ToWN of WEST WARWIck, Rhode IslANd Relating to

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1 NEW ISSUE Rating: Moody s Aa2 (on review for possible downgrade) Assured Guaranty Insured (Town Underlying Rating Baa1 ) In the opinion of Edwards Angell Palmer & Dodge LLP, Bond Counsel, based upon an analysis of existing law and assuming, among other matters, compliance with certain covenants, interest on the $6,500,000 General Obligation Bonds, Series 2009 A (the Series A Bonds ) and $2,370,000 General Obligation Refunding Bonds, Series 2009 B (the Series B Bonds and together with the Series A Bonds, collectively the Bonds ), is excluded from gross income for federal income tax purposes under the Internal Revenue Code of Interest on the Series A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes and is not included in adjusted current earnings when calculating corporate alternative minimum taxable income. Interest on the Series B Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Under existing law, interest on the Bonds is free from taxation by the State of Rhode Island (the State ) or any political subdivision or other instrumentality of the State, although the income therefrom may be included in the measure of Rhode Island estate taxes and certain Rhode Island corporate and business taxes. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on the Bonds. See TAX STATUS and APPENDIX C herein. Dated: Date of Delivery ToWN of WEST WARWIck, Rhode IslANd Relating to $6,500,000 GENERAL OBLIGATION BONDS, SERIES 2009 A and $2,370,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 2009 B due: As shown on the inside front cover The Bonds are issuable only as fully registered Bonds without coupons, and, when issued, will be registered in the name of Cede & Co., as Bondowner and nominee for The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository for the Bonds. Purchases of the Bonds will be made in book-entry form, in the denomination of $5,000 or any multiple thereof. Purchasers will not receive certificates representing their interest in Bonds purchased. So long as Cede & Co. is the Bondowner, as nominee of DTC, references herein to the Bondowners or registered owners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners (as defined herein) of the Bonds. So long as DTC, or its nominee Cede & Co., is the owner, principal and semiannual interest payments will be made directly to such owner. Principal of and interest on the Bonds will be payable by Wells Fargo Bank, N.A., Corporate Trust Department, Providence, Rhode Island, as Paying Agent (the Paying Agent ) to DTC. Disbursement of such payments to the DTC Participants is the responsibility of DTC and disbursements of such payments to Beneficial Owners is the responsibility of the DTC Participants and the Indirect Participants, as more fully described herein. (See THE BONDS¾Book-Entry Only System" herein.) Interest is computed on the basis of a 360-day year consisting of twelve 30-day months. The Bonds will be dated the date of delivery. Interest on the Bonds will be payable on October 1, 2009 and semiannually thereafter on April 1 and October 1 of each year at the rates as shown in the maturity on the inside cover. Principal of the Bonds will be payable on April 1 as shown in the maturity schedule on the inside cover. The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a financial guaranty insurance policy to be issued concurrently with the delivery of the Bonds by Assured Guaranty Corp. The Series A Bonds are subject to optional and mandatory sinking fund redemption prior to maturity, as described herein. The Series B Bonds are not subject to redemption prior to maturity. The Bonds will be designated as "qualified tax-exempt obligations" pursuant to Section 265(b)(3) of the Code. The Bonds are offered for delivery when, as, and if issued, subject to the final approving opinion of Edwards Angell Palmer & Dodge LLP, Bond Counsel, of Providence, Rhode Island, and to certain other conditions referred to herein. Certain legal matters in connection with the Bonds will be passed upon by Pannone Lopes Devereaux & West LLC, of Providence, Rhode Island as Counsel to the Underwriter. First Southwest Company will be serving as financial advisor for the Town on this transaction. It is expected that the Bonds in definitive form, will be available for delivery to DTC in New York, New York, on or about August 20, Janney Montgomery Scott Official Statement Dated August 6, 2009

2 MATURITIES, AMOUNTS, INTEREST RATES, PRICES OR YIELDS $6,500,000 General Obligation Bonds, Series 2009 A Maturity Principal Interest Maturity Principal Interest April 1 Amount Rate Yield CUSIP No.* April 1 Amount Rate Yield CUSIP No.* 2011 $245, % 1.360% UQ $290, % 3.280% UW , UR , UX , US , UY , UT , UZ , UU , VA , UV1 $1,960, % Term Bonds due April 1, 2026 Yield 4.300% CUSIP No.* VB4 $1,410, % Term Bonds due April 1, 2029 Yield 4.550% CUSIP No.* VC2 $2,370,000 General Obligation Refunding Bonds, Series 2009 B Maturity Principal Interest Maturity Principal Interest April 1 Amount Rate Yield CUSIP No.* April 1 Amount Rate Yield CUSIP No.* 2010 $305, % 0.970% VD $255, % 2.740% VJ , VE , VK , VF , VL , VG , VM , VH1 *The CUSIP Numbers have been assigned by an independent company not affiliated with the Town or the Financial Advisor and are included solely for the convenience of the holders of the Bonds. Neither the Financial Advisor, nor the Town, nor the Underwriter is responsible for the selection or uses of the CUSIP numbers, and no representation is made as to their correctness on the Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity. Yields to the April 1, 2019 optional redemption date at a redemption price of 100%.

3 TABLE OF CONTENTS Page THE BONDS... 1 Description of the Bonds... 1 Record Date... 1 Authorization and Purpose of the Bonds... 1 Plan of Refunding... 2 Book-Entry Only System... 2 Sources and Uses of Funds... 4 Redemption Prior to Maturity... 4 Security for the Bonds... 5 BOND INSURANCE... 6 The Insurance Policy... 6 The Insurer... 6 Recent Developments... 6 THE TOWN OF WEST WARWICK... 8 General... 8 Government... 8 Public Education... 9 Government Services... 9 Employee Relations Retirement Plans Municipal Employees' Plan Other Post Employment Benefits ECONOMIC CHARACTERISTICS Population Income Levels Unemployment Employment Largest Employers Housing Building Permits PROPERTY TAXES Tax Limitations Motor Vehicle Excise Tax Phase-out Program Assessed Valuations Analysis of Taxable Property Principal Taxpayers Tax Rate, Levy and Collection Record TOWN FINANCES Basis of Accounting and Financial Procedures Budgetary Data Reporting Requirements of Municipalities and School Districts Intervention of Budget and Review Commission in the Event of Certain Financial Difficulties Recent Financial Events State School Operations Aid State School Construction Aid State Library Construction Aid Other State Aid TOWN DEBT General Debt Limit Tax Anticipation Notes Authorized But Unissued Debt Comparative Statement of Outstanding Debt Wastewater System Revenue Bonds Actual Bonded Debt Service Requirements Debt Ratios and Debt Per Capita LITIGATION TAX STATUS CONTINUING DISCLOSURE CERTAIN LEGAL MATTERS FINANCIAL ADVISOR UNDERWRITING RATING MISCELLANEOUS APPENDIX A Comparative General Fund Financial Statements... A 1 APPENDIX B Audited Financial Statements for the Fiscal Year ended June 30, B 1 APPENDIX C Proposed Form of Legal Opinion for the Bonds... C 1 APPENDIX D Proposed Form of Continuing Disclosure Certificate... D 1 APPENDIX E Specimen Financial Guaranty Insurance Policy... E 1

4 This Official Statement is not to be construed as a contract or agreement between the Town and the purchasers or holders or insurers of any of the Bonds. Any statements made in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as opinion and not as representations of fact. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Town since the date hereof. All quotations from and summaries and explanations of provisions of laws and documents described herein do not purport to be complete and reference is made to said laws and documents for full and complete statements of their provisions. No dealer, salesman or any other person has been authorized to give any information or to make any representations, other than information and representations contained herein, in connection with the offering of the Bonds, and if given or made, such information or representations must not be relied upon. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy any of the Bonds in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. The information set forth herein has been furnished by the Town and other sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness. Neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Town since the date hereof. Upon issuance, the Bonds will not be registered under the Securities Act of 1933, as amended, in reliance upon exemptions contained in such Act. The Bonds will not be listed on any stock or other securities exchange. Any registration or qualification of the Bonds in accordance with applicable provisions of securities laws of the states in which the Bonds may be registered or qualified and the exemption from registration or qualification in other states cannot be regarded as a recommendation thereof. Neither the Securities and Exchange Commission nor any other federal, state or other governmental entity or agency will have passed upon the accuracy of the Official Statement or, except for the Town, approved the Bonds for sale. Any representation to the contrary may be a criminal offense. The information relating to The Depository Trust Company ("DTC") and the book-entry only system contained in this Official Statement have been furnished by DTC (see THE BONDS - Book-Entry Only System" herein). No representation is made by the Town as to the adequacy or accuracy of such information. The Town has not made any independent investigation of DTC or the book-entry only system. The financial advisor to the Town has provided the following sentence for inclusion in this official statement. The financial advisor has reviewed the information in this official statement in accordance with, and as part of, its responsibilities to the Town and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the financial advisor does not guarantee the accuracy or completeness of such information. Assured Guaranty makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, Assured Guaranty has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding Assured Guaranty supplied by Assured Guaranty and presented under the heading BOND INSURANCE and APPENDIX E - Specimen Financial Guaranty Insurance Policy. THE UNDERWRITER HAS PROVIDED THE FOLLOWING SENTENCE FOR INCLUSION IN THE OFFICIAL STATEMENT. THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITER DOES NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. The cover page hereof, this page and the appendices attached hereto are part of this Official Statement.

5 OFFICIAL STATEMENT of the TOWN OF WEST WARWICK, RHODE ISLAND Relating to $6,500,000 GENERAL OBLIGATION BONDS, SERIES 2009 A and $2,370,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 2009 B This Official Statement provides certain information concerning the Town of West Warwick, Rhode Island (the "Town") in connection with the issuance by the Town of its $6,500,000 General Obligation Bonds, Series 2009 A (the Series A Bonds ) and $2,370,000 General Obligation Refunding Bonds, Series 2009 B (the Series B Bonds and together with the Series A Bonds, collectively, the Bonds ). Description of the Bonds THE BONDS The Bonds will be issued only as fully registered Bonds in the denomination of $5,000 or any integral multiple thereof. The Bonds will be dated the date of delivery and will bear interest at the rates shown on the inside front cover page hereof. Interest on the Bonds will be payable on October 1, 2009 and semi-annually thereafter on April 1 and October 1 of each year at the rates shown in the maturity schedule on the inside front cover page hereof. Principal of the Bonds will be payable on April 1 of each year set forth on the cover page hereof. When issued the Bonds will be registered in the name of Cede & Co., as Bondowner and nominee for The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository for the Bonds. Purchases of the Bonds will be made in book-entry only form. Purchasers will not receive certificates representing their interest in the Bonds purchased. So long as Cede & Co. is the Bondowner, as nominee of DTC, references herein to the Bondowners or registered owners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners (as defined herein) of the Bonds. See "THE BONDS - Book-Entry Only System" herein. Principal of and interest on the Bonds will be paid by Wells Fargo Bank, N.A., as Paying Agent to DTC. So long as DTC or its nominee, Cede & Co., is the Bondowner, such payments will be made directly to such Bondowner. Disbursement of such payments to the DTC participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of the DTC Participants and the Indirect Participants, as more fully described herein. Interest on the Bonds is computed on the basis of a 360-day year consisting of twelve 30-day months. For every transfer and exchange of the Bonds, whether in certificated form or otherwise, the Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto. Adequate indemnification may be required to replace any lost, stolen or destroyed Bonds, whether in certificated form or otherwise. Record Date The Record Date for each payment of interest on the Bonds is the close of business on the fifteenth day preceding such interest payment date or, if such day is not a business day of the Paying Agent, the next preceding day which is a regular business day of the Paying Agent. Authorization and Purpose of the Bonds Series A Bonds in the amount of $6,500,000 will be issued pursuant to Section of the Rhode Island General Laws and an ordinance duly passed by the Town Council on July 7, 2009 for the purpose of financing the settlement of the Station Fire Litigation. See Litigation herein. 1

