HomeMy WebLinkAbout11031993-AI
City of Sebastian
1225 MAIN STREET [] SEBASTIAN, FLORIDA 32958
TELEPHONE (407) 589-5330 [] FAX (407) 589-5570
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AGENDA
SEBASTIAN CITY COUNCIL
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SPECIAL MEETING
WEDNESDAY, NOVEMBER 3, 1993 - 6:00 P.M.
CITY COUNCIL CHAMBERS
1225 MAIN STREET, SEBASTIAN, FLORIDA
ALL PROPOSED ORDINANCES AND INFORMATION ON ITEMS
BELOW MAY BE INSPECTED IN TIlE OFFICE OF THE CITY CLERK,
CITY HALL, 1225 MAIN STREET, SEBASTIAN, FLORIDA.
PURPOSE: 1)
RESOLUTION NO. R-93-61 - Establishing
Compliance with 180.301 F.S. and
Ratification of GDU Purchase & Sales Agreement
2)
RESOLUTION NO. R-93-58 Re= Bond for
GDU Water and Wastewater Facility
Acquisition
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93.263
PGS 1-32
1. CALL TO ORDER
2. ROLL CALL
RESOLUTION NO. R-93-61 - Establishing Compliance with
180.301 F.S. and Ratification of GDU Purchase & Sales
Agreement (Finance Director Transmittal dated
10/28/93, R-93-61, Purchase and Sale Agreement)
A RESOLUTION OF THE CITY OF SEBASTIAN, INDIAN RIVER
COUNTY, FLORIDA, PROVIDING FOR CERTAIN DETERMINATIONS,
FINDINGS, AND STATEMENTS AS REQUIRED IN SECTION 180.301,
FLORIDA STATUTES; RATIFYING THE CITY OF SEBASTIAN,
FLORIDA/GENERAL DEVELOPMENT UTILITIES, iNC. WATER AND
SEWER SYSTEM PURCHASE AND SALE AGREEMENT AS SIGNED BY THE
MAYOR AND CITY CLERK, A COPY OF WHICH IS ATTACHED TO THIS
RESOLUTION AS EXHIBIT "A"; PROVIDING FOR REPEAL OF
RESOLUTIONS OR PARTS OF RESOLUTIONS IN CONFLICT HEREWITH;
PROVIDING FOR SEVERABILITY; AND PROVIDING FOR AN
EFFECTIVE DATE.
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93.263
PG 33
RESOLUTION NO. R-93-58 - Bond for GDU Water and
Wastewater Facility Acquisition (Finance Director
Transmittal dated 10/28/93, R-93-58)
PG 35*
A RESOLUTION AUTHORIZING THE ISSUANCE BY THE CITY OF
SEBASTIAN, FLORIDA OF NOT EXCEEDING $5,000,000 IN
AGGREGATE PRINCIPAL AMOUNT OF UTILITIES SYSTEM REVENUE
BONDS, SERIES 1993, TO FINANCE THE COST OF THE
ACQUISITION OF AND THE CONSTRUCTION AND ACQUISTION OF
CERTAIN ADDITIONS, EXTENSIONS AND IMPROVEMENTS TO THE
GENERAL DEVELOPMENT UTILITIES WATER AND SEWER SYSTEM;
PLEDGING THE NET REVENUES OF THE UTILITIES SYSTEM TO
SECURE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON SAID
BONDS; PROVIDING FOR THE RIGHTS OF THE HOLDERS OF SAID
BONDS; PROVIDING FOR SEVERABILITY; AUTHORIZING THE
INSTITUTION OF VALIDATION PROCEEDINGS; AND PROVIDING FOR
AN EFFECTIVE DATE FOR THIS RESOLUTION.
* FOR PAGE NOS. FOR THIS RESOLUTION. PLEASE REFER TO
THOSE PRINTED ON THE DOCUHENT -- CONSULTANTS PI~OVIDED
DOCI;~ENTS FOR ~ann PACKETS
5. ADJOURN
ANY PERSON WHO DECIDES TO APPEAL ANY DECISION MADE BY THE CITY
COUNCIL WITH RESPECT TO ANY MATTER CONSIDERED AT THIS MEETING (OR
HEARING) WILL NEED A RECORD OF THE PROCEEDINGS AND MAY NEED TO
ENSURE THAT A VERBATIM RECORD OF THE PROCEEDINGS IS MADE, WHICH
RECORD INCLUDES THE TESTIMONY AND EVIDENCE UPON WHICH THE APPEAL
IS TO BE HEARD. (286.0105 F.S.)
IN COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT (ADA),
ANYONE WHO NEEDS A SPECIAL ACCOMMODATION FOR THIS MEETING SHOULD
CONTACT THE CITY'S ADA COORDINATOR AT 589-5330 AT LEAST 48 HOURS
IN ADVANCE OF THIS MEETING.
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City of Sebastian
1225 MAIN STREET g SEBASTIAN, FLORIDA 32958
TELEPHONE (407) 589-5330 [] FAX (407) 589-5570
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SUBJECT: GDU Purchase Agreement
APPROVED FOR SU ,BMITTAL BY:
kathry~ M. 0 Halloran
Interim city Manager
) DEPT. ORIGIN: Fin./MS
)
) DATE SUBMITTED: 10/28/93
)
) FOR AGENDA OF: 11/03/93
)
) EXHIBITS:
)
) - Resolution No. 93-61
) - GDU Purchase Agreement
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EXPENDITURE
REQUIRED: N/A
AMOUNT
BUDGETED: N/A
APPROPRIATION
REQUIRED: N/A
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SUMMARY STATEHENT
The city of Sebastian has held the public hearing required under
Chapter 180, Florida Statutes and made certain determinations,
findings and statements.
The city of Sebastian has authorized the execution of the
purchase agreement for the GDU Sebastian Highlands Utility
System.
The attached Resolution No. R-93-61 formalizes and incorporates
certain documents such as the Hartman and Associates briefing
document, the signed purchase and sale agreement into the
official public record.
RECOMMENDED ACTION
Move to adopt Resolution R-93-61.
RESOLUTION NO. R-93-61
A RESOLUTION OF THE CITY OF SEBASTIAN, INDIAN RIVER
COUNTY, FLORIDA, PROVIDING FOR CERTAIN DETERMINATIONS,
FINDINGS, AND STATEMENTS AS REQUIRED IN SECTION
180.301, FLORIDA STATUTES; RATIFYING THE CITY OF
SEBASTIAN, FLORIDA/GENERAL DEVELOPMENT UTILITIES, INC.
WATER AND SEWER SYSTEM PURCHASE'AND SALE AGREEMENT AS
SIGNED BY THE MAYOR AND CITY CLERK, A COPY OF WHICH IS
ATTACHED TO THIS RESOLUTION AS EXHIBIT "A"; PROVIDING
FOR REPEAL OF RESOLUTIONS OR PARTS OF RESOLUTIONS IN
CONFLICT HEREWITH; PROVIDING FOR SEVERABILIT¥; AND
PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, Section 2(b), Article VIII, Florida Constitution,
and the Municipal Home Rule Powers Act, Chapter 166, Florida
Statutes, authorize the city to conduct municipal government,
perform municipal functions, render municipal services and
exercise any power for municipal purposes, except when expressly
prohibited by law; and
WHEREAS, pursuant to its governmental powers granted
pursuant to Chapters 163, 166 and 180, Florida Statutes, and
other applicable laws, the City is authorized to preserve and
enhance present advantages, encourage the most appropriate use of
land, water and resources, consistent with the public interest,
facilities and adequate and efficient provision of water and
wastewater facilities, and conserve, develop, utilize, and
protect natural resources; and
WHEREAS, neither general law nor special act prohibits the
city from acquiring or operating water and wastewater utility
facilities; and
WHEREAS, General Development Utilities, Inc. ("GDU") is the
owner of a water and wastewater system know as "Sebastian
Highlands Water and Wastewater System" (the "System") located
within the boundaries of Indian River County, Florida; and
WHEREAS, GDU desires to sell the System to the City and the
City desires to purchase the System from GDU;.and
WHEREAS, the City has examined the assets of the System,
has examined the System's existing financial structure, has
examined the long-range needs and goals of the City relative to
the provision of water and sewer service to the City's present
and future citizens, and has determined that the signing of a
purchase and sale agreement for the acquisition of the System is
in the public interest; and
WHEREAS, the City has successfully negotiated a purchase
and sale agreement with GDU calling for the purchase and sale of
the System to the City; and
WHEREAS, in contemplation of the acquisition of the System,
the City authorized its engineering consultants, Hartman &
Associates, Inc., to prepare a briefing document to comply with
Section 180.301, Florida Statutes (the "Briefing Document"); and
WHEREAS, the Briefing Document has been submitted to the
City Council for review pursuant to Section 180.301, Florida
Statutes; and
WHEREAS, the City has scheduled, duly noticed and held
public hearings pursuant to the requirements of Section 180.301,
Florida Statutes.
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NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF BEBASTIAN, INDIAN RIVER COUNTY, FLORIDA, that:
~ 1. DETERMINATIONS. The city Council has reviewed
and considered the acq~..isition of the System, as evaluated in the
Briefing Document and in other pertinent information submitted to
the city, and in doing so has considered the following:
(a) GDU's most recent available income and expense
statement for the System;
(b) GDU's most recent available balance sheet for the
System, listing assets and liabilities and clearly
showing the amount of contributions-in-aid-of-
construction and the accumulated depreciation thereon;
(c) A statement of GDU's existing rate base for regulatory
purposes as it relates to the System;
(d) The physical condition of the System;
(e) The reasonableness of the purchase price and terms;
(f) The impacts of the purchase on utility customers, both
positive and negative;
(g) Any required additional investment and the ability and
willingness of the city to make that investment;
(h) Alternatives to the purchase and the potential impact
on utility customers if the purchase is not made; and
(i) The ability of the city to provide and maintain high-~
quality and cost-effective utility service.
The City Council's determinations and findings regarding the
items listed above are set forth in the Briefing Document, which
is hereby adopted and incorporated into this Resolution. This
Resolution and the Briefing Document are intended and declared to
be the statement required under Section 180.301, Florida
Statutes, demonstrating that the purchase of the System is in the
public interest. Furthermore, the Briefing Document contains a
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summary of the city's experience in water and wastewater utility
operation and demonstrates that the City has the financial
ability to provide water and wastewater service. Based upon the
Briefing Document and other evidence and testimony submitted and
considered at the public hearings on September 15, 1993 and
September 22, 1993, the' City Council hereby determines and finds
that it is in the public interest for the 'City to purchase the
system as contemplated in the Briefing Document..UL ON
SECTION ~. RATIFICATION OF THE SIGNIN~ OF THE PURCHASE AND
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S~LE AGREEMENT. The city Council has reviewed and considered the
acquisition of the System owned by GDU and has also analyzed the
City of Sebastian, Florida/General Development Utilities, Inc.
Water and Wastewater System Purchase and Sale Agreement (the
"Agreement"), a copy of which is attached to and incorporated in
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this Resolution as Exhibit "A". The city Council hereby ratifies
the Agreement, as signed by the Mayor and city Clerk on behalf of
the City. The City Council also authorizes its staff and
consultants to take all actions necessary to complete the
transaction contemplated by the Agreement, and further authorizes
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the Mayor and City Clerk to sign all necessary documents, before,
at and after the closing of the purchase contemplated by th~
Agreement in order to complete the purchase and sale.
~TION !. CONFLICT. All resolutions or parts of
resolutions in conflict herewith are hereby repealed.
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SECTION 4. SEVERABILITY. In the event a court of competent
jurisdiction shall hold or determine that any part of this
Resolution is invalid or unconstitutional, the remainder of the
Resolution shall not be affected and it shall be presumed that
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the city Council of the city of Sebastian did not intend to enact
such invalid or unconstitutional provision. It shall further be
assumed that the city Council would have enacted the remainder of
this Resolution without such invalid and unconstitutional
provision, thereby causing said remainder to remain in full force
and effect.
SECTION ~. EFFECTIVE DATE. This Resolution shall take
effect immediately upon its adoption.
The foregoing Resolution was moved for
Councilmember '
seconded by Councilmember
being put into a vote, the vote was as follows:
adoption by
The motion was
and, upon
Mayor Lonnie R. Powell
Vice-Mayor Frank Oberbeck
Councilmember Carolyn Corum
Councilmember Norma J. Damp
Councilmember Robert Freeland
The Mayor thereupon declared this Resolution duly passed and
adopted this day of , 1993.
CITY OF SEBASTIAN
By:
Lonnie R. Powell, Mayor
ATTEST:
Kathryn M. O,Halloran, CMC/AAE
city clerk
(SEAL)
Approved as to Form and Content:
Charles Ian Nash, City Attorney
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CITY OF SEBASTIAN, FLOR.IDA/
GENERAL DEVELOPMENT UTILITI'F S, INC.
WATER AND SEWER SYSTEM
PURCHASE AND SALE AGREEMENT
~0 ~ , 1993, by and between the CITY OF SEBASTIAN, FLORIDA
("CITY"), and GENERAL DEVELOPMENT UTILITIES, INC., a corporation
authorized to do business in the State of Florida ("UTILITY").
RECITALS
1. UTILITY is the owner of a water production, storage,
treatment, transmission, and distribution system, and a wastewater
treatment, transmission, collection and effluent disposal system
(hereinafter referred to collectively as the "Sebastian Water and
Wastewater System" or the "System") known as the Sebastian.
Highlands Water and Sewer System located primarily within the boun-
daries of the CITY 07 SEBASTIAN, FLORIDA.
2. Pursuant to the governmental powers provided in Chapters
163, 166, and 180, Florida Statutes, and other applicable laws,
CITY is authorized to preserve and enhance present advantages,
encourage the most appropriate use of land, water and resources,
consistent with public interest, facilitate the adequate and
efficient provision of water and sewerage facilities, and conserve,
develop, utilize, and protect natural resources within its
jurisdiction.
3. UTILITY agrees to sell the System to CITY.
4. CITY has examined UTILITY's Water and Wastewater System
Assets, has examined its existing financial structure, has examined
the long-range needs and goals of CITY relative to the provision o~
water and wastewater service to its present and future citizens,
and has determined that the execution of a purchase and sale
agreement for the acquisition of the Water and Wastewater System
Assets is in the public interest.
5. CITY desires to acquire the System upon the terms and
conditions hereinafter set forth in this Agreement.
ACCORDINGLY, in consideration of the above Recitals and bene-
fits to be derived from the mutual observation of the covenants
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the
parties, the parties agree as follows:
SECTION 1. RECITALS. The above Recitals are true a~d cor-
rect, and form a material part of this Agreement.
SECTION 2. PURCHASE AN~ SA~E 'OF WATER..AND WASTEWATER SYSTEM.
UTILITY agrees to sell and CITY agrees to buy the complete Syste~,
consisting of all real, personal and mixed property used or held
for use in connection with the System, hereinafter referred to as
the ,,Purchased Assets" or the ,'Water and Wastewater System Assets"
or the ,,system." The .Purchased Assets shall not include any cash
derived from monthly rates of UTILITY received by uTILITY, except
as set forth in Sections 3 and ll hereof.
SECTION 3. pURCHASED ~SSETS. On the Closing Date, as defined
below, UTILITY shall sell, assign, transfer, convey and deliver to
CITY, and CITY shall purchase, accept and pay for all oft he right,
title and interest, in and to the following property and assets:
3.%- Real Prgpe~t¥. Ail real property (the~"Property"),
owned by UTILITY in fee simple, as described in Exhibit "3.1"
attached hereto and made a part hereof, whereupon all water
production, storage, treatment, transmission, and distribution
facilities and wastewater treatment plant, wells, pumping stations,
effluent disposal areas and all other water and wastewater service
facilities are located.
3.2. Plant and Other .FaCilities. Ail right, title and
interest of UTILITY in and to the following assets owned by
UTILITY: all water production, treatment plant, storage,
treatment, transmission, distribution, pumping, and other water
facilities, including, without limitation, water wells and fire
hydrants, and all wastewater treatment plant, wastewater
collection, transmission, pumping, and disposal facilities of every
kind and'description whatsoever including, without limitation, all
trade fixtures, leasehold improvements, lift stations, pumps,
generators, controls, collection and transmission pipes or
facilities, valves, meters, service connections, and all other
water and/or wastewater service connections, and all other water
and wastewater physical facilities and property installations in
use in connection with the operation of the System by UTILITY..
13.3. Machine~ andE~ui~men~. All machinery, equipment
vehicles, tools (other than non-motorized hand tools), laboratory
equipment, office equipment and other personal property (other than
inventory as described in Paragraph 3.13), owned by UTILITY located
on the Property or utilized by uTILITY exclusively in the operation
of the System, including, but not limited to, those items more
particularly described in Exhibit "3.3" attached hereto and
incorporated into this Agreement.
