc. at (239) 939-1220 no later than one hour after being notified by the County of being the winning bidder, the original of which must be received by Public Financial Management, Inc., Financial Advisor to the County on the following business day at 10100 Deer Run Farms Road, Suite 201, Ft. Myers, FL 33912- 1045, (239) 939-3009, (239) 939-1220 fax, canaryh@publicfm.com. Failure to deliver does not relieve the bidder of the obligation to purchase the Bonds. See also the information under the heading "GENERAL" above. FORM OF BID, INTEREST RA TES AND BID PRICES Bidders must bid to purchase all maturities of the Bonds. No bid will be considered which does not offer to purchase all of the Bonds. Each bid must specify (1) an annual rate of interest for each maturity, (2) reoffering price or yield for each maturity and (3) a dollar purchase price for the entire issue of the Bonds. No more than one (1) bid from any bidder will be considered. 9 A bidder must specify the rate or rates of interest per annum (with no more than one rate of interest per maturity), which the Bonds are to bear, to be expressed in multiples of 1/8 or 1/20 of 1%. Any number of interest rates may be named, but the Bonds of each maturity, must bear interest at the same single rate for all bonds of that maturity. Each bid for the Bonds must meet the minimum and maximum coupon criteria and minimum and maximum reoffering price criteria shown in the Summary Table on a maturity and aggregate basis. Each bidder must specify, as part of its bid, the prices or yields at which a substantial amount (i.e., at least 10%) of the Bonds of each maturity will be offered and sold to the public. Reoffering prices presented as a part of the bids will not be used in computing the bidders' true interest cost. As promptly as reasonably possible after bids are received, the County will notify the successful bidder that it is the apparent winner. MUNICIPAL BOND INSURANCE The Issuer has received a commitment from MBIA Insurance Corporation of its intent to issue a municipal bond insurance policy insuring payment of principal and interest on the Bonds, when due. The cost of municipal bond insurance will be paid by the Issuer. Information regarding the bond insurance commitment may be obtained from the financial advisor to the Issuer, Public Financial Management, Inc., 10100 Deer Run Farms Road, Suite 201, Ft. Myers, FL 33912, (239) 939-3009. A WARD OF BID The County expects to award the Bonds to the winning bidder as soon as practicable after the bids are opened. Bids may not be withdrawn prior to the award. Unless all bids are rejected, the Bonds will be awarded by the County on the sale date to the bidder whose bid complies with this notice and results in the lowest true interest cost to the County. The lowest true interest cost will be determined in accordance with the True Interest Cost ("TIC") method by doubling the semi-annual interest rate, compounded semi-annually, necessary to discount the debt service payments from the payment dates to the dated date of the Bonds and to the aggregate purchase price of the Bonds. If two or more responsible bidders offer to purchase the Bonds at the same lowest true interest cost, the Bonds shall be awarded to the bidder offering the highest premium, and if the highest premium is offered by two or more such bidders (or if no premium is offered by any of such bidders), the County will award the Bonds to one of such bidders by lot. Only the final bid submitted by any bidder through PARITYwill be considered. The right reserved to the County shall be final and binding upon all bidders with respect to the form and adequacy of any proposal received and as in its conformity to the terms of this Official Notice of Sale. 10 The County will not accept and will reject any bid for less than all of the above described Bonds. The right is reserved to reject any and all bids for any reason. No facsimile, mailed or hand -delivered bids will be accepted. RIGHT OF REJECTION The County reserves the right, in its discretion, to reject any and all bids and to waive irregularity or informality in any bid. DELIVERYAND PAYMENT Delivery of the Bonds will be made by the County to DTC in book -entry only form, in New York, New York on or about the delivery date shown in the Summary Table, or such other date agreed upon by the County and the successful bidder. Payment for the Bonds must be made in Federal Funds or other funds immediately available to the County at the time of delivery of the Bonds. Any expenses incurred in providing immediate funds, whether by transfer of Federal Funds or otherwise, will be borne by the purchaser. The County intends to conduct the closing in Key West, Florida. RIGHT OF CANCELLATION The successful bidder will have the right, at its option, to cancel its obligation to purchase the Bonds if the Registrar fails to authenticate the Bonds and tender the same for delivery within 60 days from the date of sale thereof, and in such event the successful bidder will be entitled to the return of the Good Faith Deposit accompanying its bid. GOOD FAITH DEPOSIT Each bid for the purchase of the Bonds must be accompanied by a financial surety bond which guarantees payment to the County of the Good Faith Deposit amount shown in the Summary Table to secure the County against any loss resulting from a failure of the successful bidder to take up and pay for the Bonds in accordance with the terms of the Notice of Sale and of their bids. Each financial surety bond must be from an insurance company acceptable to the County and licensed to issue such a bond in the State of Florida. Each financial surety bond must be submitted to Public Financial Management, Inc., Financial Advisor to the County, 10100 Deer Run Farms Road, Suite 201, Ft. Myers, FL 33912, (239) 939-3009, prior to the time bids are required to be submitted and must be in form and substance acceptable to the County. Each financial surety bond must identify each bidder whose deposit is guaranteed by such financial surety bond. 11 The successful bidder for the Bonds is required to submit its Good Faith Deposit to the County in the form of a wire transfer in federal funds not later than 12:30 p.m., Eastern Time, on the next business day following the award. If such deposit is not received by that time, the relevant financial surety bond will be drawn upon by the County to satisfy the deposit requirement. The Good Faith Deposit so wired will be retained by the County until the delivery of such Bonds, at which time the good faith deposit will be applied against the purchase price of such Bonds or the good faith deposit will be retained by the County as partial liquidated damages in the event of the failure of the successful bidder to take up and pay for such Bonds in compliance with the terms of the Official Notice of Sale and of its bid. The County will pay no interest on the good faith deposit. The balance of the purchase price must be wired in federal funds to the account detailed in the closing memorandum provided by the County to the successful purchaser, simultaneously with delivery of such Bonds. CUSIP NUMBERS It is anticipated that CUSIP numbers will be printed on the Bonds, but neither failure to print such numbers on any Bonds nor any error with respect thereto will constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds. Bond Counsel will not review or express any opinion as to the correctness of such CUSIP numbers. The policies of the CUSIP Service Bureau will govern the assignment of specific numbers to the Bonds. The successful bidder will be responsible for applying for and obtaining CUSIP numbers for the Bonds. All expenses in relation to the printing of CUSIP numbers on the Bonds will be paid for by the County; provided, however, that the CUSIP Service Bureau charge for the assignment of said numbers will be the responsibility of and will be paid for by the successful bidder. BL UE SKY The County has not undertaken to register the Bonds under the securities laws of any state, nor investigated the eligibility of any institution or person to purchaser or participate in the underwriting of the Bonds under any applicable legal investment, insurance, banking or other laws. By submitting a bid for the Bonds, the successful bidder represents that the sale of the Bonds in states other than Florida will be made only under exemptions from registration or, wherever necessary, the successful bidder will register the Bonds in accordance with the securities laws of the state in which the Bonds are offered or sold. The County agrees to cooperate with the successful bidder, at the bidder's written request and expense, in registering the Bonds or obtaining an exemption from registration in any state where such action is necessary; provided, however, that the County shall not be required to consent to suit or to service of process in any jurisdiction. 12 DISCLOSURE OBLIGATIONS OF THE PURCHASER Section 218.38(1)(b)(2), Florida Statutes, requires that the successful purchaser file a statement with the County containing information with respect to any fee, bonus or gratuity paid, in connection with the Bonds, by any underwriter or financial consultant to any person not regularly employed or engaged by such underwriter or consultant. Receipt of such statement is a condition precedent to the delivery of the Bonds to such successful bidder. The winning bidder must (1) complete the Truth -in -Bonding Statement provided by Bond Counsel (the form of which is attached hereto as Exhibit A) and (2) indicate whether such bidder has paid any finder's fee to any person in connection with the sale of the Bonds in accordance with Section 218.386, Florida Statutes. The successful purchaser will be required to submit to the County prior to closing a certification to the effect that (i) all of the Bonds have been subject of a bona fide initial offering to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at prices no higher than those shown on the cover of the Official Statement relating to the Bonds, (ii) to the best of their knowledge, and based on their records and other information available to them which they believe to be correct, at least 10 percent of each maturity of the Bonds were sold to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at initial offering prices not greater than the respective prices shown on the cover of the Official Statement, and (iii) at the time they agreed to purchase the Bonds, based upon their assessment of the then prevailing market conditions, they had no reason to believe any of the Bonds would be sold to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at prices greater than the prices shown on the cover of the Official Statement including interest accrued on the Bonds. CONTINUING DISCLOSURE The County has covenanted to provide ongoing disclosure in accordance with Rule 15c2-12 of the Securities and Exchange Commission. The specific nature of the information to be contained in the Annual Report and the notices of material events are set forth in the Continuing Disclosure Certificate which is reproduced in its entirety in Appendix F attached to the Preliminary Official Statement for the Bonds. The covenants have been undertaken by the County in order to assist the successful purchaser in complying with clause (b)(5) of Rule 15c2-12 of the Securities and Exchange Commission. 13 CERTIFICATE The County will deliver to the purchaser of the Bonds a certificate of an official of the County, dated the date of delivery of said Bonds, stating that as of the date thereof, to the best of the knowledge and belief of said official, the Official Statement does not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statement made, in light of the circumstances under which they were made, not misleading, and further certifying that the signatory knows of no material adverse change in the financial condition of the County. Dated: February _, 2003 MONROE COUNTY, FLORIDA By: Is/Dixie M. Spehar Mayor, Board of County Commissioners Monroe County, Florida 14 EXHIBIT A FORM OF TRUTH -IN -BONDING STATEMENT 2003 Board of County Commissioners Monroe County, Florida Re: $ Monroe County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2003 Dear Commissioners: The purpose of the following two paragraphs is to furnish, pursuant to the provisions of Sections 218.385(2) and (3), Florida Statutes, as amended, the truth -in -bonding statement required thereby, as follows: (a) The County is proposing to issue $ principal amount of the above - referenced Bonds for the principal purposes of (i) financing the acquisition, construction and equipping of various capital improvements within the County, and (ii) paying certain costs and expenses related to the issuance of the Bonds. This obligation is expected to be repaid over a period of approximately years. At a true interest cost of %, total interest paid over the life of the obligation will be approximately $ (b) The Bonds are special, limited obligations of the County. The source of repayment or security for the bonds are the Pledged Funds (as described in the Official Statement for the Bonds). Authorizing this debt will result in approximately $ (representing the average annual debt service with respect to the Bonds) of such moneys being used to pay debt service on the Bonds each year for years. The foregoing is provided for information purposes only and shall not affect or control the actual terms and conditions of the Bonds. Very truly yours, Underwriter By: Authorized Signatory A-1 EXHIBIT B FORM OF PRELIMINARY OFFICIAL STATEMENT PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY _, 2003 NEW ISSUE - BOOK ENTRY ONLY In the opinion of Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Bond Counsel, interest on the Series 2003 Bonds (as hereinafter defined) is, under existing statutes, regulations, rulings and court decisions: (a) excludable from gross income for federal income tax purposes except as otherwise described herein under the caption "TAX EXEMPTION" and (b) not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. Such interest, however, will be includable in the calculation of a corporation's alternative minimum taxable income and may be subject to other federal income tax consequences described herein under the caption "TAX EXEMPTION. " Bond Counsel is further of the opinion that the Series 2003 Bonds and the interest thereon are exempt from all present intangible personal property taxes imposed pursuant to Chapter 199, Florida Statutes. See "TAX EXEMPTION" herein for a discussion of Bond Counsel's opinion, including a discussion of the corporate alternative minimum tax. $23,080,000* MONROE COUNTY, FLORIDA Infrastructure Sales Surtax Revenue Bonds, Series 2003 Dated: Date of Delivery Due: April 1 in each year as shown on the inside cover Monroe County, Florida (the "Issuer" or the "County") is issuing its Infrastructure Sales Surtax Revenue Bonds, Series 2003 (the "Series 2003 Bonds") as fully registered bonds, which initially will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). Individual purchases will be made in book entry form only in denominations of $5,000 and any integral multiple thereof. Purchasers of the Series 2003 Bonds (the "Beneficial Owners") will not receive physical delivery of the Series 2003 Bonds. Transfer of ownership in the Series 2003 Bonds will be effected by DTC's book -entry system as described herein. As long as Cede & Co. is the registered owner as nominee of DTC, principal and interest payments will be made directly to such registered owner which will in turn remit such payments to the Participants (as defined herein) for subsequent disbursement to the Beneficial Owners. Interest on the Series 2003 Bonds is payable semi-annually on April 1 and October 1 of each year commencing October 1, 2003. Principal of the Series 2003 Bonds is payable, when due, to the registered owners upon presentation and surrender at the designated corporate office of Wells Fargo Bank, National Association, Minneapolis, Minnesota. All payments of principal of and interest on the Series 2003 Bonds shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender payment of public and private debts. for the The payment of the principal of, redemption premium, if any, and interest on the Series 2003 Bonds shall be secured forthwith equally and ratably by a pledge of and lien upon (i) the proceeds received by the Issuer pursuant to Ordinance No. 013-1989 enacted by the Board of County Commissioners of the Issuer (the "Board") on May 23, 1989 and Ordinance No. 01- 2000 enacted by the Board on January 19, 2000 (collectively, the "Infrastructure Sales Surtax Ordinance") from the levy of the one cent local government infrastructure sales surtax pursuant to Section 212.055(2), Florida Statutes, and other applicable provisions of law (the "Infrastructure Sales Surtax Revenues") and (ii) until applied in accordance with the provisions of Resolution No. adopted by the Board on February 19, 2003, as supplemented (the "Resolution"), all moneys, including investments thereof, in certain funds and accounts established pursuant to the Resolution (collectively, the "Pledged Funds"). Notwithstanding the foregoing, the pledge of and lien upon the Infrastructure Sales Surtax Revenues for the benefit of the Series 2003 Bonds is junior and subordinate in all respect to the pledge thereof and lien thereon granted with respect to the Monroe County, Florida Sales Tax Refunding Revenue Bonds, Series 1998, currently outstanding in the aggregate principal amount of $8,885,000 which finally mature on April 1, 2004. The Series 2003 Bonds are being issued to provide funds to (i) acquire, construct and equip various capital improvement as more fully described herein, and (ii) pay costs associated with the issuance of the Series 2003 Bonds, including the municipal bond insurance premium and the reserve account insurance policy premium. THE SERIES 2003 BONDS SHALL NOT BE OR CONSTITUTE GENERAL OBLIGATIONS OR INDEBTEDNESS OF THE ISSUER AS "BONDS" WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION, BUT SHALL BE SPECIAL OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM AND SECURED BY A LIEN UPON AND PLEDGE OF THE PLEDGED FUNDS, WITH AND TO THE EXTENT SET FORTH IN THE RESOLUTION. NO HOLDER OF ANY SERIES 2003 BOND SHALL EVER HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY AD VALOREM TAXING POWER TO PAY SUCH SERIES 2003 BOND, OR BE ENTITLED TO PAYMENT OF SUCH SERIES 2003 BOND FROM ANY MONEYS OF THE ISSUER EXCEPT FROM THE PLEDGED FUNDS IN THE MANNER PROVIDED IN THE RESOLUTION. Certain of the Series 2003 Bonds are subject to optional and mandatory redemption as provided herein. Payment of principal of and interest on the Series 2003 Bonds when due will be insured by a municipal bond insurance policy to be issued by MBIA Insurance Corporation (the "Insurer") simultaneously with the delivery of the Series 2003 Bonds. [INSERT LOGO] This cover page contains certain information for quick reference only. It is not, and is not intended to be, a summary of this issue. Investors must read the entire Official Statement to obtain information essential to making an informed investment decision. The Series 2003 Bonds are offered when, as and if issued, subject to the approving legal opinion of Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Bond Counsel. Certain legal matters will be passed upon for the Issuer by John R. Collins, Esq., County Attorney, and Bryant, Miller and Olive, P.A., Tampa, Florida, Disclosure Counsel. Public Financial Management, Inc., Fort Myers, Florida is Financial Advisor to the Issuer in regard to the issuance of the Series 2003 Bonds. The Series 2003 Bonds in definitive form are expected to be available for delivery in New York, New York through the facilities of DTC on or about March- 2003. Sealed bids for the Series 2003 Bonds will be received through the PARITY Electronic Bid Submission System as specified in the Official Notice of Sale. Dated: *Preliminary, subject to change RED HERRING LANGUAGE: This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the Series 2003 Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, qualification or exemption under the securities laws of such jurisdiction. The Issuer has deemed this Preliminary Official Statement "final," except for certain permitted omissions, within the contemplation of Rule 15c2-12 promulgated by the Securities and Exchange Commission. $23,080,000* MONROE COUNTY, FLORIDA Infrastructure Sales Surtax Revenue Bonds, Series 2003 AMOUNTS, MATURITIES, INTEREST RATES, YIELDS AND INITIAL CUSIP NUMBERS $ * Serial Bonds Maturity Interest Initial Amount* Aril 1 * Rate Cusip Yield Number $ 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014** 2015** 2016** 2017** 2018** * Preliminary, subject to change ** Bidder may designate these maturities to be part of one Term Bond rather than Serial Bonds as described more particularly in the Official Notice of Sale under the caption "MANDATORY REDEMPTION." MONROE COUNTY, FLORIDA The Historic Gato Cigar Factory 1100 Simonton Street Key West, Florida 33040 MEMBERS OF THE BOARD OF COUNTY COMMISSIONERS Dixie Spehar, Mayor/ Chairman Murray Nelson, Mayor Pro-Tem/Vice Chairman Charles McCoy George Nugent David Rice CLERK OF THE CIRCUIT COURT OF MONROE COUNTY, FLORIDA AND EX OFFICIO CLERK OF THE BOARD OF COUNTY COMMISSIONERS Danny L. Kolhage COUNTY ADMINISTRATOR James L. Roberts COUNTY ATTORNEY John R. Collins, Esq. BUDGET DIRECTOR Jennifer Hill BOND COUNSEL Nabors, Giblin & Nickerson, P.A. Tampa, Florida FINANCIAL ADVISOR Public Financial Management, Inc. Fort Myers, Florida DISCLOSURE COUNSEL Bryant, Miller and Olive, P.A. Tampa, Florida CERTIFIED PUBLIC ACCOUNTANTS Marva Green PA, Inc. Key West, Florida No dealer, broker, salesman or other person has been authorized by the Issuer to give any information or to make any representations in connection with the Series 2003 Bonds other than as contained in this Official Statement, and, if given or made, such information or representations must not be relied upon as having been authorized by the Issuer. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2003 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 Issuer, The Depository Trust Company, the Insurer, and other sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Issuer with respect to any information provided by others. The underwriters listed on the cover page hereof (the "Underwriters") have reviewed the information in this Official Statement in accordance with and as part of their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The information and expressions of opinion stated herein are subject to change, and neither the delivery of this Official Statement nor any sale made hereunder shall create, under any circumstances, any implication that there has been no change in the matters described herein since the date hereof. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2003 BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. All summaries herein of documents and agreements are qualified in their entirety by reference to such documents and agreements, and all summaries herein of the Series 2003 Bonds are qualified in their entirety by reference to the form thereof included in the aforesaid documents and agreements. NO REGISTRATION STATEMENT RELATING TO THE SERIES 2003 BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR WITH ANY STATE SECURITIES COMMISSION. IN MAKING ANY INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATIONS OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SERIES 2003 BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. [Remainder of page intentionally left blank] TABLE OF CONTENTS Contents INTRODUCTION.................................................................................................................... ............. 1 General......................................................................................................... 1 MonroeCounty........................................................................................................... Issuance 1 Authority for and Purpose of ......................................................................... Securitvfor the Bonds................................................................................................ 2 Proposed Additional Bonds......................................................................................... 2 Municipal Bond Insurance.......................................................................................... 