6 Series B Bonds in the amount of $2,370,000 are authorized pursuant to Section of the Rhode Island General Laws and a resolution duly passed by the Town Council on June 16, 2009 and the proceeds will be applied to refund, on a current basis, the outstanding principal balance of the Town s $6,800,000 General Obligation Bonds dated March 1, 1998 (the Refunded Bonds ). Plan of Refunding A portion of the proceeds of the Series B Bonds will be deposited into a refunding escrow fund (the Refunding Escrow Fund ) held by U.S. Bank National Association, as Trustee (the Refunding Trustee ), under a Refunding Escrow Agreement (the Escrow Agreement ) with the Town, dated as of August 20, The Refunding Trustee is also the Paying Agent for the Refunded Bonds. Such proceeds will be invested in certain obligations of the United States Government (the Government Obligations ). Such proceeds and investments and income therefrom are calculated to be sufficient to pay principal, interest and redemption premium on the Refunded Bonds. Book-Entry Only System This section describes how ownership of the Bonds is to be transferred and how the principal of, premium, if any, and interest on the Bonds are to be paid to and credited by DTC while the Bonds are registered in its nominee name. The information in this section concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this Official Statement. The Town believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. The Town cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Bonds, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Bonds), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered security certificate will be issued for each maturity of each series of the Bonds in the principal amounts of such issue, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, 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 DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and 2

7 Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds issued are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Bonds, and redemption proceeds, will be made to Cede & Co., or such other nominee as may be required by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts, upon DTC s receipt of funds and corresponding detail information from the Town or the Paying Agent/Registrar on payable dates in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as in the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Paying Agent or the Town, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and principal and interest to Cede & Co., or such other nominee as may be required by an authorized representative of DTC is the responsibility of the Town, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Town and the Paying Agent/Registrar. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The Town may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered. Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should be understood that while the Bonds are in the Book-Entry-Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Bonds, but (i) 3

8 all rights of ownership must be exercised through DTC and the Book-Entry-Only System, and (ii) except as described above, notices that are to be given to registered owners will be given only to DTC. Information is this section concerning DTC and the Book-Entry-Only System has been obtained from sources that the Town believes to be reliable but neither the Town nor the Underwriter takes any responsibility for the accuracy thereof. Sources and Uses of Funds The proceeds of the Series A Bonds are to be applied as follows: SOURCES OF FUNDS: Principal of Series A Bonds... $6,500, Net Reoffering Premium , TOTAL SOURCES OF FUNDS... $6,685, USES OF FUNDS: Proceeds to Settlement Fund... $6,500, Costs of Issuance , * Underwriter s Discount... 53, TOTAL USES OF FUNDS... $6,685, The proceeds of the Series B Bonds are to be applied as follows: SOURCES OF FUNDS: Principal of Series B Bonds... $2,370, Net Reoffering Premium... 20, TOTAL SOURCES OF FUNDS... $2,390, USES OF FUNDS: Deposit to Refunding Escrow Fund... $2,323, Costs of Issuance... 50, * Underwriter s Discount... 15, TOTAL USES OF FUNDS... $2,390, *Includes bond insurance premium, legal and financial advisory fees, printing costs, and miscellaneous costs of issuance. Redemption Prior to Maturity Optional Redemption The Series A Bonds maturing on or after April 1, 2020, shall be subject to redemption prior to their stated dates of maturity, at the option of the Town, on or after April 1, 2019, as a whole or in part at any time (by lot by DTC), in any order of maturity, at 100% of the aggregate principal amount of the Series A Bonds to be redeemed, together with interest accrued and unpaid to the redemption date. The Series B Bonds are not subject to redemption prior to maturity. 4

9 Mandatory Sinking Fund Redemption The Series A Bonds maturing on April 1, 2026 shall be subject to mandatory sinking fund redemption in part through sinking fund installments by lot or in any customary manner of selection on April 1 of each year, commencing April 1, 2022 at a redemption price equal to 100% of the principal amount thereof together with accrued interest to the redemption date thereof in the principal amounts shown below: Maturity Year Amount 2022 $355, , , , ,000 The Series A Bonds maturing on April 1, 2029 shall be subject to mandatory sinking fund redemption in part through sinking fund installments by lot or in any customary manner of selection on April 1 of each year, commencing April 1, 2027 at a redemption price equal to 100% of the principal amount thereof together with accrued interest to the redemption date thereof in the principal amounts shown below: Final Maturity Year Amount 2027 $450, , ,000 Notice of any redemption of Bonds, specifying the numbers and other designations of Bonds to be redeemed, shall be given not more than 60 days nor less than 30 days prior to the date set for redemption by mailing a copy of such notice to DTC or its nominees. The Town, so long as a book-entry system is used for determining beneficial ownership of the Bonds, shall send any notice of redemption to DTC, or its nominee, as registered owner of the Bonds. Transfer of such notice to the DTC Participants is the responsibility of DTC. Transfer of such notice to Beneficial Owners by DTC Participants is the responsibility of the DTC Participants and other nominees of Beneficial Owners of the Bonds. Any failure of DTC to mail such notice to any DTC Participant, or any failure by any DTC Participant to notify any Beneficial Owner, will not affect the validity of the redemption of the Bonds. The Town can make no assurances that DTC, the DTC Participants or other nominees of the Beneficial Owners of the Bonds will distribute such redemption notices to the Beneficial Owners of the Bonds, or that they will do so on a timely basis, or that DTC will act as described in this Official Statement. Security for the Bonds The Bonds will be valid general obligations of the Town, for the payment of which the full faith and credit of the Town are pledged (See APPENDIX C Proposed Form of Legal Opinion for the Bonds ). The Rhode Island General Laws provide that the Town shall annually appropriate a sum sufficient to pay the principal and interest coming due within the year on all its general obligation bonds and notes to the extent that monies therefore are not otherwise provided, and that if such sum is not appropriated, it shall nevertheless be added to the annual tax levy. In order to provide such amount, all taxable property in the Town is subject to ad valorem taxation by the Town without limitation as to rate or amount. Rhode Island General Laws Section permits any person who shall have any claim for money due from any town to present a demand for such claim to the town council and, if satisfaction of such claim is not made within 40 days, to commence an action against the town treasurer for recovery of the claim. If a judgment is obtained for such debt due and if the monies available in the town treasury are insufficient to pay the judgment, Rhode Island General Laws Section authorizes the town treasurer to apply to any justice of the peace for an order requiring the town to hold a town meeting "for the speedy ordering and making a tax" to be collected for such purpose. If the town meeting shall fail voluntarily to assess a tax sufficient to satisfy judgment on a town debt Rhode Island General Laws Section authorizes the Superior Court to order the assessors of the town "to assess upon the ratable property thereof, and the collector to collect, a tax sufficient for the payment of such judgment, with all incidental costs and charges, and the expense of assessing and collecting such tax." 5

10 The rights of the holders of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights or remedies heretofore or hereafter enacted to the extent constitutionally applicable and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. The Insurance Policy BOND INSURANCE Concurrently with the issuance of the Bonds, Assured Guaranty Corp. ( Assured Guaranty or the Insurer ) will issue its financial guaranty insurance policy (the Policy ) for the Bonds. The Policy guarantees the scheduled payment of principal of and interest on the Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. The Insurer Assured Guaranty is a Maryland-domiciled insurance company regulated by the Maryland Insurance Administration and licensed to conduct financial guaranty insurance business in all fifty states of the United States, the District of Columbia and Puerto Rico. Assured Guaranty commenced operations in Assured Guaranty is a wholly owned, indirect subsidiary of Assured Guaranty Ltd. ( AGL ), a Bermuda-based holding company whose shares are publicly traded and are listed on the New York Stock Exchange under the symbol AGO. AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, structured finance and mortgage markets. Neither AGL nor any of its shareholders is obligated to pay any debts of Assured Guaranty or any claims under any insurance policy issued by Assured Guaranty. Assured Guaranty s financial strength is rated AAA (negative outlook) by Standard & Poor s, a division of The McGraw-Hill Companies, Inc. ( S&P ), Aa2 (on review for possible downgrade) by Moody s Investors Service, Inc. ( Moody s ) and AA (ratings watch negative) by Fitch, Inc. ( Fitch ). Each rating of Assured Guaranty should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of any security guaranteed by Assured Guaranty. Assured Guaranty does not guaranty the market price of the securities it guarantees, nor does it guaranty that the ratings on such securities will not be revised or withdrawn. Recent Developments Ratings On July 1, 2009, S&P published a Research Update in which it affirmed its AAA counterparty credit and financial strength ratings on Assured Guaranty. At the same time, S&P revised its outlook on Assured Guaranty to negative from stable. Reference is made to the Research Update, a copy of which is available at for the complete text of S&P s comments. On May 20, 2009, Moody s issued a press release stating that it had placed the Aa2 insurance financial strength rating of Assured Guaranty on review for possible downgrade. Subsequently, in an announcement dated July 24, 2009 entitled Moody s Comments on Assured s Announcement to Guarantee and Delist FSA Debt, Moody s announced that it expects to conclude its review by mid-august Reference is made to the press release and the announcement, copies of which are available at for the complete text of Moody s comments. In a press release dated August 10, 2009, Fitch revised its outlook on Assured Guaranty to negative from evolving. Reference is made to the press release, a copy of which is available at for the complete text of Fitch s comments. There can be no assurance as to the outcome of Moody s review, or as to the further action that Fitch or S&P may take with respect to Assured Guaranty. 6

11 For more information regarding Assured Guaranty s financial strength ratings and the risks relating thereto, see AGL s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, which was filed by AGL with the Securities and Exchange Commission ( SEC ) on February 26, 2009, AGL s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009, which was filed by AGL with the SEC on May 11, 2009, and AGL s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009, which was filed by AGL with the SEC on August 10, Acquisition of FSA On July 1, 2009, AGL acquired the financial guaranty operations of Financial Security Assurance Holdings Ltd. ( FSA ), the parent of financial guaranty insurance company Financial Security Assurance Inc. For more information regarding the acquisition by AGL of FSA, see Item 1.01 of the Current Report on Form 8-K filed by AGL with the SEC on July 8, Capitalization of Assured Guaranty Corp. As of March 31, 2009, Assured Guaranty had total admitted assets of $1,926,329,505 (unaudited), total liabilities of $1,570,615,119 (unaudited), total surplus of $355,714,386 (unaudited) and total statutory capital (surplus plus contingency reserves) of $1,109,717,908 (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. Incorporation of Certain Documents by Reference The portions of the following documents relating to Assured Guaranty are hereby incorporated by reference into this Official Statement and shall be deemed to be a part hereof: the Annual Report on Form 10-K of AGL for the fiscal year ended December 31, 2008 (which was filed by AGL with the SEC on February 26, 2009); the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 (which was filed by AGL with the SEC on May 11, 2009); the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009 (which was filed by AGL with the SEC on August 10, 2009); and the Current Reports on Form 8-K filed by AGL with the SEC relating to the periods following the fiscal year ended December 31, All consolidated financial statements of Assured Guaranty and all other information relating to Assured Guaranty included in documents filed by AGL with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the date of this Official Statement and prior to the termination of the offering of the Bonds shall be deemed to be incorporated by reference into this Official Statement and to be a part hereof from the respective dates of filing such consolidated financial statements. Any statement contained in a document incorporated herein by reference or contained herein under the heading BOND INSURANCE-The Insurer shall be modified or superseded for purposes of this Official Statement to the extent that a statement contained herein or in any subsequently filed document which is incorporated by reference herein also modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Official Statement. Copies of the consolidated financial statements of Assured Guaranty incorporated by reference herein and of the statutory financial statements filed by Assured Guaranty with the Maryland Insurance Administration are available upon request by contacting Assured Guaranty at 1325 Avenue of the Americas, New York, New York or by calling Assured Guaranty at (212) In addition, the information regarding Assured Guaranty that is incorporated by reference in this Official Statement that has been filed by AGL with the SEC is available to the public over the Internet at the SEC s web site at and at AGL s web site at from the SEC s Public Reference Room at 450 Fifth Street, N.W., Room 1024, Washington, D.C , and at the office of the New York Stock Exchange at 20 Broad Street, New York, New York Assured Guaranty makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, Assured Guaranty has not independently verified, makes no representation regarding, and does not accept any 7

