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91-31 (2)� , s c RESOLUTION NO. 91 -31 A RESOLUTION AUTHORIZING THE NEGOTIATED SALE OF $7,680,000 CITY OF CLEARWATER, FLORIDA, GAS SYSTEM REVENUE BONDS, SERIES 1991; AWARDING THE SALE THEREOF TO SMITH BARNEY, HARRIS UPHAM & CO. INCORPORATED, SUBJECT TO THE TERMS AND CONDITIONS OF A PURCHASE CONTRACT; PROVIDING FOR THE ISSUANCE OF THE SERIES 1991 BONDS IN BOOK- ENTRY -ONLY FORM AND AUTHORIZING EXECUTION OF A LETTER OF REPRESENTATION WITH THE DEPOSITORY TRUST COMPANY IN CONNECTION THEREWITH; AUTHORIZING THE DISTRI- BUTION OF A PRELIMINARY OFFICIAL STATEMENT AND AN OFFICIAL STATEMENT IN CONNECTION WITH THE DELIVERY OF THE BONDS; APPOINTING A PAYING AGENT AND REGISTRAR; APPOINTING AN ESCROW AGENT; PROVIDING CERTAIN OTHER MATTERS IN CONNECTION WITH THE ISSUANCE AND DELIVERY OF SUCH BONDS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Clearwater, Florida (the "Issuer "), has by an ordinance enacted on August 15, 1991 (the "Ordinance"), authorized the issuance of not to exceed $9,000,000 City of Clearwater, Florida, Gas System Revenue Bonds, Series 1991 (the "Series 1991 Bonds "); and WHEREAS, the proceeds of the Series 1991 Bonds are to be used to (i) provide funds necessary to refund the Issuer's outstanding Gas System Revenue Bonds, Series 1983 (the "Refunded Bonds ") and (ii) pay certain costs of issuance of the Series 1991 Bonds; and WHEREAS, the Issuer has received an offer from Smith Barney, Harris Upham & Co. Incorporated (the "Underwriter ") to purchase the Series 1991 Bonds, subject to the terms and conditions contained herein and set forth in a Purchase Contract, a copy of which is attached hereto as Exhibit "A" (the "Purchase Contract ") ; and WHEREAS, the Issuer now desires to issue its Series 1991 Bonds, to sell its Series 1991 Bonds pursuant to the Purchase Contract, to authorize the distribution of a Preliminary Official I I V t''"', rte- Statement and an official Statement in connection with the issuance of the Series 1991 Bonds and to take certain other actions in connection with the issuance and sale of the Series 1991 Bonds; and WHEREAS, the Issuer has been provided all applicable disclosure information required by Section 218.385, Florida Statutes, a copy of which is attached to the Purchase Contract; and WHEREAS, this resolution shall constitute a supplemental resolution under the terms of the Ordinance and all capitalized undefined terms used herein shall have the meanings set forth in the Ordinance; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF CLEARWATER, FLORIDA: SECTION I. The issuance of $7,680,000 of the Series 1991 Bonds by the City is hereby approved upon the terms and conditions set forth in the Ordinance. { SECTION 2. It is in the best interest of the Issuer and the residents and inhabitants thereof that the Series 1991 Bonds be issued utilizing a pure book -entry system of registration. In furtherance thereof, the Issuer authorizes the execiltion and delivery of a Letter of Representation with The Depository Trust Company in substantially the form attached hereto as Exhibit "B" and the Mayor and the City Clerk are hereby authorized to execute and deliver the Letter of Representation with such changes, insertions and omissions as shall be approved by the officers of the Issuer executing the same. 2 q( -3( SECTION 3. Due to the willingness of the Underwriter to purchase $7,680,000 in aggregate principal amount of the Series 1991 Bonds at favorable interest costs and the importance of timing in the marketing of such obligations it is hereby determined that it is in the best interest of the public and the Issuer to sell the Series 1991 Bonds at a negotiated sale and such sale to the Under- writer pursuant to the terms and conditions contained in the Purchase Contract and herein is hereby authorized and approved. SECTION 4. The Series 1991 Bonds are hereby sold to the Underwriter, upon the terms and conditions set forth in the Pur- chase Contract attached hereto as Exhibit "A" and incorporated by reference. The Mayor and the City Clerk are hereby authorized to execute such Purchase Contract in substantially the form attached as Exhibit "A ", with such additional changes, insertions and omis- sions therein as do not change the substance thereof and as may be approved by the said officers of the Issuer executing the same, such execution,.to be conclusive evidence of such approval. SECTION 5. The Series 1991 Bonds shall be dated, shall bear interest payable at the times, shall mature and shall be subject to redemption as provided in the Purchase Contract. The use of the proceeds of the Series 1991 Bonds, shall be as provided in the Official Statement relating to the Series 1991 Bonds. SECTION 6. The Series 1991 Bonds shall be issued under and secured by the Ordinance and shall be executed and delivered by the Mayor, the City Manager and the City Clerk in substantially the form set forth in the Ordinance, with such additional changes and t i S I ' i ' 1 insertions therein as conform to the provisions of the Purchase Contract and such execution and delivery shall be conclusive evidence of the approval thereof by such officers. SECTION 7. First Union National Bank of Florida is hereby appointed Paying Agent and Registrar for the Series 1991 Bonds. SECTION 8. First Union National Bank of Florida is hereby appointed as Escrow Agent under the Escrow Deposit Agreement. SECTION 9. On the date of issuance of the Series 1991 Bonds, the Issuer may transfer the funds on hand in the various funds and accounts established for the Refunded Bonds in such manner as may be approved by a certificate of the Finance Director executed prior to or simultaneously with the issuance of the Series 1991 Bonds. SECTION 10. The distribution by the Underwriter of the Preliminary Official Statement is hereby approved, confirmed and ratified. The distribution of a final official Statement of the Issuer relating to the issuance of the Series 1991 Bonds is hereby approved, such final Official Statement to be in substantially the form attached hereto as Exhibit C, with such additional changes, insertions and omissions as may be made and approved by officers of the Issuer executing the same, such execution to be conclusive evidence of any such approval. The Mayor and the City Manager are hereby authorized to execute such Official Statement in substan- tially the form attached to the Purchase Contract. The execution of such Official Statement by such officers is hereby approved with such additional changes, insertions and omissions as may be made and approved by such officers. 4 , , . 0 r*N Aft SECTION il. The purchase of municipal bond insurance from AMBAC Indemnity Corporation ( "AMBAC ") to irrevocably guarantee the payment of principal and interest on the Series 1991 Bonds is here- by authorized. SECTION 12. All prior resolutions of the Issuer inconsistent with the provisions of this resolution are hereby modified, supple- mented and amended to conform with the provisions herein contained and except as otherwise modified, supplemented and amended hereby shall remain in full force and effect. SECTION 13. The Mayor, the City Manager, the Finance Director, the City Attorney and the City Clerk or any other appropriate officers of the Issuer are hereby authorized and directed to execute any and all certifications or other instruments or documents required by the Resolution, the Purchase Contract, the Escrow Deposit Agreement or any other document referred to above as a prerequisite or precondition to the issuance of the Series 1991 Bonds and any such representation made therein shall be deemed to be made on behalf of the Issuer. All action taken to date by the officers of the Issuer in furtherance of the issuance of the Series 1991 Bonds is hereby approved, confirmed and ratified. SECTION 14. The Issuer designates the Bonds as "qualified n the meaning of Section 265(b) (3) of tax - exempt obligations" withi the Internal Revenue Code of 1986, as amended (the "Code "). The Issuer and any subordinate entities of the Issuer and any issuer of "tax- exempt" debt that issues "on behalf of" the Issuer do not 5 I I . 0 reasonably expect during calendar year 1991 to issue more than $10,000,000 of "tax - exempt" obligations, exclusive of any private activity bonds, as defined in Section 141(a) of the Code. SECTION 15. This resolution shall become effective immediately upon its adoption. Passed and adopted by the City Commission of the City of Clearwater, Florida, this 15th day of August, 1991. (SEAL) By: — Mayor A y EST: z Ci Clerk f Approved as to form and f correctness: City Attorney :I q'11- 31 14 w $7,680,000 CITY OF CLEARWATER, FLORIDA GAS SYSTEM REVENUE BONDS SERIES 1991 August 15, 1991 PURCHASE CONTRACT Mayor and City Commission City of Clearwater 112 S. Osceola Avenue Clearwater, Florida 33518 Dear Ladies and Gentlemen: The undersigned, Smith Barney, Harris Upham 8: Co., Incorporated (the "Underwriter"), offers to enter into this Purchase Contract with the City of Clearwater, Florida (the "City"), which, upon acceptance of this offer by the City, will be binding upon the City and upon the Underwriter. This offer is made subject to written acceptance hereof by the City at or before 11:00 p.m., Eastern Daylight Savings Time, on the date hereof and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the City at any time prior to the acceptance hereof by the City. 1. Purchase and Sale. Upon the terms and conditions and in reliance on the representations, warranties, covenants and agreements set forth herein, the Underwriter hereby agrees to purchase from the City, and the City hereby agrees to sell and deliver to the Underwriter, all (but not less than all) of the aggregate principal amount of $7,680,000 City of Clearwater, Florida, Gas System Revenue Bonds, Series 1991 (the "Bonds "). The Bonds shall be dated September 1, 1991. The purchase price for the Bonds shall be $7,367,259.35 (including original issue discount of $200,025.10) plus interest accrued on the Bonds from the dated date ($4,066.83) to the date of the closing referred to in Paragraph 7 of this Purchase Contract (the "Closing"). The Bonds shall be as described in and shall be issued and secured under the provisions of Ordinance No. 5118 -91, enacted on August 15, 1991, by the City Commission. The Bonds shall mature at the times and in the amounts and bear interest at the rates set forth in Appendix I hereto and shall be subject to redemption as provided in Appendix 13 hereto. The information required by Section 218.385(4), Florida Statutes, to be provided to the City by the Underwriter is set forth in Appendix III hereto. 2. Delivery of Official Statement and Other Documents. On or before the date of Closing, the City shall deliver, or cause to be delivered, to the Underwriter executed copies of the final Official Statement dated the date hereof relating to the Bonds (such final Official Statement, including all Appendices thereto, financial and statistical information included therein, being herein called the "Official Statement "), signed on behalf of the City by the Mayor and City Manager. - 1 - BND /7260PCon/910815 At Closing, the City shall deliver, or cause to be delivered, to the Underwriter copies of the Ordinance, certified to by the City Clerk, all substantially in the form heretofore delivered to the Underwriter, with only such changes therein as agreed upon by the Underwriter. 3. Representation of the Underwriter as to Authority. The Underwriter has been duly authorized to execute this Purchase Contract and has been duly authorized to act hereunder. 4. Public Offering. The Underwriter agrees to make an offering of all the Bonds at not in excess of the initial public offering prices or yields set forth on the front page of the Official Statement. The Underwriter reserves the right to make concessions to dealers and to change such initial public offering prices as the Underwriter reasonably deems necessary in connection with the marketing of the Bonds. The City hereby authorizes the Underwriter to use the Official Statement and the information contained therein in connection with the offering and sale of the Bonds and ratifies and confirms its authorization of the use by the Underwriter prior to the pricing of the Bonds of the Preliminary Official Statement dated August 7, 1991 (the "Preliminary Official Statement") in connection with such offering and sale. The City represents the Preliminary Official Statement was complete as of its date of delivery to the Underwriter and the City further ratifies and confirms that the Preliminary Official Statement was "final" as of its date for the purposes and within the meaning of Section 240.15c2 -12 Code of Federal Regulations (the "SEC Rule") (except for omissions permited by the SEC Rule). Pursuant to the SEC Rule, the City hereby covenants and agrees with the Underwriter that it will deliver or cause to be made available to the Underwriter copies of the Official Statement in a form suitable for delivery to Potential Customers (hereinafter defined) within seven (7) business days from the date of the date of acceptance of this Purchase Contract by the City, which, in the-opinion of the Underwriter, are in a quantity such that from the date of the delivery thereof until the first to occur of: (A) the End of the Underwriting Period (hereinafter defined), and (B) the time the Official Statement becomes available to any person from a nationally recognized municipal securities information repository, but in no case less than twenty - five (25) days following the End of the Underwriting Period, the Underwriter and any Participating Underwriter (hereinafter defined) may send to any Potential Customer on the next business day, by first class mail or other equally prompt means, on request, a single copy of such Official Statement. The Underwriter has heretofore requested of the City a quantity of Official Statements sufficient, in its opinion, to satisfy the above requirement. In the event that such quantity is Insufficient the Underwriter will so notify the City in writing and request such additional copies as shall be necessary to satisfy such requirement, with which request the City agrees to promptly comply. The term "End of the Underwriting Period" is defined by the SEC Rule to mean ".. the later of such time as the (I) issuer of municipal securities delivers the securities to the Participating Underwriters or (ii) the Participating Underwriter does not retain, directly or as a member or an underwriting syndicate, an unsold balance of the securities for sale to the public." - 2 - BND /7260PCon/910815 The term "Participating Underwriter" Is defined by the SEC Rule to mean any broker, dealer, or municipal securities dealer who has purchased from an issuer of municipal securities with a view to, or offers or sells for an issuer of municipal securities in connection with, the offering of any municipal security, or participates or has a direct or indirect participation in any such undertaking, or participates or has a participation in the direct or indirect underwriting of any such undertaking (not including a person whose Interest is limited to a commission, concession, or allowance from an underwriter, broker, dealer, or municipal securities dealer not in excess of the usual and customary distributors' or sellers' commission, concession, or allowance) in connection with a primary offering of municipal securities with an aggregate principal amount of $1,000,000 or more. The term "Potential Customer" Is defined by the SEC Rule to mean "... {i) any person contacted by the Participating Underwriter concerning the purchase of municipal securities that are intended to be offered or have been sold in an offering, (ii) any person who has expressed an interest to the Participating Underwriter in possibly purchasing such municipal securities, and (iii) any person who has a customer account with the Participating Underwriter." If at anytime from the date hereof until the End of the Underwriting Period the City becomes aware of the occurrence of any event or circumstance which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary- to make the statements therein, in the light of the circumstances under which they were made, not misleading the City shall notify the Underwriter thereof and if, in the reasonable opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will at Its expense supplement or amend the Official Statement or cause the Official Statement to be supplemented or amended in a form and in a manner approved by the Underwriter. 5. Security Deposit. The Underwriter has delivered to the City a check for $78,000 payable to the order of the City. In the event the City does not accept this offer, such check shall be returned immediately to the Underwriter. If the offer made hereby is accepted, the City agrees to hold the check uncashed until the Closing as security for the performance by the Underwriter of its obligation to accept and pay for the Bonds at the Closing. In the event of the failure by the City to deliver the Bonds at the Closing, or if the City shall be unable to satisfy or cause other parties to satisfy the conditions of the obligations contained herein, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Purchase Contract, such check shall be immediately returned to the Underwriter and the acceptance of such return shall constitute a full release and discharge of all claims by the Underwriter arising out of the transactions contemplated hereby. In the event that the Underwriter fails (other than for a reason permitted hereunder) to accept and pay for the Bonds at the Closing (as hereinafter defined), such check shall be retained by the City as and for full liquidated damages for such failure and for any defaults hereunder on the part of the Underwriter, and such retention shall constitute a full release and discharge of all claims by the City against the Underwriter arising out of the transactions contemplated hereby. In the event that the Underwriter does not fail or default under the terms of this Purchase Contract, such check shall be returned to the Underwriter at the Closing. - 3 - BND /7260PCon/910815 6. City's Representations, Warranties and Agreements. By its acceptance hereof, the City represents and warrants to and agrees with the Underwriter that, as of the date hereof: (a) The City is duly and validly existing as a body corporate and politic and as a municipal corporation. (b) The City has full legal right, power and authority to issue and sell the Bonds as contemplated by the Ordinance and the Official Statement. (c) The City has full legal right, power and authority to enter into this Purchase Contract, the Escrow Deposit Agreement to be dated as of September 1, 1991 (the "Escrow Agreement") between the City and the First Union National Bank of Florida as escrow agent (the "Escrow Agent ") and to sell and deliver the Bonds to the Underwriter as provided herein; by official action of the City taken prior to or concurrently with the acceptance hereof, the Ordinance has been duly enacted in accordance with the Constitution of Florida and the laws of the State of Florida, including the City Charter (collectively the "Act "); the Ordinance is in full force and has not been rescinded; this Purchase Contract and the Escrow Agreement when executed by the City will be duly authorized and delivered and will constitute the legal, valid and binding obligations of the City enforceable in accordance with their terms, except as the enforcement thereof may be affected by bankruptcy, insolvency, or other laws or the application by a court of equitable principles generally affecting creditors' rights; and the City has duly authorized and approved the consummation by it of all other transactions contemplated by the Ordinance, the Official Statement and this Purchase Contract to have been performed or consummated at or prior to the Date of Closing. (d) The execution and delivery of the Bonds, this Purchase Contract, the Escrow Agreement and the adoption and implementation of the Ordinance, and compliance with the obligations on the City's part contained herein and therein, will not conflict with or constitute a material breach of or material default under the Act or any federal or Florida constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indentun?, bond, note, Ordinance, agreement or other instrument to which the City is a party or to which the City or any of its properties or other assets is otherwise subject, nor will any such execution, delivery, adoption, implementation or compliance result in the creation or imposition of any material lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or other assets of the City under the terms of any such provision, law, regulation, document or instrument, except as provided or permitted by the Bonds and the Ordinance. (e) All approvals, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by the City of its obligations under this Purchase Contract, the Ordinance, the Escrow Agreement and the Bonds have been, or prior to the Closing will have been, duly obtained; provided, however, that this representation and warranty does not apply to such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds, or to such official action by the City which the Ordinance contemplates is to be taken from time to time after the Closing. 