2 Description of the Series 2003 Bonds.......................................................................... 3 TaxExemption........................................................................................................... 3 Continuing Disclosure................................................................................................ 3 OtherInformation....................................................................................................... 3 AUTHORITY FOR AND PURPOSE OF ISSUANCE.................................................................... 4 DESCRIPTION OF THE SERIES 2003 BONDS........................................................................ 4 General...................................................................................................................... 4 Book -Entry Only System............................................................................................. 6 OptionalRedemption.................................................................................................. 6 MandatoryRedemption............................................................................................... 6 Selection of Series 2003 Bonds to be Redeemed........................................................... Noticeof Redemption.................................................................................................. 7 Interchanp-eability Negotiability and Transfer.............................................................. 7 SECURITYFOR THE BONDS................................................................................................. 8 General...................................................................................................................... 8 UniformCommercial Code.......................................................................................... 9 Fundsand Accounts................................................................................................... 9 ConstructionFund....................................................................................................10 ReserveAccount........................................................................................................10 Disposition of Infrastructure Sales Surtax Revenues..................................................10 AdditionalBonds.......................................................................................................13 Subordinated Indebtedness.......................................................................................14 Accession of Subordinated Indebtedness To Parity Status with Series 2003 Bonds ...... 15 Booksand Records....................................................................................................15 Receipt of Infrastructure Sales Surtax Revenues........................................................15 No Impairment• Limitation on Maturity of Bonds........................................................15 Investments..............................................................................................................16 SeparateAccounts.....................................................................................................16 Amendment of Resolution without Consent of Bondholders; Control by Credit Facility Provider in Case of Event of Default................................................................16 INFRASTRUCTURE SALES SURTAX REVENUES...................................................................17 General.....................................................................................................................17 Local Actions and Limitations....................................................................................18 Distribution...............................................................................................................19 Historical Distribution Factors...................................................................................21 HistoricalCollections.................................................................................................22 MANAGEMENT DISCUSSION AND ANALYSIS.......................................................................23 MUNICIPALBOND INSURANCE............................................................................................24 MBIA......................................................................................................................24 MBIAInformation......................................................................................................24 Financial Strength Ratings of MBIA...........................................................................25 RESERVE ACCOUNT INSURANCE POLICY............................................................................25 ESTIMATED SOURCES AND USES OF FUNDS.....................................................................27 DEBTSERVICE SCHEDULE.................................................................................................28 INVESTMENTPOLICY...........................................................................................................28 LEGALMATTERS.................................................................................................................29 LITIGATION..........................................................................................................................29 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS.......................................30 TAXEXEMPTION..................................................................................................................30 Opinionof Bond Counsel...........................................................................................30 Internal Revenue Code of 1986..................................................................................30 Collateral Tax Consequences.....................................................................................30 Florida Taxes........... OtherTax Matters......................................................................... Tax Treatment of Original Issue Discount...................................................................31 Tax Treatment of Bond Premium................................................................................32 RATINGS..............................................................................................................................32 FINANCIALADVISOR............................................................................................................32 INDEPENDENT ACCOUNTANTS............................................................................................32 UNDERWRITING..................................................................................................................33 CONTINGENTFEES.............................................................................................................33 ENFORCEABILITY OF REMEDIES........................................................................................33 CONTINUING DISCLOSURE..................................................................................................34 ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT..............................................34 AUTHORIZATION OF OFFICIAL STATEMENT........................................................................36 APPENDIX A: General Information Concerning the Issuer APPENDIX B: General Purpose Audited Financial Statements of the Issuer APPENDIX C: Form of the Resolution APPENDIX D: Specimen Municipal Bond Insurance Policy APPENDIX E: Form of Bond Counsel Opinion APPENDIX F: Form of Continuing Disclosure Certificate [Remainder of page intentionally left blank] ii OFFICIAL STATEMENT relating to $23,080,000* MONROE COUNTY, FLORIDA Infrastructure Sales Surtax Revenue Bonds, Series 2003 INTRODUCTION General This Official Statement, including the cover page, inside cover page and the appendices hereto, is furnished with respect to the sale of $23,080,000* aggregate principal amount of Infrastructure Sales Surtax Revenue Bonds, Series 2003 (the "Series 2003 Bonds") issued by Monroe County, Florida (the "Issuer" or the "County"). This introduction is not, and is not intended to be, a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page, inside cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the Series 2003 Bonds is made only by means of this Official Statement and is subject in all respects to the information contained herein. For a complete description of the terms and conditions of the Series 2003 Bonds, reference is made to "APPENDIX C--Form of the Resolution" attached hereto. Unless otherwise indicated, capitalized terms used in this Official Statement shall have the same meaning established in "APPENDIX C--Form of the Resolution" attached hereto. Monroe County Monroe County, Florida, was constitutionally formed in 1823. It is comprised primarily of the Florida Keys, which are a string of coral islands extending in a southwesterly arc from Biscayne Bay to the Dry Tortugas. The Florida Keys separate the Atlantic Ocean on the south and the east from the Gulf of Mexico on the north and west, and extend approximately 100 miles south from the United States mainland. The County seat, the City of Key West, located on the southernmost of the Florida Keys, lies 98 miles north of Cuba, approximately 160 miles southwest of Miami and 66 nautical miles north of the Tropic of Cancer. According to the United States Census, in 2000, the County's population was 79,589. The estimated 2001 population of the County was 80,588 according to the University of Florida Bureau of Economic and Business Research. Within the County, there are five municipalities: the Cities of Key West, Layton, Marathon and Key Colony Beach and the Villages of Islamorada. See "APPENDIX A - General Information Concerning the County" attached hereto. Authority for and Purpose of Issuance The Series 2003 Bonds are being issued under the authority of and in full compliance with Chapter 125, Florida Statutes, Chapter 212, Florida Statutes, the Monroe County Code, Ordinance No. 013-1989 enacted by the Board of County Commissioners of the Issuer (the "Board") on May 23, 1989 and Ordinance No. 01-2000 enacted by the Board on January 19, 2000, as each Ordinance may be amended and supplemented (collectively, the "Infrastructure Sales Surtax Ordinance"), Ordinance No. -2003 enacted by the Board on February 19, *Preliminary, subject to change 2003 (the "Ordinance") and other applicable provisions of law (collectively, the "Act") and pursuant to Resolution No. _, adopted by the Board on February 19, 2003, as supplemented (the "Resolution"). The Series 2003 Bonds are being issued to provide funds to (i) acquire, construct and equip various capital improvement as more fully described herein, and (ii) pay costs associated with the issuance of the Series 2003 Bonds, including the municipal bond insurance premium and the reserve account insurance policy premium. Security for the Bonds The payment of the principal of, redemption premium, if any, and interest on the Series 2003 Bonds shall be secured forthwith equally and ratably by a pledge of and lien upon (i) the proceeds received by the Issuer pursuant to the Infrastructure Sales Surtax Ordinance from the levy of the one cent local government infrastructure sales surtax pursuant to Section 212.055(2), Florida Statutes, and other applicable provisions of law (the "Infrastructure Sales Surtax Revenues") and (ii) until applied in accordance with the provisions of the Resolution, all moneys, including investments thereof, in certain funds and accounts established pursuant to the Resolution (collectively, the "Pledged Funds"). Notwithstanding the foregoing, the pledge of and lien upon the Infrastructure Sales Surtax Revenues for the benefit of the Series 2003 Bonds is junior and subordinate in all respect to the pledge thereof and lien thereon granted with respect to the Monroe County, Florida Sales Tax Refunding Revenue Bonds, Series 1998, currently outstanding in the aggregate principal amount of $8,885,000 (the "Prior Bonds") which finally mature on April 1, 2004. Proposed Additional Bonds Pursuant to the Resolution, the Issuer may issue Additional Bonds on a panty with the Series 2003 Bonds. See "SECURITY FOR THE BONDS - Additional Bonds" herein for a description on the requirements which must be met for the issuance of Additional Bonds. Municipal Bond Insurance The scheduled payments of principal and interest on the Series 2003 Bonds when due will be insured by a municipal bond insurance policy to be issued by MBIA Insurance Corporation (the "Insurer") simultaneously with the delivery of the Series 2003 Bonds. See "APPENDIX D -- Specimen Municipal Bond Insurance Policy" attached hereto. Description of the Series 2003 Bonds Denominations. The Series 2003 Bonds will be issued in denominations of $5,000 or any integral multiple thereof. Redemption. Certain of the Series 2003 Bonds are subject to optional and mandatory redemption prior to their stated dates of maturity as described herein. Registration and Transfers. Transfer of ownership in the Series 2003 Bonds will be effected by The Depository Trust Company ("DTC") book -entry system as described herein. As long as Cede & Co. is the registered owner as nominee of DTC, principal and interest payments will be made directly to such registered owner which will in turn remit such payments to the Participants (as hereinafter defined) for subsequent disbursement to the Beneficial Owners (as hereinafter defined). Interest on the Series 2003 Bonds is payable semi-annually on April 1 and October 1 of each year commencing October 1, 2003. E Tax Exemption The approving legal opinion of Nabors, Giblin & Nickerson, P.A., Bond Counsel, will include an opinion to the effect that, under existing statutes, regulations, rulings and court decisions, (i) interest on the Series 2003 Bonds is exempt from all present intangible personal property taxes imposed pursuant to Chapter 199, Florida Statutes; and (ii) assuming continuing compliance by the Issuer with certain covenants set forth in the Resolution and with the Internal Revenue Code of 1986, as amended, interest on the Series 2003 Bonds is (a) excludable from gross income for federal income tax purposes, and (b) not an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations; however, interest on the Series 2003 Bonds is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on certain corporations. See "TAX EXEMPTION" herein. Continuing Disclosure The Issuer has agreed and undertaken, for the benefit of Series 2003 Bondholders, to provide certain financial information and operating data relating to the Issuer, the Pledged Funds and the Series 2003 Bonds pursuant to Rule 15c2-12 of the Securities and Exchange Commission. See "CONTINUING DISCLOSURE" herein. Other Information This Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of the Resolution and other documents and information are available, upon request and upon payment to the Issuer of a charge for copying, mailing and handling, from the County Administrator, The Historic Gato Cigar Factory, 1100 Simonton Street, Key West, Florida 33040. For a complete description of the terms and conditions of the Series 2003 Bonds, reference is made to the Resolution, the form of which is included in "APPENDIX C -- Form of the Resolution" attached hereto. The description of the Resolution, the Series 2003 Bonds and information from reports contained herein do not purport to be comprehensive or definitive. AUTHORITY FOR AND PURPOSE OF ISSUANCE The Series 2003 Bonds are being issued under the authority of and in full compliance with the Act, and under and pursuant to the terms and provisions of the Resolution. The Series 2003 Bonds are being issued to provide funds to (i) acquire, construct and equip and/or renovate, all or a portion of the following: Stock Island Fire Rescue Facility Storage; Big Pine Fire/EMS Facility; Conch Key Fire/EMS Facility; CudJoe Key Fire/EMS Facility; Key Largo North Fire Station; Tavernier Fire Rescue Facility; Ocean Reef Fire/Ambulance Replacement; Upper Keys Government Center; Plantation Key Courtroom; Marathon Courtroom Renovations; Medical Examiner Facility; Crawl Key Fire Rescue Training Facility Additions; Dedicated EOC (collectively, the "2003 Project"), and (ii) pay costs associated with the issuance of the Series 2003 Bonds, including the municipal bond insurance premium and the reserve account insurance policy premium. 3 DESCRIPTION OF THE SERIES 2003 BONDS General The Series 2003 Bonds shall be dated the date of their delivery, shall be numbered consecutively from R-1 upward, and shall be issued in the denominations of $5,000 or integral multiples thereof. The Series 2003 Bonds will mature on the dates and will bear interest at the rates set forth on the inside cover page of this Official Statement. Interest on the Series 2003 Bonds shall be payable semi-annually on April 1 and October 1 in each year commencing October 1, 2003 (each an "Interest Date") and is payable by check or draft of Wells Fargo Bank, National Association, Minneapolis, Minnesota, as initial registrar and paying agent (the "Registrar" and the "Paying Agent"), made payable to and mailed to the registered owners, as shown on the Bond registration books at the close of business on the fifteenth day (whether or not a business day) of the calendar month next preceding each Interest Date or, at the request of a holder of Series 2003 Bonds, by bank wire transfer to the account of such registered holder. Principal of the Series 2003 Bonds is payable, when due, to the registered owners upon presentation and surrender at the designated corporate trust office of the Paying Agent. While in book -entry only form, such payments will be made only to Cede & Co. as described below. Book -Entry Only System THE FOLLOWING INFORMATION CONCERNING DTC AND DTC'S BOOK -ENTRY ONLY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE COUNTY BELIEVES TO BE RELIABLE, BUT THE COUNTY TAKES NO RESPONSIBILITY FOR THE ACCURACY THEREOF. DTC will act as securities depository for the Series 2003 Bonds. The Series 2003 Bonds will be registered in the name of Cede & Co. (DTC's partnership nominee). Purchases of beneficial ownership interests in the Series 2003 Bonds will be made in book -entry only form, in the denominations hereinbefore described. Purchasers of beneficial ownership interests in the Series 2003 Bonds ("Beneficial Owners") will not receive bond certificates representing their ownership interests in the Series 2003 Bonds, except in the event that use of the book -entry only system for the Series 2003 Bonds is discontinued. One fully registered certificate will be issued for each maturity of the Series 2003 Bonds, and deposited with DTC. DTC, the world's largest depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds corporate and municipal debt issues, and money market instrand provides asset servicing for over 2 million issues of U.S. and non-U.S. equity countries issues, uments from over 85 that DTC's participants (the "Direct Participants") deposit with DTC. DTC also facilitates the Post -trade settlement among Direct Participants of securities transactions, in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a turn is owned by a number of Direct Participants of DTC and Members of wholly -owned subsidiary of The Depository Trust and Clearing Corporation ("DTCC"). DTCC, in Securities Clearing Corporation, Government Securities Clearing Corporation, the National the Clearing Corporation, and Emerging Markets Clearing Corporation, as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC and the National Association of Securities M Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non- U.S. securities brokers, dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants"). DTC has Standard and Poor's highest rating: AAA. The DTC 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 Series 2003 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for such Series 2003 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2003 Bond (the "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2003 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of the Beneficial Owners. Beneficial Owners will not receive certificates representing their beneficial interests in the Series 2003 Bonds, except in the event that use of the book -entry system for the Series 2003 Bonds is discontinued. To facilitate subsequent transfers, all Series 2003 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2003 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2003 Bonds. DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2003 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping an 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 made among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of a maturity of the Series 2003 Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such bonds, as the case may be, to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2003 Bonds unless authorized by a Direct Participant in accordance with DTC's procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & CO.