$6,240,000 COUNTY BOARD OF EDUCATION OF DALLAS COUNTY (ALABAMA) Capital Outlay Tax Anticipation Warrants Series 2012

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1 OFFICIAL STATEMENT NEW ISSUE FULL BOOK ENTRY Rating: S&P: A (Stable) In the opinion of Bond Counsel, based on existing statutes, regulations, rulings and court decisions and assuming, among other matters, compliance with certain covenants, interest on the Series 2012 Warrants is not includable in gross income for federal income tax purposes. In the opinion of Bond Counsel, interest on the Series 2012 Warrants is not a specific preference item for purposes of the federal individual or corporate alternative minimum tax, although it is included in adjusted current earnings in calculating the alternative minimum taxable income of corporations. Bond Counsel is also of the opinion that under existing law interest on the Series 2012 Warrants will be exempt from income taxation by the State of Alabama. See TAX EXEMPTION herein. $6,240,000 COUNTY BOARD OF EDUCATION OF DALLAS COUNTY (ALABAMA) Capital Outlay Tax Anticipation Warrants Series 2012 Dated: June 1, 2012 Due: August 1, as shown below The Series 2012 Warrants will bear interest payable on August 1, 2012, and semiannually thereafter on each February 1 and August 1, payable by check or draft mailed to the registered owners of the Series 2012 Warrants by Regions Bank, Birmingham, Alabama. The Series 2012 Warrants will mature on August 1 in the years and principal amounts set forth below. The Series 2012 Warrants are issuable only in fully registered form and will be initially registered only in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ), serving as securities depository for the Series 2012 Warrants. The Series 2012 Warrants will be available to purchasers in denominations of $5,000 or any integral multiple thereof only under the book-entry system maintained by DTC through its brokers and dealers who are, or act through, DTC Participants (as defined herein). The purchasers of the Series 2012 Warrants will not receive physical delivery of certificates thereof. The Series 2012 Warrants will be payable solely out of and secured by a pledge of the proceeds paid to the Board of Education of (i) a special county-wide ad valorem tax levied in Dallas County, Alabama (the County ) for school purposes, at the rate of 5 mills on each One Dollar ($1.00) of taxable property in the County under the Constitution of Alabama of 1901 (ii) a special district ad valorem tax levied in all those portions of the County outside the corporate limits of the City of Selma, Alabama for school purposes at the rate of 3 mills on each One Dollar ($1.00) of taxable property in the said portion of the County under the Constitution of Alabama of 1901, and (iii) the proceeds paid to the Board of Education of a One Percent (1%) privilege or license tax levied on all retail sales in the County pursuant to Act No enacted at the 1996 Regular Session of the Legislature of Alabama. Certain of the Series 2012 Warrants will be subject to redemption prior to their respective maturities as herein described. Year of Maturity Principal Amount Interest Rate Yield Year of Maturity Principal Amount Interest Rate 2012 $ 50, % 0.70% 2017 $ 685, % 1.56% , , , , , , , , The Series 2012 Warrants are offered, when, as and if issued by the Board at the offering price set forth above, subject to the approval of validity by Haskell Slaughter Young & Rediker, LLC, Birmingham, Alabama, Bond Counsel. Certain matters will be passed upon on behalf of the Board by Pilcher & Pilcher, P.C., Selma, Alabama. The Board expects that the Series 2012 Warrants in definitive form will be available for delivery in Mobile, Alabama, on or about June 27, June 13, 2012 Gardnyr Michael Capital, Inc. Yield

2 COUNTY BOARD OF EDUCATION OF DALLAS COUNTY (ALABAMA) Members of the Board of Education Roy Edwards President Freeman L. Waller Vice-President William Minor Mark Story Peggy Williamson Superintendent of Schools Dr. Fannie L. Major-McKenzie Chief School Finance Officer Susan S. Taylor Board of Education Counsel Pilcher & Pilcher, P.C. Selma, Alabama Bond Counsel Haskell Slaughter Young & Rediker, LLC Birmingham, Alabama

3 THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT HAS BEEN OBTAINED FROM SOURCES WHICH ARE CONSIDERED DEPENDABLE AND WHICH ARE CUSTOMARILY RELIED UPON IN THE PREPARATION OF SIMILAR OFFICIAL STATEMENTS, BUT SUCH INFORMATION IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS. ALL ESTIMATES AND ASSUMPTIONS CONTAINED HEREIN ARE BELIEVED TO BE RELIABLE BUT NO REPRESENTATION IS MADE THAT SUCH ESTIMATES OR ASSUMPTIONS ARE CORRECT OR WILL BE REALIZED. NO PERSON, INCLUDING ANY BROKER, DEALER OR SALESMAN, HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE BOARD OF EDUCATION. ANY INFORMATION OR EXPRESSIONS OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE AS TO THE AFFAIRS OF THE BOARD OF EDUCATION SINCE THE DATE HEREOF. TABLE OF CONTENTS Page INTRODUCTORY STATEMENT... 1 THE SERIES 2012 WARRANTS... 2 PURPOSE OF THE SERIES 2012 WARRANTS AND USE OF PROCEEDS... 3 THE COUNTY-WIDE TAX... 4 THE DISTRICT TAX... 4 THE COUNTY SALES AND USE TAX... 5 DEBT SERVICE AND COVERAGE... 6 BOOK-ENTRY ONLY SYSTEM... 6 THE SERIES 2012 RESOLUTION... 9 THE BOARD AND THE DISTRICT SCHOOL SYSTEM THE COUNTY UNITED STATES BANKRUPTCY CODE BANK QUALIFICATION RATING LEGAL INVESTMENT LITIGATION CONTINUING DISCLOSURE WARRANTHOLDER RISKS LEGAL MATTERS TAX EXEMPTION UNDERWRITING MISCELLANEOUS Exhibit A - General Purpose Financial Statements of the Board of Education for the Fiscal Year ending September 30, 2011 Exhibit B - Form of Bond Counsel Opinion