4 BND /7260PCon/910815 (f) The Bonds, when Issued, registered and delivered in accordance with the Ordinance and sold to the Underwriter as provided herein and in accordance with the provisions of the Ordinance, will be valid and legally enforceable obligations of the City in accordance with their terms and the terms of the Ordinance; and the Ordinance will provide, for the benefit of the holders from time to time of the Bonds, a legally valid and irrevocable lien upon and pledge of the Net Revenues as such term is defined in the Ordinance. (g) The information contained in the Preliminary Official Statement and the Official Statement pertaining to the City, the Bonds, the Ordinance and the Escrow Agreement was and is true and correct In all material respects and does not contain any untrue statement of a material fact or omit to state a material fact which is necessary to make the statements therein, in the light of the circ=imstances under which they were made, not misleading. (h) Except as described in the Official Statement, there Is no action, suit, proceeding, inquiry or investigation, at law or In equity before or by any court, governmental agency or public board or body, pending or, to the best knowledge of the City, threatened: (1) Which may affect the existence of the City or the titles of their officers to their respective offices; (2) Which may affect or which seeks to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds, or the collection or disbursement of the Net Revenues to pay the principal of and interest on the Bonds and premiums, if any, and to make other payments under the Ordinance; (3) Which In any way contests or affects the validity or enforceability of the Bonds, the Ordinance, the Escrow Agreement or any of them; (4) Which would cause the interest on the Bonds to be included In the federal gross income of the holders of the Bonds; or (5) Which contests in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement or which contests the powers of the City or any authority or proceedings for the issuance, sale or delivery of the Bonds, or the due adoption of the Ordinance or the execution and delivery of this Purchase Contract or the Escrow Agreement or any of them; nor, to the best knowledge of the City, is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceabiliL of the Bonds, the Ordinance, or any of them, or this Purchase Contract. (1) The City will furnish such information, execute such Instruments and take such other action not inconsistent with law in cooperation with the Underwriter as the Underwriter may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate, and (ii) to determine the eligibility of the Bonds for Investment under the laws of such states and other M-M BND /7260PCon/910815 jurisdictions, and will use its best efforts to continue such qualifications In effect so long as required for the distribution of the Bonds; provided that the City shall not be obligated to qualify to do business or to take any action that would subject it to general service of process in any state where it is not now so subject. Closing any event shall occur which would orlmight cause Cthe rinformation contained in the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City shall notify the Underwriter thereof, and if In the reasonable opinion of the Underwriter such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City shall cooperate with the Underwriter in supplementing or amending the Official Statement, the printing of which will be at City expense, in such form and manner and at such time or times as may be reasonably called for by the Underwriter. If it is necessary in the reasonable opinion of the Underwriter to prepare and publish a supplement or amendment to the Official Statement as a result of Information contained in the Official Statement supplied by the Underwriter, the cost of printing such amendment or supplement shall be borne by the Underwriter. (k) The City covenants to comply with the requirements of the Internal Revenue Code of 1986, as amended (the "Code ") in order to maintain the exemption_ of the interest on the Bonds from federal income taxation. These requirements include, but are not limited to, provisions which prescribe yield and other limits within which the proceeds of the Bonds and other amounts are to be Invested and require that certain investment earnings on the foregoing must be rebated on a periodic basis to the Treasury Department of the United States. 7. The Closing. At 10 :00 a.m., Eastern Daylight Savings Time, on September 4, 1991 (such date herein called the "Date of Closing"), or at such later time or on such later date as may be mutually agreed upon by the City and the Underwriter, the City shall, subject to the terms and conditions hereof, deliver the Bonds to the Underwriter in New York, New York in definitive form (all the Bonds to bear proper CUSIP numbers), duly executed and authenticated, together with the other documents hereinafter mentioned, and, subject to the terms and conditions hereof, the Underwriter shall accept such delivery and pay the purchase price of the Bonds as set forth In Paragraph 1 hereof in Federal Funds to the order of the City (such delivery of and payment for the Bonds herein called the "Closing"). The uncashed check referred to in Paragraph 5 shall be returned to the Underwriter at the closing. The Closing shall occur at the offices of the City, 112 South Osceola Avenue, Clearwater, Florida, or such other place as shall have been mutually agreed upon by the City and the Underwriter. The Bonds shall be prepared and delivered as a separate, single certificated, fully registered Bond for each of the maturities of the Bonds registered in the name of Cede & Co. 8. _Closing Conditions. The Underwriter is entering Into this Purchase Contract In reliance upon the representations, warranties and agreements of the City contained herein, and In reliance upon the representations, warranties and agreements to be contained in the documents and Instruments to be delivered at the Closing, and upon the performance of the covenants and agreements herein, as of the date hereof and as of the - 6 - BND /7260PCon/910815 date of the Closing. Accordingly, the Underwriter's obligation under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance of the covenants and agreements to be performed hereunder and under such other documents and instruments to be delivered at or prior to the Closing, and shall also be subject to the following additional conditions: (a) The representations and warranties of the City contained herein shall be true, complete and correct on the date hereof and on and as of the Date of Closing, as If made on the Date of Closing. (b) At the date of execution hereof and at the Closing, the Ordinance, and the Escrow Agreement shall have been duly approved and adopted by the City, shall be in full force and effect, and shall not have been amended, modified or supplemented, except to the extent to which the Underwriter shall have given its prior written consent and there shall have been taken in connection therewith and in connection with the issuance of the Bonds all such action as, In the opinion of Bryant, Miller and Olive, P.A., Bond Counsel, and Lawson, McWhirter, Grandoff & Reeves, Counsel for the Underwriter, shall be necessary and appropriate in connection with the transactions contemplated hereby. (c) At the Closing there will be no pending or threatened litigation or proceeding of any nature seeking to restrain or enjoin the issuance, sale or delivery of the Bonds, or the pledge, collection or application of the Net Revenues to pay the principal of and interest on the Bonds or in any way contesting or affecting the validity or enforceability of the Bonds, the Ordinance, the Purchase Contract or the Escrow Agreement or contesting in any way the proceedings of the City taken with respect thereto, or contesting in any way the due existence or powers of the City or the title of any of the members of the City Commission or officials of the City to their respective offices and the Underwriter will receive the certificate of the Mayor and Finance Director of the City to the foregoing effect or an opinion of M.A. Galbraith, Jr., Esquire City Attorney, that any such litigation is without merit. (d) There shall have been no material adverse change in the financial condition of the City's Gas System Enterprise Fund since September 30, 1990. (e) At the Closing, the Underwriter shall receive the following documents, each dated as of the Closing: (1) An opinion of Bryant, Miller and Olive, P.A., Bond Counsel, substantially In the form attached to the Official Statement as Appendix "D "; (ii) An opinion of Bond Counsel, addressed to the Underwriter, stating that the Underwriter may rely upon the opinion referred to In (1) hereof as though addressed to it and to the effect that the information contained in the Official Statement under the headings "The 1991 Bonds", "Security," "Flow of Funds," and "Covenants" (apart from any engineering, financial and statistical data contained therein as to which no opinion or belief needs to be expressed), insofar as such information purports to be the descriptions or summaries of the items addressed therein, is correct as - 7 - BND /7260PCon/910815 to matters of law and, to the extent Indicated therein, constitutes accurate and fair statements or summaries of the matters set forth or documents referred to therein and further states that the information under the heading "Tax Exemption" is correct. (iii) An opinion, dated the date of the closing and addressed to the Underwriter, of M.A. Galbraith, Esq., City Attorney to the effect that (1) this Purchase Contract has been duly authorized, executed and delivered by the City and constitutes a legal, valid, and binding agreement of the City in accordance with its terms except to the extent that the enforceability of the rights and remedies set forth herein may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally; (ii) the City has authorized, executed and delivered the Official Statement; (ill) the Information In the Official Statement as to legal matters relating to the City, the Bonds, the Ordinance and the Escrow Agreement Is correct in all material respects and does not omit any statement which, in his opinion, should be included or referred to therein and, in addition, such counsel shall state that, based upon his participation in the preparation of the Official Statement as City Attorney and without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement (except to the extent expressly set forth in this Subparagraph (iii)), as of the date of the Closing nothing has come to his attention causing him to believe that (A) the Official Statement as of Its date contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except for the financial and statistical information contained In the Official Statement as to all of which no view need be expressed), or (B) the Official Statement (as supplemented or amended pursuant to Paragraph (j) of Section 6 hereof, if applicable) as of the date of the Closing contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, ;in the light of the circumstances under which they were made, not misleading (except as aforesaid); (iv) to the best of his knowledge the City is not In material breach of or material default under any applicable constitutional provision, law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, material Ordinance, material agreement or other material instrument to which the City is a party or to which the City or any of its property or assets is otherwise subject, and no event has occurred and is continuing that with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument; and the execution and delivery of the Bonds, this Purchase Contract, the Escrow Agreement and the adoption of the Ordinance and compliance with the provisions on the City's part contained therein, will not conflict with or constitute a material breach of or default under, any constitutional provision, law, administrative regulation, judgment, decree, lean agreement, indenture, bond, note, Ordinance, agreement or other instrument to which the City Is a party or to which the City or any of its property or assets is otherwise subject, and any such execution, delivery, adoption or compliance will not result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City under the terms of any such law, regulation or instrument, except as expressly provided by the Bands, the Ordinance or the Escrow Agreement; (v) the City has the right and power under the Act to adopt the Ordinance and the Ordinance has been duly and lawfully adopted by the 8 _ BND/7260PCon/910815 City, is in full force and effect and constitutes the legal, valid and binding obligation of the City, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought In a proceeding in equity or at law), and no other authorization is required for the City to adopt the Ordinance; (vi) to the best of his knowledge, there Is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, government agency, public board or body, pending or threatened against or affecting the City, nor is there any basis for any such action, suit, proceeding, Inquiry or Investigation, wherein an unfavorable decision, ruling or finding would have a materially adverse effect upon the transactions contemplated by the Official Statement or the validity of the Bonds, the Ordinance, the Escrow Agreement or this Purchase Contract, except as described in the Official Statement; and (vii) all authorizations, consents, approvals and reviews of governmental bodies or regulatory authorities then required for the City's adoption, execution or performance of the Bonds, the Ordinance, the Escrow Agreement and this Purchase Contract have been obtained or effected and, to the best of his knowledge, he has no reason to believe that the City will be unable to obtain or effect any such additional authorization, consent, approval or review that may be required in the future for performance of any of them by the City; and, in addition, he shall give his opinion to the same effect as set forth under the caption "Litigation" in the Official Statement. (iv) A certificate, dated the Date of Closing, signed by the Mayor and Finance Director, or other appropriate officials satisfactory to the Underwriter, to the effect that, to the best knowledge of each of them: (1) the representations of the City herein are true and correct in all material respects as of the date of Closing; (ii) the City has performed all obligations to be performed hereunder as of the date of Closing; (iii) except as disclosed in the Official Statement, there is no litigation of which either of. them have notice, and to the best knowledge of each of them no litigation is pending or threatened (A) to restrain or enjoin the issuance or delivery of any of the Bonds, (B) in any way contesting or affecting any authority for the Issuance of the Bonds or the validity of the Bonds, the Ordinance, the Escrow Agreement or this Purchase Contract, (C) in any way contesting the corporate existence or powers of the City, (D) to restrain or enjoin the collection of revenues pledged or to be pledged to pay the principal of, premium, if any, and interest on the Bonds, (E) which may result in any material adverse change in the business, properties, assets and the financial condition of the City taken as a whole, or (F) asserting that the Official Statement contains any untrue statement of a material fact or omits any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (iv) since September 30, 1990, no material adverse change has occurred in the financial position or results of operations of the City except as set forth In or contemplated by the Official Statement; (v) the City has not, since September 30, 1990, incurred any material liabilities other than in the ordinary course of business or as set forth in or contemplated by the Official Statement; and (vi) the Official Statement did not as of its date, and does not as of the Date of Closing contain any untrue statement of a material fact or omit to state a material fact required to be included therein or necessary in order to make the statements contained therein, In light of the circumstances in which they were made, not misleading. 