3.4. Other Rights. Ail rights, privileges, easements,
licenses, prescriptive rights, rights-of-ways, and rights to use
public and private roads, highways, streets, and other areas owned
by UTILITY for the construction, reconstruction, maintenance and
operation of the System of UTILITY and the Purchased Assets
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(collectively referred to as the "Easements"). The Easements are
more particularly described in Exhibit "3.4" attached hereto and
incorporated in this Agreement. CITY and UTILITY acknowledge and
agree that, as additional consideration for UTILITY entering into
this Agreement, CITY shall convey to UTILITY within five (5) days
following the execution of this Agreement by both parties hereto,
those certain Easements set forth and described in Exhibit "3.4"
attached hereto and incorporated in this Agreement. Such
conveyance shall be a conveyance by the CITY of all of its right,
title and interest in those certain Easements, collectively
referred to herein as the "CITY Easements". The CiTY Easements
shall be signed by authorized representatives of CiTY and delivered
to UTILITY in the form attached to this Agreement as Exhibit "3.4"
and UTILITY shall be entitled to immediately record the CITY
Easements, at its expense, in the Public Records of Indian River
County, upon receipt thereof. Upon closing, UTILITY shall reconvey
to CITY the CITY Easements; provided, however, UTILITY shall not be
required to reconvey to CITY the CITY Easements if the transaction
contemplated in this Agreement fails to close for any reason other
than fault on the part of UTILITY.
3.5. Customer Records.
UTILITY shall provide CITY with all records associated with
its current customers of the System, including customer files
containing information such as service applications and
correspondence, and all billing information, and all information
pertaining to billing of customers,, including names, addresses,
account numbers and payment history contained in the UTILITY's
master files.
3.6. Business Records.
Ail current business records of UTILITY as described in
Exhibit "3.6" attached to this Agreement and incorporated by
reference herein. UTILITY may make and retain copies of all
records delivered to CITY pursuant to this Agreement, at its
expense, before transferring the original or (if the original i~
not available, copies of the records) to CITY. CITY agrees that
UTILITY may have reasonable access after closing to all records
delivered' pursuant to this Agreement. The provisions of this
paragraph shall survive the closing. In addition, UTILITY shall
deliver to CITY all as-built surveys, water and sewer design
plants, plats, engineering and other drawings, designs, blue-
prints, plans and specifications for the System to CITY.
3.7. Permits and APprovals. Subject to all necessary
regulatory approvals and to all conditions, limitations or
restrictions contained therein, and the transferability thereof,
all permits and other governmental authorizations and approvals
necessary to operate and maintain the System in accordance with all
governmental requirements, as described in Exhibit "3.7" attached
hereto and incorporated by reference herein. UTILITY shall, at its
expense, be responsible for renewing any operating permits and any
other permits essential to the operation of the System which may
have expired or will expire prior to the transfer of the System to
CITY. UTILITY shall also be responsible for correcting any
deficiencies, at its expense (provided, however, that in no event
shall UTILITY .be required to bring suit or expend any sum in excess
of $50,000, in the aggregate, to cure such deficiencies), which are
specificaliy documented by any regulatory agency prior to the date
on which the System is to be transferred to CITY. CITY agrees to
sign all forms required-by governmen~a£ agencies to transfer the
permits and approv&ls from UTILITY to CITY.
~.8. Choses in Action. Ail choses in action pertaining
to the System or the Purchased Assets, including, but not limited
to, warranty claims, claims for damages, the right to sue for any
past infringement, or other cause of action.
3.9. Cust~mer. Dep.0sits. Cash to be paid by cashier's
check or wire transfer in an ~mount which represents the customers'
water and sewer service security deposits and accrued interest held
by UTILITY. UTILITY shall provide CITY with a detailed written
description of each customer deposit and any interest accrued
thereon, including the name of the customer, the account number for
the customer, the date on which the deposit was received by UTILITY
from the customer, the amount of interest accrued on each deposit,
the amount of any additional deposits received from the customer
and the date such deposit was received. In the event UTILITY
provides any inaccurate or erroneous information concerning the
customer deposits to CITY, UTILITY shall defend, indemnify and hold
CITY harmless from any claims, actions, expenses or damages,
including costs and reasonable attorneys' fees at trial and/or
appeal, to which CITY may be exposed in the future as a result of
UTILITY providing such inaccurate or erroneous information to CITY.
In consideration for the transfer by UTILITY of these customers'
deposits to CITY, CITY agrees to continue to provide utility
services to those customer for which a deposit is held and, to the
extent consistent with §768.28, Florida Statutes, to indemnify and
hold UTILITY harmless for any claims, actions, expenses or damages,
including costs and reasonable attorneys' fees at trial and/or
appeal, to which UTILITY may be exposed in the future as a result
of the transfer of such customer deposits to CITY. This provision
shall surViVe closing.
3.10. Unbi!led Revenue. Unless otherwise agreed by
UTILITY and CITY, t~ere shall be no unbilled Revenues paid by CITY
because UTILITY shall bill each customer through the Closing Date.
3.11. Contracts a~d Aqreements. UTILITY agrees to
assign to CITY, and CITY agrees to assume,'all of UTILITY's right,
title and interest in and to those certain contracts and agreements
listed in Exhibit "3.11" attached to and incorporated in this
Agreement. CITY shall not be obligated to assume any contracts and
agreements except only those listed in Exhibit "3.11"
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3.12. Computer Software. Subject to all applicable
licensing agreements and to all applicable copyright laws, non-
proprietary computer software which is used or was used, in the
course of the day to day operations of UTILITY for the System,
including, without limitation, billing programs and accounting
programs, except any computer software that CITY does not desire to
receive or to sub-license. Any license assignment fees payable to
the licensor with respect to any computer software that CITY
expressly elects to receive assignment for, shall be paid by CITY.
3.13. inventor~. Ail right, title and interest of
UTILITY in and to all inventory specifically described in Exhibit
"3.13" attached hereto and made a part of this Agreement. For
purposes of this Agreement, the term "inventory" shall include
items such as hand tools, parts, chemicals, operating supplies,
pipes, nuts, bolts, fittings, screws, meters and meter boxes.
Exhibit "3.13" is separated into two parts, Part A and Part B for
purposes of Paragraph 11.1(7) of this Agreement. 'CITY, at its
expense, shall conduct a physical inventory of all items of
inventory as soon as practical after the signing of this Agreement
by the parties hereto. UTILITY shall cooperate and make available
to CITY and its representatives all items of inventory in order to
facilitate the conducting of the physical inventory by CITY.
SECTION 4. ADDITIONAL RESPONSIBILITIES OF UTILITY. UTILITY
shall provide CITY with up to eighty (80) person hours of general
support services for a period commencing upon the signing of this
Agreement by the parties hereto and ending on the date that is
sixty (60) days after the Closing Date, on an as-needed basis. If
all time is not utilized by CITY within such period, no future
obligation with respect thereto shall exist on behalf of UTILITY.
In addition, UTILITY agrees to assist CITY in aid of transition
following the closing by providing, at the request of CITY,
assistance in billing services and transfer of files at no expense
to CITY, other than any out-of-pocket costs. CITY shall, in making
requests pursuant to this Section 4, avoid any unnecessary
disruption of the normal business operations of UTILITY. The
provisions of this Section shall survive the closing.
SEC~. PURCHASE PRICE AND PAYMENT. CITY agrees to pay to
UTILITY on the Closing Date, and UTILITY agrees to accept as the
complete and full Purchase Price for the System, a total Purchase
Price in.the amount of THREE MILLION SIX HUNDRED FIFTY THOUSAND AND
00/100 DOLLARS ($3,650,000), subject to any adjustments provided
hereinafter. Said Purchase Price shall be' paid at Closing in
federal or other i~ediately available funds by wire transfer to a
bank and bank account designated by UTILITY. Prior to Closing
UTILITY shall deliver wiring instructions to CITY.
SECTION 6. STATUS OF TITLE. Within twenty (20) days
following the signing of this Agreement by UTILITY and CITY,
UTILITY shall deliver to CITY's attorney an updated title
commitment (the "Commitment") for an Owner's Title Insurance Policy
issued by First American Title Insurance Company in favor of CITY
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insuring the fee simple title to the Property listed in ~xhibit
"3.1". UTILITY shall provide CITY with an Owner's Title Insurance
Policy which is an Owner's ALTA Form B Marketability Policy in
favor of CITY in the ~mount of THREE MILLION SIX HUND~D FIFTY
THOUSAND AND 00/100 DOLLARS ($3,650,000). UTILITY shall bear the
cost of the title insurance policy, including all costs associated
with procuring the Commitment.
6._~. ExceDt~ons to Titlg. The Commitment s~ail show
UTILITY to be vested with fee's~mple title to the Property shown on
Exhibit "3.1" subject to the following (the · ,,permitted
Exceptions" ):
(1) Ad valorem real estate taxes and assessments
f6r the year 1993 and subsequent years;
(2) Restrictions set out in the recorded plats of
subdivisions covered by the System;
(3) Easements for utilities and drainage set out in
such recorded plats of subdivisions; provided, however, that none
of the restrictions or easements set out in such recorded plats of
subdivisions shall prevent, hinder or restrict the present use of
the Property;
(4) Restrictions of record (except liens, encum-
brances, or mortgages) that do not impair, restrict, or inhibit the
present use of or improvement to the property as permitted by
applicable zoning and land use regulations presently in effect and
that are not coupled with a forfeiture or reversionary provision;
(5) Ail laws, ordinances, and governmental regula-
tions, including, but not limited to, all applicable building,
zoning, land use and environmental ordinances, regulations,
restrictions, prohibitions and other requirements, none of which
will prevent or hinder the present use of the Property; and
(6) Ail matters which would be disclosed by an
accurate survey of the Property, unless a survey is provided %o
UTILITY in. a form acceptable to the title insurer in accordance
with recognized standards for surveys in connection with the
issuance of an Owner's Title Insurance Policy.
6.2. Status of Ti~l~. If the status of title shown on
said Title Insurance Commitment does not reflect the status of
title as herein set out, then, in that event, upon written noti-
fication thereof to UTILITY which notice.shall be given by CITY
within twenty (20) days after receipt of said commitment, UTILITY
agrees to use all due diligence to perfect title and shall have a
period of twenty (20) days from notification of such defects within
which to do so. If CITY shall fail to notify UTILITY within the
aforesaid ·twenty (20) days, CITY shall, for the purposes of this
Agreement, be deemed to have accepted the status of title as set
forth in the Commitment. In the event that defects are specified
and UTILITY, after exercising'all due diligence, cannot clear same
within the time provided in the preceding sentence, then, in that
event, CITY shall have the right to purchase the Property in its
then existing condition of title, or to rescind and terminate this
Agreement without liability by any party to the other(s). Although
UTILITY shall use its reasonable efforts to cause any defects to be
cured prior to -the Closing Date, in no event shall UTILITY be
required to bring suit or to expend any sum in excess of $50,000 in
the aggregate to cure title'defects, exclusive of mortgages against
the Property which are in a liquidated amount or which UTILITY has
the obligation to discharge on or before the Closing Date under the
terms of this Agreement. Notice of such election shall be given by
CITY to UTILITY, in writing, by either registered or certified
mail, within the time herein prescribed.
SECTION 7. SURVEY. CITY Shall have the option, at its ex-
pense, to prepare and provide a current survey of all the Property
set out in Exhibit "3.1" prepared by a Florida licensed surveyor in
accordance with applicable law, which survey will be prepared in
accordance with, and certified to UTILITY, CITY, UTILITY's and
CITY's attorneys and the title insurer in accordance with the
minimum detail standards adopted by the Florida Society of
Professional Land Surveyors. Any defect reflected on such survey
including, but not limited to, encroachments of improvements across
a boundary line or onto a utility strip, evidence of overlaps along
a property line, violation of restrictions, set back lines,
possession inconsistent with the Property boundaries or any other
such defect, shall be treated as a title defect under Subsection
6.2. above. CITY shall have twenty (20) days after receipt of said
survey to furnish notice to UTILITY of any title defect shown on
the survey which does not conform to the status of title described
in Section 6 of this Agreement. If CITY shall fail to notify
UTILITY within the aforesaid twenty (20) days, CITY shall be deemed
to have accepted the status of title shown on the survey.
SECTION 8.' REPRESENTATIONS AND WARRANTIES OF UTILITY. To
induce CITY to enter into this Agreement, UTILITY represents and
warrants that, as of the Closing Date:
8.1. Orqaniz~ion, Standin~ And Power. UTILITY is a
corporation, duly organized, validly existing, and in good standing
under the laws of the state of its formation, and is authorized to
do business in the State of Florida. UTILITY has all requisite
power and authority to own and lease its properties and the Water
and Wastewater System Assets, and to conduct its business as it is
currently being conducted.
8.2. Authority for.Aareement. UTILITY has the power and
authority to execute and deliver this Agreement and to carry out
its obligations hereunder. This Agreement has been duly authorized
by all action required to be taken by UTILITY has been duly
executed and delivered by UTILITY and constitutes a valid and
legally binding obligation of UTILITY, enforceable in accordance
with its terms.
7
8.3. Good and ~arketable Title. Subject to t~e Per-
mitted Exceptions, UTILITY has good and marketable title to the
purchased Assets. Notwithstanding anything contained herein to the
contrary, the Property shown on Exhibit "3.4" as easement parcels
are not subject to the fee simple ownership requirements as set
forth in Subsection 6 hereof. UTILITY shall transfer, convey and
assign to CITY at Closing an enforceable easement interest for each
of the easement parcels shown on Exhibit "3.4" so that the present
use of the easement 'parcels may be continued by CITY for the
operation of the System. The easement interests shown on Exhibits
"3.4" conveyed to CITY shall not be subordinate to any superior
interests which could result in CITY losing the right to use the
easement parcel for utility purposes. Any such superior interests
shall be deemed a title.defect under Subsection 6.2 hereof and
shall be cured by UTILITY as set forth in that Subsection. At
Closing, UTILITY shall assign to CITY all of its easement interests
in the Property regardless of whether such easement, is listed on
Exhibit "3.4"
8.4. N~o Liens 9r Encumbrances. Except as otherwise
specifically set forth herein or as may be released prior to the
Closing Date, there are no liens, claims or encumbrances of any
type or nature upon or against the Purchased Assets including, but
not limited to, financing statements or security instr%lments filed
under the Uniform Commercial code either in the County where the
land is located or with the Florida Secretary of State.
8.--5. ~- There are no actions, suits,' or
proceedings at law or in equity, pending against UTILITY before any
federal, state, municipal or other court, administrative or
governmental agency or instrumentality, domestic or foreign, which
affect the System or any of the Purchased Assets or UTILITY's right
and ability to make and perform this Agreement; nor is UTILITY
aware of any facts which to its knowledge are likely to result in
any such action, suit or proceeding. The UTILITY is not in default
with respect to any order or decree of any court or. of any
administrative or governmental agency or instrumentality affecting
the System or any of the Purchased Assets. UTILITY agrees and
warrants that it shall have a continuing duty to disclose up to and
including.the Closing Date the existence and nature of all pending
judicial ~r administrative suits, actions, proceedings, and orders
which in any way relate to the operation of the System. Any such
matters now known to UTILITY shall be initially disclosed within
ten (10) days following execution of this Agreement, and UTILITY
agrees to notify CITY of any .new actions, suits or proceedings
within ten (10) days after UTILITY receives notice thereof.
!
!
8.6. New A.qreements. UTILITY shall not enter into any
extension, developers' agreement, agreement concerning the opera-
tion of the Water and Wastewater System, agreement concerning water
and/or wastewatar service capacity, or cause any agreement to be
modified after the date of execution of this Agreement without the
prior written approval of CITY, which approval shall not be
unreasonably withheld. Notwithstanding anything to the c~ntrary
set forth in this paragraph 8.6, UTILITY need not obtain CITY's
approval to enter into service agreements with individuals that do
not commit in excess of five (5) equivalent residential connections
of water or wastewater service capacity.
8.7. Aqreements for ~onstruction. With respect to any
outstanding agreements for construction under which UTILITY has
previously received cash deposits or cash contributibns in exchange
for UTILITY's willingness to authorize the planning, permitting,
construction, installation or extension of the water and/or
wastewater system located in Sebastian, UTILITY has fully
discharged all obligations on its part for such planning,
permitting, construction, installation or extension, and UTILITY
has no further obligations, liabilities or expenses for the future
planning, permitting, construction, installation or extension of
said system under said agreements. _.
.8.8. Leases. Except as may be listed in Exhibit "3.11"
hereof, none of the Purchased Assets are subject to any interest of
any lessor or lessee and will not be so subject as of the Closing
Date.
8.9. No Contracts in..Default. UTILITY is not'aware of
any defaults of any parties to any agreements set forth or listed
in any of the Exhibits annexed to this Agreement.
8.10. No Governmental Violations. UTILITY is not aware
and has not been notified of the existence of any violations of any
governmental rules, regulations, permitting conditions or other
governmental requirements applicable to the ownership, maintenance
or operation of the System.
8.11. No Record violations. The use of the System on
the property set out in Exhibits "3.1" and "3.4" is consistent with
and does not violate any restrictions or conditions of record.