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5 OFFICIAL STATEMENT relating to $6,240,000 COUNTY BOARD OF EDUCATION OF DALLAS COUNTY (ALABAMA) Capital Outlay Tax Anticipation Warrants Series 2012 to be dated June 1, 2012 INTRODUCTORY STATEMENT This Official Statement, including the cover page as well as Exhibit A and Exhibit B hereto, is furnished by the County Board of Education of Dallas County, Alabama (the "Board") to prospective purchasers of its $6,240,000 in principal amount Capital Outlay Tax Anticipation Warrants, Series 2012, to be dated June 1, 2012 (the "Series 2012 Warrants"). The Board is an agency and instrumentality of the State of Alabama in which responsibility for the administration and supervision of the public schools in all those portions of Dallas County, Alabama (the "County") outside the corporate limits of the City of Selma in the County (the "District") is vested. The County has heretofore issued and sold its Limited Obligation School Warrants, Series 2005, dated April 1, 2005 (the "Series 2005 Warrants"), originally issued in the aggregate principal amount of $9,630,000 and now outstanding in the aggregate principal amount of $6,065,000. The Series 2005 Warrants were authorized to be issued by the County on behalf of the Board, and are payable solely from payments to be made by the Board for the account of the County under a Lease Agreement dated as of April 1, 2005 between the County as lessor and the Board as lessee, by which the County has leased certain properties to the Board. The Series 2012 Warrants will be issued by the Board in order to refund and retire the Series 2005 Warrants and thereby to enable the Board to realize a savings in its net interest cost. The Series 2012 Warrants will not constitute general obligations of or a charge against the general credit or taxing power of the State of Alabama, the County, the Board, or any other political subdivision of the State of Alabama. The principal of and the interest on the Series 2012 Warrants will be payable solely out of and secured by a pledge of the proceeds paid to the Board of (i) an ad valorem tax on all taxable property situated in the County at the rate of 5 mills on each One Dollar ($1.00) of taxable property in the County (the "County-Wide Tax") for public school purposes in the County levied pursuant to Section of the Constitution of Alabama of 1901, (ii) the proceeds of a special district ad valorem tax on all taxable property situated in the District at the rate of 3 Mills on each One Dollar ($1.00) of such taxable property in the District (the "District Tax") for public school purposes in the District levied pursuant to Section of the Constitution of Alabama of 1901 and (iii) the proceeds paid to the Board (viz., 25% thereof) of a privilege or license tax at the rate of One Percent (1%) on all retail sales in the County (the "County Sales and Use Tax") levied pursuant to Act No enacted at the 1996 Regular Session of the Legislature of Alabama. The County-Wide Tax and the District Tax were authorized to be levied and collected by elections held in the County and the District on August 29, 2006 for a period of thirty (30) years. The County-Wide Tax and the District Tax will therefore be levied and collected to and until the tax year of the County that will end on September 30, The County Sales and Use Tax has not been levied for a defined term. However, prior to the issuance of the Series 2012 Warrants, the Dallas County Commission, which has legal power and authority to levy the County 1

6 Sales and Use Tax, will adopt a resolution by which it will covenant with the Board for the benefit of the holders of the Series 2012 Warrants that it will levy and collect the County Sales and Use Tax until the Series 2012 Warrants have been paid in full. General Description THE SERIES 2012 WARRANTS The Series 2012 Warrants will be dated June 1, 2012, will bear interest from that date, payable on August 1, 2012, and on each February 1 and August 1 thereafter at the respective rate or rates established by competitive bidding and will mature on August 1 in the respective principal amounts and years set forth on the cover page of this Official Statement. The principal of as well as the interest on the Series 2012 Warrants shall be paid only in Book- Entry form as hereinafter described. Additional Obligations In the resolution of the Board under which the Series 2012 Warrants will be issued (the "Series 2012 Resolution"), the Board will reserve the privilege of issuing from time to time, for any lawful purpose, additional notes, warrants or other evidences of indebtedness (herein called "Additional Obligations"), and of pledging for payment of the principal thereof and the interest and premium (if any) thereon, on a parity with the pledge made for the benefit of the Series 2012 Warrants, the proceeds of the County-Wide Tax, the District Tax and the County Sales and Use Tax (together the "Pledged Taxes") paid to the Board from time to time to the extent necessary to pay at their respective maturities the principal of and interest and premium (if any) on such Additional Obligations; provided, that any such parity pledge for the benefit of Additional Obligations may be made only if the proceeds of the Pledged Taxes (the "Pledged Tax Proceeds") received by the Board during the fiscal year next preceding the fiscal year in which any Additional Obligations shall be issued shall have been not less than 135% of the maximum principal and interest maturing during the then current or any subsequent fiscal year of the Board with respect to the Series 2012 Warrants, any Additional Obligations theretofore issued and that will be outstanding after the issuance of the proposed Additional Obligations, and the Additional Obligations then proposed to be issued. Authority for Issuance The Series 2012 Warrants will be issued by the Board under the authority of the Constitution and laws of the State of Alabama, including particularly Article 14, Chapter 13, Title 16, Code of Alabama 1975 (the "Enabling Law"). The Enabling Law authorizes any county or city board of education under certain circumstances to issue and sell its interest-bearing tax anticipation warrants at public or private sale for the purpose of paying the costs of constructing, purchasing, improving, repairing and equipping school facilities and for the purpose of refunding warrants, or notes issued in anticipation of such tax anticipation warrants. Warrants issued under the Enabling Law are not general obligations of the board of education issuing those warrants but must be payable as to both principal and interest solely out of the proceeds of a specified tax or taxes or other revenues which may be paid or allocated to the board of education issuing such warrants. Prior to the issuance of any warrants under the Enabling Law, a board of education must file an application for approval of such issue with the State Superintendent of Education. The written approval of the State Superintendent of Education of the amount and general purpose of such warrants is deemed a sufficient approval of the issue. The Board has filed the necessary application and has obtained the aforesaid approval of the State Superintendent of Education for the issuance of the Series 2012 Warrants. 2

7 Source of Payment; Security for Series 2012 Warrants The Series 2012 Warrants will not constitute general obligations of or a charge against the general credit of the Board, or against the general credit or taxing power of the State of Alabama, the County, or any other political subdivision of the State of Alabama. The Series 2012 Warrants shall be payable solely from the Pledged Tax Proceeds. Pursuant to the said Section of the Constitution of Alabama of 1901, and an election held in the County on August 29, 2006, the County-Wide Tax has been authorized to be levied and collected in the County until September 30, 2036, and also pursuant to Section of the Constitution of Alabama and an election held in the District on August 29, 2006, the District Tax has been authorized to be levied and collected in the District until September 30, The County Sales and Use Tax has been levied by the County under the said Act No for an indefinite term, but the Dallas County Commission, the governing body of the County, has covenanted for the benefit of the holders of the Series 2012 Warrants to levy and collect the County Sales and Use Tax until the Series 2012 Warrants have been paid in full. No further action by the voters in the County or the District is required to provide for the collection of the Pledged Taxes until September 30, After provision is made for the payment and retirement of the Series 2005 Warrants simultaneously with the issuance of the Series 2012 Warrants, the Board will have outstanding no other pledges of the Pledged Tax Proceeds, and therefore no such pledges will be prior to the pledge that will be made for the benefit of the Series 2012 Warrants. The Series 2012 Resolution will provide that the Board shall make payments of the principal of and the interest on the Series 2012 Warrants to Regions Bank in Birmingham, Alabama (the "Bank"), and that the Bank shall remit all such payments of principal and interest to DTC. The Series 2012 Resolution will also provide that the Series 2012 Warrants shall constitute preferred claims against the Pledged Tax Proceeds paid to the Board and shall have preference over claims for salaries or other operating expenses, or any other purpose. The pledge of the Pledged Tax Proceeds paid to the Board will be prior and superior to any other pledge or agreement respecting the Pledged Tax Proceeds that may hereafter be made for the benefit of any securities that may hereafter be issued by the Board or any other charge or use to which said proceeds may be applied, unless other securities shall be issued as Additional Obligations on a parity of lien and with as the Series 2012 Warrants as herein described. Redemption Prior to Maturity Optional Redemption. The Series 2012 Warrants will not be subject to redemption prior to their respective maturities. Registration and Transfer of the Series 2012 Warrants The Series 2012 Warrants will be registered as to both principal and interest and may be transferable only in Book-Entry form as hereinafter described. See BOOK-ENTRY ONLY SYSTEM for a description of provisions relating to the registration, transfer and exchange of the Series 2012 Warrants. PURPOSE OF THE SERIES 2012 WARRANTS AND USE OF PROCEEDS The Series 2012 Warrants will be issued for the purpose of refunding and retiring the Series 2005 Warrants. The Board expects that the proceeds from the sale of the Series 2012 Warrants will be applied as follows: 3