9 BND/7260PCon/910815 (v) An opinion, dated the Date of Closing and addressed to the Underwriter, of Lawson, McWhirter, Grandoff & Reeves, Tampa, Florida, counsel for the Underwriter, to the effect that (1) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Ordinance is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; and (11) based upon their participation and their review of the Official Statement as counsel for the Underwriter and without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, as of the date of the Closing nothing has come to the attention of such counsel causing them to believe that (A) the Official Statement as of its date contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, In the light of the circumstances under which they were made, not misleading (except for the financial and statistical Information contained In the Official Statement as to which no view need be expressed), or (B) the Official Statement (as supplemented or amended pursuant to Paragraph (j) of Section 6 hereof, if applicable) as of the date of the Closing contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except as aforesaid). (vi) An opinion of Bryant, Miller and Olive, P.A., Boni Counsel, addressed to the City, the Underwriter and Underwriter's Counsel, to the effect that the Bonds are not "arbitrage bonds' within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. (vii) Written verification from Ernst & Young of the accuracy of (a) the arithmetical computation of the adequacy of the maturing principal amounts and interest earnings thereon of the Federal Securities to be held under the Escrow Deposit Agreement and held in the Escrow Account to pay when due all principal of and all interest and redemption premiums on the City`s Gas System Revenue Bonds Series 1983 (the 111983 Bonds") and (b) the computations of actuarial yields supporting the conclusion that the 1991 Bonds are not "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. (viii) An opinion, dated the Date of Closing, and addressed to the Underwriter from counsel for AMBAC Indemnity Corporation ("AMBAC "), to the effect that: (1) AMBAC Is a stock insurance company, duly organized and validly existing under the laws of the State of Wisconsin and dully qualified to conduct an insurance business in the State of Florida; (11) AMBAC has full corporate power and authority to execute and deliver the Municipal Bond Insurance Policy (the "Policy") and the Policy has been duly authorized, executed and delivered by AMBAC and constitutes a legal, valid and binding obligation of AMBAC enforceable in accordance with its terns except to the extent that the enforceability (but not the validity) of such obligation may be limited by any applicable bankruptcy, insolvency, liquidation, rehabilitation or other similar law or enactment now or hereafter enacted affecting the enforcement of creditors' rights; (111) the execution and delivery by AMBAC of the Policy will not, and the consummation of the transactions contemplated thereby and the satisfaction of the terms thereof will not, conflict with or result In a breach of any of the terms, conditions or provisions of the - 10 - BND /7260PCon/910815 Certificate of Incorporation or By -Laws of AMBAC, or any restriction contained In any contract, agreement or instrument to which AMBAC is a party or by which it is bound or constitute a default under any of the foregoing; (iv) proceedings legally required for the Issuance of the Policy have been taken by AMBAC and licenses, orders, consents or other authorizations or approvals of any governmental boards or bodies legally required for the enforceability of the Policy have been obtained; any proceedings not taken and any licenses, authorizations or approvals not obtained are not material to the enforceability of the Policy; (v) the statements contained in the Official Statement under the heading "Municipal Bond Insurance," insofar as such statements constitute summaries of the matters referred to therein, accurately reflect and fairly present the information purported to be shown and, insofar as such statements describe AMBAC, fairly and accurately describe AMBAC; and (vi) the form of Policy contained in Appendix "C" to the Official Statement is a true and complete copy of the form of Policy. (ix) An opinion, dated the Date of Closing and addressed to the City, Bond Counsel, the Underwriter, Underwriter's Counsel and AMBAC, of Foley & Lardner, counsel for the Escrow Agent, to the effect that (1) the Escrow Agreement has been duly authorized, executed and delivered by the Escrow Agent, (ii) constitutes a legal, valid and binding obligation of the Escrow Agent enforceable in accordance with its terms (except as the enforcement thereof may be affected by bankruptcy, insolvency, or other laws or equitable principles generally affecting creditors rights) and (iii) the performance by the Escrow Agent of its obligations under the Escrow Agreement will not conflict with, or result in a breach of any provision of its Certificate of Incorporation or By -Laws. (x) Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Date of Closing, of the City's representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the City on or prior to the Date of Closing of all the agreements then to be performed and conditions then to be satisfied by it. ,. (f) AMBAC shall have issued its policy to insure the Bonds and Standard & Poor's Corporation and Moody's Investors Service, Inc. shall have assigned their municipal bond ratings of "AAA" and "Aaa," respectively, to the Bonds. (g) Evidence that First Union National Bank of Florida has been approved by the City as the Paying Agent and Bond Registrar for the Bonds. Ali of the evidence, opinions, letters, certificates, instruments and other documents, mentioned above or elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriter and the City. If the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds contained in this Purchase Contract are not satisfied, or if the obligations of the Underwriter to purchase, to accept delivery of and - 11 - BND /7260PCon/910815 to pay for the Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter nor the City shall be under any further obligation hereunder, except that the respective obligations of the City and the Underwriter set forth In Paragraph 11 hereof shall continue in full force and effect and the deposit specified in Paragraph 5 hereof shall be returned to the Underwriter. 9. Indemnification. The Underwriter agrees to indemnify and hold harmless the City, Its officers and employees against any and all losses, damages, liabilities and expenses (including reasonable costs of investigation) caused by any untrue statement of a material fact contained in the Official Statement, or in any amendment or supplement thereto, or caused by an omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect, except insofar as such losses, damages, liabilities or expenses are caused by any untrue statement or omission which is based upon information that is (1) furnished in writing to the Underwriter by the City expressly for use in connection with the Official Statement, or (11) neither ascertainable from the public records of the City nor of which the general public has common knowledge. 10. Termination. The Underwriter may terminate this Purchase Contract by notice to the City in the event that between the date hereof and the Closing (a) legislation shall be enacted by the Congress of the United States or adopted by either House thereof or a decision by a court of the United States or the Tax Court of the United States shall be rendered or a ruling, regulation or official statement by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made, with respect to Federal taxation of revenues or other income of the general character expected to be derived under the Ordinance by the City or upon interest received on securities of the general character of the Bonds or which would have the effect of changing, directly or indirectly, the federal income tax consequences of receipt of interest on securities of the general character of the Bonds in the hands of the holders thereof, which in the reasonable opinion of the Underwriter would materially adversely affect the market price of the Bonds; (b) the United States shall become engaged in hostilities that have resulted in a declaration of war or a national emergency; (c) there shall be in force a general suspension of trading on the New York Stock Exchange as the result of an event affecting the national economy; (d) a general banking moratorium shall have been established by federal, New York or Florida authorities; or (e) any event shall have occurred or shall exist which, in the reasonable opinion of the Underwriter, would or might cause the information contained in the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading as of such time and which would materially adversely affect the market price of the Bonds. 11. Expenses. (a) Whether or not the Bonds are sold by the City to the Underwriter (unless such sale be prevented at Closing by the Underwriter's default), the City shall be MIPM BND /7260PCon/910815 obligated to pay the following expenses: (1) the cost of preparing and printing or other reproduction of the Ordinance; (ii) the cost of preparing and printing the Bonds, the Preliminary Official Statement, the Off.icIal Statement, any Blue Sky and Legal investment Surveys, and this Purchase Contract; (iii) the fees and disbursements of Bryant, Miller and Olive, P.A. Incurred in its capacity as Bond Counsel; (iv) the fees and disbursements of the Paying Agent and Registrar; (v) costs of the escrow agent; (vi) the fees and disbursements of any other experts, accountants, consultants or advisors retained by the City; and (vii) the cost of newspaper advertisements. (b) Whether or not the Bonds are sold by the City to the Underwriter (unless such sale be prevented at Closing by the City's default), the Underwriter shall be obligated to pay the following expenses and shall be permitted to pay such expenses from their discount: (1) all advertising expenses (except the cost of newspaper advertisements) in connection with the public offering of the Bonds; (ii) the fees and disbursements of Lawson, McWhirter, Grandoff & Reeves, Counsel to the Underwriter; and (iii) all other expenses incurred by them in connection with the public offering of the Bonds. 12. Notices. Any notice or other communication to be given to the City under this Purchase Contract may be given by delivering the same in writing to the address set forth above and any notice or other communications to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Smith Barney, Harris Upham & Co., Incorporated, Attn.: Worth T. Blackwell, 1 Tampa City Center, Suite 3500, Tampa, F L 33602. 13. Parties in Interest. (a) This Purchase Contract is made solely for the benefit of the City and the Underwriter (including the successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. All of the representations, warranties and agreements of the City contained in this Purchase Contract shall remain operative and in full force and effect, regardless of: (1) any investigations made by or on behalf of the Underwriter; (ii) delivery of and payment for the Bonds pursuant to this Purchase Contract; or (111) any termination of this Purchase Contract, but only to the extent provided by the last paragraph of Section. 8 hereof. (b) No covenant, stipulation, obligation or agreement contained in this Purchase Contract shall be deemed to be a covenant, stipulation, obligation or agreement of any member, agent or employee of the City Commission in his individual capacity and neither the members of the City Commission nor any official executing this Purchase Contract shall be liable personally under this Purchase Contract or be subject to any personal liability or accountability by reason of the execution hereof. 14. Effectiveness. This Purchase Contract shall become effective upon the execution of the acceptance hereof on behalf of the City by the Mayor and attestation by the City Clerk, all In accordance with the requirements set forth in the City Charter, and shall be valid and enforceable at the time of such acceptance. - 13 - BND /7260PCon /910815 W 15. Counterparts. This Purchase Contract may be executed in several counterparts, which together shall constitute one and the same instrument. 16. Florida Law Governs. The validity, interpretation and performance of this Purchase Contract shall be governed by the laws of the State of Florida. 17. Entire Agreement. This Purchase Contract when accepted by the City in writing as heretofore specified shall constitute the entire agreement between us. 18. Headings. The headings of the Sections of this Purchase Contract are Inserted for convenience only and shall not be deemed to be part hereof. Very truly yours, SMITH BARNEY, HARRIS UPHAM & CO., INCORPORATED By: Vice President and Authorized Officer Accepted as of the date hereof: CITY OF CLEARWATER, FLORIDA By: Rita J. Garvey, Mayor ATTEST: By: — Cyndie -Goudeau, City Clerk Approved as to form and legality: M.A. Galbraith, Jr., City Attorney - 14 - BND/7260PCon/910815 w Appendix I $7,680,000 CITY OF CLEARWATER, FLORIDA GAS SYSTEM REVENUE BONDS SERIES 1991 MATURITY SCHEDULE $2,900,000 Serial Bonds Due Amount Coupon Price Due Amount Coupon Price 09/01/95 150,000 5.600% 100.000 09/01/2000 300,000 6.100% 99.317 09/01/96 240,000 5.750% 100.000 09/01/2001 320,000 6.200% 99.265 09/01/97 255,000 5.800% 99.500 09/01/2002 340,000 6.300% 99.218 09/01/98 270,000 5.900% 99.435 09/01/2003 360,000 6.400% 99.175 09/01/99 285,000 6.000% 99.374 09/01/2004 380,000 6.500% 99.135 $2,325,000 6.50% Term Bonds Due September 1, 2009 @ 96.912% $2,455,000 6.50% Term Bonds Due September 1, 2013 @ 95.506% - 15 - BND /7260PCon/910815 Appendix II Mandatory Redemption, The Term Bonds maturing on September 1, 2009 and September 1, 2013, respectively, are subject to mandatory redemption in part prior to maturity by lot at the principal amount thereof (without premium) plus accrued interest to the date of redemption, from funds which the City has covenanted to deposit In the Bond Amortization Account in the Sinking Fund in the amounts and upon the dates specified as follows: Term Bonds Due September 1,2008 Date of Redemption Amount Term Bonds Due September 1, 2013 Date of Redemption Amount September 1, 2005 $410,000 September 1, 2010 $560,000 September 1, 2006 435,000 September 1, 2011 595,000 September 1, 2007 465,000 September 1, 2012 635,000 September 1, 2008 490,000 September 1, 2013 $665,000 September 1, 2009 $525,000 Money held for the credit of the Bond Amortization Account is required to be applied to the retirement of term obligations as follows: (1) Subject to the provisions of paragraph (3) below, the City may purchase Term Bonds then outstanding at the most advantageous price obtainable with reasonable diligence, such price not to exceed the principal of such Term Bonds plus the accrued interest to the date of delivery thereof. The City is required to pay the interest accrued on such Term Bonds to the date of delivery thereof from the Interest Account and the purchase price from the Bond Amortization Account, but no such purchase may be made by the City within the period of 45 days immediately preceding any interest payment date on which Term Bonds are subject to call for redemption, except from money in excess of the amounts set aside or deposited for the redemption of Term Bonds. (2) Subject to the provisions of paragraph (3) below, whenever sufficient money is on deposit in the Bond Amortization Account to redeem $5,000 or more principal amount of Term Bonds, the City may call for redemption from money in the Bond Amortization Account such amount of Term Bonds then subject to redemption as, with the redemption premium, if any, will exhaust the money then held in the Bond Amortization Account as nearly as may be practicable. Prior to calling Term Bonds for redemption, the City is required to withdraw from the Interest Account and from the Bond Amortization Account and set aside in separate accounts or deposit with the paying agents the respective amounts required for paying the interest on and the principal of and redemption premium applicable to the Term Bonds so called for redemption. (3) Money in the Bond Amortization Account is required to be applied by the City in each fiscal year to the retirement of Term Bonds then outstanding in the following order: - 16 - BND /7260PCon/910815 W (a) The Term Bonds of each series of Bonds, to the extent of the Amortization Installment, If any, for such Fiscal Year for the Term Bonds of each such series 'then outstanding, plus the applicable premium, if any, and, if the amount available In such Fiscal Year shall not be sufficient therefor, then In proportion to the Amortization Installment, If any, for such Fiscal Year for the Term Bonds of each such series then outstanding, plus the applicable premium, if any; provided, however, that If the Term Bonds of any such series are not then subject to redemption from money in the Bond Amortization Account and if the City is at any time unable to exhaust the money applicable to the Term Bonds of such series under the provisions of this clause or In the purchase of such Term Bonds under the provisions of paragraph 1 above, such money or the balance of such money, as the case may be, must be retained in the Bond Amortization Account and, as soon as it is feasible, applied to the Term Bonds of such series; and (b) Any balance then remaining, other than money retained as described in the first clause of this paragraph 3, is required to be applied to the retirement of such Term Bonds as the City In its sole discretion determines, but only, in the case of the redemption of Term Bonds of any series, In such amounts and on such terms as may be provided in the resolution or ordinance authorizing the issuance of the obligations of such series. The City is required to pay from the Sinking Fund all expenses in connection with any such purchase or redemption. Optional Redemption. The Bonds maturing in the years 1995 through 1999, inclusive, shall not be redeemable prior to their stated dates of maturity. The Bonds maturing September 1, 2000 and thereafter, shall be redeemable prior to their stated dates of maturity, at the option of the City, in whole or in part, and if in part, in inverse order of maturity, on September 1, 1999 or on any interest payment date thereafter, at the redemption prices (expressed as a percentage of the principal amount to be redeemed) set forth below, together with accrued interest to the date fixed for redemption: Redemption Period Redemption Price September 1, 1999 - August 31, 2000 102% September 1, 2000 - August 31, 2001 101% September 1, 2001 and thereafter 100% - 17 - BND /7260PCon/910815 W DISCLOSURE STATEMENT The undersigned, as Underwriter, proposes to negotiate with the City of Clearwater, Florida, for the sale of $7,680,000 amount of its Gas System Revenue Bonds, Series Information is hereby furnished tohthdate. ty°Prior to the award of the Bonds, 1. Set forth is an itemized list of the nature and estimated amounts of expenses to be incurred by the Underwriter in connection with the issuance of the Bonds: (Per Bond) 2. Set forth below are the names, addresses and estimated amounts of compensation of all "finders ", as defined in Section 218.386, Florida Statutes: NONE 3. The amount of the underwriting spread expected to be realized by the Underwriter is $112,715.55, which includes the following: Underwriter's expenses Management fee Underwriting f ee Average take -down (Per Bond) 3.53 3.75 .25 7.15 4. The management fee to be charged by the Underwriter is $28,800.00 ($3.75 per Bond). 5. Set forth below are all other fees, bonuses and other compensation estimated to with the Bond issue to all ersons not regularly employed or retained by to m. connection - 18 - BND /7260PCon/910815 $1,152.00 0.15 Clearance Underwriter's Counsel Fees and 2.00 15,360.00 Expenses 0.00 0.00 Computer 0.00 0.00 Closing and travel expenses 580.80 0.08 MSRB, PSA, CUSIP Federal Express, Telephone, Communications 0.20 Duplicating, and Printing 1,536.00 7,065.60 0.92 Advertising 230.40 0.03 Day Loan $11152.00 0.15 Federal Funds 27,076.80 3.53 2. Set forth below are the names, addresses and estimated amounts of compensation of all "finders ", as defined in Section 218.386, Florida Statutes: NONE 3. The amount of the underwriting spread expected to be realized by the Underwriter is $112,715.55, which includes the following: Underwriter's expenses Management fee Underwriting f ee Average take -down (Per Bond) 3.53 3.75 .25 7.15 4. The management fee to be charged by the Underwriter is $28,800.00 ($3.75 per Bond). 