12 responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding Assured Guaranty supplied by Assured Guaranty and presented under the heading BOND INSURANCE. General THE TOWN OF WEST WARWICK West Warwick, covering an area of 8.2 square miles, was incorporated as a Town in It is located about eleven miles south of the City of Providence and is bounded by the City of Cranston on the north, the City of Warwick on the east, the Town of East Greenwich on the south and the Town of Coventry on the west. West Warwick is a residential community with considerable industry. Villages in the Town developed very early as industrial and textile centers. Progress has been made in industrial diversification, with several larger former textile mills converted to multiple tenancy by smaller, newer businesses (see "Type of Employment and Payrolls" herein). Only two of the top twenty taxpayers in the Town are in the textile business. The Town has good transportation facilities and an abundant water supply. According to the 2000 U.S. Census, the population of the Town was 29,581, compared to 29,268 in 1990; the population density is 3,607 persons per square mile. Government In February, 1994, the Town adopted a Home Rule Charter that provides for a Council/Town Manager form of government with the Town Manager as head of the administrative branch of government. The Town Manager is appointed by action of the Town Council. The Charter grants to the Town Council all powers to enact, amend or repeal ordinances relating to the Town's property, affairs and government including: the power to create offices, departments or agencies of the Town; preserving the public peace, health and safety; establishing personnel policies; authorizing the issuance of Bonds; and providing for an annual audit of the Town's accounts. The Charter grants to the Town Manager, subject to the approval of the Town Council, the authority to appoint or remove all officers or employees of the Town, to prepare and submit to the Town Council the annual budget and annual report of the Town, to recommend to the Town Council pay schedules for Town employees and to recommend to the Town Council the adoption of such measures as the Town Manager may deem necessary for the health, safety or welfare of the Town. The Town retains the Financial Town Meeting with such powers as are prescribed by State law and not inconsistent with the Town's Charter, including the adoption of the annual budget and ordering a tax to be levied and assessed on the ratable property of the Town for the payment of the Town debts and interest, support of schools, charges and expenses arising within the Town for which the Town may legally appropriate money, and to transact such other business as may legally come before it at a legal meeting of the electors of the Town. The Financial Town Meeting is held on the third Tuesday in May. James Thomas became the Town's third Town Manager in June Mr. Thomas received his Masters degree from Brigham Young University in Public Administration with an emphasis in Public Finance in He received a Bachelor of Science degree from Weber State University Mr. Thomas has served in capacities of Town Manager/ Town Administrator/ City Manager for over 25 years. Prior to his current assignment, he served as Town Manager in Old Orchard Beach, Maine, Whitefish Bay, Wisconsin, Forest Park - Illinois, Sterling, Colorado and Roy, Utah. Mr. Thomas is a member of International City/County Management Association (ICMA) and the Rhode Island Town Managers Association, and serves on the executive board of the Rhode Island Municipal Association. Mr. Thomas has a reputation of reinventing municipal government organizations, increasing financial accountability and increasing undesignated fund balances. Malcolm Moore is the Town's Director of Finance. Mr. Moore was appointed in November Mr. Moore has been in accounting/finance for 27 years. Prior to becoming the Director of Finance, he led a consulting company specializing in municipalities. Prior to that, Mr. Moore owned and operated a manufacturing company for 10 years. Mr. Moore is currently a member of Rhode Island Government Finance Officers Association. 8

13 Public Education The general administration of the Town's school system is directed by a five-member School Committee. The School Committee determines and controls all policies affecting the administration, maintenance and operations of the public schools in the Town, appoints a superintendent of schools as its chief administrative agent, and appoints and removes all school employees upon recommendation of the superintendent of schools, except as may be provided otherwise by the laws of the State. The School Committee annually prepares and submits estimates and recommendations of funds necessary for the support of the public schools to be approved at the Financial Town Meeting. The Town's school system presently consists of four elementary schools, one middle school and one senior high school. In addition, renovations have been made at all existing elementary and secondary schools to provide adequate space for specialized programs such as special education, limited English proficiency, art, music, library, and computer studies; to provide accessibility for handicapped students and citizens; and to provide more adequate and efficient administrative facilities with improved meeting, storage, and personnel space. The following table sets forth public school enrollment information for the Town for the fiscal years ended from 2005 to 2009 as well as projected student enrollment for the years Public School Enrollment Government Services Public Safety ACTUAL ENROLLMENT Kindergarten - Grade 12 Year Elementary Secondary Total ,740 2,048 3, ,702 2,048 3, ,682 2,031 3, ,657 1,984 3, ,661 1,915 3,576 PROJECTED ENROLLMENT ,670 1,874 3, ,708 1,768 3, ,712 1,734 3, ,732 1,706 3,438 In addition to its schools the Town provides major public services, certain of which are described below: The Town s Police Department consists of 59 sworn officials and 15 other personnel and equipment includes 39 police vehicles. For the fiscal year ended June 30, 2008, the Police Department expended $5,642,830 and the Town budgeted $5,235,892 and $5,326,411 for fiscal year ending June 30, 2009 and June 30, 2010, respectively. The Town s Fire Department has 73 personnel and there are four stations in the Town. For fiscal year ended June 30, 2008 the Fire Department expended $5,989,410 and the Town budgeted $6,111,188 and $6,242,964 for fiscal year ending June 30, 2009 and June 30, 2010, respectively. In fiscal year 1996, the Town instituted billing for Fire Department Rescue runs. For fiscal year 2008 the Town collected $639,902. As of January 1, 2002, Blue Cross and Blue Shield of Rhode Island began paying for the Town s ambulance runs, which impacted the income positively. Sanitation The Town provides weekly collection of rubbish and garbage which is deposited with the Rhode Island Resource Recovery Corporation in a land fill area in the Town of Johnston, Rhode Island. The Town is currently paying $58 per ton for refuse disposal and participates in the Corporation s statewide recycling program. 9

14 Water The Kent County Water Authority services the Town and other municipalities within the area. The water facilities of the Authority have a capacity of 11.6 million gallons per day. In addition water is available through the Kent County Water Authority from the City of Providence water supply system. The Kent County Water Authority was created by Act of the Rhode Island General Assembly (Chapter 1740 of the Public Laws of 1946, as amended) and is the governing body of the Kent County Water District, a political subdivision coterminous with Kent County. Sewer System The West Warwick Sewer Commission (the Commission ), created pursuant to the Town s Home Rule Charter and Chapter 70 of the Public Laws of 1995, provides sewage treatment services to the Town, and portions of the communities of Coventry, West Greenwich, Scituate, Cranston and Warwick. The Commission establishes both assessments and user fees to meet its operating and debt service costs. The commission is governed by a five member Board composed of members serving on the West Warwick Town Council. Since 1968, the Town electorate has authorized significant renovations and expansions of the sewer system and treatment facilities. In 1972, the Town completed construction of a new treatment plant, replacement of a main sewer interceptor line and an upgraded pumping station. In the 1980s, the Town modernized and upgraded its facilities to provide secondary (biological) wastewater treatment. The cost of these projects was funded in large part through State and federal grants. In addition, the local costs were shared by the communities participating in the regional sewer system according to the percentage of "reserve" plant capacity each community has retained through Intermunicipal Agreements. The percentage of sewage flow reserved by each participating community is as follows: 73.07% for West Warwick; 21.43% for Coventry; 2.41% for Warwick; 1.28% for West Greenwich; 1.07% for Cranston; and 0.74% for Scituate. These expansions and upgrades to the Town's sewer system continue to help the Town's industrial base, once consisting of a number of the textile mills which employed around 2,500 persons at the time, and now consisting of a number of other industrial and commercial users that employ even more people. The sewer system is now capable of supporting development of approximately 400 additional acres in the West Warwick Industrial Park, which is among the largest industrial development acreages in the State. On April 1, 1990, the Town and the Cities of Cranston and Warwick entered into a Consent Agreement with the Rhode Island Department of Environmental Management to further improve the quality of their wastewater effluent in order to bring the downstream waters of the Pawtuxet River to a point where fish can propagate. Funding for planning and design of the Advanced Wastewater Treatment (AWT) facilities was provided through a state-wide bond issue authorized by the voters in November 1989 and placed into the Pawtuxet River Water Quality Bond Fund (PRWQBF). At this time, the sewer plant upgrade to Advanced Wastewater Treatment status is completed. The majority of funding for this project came from revenue bonds and the State s Revolving Loan Fund which provides low and zero interest loans for qualifying water improvement projects. The Town's share of the project cost was approximately $15 Million, $13 Million of which was borrowed through the zero interest loan program, with future sewer system revenues pledged for loan repayment. Since 2002, the Town's sewer bills contained new user charges to pay the AWT debt service costs. See TOWN DEBT-Wastewater System Revenue Bonds herein. Two other major interceptors within the Town, and one serving Coventry and West Greenwich, have been upgraded. The State s Revolving Loan Fund program was again the source of the funding, to be repaid through users fees, a good portion of which will come from the Town of Coventry. See TOWN DEBT Wastewater System Revenue Bonds. To finance sewer debt service costs, the Town assesses property owners that have access to the system. An assessment resolution was passed effective January 1, This resolution replaced the previous sewer assessment resolutions and set the rates as follows: Commercial tie-ins are assessed at a rate of $45 per thousand for the first one hundred thousand dollars of assessed value, and at a rate of $25 per thousand on the remaining assessed value as established by the Assessor of the Town at a rate of seven (7%) percent interest for a period of twenty years. Vacant land is assessed under the commercial assessment set forth above. All new residential and multi-family tie-ins will be assessed on a flat fee basis as follows: Single family units and condominium units - $6,000, Multi-family units (up to and including five units) $5,000 per unit and Multi-family units (additional units over five) at $4,000 per additional unit. 10

15 Operating costs and revenues for the sewer system are accounted for through the Sewer Enterprise Fund. The variance between sewer assessments and the debt service is now supplemented by Sewer Use revenues and no longer advanced by the General Fund. The Sewer Enterprise Fund ended fiscal year 2008 with sewer revenues of $7,853,927 and operating expenses of $7,286,881. Employee Relations The current status of union contracts for municipal and school employees is: Police Officers 3 year contract expires June 30, 2011 Public Works/Municipal Employees 2 year contract expired June 30, 2008* Teachers 3 year contract expires August 31, 2009 with a one year extension thru 2010 Firefighters 3 year contract expires June 30, 2011 * Currently in negotiation. Retirement Plans The Town provides, as a condition of employment, pension benefits to substantially all municipal employees under two separate plans. One plan is through participation in a contributory retirement system for school teachers administered under State law by the State Retirement System of the State and the second plan for all other municipal employees, including certain School Department employees, is a Town-administered pension fund utilizing a professional trustee. Municipal Employees' Plan There are 670 persons participating in this plan, consisting of 385 active and 259 retired members and 6 terminated vested and inactive members. Fire Employees and Municipal Employees contribute 8% of annual base earnings each year until normal retirement date. Police employees hired before June 30, 2005, contribute 6.5% of annual base earnings each year until normal retirement date. Effective January 1, 2008, Police employees hired before June 30, 2005, contribute 8%. Police employees hired after June 30, 2005, contribute 8% of annual base earnings each year until normal retirement date. Periodic employer contributions to the pension plan are determined on an actuarial basis using the frozen initial liability actuarial cost method. Normal cost is funded on a current basis. The unfunded actuarial accrued liability is amortized over a 30 year period. Periodic contributions for both normal cost and the amortization of the unfunded actuarial accrued liability are based on the level percentage of payroll method. The funding strategy for normal cost and the unfunded actuarial accrued liability should provide sufficient resources to pay employee pension benefits on a timely basis. The latest actuarial report is dated July 1, 2008 and was prepared by Milliman, USA. Total contributions to the pension plan in fiscal year 2008 amounted to $3,619,090, which consisted of $2,279,340 from the Town and $1,188,073 from employees. The actuarially determined contribution amounts based on the actuarial valuation as of July 1, 2008 reflected normal cost of $1,606,430 and the amortization of the unfunded actuarial accrued liability of $4,192,626 for a total contribution of $5,799,056. The Town has not completed the funding of the actuarially required pension contribution and has therefore reflected the unfunded contribution in the general long-term debt account group. Significant actuarial assumptions used to compute pension contribution requirements are the same as those used to determine the standardized measure of the pension obligation. Contributions made by the Town and employees represent 24.0% of covered payroll for the year. Normal retirement benefits are available to police participants attaining 20 years of service prior to age 62, and fire participants attaining 20 years of service prior to age Participants from other departments are eligible at age 60 and upon completion of 10 years of service or any age with 25 years of service. The plan also provides for early retirement at age 50 and 10 years of service, if Town consent is received; ordinary disability retirement after completion of 7 years of service; and, occupational disability retirement if disability occurs as a result of accident in the performance of duty. Furthermore, police and fire department members provide for a spouse's pension equal to 67.5 percent of the retired member's monthly pension payable to a surviving spouse after the member's death until the earlier of the spouse's death or remarriage, or to dependent children under age 18. As of July 1, 2005, the Town has a total unfunded accrued past service liability of $68,233,034. This accrued liability is being amortized over a period of 30 year beginning on July 1, As of July 1, 2008, the Town had an actuarial asset valuation of $44,536,