8 Sources: Principal Amount of the Series 2012 Warrants $ 6,240, Plus Original Issue Premium 110, Total $ 6,350, Uses: To pay and retire the Series 2005 Warrants $ 6,238, To pay the expenses of issuing the Series 2012 Warrants, including underwriting discount 112, Total $ 6,350, THE COUNTY-WIDE TAX As previously stated, the County-Wide Tax is an ad valorem tax levied on all taxable property in the County for school purposes, at the total rate of 5 mills on each One Dollar ($1.00) of such taxable property pursuant to Section of the Constitution of Alabama of 1901, and by an election held in the County on August 29, By the said election, the County-Wide Tax has been authorized to be levied and collected in the County to and including the fiscal year of the County that will end on September 30, The proceeds of the County-Wide Tax are paid to the Board and to the City Board of Education of the City of Selma on a pro-rata per pupil basis, as provided in the Foundation Program of the State of Alabama, after the costs of assessment and collection thereof are paid to the appropriate officials of the County. The Board is authorized to apply the proceeds of the County-Wide Tax paid to it to payment of the principal of and the interest on any of its warrant anticipation notes, its capital outlay warrants or to payment of the costs of operating public schools in the District. The following amounts represent the proceeds of the County-Wide Tax paid to the Board during the past five fiscal years of the Board: Fiscal Year Ending September 30 Proceeds of the County-Wide Tax Received by the Board 2007 $ 743, , , , ,950 THE DISTRICT TAX Also as previously stated, the District Tax is an ad valorem tax levied on all taxable property in the District for public school purposes at the rate of 3 mills on each One Dollar ($1.00) of such taxable property pursuant to Section of the Constitution of Alabama of 1901, and by an election held in the District on August 29, By the said election, the District Tax has been authorized to be levied in 4

9 the District to and including the fiscal year of the County that will end on September 30, All the proceeds of the District Tax are paid to the Board after the costs of assessment and collection thereof are paid to the appropriate officials of the County. The Board is authorized to apply the proceeds of the District Tax paid to it to payment of the principal of and the interest on any of its warrant anticipation notes, its capital outlay warrants or to the payment of the costs of operating public schools in the District. The following amounts represent the proceeds of the District Tax paid to the Board during the past five fiscal years of the Board: Fiscal Year Ending September 30 Proceeds of the District Tax Received by the Board 2007 $ 501, , , , ,369 THE COUNTY SALES AND USE TAX The County is authorized by Act No (the "Authorizing Act") enacted at the 1996 Regular Session of the Legislature of Alabama to levy a sales and use tax in the County that is parallel to the sales and use taxes levied by the State of Alabama. The Authorizing Act provides that three-fourths (3/4) of the proceeds of the County Sales and Use Tax shall be paid into the General Fund of the County, and that one-fourth (1/4) of the proceeds of the County Sales and Use Tax shall be paid to the Board. The Authorizing Act does not require the governing body of the County to levy and collect the County Sales and Use Tax for any specified period of time. However as previously stated, prior to the issuance of the Series 2012 Warrants the Dallas County Commission will adopt a resolution providing that the County will continue to levy and collect the County Sales and Use Tax until the Series 2012 Warrants have been paid in full. The following amounts represent the proceeds of the County Sales and Use Tax paid to the Board during the past five fiscal years of the Board: Fiscal Year Ending September 30 Proceeds of the County Sales and Use Tax Received by the Board 2007 $ 866, , , , ,061 5

10 DEBT SERVICE AND COVERAGE After the Series 2012 Warrants have been issued, the Series 2012 Warrants will constitute the only outstanding funded indebtedness of the Board that is payable from the Pledged Tax Proceeds. The following table shows the annual debt service on the Series 2012 Warrants at the rates of interest shown on the cover page hereof: Fiscal Year Principal of the Series 2012 Warrants Interest on the Series 2012 Warrants Total Debt Service 2012 $50,000 $22, $72, , , , , , , , , , ,000 97, , ,000 84, , ,000 67, , ,000 49, , ,000 31, , ,000 16, , TOTAL $6,240,000 $740, $6,980, Maximum Annual Debt Service: $771, Average Annual Debt Service: $698, Pledged Tax Proceeds in the amount of $2,284,380 (viz., $847,950 + $589,369 + $847,061) were paid to the Board during its fiscal year that ended on September 30, That amount provides the following coverages of Average Annual Debt Service and of Maximum Annual Debt Service as shown above: Coverage of Maximum Annual Debt Service: Coverage of Average Annual Debt Service: 2.96 times 3.27 times BOOK-ENTRY ONLY SYSTEM The information in this section concerning The Depository Trust Company ("DTC") and DTC's book-entry system has been obtained from sources the Board and the Underwriter believe to be reliable, but neither the Board nor the Underwriter takes responsibility for the accuracy or completeness thereof. There can be no assurance that DTC will abide by its procedures or that such procedures will not be changed from time to time. The Series 2012 Warrants will be issued as fully-registered warrants in the name of Cede & Co., as nominee of DTC, as registered owner of the Series 2012 Warrants. Purchasers of such warrants will not receive physical delivery of warrant certificates. For purposes of this Official Statement, so long as all of the Series 2012 Warrants are in the custody of DTC, references to Warrantholders or Owners shall mean DTC or its nominee. 6