5. Set forth below are all other fees, bonuses and other compensation estimated to with the Bond issue to all ersons not regularly employed or retained by to m. connection - 18 - BND /7260PCon/910815 Underwriter's counsel fee and expenses $15,360.00 6. The name and address of the Underwriter connected with the Bonds is as follows: Smith Barney, Harris Upham & Co., Incorporated 1 Tampa City Center, Suite 3500 Tampa, FL 33602 IN WITNESS WHEREOF, the undersigned has executed this Disclosure Statement on behalf of the Underwriter this 15th day of August, 1991. SMITH BARNEY, HARRIS UPHAM & CO., INCORPORATED By: Vice President and Authorized Officer - 19 BND /7260PCon /910815 The Depository Trust 55 Water Street New York, New York Attention: General EXHIBIT B LE'T'TER OF REPRESENTATION , 1991 Company 10041 Counsel's Office Re: $7,680,000 City of Clearwater, Florida Gas System Revenue Bonds, Series 1991 Gentlemen: The purpose of this letter is to set out certain matters relating to the issuance by the City of Clearwater, Florida (the "Issuer ") of $7,680,000 in aggregate principal amount of its City of Clearwater, Florida, Gas System Revenue Bonds, Series 1991 (the "Bonds "). First Union National Bank of Florida, St. Petersburg, Florida (the "Agent ") , is acting as Paying Agent and Bond Registrar of the Issuer with respect to the Bonds pursuant to Ordinance No. 5118 -91 of the Issuer authorizing the issuance of the Bonds enacted August 15, 1991, as amended and supplemented (collectively, the "Document "). Smith Barney, Harris Upham & Co. Incorporated (the "Underwriter ") are distributing the Bonds through The Depository Trust Company ( "DTC"). To induce DTC to accept the Bonds as eligible for deposit at DTC and act in accordance with its Rules with respect to the Bonds, the Issuer and the Agent, if any, make the following representations to DTC: 1. Subsequent to Closing on the Bonds on , 1991, the Issuer will cause the Underwriter to deposit with DTC one Bond certificate registered in the name of DTC's nominee, CEDE & CO., for each stated maturity of the Bonds in the face amounts set forth on Schedule A here- to, the total of which represents 100% of the principal amount of such Bonds. 2. In the event of any solicitation voting by holders of the Bonds, shall establish a record date for DTC notice of such record date not days in advance of such record possible. B -1 of consents from and the Issuer or Agent, such purposes and give less than 1.5 calendar date to the extent q1`,'( 3. In the event of a redemption or any other similar trans- action resulting in retirement of all Bonds outstanding or a reduction in aggregate principal amount of Bonds outstanding ( "full or partial redemption ") or an advance refunding of all or part of the Bonds outstanding, the Issuer or Agent shall give DTC notice of such event not less than 30 days nor more than 60 days prior to the redemption date or, in the case of an advance refunding, the date the proceeds are deposited in escrow. 4. In the event of a partial redemption or an advance refunding of part of the Bonds outstanding, the Issuer or Agent shall send DTC a notice specifying: (1) the amount of the redemption or refunding; (2) in the case of a refunding, the maturity date(s) established under the refunding; and (3) the date such notice is to be mailed to Bondholders or published ( "Publication Date ") . Such notice shall be sent to DTC by a secure means (e.g. legible facsimile transmission, registered or certified mail, overnight express delivery) in a timely manner designed to assure that such notice is in DTC's posses- sion no later than the close of business on the business day before the Publication Date. The Agent will forward such notice either in a separate secure transmission for each CUSIP number or in a secure transmission for multi- ple CUSIP numbers which includes a manifest or list of each CUSIP submitted in that transmission. (The Issuer or Agent sending such notice shall have a method to verify subsequently the use of such means and timeliness of the notice.) The Publication Date shall not be less than 30 days nor more than 60 days prior to the redemp- tion date or, in the case of an advance refunding, the date the proceeds are deposited in escrow. 5. In the event of an invitation to tender the Bonds, notice to Bondholders by the Issuer or Agent, specifying the terms of the tender and the date such notice is to be mailed to Bondholders or published ( "Publication Date ") shall be sent to DTC by a secure means (e.g., legible facsimile transmission, registered or certified mail, overnight express delivery) in a timely manner designed to assure that such notice is in DTC's possession no later than the close of business on the business day before the Publication Date. (The Issuer or Agent sending such notice shall have a method to verify subsequently the use of such means and timeliness of the notice.) 6. All notices and payment advices sent to DTC shall contain the CUSIP number of the Bonds. B -2 7. Notices to DTC by facsimile transmission shall be sent to DTC's Call Notification Department at (516) 227 -4039 or (516) 227 -4190. Notices to DTC by mail or any other means shall be sent to: The Depository Trust Company Muni Reorganization Manager Call Notification Department 711 Stewart Avenue Garden City, New York 11530 8. Interest payments shall be received by CEDE & CO., as nominee of DTC, or its registered assigns in next day funds on each payment date (or the equivalent in accordance with existing arrangements between the Issuer or Agent and DTC). Such payments shall be made payable to the order of "CEDE & CO." 9. Payments of principal shall be received by CEDE & CO., as nominee of DTC, or its registered assigns in next day funds on each payment date. Principal payments shall be made payable to the order of "CEDE & CO.," and shall be addressed as follows: The Depository Trust Company Muni Redemption Department 55 Water Street - 50th Floor New York, New York 10041 Attention: Collection Supervisor 10. DTC may direct the Issuer or Agent to use any other telephone number for facsimile transmission, address, or department of DTC as the number, address or department to which payments of interest or principal or notices may be sent. 11. In the event of a redemption, acceleration or any other similar transaction (e.g., tenders made and accepted in response to the Issuer's or Agent's invitation) necessi- tating a reduction in aggregate principal amount of Bonds outstanding or an advance refunding of part of the Bonds outstanding, DTC, in its discretion, (a) may request the Agent to issue and authenticate a new Bond certificate or (b) shall make an appropriate notation on the Bond certificate indicating the date and amounts of such reduction in principal except in the case of final maturity, in which case the certificate must be presented to the Agent prior to payment. 12. In the event the Issuer determines pursuant to the Document that beneficial owners of the Bonds shall be able to obtain certificated Bonds, the Issuer or Agent B -3 shall notify DTC of the availability of Bond certifi- cates, and shall issue, transfer and exchange Bond certificates in appropriate amounts as required by DTC and others. 13. DTC may determine to discontinue providing its service as securities depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or Agent (at which time DTC will confirm with the Issuer or Agent the aggregate principal amount of the Bonds outstanding) and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, whenever DTC requests the Issuer and the Agent to do so, the Agent and the Issuer will cooperate with DTC in taking appro- priate action to make available one or more separate certificates evidencing the Bonds to any DTC Participant having Bonds credited to its DTC account. 14. Nothing herein shall be deemed to require the Agent to advance funds on behalf of the Issuer. Very truly yours, FIRST UNION NATIONAL BANK OF FLORIDA Approved as to form and legality: City Attorney Received and Accepted: THE DEPOSITORY TRUST COMPANY BY: Authorized Officer cc: Underwriter By: CITY OF CLEAWWATER, FLORIDA By: Mayor ATTEST: Clerk B -4 eP a ;�I1 r CITY OF CLEARWATER, FLORIDA Gas System Revenue Bonds, Series 1991 Dated; September 1, 1991 BOOK-ENTRY-ONLY Dom September 1, (as sbovm below) The City of Clearwater, Florida (the City') is issuing $7,680,000 Gas System Revenue Bonds, Series 1991 (the "1991 Bonds") (1) to provide the funds necessary to advance refund the City'h outstanding c� oIssuance of Revenue Bonds, Bonds. Series 1983 (the " 1983 of the net Bonds') and (ii) to pay proceeds from the 1991 Bonds will be used to purchase Federal rinciPal,tinte t andc any Of and interest on which, when due, will be used to he! inc Bonds." redemption premiums on the 1983 Bonds. See "Purpose of t The 1991 Bonds will be Issued under and pursuant to Chapter 166, Florida Statutes, the amended and City Commission on August 15, 1991 as supplemented Ordinance . enacted by revenues derived The 1991 Bonds are secured by a prior (fie pledge of cmotai °s and Investments by the City from the operation of its gas system deposited in certain funds and accounts established by the Ordinance and earnings thereon. The 1991 Bonds will be issued as registered bonds without coupons an orkill be initially registered only in the name of The Depository Trust Company, New York f'DTC ") or its nominee, which will act as securities depository for the 1.991 Bonds. The 1991 Bonds will be available to purchasers in denominations of $5,000 or any integral multiple thereof. The 1991 Bonds are available only under the book -entry system maintained by DTC through brokers and dealers who are, or act through,,D n o participants. Interest on the 1991 Bonds will be payable semi-annually o begin g March 1, 1992, and on each March 1 and September 1, thereafter. The 1991 Bonds will be subject to redemption prior to maturity as more fully described herein under the caption "The 1991 Bonds." The payment of the principal of and interes, on the 1991 Bonds when due will be insured by simultaneously nicipa with the delivery of tyhe to 19b Bonds by AMBAC Indemnity Corpora r (INSERT AMBAC LOGO HERE) 'The 1991 Bonds wBl nt coustitute a debt of the City or a pledge Of the faith and credit of the City within the meaning of any cowtiftdknd or fftUtbwy provigh= or of the 1991 Bawds will wt directly Or indirectly or limitagent �d the ad valorem tam wlaateaw therefor and the �tl�ientty obligate the City to pledge any to the power of ad vabxem i mtkm- holders of the 1991 Bonds will have no recourse BND /Clearwater /91081 S In the opinion of Bond Counsel, assuming continuing compliance by the City with various covenants in the Ordinance, under existing statutes, regulations and judicial decisions, the interest on the 1991 Bonds will be excluded from gross income for Federal Income tax purposes of the holders thereof. The 1991 Bonds are, under existing laws and regulations, also exempt from intangible taxes Imposed pursuant to Chapter 199, Florida Statutes. See "Tax Exemption" herein for a description of alternative minimum tax treatment and certain other tax consequences to holders of the 1991 Bonds. AMOUNTS, MATURMES, RATES AND PRICES OR YIELDS Price or Price or Amount Maturity Rate Yield Amount Maturity Rate Yield 150,000 1995 5.600 100.000 300,000 2000 6.100 99.317 240,000 1996 5.750 100.000 320,000 2001 6.200 99.265 255,000 1997 5.800 99.500 340,000 2002 6.300 99.218 270,000 1998 5.900 99.435 360,000 2003 6.400 99.175 285,000 1999 6.000 99.374 380,000 2004 6.500 99.135 x1000 6.50% Term BOOds due September 1, 2009, Price 96.912% $2,454,000 6—W% Term 1300tls due September 19 2013, Price 951.506% (Plus Accrued Interest) The 1991 Bonds are offered when, as and If Issued and received by the Underwriter, and subject to the opinion as to the legality of the 1991 Bonds by Bryant, Miller and Olive, P.A., Tallahassee, Florida, Bond Counsel. Certain legal matters will be passed upon for the City by M.A. Galbraith, Jr., Esquire, City Attorney. Certain legal matters will be passed upon for the Underwriter by Lawson, McWhirter, Grandoff & peeves, P.A., Tampa, Florida, Counsel to the Underwriter. It Is expected that the 1991 Bondy in book - entry form will be available for delivery in New York, New York, on or about September 4, 1991. E MiFM BARNEY, HARRIS UPHAM & CO., INCORPORATED M The date of this Official Statement is August 15, 1991 BND /Clearwater /010815 /Ilzk No dealer, broker, salesman or other person has been authorized to make any representations, other than as contained in the Official Statement, and, if given or made, such other information or representations must not be relied upon. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the 1991 Bonds by any person in any Jurisdiction in which It is unlawful for such person to make such offer, solicitation or sale. The Information contained in this Official Statement has been obtained from public documents, records and other sources considered to be reliable and, while not guaranteed as to completeness or accuracy, is believed to be correct. Any statements in this Official Statement involving estimates, assumptions and matters of opinion whether or not so expressly stated, are intended as such and not as representations of fact, and the City expressly makes no representations that such estimates, assumptions and opinions will be realized or fulfilled. No information, estimates, assumptions and matters of opinion contained in this Official Statement, or any sale made hereunder, shall under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH 1991 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. Table of Contents Page SummaryStatement ............ ............................... iv Introduction ................... ............................... 1 Authorityfor Issuance . . ....... ............................... 1 Purpose of the 1991 Bonds ......... ............................... 1 The Refunding Plan .. ..... . I ....................... 1 Verification of Arithmetical Computations ........................ 2 The1991 Bonds ............................................... 2 Book- Entry-Only- System ..... ............................... 2 Redemption Provisions ....... ............................... 4 Security.. ................. ..............................6 Municipal Bond Insurance ....... ..... . ........... 7 ............. ... Payment Pursuant to Municipal Bond Insurance Policy ................ 7 AMBAC Indemnity Corporation ................................ 9 The City of Clearwater and Pinellas County .......................... 19 TheSystem .. ......... ............................... 11 Physical Description ......... ..............................1 I Management............... .............................11 GasSupply.. ........... .............................12 Rates, Fees and Charges ..... ............................... 13 ServiceArea ............. ............................... 13 InternalLoan ...... ............................ . .... 15 Consultant's Recommendation ...................... . ......... 15 Comparative Financial Statement .. ............................... 16 Debt Service Amortization Schedule .............. . ........... 17 Coverage of Maximum Debt Service by Net Revenues ................... 18 Sources and Uses of Funds ........ ............................... 18 Flow of Funds .................. .............................19 Covenants ..................... .............................21 f/ °3l Table of Contents (Cont'd.) Page Governmental Reorganization .................................... 25 Underwriting. .. ............. .............................25 Certain Legal Matters .......... ............................... 25 Tax Exemption ................ ............................... 25 Litigation ................... ............................... 27 Ratings......... ............. .............................27 Miscellaneous ......... 27 Authorization of and Certification Concerning Official Statement ... ............................... 25 APPENDIX A - Excerpts from the City's Comprehensive Annual Financial Reports and related explanatory note APPENDIX B - Ordinance No. 5115 -914 as amended APPENDIX C - Form of Municipal Bond Insurance Policy APPENDIX D - Form of Bond Counsel Opinion ® 1 i -il- '/ -31 Richard Fitzgerald Sue Herfleld CITY OF CLEARWATER, FLORIDA (BOARD OF CITY Ct3Mb9MONERS Rita J. Garvey Mayor - Commissioner CITY MANAGER Michael Wright CITY ATTORNEY M.A. Galbraith, Jr. CITY CLERK Cyndie Goudeau UTTLrn-ES FINANCE MANAGER Carole L. Greiner FINANCE DIRECTOR Daniel J. Delpan, C.P.A. BOND COUNSEL Bryant, Miller and Clive, P.A. Tallahassee, Florida Atlanta, Georgia FINANCIAL ADVISOR Raymond ,tames & Associates, Inc. St. Petersburg, Florida William Nunamaker Lee Reguiski ,11-.51 SUAU61ARY SPATE CENT This Summary Statement is subject in all respects to more complete information and to the deflnitlons contained or incorporated in this Official Statement. The offering of the 1991 Bonds to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this Summary Statement from the Official. Statement or otherwise to use It without this entire Official Statement. pure of the 1991 Boodt The 1991 Bonds are being issued (1) to provide funds for the advance refunding of the City's outstanding Gas System Revenue Bonds, Series 1993 in the original principal amount of $7,100,000, of which $6,710,000 in principal amount is currently outstanding, and (11) to pay certain costs of issuance of the 1991 Bonds. Severity for the 1991 Bonds. The payment of the principal of and the interest on the 1991 Bonds is secured equally and ratably by an irrevocable lien on the Net Revenues of the System prior and superior to all other liens or encumbrances on the Net Revenues. The Net Revenues are the Gross Revenues of the System, less Costs of Operation and Maintenance. Gross Revenues include all money received from rates, fees, rentals or other charges or income derived from the investment of funds, unless otherwise provided In the Ordinance, by the City or accruing to it in the operation of the System. The Costs of Operation and Maintenance of the System Include all current expenses, paid or accrued, for the operation, maintenance and repair of all facilities of the System, as calculated in accordance with sound accounting practice, and include without limiting the generality of the foregoing, insurance premiums, administrative expenses of the City related solely to the System, labor, touts of materials and supplies used for current operation, and charges for the accumulation of appropriate reserves for current expenses not annually recurrent but which are such as may reasonably be expected to be Incurred in accordance with sound accounting practice, but excluding any reserve for renewals or replacements, for extraordinary repairs or any allowance for depreciation. The 1991 Bonds are further secured by a prior lien and pledge on the monies and investments deposited In the Funds and Accounts established by the Ordinance except for monies and investments deposited in the Operation and Maintenance Fund. The 1991 Bonds will not constitute a debt of the City or a pledge of its faith and credit within the meaning of any constitutional or statutory provision or limitation. Nor will the 1991 Bonds constitute a lien upon the System, or any part thereof, or on any other property of the City, other than the Net Revenues In the manner provided in the Ordinance. Munlc#W Band lamaxe. AMBAC Indemnity Corporation C'AMBAC Indemnity") has Issued a Commitment for Municipal Bond Insurance (the "Commitment for Municipal Bond Insuranc8") to issue a bond insurance policy (the "Municipal Bond insurance Policy") relating to the 1991 Bonds effective as of the date of Issuance of the 1991 Bonds. Under the terms of the Municipal Bond Insurance Policy, AMBAC Indemnity will guarantee the payment of the principal of and Interest on the 1991 Bonds when due to the extent that sufficient funds for such payment have not been provided. The text of the Municipal Bond Insurance Policy is set forth in Appendix C. The insurance will extend for the term of the 1991 Bonds and once issued, cannot be cancelled by AMBAC Indemnity. 