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2003 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Series 2003 Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Issuer or the Registrar on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Direct or 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 with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Direct or Indirect Participants and not of DTC, the Registrar or the County, subject to any statutory and regulatory requirements as may be in 5 effect from time to time. Payment of principal and interest to DTC is the responsibility of the County and/or the Registrar for the Series 2003 Bonds. Disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of the Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Series 2003 Bonds at any time by giving reasonable notice to the County. Under such circumstances, in the event that a successor securities depository is not obtained, certificates are required to be printed and delivered. The County may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered. Optional Redemption The Series 2003 Bonds maturing on or before April 1, 2013 are not subject to optional redemption prior to maturity. The Series 2003 Bonds maturing on and after April 1, 2014 are subject to redemption at the option of the Issuer in whole or in part, at any time, on or after April 1, 2013 in such order of maturities as may be determined by the Issuer (less than all of a single maturity to be selected by lot) at a redemption price equal to 100.0% of the Series 2003 Bonds to be redeemed, together with accrued interest to the date set for redemption. Mandatory Redemption The Series 2003 Bonds maturing on April 1, 20_, are subject to mandatory sinking fund redemption, prior to maturity in part, by lot on April 1, 20_ and on each April 1 thereafter, at a redemption price equal to the principal amount of such Series 2003 Bonds or portions thereof to be redeemed, plus interest accrued thereon to the date of redemption, on April 1 in the following years and in the following amounts: Year Amount *Maturity. Selection of Series 2003 Bonds to be Redeemed The Series 2003 Bonds shall be redeemed only in the principal amount of $5,000 each and integral multiples thereof. The Issuer shall, at least forty-five (45) days prior to the redemption date (unless a shorter time period is satisfactory to the Registrar, but in no event less than thirty-five (35) days) notify the Registrar of such redemption date and of the principal amount of Series 2003 Bonds to be redeemed. For purposes of any redemption of less than all of the Outstanding Series 2003 Bonds of a single maturity, the particular Series 2003 Bonds or portions of Series 2003 Bonds to be redeemed shall be selected not more than forty-five (45) days and not less than thirty-five (35) days prior to the redemption date by the Registrar from the Outstanding Series 2003 Bonds of the maturity or maturities designated by the Issuer or by such method as the Registrar shall deem fair and appropriate and which may provide for the selection for redemption of Series 2003 Bonds or portions of Series 2003 Bonds in amounts of $5,000 and integral multiples thereof. principal If less than all of the Outstanding Series 2003 Bonds of a single maturity are to be redeemed, the Registrar shall promptly notify the Issuer and Paying Agent (if the Registrar is m not the Paying Agent for such Series 2003 Bonds) in writing of the Series 2003 Bonds or portions of Series 2003 Bonds selected for redemption and, in the case of any Series 2003 Bond selected for partial redemption, the principal amount thereof to be redeemed. Notice of Redemption Notice of redemption, which shall specify the Series 2003 Bond or Series 2003 Bonds (or portions thereof) to be redeemed and the date and place for redemption, shall be given by the Registrar on behalf of the Issuer, and (A) shall be filed with the Paying Agent, and (B) shall be mailed first class, postage prepaid, at least thirty (30) days prior to the redemption date to all Holders of Series 2003 Bonds to be redeemed at their addresses as they appear on the registration books kept by the Registrar as of the date of mailing of such notice. Failure to mail notice to the Holders of the Series 2003 Bonds to be redeemed, or any defect therein, shall not affect the proceedings for redemption of Series 2003 Bonds as to which no such failure or defect has occurred. Each notice of redemption shall state: (1) the CUSIP numbers of all Series 2003 Bonds being redeemed, (2) the original issue date of such Series 2003 Bonds, (3) the maturity date and rate of interest borne by each Series 2003 Bond being redeemed, (4) the redemption date, (5) the Redemption Price, (6) the date on which such notice is mailed, (7) if less than all Outstanding Series 2003 Bonds are to be redeemed, the certificate number (and, in the case of a partial redemption of any Series 2003 Bond, the principal amount) of each Series 2003 Bond to be redeemed, (8) that on such redemption date there shall become due and payable upon each Series 2003 Bond to be redeemed the Redemption Price thereof, or the Redemption Price of the specified portions of the principal thereof in the case of Series 2003 Bonds to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such date interest thereon shall cease to accrue and be payable, (9) that the Series 2003 Bonds to be redeemed, whether as a whole or in part, are to be surrendered for payment of the Redemption Price at the designated office of the Paying Agent at an address specified, and (10) unless sufficient funds have been set aside by the Issuer for such purpose prior to the mailing of the notice of redemption, that such redemption is conditioned upon the deposit of sufficient funds for such purpose on or prior to the date set for redemption; and provided, further, that such notice and the redemption set forth therein may be subject to the satisfaction of one or more additional conditions set forth therein. Interchangeability, Negotiability and Transfer Series 2003 Bonds, upon surrender thereof at the office of the Registrar with a written instrument of transfer satisfactory to the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing, may, at the option of the Holder thereof, be exchanged for an equal aggregate principal amount of registered Series 2003 Bonds of the same maturity of any other authorized denominations. The Series 2003 Bonds shall be and have all the qualities and incidents of negotiable instruments under the law merchant and the Uniform Commercial Code of the State of Florida, subject to the provisions for registration and transfer contained in the Resolution and in the Series 2003 Bonds. So long as any of the Series 2003 Bonds shall remain Outstanding, the Issuer shall maintain and keep, at the office of the Registrar, books for the registration and transfer of the Series 2003 Bonds. The transfer of any Series 2003 Bond shall be registered only upon the books of the Issuer, at the office of the Registrar, under such reasonable regulations as the Issuer may prescribe, by the Holder thereof in person or by his attorney duly authorized in writing upon surrender thereof together with a written instrument of transfer satisfactory to the Registrar 7 duly executed and guaranteed by the Holder or his duly authorized attorney. Upon the registration or transfer of any such Series 2003 Bond, the Issuer shall issue, and cause to be authenticated, in the name of the transferee a new Series 2003 Bond or Series 2003 Bonds of the same aggregate principal amount and maturity as the surrendered Series 2003 Bond. The Issuer, the Registrar and any Paying Agent or fiduciary of the Issuer may deem and treat the Person in whose name any Outstanding Series 2003 Bond shall be registered upon the books of the Issuer as the absolute owner of such Series 2003 Bond, whether such Series 2003 Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal and interest on such Series 2003 Bond and for all other purposes, and all such payments so made to any such Holder or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Series 2003 Bond to the extent of the sum or sums so paid and neither the Issuer nor the Registrar nor any Paying Agent or other fiduciary of the Issuer shall be affected by any notice to the contrary. In all cases in which the privilege of exchanging Series 2003 Bonds or the transfer of Series 2003 Bonds shall be registered, the Issuer shall execute and the Registrar shall authenticate and deliver such Series 2003 Bonds in accordance with the provisions of the Resolution. Execution of Series 2003 Bonds by the Mayor and Clerk for purposes of exchanging, replacing or registering the transfer of Series 2003 Bonds may occur at the time of the original delivery of the Series 2003 Bonds. All Series 2003 Bonds surrendered in any such exchanges or registration of transfer shall be held by the Registrar for safekeeping until directed by the Issuer to be cancelled by the Registrar. For every such exchange or registration of transfer, the Issuer or the Registrar may make a charge sufficient to reimburse it for any tax, fee, expense or other governmental charge required to be paid with respect to such exchange or registration of transfer. The Issuer and the Registrar shall not be obligated to make any such exchange or transfer of Series 2003 Bonds during the period commencing on the fifteenth day of the month immediately preceding an Interest Date on the Series 2003 Bonds and ending on such Interest Date, or, in the case of any proposed redemption of Series 2003 Bonds, then, for the Series 2003 Bonds subject to redemption, during the 15 days next preceding the date of the first mailing of notice of such redemption and continuing until such redemption date. SECURITY FOR THE BONDS General The payment of the principal of, redemption premium, if any, and interest on the Series 2003 Bonds shall be secured forthwith equally and ratably by a pledge of and lien upon (i) the Infrastructure Sales Surtax Revenues, and (ii) until applied in accordance with the provisions of the Resolution, all moneys, including investments thereof, in funds and accounts established pursuant to the Resolution except (A) for the Unrestricted Revenue Account and the Rebate Fund (as such funds are established pursuant to the Resolution), and (B) any moneys set aside in a particular subaccount of the Reserve Account if such moneys shall be pledged solely for the payments of a different Series of Bonds for which it was established in accordance with the provisions of the Resolution (collectively, the "Pledged Funds"). Notwithstanding the foregoing, the pledge of and lien upon the Infrastructure Sales Surtax Revenues for the benefit of the Series 2003 Bonds is junior and subordinate in all respect to the pledge thereof and lien thereon granted with respect to the Prior Bonds issued pursuant to Resolution No. 206-1990 adopted by the Board on March 27, 1990, as amended and supplemented (the "Prior Resolution"). The Prior Bonds are outstanding in an aggregate principal amount equal to $8,885,000, payable on April 1, 2003 in the principal amount of $4,360,000 and on April 1, 2004 in the principal amount of $4,525,000. The Prior Bonds will finally mature on April 1, 2004. In the Resolution, the Issuer covenanted and agreed not to 9:3 issue any bonds or other obligations pursuant to the Prior Resolution that have a lien on the Infrastructure Sales Surtax Revenues which is senior to the lien thereto granted by the Resolution with respect to the Bonds. THE SERIES 2003 BONDS SHALL NOT BE OR CONSTITUTE GENERAL OBLIGATIONS OR INDEBTEDNESS OF THE ISSUER AS "BONDS" WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION, BUT SHALL BE SPECIAL OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM AND SECURED BY A LIEN UPON AND PLEDGE OF THE PLEDGED FUNDS, WITH AND TO THE EXTENT SET FORTH IN THE RESOLUTION. NO HOLDER OF ANY SERIES 2003 BOND SHALL EVER HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY AD VALOREM TAXING POWER TO PAY SUCH SERIES 2003 BOND, OR BE ENTITLED TO PAYMENT OF SUCH SERIES 2003 BOND FROM ANY MONEYS OF THE ISSUER EXCEPT FROM THE PLEDGED FUNDS IN THE MANNER PROVIDED IN THE RESOLUTION. Uniform Commercial Code The Series 2003 Bonds issued under the Resolution shall be and have all the qualities and incidents of negotiable instruments under the law merchant and the Uniform Commercial Code. In 2001, the Florida Legislature adopted revisions to Florida's UCC relating to secured transactions. Under the revised UCC, transfers by governments and governmental units continue to remain exempt from the provisions of Florida's UCC. Funds and Accounts The Issuer covenanted and agreed in the Resolution to establish the following funds to be known as the "Construction Fund," the "Revenue Fund," the "Debt Service Fund," and the "Rebate Fund." The Issuer shall maintain in the Revenue Fund two accounts: the "Restricted Revenue Account" and the "Unrestricted Revenue Account." The Issuer shall maintain in the Debt Service Fund four accounts: the "Interest Account," the "Principal Account," the "Bond Amortization Account," and the "Reserve Account." The Issuer shall maintain in the Construction Fund an account for each Project. Subject to the provision described below and in the Resolution relating to restrictions in the Act regarding the application of Infrastructure Sales Surtax Revenues, moneys in the aforementioned funds and accounts, other than the Rebate Fund and the Unrestricted Revenue Account, until applied in accordance with the provisions of the Resolution, shall be subject to a lien and charge in favor of the Holders of the Bonds and for the further security of such Holders. The Issuer may at any time and from time to time appoint one or more depositories to hold, for the benefit of the Bondholders, any one or more of the funds, accounts and subaccounts established by the Resolution. Such depository or depositories shall perform at the direction of the Issuer the duties of the Issuer in depositing, transferring and disbursing moneys to and from each of such funds and accounts as set forth in the Resolution and all records of such depository in performing such duties shall be open at all reasonable times to inspection by the Issuer and its agent and employees. Any such depository shall be a bank or trust company duly authorized to exercise corporate trust powers and subject to examination by federal or state authority, of good standing, and be qualified under applicable State law as a depository. Construction Fund The Issuer shall establish within the Construction Fund a separate account for each Project (including the 2003 Project), the Costs of which are to be paid in whole or in part out of the Construction Fund. The Issuer covenants that the acquisition, construction and equipping 9 of each Project will be completed without delay and in accordance with sound engineering practices. The Issuer shall only make disbursements or payments from the applicable account of the Construction Fund to pay Costs of the Project for which such account was established, except as provided below with respect to any surplus proceeds in a particular account. The Issuer shall keep records of such disbursements and payments and shall retain all such records for six (6) years from the dates of such records. Notwithstanding any of the other provisions of the Resolution, to the extent that other moneys are not available therefor, amounts in an account of the Construction Fund shall be applied to the payment of principal and interest on the Series of Bonds for which such account was established or to reimburse a Credit Facility Provider for the payment of such principal and interest. The date of completion of acquisition, construction and equipping of a Project shall be filed by the Clerk with the Issuer. Promptly after the date of the completion of a Project, and after paying or making provisions for the payment of all unpaid items of the Costs of such Project, the Issuer shall deposit in the following order of priority any balance of moneys remaining in the Construction Fund in (A) any other account established in the Construction Fund for which the Clerk certifies that there are insufficient moneys to pay the Costs of the Project for which such account was established, (B) the Reserve Account to the extent of any deficiency therein and (C) such other fund or account established under the Resolution as shall be determined by the Issuer, provided the Issuer has received an opinion of Bond Counsel to the effect that such transfer shall not adversely affect the exclusion, if any, of interest on the Bonds (other than Taxable Bonds) from gross income for purposes of federal income taxation. Reserve Account Pursuant to the Resolution, upon delivery of the Series 2003 Bonds, the Issuer shall deposit to the Reserve Account a reserve account surety bond issued by MBIA Insurance Company (the "Reserve Account Insurance Policy"). See "RESERVE ACCOUNT INSURANCE POLICY" herein. See "MUNICIPAL BOND INSURANCE" herein for information about the Insurer. The amount of such Reserve Account Insurance Policy is equal to $ which equals the [Maximum Annual Debt Service] with respect to the Series 2003 Bonds (the "Reserve Account Requirement"). The Reserve Account. may be used to secure Additional Bonds issued pursuant to the Resolution. Alternatively, the Issuer reserves the right to establish separate subaccounts for any Series of Additional Bonds for the purpose of securing such Series only. Disposition of Infrastructure Sales Surtax Revenues (A) Prior to payment or defeasance of the Prior Bonds in accordance with the Prior Resolution, the Issuer shall deposit into the Restricted Revenue Account all Infrastructure Sales Surtax Revenues received by the Issuer after the Issuer has made the required monthly deposits to the sinking fund, bond amortization account and reserve account established by the Prior Resolution, in accordance with the Prior Resolution. Subsequent to payment or defeasance of the Prior Bonds in accordance with the Prior Resolution, the Issuer shall promptly deposit upon receipt from the State all of the Infrastructure Sales Surtax Revenues into the Restricted Revenue Account. The moneys in the Restricted Revenue Account shall be deposited or credited on or before the 25th day of each month, commencing in the month immediately following delivery of any of the Bonds to the purchasers thereof, or such later date as provided in the Resolution, in the following manner and in the following order of priority: (1) Interest Account. The Issuer shall deposit or credit to the Interest Account the sum which, together with the balance in said Account, shall equal the 10 interest on all of the Outstanding Bonds accrued and unpaid and to accrue to the end of the then current calendar month (assuming that a year consists of twelve (12) equal calendar months of thirty (30) days each). All Hedge Receipts shall be deposited directly to the Interest Account upon receipt. With respect to interest on Bonds which are subject to a Hedge Payment, interest on such Bonds during the term of the Qualified Hedge Agreement shall be deemed to include the corresponding Hedge Payments. Moneys in the Interest Account shall be applied by the Issuer (a) for deposit with the Paying Agent to pay the interest on the Bonds on or prior to the date the same shall become due, whether by maturity, redemption or otherwise, and (b) for Hedge Payments. The Issuer shall adjust the amount of the deposit to the Interest Account not later than a month immediately preceding any Interest Date so as to provide sufficient moneys in the Interest Account to pay the interest on the Bonds coming due on such Interest Date. No further deposit need be made to the Interest Account when the moneys therein are equal to the interest coming due on the Outstanding Bonds on the next succeeding Interest Date. With respect to debt service on any Bonds which are subject to a Qualified Hedge Agreement, any Hedge Payments due to the Counterparty to such Qualified Hedge Agreement relating to such Bonds shall be paid to the Counterparty to such Qualified Hedge Agreement on a parity basis with the aforesaid required payments into the Debt Service Fund. (2) Principal Account. Commencing in the month which is one year prior to the first principal due date (or if the first principal due date is less than one year from the date of issuance of the Bonds, the month immediately following the issuance of the Bonds), the Issuer shall next deposit into the Principal Account the sum which, together with the balance in said Account, shall equal the principal amount on the Outstanding Bonds due and unpaid and that portion of the principal next due which would have accrued on such Bonds during the then current calendar month if such principal amounts were deemed to accrue monthly (assuming that a year consists of twelve (12) equal calendar months having thirty (30) days each) in equal amounts from the next preceding principal payment due date, or, if there is no such preceding payment due date from a date one year preceding the due date of such principal amount. Moneys in the Principal Account shall be applied by the Issuer for deposit with the Paying Agent to pay the principal of the Bonds on or prior to the date the same shall mature, and for no other purpose. The Issuer shall adjust the amount of the deposit to the Principal Account not later than the month immediately preceding any principal payment date so as to provide sufficient moneys in the Principal Account to pay the principal on the Bonds becoming due on such principal payment date. No further deposit need be made to the Principal Account when the moneys therein are equal to the principal coming due on the Outstanding Bonds on the next succeeding principal payment date. (3) Bond Amortization Account. Commencing in the month which is one year prior to any Amortization Installment due date, there shall be deposited or credited to the Bond Amortization Account an amount which, together with the balance in said Account, shall equal the Amortization Installments of all Bonds Outstanding due and unpaid and that portion of the Amortization Installment next due which would have accrued on said Bonds during the then current calendar month if such Amortization Installment were deemed to accrue daily (assuming that a year consists of twelve (12) months of thirty (30) days each), in equal amounts from the next preceding Amortization Installment due date, or if there is no such preceding Amortization Installment due date, from a date one year preceding the due date of such Amortization Installment. Moneys in the Bond Amortization Account shall be used to purchase or redeem Term Bonds in the manner provided in the Resolution or in a Supplemental Resolution, and for no other purpose. The Issuer shall adjust the amount of the deposit into the Bond Amortization Account not later than the month immediately preceding any date for payment of an Amortization Installment so as to provide sufficient moneys 11 in the Bond Amortization Account to pay the Amortization Installments on the Bonds coming due on such date. No further deposit need be made to the Bond Amortization Account when the moneys therein are equal to the Amortization Installments coming due on the Outstanding Bonds on the next succeeding Amortization Installment due date. Payments to the Bond Amortization Account shall be on a parity with payments to the Principal Account. Amounts accumulated in the Bond Amortization Account with respect to any Amortization Installment (together with amounts accumulated in the Interest Account with respect to interest, if any, on the Term Bonds for which such Amortization Installment was established) may be applied by the Issuer, on or prior to the sixtieth (60th) day preceding the due date of such Amortization Installment, (a) to the purchase of Term Bonds of the Series and maturity for which such Amortization Installment was established at a price not exceeding par plus accrued interest, or (b) to the redemption at the applicable Redemption Prices of such Term Bonds, if then redeemable by their terms at a price not exceeding par plus accrued interest. The applicable Redemption Price (or principal amount of maturing Term Bonds) of any Term Bonds so purchased or redeemed shall be deemed to constitute part of the Bond Amortization Account until such Amortization Installment date, for the purposes of calculating the amount of such Account. As soon as practicable after the sixtieth (60th) day preceding the due date of any such Amortization Installment, the Issuer shall proceed to call for redemption on such due date, by causing notice to be given as provided in the Resolution, Term Bonds of the Series and maturity for which such Amortization Installment was established (except in the case of Term Bonds maturing on an Amortization Installment date) in such amount as shall be necessary to complete the retirement of the unsatisfied balance of such Amortization Installment. The Issuer shall pay out of the Bond Amortization Account and the Interest Account to the appropriate Paying Agents, on or before the day preceding such redemption date (or maturity date), the amount required for the redemption (or for the payment of such Term Bonds then maturing), and such amount shall be applied by such Paying Agents to such redemption (or payment). All expenses in connection with the purchase or redemption of Term Bonds shall be paid by the Issuer from the Restricted Revenue Fund. (4) Reserve Account. There shall be deposited to the Reserve Account an amount which shall not be less than one twelfth (1 / 12) of the amount which would enable the Issuer to restore the funds on deposit in the Reserve Account to an amount equal to the Reserve Account Requirement applicable thereto in one (1) year from the date of any deficiency caused by decreased market value of the investments on deposit therein or withdrawal therefrom. On or prior to each principal payment date and Interest Date for the Bonds, moneys in the Reserve Account shall be applied by the Issuer to the payment of the principal of or Redemption Price, if applicable, and interest on the Bonds to the extent moneys in the Interest Account, the Principal Account and the Bond Amortization Account shall be insufficient for such purpose. Whenever there shall be surplus moneys in the Reserve Account by reason of (i) investment income, shall be deposited in the Interest Account, and (ii) a decrease in the Reserve Account Requirement, such surplus moneys shall be deposited by the Issuer into the Unrestricted Revenue Account subject to receiving an opinion of Bond Counsel that such application will not have an adverse effect on the tax-exempt status of the Bonds, and otherwise to the Debt Service Fund. Whenever the amount of cash or securities in the Reserve Account, together with the other amounts in the Debt Service Fund, are sufficient to fully pay all Outstanding Bonds in accordance with their terms (including principal or applicable Redemption Price and interest thereon), the funds on deposit in the Reserve Account may be 12 transferred to the other Accounts of the Debt Service Fund for the payment of the Bonds. Upon the issuance of any Series of Bonds under the terms, limitations and conditions as herein provided, the Issuer shall, on the date of delivery of such Series of Bonds, fund the Reserve Account in an amount at least equal to the Reserve Account Requirement, if so required. Such required amount may be paid in full or in part from the proceeds of such Series of Bonds. (5) Unrestricted Revenue Account. The balance of any moneys after the deposits required by Sections (A)(1) through (A)(4) above