11 DTC will act as securities depository for the Series 2012 Warrants. The Series 2012 Warrants 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 fullyregistered Series 2012 Warrant will be issued for each maturity of the Series 2012 Warrants, in the aggregate principal amount of such maturity, 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 2.2 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 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 DTCC. DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with Direct Participants, through 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 Purchases of Series 2012 Warrants under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2012 Warrants on DTC's records. The ownership interest of each 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 Participants through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2012 Warrants 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 Series 2012 Warrants, except in the event that use of the book-entry system for the Series 2012 Warrants is discontinued. To facilitate subsequent transfers, all Series 2012 Warrants deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2012 Warrants with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2012 Warrants; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2012 Warrants 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 7

12 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 Series 2012 Warrants may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2012 Warrants, such as redemptions, defaults and proposed amendments to the Series 2012 Warrants. For example, Beneficial Owners of Series 2012 Warrants may wish to ascertain that the nominee holding the Series 2012 Warrants 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 Bank and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2012 Warrants within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issues to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2012 Warrants unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Series 2012 Warrants are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds and distributions on the Series 2012 Warrants will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Board or the Bank, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC or its nominee, the Bank or the Board, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and distributions to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Board or the Bank, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Series 2012 Warrants at any time by giving reasonable notice to the Board or the Bank. Under such circumstances, in the event that a successor depository is not obtained, Series 2012 Warrants are required to be printed and delivered. The Board may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Series 2012 Warrants will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Board believes to be reliable, but the Board takes no responsibility for the accuracy thereof. 8

13 THE SERIES 2012 RESOLUTION The following is a brief description of the Series 2012 Resolution. A copy of the Series 2012 Resolution is available at the principal office of the Board. Warrant Fund For the purpose of providing for the payment of the principal of and interest on the Series 2012 Warrants when due, in the resolution under which the Series 2012 Warrants will be issued, the Board has created a special fund (the "Warrant Fund") that is held by the Bank and into which the Pledged Tax Proceeds must first be paid. The Warrant Fund will be continued until the Series 2012 Warrants shall have been paid in full or such payment shall have been duly provided for. Simultaneously with the issuance of the Series 2012 Warrants, the Board will deposit into the Warrant Fund from the proceeds from the sale of the Series 2012 Warrants an amount equal to the interest that will accrue on the Series 2012 Warrants from their date until the date of their issuance. Beginning on or before the 25 th day of July, 2012, and on or before the 25 th day of each January and each July thereafter until the Series 2012 Warrants have been fully paid and retired, the Board will be required to deposit the Pledged Tax Proceeds into the Warrant Fund, in an amount equal to the principal and interest maturing with respect to the Series 2012 Warrants on each succeeding February 1 and August 1. Investment income from moneys in the Warrant Fund is to be credited against required annual payments. The Board is required to make up any deficit in the Warrant Fund from the Pledged Tax Proceeds. Use of Pledged Tax Proceeds After Payments to Warrant Fund Whenever during any fiscal year the Board shall have made the payments required to be paid into the Warrant Fund during that fiscal year, the Board may use any of the remaining Pledged Tax Proceeds received by it during the said fiscal year for any lawful purpose for which the Pledged Taxes were levied; provided that, if the amounts required to be paid into the Warrant Fund during any preceding fiscal year shall not have been paid, then before using any of such remaining Pledged Tax Proceeds, the Board shall pay such amount that may be necessary to make up any deficiency in the Warrant Fund. Security for the Warrant Fund The Bank shall at all times keep the money on deposit with it in the Warrant Fund continuously secured for the benefit of the Board and the registered owners from time to time of the Series 2012 Warrants either (a) by holding on deposit as collateral security direct obligations of the United States of America ("Federal Securities") having a market value (exclusive of accrued interest) not less than the amount of money on deposit in the Warrant Fund; or (b) if the furnishing of security in the manner provided in the foregoing clause (a) is not permitted by the then applicable laws and regulations, then in such manner as may be required or permitted by the applicable State and federal laws and regulations respecting the security for or granting a preference in the case of the deposit of public trust funds; provided, however, that it shall not be necessary for the Bank so to secure any portion of the money on deposit in the Warrant Fund that (i) may be insured by the Federal Deposit Insurance Corporation or by 9

14 any agency of the United States of America that may succeed to its functions or (ii) that may be invested as provided in the following paragraph. Investment of Money in Warrant Fund The Board may cause any money on deposit in the Warrant Fund then needed for the payment of principal of, premium (if any) or interest on the Series 2012 Warrants to be invested or reinvested by the Bank in Federal Securities or certificates of deposits of any bank or trust company that are authorized by the laws of Alabama and that are fully insured by the Federal Deposit Insurance Corporation ("Eligible Certificates"). All investments of money on deposit in the Warrant Fund shall be at the direction of the Chief School Finance Officer of the Board for the credit of the Warrant Fund and all interest accruing thereon and any profits realized therefrom shall be credited to the Warrant Fund. Any losses resulting from liquidation of investments shall also be charged to the Warrant Fund. Provisions for Payment of Series 2012 Warrants; Termination of Pledge of Pledged Taxes The Board may provide for the payment of the Series 2012 Warrants by establishing with a banking institution in the State of Alabama an irrevocable trust fund consisting of cash or Federal Securities which, together with the investment income therefrom, will produce funds sufficient to pay the principal of, premium (if any) and interest on the Series 2012 Warrants when due. All or part of the Series 2012 Warrants may be called for redemption under such circumstances. Any money on deposit in the Warrant Fund (to the extent that such money is not required for the payment of the principal of, premium (if any) and interest on the Series 2012 Warrants previously becoming due or payable, or otherwise unavailable for the following use) may at the direction of the Board be transferred to and constitute a part of the trust fund created to provide for the retirement of the Series 2012 Warrants. Upon the establishment of such an irrevocable trust, the pledge of the proceeds of the Pledged Taxes for the payment of the Series 2012 Warrants will be terminated and released. Series 2012 Resolution a Contract The terms, provisions and covenants set forth in the Series 2012 Resolution constitute a contract between the Board and the holders of the Series 2012 Warrants and shall remain in effect until the Series 2012 Warrants shall have been paid in full. THE BOARD AND THE DISTRICT SCHOOL SYSTEM The public school system in the District (the "District School System") has existed for more than 110 years. The District School System was formed immediately prior to the school year that began in September, The Board is an agency and instrumentality of the State of Alabama in which the administration and supervision of the District School System is vested. The Board is composed of five members who are voters of the County for six-year staggered terms: 10