1v fl' .5I �1 Pro Forma_ Coverage of Maximum Annual Debt Service by Net Revenues Rate Covenant. The City has covenanted that it will fix, establish, revise from time to time whenever necessary, maintain and collect always, such fees, rates, rentals and other charges for the use of the product, services and facilities of the System which will always provide Gross Revenues in each year sufficient to pay, and out of such funds pay, 100% of all Costs of Operation and Maintenance of the System in such year and all reserve and other payments provided for in the Ordinance and 125% of the Bond Service Requirement due in such year on all outstanding 1991 Bonds. Additkxmd Parity Obligatims. Additional Parity Obligations may be issued provided that Net Revenues either during the immediately preceding Fiscal Year, during any twelve (12) consecutive calendar months of the eighteen (18) calendar months Immediately preceding the sale of the proposed Additional Parity Obligations, or during the last twelve (12) month period for which the City has audited Financial Statements for the System, at the option of the City, shall have been not less than 125% of the Maximum Bond Service Requirement which will become due in any calendar year thereafter on (1) the 1991 Bonds then outstanding, (2) any Additional Parity Obligations issued and then outstanding and (3) the Additional Parity Obligations then proposed to be issued. Such Net Revenues, for this purpose, may be adjusted by the Consulting Engineer to reflect rate changes and/or acquisitions to the System, as provided in the Ordinance. The City of Clearwater. The City of Clearwater, the county seat of Pinellas County, is located In the middle of the west coast of Florida on the Gulf of Mexico, 22 miles west of Tampa. The 1989 population of the City was estimated at 102,600. The economy of the City is based primarily on light manufacturing, tourism and related services. -v- W -3-r Audited Year 1988 1989 1990 Net Revenues 2,158,510 1,901,892 2,122,152 Coverage of Maximum Debt Service on 1991 Bonds ($721,030) 2.99x 2.63x 2.94x Rate Covenant. The City has covenanted that it will fix, establish, revise from time to time whenever necessary, maintain and collect always, such fees, rates, rentals and other charges for the use of the product, services and facilities of the System which will always provide Gross Revenues in each year sufficient to pay, and out of such funds pay, 100% of all Costs of Operation and Maintenance of the System in such year and all reserve and other payments provided for in the Ordinance and 125% of the Bond Service Requirement due in such year on all outstanding 1991 Bonds. Additkxmd Parity Obligatims. Additional Parity Obligations may be issued provided that Net Revenues either during the immediately preceding Fiscal Year, during any twelve (12) consecutive calendar months of the eighteen (18) calendar months Immediately preceding the sale of the proposed Additional Parity Obligations, or during the last twelve (12) month period for which the City has audited Financial Statements for the System, at the option of the City, shall have been not less than 125% of the Maximum Bond Service Requirement which will become due in any calendar year thereafter on (1) the 1991 Bonds then outstanding, (2) any Additional Parity Obligations issued and then outstanding and (3) the Additional Parity Obligations then proposed to be issued. Such Net Revenues, for this purpose, may be adjusted by the Consulting Engineer to reflect rate changes and/or acquisitions to the System, as provided in the Ordinance. The City of Clearwater. The City of Clearwater, the county seat of Pinellas County, is located In the middle of the west coast of Florida on the Gulf of Mexico, 22 miles west of Tampa. The 1989 population of the City was estimated at 102,600. The economy of the City is based primarily on light manufacturing, tourism and related services. -v- W -3-r OFFICIAL STATE 07%ff $7,680,000 CITY OF CLEARWATER, FLORIDA GAS SYSTEM REVENGE BONDS, SERIES 1991 INTRODUCTION The purpose of this Official Statement, Including the cover page, summary statement and appendices, Is to provide information concerning the City of Clearwater, Florida (the "City") and the $7,680,000 Gas System Revenue Bonds, Series 1991 (the 1991 Bonds% Definitions of certain words and terms having Initial capitals used herein and in the Ordinance are contained in the Ordinance in Appendix B hereto. The references, excerpts and summaries of all documents referred to herein do not purport to be complete statements of the provisions of such documents, and reference Is directed to all such documents for full and complete statements of all matters of fact relating to the 1991 Bonds, the security for the payment of the 1991 Bonds, and the rights and obligations of holders thereof. The information contained 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 which may have been made verbally or in writing is to be construed as a contract with the holders of the 1991 Bonds. AUTHORITY FOR iSSJANCE The Bonds are being issued pursuant to the Constitution and Statutes of the State of Florida, including particularly Chapter 166, Florida Statutes, and other applicable provisions of law and Ordinance No. 5118 -91, enacted by the City on August 15, 1991, as supplemented (the "Ordinance "). The Ref m Plan. The City will use part of the proceeds of the 1991 Bonds to refund Its $7,100,000 Gas System Revenue Bonds, Series 1983, $6,710,000 of which are currently outstanding (the "1983 Bonds"). After paying certain costs of issuing the 1991 Bonds, the City will deposit a portion of the 1991 Bond proceeds, with First i.r_jtion National Banat aiz Florida as escrow agent (the "Escrow Agent") pursuant to an Escrow Deposit Agreement (the "Escrow Deposit Agreement"). The Escrow Deposit Agreement requires that the Escrow Agent use the amounts escrowed thereunder to purchase Federal Securities. Federal securities are direct obligations of the United States of America and obligations the principal of and Interest on which are fully guaranteed by the United States of America and which obligations are not redeemable prior to their maturity at the option of the United States and interest on obligations of the Resolution Funding Corporation. In the opinion of Bond Counsel, the lien of the ordinance pursuant to which the 1991 Bonds were Issued will be released and discharged upon the issuance by the City of the 1991 Bonds, the simultaneous purchase of the Federal Securities required pursuant to the refunding plan and the pledging and setting aside pursuant to the Escrow Deposit Agreement of such money and obligations for the payment of the principal of, premium, if any, and interest on the 1983 Bonds, the expenses of the Paying Agent for the 1983 Bonds and the costs of the Escrow Agent. Verification of Arithmetical Computations. Upon delivery of the 1991 Bonds, Ernst Young, independent accountants, will deliver a report on the mathematical accuracy of certain computations contained In schedules provided to them by the Underwriter relating to (a) the adequacy of the maturing principal amounts of the Federal Securities held in the escrows for the 1983 Bonds to be refunded, interest earned thereon and certain other moneys to pay all of the principal or redemption price of and the Interest on such 1983 Bonds as such principal or redemption price and interest become due and payable, and (b) the computations of yield used by Bond Counsel to support its opinion that the 1991 Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code. The report of Ernst & Young will include the statement that the scope of their engagement was limited to verifying the mathematical accuracy of the computations contained in such schedules provided to them and that they had no obligation to update their reports because of events occurring or data or Information coming to their attention subsequent to the date of such report. The monies and Federal Securities held in accordance with the Escrow Deposit Agreement, all interest or other income thereon, and any proceeds from the disposition thereof will be used only to pay the 1983 Bonds and will not be available for payment of the debt service on the 1991 Bonds. THE 1991 BONDS Book-Entry-Only System. DTC, New York, New York will act as securities depository for the 1991 Bonds. Upon the issuance of the 1991 Bonds, one fully registered bond for each maturity will be registered in the name of Cede & Co., as nominee for DTC. So long as Cede & Co. is the registered owner of the 1991 Bonds, as nominee of DTC, references herein to the owners of the 1991 Bonds shall mean DTC or its nominee, Cede & Co., and shall not mean the Beneficial Owners (hereinafter defined) of the 1991 Bonds. DTC is a limited- purpose trust company organized under the laws of the State of New York, 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, as amended. DTC was created to hold securities of Its participants (the "DTC Participants") and to facilitate the clearance and settlement of securities transactions among DTC Participants in such securities through electronic book -entry changes in accounts of the DTC Participants, thereby eliminating the need of physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the "Indirect Participants"). -2- %/ -3/ Purchases of the 1991 Bonds under the book -entry system may be made only through brokers and dealers who are, or act through, DTC Participants. The DTC Participants shall receive a credit balance in the records of DTC. The ownership interest of each actual purchaser of each 1991 Bond (a "Beneficial Owner") will be recorded through the records of the applicable DTC Participant. Beneficial Owners will receive from the applicable DTC Participant or Indirect Participant a written confirmation of their purchase providing details of the 1991 Bond acquired Transfers of ownership interests in the 1991 Bonds will be accomplished by book entries made by the DTC Participants who act on behalf of the Beneficial Owners and If necessary, In turn by DTC. No 1991 Ban& will be registered to the Carnes of the Bemefilclal Owners, except In the event participation In the book-entry system Is d sconthumd as described below. The City will recognize DTC or its nominee as the owner of the 1991 Bonds for all purposes, Including notices and voting. Conveyance of notices and other communications by DTC to DTC Participants and by DTC Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among DTC, DTC Participants and Indirect Participants, subject to any statutory and regulatory requirements as may be in effect from time to time. Beneficial Owners may desire to make arrangements with a DTC Participant or an Indirect Participant so that all notices of redemption or other communications to DTC which affect such Beneficial Owners, and notification of all interest payments, will be forwarded in writing by the DTC Participant. Any failure of DTC to advise any DTC Participant, or of any DTC Participant or Indirect Participant to notify the Beneficial Owner, of any notice of redemption and its content or effect will not affect the validity of the redemption of the 1991 Bonds called for redemption or of any other action premised on such notice. Payments of principal of and premium, if any, and interest on the 1991 Bonds will be made to DTC or its nominee, Cede & Co., as registered owner of the 1991 Bonds. Upon receipt of monies DTC's current practice is Immediately to credit the accounts of the DTC Participants In accordance with their respective holdings shown on the records of DTC. Payments by DTC Participants and Indirect Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is now the case with municipal securities held for the accounts of customers In bearer form or registered in "street name," and will be the responsibility of such DTC Participant or Indirect Participant and not of DTC, or the City, subject to any statutory and regulatory requirements as may be in effect from time to time. The City cannot and does not give any assurances that DTC, DTC Participants, Indirect Participants or others will distribute payments of principal of or interest or any premium on the 1991 Bonds paid to DTC or its nominee, as the registered owner, or any redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis or will serve and act in a manner described in this Official Statement. The City Is not responsible or liable for the failure of DTC, any DTC Participant or any Indirect Participant to make any payment or give any notice to a Beneficial Owner in respect of the 1991 Bonds or any error or delay relating thereto. For every transfer of the 1991 Bonds, the Beneficial Owner may be charged a sum suffIcient to cover any tax or other governmental charge that may be Imposed In relation thereto. DTC may discontinue providing its services with respect to the 1991 Bonds at any time by giving notice to the City and discharging Its responsibilities with respect thereto under applicable law, or the City may terminate Its participation In the system of book- -3- — _ .....;,, - entry transfers through DTC at any time. Upon receipt by the City Of written notice from DTC (1) to the effect that DTC has received written notice from the City or from Participants having Interests, as shown In the records of DTC, In an aggregate principal amount of not less than fifty percent (50`t )of the a outstanding 1991 Bonds to the effect that tt tp requirement that all en the outstanding 1991 Bonds be regist a conn t of the ered In the registration books kept by the Bond Registrar In the name of Cede, as nominee of DTC, Is not in the best Interest of the Beneficial Owners of the 1991 Bonds or (11) to the effect that DTC Is unable or lmwilling to discharge Its responsibilities and no substitute deposit _ functions of DTC hereunder can be found which is wory willing to undertake the functions upon reasonable and customary terms, such h 991n Bonds willanno ong be restricted to being registered In the registration books kept by the Bond Registrar in the name of Cede, as nominee of DTC, but may be registered In whatever name or names registered owners transferring or exchanging accordance with the provisions of the cg�g such 1991 Bonds shall designate, in Ordinance. In the event that such book- entry-only system is discontinued, the following provisions will apply: principal of the 1991 Bonds and redemption premium, if any, thereon will be payable at the rinci Bank of Florida In Jacksonvllleg Florida ((tthrate trust office of First Union National Bonds will be payable by check or draft Bond Registrar"). Interest on the 1991 registered owners thereof as shown on the ma to the respective addresses of the Registrar at the close of business on the 15th registration o books ontthh(w ether or not a business day), the Bond Date ") Irrespective next preceding the Interest payment date for the 1991 Bonds (the "Record spective of any transfer of the 1991 Bonds and prior to such Interest payment date unless the City mis default In s thhe rd Date Interest due on such Interest payment date. In the event of any such default, h�e defaulted interest will be payable to the registered owners at the close of business on a special Record Date for the payment of defaulted Interest as established by notice mailed to the persons in whose names the 1991 Bonds are r business on the 5th day preceding the date of ma metered l the close of as registered bonds without coupons In denominations of e 1991 Bands will g issued only thereof. The transfer of 1991 Bonds will be r $stile ri any integral multiple office of First Union National Bank of Florida upon the at the principal corporate trust Registrar's reasonable fees and any tax, fee or other the payment of the Crequ and Bond Paid with respect to such transfer. governmental charges required to be inclusRedemall tnot provislam ro redeemable epBonds their stated dates of maturity. years 1995 through 1999, maturing September 1, 2000, and thereafter, tY• The Bonds dates of maturity, at the option of the City, in whole or redeemable an prior to their stated order of maturity, on cv—Ptem.ber 1, 1999, or on any interest�t, and if !a , in inverse the redemption prices (expressed as a payment date thereafter, at redeemed) set forth below, t percentage of the principal amount to be redemption: together with accrued Interest to the date fixed for -4- t Redemption Period Redemption Price September 1, 1999 through August 31, 2000 102% September 1, 2000 through August 31, 2001 101% September 1, 2001 and thereafter. 