8.12. Absence of Chanqes. After the date of execution
of this Agreement, UTILITY shall not:
(1) undergo any change in its condition of
properties, assets, liabilities~ business or operations other than
changes in the ordinary course of business which have not been,
either in any case or in the aggregate, materially adverse to the
operation of the System;
(2) acquire or dispose of any of the System's
assets or properties of material value (having a value in excess of
$2,000), except in the ordinary course of business or with the
consent of CITY, which shall not be unreasonably withheld;
(3) subject to available administrative remedies
pursuant to Chapter 120, Florida Statutes, or any administrative or
judicial procedures or proceedings applicable to particular
permits, or intentionally fail to comply with all of the 'System
permit requirements;
(4) fail to seek or obtain any permit extensions or
renewals reasonably necessary to insure that all permits related to
the System are valid, extended, or in the process of being
extended, as of the Closing Date.
8.13. ~.' No representation or warranty made by
UTILITY, to the best of UTILITY's knowledge, in this Agreement
contains or will contain any untrue statement of material facts or
omits or will omit to state any material fact required to make the
statements herein contained not misleading.
· .8~_~_. SurT. ival of covenants. UTILITY agrees that its
representations and warranties set forth herein are true and
correct as of the date of the execution hereof, shall be true and
correct at the time of Closing, and shall survive the Closing for
a period of two (2) years.
8.1__5. FIRPTA. UTILITY is not a ,'foreign person" within
the meaning of the United States tax laws and to which reference is
made in Section 1445(b) (2) of the Internal Revenue Code of 1986, as
amended. On the Closing Date, UTILITY shall deliver to CITY a
certificate to such effect.
SECTION 9. CONDUCT PENDING CLQSING. UTILITY covenants that
pending the closing:
9.1. B~siness Conduct. Except as otherwise consented to
in writing by CITY, which shall not be unreasonably withheld, for
the perio~ beginning on the date of execution of this Agreement and
ending on the Closing Date, UTILITY shall:
(1) operate the System in, and only in, the usual~
regular and ordinary course and nevertheless comply with and uphold
all applicable governmental requirements and laws;
(2) maintain all of the System's material
structures, equipment and.other tangible personal property in good
repair, o~der and condition, except for depletion, depreciation,
ordinary wear and tear and damage by unavoidable casualty;
(3) keep in full force and effect insurance com-
parable in amount and scope of coverage to insurance now carried by
it for the System;
(4) perform in all material respects all of its
obligations under agreements, contracts and instruments relating to
or affecting the System's properties, assets and operation;
(5) maintain its books of account and records as to
the System in the usual, regular and ordinary manner;
10
(6) subject to available administrative remedies
pursuant to Chapter 120, Florida Statutes~ or any administrative or
judicial proceeding or proceeding applicable to particular permits,
comply in all material respects with all statutes, laws,
ordinances, rules and regulations applicable to it and to the
operation of the System;
(7) promptly advise CITY, in writing,
material adverse .change in the operation of System; and
of any
(8)~ not enter into any transaction, including,
without limitation, the purchase, sale or exchange of property, the
value of which exceeds $2,000, which relates to the System except
in furtherance of this Agreement with theUT!LITY, or the rendering
of any service to UTILITY, except in the ordinary course of and
pursuant tot he reasonable requirements of the business of UTILITY.
9.2. Risk of Loss.. UTILITY shall bear the ~isk of loss,
damage or destruction of the P~rchased Assets by fire or other
casualty prior to Closing Date. If any material portion of the
Purchased Assets is damaged by fire, "Act of God" or other casualty
prior to the closing Date, CITY shall have the option of (1)
closing and accepting the Purchased Assets "as is", without
reduction of the Purchase Price, together with UTILITY's assignment
to CITY of all rights under UTILITY's insurance policies and all of
the insurance proceeds, if any, relating thereto, but without any
further claim by CITY against UTILITY; or (2) cancelling this
Agreement in which event the parties shall be released from all
further obligations to each other. If any immaterial portion of
the Purchased Assets is so damaged, UTILITY shall either (1) repair
or replace same, or (2) assign UTILITY's insurance proceeds
covering ~same to CITY at closing (or if there are no adequate
proceeds available, UTILITY shall credit CITY at closing for the
reasonable uninsured value of the damaged property).
9.__3. No Encumbrances. Except as otherwise permitted
this Agreement, from and after the date of the execution of this
Agreement, UTILITY shall not, without the prior written consent of
CITY, which shall not be unreasonably withheld, dispose of
encumber any of the Purchased Assets.
9.4 Access to Records. At all times, UTILITY will coop-
erate by opening records and by providing access, upon prior
notice, to records and facilities to CITY and CITY's
representatives to assist in acquainting CITY'S operating and
administrative personnel in the operation of the System; provided
that no such inspection shall materially interfere with the
operation of the System.
9.5. ~erformance of Closin~ Condition~. UTILITY shall
perform all of the conditions to closing which should be performed
by UTILITY prior to closing as provided herein.
11
9.6. Insurance. Prior to closing, UTILITY' shall
'ntain existing fire and extended coverage ~nsu~anc~3%c°_v~ t~
cost oI y P ......... ~ not be obligated to
necessitated by casualty aamage, ux=a ~=~
assume or continue to maintain any policy of insurance that was
originally obtained by UTILITY after the Closing Date.
9.__7. Exmm~nation and Inspection- UTILITY will permit
examination by CITY'S'auth°rized representatives of all existing
contractual obligations, physical systems, assets, real estate,
rights-of-way, easements and inventories utilized by UTILITY in
connection with the System. Such facilities will be properly
maintained by UTILITY within the custom and usage of the industry
up until the closing Date and shall not otherwise utilize any items
of inventory other than for th~ operation of the System for the
period ending on the Closing Date.
SECTION 10. ~EpRESENTATION.S ..AND.. W.ARRANT!E$ ~F CIT~. To
induce UTILITY to enter into this Agreement, CiTY represents and
warrants as follows:
10.1. Orqani.zation, Standinc and Power of CITY. CITY is
a municipal c---~rporation duly organized and validly existing under
the laws of the state of Florida and has all requisite municipal
power and authority to enter into this Agreement, and to carry out
and perform the terms and provisions of this Agreement.
10.~2. Author~ty..for A~reement. CITY has the authority
and power to execute and deliver this Agreement and to carry out
its obligations hereunder. This Agreement has been duly authorized
by all municipal action required to be taken by CITY, including
holding ~11 required public hearings, has been duly executed and
delivered by CITY, and constitutes a valid and legally binding
obligation of CITY, enforceable in accordance with its terms.
10.3. Disclosure. No representation or warranty made by
CITY, to the best of CITY's knowledge, in this Agreement contains
or will contain any untrue statement of material facts or omits or
will omit to state any material fact required to make ~he
statements herein contained not.misleading.
10.4. Servicg. Upon closing the transaction
contemplated in this Agreement, CITY shall, to the extent allowable
by law, continue to provide existing: (i) water and sewer service
to the UTILITY's customers consistent with or superior to the
serwices currently being provided by UTILITY to its customers; and
(ii) water and wastewater service to Atlantic Gulf Communities
Corporation, its successors and/or assigns (,,Atlantic Gulf"), and
properties owned by-Atlantic Gulf, in a uniform and non-
discriminatory manner with other property and property owners
served by CITY.
12
10.5. Performance of Closinq Conditions. CIT~ shall
perform all of the conditions to closing which should be performed
by CITY prior to the Closing Date as provided herein.
10.6. ~rvival of Covenants. CITY agrees that its
representation and warranties set forth herein are true and correct
as of the date of the execution hereof, shall be true and correct
at the time of the Closing Date, but shall only survive for two (2)
years following the closing Date.
SECTION 11. ADJUSTMENTS AND PRORATIONS.
11-!. Adjustments. At the time of closing, the parties
covenant and agree that the following adjustments to the Purchase
-Price shall be made:
(1) Real and personal property taxes on all real
and personal property which is being conveyed by UTILITY to CITY,
shall be prorated as of the Closing Date based on the most current
tax bills available, with the understanding that if tax bills for
the current year are not available, CITY will assume responsibility
for all taxes for the current year but will be entitled to a
reproration when available.
(2) Ail rates, fees and charges for water and sewer
service shall be prorated and adjusted between the parties as of
11:59 p.m. of the Closing Date. No later than twenty (20) days
after the closing, CITY shall reimburse and credit UTILITY for
ninety-five percent (95%) of all accounts receivable zero (0) to
sixty (60) days old as of the Closing Date. UTILITY shall retain
all accounts receivable which are delinquent for more than sixty
(60) days (entitling UTILITY to the proceeds thereof if and when
paid). CITY shall promptly turn over to UTILITY any such
delinquent receivables that may be subsequently paid to CITY and
shall use reasonable efforts to assist UTILITY in the collection of
same, including, without limitation, discontinuing service to
nonpaying customers. CITY agrees to pay UTILITY for ninety-five
percent (95%) of all unbilled revenue, which shall be prorated as
of the Closing Date and paid by CITY to UTILITY within thirty (30)
days of billing. All rates, fees, and charges for water and sewer
service a~ter the Closing Date shall be the property of CITY.
(3) CITY shall reimburse and credit UTILITY for the
cost of all'additional capital improvements made to the System by
or on behalf of UTILITY prior to the Closing Date provided CITY has
consented to said improvements.
(4) UTILITY shall request' all of its suppliers and
vendors to submit final invoices for services, materials, and
supplies, including electricity for the period up to and including
the Closing Date. UTILITY shall be responsible for, and shall
provide to CITY, upon request, evidence of the payment of all such
invoices.
13
(5) For all those customers who 'are connected to
and receiving service (water, wastewater, or water and wastewater)
from ~TILITY on the Closing Date and have paid connection, plant
capacity, main extension, and/or capital charges (,,Connection
Charges") to UTILITY, the Connection Charges previously paid that
specifically apply to the service being received (water,
wastewater, or water and wastewater) shall be retained by UTILITY.
For all those customers who, on the Closing Date, are not connected
to and receiving service from UTILITY and have paid Connection
Charges to UTILITY, and to whom UTILITY has extended completely all
pipelines necessary to provide service, UTILITY may retain main
extension charges previously paid that specifically apply to the
pipelines extended (water main extension charges for water
pipelines, wastewater main extension charges for wastewater
pipelines), and UTILITY shall pay to CITY and CITY shall, receive
from UTILITY all other Connection Charges (including impact fees)
paid by such customers. All other Connection Charges received
prior to the Closing Date by UTILITY from customers Of the System
who have not connected to the System, shall be deemed the property
of CITY, and shall be paid to CITY. Except as otherwise ~rovided
in this Agreement, CITY will not accept or recognize any
obligations regarding prepaid or discounted unconnected customers.
Nothing contained in this Agreement shall be construed to require
CITY to exercise the police power in the allocation of water and/or
wastewater service capacity (hereby deemed to be a governmental
function) other than in accordance with CITY's current or future
service allocation or extension rules. CITY agrees, to the extent
consistent with §768.28, Florida Statutes, 'to indemnify and hold
UTILITY harmless for any claims, actions, expenses or damages,
including costs and reasonable attorneys' fees at trial and/or
appeal to which UTILITY may be exposed in the future as a result of
any transfer of the Connection Charges by UTILITY to CITY.
(6) The date of closing shall, for purposes of
adjustments and prorations, be deemed to be a seller ownership day..
(7) At closing, UTILITY shall receive a credit in
an amount equal to UTILITY's actual cost of certain inventory
listed in Exhibit 3.13, Part B, to this Agreement. A final
inventory of the foregoing shall be taken not earlier than five (5)
days or l~ter than the day prior to closing by representatives of
the parties to prepare the final list of such inventory.
11.2. Payment.of Fees and Taxes. UTILITY shall pay CITY
all franchise fees and utility taxes due~hrough the Closing Date.
SECTION 12. CLQSING EXPENSES. The. cost of recording any
releases, satisfactions, or corrective instruments, along with the
documentary stamps and surtax, if any, on the Deed shall be paid by
UTILITY. The cost of recording the Deed shall be paid by CITY.
Certified, confirmed and ratified special assessments or municipal
liens as of the Closing Date shall be paid by UTILITY.
Notwithstanding the foregoing, to the extent any of the foregoing
certified, confirmed or ratified liens are payable in installments,
14
CITY shall take title subject to such liens and assume the ~alance
of such installment payments, subject to appropriate prorations.
SECT~. ENVIRONMENTAL _MA...TTERS.
13.1. UTILITY warrants that the Property described in
Exhibit "3.1" and the Pur6hased Assets are in a clean and healthful
condition, free of environmental contamination or potentially
harmful physical cbnditions, other than such contaminants or
harmful conditions permitted by law. No hazardous substance has
been improperly stored upon, disposed of', spilled or otherwise
released to the environment on or in the Property or Easements by
UTILITY or, to the best of the knowledge of UTILITY after due
inquiry, by any other party. For purposes of this Agreement .the
definition of the term~"hazardous substance" shall be that set out
in Section 101(4) of the Federal Comprehensive Environmental
Response, Compensation and Liability Act, except that for purposes
of this Agreement, the term shall also include (1) petroleum (crude
oil) and natural gas (whether existing as a gas or a liquid); and
(2) any substance defined as hazardous or toxic by any state or
local regulatory agency having jurisdiction over the operations of
UTILITY.
!3.2. The operation by UTILITY of its utility business
complies in all material respects with all applicable federal,
state and local environmental and occupational health and safety
statutes and regulations.
13.3. UTILITY warrants that any tanks (whether above or
below) on or at the Property or Easements installed or used by
UTILITY are in sound conditions, free of corrosion or leaks which
could permit any release of stored material.
13.4. None of the Property has been used by UTILITY or
by any other party for the processing, storing, or otherwise
utilizing asbestos, polychlorinated byphenyls ("PCB's"), or
radioactive substances. UTILITY has received no notice that any of
the foregoing materials are present on or at any Property qr
Easements.
'~3.5. Ail hazardous waste resulting from the operations
of UTILITY on or at the Property or Easements have been disposed of
in an environmentally sound manner. None of those wastes have been
disposed of in any site where there has been, is, or, due to the
manner of disposition by UTILITY, will be released into the
environment requiring corrective action, nor has UTILITY received
notice from any state or federal environmental agency of its
possible involvement with any disposal site under investigation by
such agency.
SECTION 14. INDEMNITY.
14.1. UTILITY shall, and hereby agrees to defend,
indemnify and hold harmless, CITY at all times from and after the
15
Closing Date against and in respect to any damages, as hereinafter
defined, from claims.of any person or entity not a party to this
Agreement which arise out of facts or circumstances occurring on or
prior.to t-he time of the Closing. CITY shall notify UTILITY of any
such claims within thirty (30) days of its receipt of notice
thereof. Damages, as used herein, shall include any obligations,
losses, costs, expenses, injunctions, suits, fines~ liabilities,
penalties, and damages, including reasonable attorneys' fees at
trial and all appellate'levels, whatsoever that CITY incurs as a
result of judgment or order rendered by a Court or agency of
competent jurisdiction, that arise from, (1) any materially inac-
curate representation made by UTILITY in or under this Agreement;
(2) breach of any of the warranties made by UTILITY in or under
breach or default in the performance by UTILITY
this Agreement; (3.) .
of any of the covenants, conditions, commitments, agreements,
duties or obligations to be performed by it hereunder; (4) any
debts, liabilities or obligations of UTILITY, whether accrued,
absolute, contingent or otherwise, due or to become' due, except
those obligations specifically assumed by CITY pursuant to this
Agreement; (5) the breach by UTILITY or the failure of any act or
action to occur that is the subject of any duty, obligation,
covenant, condition, commitment, agreement, representation or
warranty undertaken or made by or on behalf of UTILITY pursuant to
this Agreement; and (6) the ownership and operation of the Water
and Wastewater utility System or the Water and Wastewater System
Assets by UTILITY prior to the Closing Date. UTILITY agrees to
defend, indemnify and hold CITY harmless from and pay any costs,
fees, penalties, or fines that are imposed by a court or agency of
competent .jurisdiction, upon CITY or UTILITY, by reason of
UTILITY's failure to fully comply with any EPA, FDEP, or Water
Management District order, rule, or statute, which may arise
before, during, or after_the Closing out of facts or circumstances
occurring on or prior to the Closing Date.
14. %. CITY shall, and hereby agrees to defend, indemnify
and hold harmless, UTILITY at all times from and after the Closing
Date against and in respect to any damages, as hereinafter defined,
from claims of any person or entity not a party to this Agreement
which arise out of facts or circumstances occurring on or after th~
time of the Closing. UTILITY shall notify CITY of any such claims
within thirty (30) days of its receipt of notice thereof. Damages,
as used herein, shall include any obligations, losses, costs,
expenses, injunctions, suits, fines, liabilities, penalties, and
damages, including reasonable attorneys' fees at trial and all
appellate levels, whatsoever that UTILITY incurs as a result of
judgment or order rendered by a Court or agency of competent
jurisdiction, that arise from, (1) any .materially inaccurate
representation made by CITY in or under this Agreement; (2) breach
of any of the warranties made by CITY in or under this Agreement;
(3) breach or default in the performance by CITY of any of the
covenants, conditions, commitments, agreements, duties or
obligations to be performed by it hereunder; (4) any debts,
liabilities or obligations of CITY, whether accrued, absolute,
contingent or otherwise, due or to become due, except those
16
obligations which were not assumed by CITY pursuant t~ this
Agreement; (5) the breach by CITY or the failure of any act or
action to occur that is the subject of any duty, obligation,
covenant, condition, commitment, agreement, representation or
warranty undertaken or made by or on behalf of CITY pursuant to
this Agreement; and (6) the ownership and operation of the Water
and Wastewater Utility System or the Water and Wastewater System
Assets by CITY after ~the Closing Date, CITY agrees to defend,
indemnify and hold UTILITY harmless from'and pay any costs, fees,
penalties, or fines that are imposed by a court or agency of
competent jurisdiction, upon UTILITY or CITY by reason of CITY's
failure to fully comply with any EPA, FDEP, or Water Management
District order, rule, or statute, which may arise afterthe Closing
out of facts or circumstances occurring after the Closing Date.