15 Members of the Board Name Year Term Expires Mark Story 2016 Roy Edwards 2012 William Minor 2016 Freeman Waller 2012 Peggy Williamson 2014 The District Superintendent of Schools, who is the chief executive officer of the Board, is elected by a vote of the members of the Board to hold office at the pleasure of the Board. The present Superintendent of Schools is Dr. Fannie L. Major-McKenzie. The Board formulates school policies for the District School System and, upon the written recommendation of the District Superintendent, appoints principals, teachers, clerical and professional assistants of the Board, prescribes the course of study and approves contracts. The Board delegates to the District Superintendent of Schools, as its executive officer, and his or her staff, responsibility for administering the policies of the Board in the District School System. The Board operates 13 schools within the District, the names of and the grades taught at which are as follows: School Grades B. K. Craig Elementary School 3-5 Brantley Elementary School K-6 Dallas County High School 9-12 J. E. Terry Elementary School K-6 Keith Middle-High School 6-12 William L. Martin Middle School 7-8 Salem Elementary School K-5 Shiloh Elementary School and Sixth Grade Academy 4-6 Southside High School 9-12 Southside Primary School K-2 Tipton Durrant Middle School 7-8 Valley Grande Elementary School K-6 11

16 The following are selected statistics and estimates concerning enrollment in the District School System: Average Enrollment by Grades Grade Total Total Kindergarten Total All Grades... 3,985 3,787 (including Kindergarten) Enrollment in the District School System During Last Five Years School Year Enrollment , , , , ,689 12

17 General Financial Information The Board operates on a fiscal year beginning on each October 1 and ending on each September 30. At the beginning of each fiscal year, the Board is required to submit a proposed budget for approval by the State Board of Education. The revenues paid to the Board by the State of Alabama for the current fiscal year may be less than the budgeted amount if there is a prorated reduction in the distribution to local school systems. The Board does not expect any significant adverse change in total budgeted receipts and expenditures for the current fiscal year. A copy of the General Purpose Financial Statements of the Board for the fiscal year ending September 30, 2011 is attached hereto as Exhibit A. The financial information of the Board that is contained in this Official Statement has been prepared on a modified accrual basis, in accordance with standards established by the Governmental Accounting Standards Board. The following comparative statements of revenues and expenditures have been extracted from audited financial statements and records of the Board for fiscal years ending September 30, 2009, September 30, 2010, as approved by the Alabama State Board of Education for the fiscal year ended September 30, 2011, and as budgeted by the Board for its current fiscal year that will end on September 30, 2012: 13

18 Summary of Revenue and Expenditures County Board of Education of Dallas County (Alabama) (2009, 2010, 2012) Budgeted for Year Ended Year Ended Year to End September 30, September 30, September 30, Revenues State $ 26,381, $ 24,910, $ 23,748, Federal 7,644, ,885, ,089, Local 4,676, ,832, ,582, Other 152, , , Total Revenues $ 38,855, $ 39,979, $ 35,560, Expenditures Current: Instruction $ 20,313, $ 19,915, $ 16,812, Instructional Support 7,209, ,280, ,705, Operation and Maintenance 3,562, ,994, ,989, Auxiliary Services: 6,480, Student Transportation 3,057, ,103, Food Service 3,155, ,988, General Administrative and Central Support 1,657, ,649, ,306, Other 944, , , Capital Outlay 2,128, , Debt Service: Principal Retirement 1,005, , Interest and Fiscal Charges 359, , Other Debt Service 7, ,252, Total Expenditures $ 43,402, $ 41,543, $ 36,380, Excess (Deficiency) of Revenues Over Expenditures $ (4,546,937.40) $ (1,564,561.53) $ Other Financing Sources (Uses) Indirect Cost $ 317, $ 265, $ 0.00 Long-Term Debt Issued 1,371, Transfers In 877, , Other Financing Sources 15, , Sale of Capital Assets 56, , Transfers Out (877,108.98) (750,343.10) 0.00 Total Other Financing Sources (Uses) $ 1,760, $ 485, $ 224, Net Changes in Fund Balances $ (2,786,327.27) $ (1,079,287.58) $ (595,384.26) Fund Balances Beginning of Year $ 2,508, $ (277,508.12) $ 1,105, Fund Balances End of Year $ (277,508.12) $ (1,356,795.70) $ 509,

19 Summary of Revenue and Expenditures County Board of Education of Dallas County (Alabama) (2011 As Approved by the Alabama State Board of Education) Year Ended September 30, 2011 Revenues State Sources $ 24,540, Federal Sources 9,960, Local Sources 4,717, Other Sources 105, Total Revenues $ 39,324, Expenditures Instructional Services $ 19,633, Instructional Support Services 7,005, Operation and Maintenance Services 3,416, Auxiliary Services 6,161, General Administrative Services 1,501, Capital Outlay 0.00 Debt Service 1,249, Other Expenditures 901, Total Expenditures $ 39,868, Other Fund Sources (Uses) Other Fund Sources $ 1,283, Other Fund Uses 1,009, Total Other Fund Sources (Uses) $ 273, Excess Revenues and Other Sources Over (Under) Expenditures and Other Fund Uses $ (271,194.84) Beginning Fund Balance October 1 $ 1,658, Ending Fund Balance September 30 $ 1,387, Indebtedness Long Term Debt. The Board does not have authority to issue long-term indebtedness that is payable from the general revenues or taxes received by the Board. All long-term indebtedness must be payable solely out of a tax or taxes or other revenues specified in the proceedings authorizing the issuance of the obligations. Under existing law, boards of education in the State of Alabama may issue long-term debt only for capital improvements or for refunding warrant anticipation warrants or warrants previously issued and outstanding. They may not incur long-term indebtedness to pay operating expenses. The County has heretofore issued and sold the Series 2005 Warrants on behalf of the Board. The Series 2005 Warrants constitute the only long-term debt of the Board that is presently outstanding. The Series 2012 Warrants will also constitute long-term funded indebtedness of the Board. 15