may be transferred, at the discretion of the Issuer, to the Unrestricted Revenue Account or any other appropriate fund and account of the Issuer and may be used for any lawful purpose including, without limitation, the early redemption of Bonds. In the event moneys on deposit in the Interest Account and the Principal Account on the third day prior to an Interest Date are not sufficient to pay the principal of and interest on the Bonds coming due on such Interest Date, the Issuer shall transfer moneys from the Unrestricted Revenue Account, if any, to the appropriate Account of the Debt Service Fund to provide for such payment. Any moneys remaining in the Unrestricted Revenue Account on each Interest Date may be used for any lawful purpose. (B) The Issuer, in its discretion, may use moneys in the Principal Account, the Bond Amortization Account and the Interest Account to purchase or redeem Outstanding Bonds coming due on the next principal payment date, provided such purchase does not adversely affect the Issuer's ability to pay the principal or interest coming due on such principal payment date on the Bonds not so purchased. (C) At least two business days prior to the date established for payment of any principal of or interest on the Bonds, the Issuer shall withdraw from the appropriate Account of the Debt Service Fund sufficient moneys to pay such principal or interest and deposit such moneys with the Paying Agent. Such deposits with the Paying Agent shall be made in moneys available to make payments of the principal of and interest on the Bonds as the same becomes due. Additional Bonds No Additional Bonds, payable on a parity with the Bonds then Outstanding pursuant to the Resolution, shall be issued except upon the conditions and in the manner provided in the Resolution. The Issuer may issue one or more Series of Additional Bonds for any one or more of the following purposes: financing or refinancing the Costs of a Project, or the completion thereof, or refunding any or all Outstanding Bonds or of any Subordinated Indebtedness of the Issuer. No such Additional Bonds shall be issued unless (1) no Event of Default (as specified in the Resolution) shall have occurred and be continuing thereunder and (2) the following conditions are complied with: (A) Except as otherwise provided in Section (D) below, there shall have been obtained and filed with the Issuer a statement of the Clerk or his/her designee: 1 stating that he or she has examined the books and records of the Issuer relating to the Infrastructure Sales Surtax Revenues which have been received by the Issuer for deposit to the Restricted Revenue Account; (2) setting forth the amount of such Infrastructure Sales Surtax Revenues during any twelve (12) consecutive months designated by the Issuer within the twenty-four (24) months immediately preceding the 13 date of delivery of such Additional Bonds with respect to which such statement is made; and (3) stating that the amount of such Infrastructure Sales Surtax Revenues received during the aforementioned 12-month period equals at least 1.30 times the Maximum Annual Debt Service on the Prior Bonds and all Bonds then Outstanding and such Additional Bonds with respect to which such statement is made. Such report may be partially based upon a certification of certain matters related to the calculation of the Maximum Annual Debt Service by the Issuer's financial advisor. (B) For the purpose of determining the Maximum Annual Debt Service under Section (A) above and for determining the Reserve Account Requirement for any Variable Rate Bonds, the interest rate on any Variable Rate Bonds. then proposed to be issued and on any Outstanding Variable Rate Bonds then Outstanding shall be deemed to be the lesser of (1) the interest rate for 20-year revenue bonds published by The Bond Buyer no more than two weeks prior to the sale of the Variable Rate Bonds, or (2) the Maximum Interest Rate. (C) Additional Bonds shall be deemed to have been issued pursuant to the Resolution the same as the Outstanding Bonds, and all of the other covenants and other provisions of the Resolution (except as to details of such Additional Bonds inconsistent therewith) shall be for the equal benefit, protection and security of the Holders of all Bonds issued pursuant to the Resolution. Except as provided in the Resolution, all Bonds, regardless of the time or times of their issuance, shall rank equally with respect to their lien on the Pledged Funds and their sources and security for payment therefrom without preference of any Bonds over any other; provided, however, that the Issuer shall include a provision in any Supplemental Resolution authorizing the issuance of Variable Rate Additional Bonds pursuant to the Additional Bonds test that in the event the principal thereof is accelerated due to such Bonds being held by the Credit Facility Provider, the lien of any accelerated debt due and owing such Credit Facility Provider on the Pledged Funds shall be subordinate in all respects to the pledge of the Pledged Funds created by the Resolution. (D) In the event any Additional Bonds are issued for the purpose of refunding any Bonds then Outstanding, the conditions of the Additional Bonds test shall not apply, provided that the issuance of such Additional Bonds shall result in a reduction of aggregate debt service. The conditions of Section (A) above shall apply to Additional Bonds issued to refund Subordinated Indebtedness and to Additional Bonds issued for refunding purposes which cannot meet the conditions of this paragraph. (E) In the event the Act is amended to provide for additional Infrastructure Sales Surtax Revenues to be distributed to the Issuer, the Issuer may, by Supplemental Resolution, extend the pledge of the Infrastructure Sales Surtax Revenues created pursuant to the terms of the Resolution to include such additional Infrastructure Sales Surtax Revenues and may then for the purpose of determining whether there are sufficient Infrastructure Sales Surtax Revenues to meet the coverage tests specified in (A) above, assume that such additional Infrastructure Sales Surtax Revenues were in effect during the applicable twelve (12) consecutive month period. Subordinated Indebtedness The Issuer will not issue any obligation, other than Additional Bonds, except under the conditions and in the manner provided in the Resolution and described above under "— Additional Bonds", payable from the Pledged Funds or voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or other charge having priority to or being on a parity with the lien thereon in favor of the Bonds and the interest thereon. The Issuer may at 14 any time or from time to time issue evidences of indebtedness payable in whole or in part out of the Pledged Funds and which may be secured by a pledge of the Pledged Funds; provided, however, that such pledge shall be, and shall be expressed to be, subordinated in all respects to the pledge of the Pledged Funds created by the Resolution and shall not be subject to acceleration prior to maturity. The Issuer shall have the right to covenant with the holders from time to time of any Subordinated Indebtedness to add to the conditions, limitations and restrictions under which any Additional Bonds may be issued pursuant to the Resolution. The Issuer agrees to pay promptly any Subordinated Indebtedness as the same shall become due. Accession of Subordinated Indebtedness To Parity Status with Series 2003 Bonds The Issuer may provide for the accession of Subordinated Indebtedness to the status of complete parity with the Bonds, if (A) the Issuer shall meet all the requirements imposed upon the issuance of Additional Bonds by the Resolution, assuming, for purposes of said requirements, that such Subordinated Indebtedness shall be Additional Bonds and (B) the Reserve Account, upon such accession, shall contain an amount equal to the Reserve Account Requirement in accordance with the Resolution. If the aforementioned conditions are satisfied, the Subordinated Indebtedness shall be deemed to have been issued pursuant to the Resolution the same as the Outstanding Bonds, and such Subordinated Indebtedness shall be considered Bonds for all purposes provided in the Resolution. Books and Records The Issuer will keep books and records of the receipt of the Infrastructure Sales Surtax Revenues in accordance with generally accepted accounting principles, and any Credit Facility Provider or Holder or Holders of at least $1,000,000 aggregate principal amount of Bonds shall have the right at all reasonable times to inspect the records, accounts and data of the Issuer relating thereto. Receipt of Infrastructure Sales Surtax Revenues The Issuer covenants to do all things necessary or required on its part by the Act or otherwise to maintain the levy and receipt of the Infrastructure Sales Surtax Revenues. The Issuer shall exercise all legally available remedies to enforce such levy, collection and receipt now or hereafter available remedies to enforce such levy, collection and receipt now or hereafter available under law. The Issuer will not take any action, including amending or supplementing the Infrastructure Sales Surtax Ordinance, or enter into any agreement that shall result in reducing the level of Infrastructure Sales Surtax Revenues received by the Issuer from that level prevailing at the time the Issuer takes such action or enters into such agreement. No Impairment; Limitation on Maturity of Bonds The pledging of the Pledged Funds in the manner provided herein shall not be subject to repeal, modification or impairment by any subsequent ordinance, resolution, agreement or other proceedings of the Issuer. The Issuer shall not (1) permit the Infrastructure Sales Surtax Ordinance to be terminated or expire while any Bonds remain Outstanding or (2) issue any Bonds maturing after the stated expiration date of the one cent local government infrastructure sales surtax authorized by the Infrastructure Sales Surtax Ordinance, as the same may be extended in accordance with the Act. Investments is Moneys on deposit in the Construction Fund, the Restricted Revenue Account and the Debt Service Fund shall be continuously secured in the manner by which the deposit of public funds are authorized to be secured by the laws of the State. Moneys on deposit in the Construction Fund, the Restricted Revenue Account and the Debt Service Fund, other than the Reserve Account, may be invested and reinvested in Authorized Investments maturing not later than the date on which the moneys therein will be needed for the purposes of such Fund or Account. "Authorized Investments" has the meaning ascribed thereto in "APPENDIX C - Form of the Resolution" attached hereto. Moneys on deposit in the Reserve Account may be invested and reinvested in Authorized Investments which shall mature no later than ten (10) years from the date of investment. All investments shall be valued at market at least semi-annually. Any and all income received by the Issuer from the investment of moneys in the Construction Fund, the Interest Account, the Principal Account, the Bond Amortization Account, the Restricted Revenue Account and the Reserve Account (to the extent such income and the other amounts in the Reserve Account does not exceed the Reserve Account Requirement) shall be retained in such respective Fund or Account. Any and all income received by the Issuer from the investment of moneys in the Reserve Account (only to the extent such income and other amounts in the Reserve Account exceeds the Reserve Account Requirement) shall be deposited in the Interest Account. Nothing contained in the Resolution shall prevent any Authorized Investments acquired as investments of or security for funds held under the Resolution from being issued or held in book -entry form on the books of the Department of the Treasury of the United States. Separate Accounts The moneys required to be accounted for in each of the funds, accounts and subaccounts established in the Resolution may be deposited in a single, non-exclusive bank account, and funds allocated to the various funds, accounts and subaccounts established in the Resolution may be invested in a common investment pool, provided that adequate accounting records are maintained to reflect and control the restricted allocation of the moneys on deposit therein and such investments for the various purposes of such funds, accounts and subaccounts as provided in the Resolution. The designation and establishment of the various funds, accounts and subaccounts in and by the Resolution shall not be construed to require the establishment of any completely independent, self -balancing funds as such term is commonly defined and used in governmental accounting, but rather is intended solely to constitute an earmarking of certain revenues for certain purposes and to establish certain priorities for application of such revenues as provided in the Resolution. Amendment of Resolution without Consent of Bondholders; Control by Credit Facility Provider in Case of Event of Default For purposes of amending the Resolution, when Bondholder consent is required pursuant to the Resolution, a Credit Facility Provider of a Series of Bonds shall be considered the Holder thereof, provided such Series of Bonds, at the time of the adoption of the amendment, shall be rated by the rating agencies which shall have rated the Bonds no lower than the initial ratings assigned thereto by such rating agencies. The consent of the Holders of Bonds shall not be required if the Credit Facility Provider shall consent to the amendment as provided by the Resolution. Such right of amendment, however, does not apply to any amendment to the Resolution regarding the Issuer's covenants with respect to the exclusion of interest on the Bonds from gross income for purposes of federal income taxation. Upon filing with the Clerk of evidence of such consent of a Credit Facility Provider, the Issuer may adopt 16 such Supplemental Resolution. After the adoption by the Issuer of such Supplemental Resolution, notice thereof shall be mailed in the same manner as notice of an amendment under the Resolution. To the extent the Insurer makes any payment of principal of or interest on Series 2003 Bonds in accordance with its Bond Insurance Policy, such Insurer shall become subrogated to the rights of the recipients of such payments in accordance with the terms of its Bond Insurance Policy. Upon the occurrence and continuance of an Event of Default, a Credit Facility Provider of a Series of Bonds, if such Credit Facility Provider shall not be in payment default under its Bond Insurance Policy, shall be deemed to be the sole owner of such Bonds for purposes of (A) directing and controlling the enforcement of all rights and remedies with respect to such Series of Bonds, including any waiver of an Event of Default and removal of any trustee, and (B) exercising any voting right or privilege or giving any consent or direction or taking any other action that the Holders of such Bonds are entitled to take pursuant to the Resolution. No provision expressly recognizing or granting rights in or to a Credit Facility Provider shall be modified without the consent of such Credit Facility Provider. A Credit Facility Provider's rights under this provision is suspended during any period in which such Credit Facility Provider is in default in its payment obligations under its Bond Insurance Policy (except to the extent of amounts previously paid by such Credit Facility Provider and due and owing to such Credit Facility Provider) and is of no force or effect if its Bond Insurance Policy is no longer in effect or if the Credit Facility Provider asserts that its Bond Insurance Policy is not in effect or if the Credit Facility Provider waives such rights in writing. INFRASTRUCTURE SALES SURTAX REVENUES General Pursuant to Chapter 212, Florida Statutes, as amended, the State of Florida is currently authorized to levy and collect a tax on sales, use and other transactions, including a sales tax of six percent (6%) on, among other things, the sales price of each item or article of tangible personal property sold at retail in the State, subject to certain exceptions and dealer allowances as set forth in Chapter 212, Florida Statutes. Pursuant to Chapter 212, Florida Statutes, counties are authorized to levy a local discretionary sales surtax of an additional one-half percent (lh%) or one percent (1%) pursuant to ordinance enacted by a majority of the members of the Board of County Commissioners and approved by referendum. Chapter 212, Florida Statutes, provides that the levy on such surtax may be extended upon approval of a majority of the electors of the County voting in a referendum on the discretionary sales surtax. The proceeds of the discretionary sales surtax may only be expended to finance, plan and construct "infrastructure" which is defined as any fixed capital expenditure or fixed capital costs associated with the construction, reconstruction or improvement of public facilities which have a life expectancy of five or more years and any land acquisition, land improvement, design and engineering costs related thereto. The Florida Department of Revenue ("FDOR") has the responsibility to administer, collect, and enforce the discretionary sales surtax. The proceeds of the County's discretionary sales surtax collections are transferred to the Discretionary Sales Surtax Trust Fund. A separate account in the trust fund is established for each county imposing such a surtax. FDOR is authorized to deduct 3% of the total revenue generated for all counties levying a surtax for administrative costs. The amount deducted for administrative costs is required to be used only for those costs solely and directly attributable to the surtax. The total administrative costs are prorated among those counties levying the surtax on the basis of the amount collected for a particular county to the total amount collected for all counties. However, FDOR is currently not deducting any amount of revenue for administering 17 these taxes, even though the authorization currently exists to do so. FDOR is required to submit annually, no later than March 1st, a report detailing the expenses and amounts deducted for administrative costs to the President of the State Senate, the Speaker of the State House of Representatives, and the governing board of each county levying the surtax. Section 212.055(2)(d)l., Florida Statutes, expressly states that neither the proceeds from the discretionary sales surtax nor the interest accrued thereon shall be used for operational expenses of any infrastructure. Further restrictions prohibit counties from using the discretionary sales surtax to replace or supplant user fees or to reduce ad valorem taxes, and from issuing bonds secured by a pledge of these revenues more frequently than once per year. The surtax applies to all transactions in the County that are subject to the State sales tax imposed on sales, use, rentals, admissions, and other transactions under Chapter 212, Florida Statutes. The surtax does not apply to the sales amount of tangible personal property greater than $5,000 or to long distance telephone service. Pursuant to Section 212.15, Florida Statutes, vendors are required to remit sales tax receipts (including proceeds of any discretionary sales surtax) by the twentieth (20th) day of the month immediately following the month of collection. No statute prescribes a deadline for remitting surtax proceeds from FDOR to the local governing bodies. However, according to the accounting division of FDOR, FDOR consistently remits the surtax proceeds to such local governing bodies by the end of the month immediately following receipt by FDOR. Pursuant to Section 212.055(2)(e), Florida Statutes, as amended, counties receiving discretionary sales surtax proceeds may pledge such proceeds for the purpose of servicing new bond indebtedness incurred pursuant to law. Local Actions and Limitations Pursuant to Ordinance No. 013-1989 enacted by the Board on May 23, 1989 and pursuant to a successful vote of the electors of the County held on August 8, 1989, the County was authorized to levy a local one -percent discretionary sales surtax for a period from November 1, 1989, and continuing through September 30, 2004 for the purposes of funding the following categories of infrastructure: recreational facilities, courthouses, parking, offices, roads, bridges, airport improvements, libraries, piers, auditoriums, riprap/seawalls, storm sewers, solid waste facilities, jails and police/fire facilities. On January 19, 2000, the Board enacted Ordinance No. 01-2000, calling a referendum for March 14, 2000, to consider whether to extend the levy of the local one -percent discretionary sales surtax through December 31, 2018 for the purposes of funding the following categories of infrastructure all of which have a life expectancy in excess of five years: wastewater facilities, recreation and conservation lands, marinas, courthouses, parking, offices, roads, bridges, airports, libraries, piers, auditoriums, riprap/seawalls, solid waste, jails, police/fire facilities, land acquisition, and storm water. In addition to the capital infrastructure projects described in the previous sentence, the funds so collected during the extension period, and interest accrued thereto, may also be expended on any public purpose, including maintenance of recreation and conservation lands, but only if: (1) the debt service obligation for the year is met; and (2) the County's comprehensive plan has been determined to be incompliance with Chapter 163, Part II, Florida Statutes. The referendum was approved by the electors of the County. Pursuant to the Infrastructure Sales Surtax Ordinance described above in this paragraph, the County may use the proceeds of the infrastructure sales surtax for the purpose of servicing new bond indebtedness incurred pursuant to general law. In addition to the one percent (1%) local government infrastructure sales surtax described above, there is also levied and collected within the County for the benefit of the Monroe County, Florida School District a one-half percent ('/,2%) sales surtax on, among other 18 things, the sales price of each item or article of tangible personal property sold at retail in the County. The levy of such sales surtax will expire on . The revenue derived from this surtax is not a revenue of the County or pledged to repay the Series 2003 Bonds. Distribution The discretionary sales surtax is distributed by the FDOR among the County and the Cities of Layton, Key Colony Beach, Key West and Marathon and the Villages of Islamorada as provided by the Florida Legislative Committee on Intergovernmental Relations. Florida law provides that, unless otherwise specified in an interlocal agreement, the distribution of the proceeds will be on the same basis as distribution of the so-called "Half -Cent Sales Tax" proceeds distributions under Section 218.62, Florida Statutes. The Infrastructure Sales Surtax Ordinance provides that the discretionary sales surtax be distributed pursuant to such statute. Such "Half -Cent Sales Tax" collected within a county and distributed to participating local government units is distributed among such county and municipalities therein in accordance with the formula detailed in Section 218.62, Florida Statutes, and shown below (the "Distribution Factor") and such Distribution Factor governs the distribution of the Infrastructure Sales Surtax collected within Monroe County among the County and the municipalities therein: County's Share Unincorporated 2/3 of the (expressed as a County + incorporated percentage) = population County population total 2/3 of the county + incorporated population County population Each municipality population Municipality's = total 2/3 of the Share (expressed county + incorporated as a percentage) population County population "Population" means the latest official State of Florida estimate of population certified prior to the beginning of the local government fiscal year. Should any unincorporated area of a county become incorporated as a municipality, the share received by the participating local governments would be adjusted accordingly. The share of the discretionary sales surtax that is to be distributed to the County will be affected by changes in the relative populations of the unincorporated and incorporated areas within the County. Such relative populations are subject to change through normal increases and decreases of population within the existing unincorporated and incorporated areas of the County and are also subject to change by annexation of previously unincorporated areas of the County by municipalities within the County. Such annexations would not only increase the population of the incorporated areas but also would, in equal amount, decrease the population of the unincorporated area. The Villages of Islamorada and the City of Marathon have recently incorporated in the County in the fiscal years ended September 30, 1999 and 2001, respectively. The total amount of discretionary sales surtax collected within the County and distributed to the County is subject to increase or decrease due to increases or decreases in the dollar volume of taxable sales within the County, which, in turn, is subject to among other things, (i) legislative changes which may include or exclude from taxation sales of particular goods or services, and (ii) changes in the dollar volume of purchases in the County, which is affected by changes in population and economic conditions. 