SECTION 15. COVENANT NOT TO ENGAGE COMPETING IN UTILITY
BUSINESS. UTILITY a~rees that it shall not engage (the words
"shall not" being used in a mandatory definition) in the business
of providing water or wastewater service to any land located within
CITY including any land annexed into CITY, for the next ten years.
This provision will only become effective upon Closing.
SECTION 16. CITY'S INVESTIGATION. CITY has previously
reviewed and considered the nature of this transaction and has, or
will have, on or before the Closing Date, acted in due diligence to
investigate the System and all aspects of this transaction. Except
only as to those matters which UTILITY has provided for the
representations or warranties in this Agreement, in electing to
proceed with this transaction, CITY shall have determined as of the
Closing Date that the System is satisfactory to CITY in all
respects and is purchasing the System in "as is" condition. CITY
has and will rely solely on CITY's own independent investigations
and inspections, except to the extent of any representations or
warranties made by UTILITY in this Agreement. CITY further
acknowledges and agrees that, except for the specific
representations made by UTILITY in this Agreement, UTILITY has made
no other representations, is not willing to make any
representations and has not held out any inducements to CITY othe~
than those specifically set forth in this Agreement.
SECT~0N 17. CLOSING. Provided that all conditions precedent
to closing have, in fact, been so performed, the place of closing
shall be at the City Hall of the city of Sebastian, Florida, or at
.such other 'location selected by CITY in order to accommodate the
closing of any municipal bonds being issued to finance this
transaction pursuant tot his.Agreement and such closing shall occur
on November 29, 1993 (the "Closing Date"),.or such earlier date as
the parties mutually agree in writing. Any party shall have the
right to extend the Closing Date thirty (30) days beyond November
29, 1993, by sending written notice to the other parties at least
fifteen (15)" days prior to November 29, 1993. Immediately
following the Closing Date, CITY shall have full right to the
possession of all of the Water and Wastewater System, all of which
shall be located in Sebastian, Florida.
17
to closing and, thereby, being assigned by UTILITY to CITY pursuant
~ this A~eement. Furthermore, CITY shall deliver to UTILITY a
~ · .... =- -- -~ the Resolution of the CITY Council which approved
cer~lz~ea copy u~
the transaction pursuant to this Agreement.
· 18.3 conditions Precededt to Closinq. The obligations
of CITY pursuant to this Agreement are contingen~ upon satisfaction
and UTILITY's performance of the following conditions set forth.in
Paragraphs 18.3(a) through 18.3(d) prior to closing (or as
otherwise provided below). If any of the contingencies specified
below are not satisfied prior to closing, CITY shall have the
right, at its option, but not the obligation, to declare this
Agreement null and void by written notice to UTILITY and all
parties shall be released of any further obligations and
responsibilities pursuant to this Agreement.
(a) CITY obtaining, at CITY's expense, a leve~ one
environmental audit indicating that the Property and the Purchased
Assets are in a clean and healthful condition, free of
environmental contamination or potentially harmful physical
conditions, other than such contaminants or harmful conditions
permitted by law. .CITY and its agents, contractors or employees
shall have the right to enter upon the Property for the purpose of
performing such audit, providing said activities shall not any way
damage the Property or any part thereof or disrupt the normal
business operations of the Property. Such audit shall be performed
not less than thirty (30) days prior to closing. CITY's failure to
obtain such audit or, in the' event CITY shall close this
transaction after having obtained such an audit, shall in no way
relieve UTILITY of any liability with respect to the breach of any
warranty or representation contained in Section 13 of this
Agreemen%.
(b) CITY determining, in its sole and absolute
discretion, that all contracts or agreements, including, but not
limited to, all leases, service agreements and developers'
agreements, which CITY is to assume pursuant to this Agreement or
which shall affect or obligate CITY at any time after the Closing
'Date, shall be suitable to CITY. For a period of thirty (30) days
commencing.upon delivery of all applicable contracts and agreements
to CITY, CITY shall be entitled to inspect said contracts and
agreements and UTILITY shall give to CITY and its agents,
contractors or employees full access to all such contracts and
commitments'and shall furnish to CITY all information concerning
such contracts and' commitments as CITY may reasonably request. In
the event CITY fails to notify UTILITY, in writing, of CITY's
election to terminate this Agreement due.to the unsuitability of
any contract or agreement within the foregoing thirty '(30) day
period, this condition shall be deemed waived.
(c) All UTILITY's representations and
warranties contained in this Agreement shall be true as of the
Closing Date as if such representation and warranties were made at
19
such time, and all such representations of warranties shall survive
the Closing for a Period of two (2) years.
(d) Ail corporate, governmental and other
proceedings to be taken by UTILITY and CITY in connection with the
transactions contemplated hereby and all documents incident thereto
shall be reasonably satisfactory in form and substance to CITY, and
to UTILITY, and to their respective attorneys, and CITY and UTILITY
shall have received from each other all such counterpart originals
or certified or other copies of such doc=ments as CITY or UTILITY
may reasonably request.
SECTION 19. RESPONSIBILITY FOR PROFESSIONAL FEES AND COSTS.
Each party hereto shall .be responsible for its own reasonable
attorneys' fees, engineering fees, accounting fees and other costs
in connection with the preparation and execution of this Agreement.
SECTION 20.
INTENTIONALLY BLANK
SECTION 21. COM~ISS. IONS. UTILITY ~nd CITY warrant to the
other that the transaction contemplated by this Agreement is a
direct, private transaction between UTILITY and CITY without the
use of a broker or commissioned agent.
SECTION 22. FURTHER ASSURANCES. Each of the parties hereto
agrees that, from time to time, upon the reasonable request of the
other party and at the expense of the requesting party, without
further consideration, it shall execute and deliver to the
requesting party any and all further instruments, affidavits,
conveyances and transfers as may be reasonably required to ca~ry
out the provisions of this Agreement.
SECTION 23. NOTICES; PROPER FORM. Any 'notices required or
allowed to be delivered hereunder shall be in writing and be deemed
to be delivered when (1) hand.delivered to the person hereinafter
designated, (2) upon receipt of such notice when deposited in the
United States mail, postage prepaid, certified mail, return receipt
requested, addressed to a party at the address set forth opposite
the party's name below, or at such other address as the party shall
have specified by written notice to the other party delivered in
accordance herewith, or (3) sent by a recognized overnight courier,
such as Federal Express, addressed to a party at the address set
forth opposite the party's name below, or at such other address as
the party shall have specified by written notice to the other party
delivered in accordance herewith:
20
!
!
CITY:
with a copy'~o:
UTILITY:
with a copy to:
city Manager
city of Sebastian, Florida
city Hall
1225 Main Street
. Sebastian, Florida 32958
(407) 589-5330
Fax (407) 589-5570
Charles Ian Nash, Esquire
city Attorney
Frese, Nash & Torpy, P~A.
930 S. Harbor city Blvd.
suite 505
Melbourne, Florida 32901
(407) 984-3300
Fax (407) 951-3741
Charles E. Fancher, Jr.,
President
General Development Utilities,
Inc.
2601 South Bayshore Drive
Miami, Florida 33131
(305) 859-4331
Fax (305) 859-4657
Marcia H. Langley, Esq.
Atlantic Gulf Communities Corp.
260! South Bayshore Drive
Miami, Florida 33133-3461
(305) 859-4231
Fax (305) 859-4524
SECTION 24. NO INTERFERENCE.WITH .EM~.LOYMENT. UTILITY will
not interfere with CITY hiring any of the present operational staff
of the Water and Wastewater System. CITY shall notify UTILITY
thirty (30) days prior to the Closing Date as to which existing
employees' of UTILITY to whom CITY will 'be extending offers of
employment.
~. ENTIRE AGREEMENT. This instrument and the
Exhibits annexed hereto constitute the entire Agreement between the
parties and supersedes all previous discussions, understandings,
and agreements between the parties relating to the subject matter
of this Agreement.
SECTION 26. AMEN~DMENT. Amendments to and waivers to the
provisions herein shall be made by the parties only in writing by
formal amendment.
21
SECTION 27. D~ISCLAIMER QF THIRD PARTY BENEFICIARIES. This
Agreement is solely for the benefit of the formal parties herein,
and no right or cause of action shall accrue upon or by reason
hereof, to or for the benefit of any third party not a formal party
hereto.
..SECTION 28. BINDING .~FFECT. Ail of the provisions of this
Agreement shall be binding upon and inure to the benefit of and be
enforceable by legal representatives, 'successors and nominees of
CITY and UTILITY.
SECTION 2..~.. T~ME OF THE ESSENCE. Time is hereby declared of
the essence to the performance of this Agreement.
SECTION 30. APPLICABLE LAW. This.-Agreement shall be con-
strued, controlled, and interpreted according to the laws of the
State of Florida, and the venue for any action or suit brought to
interpret or enforce any of the provisions of this Agreement shall
be filed and maintained in indian River County, Florida.
SECTION 31. CORROBORATION OF PAYMENT AFTER CLOSING. In each
instance in which any party to this Agreement-is to receive money
from another party to this Agreement after the Closing Date, the
party who is entitled to receive the money under the terms of this
Agreement shall have the right to inspect; at its own expense,
those books and records of the other party as may be necessary to
corroborate the accuracy of the amount of money received from the
party, within thirty (30) days of receipt of the payment. The
provisions of this Section shall survive the closing.
SECTION 32. CONSTRUCTION. Ail of the parties to this
Agreemen~ have participated fully in the negotiation and
preparation hereof, and accordingly, this Agreement shall not be
more strictly construed against any of the parties hereto. In
construing this Agreement, the singular shall be held to include
the plural, the plural shall be held to include the singular, the
use of any gender shall be held to include any other and all
genders, and the captions and paragraph headings shall ~e
disregarded.
SEC~TON 33. SEVERABILiTY. In the event any term or provision
'of this Agreement is determined by the appropriate judicial
authority to be illegal or otherwise invalid, such provision shall
be given its nearest legal meaning or be construed as deleted as
such authority determines, and the remainder of this Agreement
shall be construed to be in full force and effect.
SECTION 34. COUNTERPARTS. This Agre~ent may be executed in
several counterparts, and each such counterpart shall be deemed an
original, but all such counterparts will constitute one agreement.
SECTION 35. SPECIFIC PERFORMANCE. In the event any party to
this Agreement fails to close on the Closing Date (without any
default by another party), time being of the essence, or in the
22
event of any other default by any par~y of its obligations
hereunder which continues for a period of fifteen (15) days
following written notice thereof from another party, the non-
defaulting shall be entitled to seek all rights and remedies
available at law or equity, including specific performance..
SECTION 36. SURVIVAL OF INDEMNIFICATIONS. Ail agreements of
indemnity made by any party to this Agreement shall survive the
closing for a period of.two (2) years.
SECTION 37. RADON GAS. RADON IS A NATIIRALLY oCcuRRING
RADIOACTIVE GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN
SUFFICIENT QUANTITIES, MAY PRESENT HEALTH RISKS TO PERSONS WHO ARE
EXPOSED TO IT OVER TIME. LEVELS OF RADON THAT EXCEED FEDERAL A~D
STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN FLORIDA-
ADDITIONAL INFORMATION REGARDING RADON AND RADON TESTING MAY BE
OBTAINED FROM YOUR COUNTY PUBLIC HEALTH UNIT.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement 'on the date and year first above written.
signed, sealed and delivered
in the presence of:
Name: W~dy B. Widmann
Name: Richard B. Uotapka
CITY:
~oBhie R. Powel!, M~or !
Kathr~h M.' O,Halloran,
CMC/AAE, city Clerk
Approved as to Form and Legal
~ . · ' T0~ ~C ~'- -
'Richard E.
Assistant city Attorney
(SEAL)
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Signed, sealed and delivered
in the presence of:
STATE OF FLORIDA
COUNTY OF INDIAN R/VER
UTILITY:
GENERAL DEVELOPMENT UTILITIES,
By: ~~
Mr. Charles E. Fanche~/. Jr.'
President / '
[ Corp0ra~e Seal]
The foregginN,instrument was acknowledged before me this
~ day of ~'~.%., , 1993 by Lonnie R. Powell, the Mayor
of THE CITY OF SEBASTIAN, FLORIDA, on behalf of THE CITY OF'
SEBASTIAN. 4~'~i? personally kno__wn .$o m~. or has produced
as ideRtification.
State of Florida
SALLY A. MAi?,.
5: ....... "
N~e of Ad~o ledger T~ed, ,
Printed or St~ped ..
~d o~s~og
Commission Number
24
co Y oF
acknowledged before me this
he foregoing in rument was
~ day of ~ ~ , 1993 by Charles E- Fancher, Jr..,
Corporation, on behalI.o= ~x ~w '---~as identification~
to me or has produced
Name of Acknowledg~-~ Typed,
Printed or Stamped
com~i_~ sion Number
I i~"' ,'-...~UFI=:AL NO"~ARY SEAL
~ '~'~,~[ ~ O0~M;~ION NUMBER
~oP~0~ ,FEB' B~lgg6 ,
25
"LIST OF EXHIBITS
TO
CITY OF SEBASTIAN, FLORIDA/
GENERAL DEVELOPMENT UTILITIES, INC.
WATER AND SEWER SYSTEM
PURCHASE AND SALE AGREEMENT
3.1 Land
3.3 Equipment
3.4 Easements, ROWS, and other similar real estate rights
and assets
3.6 Business Records
3.7 Permits and Approvals
3.11 Ail Assigned and Assumed Contracts and Agreements
3.13 Inventory Part A and Part B
c:\wp\cin\sebasgdu. RE2
26
City of Sebastian
1225 MAIN STREET n SEBASTIAN, FLORIDA 32958
TELEPHONE (407) 589-5330 n FAX (407) 589-5570
SUBJECT: Utilities System Bond
Resolution
APPROVED FOR SUBMITTAL BY:
Kath~yn' M. O'Halloran
Interim City Manager
) DEPT. ORIGIN: Fin./MS
)
) DATE SUBMITTED: 10/28/93
)
) FOR AGENDA OF: 11/03/93
)
) EXHIBITS:
)
) - Resolution No. 93-58
EXPENDITURE
REQUIRED: N/A
AMOUNT
BUDGETED: N/A
APPROPRIATION
REQUIRED: N/A
SUMMARY STATEMENT
The adoption of a bond resolution is the first step in a series
of requirements that are necessary to issue bonds for the GDU
Sebastian Highlands acquisition.
Bond Counsel Mark Mustian of Nabors, Giblin and Nickerson will be
in attendance at the special meeting at 6:00 p.m., on November 3,
1993 to explain these procedures and answer any of your
questions. .
Bond Resolution NO. R-93-58 is being distributed today so that
you will have adequate time to review prior to the meeting.
There may be minor cha~ge~, to the Bond Resolution and Mr. Mustian
will d~cuss them at the meeting. However, we felt that this
document is so important that we are distributing it to you, as
is.
RECOMMENDATION
Move to adopt Resolution No. R-93-58.
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ICITY OF SEBASTIAN, FLORIDA
I UTILITIES SYSTEM REVENUE BOND RESOLUTION
ADOPTED NOVEMBER 3, 1993
SECTION 1.01.
SECTION 1.02.
SECTION 1.03.
SECTION 1.04.
SECTION 1.05.
SECTION 2.01.
SECTION 2.02.
SECTION 2 03
SECTION 2 04
SECTION 2 05
SECTION 2 06
SECTION 2 07
SECTION 2 08
SECTION 2 09
SECTION 3.01.
SECTION 3.02.
SECTION 3.03.
SECTION 3.04.
SECTION 3.05.
SECTION 4.01.
SECTION 4.02.
SECTION 4.03.
SECTION 4.04.
SECTION 4.05.
TABLE OF CONTENTS
ARTICLE I
GENERAL
PAGE
ARTICLE II
AUTHORIZATION, TERMS, EXECUTION AND
REGISTRATION OF BONDS
AUTHORIZATION OF BONDS ............ 18
AUTHORIZATION AND DESCRIPTION OF SERIES 1993
BONDS ..................... 18
APPLICATION OF SERIES 1993 BOND PROCEEDS. 19
EXECUTION OF BONDS .............. 20
AUTHENTICATION ................ 21
TEMPORARY BONDS ................ 21
BONDS MUTILATED, DESTROYED, STOLEN OR LOST. 21
EXCHANGE AND TRANSFER ............. 22
FORM OF BONDS ................. 23
ARTICLE III
REDEMPTION OF BONDS
PRIVILEGE OF REDEMPTION ............ 32
SELECTION OF BONDS TO BE REDEEMED ....... 32
NOTICE OF REDEMPTION ............. 32
REDEMPTION OF PORTIONS OF BONDS ........ 34
PAYMENT OF REDEEMED BONDS ........... 34
ARTICLE IV
SECURITY, SPECIAL FUNDS AND
APPLICATION THEREOF
BONDS NOT TO BE INDEBTEDNESS OF ISSUER. 35
SECURITY FOR BONDS .............. 35
PROJECT ACCOUNT ................ 35
CREATION OF ACCOUNTS ............. 37
DISPOSITION OF REVENUES ............ 38
i
DEFINITIONS .................. 1
AUTHORITY FOR RESOLUTION ........... 16
RESOLUTION TO CONSTITUTE CONTRACT ....... 16
FINDINGS ................... 17
AUTHORIZATION OF INITIAL PROJECT ....... 17
SECTION 4 06
SECTION 4 07
SECTION 4 O8
SECTION 4 09
SECTION 4 10
SECTION 4 11
SECTION 5 01.