20 Short Term Debt. The Board is authorized to issue revenue anticipation notes in anticipation of its current revenues. Such notes must mature by the end of the fiscal year in which issued and must be limited in principal amount to the estimated revenues for the remainder of such fiscal year. The Board is also authorized to issue warrant anticipation notes with a maturity of 18 months in anticipation of the issuance of warrants or long-term indebtedness. Such warrant anticipation notes must be payable solely out of a specified tax or taxes. No such warrant anticipation notes of the Board that are now outstanding. Employees and Employee Relations The Board now employs approximately 547 persons, of whom approximately 268 work in the instructional program of the schools under the administration of the Board. The current pupil-to-teacher ratio of the Board is approximately 18 to 1. No employees of the Board are represented by labor unions or similar employee organizations. The Board does not bargain collectively with any labor union or employee organization. The Board has never experienced a strike, boycott, or other work stoppage and no such work stoppage is threatened. Approximately 424 persons employed by the Board are members of the Alabama Education Association (AEA). AEA represents individual teachers in tenure and contract disputes with the Board, but does not bargain with the Board on behalf of teachers with respect to salaries or compensation; however, AEA does actively represent teachers in negotiations with the State of Alabama Board of Education, where minimum salaries are determined. Retirement System Employees of the Board are participants in the Teachers Retirement System of Alabama, which was established by an act of the Legislature of Alabama. The Board is required to deduct from each employee's compensation an amount or percentage specified by the State Board of Control in each month. The State of Alabama, by annual appropriation of the Legislature of Alabama, contributes a like amount. The Board is not required to make contributions to the retirement system on the employees' behalf. Budget and Accounting System The Board maintains a financial reporting system for the purpose of providing timely and accurate reports of Board receipts and disbursements. The accounting policies of the Board conform to generally accepted accounting principles applicable to local governmental units. Prior to the commencement of each fiscal year, the Superintendent of Education, in conjunction with his administrative staff, prepares an annual operating budget for adoption by the Board, which is subject to the approval by the State Superintendent of Education. The budget represents a complete financial plan for the Board and reflects the projection of all receipts and disbursements from all sources. Formal budget integration is used during the fiscal year as a management control device for the Board's General Fund, Special Revenue Funds, Debt Service Funds and Capital Project Funds. The budget is adopted by a "line-item" basis consistent with generally accepted accounting principles. Budget control is maintained at the line-item level by encumbrance of estimated purchase amounts prior to the release of purchase orders to vendors. The accounts of the Board are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that include its assets, liabilities, fund equity, revenues and expenditures as 16

21 appropriate. Board resources are accounted for on an individual fund basis by the purpose for which such resources are to be spent; monitoring of these funds is the means for controlling spending activities. All governmental funds are accounted for by using the modified accrual basis of accounting. The Board's records are maintained in compliance with current State and Federal regulations and in accordance with generally accepted accounting principles. At the end of each fiscal year, the Board is required to file an unaudited financial statement with the State Department of Education on forms provided by the State Board. The Board obtains an audit by the Department of Public Accounts of the State of Alabama following each fiscal year. The last completed audit for the Board was for its fiscal year ending on September 30, An audit for the fiscal year that ended on September 30, 2011 is now in progress. General Information THE COUNTY The County is located in the central portion of southern Alabama and has an area of 975 square miles. The City of Selma, the seat of County government, is the largest incorporated area within the County. County Powers and Functions Among the principal governmental functions vested in Alabama counties are law enforcement, tax assessment, levy and collection, administration of decedent's estates and probate matters, maintenance of real and personal property title records, indigent care, construction and maintenance of public roads and bridges, and maintenance of the county courthouse (which provides office space for various county officials). In addition, Alabama counties have traditionally shared responsibility with the federal, state and other local governments for the financial support of county health departments. Government Organization and Authority The County is a political subdivision of the State of Alabama and is governed by a five-member County Commission. The Chairman of the County Commission, who is the Probate Judge of the County, is elected by the voters in the County at large for a six year term. The remaining four members of the County Commission are elected by voters of single-member districts in the County for concurrent fouryear terms. The present members of the County Commission and the date of ending of their respective current terms of office are as follows: Name Current Term Expires Kimbrough Ballard, Chairman 2013 Roy Moore 2012 Larry Nickles 2012 Connel Towns 2012 Curtis Williams 2012 The principal officers of the County include the Tax Assessor of the County, the Tax Collector of the County, the County Sheriff and Circuit Clerk, all of whom are elected at large. The construction of roads and bridges within the County is supervised by an appointed County Engineer. The current Tax Assessor is Frances Hughes, and the current Tax Collector is Tammy Jones King. 17

22 Population The population of the County since 1970, according to the United States Bureau of the Census, is shown in the following table: Percentage Year Population Change , % , % , % , % The closure of Craig Air Force Base near Selma in 1987 caused the transfer of approximately 6,700 persons from the County, and was largely responsible for the decline in the population of the County from 1980 to Source: U.S. Department of Commerce, Bureau of Economic Analysis Income Levels Per capita income, which is the total income of all families and individuals in the County divided by the total population of the County, and mean family income, which is the total income of all families in the County divided by the total number of families in the County, are set forth below: Per Capita Income Median Family Income Area Measured Dallas County $ 28,713 $ 16,646 $ 26,029 $ 34,900 State of Alabama 33,411 22,984 42,081 54,600 United States 39,635 27,334 51,914 64,200 Source: U.S. Department of Commerce, Bureau of Economic Analysis; U.S. Department of Housing and Urban Development Employment Data A comparison of the County's unemployment statistics versus the State and national statistics for the last three calendar years is as follows: Dallas County 9.9% 18.9% 16.4% State of Alabama 5.0% 9.9% 9.5% United States 5.8% 9.3% 9.6% Source: Alabama Department of Industrial Relations 18

23 Major Employers. The following table sets forth the major employers in the County as of December 31, 2011: Employer No. of Employees International Paper Co., Riverdale Mill 843 Vaughan Regional Medical Center 600 American Apparel, Inc. 400 Wal-Mart Super Center 385 Hanil E-Hwa Interior Systems of Alabama 324 Bush Hog, Division of Alamo Group 260 Honda Lock-America Inc. (HL-A) 256 Plantation Patterns, LLC 250 Cahaba Center for Mental Health Mental Retardation Services 232 Wallace Community College 220 R. L. Zeigler Co., Inc. 210 Warren Manor Nursing & Rehab Center 200 Crown Health Care Laundry Services 165 Miller & Company 140 Renosol Seating 140 Concordia College 130 Rayco Industrial 125 Park Place Nursing & Rehab Center 120 Global Security Glazing 119 Globe Metallurgical, Inc. 102 Source: Selma-Dallas County Chamber of Commerce Transportation Miscellaneous. The County is served by two freight lines and one interstate bus line. The County is served by an adequate network of improved highways, including U.S. Highway 80 and Alabama Highways No. 5, 22 and 41, connecting the County with all parts of the State and nation. Medical and Health Services The County is served by one general hospital having a total of 175 beds. Ad Valorem Taxation in Dallas County The total assessed valuation of the taxable property (net of applicable exemptions) in the County for the last four fiscal years has been as follows: 19

24 Fiscal Year Ended September 30 Total Assessed Valuation (net) 2007 $ 329,655, ,476, ,448, ,039, ,865,220 Variations in the assessed valuation of taxable property in the County as shown above reflect the results of certain reappraisals of the assessed value of such property undertaken in the County in recent fiscal years. In addition, the County has a 99% collection rate on assessed ad valorem property. Source: Tax Assessor of Dallas County Total Ad Valorem Tax Rate on Property in Dallas County Tax Rate Mills STATE: General Soldiers and Historical Commission Schools COUNTY: Total State Tax Rates General Road & Bridge Volunteer Fire Dept School-County-Wide School-District Total County Tax Rates Total State and County Rates