16 School Teacher's Retirement Plan The Town provides retirement benefits to its public school teachers through its participation in the Rhode Island Retirement System, a statutory, mandatory, statewide, cost-sharing multi-employer defined benefit plan, which first covered State teachers on July 1, This Teachers Retirement System is administered as a unified statewide system by the State Retirement Board, the composition of which is set forth in the pertinent State statute. The assets are held in the custody of the State Treasurer as an undivided single fund. The actuarial costs of the retirement benefits are partially funded by employee contributions of 9.50% of the actuarial costs of the retirement benefits effective July 1, The actuary determines the net employer actuarial costs annually and as provided by the State Retirement Board to the Department of Administration. Contributions are reported as a percent of payroll, payable in part by the State and in part by the Town. The split between State and Town is specified in State statute. For fiscal year , the State paid 40 percent and the Town paid 60 percent. The actuarial valuation prepared by Gabriel, Roeder, Smith & Company uses the Entry Age Normal (EAN) actuarial cost method. Valuations under this method assume a valuation date of June 30 th of each plan year. This is the date as of which both the actuarial present value of future benefits and the actuarial value of assets are determined. The valuation assumes an annual salary increase on a scale of age/service. In addition, other actuarial assumptions are made for post-retirement increases and other contingencies as set forth in the published annual reports of the State Retirement Board. The following are comparative highlights for 2004 through 2007 for the Teachers System as a whole: 6/30/2007 6/30/2006 6/30/2005 6/30/2004 Active participants 14,146 14,343 14,469 14,556 Pensioners and beneficiaries 9,118 8,873 8,565 8,179 Inactive participants 2,257 2,165 2,037 1,836 Net assets $4,185,381,396 $3,623,938,636 $3,364,100,154 $3,131,927,525 Employer contributions $179,916,390 $138,332,998 $ 121,853,338 $ 115,715,178 Member and other misc. contributions , ,420 83,169,179 83,658,995 Total contributions $278,379,509 $218,525,424 $ 205,022,517 $ 199,374,173 Miscellaneous income (10,203) Investment income 651,826, ,992, ,914, ,176,631 Total income available for benefit payments $930,206,061 $607,249,112 $ 555,937,004 $ 701,540,601 Benefit payment ($368,763,301) ($344,681,968) ($323,764,375) ($299,433,958) Excess of income over expenses $561,442,760 $259,383,482 $ 232,172,629 $ 402,106,643 Compiled from Employee Retirement System of Rhode Island - Annual Reports Actuarial costs and liabilities, as shown in the summary presentation, are determined in the aggregate for the Teachers Retirement System. Accordingly, employer contributions are first determined in the aggregate for all participating employers in this multi-employer system and are then expressed as a percentage of the aggregate participating payroll. With respect to the Teachers Retirement System, Gabriel, Roeder, Smith & Company, independent actuaries advising the Retirement Board have calculated the pension plan to be fully funded by According to the statutory funding schedule, the combined contributions required each year by the Town and the State will remain relatively level as a percent of payroll as the System moves toward funding the full actuarial liability. Ultimately, however, because the actuarial funding results in the accumulation of reserves that are invested, the required appropriation will be significantly less than would be required if the Teachers Retirement System were on a pay-as-you-go basis. Other Post Employment Benefits In addition to pension benefits, cities and towns may provide retired employees with health care and/or life insurance benefits. The Governmental Accounting Standards Board ( GASB ) recently promulgated its Statement Nos. 43 and 45, which will for the first time require public sector entities to report the future costs of these non-pension, postemployment benefits in their financial statements. These new accounting standards do not require pre-funding such benefits, but the basis applied by the standards for measurement of costs and liabilities for these benefits is conservative if they continue to be funded on a pay-as-you-go basis and will result in larger yearly cost and liability accruals than if such 12

17 benefits were pre-funded in a trust fund in the same manner as traditional pension benefits. The Town is required to implement the new GASB reporting requirements for other post-employment benefits beginning with the fiscal year. The Town has gathered information for an appraisal of its OPEB liability. The Town recently hired a firm to conduct a study and a report is expected within the next few months. Currently 141 retirees meet these eligibility requirements for post retirement health care benefits. The Town reimburses 100% of the amount of medical and hospitalization costs incurred by the retirees and their dependents, which amounted to $1,641,547 for the year ended June 30, Population ECONOMIC CHARACTERISTICS Ranked tenth in population among the thirty-nine cities and towns in State, the Town's 2000 population was 29,581, according to the U.S. census of that year. Town Population % Change State Population % Change , % 1,048, % , ,003, , ,154 (0.3) , , , , , , , , , , Source: U.S. Bureau of the Census, Income Levels The following table lists the per capita and median family income according to the 2000 U.S. Census. Per Capita Median Family West Warwick $20,250 $47,674 Rhode Island 21,688 52,781 United States 21,587 50,732 Source: U.S. Bureau of the Census, Unemployment The most recent labor market information summary indicates that annualized unemployment for the years indicated was as shown in the following table: Annualized West Warwick 4.4% 4.7% 5.4% 6.1% 5.7% 5.7% 5.4% 5.7% 8.2% Rhode Island United States Source: Rhode Island Department of Labor and Training. Not Seasonally Adjusted 13

18 Monthly 2009 January February March April May West Warwick 12.6% 12.6% 12.2% 11.9% 12.5% Rhode Island United States Source: Rhode Island Department of Labor and Training. Not Seasonally Adjusted Employment Through the 12 months ended December 31, 2008, the Town had 613 private business and industrial firms subject to the payment of employment security taxes. During that period, the payrolls for those firms totaled $290,680,760 and the average number of persons employed was 7,679. % of Total # of Avg. Covered Wage Units Empmnt. Emp. Construction $ 13,174, Manufacturing 74,688, , Wholesale Trade 16,377, Retail Trade 29,837, , Transportation & Warehousing 11,516, Information 48,664, Finance & Insurance 40,725, Real Estate & Rental & Leasing 2,078, Professional & Technical Services 4,494, Management of Companies and Enterprises Administrative & Waste Services 3,150, Educational Services 410, Health Care & Social Assistance 25,172, Arts, Entertainment, & Recreation 1,035, Accommodations & Food Services 9,772, Other Service Except Public Admin 7,364, TOTAL $ 288,462, , % Source: Department of Labor & Training. Data Complied May Largest Employers The following lists the largest private employers in the Town. Name Type of Business # of Employees Metlife Insurance Insurance Provider 2,056 Cox Communications Cable/Internet/Phone Service Provider 820 Amtrol, Inc. Water Heater Mfg. 500 Bradford Soap Works Soap Mfg. 350 Astro-Med, Inc. Medical Supplier 300 Arpin Van Lines Movers 253 Centreville Savings Bank Financial Services 165 Advanced Interconnections Electrial Socket Mfg. 110 West View Nursing Home Nursing Home 140 Cowessett Inn, Inc. Restaurant 105 First Student School Bus Transportation 100 Source: Rhode Island Economic Development Corporation; February 2009 report. 14

19 Housing According to the 2000 U.S. Census, there were 13,186 housing units in the Town as of April, 2000 as compared to 12,488 in This represents an increase of 698 housing units or 5.6%. Occupied housing units totaled 12,498 in 2000, an increase of 776 units or 6.6% from the 11,722 occupied units reported in In 2000, 52% of the occupied housing units were owner-occupied. State. By first quarter of 2009, the median home sales price in the Town was $155,000 compared to $180,000 for the Building Permits Building permits issued by the Town's Building Inspector for the fiscal years indicated and the declared value of construction are as follows: Fiscal Permits Year Issued Value $15,528, ,642, ,935, ,105, ,116 22,207, ,335 22,984, ,045 20,578, ,227 42,507, ,079, ,224, ,186,192 PROPERTY TAXES Under State law, State municipalities, including the Town, are restricted from levying general taxes except ad valorem taxes upon real and personal property and an excise tax on motor vehicles. The Town s fiscal year begins July 1st. Taxes are payable in full in July, or quarterly in July, October, January and April and are based on the prior December 31st assessment. Tax Limitations Rhode Island General Laws Section limits the amount by which a city or town may increase its tax levy unless it qualifies for certain exemptions relating to loss of non-property tax revenue, emergencies, payment of debt service and substantial increase in the tax base necessitating significant expenditures. Through and including its fiscal year 2007, the maximum amount is five and one-half percent (5.5%) in excess of the amount levied for the prior year. The maximum amount a city or town may levy in excess of the amount levied for the prior fiscal year is gradually decreased from five and one-half percent (5.5%) to four percent (4.0%) by decreasing the amount a city or town may levy by one-quarter percent (0.25%) annually beginning in 2008 and ending in For fiscal year 2010, the tax levy cap is four and three-quarters percent (4.75%) in excess of the 2009 levy. Any levy in excess of the percentage increase as specified in subsection (a) or (b) of Section shall be approved by the affirmative vote of at least four-fifths (4/5) of the full membership of the governing body of the city or town and, in the case of a city or town with a financial town meeting, the majority of electors present and voting at the financial town meeting. Section makes it clear that nothing contained therein constrains the payment of obligations as described by Section of the Rhode Island General Laws, which provides that the outstanding notes, bonds and contracts of cities and towns shall be paid and be fulfilled and that the power and obligation of each city and town to pay its general obligation bonds and notes shall be unlimited and each city and town shall levy ad valorem taxes upon all taxable property within the city or town for the payment of such bonds and notes and interest thereon, without limitation as to rate or amount, except as otherwise provided by or pursuant to law. 15

20 Motor Vehicle Excise Tax Phase-out Program The General Assembly passed legislation during the 1998 Legislative Session that eliminates municipal authority to levy an excise tax on motor vehicles and trailers after fiscal year This legislative directive requires all cities and towns to exempt the first $4,500 (based on NADA valuation) in value on all motor vehicles subject to taxation in fiscal year The legislation provided that the value of the exemption would increase each year until a full phase-out was reached in fiscal year The adopted Motor Vehicle Tax Phase-Out also freezes the Town s 1998 Tax Rate for motor vehicles for all future assessment periods. To offset State budget deficits, in 2002, the General Assembly amended this legislation to extend this phase-out period until fiscal year 2008 and to establish the exemption for fiscal year 2003 and thereafter at $4,500. However, phaseouts occurring beyond fiscal year 2003 were subject to annual review and appropriation by the General Assembly. In 2005, the General Assembly increased the exemption for fiscal year 2006 and in 2006 the General Assembly increased the exemption for fiscal year 2007 to $6,000. Any future increases in the phase-out must be specifically approved by the General Assembly. The exemption for fiscal year 2010 remains at $6,000. Assessed Valuations The following table indicates assessed valuations of taxable real, personal property and motor vehicles for fiscal years As of December 31, (2) Assessed Valuation Real Estate $ 1,946,806,200 $ 1,972,958,150 $ 2,572,539,780 $ 2,584,304,380 $ 2,587,494,570 Tangible Personal Property (1) 265,368, ,012, ,985, ,333, ,878,674 Total Assessed Valuation $ 2,212,175,027 $ 2,265,970,667 $ 2,865,525,032 $ 2,860,638,044 $ 2,844,373,244 Less: Exemption 100,391, ,935, ,547, ,463, ,109,293 Net Real & Tangible Personal Property $ 2,111,783,764 $ 2,146,035,237 $ 2,730,978,018 $ 2,728,174,687 $ 2,717,263,951 (1) Includes motor vehicle excise tax. (2) Statistical Update. Analysis of Taxable Property The following table shows an analysis of taxable real and personal property in the Town, assessed as of December 31, 2007 and as reflected in the Tax Rolls for the fiscal year ending June 30, 2009: % of Total Real Estate & Tangible Property Class Town State Residential 80.13% 82.47% Commercial Industrial Utilities & Railroads Motor Vehicles Other Total % % Source: State of RI Department of Administration Annual State Report on Local Government Finances and Tax Equalization. 16