100% Mandatory Rebemptinn. The Term Bonds maturing on September 1, 2009 and September 1, 2013, respectively, are subject to mandatory redemption in part prior to maturity by lot at the principal amount thereof (without premium) plus accrued interest to the date of redemption, from funds which the City has covenanted to deposit in the Bond Amortization Account in the Sinking Fund In the amounts and upon the dates specified as follows: Term Bonds Due September 1, 2009 Term Bonds Due September 1, 2013 Date of Redemption Amount Date of Redemption Amount September 1, 2005 410,000 September 1, 2010 560,000 September 1, 2006 435,000 September 1, 2011 595,000 September 1, 2007 465,000 September 1, 2012 635,000 September 1, 2006 490,000 September 1, 2013 665,0008 September 1, 2009 525,000' 'Final Maturity Money held for the credit of the Bond Amortization Account is required to be applied to the retirement of term obligations as follows: (1) Subject to the provisions of paragraph (3) below, the City may purchase Term Bonds then outstanding at the most advantageous price obtainable with reasonable diligence, such price not to exceed the principal of such Term Bonds plus the accrued interest to the date of delivery thereof. The City is required to pay the interest accrued on such Term Bonds to the date of delivery thereof from the Interest Account and the purchase price from the Bond Amortization Account, but no such purchase may be made by the City within the period of 45 days Immediately preceding any interest payment date on which Term Bonds are subject to call for redemption, except from money in excess of the ,amounts set aside or deposited for the redemption of Term Bonds. (2) Subject to the provisions of paragraph (3) below, whenever sufficient money is on deposit IS the Bond Amortization Account to redeem $5,000 or more principal amount of Term Bonds, the City may call for redemption from money In the Bond Amortization Account such amount of Term Bonds then subject to redemption as, with the redemption premium, if any, will exhaust the money then held in the Bond Amortization Account as nearly as may be practicable. Prior to calling Term Bonds for redemption, the City Is required to withdraw from the Interest Account and from the Bond Amortization Account and set aside In separate accounts or deposit with the paying agents the respective amounts required for paying the Interest on and the principal of and redemption premium applicable to the Term Bonds so called for redemption. -5- (3) Money in the Bond Amortization Account is required to be applied by the City in each fiscal year to the retirement of Term Bonds then outstanding in the following order. (a) The Term Bonds of each series of Bonds, to the extent of the Amortization Installment, if any, for such Fiscal Year for the Term Bonds of each such series then outstanding, plus the applicable premium, if any, and, if the amount available in such Fiscal Year shall not be sufficient therefor, then in proportion to the Amortization Installment, If any, for such Fiscal Year for the Term Bonds of each such series then outstanding, plus the applicable premium, If any; provided, however, that if the Term Bonds of any such series are not then subject to redemption from money in the Bond Amortization Account and If the City is at any time unable to exhaust the money i applicable to the Term Bonds of such series under the provisions of this clause or in the purchase of such Term Bonds under the provisions of paragraph 1 above, such money or the balance of such money, as the case may be, must be retained in the Bond Amortization Account and, as soon as it Is feasible, applied to the Term Bonds of such series; and E 1 (b) Any balance then remaining, other than money retained under the first clause of this paragraph 3, is required to be applied to the retirement of such Term Bonds as the City in its sole discretion determines, but only, in the case of the redemption of Term Bonds of any series, In such amounts and on such terms as may be provided In the resolution or ordinance authorizing the issuance of the obligations of such } series. i i The City is required to pay from the Sinking Fund all expenses In connection with any such purchase or redemption. i SECURITY The payment of the principal of and interest on the 1991 Bonds Is secured equally s and ratably by an irrevocable lien upon and pledge of the Net Revenues derived by the j CIty from the operation of the System. "Net Revenues" is defined I A Reserve Account within the Sinking Fund has been established pursuant to the Ordinance. Within the Reserve Account, there will be established a separate subaccount for each series of Bonds. Revenues must be applied by the City to maintain in each subaccount in the Reserve Account a sum equal to the Reserve Requirement, if any, for any subsequent year on each series of Bonds, which sum will initially be deposited therein from the proceeds of the sale of the 1351 Bonds and other funds of the City. To the extent the City determines pursuant to a subsequent resolution to fund a subaccount within the Reserve Account for a respective series of Bonds, the City may provide that the difference between the amounts on deposit in such subaccount and the Reserve Requirement for such series of Bonds shall be an amount covered by obtaining bond Insurance issued by a reputable and recognized municipal bond insurer, by a surety bond, by a letter of credit or any combination thereof or by such other forth of credit enhancement as shall be approved by a resolution of the City adopted prior to the issuance of the series of Bonds for which such subaccount is established. Such resolution may also provide for the substitution of such credit enhancement. For further information concerning the Reserve Account, please refer to the section entitled "Flow of Funds" contained herein. Notwithstanding any provision of the Resolution to the contrary, moneys In each subaccount In the Reserve Account may be used only for the purpose of the payment of maturing principal of or interest or making Amortization Installments on the Bonds for which such subaccount was established when the other moneys in the Sinking Fund are Insufficient therefor, and for no other purpose including the payment of any other series of Bonds. The Bonds do not constitute an indebtedness, liability, general or moral obligation, or pledge of the faith, credit or taxing power of the City, the State of Florida, or any political subdivision thereof, within the meaning of any constitutional, statutory or charter provisions. Neither the State of Florida, nor any political subdivision thereof, nor the City shall be obligated (1) to levy ad valorem taxes on any property to pay the principal of the Bonds, the interest thereon, or other costs incident thereto or (ii) to pay the same from any other funds of the City except the Net Revenues, in the manner provided in the Ordinance. MUNICIPAL BOND LNSURANCE PaYment Purmmt to Municipal Bond hmrance PaUcy. AMBAC Indemnity has made a commitment to issue a municipal bond insurance policy (the "Municipal Bond Insurance Policjf') relating to the Bonds effective as of the date of Issuance of the Bonds. Under the terms of the Municipal Bond Insurance Policy, AMBAC indemnity will pay to the United States Trust Company of New York, In New York, New York or any successor thereto (the " n ,*a_nce Trustee ") that portion of the principal of and interest on the Bonds which shall become Due for Payment but shall be uppaid by reason of Nonpayment by the City (as such terms are defined in the Municipal Bond insurance Policy). AMBAC Indemnity will make such payments to the Insurance Trustee on the later of the date on which such principal and interest becomes Due for Payment or within one business day following the date on which AMBAC indemnity shall have received notice of Nonpayment from the Bond Registrar. The fin=ance will extend for the term of the Bonds and, once issued, cannot be cancelled by AMBAC Indemnity. -7- p ,,:V The Municipal Bond Insurance Policy will Insure payment only on stated maturity dates and on mandatory sinking fund Installment dates, in the case of principal, and on stated dates for payment, in the case of interest. If the Bonds become subject to mandatory redemption and insufficient funds are available for redemption of all outstanding Bands,. AMBAC Indemnity will remain obligated to pay principal of and interest on outstanding Bonds on the originally scheduled interest and principal payment dates including mandatory sinking fund redemption dates. In the event of any acceleration of the principal of the Bonds, the insured payments will be made at such times and in such amounts as would have been made had there not been an acceleration. In the event the Bond Registrar has notice that any payment of principal of or Interest on a Bond which has become Due for Payment and which is made to a Bondholder by or on behalf of the issuer has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code In accordance with a final, nonappealable order of a court of competent jurisdiction, such registered owner will be entitled to payment from AMBAC Indemnity to the extent of such recovery If sufficient funds are not otherwise available. The Municipal Bond Insurance Policy does not insure any risk other than Nonpayment, as defined in the Policy. Specifically, the Municipal Bond Insurance Policy does not cover: 1. payment on acceleration, as a result of a call for redemption (other than mandatory sinking fund redemption) or as a result of any other advancement of maturity. 2. payment of any redemption, prepayment or acceleration premium. 3. nonpayment of principal or interest caused by the insolvency or negligence of any Trustee or Paying Agent, If any. If It becomes necessary to call upon the Municipal Bond Insurance Policy, payment of principal requires surrender of Bonds to the Insurance Trustee together with an appropriate instrument of assignment so as to permit ownership of such Bonds to be registered in the name of AMBAC Indemnity to the extent of the payment under the Municipal Bond Insurance Policy. Payment of interest pursuant to the Municipal Bond Insurance Policy requires proof of Bondholder entitlement to interest payments and an appropriate assignment of the Bondholder's right to payment to AMBAC Indemnity. Upon payment of the insurance benefits, AMBAC indemnity will become the owner of the Bond, appurtenant coupon, If any, or right to payment of principal or interest on such Bond and will be fully subrogated to the surrendering Bondholder's rights to payment. In cases where the Bonds are Issuable in book entry form, the Insurance Trustee shall disburse principal and Interest to a Bondholder only upon evidence satisfactory to the Insurance Trustee and AMBAC indemnity that the ownership Interest of the Bondholder In the right to payment of such principal and Interest has been effectively transferred to AMBAC Indemnity on the books maintained for such purpose. AMBAC Indemnity shall be fully subrogated to all of the Bondholders' rights to payment to the extent of the Insurance disbursements so made. -8- The insurance provided by the Municipal Bond Insurance Policy is not covered by the Florida Insurance Guaranty Association. A jHAC Indemnity Corporation. AMBAC Indemnity is a Wisconsin - domiciled stock insurance corporation regulated by the Insurance Department of the State of Wisconsin and licensed to do businesss in 50 states and the District of Columbia, with admitted assets of approximately $1,259,700,000 (unaudited) and statutory capital of approximately $752,200,000 (unaudited) as of March 31, 1991. Statutory capital consists of AMBAC Indemnity's policyholders' surplus and statutory contingency reserve. AMBAC Indemnity was formerly a wholly -owned subsidiary of Citicorp Financial Guaranty Holdings, Inc. C'Holdings") (formerly known as AMBAC, Inc.), a financial holding company and Itself a wholly -owned subsidiary of Citibank, N.A. ("Citibank"). On May 1, 1991, AMBAC Inc. C'AMBAC Inc. "), a financial holding company recently formed by Holdings, registered for sale with the Securities and Exchange Commission 17,600,000 shares of its common stock. The registration statement with respect to such sale was declared effective on July 11, 1991. As a result of the sale, Citibank, through its affiliate Holdings, owns approximately 49% of the total equity of AMBAC, Inc., with a right to cast 20% of the total number of votes of all shares of outstanding common stock of AMBAC Inc. until such time as Citibank, including its affiliates, reduces its equity ownership to less than 25% of AMBAC Inc. (at which time the shares owned by it become non - voting). As of the date of the consummation of the sale of common stock, AMBAC Indemnity becomes a direct wholly owned subsidiary of AMBAC Inc. The Wisconsin Insurance Department has stated that the sale of common stock described herein does not require Its prior approval. Both Moody's Investors Service, Inc. and Standard & Poor's Corporation have reaffirmed that the sale of the common stock of AMBAC Inc, does not affect AMBAC Indemnity's triple -A claims- paying ability rating. Copies of AMBAC Indemnity's financial statements prelpared in acordance with statutory accounting standards are available from AMBAC Indemnity. The address of AMBAC Indemnity's administrative offices and Its telephone number are One State Street Plaza, 17th Floor, New York, New York, 10004 and (212) 668 -0340. AMBAC Indemnity has entered Into pro rats reinsurance agreements under which a percentage of the insurance underwritten pursuant to certain municipal bond insurance programs of AMBAC Indemnity has been and will be assumed by a number of foreign and domestic unaffiliated reinsurers. AMBAC Indemnity has obtained a ruling from the Internal Revenue Service to the effect t4.at the insuring of an obligation by f Merest de�ch ty will not andt tthe treatment for federal income tax purposes Insurance proceeds representing maturing interest paid by AMBAC Indemnity under policy provisos substantially identical to those contained in !pal bond r as Insurance policy shall be treated for federal income tax purposes in the same if such payments were made by the Issuer of the Bonds. AMBAC Indemnity makes no representation regarding the Bands or the advisabiilty of Investing in the Bonds and makes no representation regarding, nor has It participated In the preparation of, the Official Statement other than the information supplied by AMBAC Indemnity and presented under the heading "Municipal Bond Insurance:' Em THE Crry OF CLEARWATER AND PINELLAS COUNTY The City of Clearwater, the County Seat of Pinellas County, is geographically located in the middle of the west coast of Florida on the Gulf of Mexico. It is situated approximately 22 miles west of Tampa and 16 miles north of St. Petersburg. Standing on the highest coastal elevation of the State, the City limits comprise approximately 32 -1/2 square miles, Including 8 -1/2 square miles of waterways and lakes. Clearwater Beach, a corporate part of the City, is an active beach community and is connected to the main part of the City by Memorial Causeway, a four -lane, tall-free drive stretching almost two miles across Clearwater Harbor. Business on Clearwater Beach is mainly tourist - oriented, with its hotels, motels and gift shops. Many fine homes, apartments, and condominiums offer pleasant, semitropical accommodations to permanent residents and winter and summer visitors. The 1989 population of the City of Clearwater was estimated to be 102,600 persons, or approximately 12% of the estimated County population. The following chart shows the historical population of the City for the ten -year period 1980 -1989. CITY OF CLEARWATER, FLORIDA HISTORICAL POPULATION 1980 -1989 Year Population 1980 85,528 1981 87,859 1982 89,707 1983 91,879 1984 93,648 1985 95,330 1986 97,882 1987 99,124 1988 100,900 1989 102,600 Source of Population Figures: U.S. Census, 1980, U.S. Bureau of Census Estimates 1981 - 1989. The City of Clearwater and the other municipalities served by the System are located in Pinellas County, Florida. Pinellas County is the second smallest county in the state in land mass, but is the third most populated county in Florida and the most densely populated with nearly 825,000 residents. Major private employers In the County include an electric utility holding company, the utility, a television merchandiser, several hospitals, a newspaper publisher, and a retailer's corporate headquarters. Tourism is the largest industry in the County employing over 37,000 people In hotels, shops, restaurants and other related businesses. Annual visitors exceed 3.6 million people, -10- • k THE SYSTEM Physical Descrfptk. The City's Gas System began in the 1920's and included production, distribution and sale of manufactured gas. The System was converted to natural gas in 1959. In addition to serving the City of Clearwater, the System has expanded into, and has franchise agreements with, the cities of Bellealr, Belleair Bluffs, Dunedin, Indian Rocks Beach, Largo, Oldsmar, Safety Harbor, and Tarpon Springs. The franchise agreements expire respectively in 2020, 20029 20209 2018, 2001, 2014, 2001 and 2013, which in some Instances is prior to the maturity of the 1991 Bonds. It is anticipated that such franchise agreements will be renewed upon their expiration, however, there can be no assurance of such renewals. Each franchise agreement authorizes the respective municipality to terminate the franchise agreement in the event the Ci,: :ails to furnish gas as required by the agreement for causes within the control of the City for a period of 72 hours. In addition, the franchise agreements with Dunedin, Belleair Bluffs, Largo and Safety Harbor authorize the municipality to purchase from the City the property used with respect to each franchise at the expiration of the franchise. The franchise agreements with Oldsmar and Tarpon Springs authorize Oldsmar and Tarpon Springs to purchase such property during the term of the franchise as well as at expiration. The System also services the unincorporated area between these cities. The System currently serves approximately 11,650 customers and is comprised of 403 miles of gas main. Aftnagement: The City Is a commission manager municipal government. The Mayor and Commissioners are elected by the City's voters on an at -large basis. All have voting power at Commission meetings which are chaired by the Mayor. The City Commission appoints the Manager and the Manager is responsible for appointing all officers and employees in the Administrative Service of the City, including the Gas System Manager. The Clearwater Gas System is administered by the Gas System Manager reporting directly to the City Manager and is one of five utilities billed by the Clearwater Utilities Department (Water, Sewer, Gas, Sanitation, Stormwater). Charles A. Hunsicker currently serves as Assistant City Manager and Interim Gas System Manager reporting directly to the City Manager. He received his Bachelor of Science degree in Rural Sociology from the University of Wisconsin - Madison in 1975 and Masters degree in Urban and Regional Planning from Florida State University in 1982. He has served as Interim Gas System Manager since March 4, 1991. Mr. Hunsicker had no experience with natural gas systems prior to assuming his current responsibilities with the City as Assistant City Manager. Prior to joining the City of Clearwater in 1989, Mr. Hunsicker served as Acting Director, Division of Mining Regulation (1987 - 1989), Deputy Director, Public Works Department (1986 - 1989), and Acting Assistant County Administrator (1985 -1986) all with Manatee County, Florida. 