25 Largest Taxpayers The following are the ten largest taxpayers in the County, and the amount of ad valorem tax paid by each to the Revenue Commissioner of the County for the tax year that ended on September 30, 2011: Name of Taxpayer Amount Paid Alabama Power Company $ 679, Transcontinental Gas Pipe 280, Southern Natural Gas Co. 221, PPHC-Alabama Inc. 199, Dixie Pellets LLC 185, BST Inc. d/b/a AT&T Alabama 164, Bush Hog LLC 126, Norfolk Southern Railway Co. 119, Bush Hog, Inc. 98, HL-A Co. Inc. 98, Source: Tax Collector of Dallas County for fiscal year ended September 30, 2011 Miscellaneous Tax Information Under present law, the rate at which County ad valorem taxes are levied may under certain circumstances be increased if the increase is proposed by the governing body of the County, considered at a public hearing, approved by an act of the Legislature, and ratified by a majority vote of the qualified electors of the County. Under separate laws, the State of Alabama levies a $.07 per gallon gasoline tax and $.04 per gallon gasoline tax. The remittances by the State to local governments are made on a distribution formula based on population and miles of roads. The Constitution of Alabama requires that all gasoline tax proceeds be used only for construction and maintenance of roads and bridges. Other revenues of the County include interest on investments, deed and mortgage taxes, fees and commissions of County officials, and other miscellaneous revenues. Under general authority granted to the County by the Legislature, the County levies, in addition to the aforementioned taxes, certain other license taxes on the privilege of engaging in certain activities within the County. All privilege, license and other excise taxes (including license taxes based on gross receipts) that are collected in the County must be levied at rates that are not confiscatory or "unreasonable." UNITED STATES BANKRUPTCY CODE The United States Bankruptcy Code permits political subdivisions and public agencies or instrumentalities that are insolvent or unable to meet their debts to file petitions for relief in the federal bankruptcy courts if authorized by state law. Although no reported decision has expressly so held, prospective purchasers of the Series 2012 Warrants should assume that existing Alabama statutes presently authorize the Board and other boards of education in Alabama to file such petitions for relief. Bankruptcy proceedings by the Board could have adverse effects on holders of the Series 2012 Warrants, including (i) delay in the enforcement of their remedies, (ii) subordination of their claims to the 21

26 claims of those supplying goods and services to the Board after the initiation of bankruptcy proceedings and to the administrative expenses of bankruptcy proceedings, and (iii) imposition without their consent of a reorganization plan reducing or delaying payment on the Series 2012 Warrants. Such a reorganization plan, when confirmed by the bankruptcy court, binds all creditors who had timely notice or actual knowledge of the petition or plan and discharges all claims against the petitioning political subdivision provided for in the plan. No plan may, however, be confirmed by the court unless, among other conditions, either the plan has been accepted in writing by 2/3 in amount and more than 50% in number of the allowed claims of each class which is impaired by the plan, or the court finds that the plan does not discriminate unfairly, and is fair and equitable, with respect to each class of claims that is impaired under, and has not accepted, the plan. BANK QUALIFICATION In the Series 2012 Resolution the Board will designate the Series 2012 Warrants as "qualified taxexempt obligation" under Section 265(b) of the Internal Revenue Code of In making such designation the Board has certified that it anticipates that the total principal amount of tax-exempt obligations to be issued by the Board during the calendar year 2012 will not exceed $10,000,000. As a result of that designation, the Series 2012 Warrants may be treated by financial institutions as though they were acquired on August 7, 1986, and there may be allowed to such financial institutions that purchase the Series 2012 Warrants a deduction of up to 80% of the interest paid to depositors that is allocable to the Series 2012 Warrants by such financial institutions. RATING Standard & Poor's Rating Services, a Division of The McGraw-Hill Companies, has assigned a rating of "A (Stable)" to the Series 2012 Warrants. Any explanation of the significance of that rating may be obtained only from the rating agency assigning the same. Generally, rating agencies base their ratings on the information and materials furnished them by the prospective issuer, as well as on investigations, studies and assumptions by the rating agencies. There is no assurance that the said rating will remain in effect for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing that rating, circumstances so warrant. Any such downward change in or withdrawal of the rating may have an adverse affect on the market price of the Series 2012 Warrants. LEGAL INVESTMENT Under the Code of Alabama of 1975 (Section ), the Series 2012 Warrants will be legal investments for fiduciaries. Said Section provides: "The warrants issued pursuant to the provisions of this article shall be legal investments for executors, administrators, trustees and other fiduciaries." LITIGATION There is not now pending any litigation restraining, enjoining or in any manner questioning or affecting the creation, organization or existence of the Board or the title of the present members of the Board to their respective offices. 22

27 Also, there is not now pending any litigation restraining, enjoining or in any manner questioning or affecting the validity of the Series 2012 Warrants; the proceedings and authority under which the Series 2012 Warrants are to be issued; the levy and collection of the Pledged Taxes or the pledge thereof to the payment of the Series 2012 Warrants. There are no legal proceedings pending or threatened against the Board which may have a material effect upon the financial condition of the Board except as noted below. CONTINUING DISCLOSURE In the Series 2012 Resolution the Board will enter into an undertaking (the "Undertaking") for the benefit of the Beneficial Owners of the Series 2012 Warrants to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board (the "MSRB") pursuant to the requirements of Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule"). The Undertaking is summarized below. Annual Report In the Undertaking, the Board agrees, in accordance with the provisions of the Rule, to provide or cause to be provided to the MSRB, not later than 270 days after the close of each fiscal year of the Board, commencing with the fiscal year that will end on September 30, 2012, the following Annual Report: (1) Total Pledged Tax Proceeds collected by the Board for the previous fiscal year of the Board; (2) A statement of revenues, expenditures and changes in fund balances for the Board's general fund for the previous fiscal year; and (3) A statement of revenues, expenditures and changes in fund balances for the Board's debt reserve fund for the previous fiscal year. The Board also agrees, in accordance with the Rule, to provide or cause to be provided in a timely manner to the MSRB, notice of any failure to provide or cause to be provided the Annual Report, or any part thereof, as described in this paragraph. Audited Financial Statements The Board agrees to provide or cause to be provided within 270 days after the close of each fiscal year of the Board its audited financial statements to the MSRB; provided, however, that if audited financial statements of the Board are not available at such time, the Board will provide unaudited financial statements within 270 days after the end of the fiscal year and will provide its audited financial statements for such fiscal year when and if available. The audited financial statements of the Board so provided will be prepared pursuant to generally accepted accounting principles as applicable to it. Notice of Material Events The Board agrees to provide or cause to be provided to the MSRB, in a timely manner not in excess of ten (10) business days after the occurrence of the event, as required by the Rule, notice of the occurrence of any of the following events with respect to the Series 2012 Warrants: 23