SECTION 5 02.
SECTION 5 03.
SECTION 5 04
SECTION 5 05
SECTION 5 06
SECTION 5 07
SECTION 5 08
SECTION 5 09
SECTION 5 10
SECTION 5 11
SECTION 5 12
SECTION 5 13
SECTION 5 14
SECTION 5 15
SECTION 5 16
SECTION 5 17
SECTION 6.01.
SECTION 6.02.
SECTION 6.03.
SECTION 6.04.
SECTION 7.01.
SECTION 7.02.
REBATE ACCOUNT ................ 49
WATER IMPACT FEES ACCOUNT ........... 49
SEWER IMPACT FEES ACCOUNT ........... 50
RATE STABILIZATION ACCOUNT .......... 51
INVESTMENTS .................. 51
SEPARATE ACCOUNTS ............... 52
ARTICLE V
COVENANTS
GENERAL .................... 54
OPERATION AND MAINTENANCE ........... 54
ANNUAL BUDGET ................. 54
RATES ..................... 54
BOOKS AND RECORDS ............... 56
ANNUAL AUDIT ................. 56
NO MORTGAGE OR SALE OF THE SYSTEM ....... 56
INSURANCE ................... 58
NO FREE SERVICE ................ 58
NO IMPAIRMENT OF RIGHTS ............ 59
COMPULSORY SEWER CONNECTIONS ......... 59
ENFORCEMENT OF CHARGES ............ 59
COVENANTS WITH CREDIT BANKS AND INSURERS, 59
CONSULTING ENGINEERS ............. 59
UNIT WATER AND SEWER BILLS .......... 60
COLLECTION OF IMPACT FEES ........... 60
FEDERAL INCOME TAXATION COVENANTS; TA3ZA_BLE
BONDS ..................... 60
ARTICLE VI
SUBORDINATED INDEBTEDNESS AND
ADDITIONAL BONDS
SUBORDINATED INDEBTEDNESS ........... 62
ISSUANCE OF ADDITIONAL BONDS ......... 62
BOND ANTICIPATION NOTES ............ 67
ACCESSION OF SUBORDINATED INDEBTEDNESS TO
PARITY STATUS WITH BONDS ........... 67
ARTICLE VII
DEFAULTS AND REMEDIES
EVENTS OF DEFAULT
REMEDIES ...................
ii
68
68
SECTION 7.03.
SECTION 7.04.
SECTION 7.05.
SECTION 7.06.
SECTION 7.07.
DIRECTIONS TO TRUSTEE AS TO REMEDIAL
PROCEEDINGS ................... 69
REMEDIES CUMULATIVE .............. 69
WAIVER OF DEFAULT ............... 70
APPLICATION OF MONEYS AFTER DEFAULT ...... 70
CONTROL BY INSURER .............. 71
SECTION 8.01.
SECTION 8.02.
SECTION 8.03.
SECTION 8.04.
ARTICLE VIII
SUPPLEMENTAL RESOLUTIONS
SUPPLEMENTAL RESOLUTION WITHOUT BONDHOLDERS'
CONSENT .................... 72
SUPPLEMENTAL RESOLUTION WITH BONDHOLDERS' AND
INSURER'S CONSENT ............... 73
AMENDMENT WITH CONSENT OF INSURER ONLY. 74
TRANSCRIPT OF DOCUMENTS TO INSURERS ...... 75
SECTION 9.01.
SECTION 9.02.
SECTION 9.03.
SECTION 9.04.
SECTION 9.05.
SECTION 9.06.
ARTICLE IX
MISCELLANEOUS
DEFEASANCE .................. 76
CAPITAL APPRECIATION BONDS .......... 78
SALE OF BONDS ................. 78
SEVERABILITY OF INVALID PROVISIONS ...... 78
VALiDATiON AUTHORIZED ............. 78
EFFECTIVE DATE ................ 78
EXHIBIT A -- DESCRIPTION OF THE PROJECT
iii
RESOLUTION No. R-93-58
A RESOLUTION AUTHORIZING THE ISSUANCE BY THE
CITY OF SEBASTIAN, FLORIDA OF NOT EXCEEDING
$5,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF
UTILITIES SYSTEM REVENUE BONDS, SERIES 1993,
TO FINANCE THE COST OF THE ACQUISITION OF AND
THE CONSTRUCTION AND ACQUISITION OF CERTAIN
ADDITIONS, EXTENSIONS AND IMPROVEMENTS TO THE
GENERAL DEVELOPMENT UTILITIES WATER AND SEWER
SYSTEM; PLEDGING THE NET REVENUES OF THE
UTILITIES SYSTEM TO SECURE PAYMENT OF THE
PRINCIPAL OF AND INTEREST ON SAID BONDS;
PROVIDING FOR THE RIGHTS OF THE HOLDERS OF
SAID BONDS; PROVIDING FOR SEVERABILITY;
AUTHORIZING THE INSTITUTION OF VALIDATION
PROCEEDINGS; AND PROVIDING FOR AN EFFECTIVE
DATE FOR THIS RESOLUTION.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEBASTIAN,
FLORIDA:
ARTICLE I
GENERAL
SECTION 1.01. DEFINITIONS. When used in this Resolution, the
following terms shall have the following meanings, unless the
context clearly otherwise requires:
"Accreted Value" shall mean, as of any date of computation
with respect to any Capital Appreciation Bond, an amount equal to
the principal amount of such Capital Appreciation Bond (the
principal amount at its initial offering) plus the interest accrued
on such Capital Appreciation Bond from the date of delivery to the
original purchasers thereof to the Interest Date next preceding the
date of computation or the date of computation if an Interest Date,
such interest to accrue at a rate not exceeding the legal rate,
compounded semiannually, plus, with respect to matters related to
the payment upon redemption or acceleration of the Capital
Appreciation Bonds, if such date of computation shall not be an
Interest Date, a portion of the difference between the Accreted
Value as of the immediately preceding Interest Date and the
Accreted Value as of the immediately succeeding Interest Date,
calculated based on the assumption that Accreted Value accrues
during any semi-annual period in equal daily amounts on the basis
of a 360-day year.
"Act" shall mean Chapter 166, Florida Statutes, the City
Charter of the City of Sebastian and other applicable provisions of
law.
"Additional Bonds" shall mean the obligations issued at any
time under the provisions of Section 6.02 hereof on a parity with
the Series 1993 Bonds.
"Additional Project" shall mean any structure, property or
facility for public use which the Issuer from time to time may
determine to construct or acquire as part of the System, together
with all equipment, structures and other facilities necessary or
appropriate in connection therewith which are financed in whole or
in part with the indebtedness secured by this Resolution. This
term is to be broadly construed as including any lawful undertaking
which will accrue to the benefit of the System, including, without
limitation, joint ventures and acquisition of partial interests or
contractual rights, and including modification, disposal,
replacements or cancellation of a Project previously authorized,
should such modification, disposal or cancellation be permitted
under this Resolution.
"Administrative Expenses" shall mean those expenses for
administration of the System properly allocable as an operating
expense to the System, including audit fees, legal fees and
financial expenses.
"Amortization Installment" shall mean an amount designated as
such by Supplemental Resolution of the Issuer and established with
respect to the Term Bonds.
"Annual Audit" shall mean the annual audit prepared pursuant
to the requirements of Section 5.06 hereof.
"Annual Budget" shall mean the annual budget, balanced as to
revenues and expenses, prepared pursuant to the requirements of
Section 5.03 hereof.
"Annual Debt Service" shall mean, at any time, the aggregate
amount in the then current Fiscal Year of (1) interest required to
be paid on the Outstanding Bonds during such Fiscal Year, except to
the extent that such interest is to be paid from amounts in the
Payment Subaccount derived from Bond proceeds, (2) principal of
Outstanding Serial Bonds maturing in such Fiscal Year, (3) the
Amortization Installments herein designated with respect to such
Fiscal Year and (4) any amounts owed by the Issuer to the issuer of
such Reserve Subaccount Credit Instrument as a result of a draw
thereon or a claim thereunder; provided that in computing such
Annual Debt Service for any future period, any Variable Rate Bonds
shall be deemed to bear interest at all times to the maturity
thereof at a constant rate of interest equal to the lesser of (i)
the interest rate for 30-year revenue bonds published by The Bond
Buyer no more than two weeks prior to the sale of the additional
parity Variable Rate Bonds, plus fifty (50) basis points or (ii)
the Maximum Interest Rate. For purposes of this definition, all
amounts payable on a Capital Appreciation Bond shall be considered
a principal payment due in the year it becomes due.
"Authorized Investments" shall mean any of the following, if
and to the extent that the same are at the time legal for
investment of funds of the Issuer:
(A) Direct obligations of the United States of America and
securities fully and unconditionally guaranteed as to the timely
payment of principal and interest by the United States of America,
provided, that the full faith and credit of the United States of
America must be pledged to any such direct obligation or guarantee
("Direct Obligations");
(b) Direct Obligations and fully guaranteed certificates of
beneficial interest of the Export-Import Bank of the United States;
consolidated debt obligations and letter of credit backed issues of
the Federal Home Loan Banks; participation certificates and senior
debt obligations of the Federal Home Loan Mortgage Corporation
("FHLMCs"); debentures of the Federal Housing Administration;
mortgage-backed securities (except stripped mortgage securities
which are valued greater than par on the portion of unpaid
principal) and senior debt obligations of the Federal National
Mortgage Association ("FNMAs"); participation certificates of the
General Services Administration; guaranteed mortgage-backed
securities and guaranteed participation certificates of the
Government National Mortgage Association ("GNMAs"); guaranteed
participation certificates and guaranteed pool certificates of the
Small Business Administration; debt obligations and letter of
credit-backed issues of the Student Loan Marketing Association;
local authority bonds of the U.S. Department of Housing & Urban
Development; guaranteed Title XI financings of the U.S. Maritime
Administration; guaranteed transit bonds of the Washington
Metropolitan Area Transit Authority; Resolution Funding Corporation
securities.
(c) Direct Obligations of any state of the United States of
America or any subdivision or agency thereof whose unsecured,
uninsured and unguaranteed general obligation debt is rated, at the
time of purchase, "A" or better by Moody's and "A" or better by
Standard & Poor's, or any obligation fully and unconditionally
guaranteed by any state, subdivision or agency whose unsecured,
uninsured and unguaranteed general obligation debt is rated, at the
time of purchase, "A" or better by Moody's and "A" or better by
Standard & Poor's;
(d) Commercial paper (having original maturities of not more
than two hundred seventy (270) days) rated, at the time of
purchase, "Pwl" by Moody's and "A-i" or better by Standard &
Poor's;
3
(e) Federal funds, unsecured certificates of deposit, time
deposits or bankers acceptances (in each case having maturities of
not more than three hundred sixty-five (365) days) of any domestic
bank including a branch office of a foreign bank which branch
office is located in the United States, provided legal opinions are
received to the effect that full and timely payment of such deposit
or similar obligation is enforceable against the principal office
or any branch of such bank, which, at the time of purchase, has a
short-term "Bank Deposit" rating of "P-i" by Moody's and a "Short-
Term CD" rating of "A-i" or better by Standard & Poor's.
(f) Deposits of any bank or savings and loan association
which has combined capital, surplus and undivided profits of not
less than $3 million, provided such deposits are continuously and
fully insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation;
(g) Investments in money-market
"AAAm-G" by Standard & Poor's;
funds rated "AAAm" or
(h) Repurchase agreements collateralized by Direct
Obligations, GNMAs, FNMAs or FHLMCs with any registered
broker/dealer subject to the Securities Investors' Protection
Corporation jurisdiction or any commercial bank insured by the
FDIC, if such broker/dealer or bank has an uninsured, unsecured and
unguaranteed obligation rated "P-i" or "A3" or better by Moody's,
and "A-i" or "A-" or better by Standard & Poor's, provided:
(i) a master repurchase agreement or specific written
repurchase agreement governs the transaction; and
(ii) the securities are held free and clear of any lien
by the Issuer or an independent third party acting solely as
agent ("Agent") for the Issuer, and such third party is (i) a
Federal Reserve Bank, (ii) a bank which is a member of the
Federal Deposit Insurance Corporation and which has combined
capital, surplus and undivided profits of not less than $50
million or (iii) a bank approved in writing for such purpose
by any of the Insurers, and the Issuer shall have received
written confirmation from such third party that it holds such
securities, free and clear of any lien, as agent for the
Issuer; and
(iii) a perfected first security interest under the
Uniform Commercial Code, or book entry procedures prescribed
at 31 C.F.R. 306.1, et seq., or 31 C.F.R. 350.0, et seq., in
such securities is created for the benefit of the Issuer; and
(iv) the repurchase agreement has a term of one hundred
eighty (180) days or less, and the Issuer or the agent will
value the collateral securities no less frequently than weekly
and will liquidate the collateral securities if any deficiency
in the required collateral percentage is not restored within
two (2) business days of such valuation; and
(v) the fair market value of the securities in relation
to the amount of the repurchase obligation, including
principal and interest, is equal to at least one hundred three
percent (103%).
(i) Units of participation in the Local Government Surplus
Funds Trust Fund established pursuant to Part IV, Chapter 218,
Florida Statutes, or any similar common trust fund which is
established pursuant to State law as a legal depository of public
moneys.
(j) Investments pursuant to the Florida Arbitrage and
Investment Management Trust established by a Declaration of Trust,
made as of April 10, 1992, by the School Board of Escambia County,
Florida, the City of Lakeland, Florida and the City of Fort
Lauderdale, Florida.
(k) Any other investment authorized under the laws of the
State and approved by the Credit Facility Issuer, if any.
"Authorized Issuer Officer" shall mean the Clerk or, his
designee, or, when used in reference to any act or document, any
person authorized by resolution of the Issuer to perform such act
or sign such document.
"Bond Counsel" shall mean Nabors, Giblin & Nickerson, P.A. or
any other attorney at law or firm of attorneys, of nationally
recognized standing in matters pertaining to the Federal tax
exemption of interest on obligations issued by states and political
subdivisions, and duly admitted to practice law before the highest
court of any state of the United States of America.
"Bond Insurance Policy" shall mean the municipal bond new
issue insurance policy or policies issued by an Insurer
guaranteeing the payment of the principal of and interest on any
portion of the Bonds.
"Bond Year" shall mean the period commencing on and ending on
the dates specified by Supplemental Resolution of the Issuer.
"Bondholder" or "Holder" or "holder" or any similar term, when
used with reference to a Bond or Bonds, shall mean any person who
shall be the registered owner of any Outstanding Bond or Bonds as
provided in the registration books of the Issuer.
"Bonds" shall mean the Series 1993 Bonds, together with any
Additional Bonds issued pursuant to this Resolution and any
Subordinated Indebtedness which accedes to the status of Bonds
pursuant to Section 6.04 hereof.
5
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which the Insurance Trustee is authorized by law
to remain closed.
"Capital Appreciation Bonds" shall mean those Bonds so
designated by Supplemental Resolution of the Issuer, which may be
either Serial Bonds or Term Bonds and which shall bear interest
payable at maturity or redemption. In the case of Capital
Appreciation Bonds that are convertible to Bonds with interest
payable prior to maturity or redemption of such Bonds, such Bonds
shall be considered Capital Appreciation Bonds only during the
period of time prior to such conversion.
"Clerk" shall mean the Clerk of the Governing Body and such
other person as may be duly authorized to act on his or her behalf.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations and rules thereunder in effect or
proposed.
"Consulting Engineers" shall mean any engineering firm of
favorable reputation for skill and experience with respect to the
construction and operation of facilities similar tc the System,
which is duly licensed under the laws of the State and designated
by the Issuer to perform the duties of the Consulting Engineers
under the provisions hereof.
"Cost," when used in connection with a Project, shall mean (1)
the Issuer's cost of physical construction; (2) costs of
acquisition by or for the Issuer of such Project; (3) costs of land
and interests therein and the cost of the Issuer incidental to such
acquisition; (4) the cost of any indemnity and surety bonds and
premiums for insurance during construction; (5) all interest due to
be paid on the Bonds and other obligations relating ~o the System
during the period of construction of such Project; (6) engineering,
legal and other consultant fees and expenses; (7) costs and
expenses of the financing, including audits, costs of ratings and
bond insurance fees and expenses of any Paying Agen%, Registrar,
Insurer, Credit Bank or depository; (8) amounts, if any, required
by this Resolution to be paid into the Payment Subaccount upon the
issuance of any Series of Bonds; (9) payments, when due (whether at
the maturity of principal or the due date of interest or upon
redemption) on any indebtedness of the Issuer (other than the
Bonds) incurred for a Project for the System; (i0) costs of
machinery, equipment and supplies required by the Issuer for the
completion of such Project; and (11) any other costs properly
attributable to such construction or acquisition, as determined by
generally accepted accounting principles applicable to water and
sewer utility systems, and shall include reimbursement to the
Issuer for any such .items of Cost heretofore paid by the Issuer.