21 Principal Taxpayers The following table sets forth the principal taxpayers in the Town and assessed valuation of property held by such taxpayers as of December 31, Assessed Type of Name Valuation Business Cox Communications $ 26,908,100 Communications Greenwich Place LLC 16,464,900 Condo Sanrose Realty Associates 16,473,400 Realty TC Warwick LLC 14,922,200 Commercial Cox Communications 13,150,950 Communications GPT Tanglewood 11,265,500 Apartments Westcott Terrace LLC 11,038,000 Apartments Amtrol Water Technology LLC 9,560,300 Manufacturing Natco Products Corporation 8,232,370 Manufacturing National Grid 8,219,120 Utility Source: The Town s Tax Assessor's Office. Tax Rate, Levy and Collection Record The Town has semi-annual tax sales for prior year delinquent real property taxes and sewer assessments and sewer use. Delinquent automobile excise taxes are collected in cooperation with the Rhode Island Registry of Motor Vehicles and collection attorneys. If automobile taxes have not been paid, information is supplied to the Registry of Motor Vehicles and motor vehicles may not be re-registered until taxes are paid in full. Other delinquent personal property taxes are collected through a series of delinquent notices, personal contact, payment plans and lawsuits by the Town's Legal Department when necessary. The Town assesses an interest charge of 18% per annum on delinquent accounts. Set forth below is the Town's tax collection record and yearly collection ratio after the fourth quarter taxes are due. Net Total % of Fiscal Tax Abatements Collections % of Net Tax Net Year Rate & Net End of Fiscal Levy End of Collections Levy Ending $1,000 (2) Levy Additions Levy Year Fiscal Year 6/30/09 6/30/ (1) $ $ 49,395,486 (12,580) $ 49,385,905 $ 47,711, % $ 47,711, % ,044,147 (327,289) 46,716,857 45,498, % 46,536, % ,699,149 (63,324) 44,635,825 43,532, % 44,526, % ,061,061 (242,298) 41,818,763 40,975, % 41,712, % ,283,276 (109,694) 40,173,582 39,798, % 40,115, % ,178,753 (140,402) 38,038,711 37,359, % 37,968, % ,714,264 (266,959) 36,477,305 35,784, % 36,393, % ,239,643 (224,628) 36,015,015 34,802, % 35,946, % ,001,036 (368,162) 35,632,874 34,210, % 35,573, % ,888,579 (357,106) 34,531,473 32,579, % 34,519, % (1) Collections through June 30, 2009 (2) Residential Tax Rate Basis of Accounting and Financial Procedures TOWN FINANCES The financial statements of the General Fund are prepared on a modified accrual basis, reflecting assets, liabilities, and financial activities not recorded in separate fund groups. Receivables for property taxes are recorded as assets in the balance sheet with the tax receivables fully offset by reserve accounts. In accordance with generally accepted accounting principles tax revenues are recorded when they become both measurable and available; expenditures and transfers out are recorded when the related liability is incurred. The Town's audit report for the year ended June 30, 2008 is set forth in APPENDIX B of this Official Statement. 17

22 The financial statements set forth herein in APPENDIX A have been prepared by the Director of Finance from financial statements audited by Parmelee, Poirier & Associates, Certified Public Accountants for the years Budgetary Data In accordance with the Town's Home Rule Charter, the Town has formally established budgetary accounting control for its General Fund and the School Unrestricted Fund, which is a Special Revenue Fund. The General Fund is subject to an annual operating budget adopted by the Town Council. The School Unrestricted Fund is subject to an annual operating budget approved by the School Committee and adopted by the Town Council. The annual operating budgets' appropriation amounts are supported by revenue estimates and take into account the elimination of accumulated deficits and the reappropriation of accumulated surpluses to the extent necessary. The General Fund and School Unrestricted Fund's annual operating budgets are in conformity with generally accepted accounting principles and the budget-to-actual presentation in the financial statement reflects the same basis of accounting. Set forth below is a summary of the Town's gross budget for the fiscal years 2008, 2009 and Revenue: Property Taxes $ 46,334,478 $ 48,517,481 $ 50,772,576 Intergovernmental & Departmental Revenues 29,049,046 27,864,754 26,447,287 Local Non-Tax Revenue 4,516,377 3,131,400 2,562,521 Total Revenues $ 79,899,901 $ 79,513,635 $ 79,782,384 Expenditures: Education $ 49,423,901 $ 49,269,685 $ 49,269,685 Legislative, Judicial & General & Administrative 10,093,784 10,192,837 9,897,910 Public Safety 11,229,445 11,347,080 11,569,375 Financial 317, , ,150 Tax Collector 231, , ,090 Tax Assessor 190, , ,359 Public Works 4,116,079 4,010,131 3,651,596 Public Healthcare & Welfare 497, , ,800 Library 814, , ,759 Parks & Recreation 336, , ,823 Debt Service 2,201,224 2,394,639 2,966,337 Capital Budget 444,500 42,700 18,500 Total Expenditures $ 79,896,901 $ 79,513,635 $ 79,782,384 Reporting Requirements of Municipalities and School Districts In June 2003, the Rhode Island General Assembly passed new financial reporting requirements for municipalities in order to ensure that municipalities and school districts monitor their financial operations on an ongoing basis and to prevent potential budget deficits (Rhode Island General Laws Section (the Financial Reporting Act )). Reporting The chief financial officer of the municipality must submit monthly reports to the municipality s chief executive officer, each member of the city or town council, and school district committee certifying the status of the municipal budget, including the school department budget or regional school budget. The chief financial officer of the municipality must also submit quarterly reports to the State Office of the Municipal Affairs certifying the status of the municipal budget. The chief financial officer of the school department or school district shall certify the status of the school district s budget and shall assist in the preparation of these reports. 18

23 If any reports project a year-end deficit, the chief financial officer of the municipality must submit a corrective action plan, providing for the avoidance of a year-end deficit, to the State Office of Municipal Affairs no later than thirty (30) days after completion of his or her monthly budget analysis. If, at the end of the fiscal year, the chief financial official determines that it is likely that the city or town s general fund or combined general fund and unrestricted school special revenue fund will incur a deficit, the municipality must immediately develop a plan to eliminate the accumulated year-end deficit by annual appropriation over no more than five (5) years. This plan must be submitted to the State Auditor General for approval. Restrictions and Requirements Remedies No municipality can sell long-term bonds in order to fund a deficit without prior approval by the Rhode Island Auditor General and the Director of the Rhode Island Department of Administration. No municipality can incur expenditures or obligate the municipality to expend unbudgeted amounts in excess of $100,000 without first notifying the city or town council of the proposed expenditure and identifying the source of funding. Any such expenditure must be included in the chief financial officer s monthly report. No school committee or school department can incur accumulated unbudgeted expenditures in excess of $100,000 without notifying the chief financial officer of the municipality of the proposed expenditure and identifying the source of funding. Any such expenditure must be included in the chief financial officer s monthly report. School committees, boards or regional school districts that are independent government entities within a municipality must cooperate in providing to the chief financial officer all information needed to formulate his or her reports and the deficit elimination plan. If a municipality does not comply with the requirements of the Financial Reporting Act, the State Auditor General or State Office of Municipal Affairs, through the Director of Administration, may elect any or all of the following remedies: - Petition the Superior Court for mandatory injunctive relief seeking compliance with the provisions of the Financial Reporting Act; - In the event a municipality fails to provide a year-end deficit elimination plan, implement a budget and review commission pursuant to Rhode Island General Laws Section ; - Withhold State Aid. If a school committee or board fails to cooperate with the municipality or provide all information requested by the chief financial officer needed to formulate a plan: - The Auditor General or the Director of Administration may petition the Superior Court to order the school committee or board to cooperate; and - The Director of Administration may also direct the Rhode Island Controller and General Treasurer to withhold state aid from a school committee until the school committee or board cooperates in the formulation of the plan. The Town has not been advised by the State Auditor General or the State Director of Administration that it is not in compliance with the requirements of the Financial Reporting Act. 19

24 Intervention of Budget and Review Commission in the Event of Certain Financial Difficulties The director of the state department of administration (hereinafter director ) is empowered under Rhode Island General Laws Section to authorize, create, and establish a budget and review commission in any town or city where the director finds that the town or city s bond rating has been assigned by one or more recognized rating agencies a rating which is below investment grade and there is an imminent threat of default on any or all of its debt obligations. The budget and review commission shall consist of the chief executive officer of the town or city; the president of the town or city council; three (3) public members from the affected municipality, at least one of whom shall be qualified by training or experience in the fields of finance or accounting, to be appointed by the governor, with the advice and consent of the senate; two (2) ex-officio state officials who shall be the director, or his or her designee from the department of the administration; and one member of the public finance management board to be appointed by the governor, with the advice and consent of the senate. The director shall serve as chair of the commission. The powers of the budget and review commission shall be to impose taxes and to make appropriations for the expenditure of moneys, for the purpose of adopting a budget and, for the purpose of maintaining a balanced budget, the budget and review commission shall make reductions or suspensions in the appropriations to any or all departments, offices or other agencies of town or city government as will prevent a deficit for the fiscal year. The budget and review commission shall remain in the office until that time as the chief executive officer of the town or city and the town or city council petitions the director to disband the budget and review commission. The budget and review commission shall commence its work by examining the financial and operating condition of the city or town and shall also advise the chief executive officer, city or town council and the fiscal officials of the city or town on the formulation of adequate budget and budgetary controls. Within ninety (90) days of its being disbanded, the budget and review commission shall approve and issue a report detailing its findings and recommendations. The examination and report shall be completed and published no sooner than three (3) weeks after the formation of the budget and review commission. The commission shall commence the exercise of its powers only after the examination and publication of the commission s report. Recent Financial Events The Town generated a deficit in the year fiscal ending June 30, 2008 in the amount of $1.5 million primarily due to the School Department overspending its budget by $1.1 million. The School Department has projected another deficit in the amount of $3.3 million for the fiscal year ending June 30, Under what is known as a Caruolo action, the Town was facing a lawsuit brought by its School Department seeking $3.3 million in additional local appropriation for the fiscal year ending June 30, The case was recently dismissed by the court. The Town and School Department will be meeting in the next few weeks to address the projected deficit. The Town is projecting a $200,000 surplus (Municipal Budget) for the fiscal year ending June 30, State School Operations Aid Pursuant to Rhode Island General Laws Sections to , as amended, the State provides operations assistance to each municipality and school district in the State, subject to annual appropriation by the General Assembly. The statute provides for a guaranteed minimum per pupil expenditure set by each municipality under a formula prescribed by the statute and equalized with other municipalities on the basis of assessed valuations and other factors as determined by the Rhode Island General Assembly. The legislation guarantees a minimum program for every pupil, and, if the municipality fails to provide adequate funds for such program, the State transfers other State Aid due to the municipality to the school account. Under this program, the Town School Department received $19,499,965 in the fiscal year ended June 30, The Town has budgeted $20,440,547 and $20,440,547 for the year ending June 2009 and June 30, 2010, respectively. The legislation authorizing State school operations is subject to future change. 20