19 The potential for increased use of electronic commerce and other internet-related sales activity (pursuant to federal law, retail sales via the internet are exempt from sales tax until at least November 1, 2003) could have a material adverse impact upon the amount of Infrastructure Sales Surtax Revenues collected by the County. [Remainder of page intentionally left blank] 20 Historical Distribution Factors The following table sets forth historical population distribution factors of the infrastructure sales surtax to the County (unincorporated) and the incorporated areas therein for the last ten years. HISTORICAL POPULATION DISTRIBUTION FACTORS FOR INCORPORATED AND UNINCORPORATED MONROE COUNTY Fiscal Year Ended Unincorporated Incorporated September 30 Monroe County Monroe County 2002 59.88% 40.12% 2001(1) 59.76 40.24 2000 66.84 33.16 19990) 66.95 33.05 1998 70.90 29.10 1997 72.48 27.52 1996 72.53 27.47 1995 72.65 27.35 1994 72.67 27.33 1993 72.57 27.43 (l) The population distribution factors for these fiscal years changed from the previous fiscal year due, in part, to the incorporation of the Villages of Islamorada in Fiscal Year 1999 and the City of Marathon in Fiscal Year 2001. Source: Florida Department of Revenue [Remainder of page intentionally left blank] 21 Historical Collections The following table sets forth the historical collections of the Infrastructure Sales Surtax Revenues by the County (and does not include any local government infrastructure sales surtax distributed to municipalities located in the County.) MONROE COUNTY, FLORIDA HISTORICAL INFRASTRUCTURE SALES SURTAX REVENUESM Infrastructure Year Ended Sales Surtax Percentage September 30 Revenues(') Change 1993 10,058,171 -- 1994 9,624,657 (4.3)% 1995 10,703,389 10.1 1996 11,393,620 6.4 1997 11,979,091 5.1 1998 12,538,732 4.7 1999(2) 13,048,112 4.1 2000 13,072,553 0.2 2001(�) 12,658,691 (3.2) 2002 12,538,217 (1.0) (1) Unaudited (2) As noted in the previous table, the population distribution factors for these fiscal years changed from the previous fiscal year due, in part, to the incorporation of the Villages of Islamorada in Fiscal Year 1999 and the City of Marathon in Fiscal Year 2001, which explains, in part, the change in Sales Surtax Revenues for Fiscal Years 1999 and 2001, notwithstanding that Sales Surtax Revenues increased in Fiscal Year 1999 from the prior Fiscal Year. Source: Florida Department of Revenue MONROE COUNTY, FLORIDA PRO FORMA DEBT SERVICE COVERAGE ON THE SERIES 2003 BONDS AND THE PRIOR BONDS Fiscal Year Ended September 30 1998 1999 2000 2001 2002 Infrastructure Sales Surtax Revenues $12,538,732 $13,048,112 $13,072,553 $12,658,691 $12,538,217 Combined Maximum Annual Debt Service on the Prior Bonds and the Series 2003 Bonds(') Pro Forma Debt Service Coverage(21 5,675,532( 2) 5,675,532(2( 5,675,532(2( 5,675,532(2) 5,675,532(2( 2.21x 2.30x 2.30x 2.23x 2.21x (1) Calculated on the basis of a year ended September 30. (2) Estimated by the Financial Advisor based on current market conditions and an estimated true interest cost rate of approximately 4.58% on the Series 2003 Bonds with a final maturity of April 1, [2018]. After the final principal payment on the Prior Bonds due on April 1, 2004 is made, the estimated maximum annual debt service on the Series 2003 Bonds will be $2,158,324 and pro forma debt service coverage increases to 5.81x for the fiscal year ended September 30, 1998, 6.05x for the fiscal year ended September 30, 1999, 6.06x for the fiscal year ended September 30, 22 2000, 5.87x for the fiscal year ended September 30, 2001 and 5.81x for the fiscal year ended September 30, 2002. MANAGEMENT DISCUSSION AND ANALYSIS [TO COME] 23 MUNICIPAL BOND INSURANCE The following information under this heading has been furnished by MBIA Insurance Corporation for use in this Official Statement. MBIA MBIA Insurance Corporation ("MBIA") is the principal operating subsidiary of MBIA Inc., a New York Stock Exchange listed company (the "Company"). The Company is not obligated to pay the debts of or claims against MBIA. MBIA is domiciled in the State of New York and licensed to do business in and subject to regulation under the laws of all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United States and the Territory of Guam. MBIA has three branches, one in the Republic of France, one in the Republic of Singapore and one in the Kingdom of Spain. New York has laws prescribing minimum capital requirements, limiting classes and concentrations of investments and requiring the approval of policy rates and forms. State laws also regulate the amount of both the aggregate and individual risks that may be insured, the payment of dividends by MBIA, changes in control and transactions among affiliates. Additionally, MBIA is required to maintain contingency reserves on its liabilities in certain amounts and for certain periods of time. MBIA does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Reserve Account Insurance Policy and MBIA set forth under the heading "MUNICIPAL BOND INSURANCE". Additionally, MBIA makes no representation regarding the Series 2003 Bonds or the advisability of investing in the Series 2003 Bonds. The Reserve Account Insurance Policy is not covered by the Property/Casualty Insurance Security Fund specified in Article 76 of the New York Insurance Law. MBIA Information The following documents filed by the Company with the Securities and Exchange Commission (the "SEC") are incorporated herein by reference: (1) The Company's Annual Report on Form 10-K for the year ended December 31, 2001; and (2) The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002. Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as amended, after the date of this Official Statement and prior to the termination of the offering of the Series 2003 Bonds offered hereby shall be deemed to be incorporated by reference in this Official Statement and to be a part hereof. Any statement contained in a document incorporated or deemed to be incorporated by reference herein, or contained in this Official Statement, shall be deemed to be modified or superseded for purposes of this Official Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Official Statement. 24 The Company files annual, quarterly and special reports, information statements and other information with the SEC under File No. 1-9583. Copies of the SEC filings (including (1) the Company's Annual Report on Form 10-K for the year ended December 31, 2001, and (2) the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002), are available (i) over the Internet at the SEC's web site at http: / /www.sec.gov; (ii) at the SEC's public reference room in Washington D.C.; (iii) over the Internet at the Company's web site at http://www.mbia.com; and (iv) at no cost, upon request to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504. The telephone number of MBIA is (914) 273-4545. As of December 31, 2001, MBIA had admitted assets of $8.5 billion (audited), total liabilities of $5.6 billion (audited), and total capital and surplus of $2.9 billion (audited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of June 30, 2002, MBIA had admitted assets of $8.7 billion (unaudited), total liabilities of $5.7 billion (unaudited), and total capital and surplus of $3.0 billion (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. Financial Strength Ratings of MBIA Moody's Investors Service, Inc. rates the financial strength of MBIA "Aaa." Standard & Poor's, a division of The McGraw-Hill Companies, Inc. rates the financial strength of MBIA "AAA." Fitch Ratings rates the financial strength of MBIA "AAA." Each rating of MBIA should be evaluated independently. The ratings reflect the respective rating agency's current assessment of the creditworthiness of MBIA and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold the Series 2003 Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of the Series 2003 Bonds. MBIA does not guaranty the market price of the Series 2003 Bonds nor does it guaranty that the ratings on the Series 2003 Bonds will not be revised or withdrawn. The insurance provided by the Reserve Account Insurance Policy is not covered by the Florida Insurance Guaranty Association created under chapter 631, Florida Statutes. THE INFORMATION RELATING TO THE INSURER CONTAINED ABOVE HAS BEEN FURNISHED BY THE INSURER. NO REPRESENTATION IS MADE BY THE ISSUER OR THE UNDERWRITERS AS TO THE ACCURACY OR ADEQUACY OF SUCH INFORMATION OR THAT THERE HAS NOT BEEN ANY MATERIAL ADVERSE CHANGE IN SUCH INFORMATION SUBSEQUENT TO THE DATE OF SUCH INFORMATION. NEITHER THE ISSUER NOR THE UNDERWRITERS HAS MADE ANY INVESTIGATION INTO THE FINANCIAL CONDITION OF THE INSURER, AND NO REPRESENTATION IS MADE AS TO THE ABILITY OF THE INSURER TO MEET ITS OBLIGATIONS UNDER THE MUNICIPAL BOND INSURANCE POLICY. RESERVE ACCOUNT INSURANCE POLICY The Reserve Account Requirement for the Series 2003 Bonds will be funded by a reserve 25 account surety bond issued in the amount of $ by MBIA to secure the Series 2003 Bonds (the "Reserve Account Insurance Policy"). The Reserve Account Insurance Policy will provide that upon notice from the Paying Agent to MBIA to the effect that insufficient amounts are on deposit in the Reserve Account to pay the principal of (at maturity or pursuant to mandatory redemption requirements) and interest on the Series 2003 Bonds, MBIA will promptly deposit with the Paying Agent an amount sufficient to pay the principal of and interest on the Series 2003 Bonds or the available amount of the Reserve Account Insurance Policy, whichever is less. Upon the later of: (i) three (3) days after receipt by MBIA of a Demand for Payment in the form attached to the Reserve Account Insurance Policy, duly executed by the Paying Agent; or (ii) the payment date of the Series 2003 Bonds as specified in the Demand for Payment presented by the Paying Agent to MBIA, MBIA will make a deposit of funds in an account with State Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient for the payment to the Paying Agent, of amounts which are then due to the Paying Agent (as specified in the Demand for Payment) subject to the Reserve Account Insurance Policy coverage. The available amount of the Reserve Account Insurance Policy is the initial face amount of the Reserve Account Insurance Policy less the amount of any previous deposits by MBIA with the Paying Agent which have not been reimbursed by the County. In conjunction with the issuance of the Series 2003 Bonds, the County and MBIA will enter into a Financial Guaranty Agreement (the "Agreement"). Pursuant to the Agreement, the County is required to reimburse MBIA, within one year of any deposit, the amount of such deposit made by MBIA with the Paying Agent under the Reserve Account Insurance Policy. Under the terms of the Agreement, the County is required to reimburse MBIA, with interest, until the face amount of the Reserve Account Insurance Policy is reinstated, before any deposit of Infrastructure Sales Surtax Revenues is made to the [Restricted Revenue Account]. No optional redemption of the Series 2003 Bonds may be made until Reserve Account Insurance Policy is reinstated. The Reserve Account Insurance Policy will be held by the Paying Agent in the Reserve Account and is provided as an alternative to the County depositing funds equal to the Reserve Account Requirement for outstanding Series 2003 Bonds. [Remainder of page intentionally left blank] ESTIMATED SOURCES AND USES OF FUNDS The table that follows summarizes the estimated sources and uses of funds to be derived from the sale of the Series 2003 Bonds: SOURCES: Principal Amount of Series 2003 Bonds $ Less: Net Original Issue Discount TOTAL SOURCES $ USES: Deposit to Account in Construction Fund $ Costs of Issuance (1) TOTAL USES $ (1► Includes municipal bond insurance premium, reserve account insurance policy premium, Underwriters' discount, legal fees and miscellaneous costs of issuance. [Remainder of page intentionally left blank] 27 DEBT SERVICE SCHEDULE Year Ending Prior Series 2003 Bonds April Bonds Principal Interest 2002 $4,701,023.75 2003 4,700,343.75 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 TOTAL $9,401,367.50 INVESTMENT POLICY Total Debt Service All investment activity of the County's pooled cash, not otherwise classified as restricted assets requiring separate investing is currently governed by an investment policy prepared by the Clerk and adopted by the Board on Such investments are limited to: A. The Local Government Surplus Fund's Trust Fund, the Florida Clerks Association's Florida Counties Investment Trust, or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Section 163.01, Florida Statutes. B. Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency. C. Savings accounts in state certified qualified public depositories, as defined in Section 280.02, Florida Statutes. D. Certificates of deposit in state certified qualified public depositories, as defined in Section 280.02, Florida Statutes. E. Direct obligations of the U.S. Government and obligations guaranteed by the U.S. Government as to principal and interest. Investments in this category would include, but not be limited to, U.S. Treasury Bills, Notes and Bonds, and securities issued by the Government National Mortgage RM Association (Ginnie Mae), Veterans Administration, and Federal Housing Administration. F. Other U.S. Agency obligations which carry an implied guarantee and the full faith and credit of the U.S. Government. Investments in this category would include, but not be limited to, obligations of the Federal Farm Credit Bank, Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Student Loan Marketing Association (Sallie Mae), the Financial Assistance Corporation and Federal Agriculture Mortgage Corporation (Farmer Mac). Investments strictly and specifically excluded from use are collaterized mortgage obligations (CMOs), real estate mortgage conduits (REMICs), Interest Only (IO) and Principal Only (PO) agency securities, inverse floaters, reverse repurchase agreements, forwards, futures, currency and interest rate swaps, options and caps/floors/collars and all other investment types prohibited by law. The Board of County Commissioners may revise the aforementioned investment policy from time to time. For information relating to the investment of funds and accounts created pursuant to the Resolution, please see "APPENDIX C - Form of the Resolution" attached hereto. LEGAL MATTERS Certain legal matters in connection with the issuance of the Series 2003 Bonds are subject to an approving legal opinion of Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Bond Counsel, whose approving opinion (a form of which is attached hereto as "APPENDIX E-- Form of Bond Counsel Opinion") will be available at the time of delivery of the Series 2003 Bonds. Certain legal matters will be passed on for the Issuer by John R. Collins, Esq., County Attorney, and Bryant, Miller and Olive, P.A., Tampa, Florida, Disclosure Counsel. Bond Counsel has not been engaged to, nor has it undertaken to, review (1) the accuracy, completeness or sufficiency of this Official Statement or any other offering material relating to the Series 2003 Bonds; provided, however, that Bond Counsel will render an opinion to the Underwriters of the Series 2003 Bonds (upon which opinion only the Underwriters may rely) relating to the fairness of the presentation of certain statements contained herein under the heading "TAX EXEMPTION' and certain statements which summarize provisions of the Resolution, the Series 2003 Bonds and federal tax law, and (2) the compliance with any federal or state law with regard to the sale or distribution of the Series 2003 Bonds. LITIGATION [There is no pending or, to the knowledge of the Issuer, any threatened litigation against the Issuer of any nature whatsoever which in any way questions or affects the validity of the Series 2003 Bonds, or any proceedings or transactions relating to their issuance, sale, execution, or delivery, or the adoption of the Resolution, or the pledge of the Pledged Funds. Neither the creation, organization or existence, nor the title of the present members of the Board, or other officers of the Issuer is being contested. The Issuer experiences claims, litigation, and various legal proceedings which Individually are not expected to have a material adverse effect on the operations or financial condition of the Issuer, but may, in the aggregate, have a material impact thereon. In the opinion of the County Attorney, however, the Issuer will either we, successfully defend such actions or otherwise resolve such matters without any material adverse consequences on the financial condition of the Issuer.] DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS Pursuant to Section 517.051, Florida Statutes, as amended, no person may directly or indirectly offer or sell securities of the Issuer except by an offering circular containing full and fair disclosure of all defaults as to principal or interest on its obligations since December 31, 1975, as provided by rule of the Florida Department of Banking and Finance (the "Department"). Pursuant to Rule 3E-400.003, Florida Administrative Code, the Department has required the disclosure of the amounts and types of defaults, any legal proceedings resulting from such defaults, whether a trustee or receiver has been appointed over the assets of the Issuer, and certain additional financial information, unless the Issuer believes in good faith that such information would not be considered material by a reasonable investor. The Issuer is not and has not been in default on any bond issued since December 31, 1975 that would be considered material by a reasonable investor. TAX EXEMPTION Opinion of Bond Counsel In the opinion of Bond Counsel, the form of which is included as "APPENDIX E--Form of Bond Counsel Opinion" attached hereto, the interest on the Series 2003 Bonds is excludable from gross income and is not a specific item of tax preference for federal income tax purposes under existing statutes, regulations, rulings and court decisions. However, interest on the Series 2003 Bonds is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on corporations pursuant to the Internal Revenue Code of 1986, as amended (the "Code"). Failure by the Issuer to comply subsequently to the issuance of the Series 2003 Bonds with certain requirements of the Code, regarding the use, expenditure and investment of Series 2003 Bonds proceeds and the timely payment of certain investment earnings to the Treasury of the United States, may cause interest on the Series 2003 Bonds to become includable in gross income for federal income tax purposes retroactive to their date of issuance. The Issuer has covenanted in the Resolution to comply with all provisions of the Code necessary to, among other things, maintain the exclusion from gross income of interest on the Series 2003 Bonds for purposes of federal income taxation. In rendering its opinion, Bond Counsel has assumed continuing compliance with such covenants. Internal Revenue Code of 1986 The Code contains a number of provisions that apply to the Series 2003 Bonds, including, among other things, restrictions relating to the use or investment of the proceeds of the Series 2003 Bonds and the payment of certain arbitrage earnings in excess of the "yield" on the Series 2003 Bonds to the Treasury of the United States. Noncompliance with such provisions may result in interest on the Series 2003 Bonds being included in gross income for federal income tax purposes retroactive to their date of issuance. Collateral Tax Consequences Except as described above, Bond Counsel will express no opinion regarding the federal income tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of, the Series 2003 Bonds. Prospective purchasers of Series 2003 Bonds should be aware that the ownership of Series 2003 Bonds may result in other collateral federal tax 30 consequences. For example, ownership of the Series 2003 Bonds may result in collateral tax consequences to various types of corporations relating to (1) denial of interest deduction to purchase or carry such Series 2003 Bonds, (2) the branch profits tax, and (3) the inclusion of interest on the Series 2003 Bonds in passive income for certain Subchapter S corporations. In addition, the interest on the Series 2003 Bonds may be included in gross income by recipients of certain Social Security and Railroad Retirement benefits. PURCHASE, OWNERSHIP, SALE OR DISPOSITION OF THE SERIES 2003 BONDS AND THE RECEIPT OR ACCRUAL OF THE INTEREST THEREON MAY HAVE ADVERSE FEDERAL TAX CONSEQUENCES FOR CERTAIN INDIVIDUAL AND CORPORATE BONDHOLDERS, INCLUDING, BUT NOT LIMITED TO, THE CONSEQUENCES DESCRIBED ABOVE. PROSPECTIVE BONDHOLDERS SHOULD CONSULT WITH THEIR TAX SPECIALISTS FOR INFORMATION IN THAT REGARD. Florida Taxes In the opinion of Bond Counsel, the Series 2003 Bonds and the income thereon are exempt from all present intangible personal property taxes imposed pursuant to Chapter 199, Florida Statutes. Other Tax Matters Interest on the Series 2003 Bonds may be subject to state or local income taxation under applicable state or local laws in other jurisdictions. Purchasers of the Series 2003 Bonds should consult their own tax advisors as to the income tax status of interest on the Series 2003 Bonds in their particular state or local jurisdictions. During recent years, legislative proposals have been introduced in Congress, and in some cases enacted, that altered certain federal tax consequences resulting from the ownership of obligations that are similar to the Series 2003 Bonds. In some cases, these proposals have contained provisions that altered these consequences on a retroactive basis. Such alterations of federal tax consequences may have affected the market value of obligations similar to the Series 2003 Bonds. From time to time, legislative proposals are pending which could have an effect on both the federal tax consequences resulting from ownership of the Series 2003 Bonds and their market value. No assurance can be given that additional legislative proposals will not be introduced or enacted that would or might apply to, or have an adverse effect upon, the Series 2003 Bonds. 