Any Supplemental Resolution may provide for additional items to be
included in the aforesaid Costs.
"Credit Bank" shall mean as to any particular Series of Bonds,
the Person (other than an Insurer) providing a letter of credit, a
line of credit or another credit or liquidity enhancement facility,
as designated in the Supplemental Resolution providing for the
issuance of such Bonds.
"Credit Facility" shall mean as to any particular Series of
Bonds, a letter of credit, a line of credit or another credit or
legal liquidity enhancement facility (other than an insurance
policy issued by an Insurer), as approved in the Supplemental
Resolution providing for the issuance of such Bonds.
"Debt Service Account" shall mean the account established
pursuant to Section 4.04(C) hereof.
"Federal Securities" obligations described in paragraphs (1)
and (2) of the definition of "Authorized Investments." "Federal
Securities" shall also include direct obligations of the United
States Treasury, Treasury Receipts, CATS, STRPS, Refcorp interest
strips and TIGRS; provided such obligations do not permit
redemption prior to maturity at the option of the.obligor.
"Fiscal Year" shall mean the period commencing on October 1 of
each year and continuing through the next succeeding September 30,
or such other period as may be prescribed by law.
"GDU System" shall mean the utility system being purchased
pursuant to the Purchase Agreement.
"Governing Body" shall mean the City Council of the City of
Sebastian.
"Government Grant", when used with respect to the System,
shall mean any sum of money (including any loan) heretofore or
hereafter received by the Issuer from the United States of America
or any agency thereof or from the State or any agency or political
subdivision thereof as or on account of a grant or contribution,
not repayable by the Issuer, for or with respect to (1) the
construction, acquisition or other development of an addition,
extension or improvement to any part of the System or any costs of
any such construction, acquisition or development, or (2) the
financing of any such construction, acquisition, development or
costs.
"Gross Revenues" shall mean all income and moneys received by
the Issuer from the rates, fees, rentals, charges and other income
to be made and collected by the Issuer for the use of the products,
services and facilities to be provided by the System, or otherwise
received by the Issuer or accruing to the Issuer in the management
and operation of the System, calculated in accordance with
generally accepted accounting principles employed in the operation
of water and sewer systems similar to the System, including,
without limiting the generality of the foregoing, (1) moneys
deposited from the Rate Stabilization Account into the Revenue
Account, (2) all earnings and income derived from the investment of
moneys under the provisions of this Resolution which are deposited
or credited to the funds and accounts established hereunder, other
than the Project Account and Rebate Account, and (3) payments made
by developers to the Issuer for reservation of capacity and similar
such charges. "Gross Revenues" shall not include (1) Government
Grants and investment earnings thereon, (2) Water Impact Fees and
earnings thereon, (3) Sewer Impact Fees and earnings thereon, (4)
Special Assessments and earnings thereon, (5) non-cash items
contributed to the Issuer with respect to the System (6) moneys
deposited to the Rate Stabilization Account from the Surplus
Reserve Account, (7) Stormwater Fees and earnings thereon (except
to the extent described under the definition of the term the
"System" herein), and (8) amounts received which must be remitted
as contract payments to the developer of the Park Place system
acquired by the Issuer. Gross Revenues may include Special
Assessment Proceeds and/or other revenues related to the System
which are not enumerated in the definition of "Gross Revenues" if
and to the extent the same shall be approved for inclusion by each
Insurer of Bonds then Outstanding.
"Impact Fees" shall mean the Sewer Impact Fees and Water
Impact Fees.
"Initial Project" shall mean the acquisition of, and the
construction, renovation or reconstruction of certain improvements
and additions to the System more particularly described in Exhibit
A attached hereto and made a part hereof, including, without
limitation, all property rights, easements, appurtenances,
rights-of-way, franchises and equipment relating thereto and deemed
necessary or convenient for the acquisition, construction,
renovation, reconstruction or operation thereof, with such changes,
deletions, additions or modifications to the enumerated
improvements, equipment and facilities, or such other improvements,
equipment or facilities as may hereafter be approved by the
Governing Body in accordance with the Act.
"Insurance Trustee" shall mean the Insurance Trustee
designated by the Insurer with respect to any Series of Bonds.
"Insurer" shall mean, with respect to the Series 1993 Bonds,
such Insurer as set forth in a Supplemental Resolution of the
Issuer. With respect to any other Series of Bonds, "Insurer" shall
mean such Person as shall be in the business of insuring or
guaranteeing the payment of principal of and interest on municipal
securities and whose credit is such that, at the time of any action
or consent required or permitted by the Insurer pursuant to the
terms of this Resolution, all municipal securities insured or
guaranteed by it are then rated, because of such insurance or
guarantee, in one of the two most secure grades by one of the two
most widely nationally recognized rating agencies which regularly
rate the credit of municipal securities.
8
"Interest Date" or "interest payment date" shall be such date
or dates as shall be provided by Supplemental Resolution of the
Issuer.
"Issuer" shall mean the City of Sebastian, a municipal
corporation duly organized under the laws of the State.
"Maximum Annual Debt Service" shall mean the largest aggregate
amount in any Fiscal Year, excluding all Fiscal Years which shall
have ended prior to the Fiscal Year in which the Maximum Annual
Debt Service shall at any time be computed, of the Annual Debt
Service.
"Maximum Interest Rate" shall mean, with respect to any
particular Variable Rate Bonds, a numerical rate of interest, which
shall be set forth in the Supplemental Resolution of the Issuer
delineating the details of such Bonds, that shall be the maximum
rate of interest such Bonds may at any particular time bear.
"Mayor" shall mean the Mayor or Vice Mayor of the Governing
Body and such other person as may be duly authorized to act on his
or her behalf.
"Moody's" shall mean Moody's Investors Service, Inc. and any
assigns and successors thereto.
"Net Revenues" shall mean Gross Revenues less Operating
Expenses.
"Operation and Maintenance Account" shall mean the account
created pursuant to Section 4.04(B) hereof.
"Operating Expenses" shall mean the Issuer's expenses for
operation, maintenance, repairs and replacements with respect to
the System and shall include, without limiting the generality of
the foregoing, administration expenses, payments for the purchase
of materials essential to or used in the operation of the System,
including bulk purchases of water or sewage services, fees for the
management of the System or any portion thereof, insurance and
surety bond premiums, the fees to the provider of a Reserve
Subaccount Credit Instrument (but excluding any expenses or
reimbursement obligations for draws made thereunder), accounting,
legal and engineering expenses, ordinary and current rentals of
equipment or other property, refunds of moneys lawfully due to
others, payments to others for disposal of sewage or other wastes,
payments to pension, retirement, health and hospitalization funds,
and any other expenses required to be paid for or with respect to
proper operation or maintenance of the System, all to the extent
properly characterized as an expense and attributable to the System
in accordance with generally accepted accounting principles
employed in the operation of public utility systems similar to the
System, and disbursements for the expenses, liabilities and
compensation of any Paying Agent or Registrar under this
Resolution, but does not include (i) Administrative Expenses, or
(ii) any costs or expenses in respect of original construction or
improvement other than expenditures necessary to prevent an
interruption or continuance of an interruption of Gross Revenues or
minor capital expenditures necessary for the proper and economical
operation or maintenance of the System in accordance with generally
accepted accounting principles, or (iii) any provision for
interest, depreciation, depletion, amortization or similar charges,
or (iv) any fee in lieu of taxes or other transfers to the general
fund of the Issuer, or (v) any non-cash items paid by the Issuer
with respect to the System, or (vi) extraordinary, non-recurring
expenses, or (vii) expenditures for studies for renewal or
replacement or capital items which are not funded in the current
Fiscal Year.
"Outstanding", when used with reference to Bonds and as of any
particular date, shall describe all Bonds theretofore and thereupon
being authenticated and delivered except, (1) any Bond in lieu of
which other Bond or Bonds have been issued under agreement to
replace lost, mutilated or destroyed Bonds, (2) any Bond
surrendered by the Holder thereof in exchange for other Bond or
Bonds under Sections 2.06 and 2.08 hereof, (3) Bonds deemed to have
been paid pursuant to Section 9.01 hereof and (4) Bonds cancelled
after purchase in the open market or because of payment at or
redemption prior to maturity.
"Paying Agent" shall mean any paying agent for Bonds appointed
by or pursuant to Supplemental Resolution, and its successor or
assigns, and any other Person which may at any time be substituted
in its place pursuant to this Resolution.
"Payment Subaccount" shall mean the separate subaccount in the
Debt Service Account established pursuant to Section 4.04(C)
hereof.
"Person" shall mean an individual, a corporation, a
partnership, an association, a joint stock company, a trust, any
unincorporated organization or governmental entity or other legal
entity.
"Pledged Funds" shall mean (1) the Net Revenues, (2) the
Impact Fees, and (3) until applied in accordance with the
provisions of this Resolution, all moneys, including investments
thereof, in the accounts and subaccounts established hereunder,
except (A) to the extent moneys therein shall be required to pay
the Operating Expenses of the System in accordance with the terms
hereof, (B) to the extent moneys in each subaccount of the Reserve
Subaccount shall be pledged solely for the payment of the Series of
Bonds for which it was established in accordance with the
provisions hereof, (C) amounts in the Rebate Account and (D)
amounts in the Surplus Reserve Account.
10
"Prerefunded Obligations" shall mean any bonds or other
obligations of any state of the United States of America or of any
agency, instrumentality or local governmental unit of any such
state (1) which are (A) not callable prior to maturity or (B) as to
which irrevocable instructions have been given to the fiduciary for
such bonds or other obligations by the obligor to give due notice
of redemption and to call such bonds for redemption on the date or
dates specified in such instructions (2) which are fully secured as
to principal, redemption premium, if any, and interest by a fund
held by a fiduciary consisting only of cash or Federal Securities,
secured in the manner set forth in Section 9.01 hereof, which fund
may be applied only to the payment of such principal of, redemption
premium, if any, and interest on such bonds or other obligations on
the maturity date or dates thereof or the specified redemption date
or dates pursuant to such irrevocable instructions, as the case may
be, (3) as to which the principal of and interest on the Federal
Securities, which have been deposited in such fund along with any
cash on deposit in such fund are sufficient to pay principal of,
redemption premium, if any, and interest on the bonds or other
obligations on the maturity date or dates thereof or on the
redemption date or dates specified in the irrevocable instructions
referred to in clause (1) above and are not available to satisfy
any other claims, including those against the fiduciary holding the
same, and (4) which are rated in the highest rating category of one
of the Rating Agencies.
"Project Account" shall mean the account established pursuant
to Section 4.03 hereof.
"Purchase Agreement" shall mean the Agreement of City of
Sebastian, Florida/General Development Utilities, Inc. Water and
Sewer System Purchase and Sale Agreement dated as of October 12,
1993, by. and between the Issuer and General Development Utilities,
Inc.
"Rate Consultant" shall mean any accountant, engineer or
consultant or firm of accountants, engineers or consultants chosen
by the Issuer with reputation for skill and experience in reviewing
and recommending rates for utility systems similar to the System.
"Rate Stabilization Account" shall mean the Rate Stabilization
Account established pursuant to Section 4.04(J) hereof.
"Rating Agencies" shall mean Moody's and Standard & Poor's.
"Rebate Account" shall mean the Rebate Account established
pursuant to Section 4.04(E) hereof.
"Redemption Price" shall mean, with respect to any Bond or
portion thereof, the principal amount or portion thereof, plus the
applicable premium, if any, payable upon redemption thereof
pursuant to such Bond or this Resolution.
11
"Refunding Securities" shall mean Federal Securities and
Prerefunded Obligations.
"Registrar" shall mean any registrar for the Bonds appointed
by or pursuant to this Resolution and its successors and assigns,
and any other Person which may at any time be substituted in its
place pursuant to this Resolution or any Supplemental Resolution.
"Renewal and Replacement Account" shall mean the account
created pursuant to Section 4.04(D) hereof.
"Renewal and Replacement Account Requirement" shall mean, on
the date of calculation, an amount of money equal to five percent
(5%) of the Gross Revenues received by the Issuer in the
immediately preceding Fiscal Year, or such other amount as may be
certified to the Issuer by the Consulting Engineers as an amount
appropriate for the purposes of this Resolution.
"Reserve Subaccount" shall mean the separate subaccount in the
Debt Service Account established pursuant to Section 4.04(C)
hereof.
"Reserve Subaccount Credit InstrLunent" shall mean a Reserve
Subaccount Insurance Policy or a Reserve Subaccount Letter of
Credit.
"Reserve Subaccount Insurance Policy" shall mean the insurance
policy placed in the Reserve Subaccount in lieu of or in partial
substitution for cash therein pursuant to Section 4.05(B) (3)
hereof.
"Reserve Subaccount Letter of Credit" shall mean an
unconditional irrevocable commercial letter of credit issued by any.
bank or national banking association, insurance company or other
financial institution to the Paying Agent and then placed in the
appropriate subaccount of the Reserve Subaccount in lieu of or in
partial substitution for cash therein pursuant to Section
4.05(B) (3) hereof.
"Reserve Subaccount Requirement" shall mean, as of any date of
calculation for a particular subaccount of the Reserve Subaccount,
an amount equal to the lesser of (1) Maximum Annual Debt Service
for all Outstanding Bonds which are secured by such subaccount, (2)
one hundred twenty-five percent (125%) of the average annual debt
service for all Outstanding Bonds which are secured by such
subaccount, or (3) ten percent (10%) of the original proceeds of
Outstanding Bonds which are secured by such subaccount. Subject to
the foregoing, in computing the Reserve Subaccount Requirement in
respect of any subaccount of the Reserve Subaccount which secures
Bonds that constitute Variable Rate Bonds, such Variable Rate Bonds
shall be assumed to bear interest at the highest of (A) the actual
rate on the date of calculation or if the indebtedness is not yet
outstanding, the initial rate (if established and binding), (B) if
12
the indebtedness has been outstanding for at least twelve months,
the average rate over the twelve months immediately preceding the
date of calculation and (C) (i) if interest on the indebtedness is
excludable from gross income under the applicable provisions of the
Internal Revenue Code, the most recently published Bond Buyer 25
Bond Revenue Index (or comparable index if no longer published)
plus fifty (50) basis points, or (ii) if interest is not so
excludable, the interest rate on direct U.S. Treasury obligations
with comparable maturities plus fifty (50) basis points. The dates
of calculation of the Reserve Subaccount Requirement for purposes
of computing such Requirement in regard to Variable Rate Bonds
shall be (i) July 1 of each year and (ii) the sale date relating to
the initial issuance of Variable Rate Bonds. In computing the
Reserve Subaccount Requirement in accordance with clause (3) of
this definition in respect of any Capital Appreciation Bonds, the
principal amount of such Bonds shall be the Accreted Value thereof,
not the original principal amount.
"Resolution" shall mean this Resolution, as the same may from
time to time be amended, modified or supplemented by Supplemental
Resolutions.
"Revenue Account" shall mean the account created pursuant to
Section 4.04(A) hereof.
"Serial Bonds" shall mean all of the Bonds other than the Term
Bonds.
"Series" shall mean all the Bonds delivered on original
issuance in a simultaneous transaction and identified pursuant to
Sections 2.01 and 2.02 hereof or a Supplemental Resolution
authorizing the issuance by the Issuer of such Bonds as a separate
Series, regardless of variations in maturity, interest rate,
Amortization Installments or other provisions.
"Series 1993 Bonds" shall mean the Issuer's Utilities System
Revenue Bonds, Series 1993 authorized pursuant to Section 2.02
hereof.
"Sewer Impact Fees" shall mean the fees and charges, if any,
which relate to acquiring, constructing, equipping or expanding the
capacity of the sewer facilities of the System, limited to excess
capacity not related to that portion of existing facilities used by
current customers at the time of acquisition of the Initial Project
by the Issuer, for the purpose of paying or reimbursing the
equitable share of the capital cost relating to such acquisition,
construction, expansion or equipping of excess and unused capacity
of the System or expansion thereof in order to serve new users of
the sewer facilities of the System, to the extent the same are
lawfully levied, collected and pledged.
"Sewer Impact Fees A~ount" shall mean the account created
pursuant to Section 4.04(G) hereof.
13
"Special Assessments" shall mean any and ali assessments
against property benefited by the System or any part thereof, but
which shall be subject to the lien and pledge of tkis Resolution
only if and to the extent provision for inclusion as part of the
Pledged Funds has been made by Supplemental Resclution to be
adopted by the Issuer.
"Special Assessment Proceeds" shall mean the proceeds of
Special Assessments pledged hereunder (principal and interest)
whether paid at one time or from time to time.
"State" shall mean the State of Florida.
"Standard and Poor's" shall mean Standard and Poor's
Corporation, and any assigns and successors thereto.