4 -l1- .4 Terry Neenan has served as Gas Superintendent of the System since 1986. Prior to that he served as Assistant Superintendent from 1982 to 1986, Service Survisor from 1979 to 1982, Utilities Serviceman 11 from 1970 to 1979 and Utilities Servicemann I from 1968 -1970 all with the City of Clearwater. He holds a with Pinellas County and Master Gas Fitter License Witt, Master inellas County License and holds other licenses and certificates related to natural nd the City, from Largo Senior High School in 1960 and has attended St. Pet Mr. Junior = graduated College and the Florida Gas Transmission School in Sanford, Florida. o the He has as Secretary g Section of the and Treasurer and currently serves as Vice Chairman f Operating Florida Natural Gas Association. served TransmGassio om The City purchases Its suPP1Y Of natural pny i` FGT' ), The present supply of gas from the Florida Gas agreements between the City and FGT effective as of Nogvem er 989 s These agreements provide a maximum daily quantity of during the months of November through April, 46,500 toxi mstely 110,000 therms of gas through September and 49,000 therms in October not to exceed a yearly entittlehs 19,499,000 therms of gas. The service notwithstanding then FGT °s agreements provide that FGT does not have and, faith efforts, may not have In the future, sufficient gas supplies to supply the City with the agreements. The service quantities of gas specified In the Service liable in damages or otherwise for any volumes of gas as t the City may not hold FGT receive as a result of curtailment of deliveries by FGT the City is not permitted to and Conditions on file with the Federal Energy Y Pursuant to FGT General Terms to the extent such curtailment is shown to be the ra Regulatory ofCFGT�i� C'FERC "), excefst fault or willful misconduct. The service agreements expire in November, e1994.bad faith, Natural gas is supplied to the City by FGT the FERC Docket No. RP89- 50.000, et al. FGT ttuuralegas mS amended In meaning of the Natural Gas Act and is engaged in, among other thin co Pant within the of natural gas for others and the sale and delivery of natural �' the transportation ultimate use. At the present time FGT is a wh011 �' for resale and for Corporation which is owned equally by Enron Corh0l Corporation and subsidiary of Citrus Corporation, through its subsidiaries Sonat, Inc. Enron miles of transmission pipeline from Texas to the Canadianeborder�anpp ®m California 00 Florida. Sonat, Inc., although considered an Industrial cord community, through its subsidiaries, owns and has Interest hr natural gas by the financial facilities that provide service In the states of Florida, Geo Ids transportation Tennessee, Mississippi, and Texas as well as the Federal offshore South Carolina, the State of Louisiana, Domain In and around FGT Florida which Considering constructing an additional gas Pipeline along evould increase the Supplies of the west coast of reservation d�its from gas Purchas?rs t gas the to the demand for such�tncreased PPiy The City has paid FGT reservation delivered in approximately 1994 which would charges for additional quantities of gas d ly be quantity to 132,000 therms. While FGT Is considering e City maximum winter dally Pipeline, It is not obligated to do so nor is it Obligatet c pnstructing the additional urnish the City with any -12- T does not construct the pipeline, the City is entitled to additional supplies of gas. R FGT and Of its reservation deposit. Daps. interruptible customers the above the return into two gr call for delivering effect. The gysteMss customers are divide se eements Although service has a supply restriction plan In ye the to mers. led by the CltY, titles of gas, FGT is required cut o general castes City in turn may cut of4 the quantities of if t� deliver suif icient �m not experienced ally went. The City has Should FGT be prior notice of any notice. Tile a winter of 1976 -1927. City 4 hours p since the aliment of service. interruptible f services to ninterrupt] custome� enced c rtall past five years was curtailment of se S teal have never exPe General Customers B�f�e for both customer groups December 23, 1989• b the The maximum declared an open access pipeline wn gas and the 102,740 therms and occurred line was slow their t 1990, the FGT Pipe As such, their other saPP In Augur + Regulatory under mis'' t option agreements be suppliers, Federal Of othe n the PIPe Is adMted in the City and FGT. The purchase Price for naturaleII General Terms and and Gas Adjustment per FGT-- schedule of rates established a sch Itatce Fees ith FG" , RC. City Cammissioe �t adjustment Provision allw of accordance n on file with FERC. in the purchase price s by ordinanceg which includes sine ease or decreasee ng or revising and charges pass - through to custom Ilation by any state agency In wave ranged from lows the City is not subject to re9L eneral and interruptible rates have r ° 51.658 Per gas. The City t, 1986 to highs 70.778t are as follows: its rates. In the last f ive y the g of 53.380` and 35.3074 per therm in Augur 1591 reactively. The current rates and charges r therm therm in February, Rat—�- Ratf Iheduie 66.6824 47.663¢ General table d northern InterruP covers central an is bounded System's present serve miles. The service area ounty line on Selvice ArM The S ro amately 135 sq the Pasco unty, an area of aPP a Gulf of Mexico on the wes� adeiitlOn to the City of Pinellas line on 'the east. Bellesir Blois, Dunedin, by Ulmerton Road on the south, County Bellealro as well as d the vice area L eludes the cities r and Tarpon Springs, the north the service area Indian Rocks Beach, Largo, Oldsmar, Safety County portions of the unincorPt tee. areas of Pinellas ormation is readily the latest date as of which the to table: As of "bruasy, 198 ?, located as shown in the following available, the S;em' customers were Lora 13- Number of Location Meters Percentage Bellealr 167 1.5% Belleau Bluffs 12 0.1 Clearwater 6,913 62.3 Dunedin 1,102 9.9 Largo 1,138 10.3 Oldsmar 16 0.2 Safety Harbor 378 3.4 Tarpon Springs 81 0.7 Unincorporated Areas 1,283 11.6 Total 1110913 100.0% The City provides service to non - interruptible and interruptible classes of customers. The System derives less than one percent of its revenues from the largest non - interruptible customer. The following table shows the five largest interruptible customers by peak monthly consumption and the percent of the System's revenues derived from such customers during the 12 months ending June 30, 1991: Interruptible Peak Monthly Therms % of Gross Revenues Metal Industries, Inc. 62,950 4.0 Morton F. Plant Hospital l 56,900 3.0 ARA Healthcare Textile Services, Inc. 55,630 4.0 Aubrey T. Moorefield Paving Contractors, Inc. 36,570 2.0 Plasti -Kraft Corp. 24,850 1.0 I currently using an alternative fuel service The City's consumers have grown from 8,914 in 1985 to 11,650 in 1990. The City's 11,650 connections represent a market penetration of approximately 6%. The following table shows the breakdown of the City's customers by category as well as the volume of gas sold to each category and the sales revenues generated by each category: No. Gas Gas Customers Volume Sales Interruptible 11 20% 13% Residential 9,777 22% 26% Commercial 1,862 58% 61% -14- Internal IA=- Prior to 1990, the City funded a portion of the System's capital Improvements through an Internal loan from other Enterprise Funds. This non - interest bearing internal loan was historically classified on the balance sheet as the current liability "Deficit In Pooled Cash and Investments." As detailed in Appendix A, the remaining balance on this internal loan was reclassified as "Due to other Funds" in the City's financial statements as of September 30, 1990 (and netted with other amounts due to or from other funds). Consultantls Recommendation. The City recently engaged a national firm of accountants and management consultants to prepare a business plan for the System. The consultants identified the strategic goals and objectives the City should seek to achieve. First, to retain current System customers and obtain new connections, the consultant recommended the City Improve its level of service to System customers by, among other things, providing additional training of System employees, adding staff to meet customer demand, providing service more promptly and improving customer relations. Second, to preserve the System's development potential, the con.stultant also recommended the City expand the System north Into Pasco County. The City is Implementing plans designed to accomplish both recommendations. ■ -15- 0 CITY OF CLEARWATER, FLORIDA U rILrry SYSTEM - GAS DW19ON CON[PARATIVE FINANCIAL. STATE EN •T(1? Fiscal Year 1988 1939 1990 GROSS REVENUES: $8,993,905 $8,715,030 $9,026,884 322,993 Sales to Customers Service Charges 326,814 272,091 180,972 210,076 Earnings on Investments 146,385 517 2,187 6,206 Other----------- -------------------------- — -------------- ------ $9,467,621 $9,170,280 $9,566,159 Total Gross Revenues COST OF OPERATION AND MAINTENANCE Personal Services $1,418,352 $1,561,460 39873,581 $1,600,482 3,933,.459 purchases for Resale 4,073,384 Oper. Materials,/ 139,128 80,195 85,225 222,952 Supplies Transportation 290,007 27,328 287,117 28,069 39,488 Utility Service 142,178 192,179 256,671 Repairs & Maintenance Interfund Admin. 540,838 486,222 484,820 239,903 Charge Taxes 227,741 212,797 546,768 581,007 Other 450,155 Total Cost of Operation a.*ad Maintenance $7,309,111 $7,268,38,8 $7,444,007 $2,158,510 $1,9111,892 $2,122,152 Net Revenues -- - - - - -- Source: City of Clearwater, Annual Financial Statements. t (1) Excludes Depreciation -16- - 17 - DEBT SERVICE AMORTIZATION SCHEDULE YEAR PRINCIPAL INTEREST TOTAL 1992 $488,020.00 $488,020.00 1993 488,020.00 488,020.00 1994 488,020.00 488,020.00 1995 150,000.00 488,020.00 638,020.00 1996 240,000.00 479,620.00 719,620.00 1897 255,000.00 465,820.00 720,820.00 1998 270,000.00 451,030.00 721,030.00 1999 285,000.00 435,100.00 720,100.00 2000 300,000.00 416,000.00 718,000.00 2001 320,000.00 399,700.00 719,700.00 2002 340,000.00 379,6W.00 719,850.00 2003 360,000.00 358,440.00 718,440.00 2004 380,000.00 335,400.00 715,400.00 2005 410,000.00 310,700.00 720,700.00 2006 435,000.00 284,050.00 719,050.00 2007 465,000.00 255,775.00 720,775.00 2008 490,000.00 225,550.00 715,550.00 2009 525,000.00 193,700.00 718,700.00 2010 5650,000.00 159,575.00 719,575.00 2011 595,000.00 123,175.00 718,175.00 2012 635,000.00 84,500.00 719,500.00 2013 6651000.00 43,225.00 708,225.00 Total $7,680,000.00 $7,335,300.00 $15,035,300.00 - 17 - � 4r COVERAGE OF MAXIMUM DEBT SERVICE BY NET REVEIvUES Fiscal Year Ending 1988 1989 Gross Revenues (1) $9,467,621 $9,170,280 Cost of Operation Accrued Interest $7,680,000.00 and Maintenance(l) 4,066.83 735.675.00 7,309.111 7,268,358 _ Net Revenues $2,158,510 $1,901,892 Maximum Annual Debt Deposit Pursuant to Escrow Service $721,030 $721,030 Coverage of Maximum Interest Account Annual Debt Service 4,066.83 Original Issue D� t by Net Revenues Iss��?nce Expenses 200,025.10 200,025.10 (1) City of Clearwater, Annual Financial Reports (Audited) SOURCES AND USES OF P'i NDS Sources of Funds Par Amount of Bonds Accrued Interest $7,680,000.00 Existing Reserve Account Moneys 4,066.83 735.675.00 Total Sources of Funds $8,419,741.83 Uses of Funds Deposit Pursuant to Escrow Deposit Agreement Sinking Fund. $7,242,784.96 Interest Account Reserve Account 4,066.83 Original Issue D� t 721,030.00 Iss��?nce Expenses 200,025.10 200,025.10 251,834.94 Total Uses of Funds $8,4 19,741.83 (1) Includes underwriting discount, insurance premium, other Issuance costs and Issue size rounding. FLOW OF FUNDS intent Of Funds and Accawts. The following Funds and Accounts have been established pursuant to the Ordinance: Revenue Fund Operation and Maintenance Fund Sinking Fund Interest Account Principal Account Reserve Account Bond Amortization Account Renewal and Replacement Fund A separate subaccount 1s required to be maintained In the Reserve Account for each series of Bonds. Priority of Fkm of Fug. The entire Gross Revenues, except the income from investments (hereinafter discussed), derived from the operation of the System must be deposited In the Revenue Fund. The Revenue Fund constitutes a trust fund for the Purposes provided In the Ordinance, and must be kept separate and distinct from all other funds of the City and used only for the Purposes and in the manner provided in the Ordinance. All revenues at any time remaining on deposit In the Revenue Fund must be disposed of on or before the fifteenth (15th) day of each month, commencing In the month immediately following the delivery of the 1991 Bonds only In the following manner and In the following order of priority: 1. Revenues must first be used to deposit In the Operation and Maintenance Fund, such sums as are necessary for the Cost of Operation and Maintenance for the next ensuing month. 2. Revenues must next be used for deposit Into the Interest Account, such sums as will be sufficient to pay one -sixth (1/6) of all interest becoming due on the 1991 Bonds on the next semi - annual interest Payment date. 3. Revenues must next be used for deposit into the Principal Account, In any bond year In which a Serial Bond matures, such sums as will be sufficient to pay one - twelfth (1/12) of the principal maturing on Serial Bonds In such year. 4. Revenues must next be used for deposit into the Bond Amortization Account, In any bond year In which an Amortization hutaliment is due, such sums as will be sufficient to pay one- twelfth (1/12) of the Amortization installment required to be made in such year. Such payment will be credited to a separate special account for each series of Term Bonds outstanding, and If there Is more than one Stated maturity for. Term Bonds of a series, then Into a separate special accoua-it In the Bond Amortization Account for each such separate maturity of Term Bonds. The funds and Investments In each such separate account are pledged solely to the payment of principal of the Term Bonds of the series or maturity within a series for which it Is established and will not be available for -19- payment, pure or redemption ountfin Term the Siinkingf Fund other makeeup anytdeficie ties in for transfer to any other required payments therein. it in each of the separate special accounts in the Bond Mweys on di for the open market purchase or the Amortization Account are required t to the Ordinance of the series or maturity of Term tO redemption of Term Bonds, Pursuant ate special account is established or may Bonds within a series for which such and remain in said separate special account and be invested antil the stated date of maturity of the Term Bonds. The required a req its to the Principal Account, interest Account and Bond Amortization Account are requlredt to be In order to take into account the amount of money currently on deposit lied by the City to maintain in each subaccount ent 5, Revenues must next be app for any subsea equal to the Reserve Requirement, de�ited therein from the the Reserve Account a sum eq which sum will initially be To the extent the year on each series of Bonds+ proceeds of the sale of the 1991 Bondi a d other �t to °fund a lsubaccount vlde within the that the City determines pursuant to a subsea the City may P Reserve Account for a respective series of Bonds, t in such subaccount and the Resew difference between the amounts on de as amount covered by obtaining Requirement for such series of Bonds municipal bond insurer, by a surety bond, insurance issued by a reputable and recognized other form of credit combination thereof or the such adopted prior to the en a letter of credit or any lisped. Such resolution enhancement as shah be approved by a resolution of the City issuance of the series of Bonds for which such subac�unt is established. may also provide for the substitution f such credit thereof retch t. Bond f r ie�t surety bond+ a letter of credit or any ited in the subaccount !n the Reserve enhancement may in the future be oveQl bysquent resolution of the Clty, provided for the 1991 Bonds as may be PP �gn r a e and ne Of Corporation and that the provider of such credit enhancement gTt) luythen rated in one of the two highest Moody's investors Service, lnc� Any withdrawals from any subacc Oust in the Reserve Account are required subsequently restored from the first moneys available In the Revenue Fund on a current prra subsea is in the Reserve Acc oUl after d (inc required all prorate basis as to all subaccoun Payments for the Operation and Maintenance Fund and Sinking Funds) ha been deficiencies in prior payments to those ve ° made In full- deficiencies in Notwithstanding any prolq count n of the Resolution o ly r the t purpose of the each subaccount in the Reserve for inrest orymakinS Amortization Installments on the payment of maturing principal was established when the other moneys in the Sinking Bonds for which such subaccoun t Including the payment of any Fund are insufficient therefor, and for no other purl other series of Bonds• may withdraw in the event of the refunding of any series of Bonds, the City from the subaccount within the Reserve Account for such series of Bonds' all or any za portion of the amounts accumulated therein with respect to the Bonds being refunded and deposit such amounts as required by the resolution authorizing the refunding of such series of Bonds. 6. The City must next deposit Into the Renewal and Replacement Fund an amount equal to one- twelfth (1/12) of an amount equal to 5% of prior year`s Gross Revenues; provided, however, that so long as there shall be on deposit In such Renewal and Replacement Fund a balance of at least $300,000, no additional deposits In such Fund are required. The moneys In the Renewal and Replacement Fund may be used only for the purpose of paying the cost of extensions, enlargements or additions to, or the replacement of capital assets of the System and emergency repairs thereto. Such moneys on deposit In such Fund are also required to be used to supplement the Reserve Account if necessary, in order to prevent a default In the payment of the principal or Amortization. Installments of and Interest on the Bonds. 7. The balance of any moneys remaining In the Revenue Fund after the above required payments have been made may be used by the City for any lawful purpose. 8. The Operation and Maintenance Fund, the Sinking Fund, the Renewal and Replacement Fund, the Revenue Fund, and all accounts therein and any other special funds established and created under the Ordinance constitute trust funds for the purposes provided herein for such funds. All such funds shall be continuously secured In the same manner as City deposits are authorized to be secured by the laws of the State of Florida COVENAN75 Rate Covenant. In and by the Ordinance, the City has covenanted that It will fix, establish, revise from time to time whenever necessary, maintain and collect always, such fees, rates, rentals and other charges for the use of the product, services and facilities of the System which will always provide Revenues In each year sufficient to pay, and out of such funds pay, 100% of the Cost of Operation and Maintenance of the System In such year and all reserve and other payments provided for In the Ordinance and 125% of the Bond Service Requirement due In such year on all outstanding Bonds. The City has covenanted that such rates, fees, rentals, or other charges shall not be reduced so as to be insufficient to provide Revenues for such purposes. Additkwal Parity Obigatimm Additional Parity Obligations, payable on a parity from Net Revenues of the System with the 1991 Bonds, may be issued after the Issuance of any 1991 Bands, for construction and acquisition of additions, extensions and Improvements to the System or for refunding purposes and upon the following conditions: 1. The Net Revenues derived or which would have been derived, if adjusted as set forth below, from the System, either during the immediately preceding Fiscal Year, during any twelve (12) con ecutive calendar months of the eighteen (18) calendar months Immediately preceding the sale of the proposed Additional Parity Obligations or during the last twelve (12) month period for which the City has audited financial statements for the System, at the option of the City, shall have been not less than 125% of the Maximum Bond Service Requirement which will become due in any calendar year thereafter on (a) the 1991 Bonds then outstanding, (b) any Additional Parity Obligations Issued and then outstanding, and (c) the Additional Parity Obligations then proposed to be issued. - 21 - In determining the amount of Net Revenues for the purposes of paragraph (1) above, the Consulting Engineers may adjust the Net Revenues by adding thereto the following. a. The Net Revenues (computed for such utility on the same basis as net revenues are computed for the System) of any gas utility which the City shall have acquired prior to the .issuance of such Additional Parity Obligations or which the City shall be acquiring from proceeds of such Additional Parity Obligations; and b. In the event a change has been made In the rate schedules for services from the System prior to the Issuance of the proposed Additional Parity Obligations for a part of such 12 month period referred to in (1) above, and such change has resulted in an Increase In Net Revenues, such amount of additional Net Revenues which the Consulting Engineers estimate would have been received by the City during such 12 month period if such change in such rate schedule had been In effect during the entire 12 month period; and in the event a change has been made in the rate schedules for services from the System prior to the Issuance of the proposed Additional Parity Obligations for a part of such 12 month period referred to in (1) above, and such change has resulted in a decrease in Net Revenues, by subtracting therefrom such amount of the Net Revenues which the Consulting Engineers estimate would not have been received by the City during such 12 month period referred to in (1) above, if such change in such rate schedule had been in effect during the entire 12 month period, 2. Each resolution or ordinance authoriWing the Issuance of Additional Parity Obligations will recite that all of the covenants contained In the Ordinance will be applicable to such Additional Parity Obligations. 