31 Tax Treatment of Original Issue Discount Bond Counsel is further of the opinion that the difference between the principal amount of the Series 2003 Bonds maturing on April 1, 20_ through April 1, 20_, inclusive and on April 1, 20_ (collectively the "Discount Bonds") and the initial offering price to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of Underwriters or wholesalers) at which price a substantial amount of such Discount Bonds of the same maturity was sold constitutes original issue discount which is excludable from gross income for federal income tax purposes to the same extent as interest on the Series 2003 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. Tax Treatment of Bond Premium The difference between the principal amount of the Series 2003 Bonds maturing on April 1, 20_ through April 1, 20_, inclusive (the "Premium Bonds") and the initial offering price to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of such Premium Bonds of the same maturity was sold constitutes to an initial purchaser amortizable bond premium which is not deductible from gross income for Federal income tax purposes. The amount of amortizable bond premium for a taxable year is determined actuarially on a constant interest rate basis over the term of each Premium Bond. For purposes of determining gain or loss on the sale or other disposition of a Premium Bond, an initial purchaser who acquires such obligation in the initial offering to the public at the initial offering price is required to decrease such purchaser's adjusted basis in such Premium Bond annually by the amount of amortizable bond premium for the taxable year. The amortization of bond premium may be taken into account as a reduction in the amount of tax-exempt income for purposes of determining various other tax consequences of owning such Premium Bonds. Owners of the Premium Bonds are advised that they should consult with their own advisors with respect to the state and local tax consequences of owning such Premium Bonds. RATINGS Moody's Investors Service ("Moody's") and Standard and Poor's Ratings Services ("Standard and Poor's") are expected to assign their municipal bond ratings of "Aaa" and "AAA," respectively, to the Series 2003 Bonds with the understanding that upon delivery of the Series 2003 Bonds, the Municipal Bond Insurance Policy will be issued by the Insurer. [In addition, Moody's and Fitch assigned underlying ratings of "_" and "_," respectively, without giving any regard to such Municipal Bond Insurance Policy.] The ratings reflect only the views of said rating agencies and an explanation of the ratings may be obtained only from said rating agencies. There is no assurance that such ratings will continue for any given period of time or that they will not be lowered or withdrawn entirely by the rating agencies, or any of them, if in their judgment, circumstances so warrant. A downward change in or withdrawal of any of such ratings, may have an adverse effect on the market price of the Series 2003 Bonds. An explanation of the significance of the ratings can be received from the rating agencies, at the 32 following addresses: Moody's Investors Service, 99 Church Street, New York, New York 10007- 2796 and Standard & Poor's Ratings Services, 25 Broadway, New York, New York 10004. FINANCIAL ADVISOR The Issuer has retained Public Financial Management, Inc., Fort Myers, Florida, as Financial Advisor in connection with the Issuer's financing plans and with respect to the authorization and issuance of the Series 2003 Bonds. The Financial Advisor is not obligated to undertake and has not undertaken to make an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Official Statement. The Financial Advisor did not participate in the underwriting of the Series 2003 Bonds. The Financial Advisor may receive a fee for bidding investments for certain proceeds of the Series 2003 Bonds. INDEPENDENT ACCOUNTANTS The General Purpose Audited Financial Statements of the Issuer for the fiscal year ending September 30, 2001, and report thereon of Marva Green PA, Inc., Key West, Florida (the "Independent Certified Public Accountants") are attached hereto as "APPENDIX B -- General Purpose Audited Financial Statements of the County." Such statements speak only as of September 30, 2001. [The Independent Certified Public Accountants have consented to the use thereof herein and have performed various procedures relating to the provision of such consent.] The Series 2003 Bonds are payable solely from the Pledged Funds as described in the Resolution and herein and the Series 2003 Bonds are not otherwise secured by, or payable from, the general revenues of the Issuer. The General Purpose Audited Financial Statements attached hereto as "APPENDIX B -- General Purpose Audited Financial Statements of the Issuer" are presented for general information purposes only. The Issuer covenanted and agreed in the Resolution to, immediately after the close of each Fiscal Year, cause the financial statements of the Issuer to be properly audited by a recognized independent certified public accountant or recognized independent firm of certified public accountants, and shall require such accountants to complete their report on the annual financial statements in accordance with applicable law. The annual financial statement shall be prepared in conformity with generally accepted accounting principles consistently applied. For the Fiscal Year ending September 30, 2002, the Issuer will prepare its annual financial statements in accordance with GASB No. 34. The Clerk's Office, including the Finance Department, is implementing such requirements with the assistance of its consultants to insure that all requirements of GASB 34 are satisfied. UNDERWRITING The Series 2003 Bonds are being purchased by the underwriters shown on the cover of the Official Statement (the "Underwriters") at an aggregate purchase price of $ (which includes net original issue discount of $ and Underwriters' discount of $ ). The Underwriters' obligations are subject to certain conditions precedent described in the Official Notice of Sale which was prepared by the Issuer, and the Underwriters will be obligated to purchase all of the Series 2003 Bonds if any Series 2003 Bonds are purchased. The Series 2003 Bonds may be offered and sold to certain dealers (including dealers depositing such Series 2003 Bonds into investment trusts) at prices lower than such public offering prices, and 33 such public offering prices may be changed, from time to time, by the Underwriters. CONTINGENT FEES The Issuer has retained Bond Counsel, the Financial Advisor and Disclosure Counsel with respect to the authorization, sale, execution and delivery of the Series 2003 Bonds. Payment of the fees of such professionals and an underwriting discount to the Underwriters are each contingent upon the issuance of the Series 2003 Bonds. ENFORCEABILITY OF REMEDIES The remedies available to the owners of the Series 2003 Bonds upon an event of default under the Resolution, the Municipal Bond Insurance Policy and the Reserve Account Insurance Policy are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically the federal bankruptcy code, the remedies specified by the Resolution, the Series 2003 Bonds, the Municipal Bond Insurance Policy and the Reserve Account Insurance Policy may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2003 Bonds (including Bond Counsel's approving opinion) will be qualified, as to the enforceability of the remedies provided in the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before of after such delivery. See "APPENDIX C -- Form of the Resolution" attached hereto for a description of events of default and remedies. CONTINUING DISCLOSURE The Issuer has covenanted for the benefit of the Series 2003 Bondholders to provide certain financial information and operating data relating to the Issuer and the Series 2003 Bonds in each year, and to provide notices of the occurrence of certain enumerated material events. The Issuer has agreed to file annual financial information and operating data and the audited financial statements with each nationally recognized municipal securities information repository then approved by the Securities and Exchange Commission (the "NRMSIRs"), as well as any state information depository that is established in the State (the "SID"). Currently, there are no such SIDS. The Issuer has agreed to file notices of certain enumerated material events, when and if they occur, with the NRMSIRs or the Municipal Securities Rulemaking Board, and with the SIDs, if any. The specific nature of the financial information, operating data, and of the type of events which trigger a disclosure obligation, and other details of the undertaking are described in "APPENDIX F--Form of Continuing Disclosure Certificate" attached hereto. The Continuing Disclosure Certificate shall be executed by the Issuer prior to the issuance of the Series 2003 Bonds. These covenants have been made in order to assist the Underwriters in complying with the continuing disclosure requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the "Rule"). With respect to the Series 2003 Bonds, no party other than the Issuer is obligated to provide, nor is expected to provide, any continuing disclosure information with respect to the Rule. The Issuer inadvertently failed to comply with the requirement to timely submit audited financial statements, financial information, operating data and certain other information for the fiscal years ended September 30, 1999, 2000 and 2001. Upon realizing the failure to comply, the Issuer timely reported such circumstance in accordance with the requirements of 34 the Rule, and supplemented its filing on to complete said obligation. Subsequent to this instance of non-compliance, the Issuer fully anticipates satisfying all future obligations in connection therewith. ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT The references, excerpts, and summaries of all documents, statutes, and information concerning the Issuer and certain reports and statistical data referred to herein do not purport to be complete, comprehensive and definitive and each such summary and reference is qualified in its entirety by reference to each such document for full and complete statements of all matters of fact relating to the Series 2003 Bonds, the security for the payment of the Series 2003 Bonds and the rights and obligations of the owners thereof and to each such statute, report or instrument. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Neither this Official Statement nor any statement that may have been made verbally or in writing is to be construed as a contract with the owners of the Series 2003 Bonds. The appendices attached hereto are integral parts of this Official Statement and must be read in their entirety together with all foregoing statements. [Remainder of page intentionally left blank] 35 AUTHORIZATION OF OFFICIAL STATEMENT The execution and delivery of this Official Statement has been duly authorized and approved by the Issuer. At the time of delivery of the Series 2003 Bonds, the Issuer will furnish a certificate to the effect that nothing has come to their attention which would lead it to believe that the Official Statement (other than information herein related to the Insurer, the Municipal Bond Insurance Policy, the Reserve Account Insurance Policy, DTC, the book -entry only system of registration and the information contained under the caption "Tax Exemption" as to which no opinion shall be expressed), as of its date and as of the date of delivery of the Series 2003 Bonds, contains an untrue statement of a material fact or omits to state a material fact which should be included therein for the purposes for which the Official Statement is intended to be used, or which is necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. MONROE COUNTY, FLORIDA By: Mayor, Board of County Commissioners By: County Administrator 36 APPENDIX A GENERAL INFORMATION CONCERNING THE ISSUER A-1 INFORMATION CONCERNING MONROE COUNTY, FLORIDA The following information concerning Monroe County, Florida (the "County"), is included only for the purposes of supplying general information regarding the primary community served by the County. The Series 2003 Bonds are payable solely from the Pledged Funds described herein, and are not payable or secured by other properties of the County or any other political subdivision of the State of Florida. General Information Monroe County, Florida, was constitutionally formed in 1823. It is comprised primarily of the Florida Keys, which are a string of coral islands extending in a southwesterly arc from Biscayne Bay to the Dry Tortugas. The Florida Keys separate the Atlantic Ocean on the south and the east from the Gulf of Mexico on the north and west, and extend approximately 100 miles south from the United States mainland. The County seat, Key West, located on the southernmost of the Florida Keys, lies 98 miles north of Cuba, approximately 160 miles southwest of Miami and 66 nautical miles north of the Tropic of Cancer. The County has a mild, sub -tropical climate. The average annual temperature is 77.7 degrees, with an average temperature during the winter of 69.9 degrees and a summer average of 83.9 degrees. The highest temperature recorded was 95 degrees in 1957, and the lowest temperature recorded was 41 degrees in 1981. Precipitation (39-40 inches per year) is characterized by dry and wet seasons in June through October and December through March, respectively. History Initial European contact with the Florida Keys, then occupied by the Calusa Indians, occurred in 1513 with Ponce de Leon's exploration of the Straits of Florida. As a consequence of an Indian war in which the remains of the slain were left to the elements, the island was named Cayo Hueso, or Bond Key, which was later anglicized to Key West. In 1815 the Florida Keys were granted to Juan Publo Salas by the Spanish governor of Florida. In 1821 Florida became a United States territory. Nevertheless, Salas sold the island to John Simonton of Mobile, Alabama, for $2,000. In 1823 Commodore David Porter established a United States naval base on the island. During the period immediately following, in excess of 120 vessels, many from the Bahamas, were employed in the wrecking business in direct competition with emigrants from New England. The City of Key West was incorporated in 1828. Federal legislation permitting salvaging of property from wrecked ships was the principal reason Key West grew by the 1890's to the wealthiest city, per capita, in the United States. In 1831 the first cigar factory was established in Key West, and by 1869 the City became the largest clear -Havana cigar manufacturing city in the United States. The strategic importance of Key West was demonstrated in 1823, when the West Indian Anti -Piracy Squadron established its base there. Key West's connection with the military dates from this period, and its fortunes were thereafter linked to federal decisions concerning military presence in the Gulf of Mexico. The economic importance of Key West was affected by the excellence of its harbor at the time of the completion of the Panama Canal, and its proximity to Cuba. In 1912 the Overseas Railway from Miami to Key West was completed. This constituted building a railroad 128 miles out to sea, spanning 29 islands of the Florida Keys, and connecting Key West and Havana, Cuba, by train -ferry with the rest of Florida. An estimated average of 3,000 men labored A-2 approximately seven years, at a total cost of approximately $50 million to complete the railroad that for the next 22 years would provide a round trip from Miami to Havana, including meals for $24. In 1938 the State of Florida completed a modern highway on the bed of the railroad tracks, permitting motorists to drive from Miami to Key West. That highway and its series of bridges have recently undergone renovation. In 1920 the first international air passenger service and the first international air mail routes for the United States were established between Key West and Havana, Cuba; and in 1927 the Key West airport was designated the first Airport of Entry in the United States. Pan American Airlines was established at Key West in 1927. In 1942 a fresh water pipeline from the mainland was opened. A new pipeline from the mainland, as well as new mainland water treatment facilities and pumping stations, were completed in 1982. Those facilities have substantially increased the quantity of water which can be delivered to the Keys. These facilities are currently administered by the Florida Keys Aqueduct Authority. In 1946 President Truman created the "Little White House" in Key West on the Naval Annex that bears his name. Recent development has resulted in substantial historic renovation and restoration and continuing growth of tourist activity. Government The County has a five -member Board of County Commissioners elected for staggered terms of four years. The Mayor (Chairman) and the Mayor Pro-Tem (Vice Chairman) are elected by the Board. The Board apportions and levies County taxes and controls the expenditure of all County funds, except for schools, which are controlled by The School Board of Monroe County (the "School Board"). The budget year of the County runs from October 1 to the following September 30. Operating revenue is raised mainly from ad valorem real and personal property taxes, with supplements from state and federal sources for county roads, welfare and health. The Board operates the county road system and has the power to establish, build, maintain, repair, protect and preserve these facilities. The County may issue bonds for all lawful purposes. The Board correlates and is responsible for various types of elections in the County. Other elected officials serving county -wide are a five -member School Board, a Superintendent of Schools, a Property Appraiser, a Tax Collector, a Supervisor of Elections, a Sheriff, and a Clerk of the Circuit Court who is also ex officio Clerk of the Board of County Commissioners. The Board appoints a County Administrator who serves at the pleasure of the Board. The Military The United States Naval Station at Key West (the "Naval Station") was established in 1823 with the formation of the West Indian Anti -Piracy Squadron. Some construction began in 1823, and the permanent construction of the Naval Building began in 1856. In 1974 the Naval Station was disestablished, though military operations still exist within the City, including a medical facility, substantial barracks and military housing for Boca Chica Air Station and numerous federal agencies such as the United States Coast Guard and the Department of Agriculture. The present mission of the various U.S. Military and Coast Guard commands in the Key West area include both air and surface functions. The major military activities center around A-3 the Boca Chica Naval Air Station on Boca Chica Key (located immediately to the east of Stock Island and Key West) and Truman Annex. Health Care There are three hospitals located throughout the County: Lower Keys Medical Center (167 beds), Fisherman's Hospital (58 Beds) and Mariner's Hospital (42 beds). Source: Monroe County, Florida Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2001. Population From 1930 to 1970, the population of the County increased by 38,962 or 286%. From 1970 to 1980, the population increased by 20%; from 1980 to 1990, by 23%; and from 1990 to 2000, the population increased by 2%. Population Statistics Monroe County and State of Florida 1930-2000 Percentage State of Percentage Year Monroe Countv Changes Florida Changes 1930 13,624 -- 1,468,211 -- 1940 14,078 3% 1897,414 29% 1950 29,957 113 2:771,305 46 1960 47,921 60 4,951,560 79 1970 52,586 10 6,791,418 37 1980 63,188 20 9,746,961 44 1990 78,024 23 12,938,071 33 2000 79,589 2 15,982,378 24 Source: United States Bureau of the Census and Florida Statistical Abstract 2002, Bureau of Business and Economic Research, University of Florida. A-4 The following tables show the population summary for Monroe County for the years 1995 through 2001 and the Monroe County projected population by age for the years 2010 and 2020. Monroe County Population Summary 1995-2001 1995 1996 1997 1998 1999 2000 2001 Monroe County 83,401 83,789 84,743 85,646 87,030 79,589 80,588 Islamorada(l) 7,632 7,639 6,846 6,950 Key Colony 1,049 1,048 1,048 1,059 1,084 788 799 Beach Key West 26,842 27,009 27,305 27,522 27,698 25,478 25,735 Layton 200 200 197 218 204 186 186 Marathon(2) 10,255 10,407 Unincorporated 55,310 55,532 56,193 49,215 50,405 36,036 36,511 (1) Islamorada incorporated in Fiscal Year 1999. 12) Marathon incorporated in Fiscal Year 2001. Sources: Florida Estimates of Population, 1996 and 1997 for years 1995 and 1996. Florida Statistical Abstract 1998-2002, Bureau of Economic and Business Research, University of Florida for years 1997 through 2001. Population Projections By Age Monroe County, Florida 2010 and 2020 Year Total 0-17 18-64 65-74 75-84 85+ 2010 82,212 13,886 56,146 7,381 3,717 1,08 2020 84,088 14,453 54,436 9,985 4,127 1,08 2 7 Source: Florida Statistical Abstract 2002; Bureau of Economic and Business Research, University of Florida. A-5 Monroe County Property Tax Levies and Collections For Last Ten Tax Years Percent of Tax Year Tax Lew Tax Collection Lew Collected 1992 $40,610,035 $39,072,069 96.2% 1993 42,637,049 41,350,979 97.0 1994 43,472,080 42,014,616 96.6 1995 48,129,060 46,502,205 96.6 1996 51,350,380 49,747,700 96.9 1997 53,523,947 51,917,045 97.0 1998 56,473,845 54,723,468 97.0 1999 55,411,449 53,578,782 97.0 2000 56,096,471 54,027,766 96.0 2001 53,154,741 51,323,260 96.0 Property tax levies, based on assessed values as of January 1st, become due and payable on November 1st of each year. A four percent discount is allowed if the taxes are paid in November, with the discount declining by one percent each month thereafter. Accordingly, taxes collected will never be one hundred percent of the tax levy. Taxes become delinquent on April 1st of each year and tax certificates for the full amount of any unpaid taxes and assessments must be sold not later than June 1st of each year. Property taxes receivable and a corresponding reserve for uncollectible property taxes are not included in the financial statements as there are no delinquent taxes as of September 30, 2001 Source: Monroe County, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2001. Monroe County Assessed and Estimated Actual Value of Taxable Property For Last Ten Fiscal Years Real Property Personal Property Total Assessed Fiscal Year Assessed Value Assessed Value Value 1992 $6,135,745,413 $305,062,159 $6,440,807,572 1993 6,205,863,228 310,418,654 6,516,281,882 1994 6,140,029,454 318,280,985 6,458,310,439 1995 6,601,604,418 338,856,309 6,940,460,727 1996 6,856,274,547 360,857,198 7,217,131,745 1997 6,970,972,120 355,388,938 7,326,361,058 1998 7,513,987,881 341,038,010 7,855,025,891 1999 7,951,158,054 363,277,323 8,314,435,377 2000 8,682,695,235 392,464,314 9,075,159,549 2001 9,560,072,249 398,805,072 9,958,877,321 A-6 Assessed values used are net taxable values after deducting allowable statutory exemptions. Property is assessed as of January 1st and taxes based on those assessments are levied and become due on the following November 1st. Therefore, assessments and levies applicable to a certain tax year are collected in the fiscal year ending during the next succeeding calendar year. Estimated actual value for each tax year is equal to the assessed value. The ratio of total assessed to the total estimated actual value is 100% for each tax year. Source: Monroe County, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2001. Monroe County, Florida Aggregate Millage Rates For Last Ten Tax Years Tax Year Operating Debt Service 1992 6.8061 -0- 1993 5.5903 -0- 1994 5.7142 -0- 1995 6.0983 -0- 1996 6.0857 -0- 1997 5.8089 -0- 1998 5.5354 -0- 1999 5.1056 -0- 2000 4.2181 -0- 2001 4.4369 -0- County millage consists of the General Revenue Fund, the Fine and Forfeiture Fund, the Health Clinic and the General Purpose Fund. Property is assessed as of January 1st and the taxes based on those assessments are levied according to the tax rate in effect during that tax year and become due on November 1st. Therefore, assessments and tax levies applicable to a certain tax year are collected in the fiscal year ending during the following calendar year. Monroe County does not have outstanding debt funded by ad valorem taxes. Source: Monroe County, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2001. A-7 Monroe County, Florida Ten Largest Taxpayers Taxpayer Assessed Valued) 1. Bellsouth $66,038,260 2. Casa Marina 51,302,073 3. Hilton Resorts & Marina 32,128,154 4. Cheeca Lodge 31,629,003 5. Pier House 25,813,926 6. Sheraton Suites 23,852,031 7. Hawks Cay 22,819,263 8. Southernmost Beach LP 22,526,655 9. Holiday Inn Key West 22,105,391 10. Reach 19,927,612 $318,142,368 G)Monroe County Property Appraiser (2)Monroe County Tax Collector 2001 Fiscal Year Percentage of Taxes Collected(2) Total Collected(2) $879,961 0.62% 708,599 0.50 450,175 0.32 422,476 0.30 356,549 0.25 329,451 0.23 307,044 0.21 311,145 0.22 305,326 0.21 275,246 0.19 $4,345,972 3.05% Source: Monroe County, Florida Comprehensive Annual Financial Report For the Year Ended September 30, 2001. Monroe County, Florida Ratio of Net General Bonded Debt To Assessed Value and Net Bonded Debt Per Capita Taxable Gross Bonded Debt Service Year Population Assessed Value Debt Funds 1992 80,968 $6,440,807,57 — — 2 1993 81,766 6,516,281,882 — — 1994 81,796 6,458,310,439 — — 1995 81,850 6,940,460,727 — — 1996 80,730 7,217,131,745 — — 1997 81,919 7,326,361,058 — — 1998 85,646 7,513,987,881 — — 1999 79,941 7,951,158,054 — — 2000 79,589 8,682,695,235 — 2001 80,588 9,560,072,249 — — Property Taxable Value Assessments are as of January 1 of each year. Monroe County does not have general bonded debt. Source: Monroe County, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2001. A-8 Monroe County, Florida Computation of Direct Underlying and Overlapping Debt September 30, 2001 Percentage Applicable to this Overlapping Governmental Unit Gross Debt Governmental Unit Net Debt Monroe County, Florida $-- -- $-- Monroe County does not have any outstanding general obligation debt funded by ad valorem taxes. Source: Monroe County, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2001. Monroe County, Florida Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Government Expenditures For Last Ten Fiscal Years Ratio of Debt Service to General General Other Debt Total Debt Government Government Fiscal Year Principal Interest Service ServiceM Expenditures Expenditures 1992 $1,380,00 $2,949,256(2 $328,191 $4,657,44 $ 5.82% 0 7 79,987,426 1993 3,932,492 2,827,261 277,483 7,037,236 83,070,774 8.47 1994 3,000,000 1,500,948 126,888 4,627,836 92,519,401 5.00 1995 3,315,000 3,407,870 165,200 6,888,070 102,740,55 6.70 1996 3,475,000 2,198,015 104,212 5,777,227 102,080,61 3 5.66 1997 3,655,000 2,014,990 301,029 5,971,019 109,460,47 7 5.46 1998 3,845,000 1,298,096 722,885 5,865,981 117,691,24 9 4.99 1999 4,280,000 1,263,255 75,701 5,618,956 135,715,33 1 4.14 2000 4,455,000 1,034,686 92,548 5,582,234 138,019,79 2 4.04 2001 4,690,000 818,836 152,973 5,661,809 145,332,48 5 3.90 8 Service includes principal and interest on general obligation bonds, revenue Debt bonds, bond anticipation notes and other loan and notes payable. (2) Interest includes fiscal charges. A-9 Source: Monroe County, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2001. A-10 Economy International and domestic tourism remains an important economic factor in Monroe County. The tropical climate together with the recreational water activities makes the Florida Keys and Key West a major tourist area. Further evidence of the importance of the tourist industry is that of the top ten taxpayers in Monroe County, nine are hotels. Monroe County expects to experience a decrease in tourism trade attributed to the September 11, 2001 terrorist attacks. Any such long-term decrease could have an effect on the Keys' economy. Monroe County, Florida Average Monthly Employment by Major Sector 2000 and 2001 Sector 2000(A) 2001(B) Agriculture, forestry and fishing 347 409 Services 12,534 12,515 Manufacturing 451 439 Mining N/A N/A Construction 2,232 2,168 Wholesale Trade 836 731 Retail Trade 10,793 11,331 Finance, Insurance and Real Estate 1,633 1,680 Transportation, Communications and Public Utilities 1,800 1,868 Other 124 46 Total All Industries 30,750 31,185 (A) Revised (B) Preliminary N/A Not available Source: Florida Statistical Abstract 2002, Bureau of Economic and Business Research, University of Florida. [Remainder of page intentionally left blank.] A-11 Employment Monroe County has consistently trailed the State in unemployment for each of the past ten years as shown in the table below. Employment — Monroe County Labor Year Force Employment Unemploymen t 1992 42,211 40,449 1,762 1993 43,605 41,948 1,657 1994 43,084 41,636 1,448 1995 44,023 42,807 1,216 1996 44,401 43,355 1,046 1997 45,505 44,446 1,059 1998 45,979 44,769 1,210 1999 45,816 44,793 1,023 2000 44,604 43,705 899 2001 46,280 45,084 1,196 County Unemploymen t Rate 4.2% 3.8 3.4 2.8 2.4 2.3 2.6 2.2 2.0 2.6 State Unemploymen t Rate 6.3% 6.0 5.4 5.0 4.5 4.8 4.3 3.9 3.6 4.8 Source: State of Florida Department of Labor and Employment Security and U.S. Department of Labor, Bureau of Labor Statistics for years 1992 through 1996; Florida Statistical Abstract 2000, 2001 and 2002, Bureau of Economic and Business Research, University of Florida for years 1997 through 2001. [Remainder of page intentionally left blank.] A-12 Per Capita Personal Income Monroe County, Florida and United States (rounded to dollars) Year Monroe County State of Florida United Stated 1991 $23,251 $20,068 $20,023 1992 23,629 20,441 20,960 1993 25,497 21,320 21,539 1994 25,675 21,905 22,340 1995 27,636 22,942 23,255 1996 28,904 23,909 24,270 1997 30,766 24,869 25,412 1998 33,601 26,161 26,893 1999 33,654 26,593 27,843 2000 35,423 27,764 29,469 Source: Florida Statistical Abstract 2002, Bureau of Economic and Business Research, University of Florida. Yearly Sales Comparison Monroe County, Florida (in millions) Gross Sales Taxable Percent Taxable Sales Sales as % Year Gross Sales Change Taxable Sales Percent of Gross Change 1991 $1,615.4 .3 $1,118.7 ( .1) 69.3 1992 1,746.2 8.0 1,202.8 7.5 68.9 1993 1,943.6 11.3 1,371.2 14.0 70.5 1994 2,013.1 3.6 1,389.1 1.3 69.0 1995 2,115.7 5.1 1,459.2 5.0 69.0 1996 2,300.8 8.7 1,500.9 2.9 65.2 1997 2,480.5 7.8 1,703.8 13.5 68.7 1998 2,589.2 4.4 1,794.2 5.3 69.3 1999 2,842.2 9.8 1,955.3 9.0 68.8 2000 3,011.4 6.0 2,074.5 6.1 68.9 2001 3,073.4 2.1 2,115.1 2.0 68.8 Source: Florida Statistical Abstracts, Bureau of Economic and Business Research, University of Florida. Education The County is served by The School Board of Monroe County, Florida. The School Board maintains 12 schools serving grades kindergarten through 12, with a staff of 607 teachers and 21 administrators. For the school year 2000-2001, the school system served 8,847 children. The County maintains a public library, which was the first public library established in south Florida. The library includes five facilities and houses a total of 167,656 books. A-13 Monroe County, Florida Property Value, Construction and Bank Deposits Last Ten Fiscal Years Fiscal Year Property Value Construction Bank Deposits 1992 $4,375,917,282 $120,323,709 $ 1993 4,447,309,657 91,934,986 888,072,000 923,935,000 1994 4,390,694,004 66,414,893 952,120,000 1995 4,791,995,498 88,598,075 947,751,000 1996 4,957,041,364 79,313,136 999,568,000 1997 4,978,695,909 81,984,599 1,071,370,00 1998 5,221,503,169 81,159,701 1,117,690,00 0 1999 4,399,264,593 66,148,495 1,255,767,00 0 2000 4,742,183,007 108,526,787 1,346,580,00 0 2001 4,330,433,917 70,942,170 1,427,373,00 0 0 Property value and construction does not include the municipal areas of the County. In Fiscal Year 1999, Islamorada incorporated. In Fiscal Year 2001, Marathon incorporated. Construction amounts include new construction minus deletions for the Tax Roll. Source: Monroe County, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2001. Risk Management The County is exposed to various risks of loss related to tort; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. During the fiscal years ended 1976, 1984 and 1988, the County established the Worker's Compensation, Group Insurance and Risk Management Funds, respectively, as internal service funds to account for and finance its uninsured risks of loss. Under these programs, the Worker's Compensation Fund provides $250,000 of coverage per claim. The Group Insurance Fund provides coverage up to $85,000 for each medical claim. Risk Management provides $100,000 for each general liability, public official liability and auto liability claim and $100,000 for most property damage claims. Windstorm, Flood and Property Damage insurance excess coverage varies by individual property. The County purchases commercial insurance for claims in excess of coverage provided by the funds and for all other risks of loss. Settled claims have not exceeded this commercial coverage in any of the past three years. [Remainder of page intentionally left blank] A-14 All funds of the County participate in the programs and make payments to the Worker's Compensation, Group Insurance and Risk Management Funds based on estimates of the amounts needed to pay prior and current year claims. The claims liabilities reported at September 30, 2001 are based on the requirements of Governmental Accounting Standards Board Statement No. 10, the issuance of the financial statements indicates that it is probable that liability has been incurred at the date of the financial amount of the loss can be reasonably estimated. Changes in the claims liability amounts in fiscal year 2000 and 2001 were: Worker's Group Risk Compensation Insurance Management Total Balance at September 30, 1999 $ 902,840 $ $ 1,477,190 $ 4,646,966 2,266,936 Current year claims and changes in estimates 1,991,273 9,162,271 241,742 11,395,286 Claim payments (1,299,722) (8,680,5261 (199,162) (10,179,410) Balance at September 30, 2000 1,594,391 2,748,681 1,519,770 5,862,842 Current year claims and changes 1,082,733 10,044,32 613,147 11,740,208 in estimates 8 Claim payments (1,677,124) (9,880,154) (241239) (11,799,517) Balance at September 30, 2001 $ 1,000,000 $ $ 1,890,678 $ 5,803,533 2,912,855 A-15 APPENDIX B GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE ISSUER APPENDIX C FORM OF THE RESOLUTION APPENDIX D SPECIMEN MUNICIPAL BOND INSURANCE POLICY APPENDIX E FORM OF BOND COUNSEL OPINION APPENDIX F FORM OF CONTINUING DISCLOSURE CERTIFICATE J: \Tampa\Monroe\POS-2.doc February 4, 2003 EXHIBIT C FORM OF CONTINUING DISCLOSURE CERTIFICATE FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by Monroe County, Florida (the "County") in connection with the issuance of its $ Infrastructure Sales Surtax Revenue Bonds, Series 2003 (the "Series 2003 Bonds"). The Series 2003 Bonds are being issued pursuant to the County's Resolution No. adopted on February 19, 2003, as amended and supplemented (the "Resolution"). The County covenants and agrees as follows: SECTION 1. PURPOSE OF DISCLOSURE CERTIFICATE. This Disclosure Certificate is being executed and delivered by the County for the benefit of the Series 2003 Bondholders and in order to assist the original underwriters of the Series 2003 Bonds in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934 (the "Rule"). SECTION 2. PROVISION OF ANNUAL INFORMATION. Except as otherwise provided herein, the County shall provide to all of the nationally recognized municipal securities information repositories described in Section 4 hereof (the "NRMSIRs"), and to any state information depository that is subsequently established within the State of Florida (the "SID"), on or before April 30 of each year, commencing April 30, 2003, the information set forth below in this Section 2. Notwithstanding the immediately preceding sentence, to the extent any such information does not become available to the County before April 30 of any year, the County shall provide such information when it becomes available, but no later than one year following the end of the County's Fiscal Year. (A) the County's Comprehensive Annual Financial Report for the immediately preceding Fiscal Year (the "CAFR"), which shall include the audited financial statements of the County for the immediately preceding Fiscal Year prepared in accordance with Generally Accepted Accounting Principles, as modified by applicable State of Florida requirements and the governmental accounting standards promulgated by the Government Accounting Standards Board; provided, however, if the audited financial statements of the County are not completed prior to April 30 of any year, the County shall provide unaudited financial statements on such date and shall provide the audited financial statements as soon as practicable following their completion; and (B) to the extent not set forth in the CAFR, updates to the following historical financial information and operating data presented in tabular form in the official statement prepared in connection with the sale and issuance of the Series 2003 Bonds (as amended, the "Official Statement") in the sections entitled "HISTORICAL POPULATION DISTRIBUTION FACTORS FOR INCORPORATED AND UNINCORPORATED MONROE COUNTY," "MONROE COUNTY, FLORIDA HISTORICAL INFRASTRUCTURE SALES SURTAX REVENUES" and "MONROE COUNTY, FLORIDA PRO FORMA DEBT SERVICE COVERAGE ON THE SERIES 2003 BONDS AND THE PRIOR BONDS." For purposes of this Disclosure Certificate, "Fiscal Year" means the period commencing on October 1 and ending on September 30 of the next succeeding year, or such other period of time provided by applicable law. F-1 SECTION 3. REPORTING SIGNIFICANT EVENTS. The County shall provide to the NRMSIRs and the Municipal Securities Rulemaking Board (the "MSRB") and to any SID, on a timely basis, notice of any of the following events, if such event is material with respect to the Series 2003 Bonds or the County's ability to satisfy its payment obligations with respect to the Series 2003 Bonds: (A) Principal and interest payment delinquencies; (B) Non-payment related defaults; (C) Unscheduled draws on the debt service reserve fund reflecting financial difficulties; (D) Unscheduled draws on credit enhancement reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; (F) Adverse tax opinions or events affecting the tax-exempt status of the Series 2003 Bonds; (G) Modifications to rights of Series 2003 Bondholders; (H) Calls on the Series 2003 Bonds; (I) Defeasance of the Series 2003 Bonds; (J) Release, substitution, or sale of property securing repayment of the Series 2003 Bonds; (K) Rating changes; and (L) Notice of any failure on the part of the County or any other Obligated Person (as defined herein) to meet the requirements of Section 2 hereof. The County may from time to time, in its discretion, choose to provide notice of the occurrence of certain other events, in addition to those listed in this Section 3, if, in the judgment of the County, such other events are material with respect to the Series 2003 Bonds, but the County does not specifically undertake to commit to provide any such additional notice of the occurrence of any material event except those events listed above. Whenever the County obtains knowledge of the occurrence of a significant event described in this Section 3, the County shall as soon as possible determine if such event would be material under applicable federal securities law to holders of Series 2003 Bonds, provided, that any event under clauses (D), (E), (F), (K) or (L) above will always be deemed to be material. SECTION 4. NRMSIRs. The NRMSIRs to which the County shall provide the information described in Sections 2 and 3 above, to the extent required, shall be the following organizations, their successors and assigns: F-2 (A) Bloomberg Municipal Repository 100 Business Park Drive Skillman, New Jersey 08558 Phone: 609/279-3225 Fax: 609/279-5962 Email: munis@bloomberg.com A FT Interactive Data Attn: NRMSIR 100 William Street New York, New York 10038 Phone: 212 / 771-6999 Fax: 212/771-7390 (Secondary Market Information) Fax: 212 / 771-7391 (Primary Market Information) Email: nrmsir@ftid.com (C) Standard and Poor's J.J. Kenny Repository 55 Water Street, 45th Floor New York, New York 10041 Phone: 212/438-4595 Fax: 212/438-3975 Email:nrmsir-repository@sandp.com (D) DPC Data Inc. One Executive Drive Fort Lee, New Jersey 07024 Phone: 201 /346-0701 Fax: 201 /947-0107 Email: nrmsir@dpcdata.com (E) Any NRMSIRs that are established subsequently and approved by the SEC. (F) A list of the names and addresses of all designated NRMSIRs as of any date is available by visiting the SEC's website at www.sec.gov/info/municipal/nr-msir.htm. SECTION S. NO EVENT OF DEFAULT. Notwithstanding any other provision in the Resolution to the contrary, failure of the County to comply with the provisions of this Disclosure Certificate shall not be considered an event of default under the Resolution; provided, however, any Series 2003 Bondholder may take such actions as may be necessary and appropriate, including pursuing an action for mandamus or specific performance, as applicable, by court order, to cause the County to comply with its obligations hereunder. For purposes of this Disclosure Certificate, "Series 2003 Bondholder" shall mean any person who (A) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2003 Bonds (including persons holding Series 2003 Bonds through nominees, depositories or other intermediaries), or (B) is treated as the owner of any Series 2003 Bond for federal income tax purposes. F-3 SECTION 6. INCORPORATION BY REFERENCE. Any or all of the information required herein to be disclosed may be incorporated by reference from other documents, including official statements or debt issues of the County of related public entities, which have been submitted to each of the NRMSIRs and the SID, if any, or the SEC. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The County shall clearly identify each document incorporated by reference. SECTION 7. DISSEMINATION AGENTS. The County may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor disseminating agent. SECTION 8. TERMINATION. The County's obligations under this Disclosure Certificate shall terminate upon (A) the legal defeasance, prior redemption or payment in full of all of the Series 2003 Bonds, or (B) the termination of the continuing disclosure requirements of the Rule by legislative, judicial or administrative action. SECTION 9. AMENDMENTS. Notwithstanding any other provision of this Disclosure Certificate, the County may amend this Disclosure Certificate, and any provision may be waived, if such amendment or waiver is supported by an opinion of counsel that is nationally recognized in the area of federal securities laws, to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. SECTION 10. ADDITIONAL INFORMATION. Nothing in this Disclosure Certificate shall be deemed to prevent the County from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in its annual information described in Section 2 hereof or notice of occurrence of a significant event described in Section 3 hereof, in addition to that which is required by this Disclosure Certificate. If the County chooses to include any information in its annual information or notice of occurrence of a significant event in addition to that which is specifically required by this Disclosure Certificate, the County shall have no obligation under this Disclosure Certificate to update such information or include it in its future annual information or notice of occurrence of a significant event. SECTION 11. OBLIGATED PERSONS. If any person, other than the County, becomes an Obligated Person (as defined in the Rule) relating to the Series 2003 Bonds, the County shall use its best efforts to require such Obligated Person to comply with all provisions of the Rule applicable to such Obligated Person. F-4 Dated: March _, 2003 MONROE COUNTY, FLORIDA ATTESTED AND COUNTERSIGNED: Clerk, Board of County Commissioners APPROVED AS TO FORM AND LEGAL SUFFICIENCY: County Attorney's Office J:\Tampa\Monroe\CDC-1.doc 1/17/03 F-5 M Mayor, Board of County Commissioners EXHIBIT D FORM OF DEBT SERVICE RESERVE FUND POLICY AGREEMENT FINANCIAL GUARANTY AGREEMENT FINANCIAL GUARANTY AGREEMENT made as of [CLOSING DATE], by and between [ISSUER] (the "Issuer") and MBIA Insurance Corporation (the "Insurer"), organized under the laws of the state of New York. WITNESSETH: WHEREAS, the Lssuer has or will issue the Obligations; and WHEREAS, pursuant to the term of the Document the Issuer agrees to make certain payments on the Obligations; and WHEREAS, the Insurer will issue its Surety Bond, substantially in the form set forth in Annex A to this Agreement, guaranteeing certain payments by the Issuer subject to the terms and limitations of the Surety Bond; and WHEREAS, to induce the Insurer to issue the Surety Bond, the Issuer has agreed to pay the premium for the Surety Bond and to reimburse the Insurer for all payments made by the Insurer under the Surety Bond, all as more fully set forth in this Agreement; and WHEREAS, the Issuer understands that the Insurer expressly requires the delivery of this Agreement as part of the consideration for the execution by the Insurer of the Surety Bond; and NOW, THEREFORE, in consideration of the premises and of the agreements herein contained and of the execution of the Surety Bond, the Issuer and the Insurer agree as follows: ARTICLE I DEFINITIONS; SURETY BOND Section 1.01. Definitions. The terms which are capitalized herein shall have the meanings specified in Annex B hereto. Section 1.02. Sure , Bond. (a) The Insurer will issue the Surety Bond in accordance with and subject to the terms and conditions of the Commitment (b) The maximum liability of the Insurer under the Surety Bond and the coverage and term thereof shall be subject to and limited by the terms and conditions of the Surety Bond. Section 1.03. Premium. In consideration of the Insurer agreeing to issue the Surety Bond hereunder, the Issuer hereby agrees to pay or cause to be paid the Premium set forth in Annex B hereto. The Premium on the Surety Bond is not refundable for any reason. Section 1.04. Certain Other Expenses. The Issuer will pay all reasonable fees and disbursements of the Insurer's special counsel related to any modification of this Agreement or the Surety Bond. ARTICLE H REIMBURSEMENT AND INDEMNIFICATION OBLIGATIONS OF ISSUER AND SECURITY THEREFOR Section 2.01. Reimbursement for Payments Under the Surety Bond and Expenses: Indemnification. (a) The Issuer will reimburse the Insurer, within the Reimbursement Period, without demand or notice by the Insurer to the Issuer or any other person, to the extent of each Surety Bond Payment with interest on each Surety Bond Payment from and including the date made to the date of the reimbursement at the lesser of the Reimbursement Rate or the maximum rate of interest permitted by then applicable law. (b) The Issuer also agrees to reimburse the Insurer immediately and unconditionally upon demand, to the extent permitted by state law, for all reasonable expenses incurred by the Insurer in connection with the Surety Bond and the enforcement by the Insurer of the Issuers obligations under this Agreement, the Document, and any other document executed in connection with the issuance of the Obligations, together with interest on all such expenses from and including the date incurred to the date of payment at the rate set forth in subsection (a) of this Section 2.01. (c) The Issuer agrees to indemnify the Insurer, to the extent permitted by state law, against any and all liability, claims, loss, costs, damages, fees of attorneys and other expenses which the Insurer may sustain or incur by reason of or in consequence of (i) the failure of the Issuer to perform or comply with the covenants or conditions of this Agreement or (H) reliance by the Insurer upon representations made by the Issuer or (iii) a default by the Issuer under the terms of the Document or any other documents executed in connection with the issuance of the Obligations. (d) The Issuer agrees that all amounts owing to the hm= pursuant to Section 1.03 hereof and this Section 2.01 must be paid in full prior to any optional redemption or refunding of the Obligations. (e) All payments made to the Insurer under this Agreement shall be paid in lawful currency of the United States in immediately available funds at the hisurers office at 113 King Street, Armonk, New York 10504, Attention: Accounting and Insured Portfolio Management Departments, or at such other place as shall be designated by the Insurer. Section 2.02. Allocation of Payments. The Insurer and the Issuer hereby agree that each payment received by the hisurer from or on behalf of the Issuer as a reimbursement to the Insurer as required by Section 2.01 hereof shall be applied by the Insurer first, toward payment of any unpaid premium; second, toward repayment of the aggregate Surety Bond Payments made by the Irisurer and not yet repaid, payment of which will reinstate all or a portion of the Surety Bond Coverage to the extent of such repayment (but not to exceed the Surety Bond Limit); and third, upon full reinstatement of the Surety Bond Coverage to the Surety Bond Limit, toward other amounts, including, without limitation, any interest payable with respect to any Surety Bond Payments then due to the Insurer. Section 2.03. Security for Payments; Instruments of Further Assurance. To the extent, but only to the extent, that the Document, or any related hidenture, mist agreement, ordinance, resolution, mortgage, security agreement or similar instrument, if any, pledges to the Owners or any trustee therefor, or grants a security interest or lien in or on any collateral, property, revenue or other payments ("Collateral and Revenues") in order to secure the Obligations or provide a source of payment for the Obligations, the Issuer hereby grants to the Insurer a security interest in or lien on, as the case may be, and pledges to the Insurer all such Collateral and