"Stormwater Fees" shall mean any fees or charges levied by the
Issuer on mixed-use, industrial, commercial or residential property
for the purposes of making stormwater-related improvements or
paying costs related to stormwater-related improvements.
"Subordinated Indebtedness" shall mean that indebtedness of
the Issuer, subordinate and junior to the Bonds, and any
indebtedness issued in accordance with the provisicns of Section
6.01 hereof.
"Supplemental Resolution" shall mean any resolution of the
Issuer amending or supplementing this Resolution enacted and
becoming effective in accordance with the terms of Sections 8.01,
8.02 and 8.03 hereof.
"Surplus Reserve Account" shall mean the Surplus Reserve
Account established pursuant to Section 4.04(F) hereof.
"System" shall mean any and all water production, storage
treatment, transmission and distribution system and wastewater
treatment, transmission, collection and effluent disposal system
now owned and operated or hereafter owned and operated by the
Issuer, including the Project, which System shall also include any
and all improvements, extensions and additions thereto hereafter
constructed or acquired either from the proceeds of Bonds or from
any other sources, together with all property, real or personal,
tangible or intangible, now or hereafter owned or used in
connection therewith. "System" shall also include any stormwater
utility, effluent reuse facilities or any other utility facilities
if and to the extent (i) the Issuer determines by Supplemental
Resolution to include such utility or facilities within the System
as described herein, and (ii) such action will not cause the Issuer
to fail to meet the rate covenant set forth in Section 5.04 hereof
in the Fiscal Year in which such action takes place.
"Taxable Bonds" means any Bond which states, in the body
thereof, that the interest income thereon is includable in the
14
gross income of the Holder thereof for Federal
purposes or that such interest is subject to
taxation.
income taxation
Federal income
"Term Bonds" shall mean those Bonds which shall be designated
as Term Bonds hereby or by Supplemental Resolution of the Issuer.
"Term Bonds Redemption Subaccount" shall mean the separate
subaccount in the Debt Service Account established pursuant to
Section 4.04(C) hereof.
"Variable Rate Bonds" shall mean Bonds issued with a variable,
adjustable, convertible or other similar rate which is not fixed in
percentage for the entire term thereof at the date of issue.
"Water Impact Fees" shall mean the fees and charges, if any,
which relate to acquiring, constructing, equipping or expanding the
capacity of the water facilities of the System, limited to excess
capacity not related to that portion of existing facilities used by
current customers at the time of acquisition of the Initial Project
by the Issuer, for the purpose of paying or reimbursing the
equitable share of the capital cost relating to such acquisition,
construction, expansion or equipping of excess and unused capacity
of the System or expansion thereof in order to serve new users of
the water facilities of the System, to the extent the same are
lawfully levied, collected and pledged.
"Water Impact Fees Account" shall mean the account created
pursuant to Section 4.04(H) hereof.
The terms "herein," "hereunder," "hereby," "hereto," "hereof,"
and any similar terms, shall refer to this Resolution; the term
"heretofore" shall mean before the date of adoption of this
Resolution; and the term "hereafter" shall mean after the date of
adoption of this Resolution.
Words importing the masculine gender include every other
gender.
Words importing the singular number include the plural number,
and vice versa.
SECTION 1.02. AUTHORITY FOR RESOLUTION. This Resolution is
adopted pursuant to the provisions of the Act. The Issuer has
ascertained and hereby determined that adoption of this Resolution
is necessary to carry out the powers, purposes and duties expressly
provided in the Act, that each and every matter and thing as to
which provision is made herein is necessary in order to carry out
and effectuate the purposes of the Issuer in accordance with the
Act and to carry out and effectuate the plan and purpose of the
Act, and that the powers of the Issuer herein exercised are in each
case exercised in accordance with the provisions of the Act and in
furtherance of the purposes of the Issuer.
15
SECTION 1.03. RESOLUTION TO CONSTITUTE CONTRACT. In
consideration of the purchase and acceptance of any or all of the
Bonds by those who shall hold the same from time to time, the
provisions of this Resolution shall be a part of the contract of
the Issuer with the Holders of the Bonds, and shall be deemed to be
and shall constitute a contract between the Issuer and the Holders
from time to time of the Bonds. The pledge made in the Resolution
and the provisions, covenants and agreements herein set forth to be
performed by or on behalf of the Issuer shall be for the equal
benefit, protection and security of the Holders of any and all of
said Bonds in accordance with the terms hereof. All of the Bonds,
regardless of the time or times of their issuance or maturity,
shall be of equal rank without preference, priority or distinction
of any of the Bonds over any other thereof except.as expressly.
provided in or pursuant to this Resolution.
SECTION 1.04.
and declared:
FINDINGS. It is hereby ascertained, determined
(A) That it is deemed in the best interests of the citizens
of the .Issuer that the Initial Project shall be acquired and
financed by the proceeds of the Bonds issued pursuant to this
Resolution.
(B) That the estimated Gross Revenues to be derived in each
year hereafter from the operation of the System will be sufficient
to pay all Operating Expenses and the principal of and interest on
the Bonds to be issued pursuant to this Resolution, as the same
become due, and all other payments provided for in this Resolution.
(C) That the principal of and interest on the Bonds to be
issued pursuant to this Resolution, and all other payments provided
for in this Resolution, will be paid solely from the Pledged Funds
in accordance with the terms hereof; and the ad valorem taxing
power of the Issuer will never be necessary or authorized to pay
the principal of and interest on the Bonds to be issued pursuant to
this Resolution, or to make any other payments provided for in this
Resolution, and the Bonds shall not constitute a lien upon the
System or upon any other property whatsoever of or in the Issuer.
SECTION 1.05. AUTHORIZATION OF INITIAL PROJECT. The Issuer
does hereby authorize the acquisition and construction of the
Initial Project.
16
ARTICLE II
AUTHORIZATION, TERMS, EXECUTION AND
REGISTRATION OF BONDS
SECTION 2.01. AUTHORIZATION OF BONDS. This Resolution
creates an issue of Bonds of the Issuer to be designated as "City
of Sebastian, Florida Utilities System Revenue Bonds" which may be
issued in one or more Series as hereinafter provided. The
aggregate principal amount of the Bonds which may be executed and
delivered under this Resolution is not limited except as is or may
be hereafter provided in this Resolution or as limited by the Act
or by law.
The Bonds may, if and when authorized by the Issuer pursuant
to this Resolution, be issued in one or more Series, with such
further appropriate particular designations added to or
incorporated in such title for the Bonds of any particular Series
as the issuer may determine and as may be necessary to distinguish
such Bonds from the Bonds of any other Series. Each Bond shall
bear upon its face the designation so determined for the Series to
which it belongs.
The Bonds shall be issued for such purpose or purposes; shall
bear interest at such rate or rates not exceeding the maximum rate
permitted by law; and shall be payable in lawful money of the
United States of America on such dates; all as determined by
Supplemental Resolution of the Issuer.
The Bonds shall be issued in such denominations and such form,
whether coupon or registered; shall be dated such date; shall bear
such numbers; shall be payable at such place or places; shall
contain such redemption provisions; shall have such Paying Agents
and Registrars; shall mature in such years and amounts; and the
proceeds shall be used in such manner; all as determined by
Supplemental Resolution of the Issuer. The Issuer may issue Bonds
which may be secured by a Credit Facility or by an insurance policy
of an Insurer, all as shall be determined by Supplemental
Resolution of the Issuer. The Governing Body may delegate approval
of the terms and details of a Series of Bonds to an Authorized
Issuer Officer pursuant to Supplemental Resolution.
SECTION 2.02.
BONDS.
AUTHORIZATION AND DESCRIPTION OF SERIES 1993
(A) (i) A Series of Bonds entitled to the benefit,
protection and security of this Resolution is hereby authorized in
the aggregate principal amount of not exceeding $5,000,000 for the
principal purposes of acquiring and constructing the initial
Project, funding the Reserve Subaccount and paying certain costs of
issuance incurred with respect to the Series 1993 Bonds. Such
17
Series of Bonds shall be designated as, and shall be distinguished
from the Bonds of all other Series by the title, "City of
Sebastian, Florida Utilities System Revenue Bonds, Series 1993";
provided the Issuer may change such designation in the event that
the total amount of Series 1993 Bonds authorized herein are not
issued in a simultaneous transaction or the Series 1993 Bonds are
not issued in a simultaneous transaction.
(ii) The Series 1993 Bonds shall be dated as of the first day
of the month in which occurs the delivery of the Series 1993 Bonds
to the purchaser or purchasers thereof or such other date as may be
set forth by Supplemental Resolution of the Issuer; shall be issued
as fully registered Bonds; shall be numbered consecutively from one
upward in order of maturity preceded by the letter "R"; shall be in
such denominations and shall bear interest at a rate or rates not
exceeding the maximum rate permitted by law, payable in such manner
and on such dates; shall consist of such amounts of Serial Bonds,
Term Bonds, Variable Rate Bonds and Capital Appreciation Bonds
maturing in such years and amounts not exceeding forty (40) years
from their date; shall be payable in such place or places; shall
have such Paying Agents and Registrars; and shall contain such
redemption provisions; all as the Issuer shall provide hereafter by
Supplemental Resolution.
(iii) The principal of or Redemption Price, if applicable, on
the Series 1993 Bonds are payable upon presentation of the Series
1993 Bonds at the office of the Paying Agent. Interest payable on
any Series 1993 Bond on any Interest Date will be paid by check or
draft of the Paying Agent to the Holder in whose name such Bond
shall be registered at the close of business on the date which
shall be the fifteenth day (whether or not a business day) of the
calendar month next preceding such Interest Date, or, at the option
of the Paying Agent, and at the request and expense of the Holder
of $500,000 or more in principal amount of Series 1993 Bonds, by
bank wire transfer for the account of such Holder. All payments of
principal of or Redemption Price, if applicable, and interest on
the Series 1993 Bonds shall be payable in any coin or currency of
the United States of America which at the time of payment is legal
tender for the payment of public and private debts.
SECTION 2.03. APPLICATION OF SERIES 1993 BOND PROCEEDS.
(A) Except as otherwise provided by Supplemental Resolution
of the Issuer, the proceeds derived from the sale of the Series
1993 Bonds, including accrued interest and premium, if any, shall,
simultaneously with the delivery of the Series 1993 Bonds to the
purchaser or purchasers thereof, be applied by the Issuer as
follows:
(i) Accrued interest and proceeds of the Series 1993
Bonds representing capitalized interest, if any, shall be
deposited or credited to the Payment Subaccount and shall be
18
used only for the purpose of paying the interest which shall
thereafter become due on the Series 1993 Bonds.
(ii) A sufficient amount of Series !993 Bond proceeds
shall be deposited or credited to the appropriate subaccount
of the Reserve Subaccount which, together with any moneys and
securities therein and Reserve Subaccount Insurance Policy
and/or Reserve Subaccount Letter of Credit obtained in
accordance with Section 4.05(B) (3) hereof, shall equal the
Reserve Subaccount Requirement for such subacco~t.
(iii) A sufficient amount of the Series 1993 Bond proceeds
shall be applied to the payment of the prem±ums of any
municipal bond insurance policies applicable to the Series
1993 Bonds or reserves established therefor and to the payment
of costs and expenses relating to the issuance of the Series
1993 Bonds. Such amount may, at the option of the Issuer, be
deposited or credited to and disbursed from the Project
Account.
(iv) The balance of the Series 1993 Bond proceeds shall
be deposited or credited to the Project Account.
SECTION 2.04. EXECUTION OF BONDS. The Bonds shall be
executed in the name of the Issuer with the manual or facsimile
signature of the Mayor and the official seal of 5he Issuer shall be
imprinted thereon, attested and countersigned with tke manual or
facsimile signature of the Clerk. In case any one or more of the
officers who shall have signed or sealed any of the Bonds or whose
facsimile signature shall appear thereon shall cease to be such
officer of the Issuer before the Bonds so signed and sealed have
been actually sold and delivered, such Bonds may nevertheless be
sold and delivered as herein provided and may be issued as if the
person who signed or sealed such Bonds had not ceased to hold such
office. Any Bond may be signed and sealed on behalf of the Issuer
by such person who at the actual time of the execution of such Bond
shall hold the proper office of the Issuer, although at the date of
such Bond such person may not have held such office or may not have
been so authorized. The Issuer may adopt and use for such purposes
the facsimile signatures of any such persons who shall have held
such offices at any time after the date of the adoption of this
Resolution, notwithstanding that either or both shall have ceased
to hold such office at the time the Bonds shall be actually sold
and delivered.
SECTION 2.05. AUTHENTICATION. No Bond of any Series shall be
secured hereunder or entitled to the benefit hereof or shall be
valid or obligatory for any purpose unless there shall be manually
endorsed on such Bond a certificate of authentication by the
Registrar or such other entity as may be approvedby the Issuer for
such purpose. Such certificate on any Bond shall be conclusive
evidence that such Bond has been duly authenticated and delivered
19
under this Resolution. The form of such certificate shall be
substantially in the form provided in Section 2.09 hereof.
SECTION 2.06. TEMPORARY BONDS. Until the definitive Bonds of
any Series are prepared, the Issuer may execute, in the same manner
as is provided in Section 2.04, and deliver, upon authentication by
the Registrar pursuant to Section 2.05 hereof, in lieu of
definitive Bonds, but subject to the same provisions, limitations
and conditions as the definitive Bonds, except as to the
denominations thereof, one or more temporary Bonds substantially of
the tenor of the'definitive Bonds in lieu of which such temporary
Bond or Bonds are issued, in denominations authorized by the Issuer
by subsequent resolution and with such omissions, insertions and
variations as may be appropriate to temporary Bonds. The Issuer,
at his own expense, shall prepare and execute definitive Bonds,
which shall be authenticated by the Registrar. Upon the surrender
of such temporary Bonds for exchange, the Registrar, without charge
to the Holder thereof, shall deliver in exchange therefor
definitive Bonds, of the same aggregate principal amount and Series
and maturity as the temporary Bonds surrendered. Until so
exchanged, the temporary Bonds shall in all respects be entitled to
the same benefits and security as definitive Bonds issued pursuant
to this Resolution. Ail temporary Bonds surrendered in exchange
for another temporary Bond or Bonds or for a definitive Bond or
Bonds shall be forthwith cancelled by the Registrar.
SECTION 2.07. BONDS MUTILATED, DESTROYED, STOLEN OR LOST. In
case any Bond shall become mutilated, or be destroyed, stolen or
lost, the Issuer may, in its discretion, issue and deliver, and the
Registrar shall authenticate, a new Bond of like tenor as the Bond
so mutilated, destroyed, stolen or lost, in exchange and
substitution for such mutilated Bond upon surrender and
cancellation of such mutilated Bond or in lieu of and substitution
for the Bond destroyed, stolen or lost, and upon the Holder
furnishing the Issuer and the Registrar proof of his ownership
thereof and satisfactory indemnity and complying with such other
reasonable regulations and conditions as the Issuer or the
Registrar may prescribe and paying such expenses as the Issuer and
the Registrar may incur. Ail Bonds so surrendered or replaced
shall be cancelled by the Registrar. If any of the Bonds shall
have matured or be about to mature, instead of issuing a substitute
Bond, the Issuer may pay the same or cause the Bond to be paid,
upon being indemnified as aforesaid, and if such Bonds be lost,
stolen or destroyed, without surrender thereof.
Any such duplicate Bonds issued pursuant to this Section 2.07
shall constitute original contractual obligations on the part of
the Issuer whether or not the lost, stolen or destroyed Bond be at
any time found by anyone, and such duplicate Bond shall be entitled
to equal and proportionate benefits and rights as to lien on the
Pledged Funds to the same extent as all other Bonds issued
hereunder.
20
SECTION 2.08. EXCF~%NGE AND TRANSFER. Bonds, upon surrender
thereof at the office of the Registrar with a written instrument of
transfer satisfactory to the Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing, may, at the
option of the Holder thereof, be exchanged for an equal aggregate
principal amount of registered Bonds of the same Series and
maturity of any other authorized denominations.
The Bonds issued under this Resolution shall be and have all
the qualities and incidents of negotiable instruments under the law
merchant and the Uniform Commercial Code of the State, subject to
the provisions for registration of transfer contained in this
Resolution and in the Bonds. So long as any of the Bonds shall
remain Outstanding, the Issuer shall maintain and keep, at the
office of the Registrar, books for the registration and transfer of
the Bonds.
The transfer of any Bond shall be registered only upon the
books of the Issuer, at the office of the Registrar, under such
reasonable regulations as the Issuer may prescribe, by the Holder
thereof in person or by his attorney duly authorized in writing
upon surrender thereof together with a written instrument of
transfer satisfactory to the Registrar duly executed and guaranteed
by the Holder or his duly authorized attorney. Upon the
registration of transfer of any such Bond, the Issuer shall issue,
and cause to be authenticated, in the name of the transferee a new
Bond or Bonds of the same aggregate principal amount and Series and
maturity as the surrendered Bond. The Issuer, the Registrar and
any Paying Agent or fiduciary of the Issuer may deem and treat the
Person in whose name any Outstanding Bond shall be registered upon
the books of the Issuer as the absolute owner of such Bond, whether
such Bond shall be overdue or not, for the purpose of receiving
payment of, or on account of, the principal or Redemption Price, if
applicable, and interest on such Bond and for all other purposes,
and all such payments so made to any such Holder or upon his order
shall be valid and effectual to satisfy and discharge the liability
upon such Bond to the extent of the sum or sums so paid and neither
the Issuer nor the Registrar nor any Paying Agent or other
fiduciary of the Issuer shall be affected by any notice to the
contrary.