25 State School Construction Aid Pursuant to Rhode Island General Laws Section to , as amended, the State provides construction aid to Rhode Island municipalities for the cost of building or renovating public schools. All buildings constructed or renovated since July 1, 1949 are eligible for assistance of a minimum of 30% of the full cost of such buildings. Such assistance level may be further increased by a formula, which takes into account the equalized assessed valuation and debt service burden of the particular municipality. For the fiscal year ended June 30, 2008, the Town received $1,377,910 school construction aid. The Town has budgeted $1,375,000 and $1,375,000 for fiscal year ending June 30, 2009 and June 30, 2010, respectively. The legislation authorizing State School Construction Aid is subject to future change and all State aid is subject to annual appropriation by the Rhode Island General Assembly. School housing project costs include the cost of interest on any bond issued after July 1, For projects approved by the voters after June 30, 2003, the cost of interest on any bond will be reimbursed as an eligible project cost only if the bonds for these projects are issued through the Rhode Island Health and Educational Building Corporation. School housing project costs subject to State Aid reimbursement shall not include bond issuance costs and demolition cost for buildings, facilities or sites deemed surplus by the School Committee. State aid reimbursement for school construction projects is based on the share ratio established for that year by the Rhode Island Department of Education. For the current year, the Town's share ratio is approximately 51%. This ratio can vary from year to year. State Library Construction Aid Pursuant to Rhode Island General Laws Section , as amended, the State Department of Library Services has agreed to reimburse the Town for fifty (50%) percent of the State approved construction costs of the Champlin Memorial Library funded in part by proceeds of $2,000,000 Bonds issued in September, 1991, such reimbursement not to exceed $1,189,000, plus interest costs incurred by borrowing the State's share of construction costs. Reimbursement by the State begins in the fiscal year following the completion and acceptance of the Library. It is anticipated that reimbursement will be made in equal installments, plus the interest reimbursement, over twenty years, commencing in the fiscal year; the Town received $87,694 in the fiscal year ended June 30, The Town has budgeted $82,901 and $82,901 for fiscal years ending June 30, 2009 and June 30, 2010, respectively. The legislation authorizing state library construction aid is subject to future change and all state aid is subject to annual appropriation by the Rhode Island General Assembly. Other State Aid In addition to School Operations Aid and School Construction Aid, municipalities in Rhode Island have received additional aid through the State General Revenue Sharing program and other miscellaneous State aid. The General Revenue Sharing program, with a distribution formula similar to the Federal Revenue Sharing program, replaced various State grant and aid programs as of July 1, For the fiscal year ended June 30, 2008 the Town received other miscellaneous State aid in the amount of $2,648,130. The Town has budgeted $2,978,568 and $1,561,101 for fiscal year ending June 30, 2009 and June 30, 2010, respectively. General TOWN DEBT Bonds of the Town are generally authorized pursuant to special legislation, which requires referendum approval and a majority vote of the Town Council. Such legislation normally provides that the indebtedness is not subject to the general three percent debt limit. (See "Debt Limit" below). Town Bonds may also be authorized within the general debt limit of Section of the Rhode Island General Laws and by an ordinance passed by a majority vote of the Town Council. In addition, the Town Council may similarly authorize refunding Bonds by resolution, but no referendum is required. 21

26 Debt Limit Except as provided below, under Chapter of the Rhode Island General Laws the Town may not, without special statutory authorization, incur any debt which would increase its aggregate indebtedness not otherwise excepted by law to an amount greater than 3% of the taxable property of the Town. Deducted from the computation of aggregate indebtedness is the amount of any borrowing in anticipation of taxes authorized by law and the amount of any sinking funds maintained by the Town. The State Legislature may by special act permit the Town to incur indebtedness outside the 3% debt limit. Special legislation adopted by the Legislature authorizing the Town to incur debt generally is subject to referendum by the electors of the Town. The Town s assessed valuation was $2,844,373,244 as of December 31, Based on this amount, the current 3% debt limit of the Town is $85,331,197. On June 30, 2008, the total outstanding debt of the Town issued within the 3% debt limit was $22,963,000 leaving capacity of $62,368,197. Tax Anticipation Notes Under Rhode Island law the Town may borrow in each fiscal year, in anticipation of the receipt of the proceeds of the property tax due in such fiscal year, an amount which shall not exceed the total tax levy of the then current fiscal year, or, if no tax levy has yet been made, which does not exceed the tax levy of the next preceding fiscal year. Tax anticipation notes must be payable not later than one year from their date, but notes issued for less than one year may be renewed, provided such renewal notes are payable within one year of the date of the original notes. The Town has not issued tax anticipation notes since Authorized But Unissued Debt The following table sets forth the amounts, purposes and statutorily authorized but unissued general obligation debt of the Town. Chapter/ Total Notes Bonds Section Year Description Authority Issued Issued Unissued Open Space $ 2,000,000 $ - $ 850,000 $ 1,150, Sewer 2,500, ,500,000 Comparative Statement of Outstanding Debt The outstanding general obligation ( GO ) debt of the Town for the fiscal years ended was as follows: For the Fiscal Years Ended June 30, General Obligation Bonds School Bonds $ 14,525,000 $ 13,890,000 $ 16,678,000 $ 15,758,000 $ 20,065,000 Town Capital Improvements - - 2,100,000 1,990,000 1,880,000 GO Refunding 2,765,404 1,040, , , ,000 Open Space 535, , , , ,000 Total GO Debt $ 17,825,404 $ 15,425,000 $ 20,143,000 $ 18,938,000 $ 22,960,000 Sewer Bonds Payable Sewer Capital Appreciation Bond $ 1,364,211 $ 878,041 $ 426,023 $ - $ - Sewer Refunding 2,774,596 1,495,000 1,130, , ,000 Total Sewer Debt $ 4,138,807 $ 2,373,041 $ 1,556,023 $ 760,000 $ 385,000 Total GO Debt Outstanding $ 21,964,211 $ 17,798,041 $ 21,699,023 $ 19,698,000 $ 23,345,000 22

27 Wastewater System Revenue Bonds In addition to the above General Obligation Bonds, the Town privately placed the following Wastewater System Revenue Bonds with the Rhode Island Clean Water Finance Agency ( RICWFA ): For the Fiscal Years Ended June, Sewer Revenue Bonds Payable RICWFA Sewer Loan - 6/5/03 $ 20,923,000 $ 20,923,000 $ 19,802,000 $ 18,681,000 $ 17,560,000 Revenue Note - 3/9/04 7,719,000 7,719, RICWFA Sewer Loan - 12/30/04-3,000,000 3,000,000 2,872,000 2,742,000 RICWFA Sewer Loan - 12/15/ ,719,000 7,395,000 7,066,000 RICWFA Sewer Loan - 9/1/ , ,000 Total Sewer Revenue Debt $ 28,642,000 $ 31,642,000 $ 30,521,000 $ 29,448,000 $ 27,847,000 The Town's bonds issued to the RICWFA are not general obligations of the Town, but rather, are special obligations payable solely from wastewater system revenues. See THE TOWN OF WEST WARWICK - Government Services Sewer System. Actual Bonded Debt Service Requirements The following table sets forth a schedule of the Town s actual bonded General Obligation debt service for the fiscal years ending Fiscal Year Existing G.O. Debt Service (1)(2)(3) Series A Bonds Series B Bonds Total June 30, Principal Interest Principal Interest Principal Interest Debt Service 2010 $ 1,235,500 $ 797,433 $ - $ 167,254 $ 305,000 $ 38,698 $ 2,543, ,285, , , , ,000 56,938 2,885, ,315, , , , ,000 51,338 2,839, ,340, , , , ,000 45,938 2,796, ,240, , , , ,000 39,313 2,634, ,200, , , , ,000 31,513 2,529, ,225, , , , ,000 23,863 2,493, ,250, , , , ,000 16,363 2,455, ,280, , , , ,000 8,400 2,417, ,315, , , , ,147, ,350, , , , ,128, ,385, , , , ,103, ,425, , , , ,080, ,000 81, , , , ,000 64, , , , ,000 47, , , , ,000 31, ,000 86, , ,000 17, ,000 66, , ,000 5, ,000 45, , ,000 23, , $ 18,751,500 $ 6,427,449 $ 6,500,000 $ 3,451,423 $ 2,370,000 $ 312,361 $ 37,812,733 (1) Includes annual sinking fund payments and supplemental coupon on 2005 QZAB $3,688,000 Issue (2) Excludes self-supporting sewer debt (3) Excludes bonds being refunded. 23

28 Debt Ratios and Debt Per Capita Set forth in the table below are the Town s General Obligation Debt Ratios and Debt Per Capita for the years Ratio of Net Debt Payable Bonded Net Gross from Net Debt to Bonded Fiscal Assessed Bonded Enterprise Bonded Assessed Per Year Population(1) Valuation Debt Revenue Debt Value Capita ,268 $ 1,166,836,698 $ 34,971,308 $ 14,212,066 $ 20,759, % $ ,268 1,193,029,934 30,075,726 12,730,684 17,345, % ,581 1,189,912,533 25,503,778 10,856,536 14,647, % ,581 1,203,754,848 21,653,608 9,086,808 12,566, % ,581 1,306,065,761 28,231,754 7,312,554 20,919, % ,581 1,300,806,121 26,053,535 5,855,410 20,198, % ,581 1,323,519,121 21,964,211 4,138,807 17,825, % ,581 2,173,269,916 17,798,041 2,373,041 15,425, % ,581 2,212,175,027 21,699,023 1,556,023 20,143, % ,581 2,265,970,667 19,698, ,000 18,938, % ,581 2,865,525,032 23,348, ,000 22,963, % (1) U.S. Census LITIGATION After a devastating fire occurred in February of 2003 at The Station Nightclub located in West Warwick, RI, multiple suits (consolidated) were filed on behalf of the 100 individuals who died in the fire and 206 other individuals who were either injured or had loss of consortium claims. Eventually, all of the suits were removed to the Federal District Court for the District of Rhode Island. The Town of West Warwick and a number of West Warwick employees (Town s Fire Inspector, Building Inspector and a police officer who was present at the time of the fire on a detail assignment) were named as defendants along with a number of individuals and corporations. Generally, the defendants fit into four categories: 1.) Government entities and officials such as the Town of West Warwick and the State of Rhode Island; 2.) Manufacturing entities such as the foam company and suppliers of some of the building materials; 3.) Promotion related companies such as Anheuser-Busch who sponsored the concert taking place when the fire occurred and various broadcasting entities who had some part in the promotional aspects of the concert; and 4.) Entities and individuals related to the nightclub and the band that was playing at the time such as the owners of the nightclub, the owner of the building and the band and its members. The Town, along with many other defendants, filed an initial motion to dismiss. The Town of West Warwick s motion to dismiss was denied by the Court. In fact, most of the initial motions to dismiss were denied. Numerous defendants including the Town of West Warwick filed motions for summary judgment. While those motions were pending and before significant discovery occurred, the plaintiffs and most of the defendants entered into initial settlement agreements. The total settlement amount for all of the defendants is $176,193,000. The Town of West Warwick defendants contribution to this overall settlement amount is $10,000,000. It should be noted that the State of Rhode Island also agreed to contribute $10,000,000 as the overall settlement amount. The Town s decision to settle is based on a number of factors. One of those factors concerns the unique makeup of Rhode Island law regarding joint and several liability. In this matter, any non-settling defendants if found liable, will be responsible for the entire amount of the loss minus the amount received by the settling entities without regard to the percentage of liability of each non-settling entity. Generally, estimates of the amount of total loss to compensate all of the plaintiffs in this matter are in the range of $750,000,000 to $1,000,000,000. This total amount served as an incentive for all defendants to settle so as not to be left to pay the gap between the settlement amounts and the overall damage loss. 24