Revenues as security for payment of all amounts due hereunder and under the Document or any other document executed in connection with the issuance of the Obligations, which security interest, lien and/or pledge created or granted under this Section 2.03 shall be subordinate only to the interests of the Owners and any trustee therefor in such Collateral and Revenues, except as otherwise provided. The Issuer agrees that it will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all financing statements, if applicable, and all other further instruments as may be required by law or as shall reasonably be requested by the Insurer for the perfection of the security interest, if any, granted under this Section 2.03 and for the preservation and protection of all rights of the Insurer under this Section 2.03. Section 2.04. Unconditional Obligation. The obligations hereunder are absolute and unconditional and will be paid or performed strictly in accordance with this Agreement, subject to the limitations of the Document, irrespective of: (a) any lack of validity or enforceability of, or any amendment or other modification of, or waiver with respect to the Obligations, the Document or any other document executed in connection with the issuance of the Obligations; or (b) any exchange, release or nonperfection of any security interest in property securing the Obligations or this Agreement or any obligations hereunder; or (c) any circumstances that might otherwise constitute a defense available to, or discharge of, the Issuer with respect to the Obligations, the Document or any other document executed in connection with the issuance of the Obligations; or (d) whether or not such obligations are contingent or matured, disputers or undisputed, liquidated or unliquidated. Section 2.05. Insurer's Rip-hts. The Issuer shall repay the Insurer to the extent of payments made and expenses incurred by the Insurer in connection with the Obligations and this Agreement. The obligation of the Issuer to repay such amounts shall be subordinate only to the rights of the Owners to receive regularly scheduled principal and interest on the Obligations. Section 2.06. On -Going Information Obligations of Issuer. (a) Quarterly Rgports. The Issuer will provide to the Insurer within 45 days of the close of each quarter interim financial statements covering all fiord balances under the Document, a statement of operations (income statement), balance sheet and changes in fiord balances. These statements need not be audited by an independent certified public accountant, but if any audited statements are produced, they must be provided to the Insurer, (b) Annual Reports. The Issuer will provide to the Insurer annual financial statements audited by an independent certified public accountant within 90 days of the end of each fiscal year; (c) Access to Facilities. Books and Records. The Issuer will grant the Insurer reasonable access to the project financed by the Obligations and will make available to the Insurer, at reasonable times and upon reasonable notice all books and records relative to the project financed by the Obligations; and (d) Compliance Certificate. On an annual basis the Issuer will provide to the Insurer a certificate confirming compliance with all covenants and obligations hereunder and under the Revenue Agreement, the Document or any other document executed in connection with the issuance of the Obligations. ARTICLE III AMENDMENTS TO DOCUMENT So long as this Agreement is in effect, the Issuer agrees that it will not agree to amend the Document or any other document executed in connection with the issuance of the Obligations, without the prior written consent of the Insurer. ARTICLE IV EVENTS OF DEFAULT; REMEDIES Section 4.01. Events of Default. The following events shall constitute Events of Default hereunder: (a) The Issuer shall fail to pay to the Insurer when due any amount payable under Sections 1.03; or (b) The Issuer shall fail to pay to the Insurer any amount payable under Sections 1.04 and 2.01 hereof and such failure shall have continued for a period in excess of the Reimbursement Period; or (c) Any material representation or warranty made by the Issuer under the Document or hereunder or any statement in the application for the Surety Bond or any report, certificate, financial statement, document or other instrument provided in connection with the Commitment, the Surety Bond, the Obligations, or herewith shall have been materially false at the time when made; or (d) Except as otherwise provided in this Section 4.01, the Issuer shall fail to perform any of its other obligations under the Document, or any other document executed in connection with the issuance of the Obligations, or hereunder, provided that such failure continues for more than 30 days after receipt by the Issuer of written notice of such failure to perform; or (e) The Issuer shall (i) voluntarily commence any proceeding or file any petition seeldng relief under the United States Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency or similar law, (ii) consent to the institution of, or fail to controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator or similar official for such party or for a substantial part of its property, (iv) file an answer admitting the material allegations of a petition filed against it in any. such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take action for the purpose of effecting any of the foregoing; or (0 An involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Issuer, or of a substantial part of its property, under the United States Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency or similar law or (ii) the appointment of a receiver, trustee, custodian, sequesttator or similar official for the Issuer or for a substantial part of its property; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall continue unstayed and in effect for 30 days. Section 4.02. Remedies. If an Event of Default shall occur and be continuing, then the Insurer may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due under this Agreement or to enforce performance of any obligation of the Issuer to the Insurer under the Document or any related instrument, and any obligation, agreement or covenant of the Issuer under this Agreement; provided, however, that the Insurer may not take any action to direct or require acceleration or other early redemption of the Obligations or adversely affect the rights of the Owners. In addition, if an Event of Default shall occur due to the failure to pay to the Insurer the amounts due under Section 1.03 hereof, the Insurer shall have the right to cancel the Surety Bond in accordance with its terms. All rights and remedies of the Insurer under this Section 4.02 are cumulative and the exercise of any one remedy does not preclude the exercise of one or more of the other available remedies. ARTICLE V SETTLEMENT The Insurer shall have the exclusive right to decide and determine whether any claim, liability, suit or judgment made or brought against the Insurer, the Issuer or any other party on the Surety Bond shall or shall not be paid, compromised, resisted, defended, tried or appealed, and the Insurer's decision thereon, if made in good faith, shall be final and binding upon the Insurer, the Issuer and any other party on the Surety Bond. An itemized statement of payments made by the Insurer, certified by an officer of the Insurer, or the voucher or vouchers for such payments, shall be prima facie evidence of the liability of the Issuer, and if the Issuer fails to immediately reimburse the Insurer upon the receipt of such statement of payments, interest shall be computed on such amount from the date of any payment made by the Insurer at the rate set forth in subsection (a) of Section 2.01 hereof. ARTICLE VI MISCELLANEOUS Section 6.01. Interest Computations. All computations of interest due hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days. Section 6.02. Exercise of Rights. No failure or delay on the part of the Insurer to exercise any right, power or privilege under this Agreement and no course of dealing between the Insurer and the Issuer or any other party shall operate as a waiver of any such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Insurer would otherwise have pursuant to law or equity. No notice to or demand on any party in any case shall entitle such party to any other or further notice or demand in similar or other circumstances, or constitute a waiver of the right of the other party to any other or fiuther action in any circumstances without notice or demand. Section 6.03. Amendment and Waiver. Any provision of this Agreement may be amended, waived, supplemented, discharged or terminated only with the prior written consent of the Issuer and the Insurer. The Issuer hereby agrees that upon the written request of the Paying Agent, the Insurer may make or consent to issue any substitute for the Surety Bond to cure any ambiguity or formal defect or omission in the Surety Bond which does not materially change the terms of the Surety Bond nor adversely affect the rights of the Owners, and this Agreement shall apply to such substituted surety bond. The Insurer agrees to deliver to the Issuer and to the company or companies, if any, rating the Obligations, a copy of such substituted surety bond. Section 6.04. Successors and Assigns; Descriptive Heading. (a) This Agreement shall bind, and the benefits thereof shall inure to, the Issuer and the Insurer and their respective successors and assigns; provided, that the Issuer may not transfer or assign any or all of its rights and obligations hereunder without the prior written consent of the Insurer. (b) The descriptive headings of the various provisions of this Agreement are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof. Section 6.05. Other Sureties. If the Insurer shall procure any other surety to reinsure the Surety Bond, this Agreement shall inure to the benefit of such other surety, its successors and assigns, so as to give to it a direct right of action against the Issuer to enforce this Agreement, and "the Insurer," wherever used herein, shall be deemed to include such reinsuring surety, as its respective interests may appear. Section 6.06. Signature on Bond. The Issuer's liability shall not be affected by its failure to sign the Surety Bond nor by any claim that other indemnity or security was to have been obtained nor by the release of any indemnity, nor the return or exchange of any collateral that may have been obtained. Section 6.07. Waiver. The Issuer waives any defense that this Agreement was executed subsequent to the date of the Surety Bond, admitting and covenanting that such Surety Bond was executed pursuant to the Issuer's request and in reliance on the Issuer's promise to execute this Agreement Section 6.08. Notices, Requests, Demands. Except as otherwise expressly provided herein, all written notices, requests, demands or other communications to or upon the respective parties hereto shall be deemed to have been given or made when actually received, or in the case of telex or telecopier notice sent over a telex or a telecopier machine owned or operated by a party hereto, when sent, addressed as specified below or at such other address as any of the parties may hereafter specify in writing to the others: If to the Issuer: [ISSUER] [STREET ADDRESS] [CITY, STATE ZIP] Attention: [PERSON AT ISSUER] If to the Paying Agent: [PAYING AGENT] Attention: Corporate Trust Officer If to the Insurer: MBIA Insurance Corporation 113 King Street Armonk, New York 10504 Attention: Insured Portfolio Management Group Section 6.09. Survival of Representations and Warranties. All representations, warranties and obligations contained herein shall survive the execution and delivery of this Agreement and the Surety Bond. Section 6.10. Governing Law. This Agreement and the rights and obligations of the parties under this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State. Section 6.11. Counterparts. This Agreement may be executed in any number of copies and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument Complete counterparts of this Agreement shall be lodged with the Issuer and the Insurer. Section 6.12. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 6.13. Survival of Obligations. Notwithstanding anything to the contrary contained in this Agreement, the obligation of the Issuer to pay all amounts due hereunder and the rights of the Insurer to pursue all remedies shall survive the expiration, termination or substitution of the Surety Bond and this Agreement. IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written. Attest [ISSUER] Title: MBIA Insurance Corporation President Assistant Secretary ANNEX A DEBT SERVICE RESERVE SURETY BOND MBIA Insurance Corporation Armonk, New York 10504 Surety Bond No. [POLICY NO.] MBIA Insurance Corporation (the "Insurer"), in consideration of the payment of the premium and subject to the terms of this Surety Bond, hereby unconditionally and irrevocably guarantees the full and complete payments that are to be applied to payment of principal of and interest on the Obligations (as hereinafter defined) and that are required to be made by or on behalf of [NAME OF ISSUER] (the "Issuer") under the [TITLE OF THE DOCUMENT] (the "Document") to [NAME OF PAYING AGENT], (the "Paying Agent"), as such payments are due but shall not be so paid, in connection with the issuance by the Issuer of [TITLE OF THE OBLIGATIONS] (the "Obligations"), provided, that the amount available hereunder for payment pursuant to any one Demand for Payment (as hereinafter defined) shall not exceed [a: FIXED COVERAGE [Dollar Amount of Coverage] or the debt service reserve fund requirement for the Obligations, whichever is less (the "Surety Bond Limit"); provided, further, that the amount available at any particular time to be paid to the Paying Agent under the terms hereof (the "Surety Bond Coverage") shall be reduced and may be reinstated from time to time as set forth herein.] or [b: VARIABLE COVERAGE the annual amount set forth for the applicable bond year on Exhibit A attached hereto (the "Surety Bond Limit"); provided, further, that the amount available at any particular time to be paid to the Paying Agent under the terms hereof (the "Surety Bond Coverage") shall be reduced and may be reinstated from time to time as set forth herein.] 1. As used herein, the term "Owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the applicable paying agent, the Issuer or any designee of the Issuer for such purpose. The term "Owner" shall not include the Issuer or any person or entity whose obligation or obligations by agreement constitute the underlying security or source of payment for the Obligations. 2. Upon the later of: (i) three (3) days after receipt by the Insurer of a demand for payment in the form attached hereto as Attachment 1 (the "Demand for Payment"), duly executed by the Paying Agent; or (ii) the payment date of the Obligations as specified in the Demand for Payment presented by the Paying Agent to the Insurer, the Insurer will make a deposit of funds in an account with State Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient for the payment to the Paying Agent, of amounts that are then due to the Paying Agent (as specified in the Demand for Payment) subject to the Surety Bond Coverage. 3. Demand for Payment hereunder may be made by prepaid telecopy, telex, TWX or telegram of the executed Demand for Payment c/o the Insurer. If a Demand for Payment made hereunder does not, in any instance, conform to the terms and conditions of this Surety Bond, the Insurer shall give notice to the Paying Agent, as promptly as reasonably practicable, that such Demand for Payment was not effected in accordance with the terms and conditions of this Surety Bond and briefly state the reason(s) therefor. Upon being notified that such Demand for Payment was not effected in accordance with this Surety Bond, the Paying Agent may attempt to correct any such nonconforming Demand for Payment if, and to the extent that, the Paying Agent is entitled and able to do so. 4. The amount payable by the Insurer under this Surety Bond pursuant to a particular Demand for Payment shall be limited to the Surety Bond Coverage. The Surety Bond Coverage shall be reduced automatically to the extent of each payment made by the Insurer hereunder and will be reinstated to the extent of each reimbursement of the Insurer pursuant to the provisions of Article II of the Financial Guaranty Agreement dated the date hereof between the Insurer and the [ISSUER OR OBLIGOR] (the "Financial Guaranty Agreement"); provided, [ANNUAL PREMIUM OPTION: that no premium is due and unpaid on this Surety Bond and] that in no event shall such reinstatement exceed the Surety Bond Limit. The Insurer will notify the Paying Agent, in writing within five (5) days of such reimbursement, that the Surety Bond Coverage has been reinstated to the extent of such reimbursement pursuant to the Financial Guaranty Agreement and such reinstatement shall be effective as of the date the Insurer gives such notice. The notice to the Paying Agent will be substantially in the form attached hereto as Attachment 2. 5. Any service of process on the Insurer or notice to the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. 6. The term of this Surety Bond shall expire [ANNUAL PREMIUM OPTION: ,unless cancelled pursuant to paragraph 9 hereof,] on the earlier of (i) [MATURITY DATE] (the maturity date of the Obligations being currently issued), or (ii) the date on which the Issuer has made all payments required to be made on the Obligations pursuant to the Document. 7. The premium payable on this Surety Bond is not refundable for any reason, including the payment prior to maturity of the Obligations. 8. [OPTIONAL FIRST SENTENCE: This Surety Bond shall be governed by and interpreted under the laws of the State of (STATE)]. Any suit hereunder in connection with any payment may be brought only by the Paying Agent within [I or 3 years] after (i) a Demand for Payment, with respect to such payment, is made pursuant to the terms of this Surety Bond and the Insurer has failed to make such payment, or (ii) payment would otherwise have been due hereunder but for the failure on the part of the Paying Agent to deliver to the Insurer a Demand for Payment pursuant to the terms of this Surety Bond, whichever is earlier. [NOS. 9 and 11 are OPTIONAL] 9. Subject to the terms of the Document, the Issuer shall have the right, upon 30 days prior written notice to the Insurer and the Paying Agent, to terminate this Surety Bond. In the event of a failure by the Issuer to pay the premium due on this Surety Bond pursuant to the terms of the Financial Guaranty Agreement, the Insurer shall have the right upon [No. of days] days prior written notice to the Issuer and the Paying Agent to cancel this Surety Bond. No Demand for Payment shall be made subsequent to such notice of cancellation unless payments are due but shall not have been so paid in connection with the Obligations. 10. There shall be no acceleration payment due under this Policy unless such acceleration is at the sole option of the Insurer. 11. 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, the Insurer has caused this Surety Bond to be executed in facsimile on its behalf by its duly authorized officers, this [DATE] day of [MONTH,YEAR]. MBIA INSURANCE CORPORATION President Assistant Secretary SB-DSRF-9-[STATE CODE] 4/95 EXHIBIT A Surety Bond No. [POLICY NO.] Bond Year Maximum Annual Debt Service 20 to 20 $ 20 to 20 20 to 20 $ DEMAND FOR PAYMENT MBIA Insurance Corporation 113 King Street Armonk, New York 10504 Attention: President Attachment 1 Surety Bond No. [POLICY NO.] , 20_ Reference is made to the Surety Bond No. [POLICY NO.] (the "Surety Bond") issued by the MBIA Insurance Corporation (the "Insurer"). The terms which are capitalized herein and not otherwise defined have the meanings specified in the Surety Bond unless the context otherwise requires. The Paying Agent hereby certifies that: (a) In accordance with the provisions of the Document (attached hereto as Exhibit A), payment is due to the Owners of the Obligations on (the "Due Date") in an amount equal to $ (the "Amount Due"). (b) The [Debt Service Reserve Fund Requirement] for the Obligations is $ (c) The amounts legally available to the Paying Agent on the Due Date will be $ less than the Amount Due (the "Deficiency"). (d) The Paying Agent has not heretofore made demand under the Surety Bond for the Amount Due or any portion thereof. The Paying Agent hereby requests that payment of the Deficiency (subject to the Surety Bond Coverage) be made by the Insurer under the Surety Bond and directs that payment under the Surety Bond be made to the following account by bank wire transfer of federal or other immediately available funds in accordance with the terms of the Surety Bond: [Paying Agent's Account] [PAYING AGENT] By Its NOTICE OF REINSTATEMENT [Paying Agent] [Address] Attachment 2 Surety Bond No. [POLICY NO.] ,20 Reference is made to the Surety Bond No. [POLICY NO.] (the "Surety Bond") issued by the MBIA Insurance Corporation (the "Insurer"). The terms which are capitalized herein and not otherwise defined have the meanings specified in the Surety Bond unless the context otherwise requires. The Insurer hereby delivers notice that it is in receipt of payment from the Obligor pursuant to Article II of the Financial Guaranty Agreement and as of the date hereof the Surety Bond Coverage is $ MBIA Insurance Corporation President Attest: Assistant Secretary ANNEX B DEFINITIONS For all purposes of this Agreement and the Surety Bond, except as otherwise expressly provided herein or unless the context otherwise requires, all capitalized terms shall have the meaning as set out below, which shall be equally applicable to both the singular and plural forms of such terms. "Agreement" means this Financial Guaranty Agreement. "Closing Date" means [CLOSING DATE],1998. "Commitment" means the commitment to issue Municipal Bond Guaranty Insurance in the form attached hereto as Annex C. "Debt Service Payments" means those payments required to be made by or on behalf of the Issuer which will be applied to payment of principal of and interest on the Obligations. "Demand for Payment" means the certificate submitted to the Insurer for payment under the Surety Bond substantially in the form attached to the Surety Bond as Attachment 1. "Document" means [DOCUMENT]. "Event of Default" shall mean those events of default set forth in Section 4.01 of the Agreement. "Insurer" has the same meaning as set forth in the first paragraph of this Agreement. "Issuer" means [ISSUER]. "Obligations" means [LEGAL TTFLE OF ISSUE]. "Owners" means the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer or any designee of the Issuer for such purpose. "Paying Agent" means [PAYING AGENT]. "Premium" means [PREMIUM} payable to the Insurer on or prior to the Closing Date. "Reimbursement Period" means, with respect to a particular Surety Bond Payment, the period commencing on the date of such Surety Bond Payment and ending on the earlier of the date of cancellation of the Surety Bond due to nonpayment of Premium when due or on the expiration of x following such Surety Bond Payment. "Reimbursement Rate" means Citibank's prime rate plus three (3) percent per annum, as of the date of such Surety Bond Payment, said "prime rate" being the rate of interest announced from time to time by Citibank, N.A., New York, New York, as its prime rate. The rate of interest shall be calculated on the basis of the actual number of days elapsed over a 360-day year. "State" means [STATE]. "Surety Bond" means that surety bond attached hereto as Annex A and issued by the Insurer guaranteeing, subject to the terms and limitations thereof, Debt Service Payments required to be made by the Issuer under the Document. "Surety Bond Coverage" means the amount available at any particular time to be paid under the terms of the Surety Bond, which amount shall never exceed the Surety Bond Limit. "Surety Bond Limit" means [SURETY BOND LIlVIT11. "Surety Bond Payment" means an amount equal to the Debt Service Payment required to be made by the Issuer pursuant to the Document less (i) that portion of the Debt Service Payment paid by or on behalf of the Issuer, and (ii) other funds legally available for payment to the Owners, all as certified in a Demand for Payment. ANNEX C • ulul�Zl [To be provided]