28 1. principal and interest payment delinquencies; 2. non-payment related defaults, if material; 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; 6. adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Series 2012 Warrants, or other material events affecting the tax status of the Series 2012 Warrants; 7. modifications of the rights of holders of the Series 2012 Warrants, if material; 8. warrant calls, if material, and tender offers; 9. defeasances; 10. release, substitution or sale of property securing repayment of the Series 2012 Warrants, if material; 11. rating changes; 12. bankruptcy, insolvency, receivership or similar event of the obligated person; 13. the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and 14. appointment of a successor or additional trustee or the change of the name of a trustee, if material. Form and Method of Filing All filings to be provided under the Undertaking shall be made by posting such information in electronic format on the MSRB's EMMA system at accompanied by identifying information as prescribed by the MSRB. All such filings shall be made in conformity with the procedures and requirements established by the MSRB in effect at the time of such filing. Additional Information The Board may from time to time choose to provide other information in addition to the information and notices listed above, but the Board does not undertake in the Undertaking to commit to provide any such additional information or to update or to continue to provide such additional information or notices once provided. 24

29 Amendment; Waiver The Board may amend the Undertaking and any provision of the Undertaking may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws, to the effect that such amendment or waiver would not cause the undertakings therein to violate the Rule taking into account any subsequent change in or official interpretation of the Rule. Beneficiaries and Enforcement The Board agrees that its undertakings pursuant to the Rule set forth in the Undertaking are intended to be for the benefit of the holders of the Series 2012 Warrants and shall be enforceable by such holders. No failure by the Board to comply with its obligations under the Undertaking shall constitute an event of default respecting the Series 2012 Warrants. No failure by the Board under the Undertaking shall ever subject the Board to money damages in any amount or of any type. A failure by the Board to comply with an Undertaking must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Series 2012 Warrants in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Series 2012 Warrants and their market price. The Board has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. WARRANTHOLDER RISKS The Series 2012 Warrants are payable solely out of the Pledged Tax Proceeds and do not constitute a general obligation of or a charge against the general credit or taxing power of the State of Alabama, the County, the Board or any political subdivision of any of the foregoing. The sufficiency of the Pledged Tax Proceeds to pay debt service on the Series 2012 Warrants may be affected by future events and conditions relating generally to, among other things, changes in the value of real property in the County, population trends and economic developments, the exact nature and extent of which are not presently determinable. LEGAL MATTERS The validity and legality of the Series 2012 Warrants are subject to the approval of Haskell Slaughter Young & Rediker, LLC, of Birmingham, Alabama, Bond Counsel, whose approving opinion will be delivered with and printed on the Series 2012 Warrants in substantially the form of Exhibit B hereto. Certain legal matters will be passed upon on behalf of the Board by its counsel Pilcher & Pilcher, P.C., Selma, Alabama. General TAX EXEMPTION In the opinion of Haskell Slaughter Young & Rediker, LLC, Bond Counsel, based on existing statutes, regulations, rulings and court decisions, interest on the Series 2012 Warrants will be not be includable in gross income for federal income tax purposes. 25

30 The Internal Revenue Code of 1986, as amended (herein called the "Code"), imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2012 Warrants. The Board has covenanted to comply with certain restrictions designed to assure that the interest on the Series 2012 Warrants will not be included in federal gross income. Failure to comply with these covenants may result in interest on the Series 2012 Warrants being included in federal gross income, possibly from the date of issuance of the Series 2012 Warrants. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel is further of the opinion that interest on the Series 2012 Warrants is not a specific preference item for purposes of the Code's individual or corporate alternative minimum tax provisions. However, interest on the Series 2012 Warrants received by corporations will be included in adjusted current earnings, a portion of which may increase the alternative minimum taxable income of such corporations. Also, the interest on the Series 2012 Warrants will be subject to the environmental tax imposed on corporations and, in the case of United States branches of foreign corporations, the branch profits tax imposed by the Code. Prospective purchasers of the Series 2012 Warrants should also be aware of the provision included in the Code which will require property and casualty insurance companies owning Series 2012 Warrants to reduce their loss reserve deduction by 15% of the interest received or accrued on the Series 2012 Warrants. Although Bond Counsel has rendered an opinion that interest on the Series 2012 Warrants is excluded from federal gross income, the accrual or receipt of interest on the Series 2012 Warrants may otherwise affect the federal tax liability of a holder thereof. The extent of these other tax consequences will depend upon the holder's particular tax status and the holder's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. In the opinion of Bond Counsel, interest on the Series 2012 Warrants is not subject to income taxation by the State of Alabama. UNDERWRITING The Series 2012 Warrants have been purchased from the Board pursuant to a Warrant Purchase Agreement for reoffering by Gardnyr Michael Capital, Inc., Mobile, Alabama (the "Underwriter"). Said Warrant Purchase Agreement provides that the Underwriter will take and pay for all the Series 2012 Warrants if any are taken. The Underwriter, subject to certain terms and conditions set forth in said Warrant Purchase Agreement, has agreed to purchase the Series 2012 Warrants at a price of $6,288,459.40, which reflects an underwriting discount of $62,400.00, as well as an "original issue premium" of $110, The Underwriter may offer and sell the Series 2012 Warrants to certain dealers and others at prices lower than the public offering price, and the Underwriter may also change the offering price of the Series 2012 Warrants from time to time. MISCELLANEOUS The Board will fully comply with the requirements of Rule 15-c2-12 of the Securities and Exchange Commission in the delivery of a final Official Statement with respect to the Series 2012 Warrants, and in all matters of continuing disclosure required by the said Rule 15-c2-12. Neither this Official Statement nor any statement herein should be construed as a contract with the registered owners of the Series 2012 Warrants. All estimates, whether or not so stated, are not to be construed as representations that they will be realized. 26

31 The Board has furnished all information in this Official Statement relating to the Board and has obtained all other information from sources which are considered reliable and which are customarily relied upon in the preparation of similar official statements. For further information about the Board, or copies of the Series 2012 Resolution, contract Dr. Fannie L. Major-McKenzie at the offices of the Board at 429 Lauderdale Street, Selma, Alabama (telephone number (334) ). COUNTY BOARD OF EDUCATION OF DALLAS COUNTY By /s/ Fannie L. Major-McKenzie Superintendent of Schools June 13,

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33 EXHIBIT A General Purpose Financial Statements of the Board of Education for the Fiscal Year ending September 30, 2011

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35 Report on the Dallas County Board of Education Dallas County, Alabama October 1, 2009 through September 30, 2010 Filed: August 26, 2011 Department of Examiners of Public Accounts 50 North Ripley Street, Room 3201 P.O. Box Montgomery, Alabama Website: Ronald L. Jones, Chief Examiner

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