29 In addition, the $10,000,000 settlement of behalf of the Town, in comparison to the other settling defendants and the overall settlement amount, is responsible considering the potential loss. The Town s insurance coverage started at $4,000,000 but is reduced by the legal expenses. It is estimated that eventually, insurance coverage will be at $3.5 million. Therefore, the Town s contribution to the settlement amount is approximately $6.5 million. The Federal Court and all counsel have been diligently working on the complicated settlement including a universal release and the approval of all settlements by the Court (including settlements by minors) using a Special Master. It is expected that the payouts will be due sometime in September of During the ordinary course of its operations, the Town is a party to various claims, other legal actions and complaints. These various legal actions include disputes in property valuations and torts for which the Town has been named as a defendant. In the opinion of the Town s management and legal counsel, other than the matter stated above they do not anticipate any of them to have a material financial impact, or at this time their legal counsel has been unable to assess liability, if any, on the part of the Town. TAX STATUS In the opinion of Edwards Angell Palmer & Dodge LLP, Bond Counsel to the Town ( Bond Counsel ), based upon an analysis of existing laws, regulations, rulings, and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the Code ). On February 17, 2009, the President signed the American Recovery and Reinvestment Act of 2009 (the Recovery Act ) into law. The Recovery Act includes changes which modify the treatment under the alternative minimum tax of interest on certain bonds of state and local government entities. Interest on the Series A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes and, as a result of the modifications made by the Recovery Act, is not included in adjusted current earnings when calculating corporate alternative minimum taxable income. Such alternative minimum tax modifications are not applicable to the Series B Bonds. Bond Counsel is of the opinion that interest on the Series B Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other federal tax consequences arising with respect to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. The Code imposes various requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. Failure to comply with these requirements may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The Town has covenanted to comply with such requirements to ensure that interest on the Bonds will not be included in federal gross income. The opinion of Bond Counsel assumes compliance with these covenants. Other than as expressly stated herein, Bond Counsel expresses no opinion regarding any other federal tax consequences arising with respect to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. Bond Counsel is also of the opinion that, under existing law, interest on the Bonds is free from taxation by the State or any political subdivision or other instrumentality of the State, although the Bonds and the income therefrom may be included in the measure of certain Rhode Island corporate and business taxes. Bond Counsel has not opined as to other Rhode Island tax consequences arising with respect to the Bonds. Prospective Bondholders should be aware, however, that the Bonds may be included in the measure of Rhode Island estate taxes, and the Bonds and the interest thereon may be included in the measure of certain Rhode Island corporate and business taxes. Bond Counsel has not opined as to the taxability of the Bonds or the income therefrom under the laws of any state other than Rhode Island. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX C hereto. To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes original issue discount, the accrual of which, to the extent properly allocable to each owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and is exempt from Rhode Island income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with 25

30 respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Bondholders should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public. Bonds purchased, whether at original issuance or otherwise, for an amount greater than the stated principal amount to be paid at maturity of such Bonds, or, in some cases, at the earlier redemption date of such Bonds ( Premium Bonds ), will be treated as having amortizable bond premium for federal income tax purposes and Rhode Island income tax purposes. No deduction is allowable for the amortizable bond premium in the case of obligations, such as the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, a Bondholder s basis in a Premium Bond will be reduced by the amount of amortizable bond premium properly allocable to such Bondholder. Holders of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Further, no assurance can be given that pending or future legislation, including amendments to the Code, if enacted into law, or any proposed legislation, including amendments to the Code, or any future judicial, regulatory or administrative interpretation or development with respect to existing law, will not adversely affect the value of, or the tax status of interest on, the Bonds. Prospective holders of the Bonds are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax. Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from Rhode Island income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect a Bondholder s federal or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the Bondholder or the Bondholder s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences, and holders of the Bonds should consult with their own tax advisors with respect to such consequences. CONTINUING DISCLOSURE In order to assist the Underwriter in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission (the "Rule"), the Town will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the Town by not later than 240 days after the end of each fiscal year commencing with the fiscal year ending June 30, 2010 (the "Annual Report"), to provide notices of the occurrence of certain enumerated events, if material and to provide notice of failure to provide the Annual Report. The covenants will be contained in a Continuing Disclosure Certificate, the proposed form of which is provided in APPENDIX D. The Town has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12. CERTAIN LEGAL MATTERS All legal matters incidental to the authorization, issuance, sale and delivery of the Bonds are subject to the approval of Edwards Angell Palmer Dodge LLP, Providence, Rhode Island, Bond Counsel, whose approving opinion substantially in the form appended hereto as APPENDIX C will be delivered with the issuance of the Bonds. Certain legal matters will be passed upon for the Underwriter by its counsel, Pannone Lopes Devereaux & West LLC, of Providence, Rhode Island. 26

31 FINANCIAL ADVISOR First Southwest Company ( FSC ) is employed by the Town to perform professional services in the capacity of financial advisor. In its role as financial advisor to the Town, FSC has provided advice on the plan of financing and structure of the Bonds, reviewed certain legal and disclosure documents, including this Official Statement, for financial matters, and assisted the Town with the pricing of the Bonds. As the Town s financial advisor, FSC has not independently verified the factual information contained in this Official Statement but relied on the information supplied by the Town and other sources and the Town s certification as to the Official Statement. UNDERWRITING The Series A Bonds are being purchased for reoffering by the Janney Montgomery Scott LLC, at an aggregate purchase price for the Series A Bonds of par plus a net premium of $185, less the underwriter s compensation of $53, The Underwriter may offer and sell the Series A Bonds to certain dealers and others at prices other than the initial offering price. The offering price may be changed from time to time by the Underwriter. The Series B Bonds are being purchased for reoffering by the Janney Montgomery Scott LLC, at an aggregate purchase price for the Series B Bonds of par plus a net premium of $20, less the underwriter s compensation of $15, The Underwriter may offer and sell the Series B Bonds to certain dealers and others at prices other than the initial offering price. The offering price may be changed from time to time by the Underwriter. RATING The Bonds are expected to be assigned a rating by Moody s Investors Service ( Moody s ). The rating assigned by Moody s is Aa2 (on review for possible downgrade) based upon the understanding that the payment of the principal of and interest on the Bonds will be guaranteed by a financial guaranty insurance policy to be issued by Assured Guaranty Corporation simultaneously with the delivery of the Bonds. The Town has an underlying rating of Baa1 from Moody s. Such ratings reflect only the views of Moody s, and an explanation of the significance of such ratings may be obtained from the Moody s. There is no assurance that the rating given the Bonds or the Town by Moody s will be maintained for any given period of time or that it may not be revised downward or withdrawn entirely. Any such downward change in or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. MISCELLANEOUS All quotations from and summaries and explanations of laws herein do not purport to be complete, and reference is made to said laws for full and complete statements of their provisions. This Official Statement is submitted only in connection with the sale of the Bonds by the Town and may not be reproduced or used in whole or in part for any other purpose, except for the purpose of compliance with applicable securities laws and regulations. TOWN OF WEST WARWICK, RHODE ISLAND /s/ Malcolm Moore Director of Finance Dated: August 6,

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33 APPENDIX A TOWN OF WEST WARWICK, RHODE ISLAND COMPARATIVE BALANCE SHEET GENERAL FUND (1) For the Fiscal Year Ended June 30, Assets Cash & Investments $ 14,724,658 $ 16,002,803 $ 21,488,826 $ 15,251,612 $ 12,660,825 Accounts Receivable: Real Estate & Personal Property Tax Assessments 2,919,179 2,694,315 1,686,974 1,902,340 2,040,509 Due from Federal & State Governments , ,265 - Other Receivables 234, ,019 40,437 36, ,152 Other Assets: Other Assets 144, , , , ,456 Internal Balances 1,679,559 2,007,957 1,841,793 2,628,686 2,410,244 Inventories 21,102 12,783 22,758 24,612 35,424 Total Assets $ 19,723,556 $ 20,922,977 $ 25,421,567 $ 20,511,814 $ 18,227,610 Liabilities & Reserves Accounts Payable & Accrued Interest 1,326,901 1,045,706 1,399,075 1,281,763 1,225,469 Due to Other Funds Due to Federal & State Governments Deferred Revenue 5,348,820 6,950,401 7,003,578 5,941,003 7,000,969 Reserves Other Liabilities 5,217,228 4,969,541 8,277,150 6,193,536 5,695,317 Total Liabilities & Reserves $ 11,892,949 $ 12,965,648 $ 16,679,803 $ 13,416,302 $ 13,921,755 Fund Balances: Reserved for Inventory 21,102 12,782 22,758 24,612 35,424 Reserved - Other 2,538,430 2,954, , , ,351 Unreserved - Designated for next years budget - - 3,390, ,602 - Unreserved Surplus / (Deficit) (2) 5,271,075 4,989,556 4,745,857 5,763,851 4,104,080 Total Fund Equity 7,830,607 7,957,329 8,741,764 7,095,512 4,305,855 Total Liabilities & Fund Equity $ 19,723,556 $ 20,922,977 $ 25,421,567 $ 20,511,814 $ 18,227,610 (1) Prepared from audited financial statements. (2) The Town's Charter requires the Town to maintain a minimum undesignated fund balance of 5% of operating revenues. A - 1

34 TOWN OF WEST WARWICK, RHODE ISLAND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GENERAL FUND (1) For the Fiscal Year Ended June 30, Revenues: General Property $ 38,229,030 $ 40,242,266 $ 42,013,684 $ 44,289,634 $ 46,294,634 Intergovernmental & Departmental Revenue 26,690,844 26,799,305 26,994,093 28,292,802 28,551,440 Licenses & Permits 1,292,415 1,892,852 1,958,581 2,726,801 2,142,820 Fines & Interest on Late Payments 420, , , , ,658 Interest on Investments 263, , , , ,053 Other Revenues 151,433 70,134 1,341,844 46,003 52,112 Total Revenues $ 67,048,036 $ 69,824,695 $ 73,112,100 $ 76,552,841 $ 78,069,717 Expenditures: General Government $ 6,958,589 $ 6,503,818 $ 8,009,944 $ 9,605,843 $ 9,729,539 Financial Government 816, , , , ,673 Public Safety 9,649,844 10,016,903 10,702,117 11,042,255 11,632,240 Public Works 3,920,419 3,959,916 4,148,197 4,250,885 4,856,031 Debt Service 3,312,434 3,226,009 1,870,849 2,036,175 1,862,537 Other Activates 2,194,749 2,299,721 2,466,092 2,613,440 1,683,468 Total Expenditures $ 26,852,421 $ 26,790,760 $ 27,921,711 $ 30,518,638 $ 30,525,488 Excess of Revenues Over (Under) Expenditures 40,195,421 43,033,935 45,190,389 46,034,203 47,544,229 Other Financial Sources (Uses) Sale of Capital Assets ,002 25,101 16,032 Transfer from Other Funds 145, , ,000 82,113 Transfer (to) Other Funds (40,492,757) (43,075,598) (44,908,896) (47,885,556) (50,432,031) Total other Financing Sources (Uses) (40,346,858) (42,907,213) (44,405,894) (47,680,455) (50,333,886) Excess of Revenues & Other Sources Over (Under) Expenditures & Other Uses (151,243) 126, ,495 (1,646,252) (2,789,657) (Increase) in Reserves Net Changes in Unreserved Fund Balance for the Year Fund Balance - Beginning 7,981,850 7,830,607 7,957,329 8,741,764 7,095,521 Adjustments to Prior Years Fund Balance - Ending $ 7,830,607 $ 7,957,329 $ 8,741,824 $ 7,095,512 $ 4,305,864 (1) Prepared from audited financial statements. A - 2

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179 APPENDIX C [Date of Delivery] Town of West Warwick, Rhode Island 1170 Main Street West Warwick, Rhode Island Ladies and Gentlemen: $6,500,000 Town of West Warwick, Rhode Island General Obligation Bonds, Series 2009 A Dated: August 20, 2009, Due: April 1, and $2,370,000 Town of West Warwick, Rhode Island General Obligation Refunding Bonds, Series 2009 B Dated: August 20, 2009, Due: April 1, We have acted as bond counsel to the Town of West Warwick, Rhode Island (the Town ) in connection with the issuance by the Town of its $6,500,000 General Obligation Bonds, Series 2009 A dated August 20, 2009, due April 1, (the Series A Bonds ) and $2,370,000 General Obligation Refunding Bonds, Series 2009 B dated August 20, 2009, due April 1, (the Series B Bonds, and together with the Series A Bonds, collectively, the Bonds ). In such capacity, we have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations and covenants of the Town in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based on our examination, we are of the opinion under existing law, as follows: 1. The Bonds are valid general obligations of the Town, and all taxable property in the Town is subject to taxation without limitation as to rate or amount to pay the Bonds and the interest thereon. 2. Interest on the Bonds is excluded from the gross income of the owners of the Bonds for federal income tax purposes. In addition, interest on the Series A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes and is not included in adjusted current earnings when calculating corporate alternative minimum taxable income. Interest on the Series B Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes although such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. In rendering the opinions set forth in this paragraph, we have assumed compliance by the Town with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, and continue to be, excluded from gross income for federal income tax purposes. The Town has covenanted to comply with all such requirements. Failure by the Town to comply with certain of such requirements may cause interest on the Bonds to become included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. We express no opinion regarding any other federal tax consequences arising with respect to the Bonds. C-1