3. The City shall not be In default in performing any of the covenants and obligations of the Ordinance, and all payments required to have been made into the accounts and funds, as provided in the Ordinance, shall have been made to the full extent required. Operatlan and Maintenance. The City covenants it will maintain the System and all parts thereof In good condition and will operate the same In an efficient and economical manner making such expenditures for equipment and for renewals, repairs and replacements as may be proper for the economical oration and maintenance thereof. Operating Bw%et. The City covenants to annually prepare and adopt prior to the beginning of each of its Fiscal Years, a detailed budget or budgets of the estimated expenditures for the operation and maintenance of the System during such next succeeding Fiscal Year. AnwAd Au it. At least once a year, within sir months after the clone of its Fiscal Year, the City covenants to cause the books, records and accounts relating to the System to be properly audited by a recognized independent firm of certified public accountants. No Mortgage or Sale of the System. The City has covenanted not to sell, tease, mortgage, pledge or otherwise encumber the System, or any substantial part thereof, or any revenues to be derived therefrom, except as described below, -22- Notwithstanding the foregoing, the City has :curved the right to sell, lease or otherwise dispose of any of the property comprising a part of the System which the City hereafter determines, In the manner provided in the Ordinance, to be no longer necessary, useful or profitable in the operation of the System. Prior to any such sale, lease or other disposition of said property, If the amount to be received therefor is not In excess of $50,000, the City Manager of the Issuer or other duly authorized officer in charge thereof is required to make a finding in writing determining that such property comprising a part of the System is no longer necessary, useful or profitable In the operation thereof. If the amount to be received from such sale, lease or other disposition of said property is in excess of $50,000 but not in excess of $ 100,000 such City Manager or other officer is required to first make a finding in writing determining that such property comprising a part of the System is no longer necessary, useful or profitable in the operation thereof, and the governing body of the Issuer must, by resolution or ordinance duly adopted, approve and concur in the finding of such City Manager or other officer, and authorize such sale, lease or other disposition of said property. If the amount to be received from such sale, lease or other disposition of said property Is In excess of $100,000 but not in excess of 10% of the value of fixed assets of the System according to the most recent annual audit report, such City Manager or other officer must first make a finding in writing determining that such property comprising a part of the System is no longer necessary, useful or profitable in the operation thereof, and the Consulting Engineer must make a finding that it is In the best interest of the System that such property be died of, and the governing body of the City must by resolution or ordinance, duly adopted, approve and concur In the findings of such City Manager or other officer and of the Consulting Engineer, and authorize such sale, lease or other disposition of said property. Anything in this section to the contrary notwithstanding, nothing restricts the governing body of the City or, to the extent such authority has been vested in him by such governing body, the City Manager in the exercise of his discretion, from authorizing the sale or other disposition of any of the property comprising, a part of the System, If the Consulting Engineer certifies that the Net Revenues of the System will not be materially adversely affected by reason of such ,sale or d sposition. Such, proceeds must be placed in the Renewal and Replacement Fund or used for the retirement of outstanding 1991 Bonds, in such proportions to be determined by the governing body of the City upon the recommendations of the City Manager. The payment of such proceeds Into the Renewal and Replacement Fund do not reduce the amounts required to be paid Into such Fund by other provisions of the Ordinance. Anything in this section to the contrary notwithstanding, nothing prohibits the City from transferring owners of the System to another governmental entity in accordance with the Ordnance without complying with the provisions described in this section. See "Governmental Reorganization" herein. No Free Servioe. The City has covenanted not to render or cause to be rendered any free services of any nature by its System, nor will any preferential rates be established for users of the same class. Whenever the City, including its departments, 23 agencies and iL3trumentalities, shall avail itself of the product, facilities or services provided by the System, or any part thereof, the same rates, fees or charges applicable to other customers receiving like services under. similar circumstances shall be charged to the City and any such department, agency or instrumentality. Such charges shall be paid as they accrue, and the City is required to transfer from its general funds to the Revenue Fund sufficient sums to pay such charges. The revenues so received will be deemed to be Revenues accounted for in the same emanner as other Revenues ues derived from such operation the System. Enformment of Collections The City has covenanted to enforce and collect the rates, fees and other charges for the services and facilities of the System herein pledged; to take all steps, actions and proceedings for the enforcement and collection of such rates, charges and fees as shall become delinquent to the full extent permitted or authorized by law; and to maintain accurate records with respect thereof. All such fees, rates, charges and revenues pledged pursuant to the Ordinance will+ as collected, be held in trust to be applied as provided in the Ordinance. The City will, under reasonable rules and regulations, to the full extent permitted by law, shut off the connection of any users of the System for non - payment of fees, rentals and other char;es for the services of the System and will not furnish him or permit him to receive from the System further service until all obligations owed by him to the City on account of services have been paid In full. No Competing System. To the full extent permitted by law, the City has covenanted not to hereafter grant, or cause, consent to, or allow the granting sf, any franchise or permit to any person, for the furnishing of competing gas within the boundaries of the service area of the City; provided, however, that if the Gas System Manager renders an opinion that it would not be feasible for the City to provide such services to any specific area within the three years succeeding a request to provide such service, the City may authorize or allow the granting of such franchise or permit for such area upon such terms and conditions as it may approve. Unlawful Connection Profited. The City has enacted an ordinance making it unlawful for any person or persons to tamper with, change or make any connection with the System without the written consent of the City, or to awake any reconnection with the System when service has been discontinued for delinquent charges, until such delinquent charges have been paid in full, including Interest, reasonable penalties and reconnection charges. The City will r yvi to the g the provisions permitted co by la n, enforce this covenant and prosecute any pe or any penal ordinance relating to the sae. Amendamt of the O In the Ordinance, the City has reserved the right to amend or supplement the Ordinance for certain purposes without the consent of Bondholders If the amendment or supplement does not adversely affect the rights of Bondholders. Otherwise, no material modification or amendment of the Ordinance may be made without the consent in writing of the Bondholders of fifty -one percent or more of the principal amount of the 1931 Bonds of each Series so affected a change outstanding; provided, however, that no modification or amendment may permit in the maturity of such 1991 Bonds or a reduction in the rate of Interest thereon or in the -24- amount of the principal obligation thereof or affecting the promise of the City to pay the principal of and Interest on the 1991 Bonds as the same become due from the Net Revenues of the System or reduce the percentage of the Bondholders required to consent to any material modification or amendment of the Ordinance without the consent of the Bondholders of all such obligations. For purposes of this paragraph, to the extent that any 1991 Bonds are secured by a Credit Facility and such 1991 Bonds are then rated in one of the two highest rating categories (without regard to gradation) by either Standard & Poort Corporation or Moody's Investors Service, Inc., or successors and assigns, then the consent of the Credit Facility Issuer will be deemed to constitute the consent of the Bondholders and in such case no consent of the Bondholders Is required. GOVERNIWENTAL REORGANIZA71ON In the future the City may determine It Is in the best interest of the City or the System to reorganize the governmental structure of the City, including merging or consolidating the City with another public body or transferring the System to another public body. Nothing in the Ordinance prohibits such action, provided that any reorganization which affects the System or any transfer of the System must provide that the System shall be continued as a single enterprise and that any public body which succeeds to the ownership and operation of the System Is required to also assume all rights, power, obligations, duties and liabilities of the City under the Ordinance and pertaining to all Bonds. UNDERWRITING The 1991 Bonds are being purchased by the Underwriter, Smith Barney, Harris Upham 114 Co. Incorporated. The Underwriter has agreed to purchase the 1991 Bonds at an aggregate purchase price of $7,367,259.35, plus accrued Interest from the dated date to the date of delivery. The initial public offering prices set forth on the cover of this Official Statement may be changed by the Underwriter, and the Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices. CERTAIN LEGAL MATTERS Certain legal matters in connection with the issuance of the 1991 Bonds are subject to the approval of Bryant, Miller and Olive, P.A., Tallahassee, Florida, Bond Counsel whose approving opinion will be available at the time of delivery of the 1991 Bonds. Certain legal matters will be passed upon for the Underwriter by its counsel, Lawson, McWhirter, Grandoff & Reeves, P.A., Tampa, Florida. Certain legal matters will be passed upon for the City by M.A. Galbraith, jr., Esquire, City Attorney. TALC E%Ebilyi ON The Internal Revenue Code of 1986, as amended (the "Code ") establishes certain requirements which must be met subsequent to the Issuance and delivery of the 1991 Bonds in order that interest on the 1991 Bonds be and remain excluded from gross income for purposes of Federal income taxation. Non - compliance may cause interest on the 1991 Bonds to be included in Federal gross income retroactive to the date of issuance of the 1991 Bonds, regardless of the date on which such non - compliance occurs or is -25- ascertained. These requirements include, but are not limited to, provisions which prescribe yield and other limits within which the proceeds of the 1991 Bonds and the other amounts are to be invested and require that certain investment earnings on the foregoing must be rebated on a periodic basis to the Treasury Department of the United States. The City has covenanted in the Ordinance to comply with such requirements in order to maintain the exclusions from Federal gross Income of the interest on the 1991 Bonds. in the opinion of bond counsel, assuming compliance with the aforementioned covenants, under existing laws, regulations, judicial decisions and rulings, interest on the 1991 Bonds Is excluded from gross income for purposes of Federal income taxation. Interest on the 1991 Bonds is not an item of tax preference for purposes of the Federal alternative minimum tax imposed on individuals or corporations; however, interest on the 1991 Bonds may be subject to the alternative minimum tax when any 1991 Bond is held by a corporation. The alternative minimum taxable income of a corporation must be increased by 75% of the excess of such corporation's adjusted current earnings over its alternative minimum taxable income (Before this adjustment and the alternative tax net operating loss deduction). "Adjusted Current Earnings" will include Interest on the 1991 Bonds. The 1991 Bonds are exempt from all present intangible personal property taxes imposed pursuant to Chapter 199, Florida Statutes. 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 1991 Bonds. Prospective purchasers of 1991 Bonds should be aware that the ownership of 1991 Bonds may result In collateral Federal Income tax consequences, including (1) the denial of a deduction for Interest on Indebtedness Incurred or continued to purchase or carry 1991 Bonds, (li) the reduction of the loss reserve deduction for property and casualty insurance companies by 15% of certain items, including interest on the 1991 Bonds, (iii) for taxable years beginning before 1996, the inclusion of interest on 1991 Bonds in "modified alternative minimum taxable income" for purposes of the environmental tax imposed on corporations, (iv) the inclusion of interest on the 1991 Bonds in earnings of certain foreign corporations doing business in the United States for purposes of a branch profits tax, (v) the inclusion of interest on 1991 Bonds in passive income subject to Federal income taxation of certain Subchapter S corporations with Subchapter C earnings and profits at the close of the taxable year, and (vi) the inclusion of interest on the 1991 Bonds in "modified adjusted gross Income" by recipients of certain Social Security and Railroad Retirement benefits for purposes of determining whether such benefits are included in gross income for Federal Income tax purposes. PURCHASE, OWNERSHIP, SALE OR DISPOSITION OF THE 1991 BONDS AND THE RECEIPT OR ACCRUAL OF THE INTEREST THEREON MAY HAVE ADVERSE FEDERAL TAX CONSEQUENCES FOR CERTAIN INDIV[DUAL AND CORPORATE BONDHOLDERS. PROSPECTIVE 1991 BONDHOLDERS SHOULD CONSULT WITH THEIR TAX SPECIALISTS FOR INFORMATION IN THAT REGARD. 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 1991 Bonds. In some cases these proposals have contained provisions that altered these consequences on a retroactive basis. Such alteration of Federal tax consequences may have affected the market value _26_ Aft of obligations similar to the 1991 Bonds. From time to time, legislative proposals are pending which could have an effect on both the Federal tax consequences resulting from ownership of 1991 Bonds and their market value. No assurance can be given that legislative proposals will not be Introduced or enacted that would or might apply to, or have an adverse effect upon, the 1991 Bonds. F.i°Y'HGA77ON There is no litigation pending or threatened that seeks to restrain or enjoin the Issuance or delivery of the 1991 Bonds or the proceedings or the authority under which they are to be issued. Neither the creation, organization or existence of the City is contested. There is no litigation pending which in any manner questions the right of the City to pledge the Net Revenues of the Gas System to the payment of the 1991 Bonds and the interest thereon. The CIty experiences routine litigation and claims incidental to the conduct of its affairs. In the opinion of the City Attorney, there are no actions presently pending or threatened, the adverse outcome of which would impair the City's ability to perform its obligations to the holders of the 1991 Bonds. r Y Standard & Poor`s Corporation and Moody's Investors Service, Inc. have assigned their municipal bond ratings of "AAA" and "Aaa," respectively, to the 1991 Bonds with the understanding that upon delivery of the 1991 Bonds, a policy Insuring the payment when due of the principal of and interest on the 1991 Bonds will be issued by AMBAC Indemnity Corporation. The ratings reflect only the views of the respective rating agencies and are based on current information furnished by the City or obtained from other sources considered reliable by each rating agency. Any explanation of the significance of the ratings may be obtained from the respective rating agency. A securities rating is not a recommendation to buy, sell or hold securities. There can be no assurance that a rating will remain in effect for any given period of time or that it will not be revised downward or withdrawn entirely by a rating agency, if in its Judgment, circumstances so warrant. Any such downward revisions or withdrawal of a rating may have an adverse effect on the market price of the 1991 Bonds. hC[SCELLANEOW The information in the foregoing pages is presented for the information of prospective purchasers of the 1991 Bonds described herein. The Information has been compiled from offIcIal and other sources and, while not guaranteed by the City, is believed to be correct. So far as any statements made In this Official Statement and the Appendices hereto involve matters of opinion or estimates, whether or not so expressly stated, they are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. -27- r ! r AI)THORIZATION OF AND CERTIFICATION CONCERNING THE OFFICIAL STATEMENT The Official Statement has been authorized by the City of Clearwater, Florida. Concurrently with the delivery of the 1991 Bonds, the undersigned will furnish their certificate to the effect that, to the best of their knowledge, this Officiall Statement did not as of its date, and does not as of the date of the delivery of the 1991 Bonds, contain f any untrue statement of a material fact or omit to state a material fact which should be included therein for the purposes for which this Official Statement is to be used, or i which is necessary In order to make the statements therein, in the light of the circumstances in which they were made, not misleading. CITY OF CLEARWATER, FLORIDA Mayor City Manager i i a "< x -29- 1� -5%