180 Town of West Warwick, Rhode Island [Date of Delivery] Page 2 of 2 3. Income from the Bonds is free from taxation by the State of Rhode Island or any political subdivision or other instrumentality of the State although the income therefrom may be included in the measure of Rhode Island estate taxes and certain Rhode Island corporate and business taxes. We express no opinion regarding any other Rhode Island tax consequences arising with respect to the Bonds or any tax consequences arising with respect to the Bonds under the laws of any state other than Rhode Island. This opinion is expressed as of the date hereof, and we neither assume nor undertake any obligation to update, revise, supplement or restate this opinion to reflect any action taken or omitted, or any facts or circumstances or changes in law or in the interpretation thereof, that may hereafter arise or occur, or for any other reason. The rights of the holders of the Bonds and the enforceability of the Bonds may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights heretofore or hereafter enacted to the extent constitutionally applicable, and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. EDWARDS ANGELL PALMER & DODGE LLP C-2

181 PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX D This Continuing Disclosure Certificate (the Disclosure Certificate ) is executed and delivered by the Town of West Warwick, Rhode Island (the Issuer ) in connection with the issuance of its $6,500,000 General Obligation Bonds, Series 2009 A, dated August 20, 2009, due April 1, (the Series A Bonds ) and $2,370,000 General Obligation Refunding Bonds, Series 2009 B, dated August 20, 2009, due April 1, (the Series B Bonds ) (the Series A Bonds and the Series B Bonds are hereinafter collectively referred to as the Bonds). The Issuer covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Owners of the Bonds and in order to assist the Participating Underwriters in complying with the Rule. SECTION 2. Definitions. For purposes of this Disclosure Certificate the following capitalized terms shall have the following meanings: Annual Report shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. Listed Events shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. MSRB shall mean the Municipal Securities Rulemaking Board established pursuant to Section 15(b)(1) of the Securities and Exchange Act of 1934, as amended, and designated as the sole repository by the Securities and Exchange Commission to receive filings pursuant to the Rule. Owners of the Bonds shall mean the registered owners, including beneficial owners, of the Bonds. Participating Underwriter shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. Rule shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. SECTION 3. Provision of Annual Reports. (a) Commencing with the fiscal year ending June 30, 2010, the Issuer shall, not later than 270 days after the end of each fiscal year, provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; D-1

182 provided that the audited financial statements of the Issuer may be submitted when available separately from the balance of the Annual Report. (b) If the Issuer is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the Issuer shall send a notice to the MSRB, in substantially the form attached as Exhibit A. SECTION 4. Content of Annual Reports. The Issuer s Annual Report shall contain or incorporate by reference the following: (a) quantitative information for the preceding fiscal year of the type presented in the Issuer s Official Statement dated August 6, 2009 relating to the Bonds regarding (i) the revenues and expenditures of the Issuer relating to its operating budget, (ii) fund balances, (iii) property tax information, (iv) outstanding indebtedness and overlapping debt of the Issuer, and (v) pension obligations of the Issuer, and (b) the most recently available audited financial statements of the Issuer, prepared in accordance with generally accepted accounting principles (except for the omission, if any, of a statement of fixed assets). If audited financial statements for the preceding fiscal year are not available when the Annual Report is submitted, the Annual Report will include unaudited financial statements for the preceding fiscal year and audited financial statements for such fiscal year shall be submitted when available. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which (i) are available to the public on the MSRB internet website or (ii) have been filed with the Securities and Exchange Commission. The Issuer shall clearly identify each such other document so incorporated by reference. SECTION 5. Reporting of Material Events. (a) The Issuer shall give notice, in accordance with subsection 5(b) below, of the occurrence of any of the following events with respect to the Bonds, if material: 1. Principal and interest payment delinquencies. 2. Non-payment related defaults. 3. Unscheduled draws on debt service reserves reflecting financial difficulties. 4. Unscheduled draws on credit enhancements reflecting financial difficulties. 5. Substitution of credit or liquidity providers, or their failure to perform. D-2

183 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds. 7. Modifications to rights of the Owners of the Bonds. 8. Bond calls. 9. Defeasances. 10. Release, substitution or sale of property securing repayment of the Bonds. 11. Rating changes. It should be noted, however, that as of this date events of the types listed in paragraphs 2, 3, 8, and 10 above are not applicable to the Bonds. (b) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, the Issuer shall as soon as possible determine if such an event would be material under applicable federal securities laws and if so, the Issuer shall promptly file a notice of such occurrence with the MSRB. SECTION 6. Filing Requirements. All documents required under this Disclosure Certificate to be provided to the MSRB shall be accompanied by indentifying information as prescribed by the MSRB and shall be made in electronic format through the Electronic Municipal Market Access ( EMMA ) website, currently located at SECTION 7. Termination of Reporting Obligation. The Issuer s obligations under this Disclosure Certificate shall terminate upon the legal defeasance in accordance with the terms of the Bonds, prior redemption or payment in full of all of the Bonds. SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Issuer may amend this Disclosure Certificate and any provision of this Disclosure Certificate may be waived if such amendment or waiver is permitted by the Rule, as evidenced by an opinion of counsel experienced in federal securities law (to the effect that performance by the parties to this Disclosure Certificate as so amended will not cause the Disclosure Certificate to violate the Rule. The first Annual Report filed after enactment of any amendment to or waiver of this Disclosure Certificate shall explain, in narrative form, the reasons for the amendment or waiver and the impact of the change in the type of information being provided in the Annual Report. If the amendment provides for a change in the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information in order to provide information to investors to enable D-3

184 them to evaluate the ability of the Issuer to meet its obligations. To the extent reasonably feasible, the comparison shall also be quantitative. SECTION 9. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate any Owner of the Bonds may seek a court order for specific performance by the Issuer of its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not constitute a default with respect to the Bonds, and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action for specific performance of the Issuer s obligations hereunder and not for money damages in any amount. SECTION 10. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Owners of the Bonds from time to time, and shall create no rights in any other person or entity. SECTION 11. Enforcement. This Disclosure Certificate shall be construed and interpreted in accordance with the laws of the State of Rhode Island (the State ), and any suits and actions arising out of this Disclosure Certificate shall be instituted in a court of competent jurisdiction in the State; provided, however, that to the extent this Disclosure Certificate addresses matters of federal securities laws, including the Rule, this Disclosure Certificate shall be construed in accordance with such federal securities laws and official interpretations thereof. Date: August, 2009 TOWN OF WEST WARWICK, RHODE ISLAND By: Finance Director D-4

185 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Name of Issue: Town of West Warwick, Rhode Island $6,500,000 General Obligation Bonds, Series 2009 A $2,370,000 General Obligation Refunding Bonds, Series 2009 B Date of Issuance: August 20, 2009 NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate of the Issuer dated August 20, The Issuer anticipates that the Annual Report will be filed by. Dated: TOWN OF WEST WARWICK, RHODE ISLAND By: D-5

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187 APPENDIX E Financial Guaranty Insurance Policy Issuer: Policy No.: Obligations: Premium: Effective Date: Assured Guaranty Corp., a Maryland corporation ( Assured Guaranty ), in consideration of the payment of the Premium and on the terms and subject to the conditions of this Policy (which includes each endorsement hereto), hereby unconditionally and irrevocably agrees to pay to the trustee (the Trustee ) or the paying agent (the Paying Agent ) for the Obligations (as set forth in the documentation providing for the issuance of and securing the Obligations) for the benefit of the Holders, that portion of the Insured Payments which shall become Due for Payment but shall be unpaid by reason of Nonpayment. Assured Guaranty will make such Insured Payments to the Trustee or the Paying Agent on the later to occur of (i) the date applicable principal or interest becomes Due for Payment, or (ii) the Business Day next following the day on which Assured Guaranty shall have Received a completed Notice of Nonpayment. If a Notice of Nonpayment by Assured Guaranty is incomplete or does not in any instance conform to the terms and conditions of this Policy, it shall be deemed not Received, and Assured Guaranty shall promptly give notice to the Trustee or the Paying Agent. Upon receipt of such notice, the Trustee or the Paying Agent may submit an amended Notice of Nonpayment. The Trustee or the Paying Agent will disburse the Insured Payments to the Holders only upon receipt by the Trustee or the Paying Agent, in form reasonably satisfactory to it of (i) evidence of the Holder's right to receive such payments, and (ii) evidence, including without limitation any appropriate instruments of assignment, that all of the Holder's rights to payment of such principal or interest Due for Payment shall thereupon vest in Assured Guaranty. Upon and to the extent of such disbursement, Assured Guaranty shall become the Holder of the Obligations, any appurtenant coupon thereto and right to receipt of payment of principal thereof or interest thereon, and shall be fully subrogated to all of the Holder's right, title and interest thereunder, including without limitation the right to receive payments in respect of the Obligations. Payment by Assured Guaranty to the Trustee or the Paying Agent for the benefit of the Holders shall discharge the obligation of Assured Guaranty under this Policy to the extent of such payment. This Policy is non-cancelable by Assured Guaranty for any reason. The Premium on this Policy is not refundable for any reason. This Policy does not insure against loss of any prepayment premium or other acceleration payment which at any time may become due in respect of any Obligation, other than at the sole option of Assured Guaranty, nor against any risk other than Nonpayment. Except to the extent expressly modified by any endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. Avoided Payment means any amount previously distributed to a Holder in respect of any Insured Payment by or on behalf of the Issuer, which amount has been recovered from such Holder pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction that such payment constitutes an avoidable preference with respect to such Holder. Business Day means any day other than (i) a Saturday or Sunday, (ii) any day on which the offices of the Trustee, the Paying Agent or Assured Guaranty are closed, or (iii) any day on which banking institutions are authorized or required by law, executive order or governmental decree to be closed in the City of New York or in the State of Maryland. Due for Payment means (i) when referring to the principal of an Obligation, the stated maturity date thereof, or the date on which such Obligation shall have been duly called for mandatory sinking fund redemption, and does not refer to any earlier date on which payment is due by reason of a call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless Assured Guaranty in its sole discretion elects to make any principal payment, in whole or in part, on such earlier date) and (ii) when referring to interest on an Obligation, the stated date for payment of such interest. Holder means, in respect of any Obligation, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Obligation to payment of principal or interest thereunder, except that Holder shall not include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Obligations. Insured Payments means that portion of the principal of and interest on the Obligations that shall become Due for Payment but shall be unpaid by reason of Nonpayment. Insured Payments shall not include any additional amounts owing by the Issuer solely as a result of the failure by the Trustee or the Paying Agent to pay such amount when due and payable, including without limitation any such additional amounts as may be attributable to penalties or to interest accruing at a default rate, to amounts payable in respect of indemnification, or to any other additional amounts payable by the Trustee or the Paying Agent by reason of such failure. Nonpayment means, in respect of an Obligation, the failure of the Issuer to have provided sufficient funds to the Trustee or the Paying Agent for payment in full of all principal and interest Due for Payment on such Obligation. It is further understood that the term "Nonpayment" in respect of an Obligation includes any Avoided Payment. Receipt or Received means actual receipt or notice of or, if notice is given by overnight or other delivery service, or by certified or registered United States mail, by a delivery receipt signed by a person authorized to accept delivery on behalf of the person to whom the notice was given. Notices to Assured Guaranty may be mailed by registered mail or personally delivered or telecopied to it at 1325 Avenue of the Americas, New York, New York 10019, Telephone Number: (212) , Facsimile Number: (212) , Attention: Risk Management Department Public Finance Surveillance, with a copy to the General Counsel, or to such other address as shall be specified by Assured Guaranty to the Trustee or the Paying Agent in writing. A Notice of Nonpayment will be deemed to be Received by Assured Guaranty on a given Business Day if it is Received prior to 12:00 noon (New York City time) on such Business Day; otherwise it will be deemed Received on the next Business Day. Term means the period from and including the Effective Date until the earlier of (i) the maturity date for the Obligations, or (ii) the date on which the Issuer has made all payments required to be made on the Obligations. E-1