The Registrar, in any case where it is not also the Paying
Agent in respect to any Series of Bonds, forthwith (A) following
the fifteenth (15th) day prior to an interest payment date for such
Series; (B) following the fifteenth day next preceding the date of
first mailing of notice of redemption of any Bonds of such Series;
and (C) at any other time as reasonably requested by the Paying
Agent of such Series, certify and furnish to such Paying Agent the
names, addresses and holdings of Bondholders and any other relevant
information reflected in the registration books. Any Paying Agent
of any fully registered Bond shall effect payment of interest on
such Bonds by mailing a check to the Holder entitled thereto or
may, in lieu thereof, upon the request and at the expense of the
21
Holder of $500,000 or more in principal amount of Series 1993
Bonds, by bank wire transfer for the account of such Holder.
In all cases in which Bonds shall be exchanged or the transfer
of Bonds shall be registered, the Issuer shall execute and deliver
Bonds and the Registrar shall authenticate such Bonds in accordance
with the provisions of this Resolution. Execution of Bonds by the
Mayor and Clerk for purposes of exchanging, replacing or
registering the transfer of Bonds may occur at the time of the
original delivery of the Series of which such Bonds are a part. All
Bonds surrendered in any such exchanges or registration of transfer
shall be held by the Registrar in safekeeping until directed by the
Issuer to be cancelled by the Registrar. For every such exchange
or registration of transfer, the Issuer or the Registrar may make
a charge sufficient to reimburse it for any tax, fee, expense or
other governmental charge required to be paid with respect to such
exchange or registration of transfer. The Issuer and the Registrar
shall not be obligated to make any such exchange or registration of
transfer of Bonds of any Series during the fifteen (15) days next
preceding an Interest Date on the Bonds of such Series (other than
Capital Appreciation Bonds and Variable Rate Bonds), or, in the
case of any proposed redemption of Bonds of such Series, then
during the fifteen (15) days next preceding the date of the first
mailing of notice of such redemption and, in the case of Bonds
called for redemption, continuing until such redemption date.
The Issuer may elect to issue any Bonds as uncertificated
registered public obligations (not represented by instruments),
commonly known as book-entry obligations, provided it shall
establish a system of registration therefor by Supplemental
Resolution.
SECTION 2.09. FORM OF BONDS. The text of the Bonds, except
as otherwise provided pursuant to Section 2.09 hereof and except
for Capital Appreciation Bonds and Variable Rate Bonds, the form of
which shall be provided by Supplemental Resolution of the Issuer,
shall be in substantially the following form with such omissions,
insertions and variations as may be necessary and/or desirable and
approved by the Mayor or the Clerk prior to the issuance thereof,
(which necessity and/or desirability and approval shall be presumed
by such officer's execution of the Bonds and the Issuer's delivery
of the Bonds to the purchaser or purchasers thereof):
22
No. R- $
UNITED STATES OF AMERICA
STATE OF FLORIDA
CITY OF SEBASTIAN
UTILITIES SYSTEM REVENUE BOND,
SERIES
Interest Maturity Date of
Rate Date Original Issue CUSIP
Registered Holder:
Principal Amount:
KNOW ALL MEN BY THESE PRESENTS, that City of Sebastian,
Plorida, a political subdivision of the State of Florida, {the
"Issuer"), for value received, hereby promises to pay, solely from
the Pledged Funds hereinafter described, to the Registered Holder
identified above, or registered assigns as hereinafter provided, on
the Maturity Date identified above, the Principal Amount identified
above and to pay interest on such Principal Amount from the Date of
Original Issue identified above or from the most recent interest
payment date to which interest has been paid at the Interest Rate
per annum identified above on and of
each year commencing until such Principal Amount
shall have been paid, except as the provisions hereinafter set
forth with respect to redemption prior to maturity may be or become
applicable hereto.
Such Principal Amount and interest and the premium, if any, on
this Bond are payable in any coin or currency of the United States
of America which, on the respective dates of payment thereof, shall
be legal tender for the payment of public and private debts. Such
Principal Amount and the premium, if any, on this Bond, are payable
at the principal corporate trust office of
, as Paying Agent. Payment of eaCh
installment of interest shall be made to the person in whose name
this Bond shall be registered on the registration books of the
Issuer maintained by , ,
, as Registrar, at the close of business on the date which
23
shall be the fifteenth (15th) day (whether or not a business day)
next preceding each interest payment date and shall be paid by
check or draft of the Paying Agent to such Registered Holder at the
address appearing on such registration books or, at the option of
such Paying Agent, and at the request and expense of the Holder of
$500,000 or more in principal amount, by bank wire transfer for the
account of such Holder,
This Bond is one of an authorized issue of Bonds in the
aggregate principal amount of $ (the "Bonds") of like
date, tenor and effect, except as to maturity date, interest rate,
denomination and number, issued to finance
, in and for the Issuer, under the authority of
and in full compliance with the Constitution and laws of the State,
particularly Chapter 166, Florida Statutes, and other applicable
provisions of law (the "Act"), and a resolution duly adopted by the
City Council of the Issuer, on , as amended and
supplemented (the "Resolution"), and is subject to all the terms
and conditions of the Resolution.
This Bond and the interest hereon are payable solely from and
secured by a lien upon and a pledge of the Pledged Revenues (as
defined in the Resolution) to be derived from the operation of the
Issuer's water and sewer system (the "System"), and until applied
in accordance with the provisions of the Resolution, all moneys,
including investments thereof, in the accounts and subaccounts
established by the Resolution, except (A) to the extent moneys
therein shall be required to pay the Operating Expenses (as defined
in the Resolution) of the System in accordance with the terms of
the Resolution, (B) to the extent moneys in each subaccount of the
Reserve Subaccount shall be pledged solely for the payment of the
Series of Bonds for which it was established in accordance with the
provisions of the Resolution, (C) amounts in the Rebate Account and
(D) amounts in the Surplus Reserve Account (collectively, the
"Pledged Funds"). It is expressly agreed by the Registered Holder
of this Bond that the full faith and credit of the Issuer are not
pledged to the payment of the principal of, premium, if any, and
interest on this Bond and that such Holder shall never have the
right to require or compel the exercise of any taxing power of the
Issuer to the payment of such principal, premium, if any, and
interest. This Bond and the obligation evidenced hereby shall not
constitute a lien upon the System or any other property of the
Issuer, but shall constitute a lien only on, and shall be payable
solely from, the Pledged Funds in accordance with the terms of the
Resolution.
Neither the members of the City Council of the Issuer nor any
person executing this Bond shall be liable personally hereon or be
subject to any personal liability or accountability by reason of
the issuance, hereof.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
BOND SET FORTH ON THE REVERSE SIDE HEREOF AND SUCH FURTHER
24
PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET
FORTH ON THE FRONT SIDE HEREOF.
This Bond shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have
been signed by the Registrar.
IN WITNESS W/{EREOF, the City Council of the City of Sebastian,
Florida has issued this Bond and has caused the same to be executed
by the manual or facsimile signature of its Mayor, and by the
manual or facsimile signature of its Clerk and its corporate seal
or a facsimile thereof to be affixed or reproduced hereon, all of
the day of ,
(SEAL)
CITY OF SEBASTIAN, FLORIDA
Mayor
Clerk
25
(Provisions on Reverse Side of Bond)
The transfer of this Bond is registrable in accordance with
the terms of the Resolution only upon the books of the Issuer kept
for that purpose at the principal corporate trust office of the
Registrar by the Registered Holder hereof in person or by his
attorney duly authorized in writing, upon the surrender of this
Bond together with a written instrument of transfer satisfactory to
the Registrar duly executed by the Registered Holder or his
attorney duly authorized in writing, and thereupon a new Bond or
Bonds in the same aggregate principal amount shall be issued to the
transferee in exchange therefor, and upon the payment of the
charges, if any, therein prescribed. The Bonds are issuable in the
form of fully registered Bonds in the denomination of $ and
any integral multiple thereof, not exceeding the aggregate
principal amount of the Bonds. The Issuer, the Registrar and any
Paying Agent may treat the Registered Holder of this Bond as the
absolute owner hereof for all purposes, whether or not this Bond
shall be overdue, and shall not be affected by any notice to the
contrary. The Issuer and the Registrar shall not be obligated to
make any exchange or transfer of the Bonds during the fifteen (15)
days next preceding an interest payment date or, in the case of any
proposed redemption of the Bonds, then, during the fifteen (15)
days next preceding the date of the first mailing of notice of such
redemption and, in the case of the Bonds called for redemption,
continuing until such redemption date.
(INSERT REDEMPTION PROVISIONS)
Redemption of this Bond under the preceding paragraphs shall
be made as provided in the Resolution upon notice given by first
class mail sent at least thirty (30) days prior to the redemption
date to the Registered Holder hereof at the address shown on the
registration books maintained by the Registrar; provided, however,
that failure to mail notice to the Registered Holder hereof, or any
defect therein, shall not affect the validity of the proceedings
for redemption of other Bonds as to which no such failure or defect
has occurred. In the event that less than the full principal
amount hereof shall have been called for redemption, the Registered
Holder hereof shall surrender this Bond in exchange for one or more
Bonds in an aggregate principal amount equal to the unredeemed
portion of principal, as provided in the Resolution.
Reference to the Resolution and any and all resolutions
supplemental thereto and modifications and amendments thereof and
to the Act is made for a description of the pledge and covenants
securing this Bond, the nature, manner and extent of enforcement of
26
such pledge and covenants, and the rights, duties, immunities and
obligations of the Issuer.
It is hereby certified and recited that all acts, conditions
and things required to exist, to happen and to be performed
precedent to and in the issuance of this Bond, exist, have happened
and have been performed, in regular and due form and time as
required by the laws and Constitution of the State of Florida
applicable thereto, and that the issuance of the Bonds does not
violate any constitutional or statutory limitations or provisions.
27
FOR VALUE
transfers unto
RECEIVED, the undersigned sells, assigns
Insert Social Security or Other
Identifying Number of Assignee
and
(Name and Address of Assignee)
the within Bond and does hereby irrevocably constitute and appoint
, as attorney to register the
transfer of the said Bond on the books kept for registration
thereof with full power of substitution in the premises.
Dated:
Signature guaranteed:
NOTICE: Signature(s) must be
guaranteed by a member firm
of the New York Stock Exchange
or a commercial bank or trust
company.
NOTICE: The signature to this
assignment must correspond with the
name of the Registered Holder as it
appears upon the face of the within
Bond in every particular, without
alteration or enlargement or any
change whatever and the Social
Security or other identifying number
of such assignee must be supplied.
28
The following abbreviations, when used in the inscription on
the face of the within Bond, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN
as joint tenants with right of
survivorship and not as tenants
in common
UNIF TRANS MIN ACT --
(Cust.)
Custodian for
under Uniform Transfers to Minors Act of
(State)
Additional abbreviations may also be used though not in list
above.
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the Issuer described in the
within-mentioned Resolution.
DATE OF AUTHENTICATION:
Registrar
By:
Authorized Officer
29
ARTICLE iii
REDEMPTION OF BONDS
SECTION 3.01. PRIVILEGE OF REDEMPTION. The terms of this
Article III shall apply to redemption of Bonds other than Capital
Appreciation Bonds or Variable Rate Bonds. The terms and
provisions relating to redemption of Capital Appreciation Bonds and
Variable Rate Bonds shall be provided by Supplemental Resolution.
SECTION 3.02. SELECTION OF BONDS TO BE REDEEMED. The Bonds
shall be redeemed only in the principal amount of $5,000 each and
integral multiples thereof. The Issuer shall, at least sixty (60)
days prior to the redemption date (unless a shorter time period
shall be satisfactory to the Registrar) notify the Registrar of
such redemption date and of the principal amount of Bonds to be
redeemed. For purposes of any redemption of less than all of the
Outstanding Bonds of a single maturity, the particular Bonds or
portions of Bonds to be redeemed shall be selected not more than
forty-five (45) days prior to the redemption date by the Registrar
from the Outstanding Bonds of the maturity or maturities designated
by the Issuer by such method as the Registrar shall deem fair and
appropriate and which may provide for the selection for redemption
of Bonds or portions of Bonds in principal amounts of $5,000 and
integral multiples thereof.
If less than all of the Outstanding Bonds of a single maturity
are to be redeemed, the Registrar shall promptly notify the Issuer
and Paying Agent (if the Registrar is not the Paying Agent for such
Bonds) in writing of the Bonds or portions of Bonds selected for
redemption and, in the case of any Bond selected for partial
redemption, the principal amount thereof to be redeemed.
SECTION 3.03. NOTICE OF REDEMPTION. Notice of such
redemption, which shall specify the Bond or Bonds (or portions
thereof) to be redeemed and the date and place for redemption,
shall be given by the Registrar on behalf of the Issuer, and (A)
shall be filed with the Paying Agents of such Bonds, {B) shall be
mailed first class, postage prepaid, at least thirty (30) days
prior to the redemption date, to all Holders of Bonds to be
redeemed at their addresses as they appear on the registration
books kept by the Registrar, and (C) shall be mailed certified,
postage prepaid, at least thirty-five {35) days prior to the
redemption date to the registered securities depositaries, to two
or more nationally recognized municipal bond information services
and to each Insurer of any Bonds Outstanding affected by such
redemption. Failure to mail notice to the Holders of the Bonds to
be redeemed, or any defect therein, shall not affect the
proceedings for redemption of Bonds as to which no such failure or
defect has occurred. Notice of any redemption of Bonds at the
option of the Issuer (except pursuant to a refunding) shall be
3O
given only upon the prior deposit into the Debt Service Account of
sufficient amounts to effect such redemption.
Each notice of redemption shall state: (1) the CUSIP numbers
of all Bonds being redeemed; (2) the original issue date of such
Bonds; (3) the maturity date and rate of interest borne by each
Bond being redeemed; (4) the redemption date; (5) the Redemption
Price; (6) the date on which such notice is mailed; (7) if less
than all Outstanding Bonds are to be redeemed, the certificate
number (and, in the case of a partial redemption of any Bond, the
principal amount) of each Bond to be redeemed; (8) that on such
redemption date there shall become due and payable upon each Bond
to be redeemed the Redemption Price thereof, or the Redemption
Price of the specified portions of the principal thereof in the
case of Bonds to be redeemed in part only, together with interest
accrued thereon to the redemption date, and that from and after
such date interest thereon shall cease to accrue and be payable;
(9) that the Bonds to be redeemed, whether as a whole or in part,
are to be surrendered for payment of the redemption price at the
principal office of the Registrar at an address specified; and (10)
the name and telephone number of a person designated by the
Registrar to be responsible for such redemption.
In addition to the mailing of the notice described above, each
notice of redemption and payment of the Redemption Price shall meet
the following requirements; provided, however, the failure to
provide such further notice of redemption or to comply with the
terms of this paragraph shall not in any manner defeat the
effectiveness of a call for redemption if notice thereof is given
as prescribed above:
(i) Each further notice of redemption shall be sent at
least thirty (30) days before the redemption date by certified
mail or overnight delivery service or telecopy to all
registered securities depositories then in the business of
holding substantial amounts of obligations of types comprising
the Bonds (such depositories now being The Depository Trust
Company, New York, New York, Midwest Securities Trust Company,
Chicago, Illinois, Pacific Securities Depository Trust
Company, San Francisco, California, and Philadelphia
Depository Trust Company, Philadelphia, Pennsylvania) and to
one or more national information services which disseminate
notices of prepayment or redemption of obligations such as the
Bonds.
(ii) Each further notice of prepayment shall be published
one time in The Bond Buyer or, if such publication is
impractical or, in the opinion of the Paying Agent, unlikely
to reach a substantial number of the Bondholders, in some
other financial newspaper or journal which regularly carries
notices of redemption of other obligations similar to the
Bonds, such publication to be made at least thirty (30) days
prior to the redemption date.
31
The notice of redemption described in this paragraph need not be
given as described above if the Bonds called for redemption are
registered pursuant to a book-entry only system.
SECTION 3.04. REDEMPTION OF PORTIONS OF BONDS. Any Bond
which is to be redeemed only in part shall be surrendered at any
place of payment specified in the notice of redemption (with due
endorsement by, or written instrument of transfer in form
satisfactory to the Registrar duly executed by, the Holder thereof
or his attorney duly authorized in writing) and the Issuer shall
execute and the Registrar shall authenticate and deliver to the
Holder of such Bond, without service charge, a new Bond or Bonds,
of any authorized denomination, as requested by such Holder in an
aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Bonds so surrendered.
SECTION 3.05. PAYMENT OF REDEEMED BONDS. Notice of
redemption having been given substantially as aforesaid, the Bonds
or portions of Bonds so to be redeemed shall, on the redemption
date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Issuer shall
default in the payment of the Redemption Price) such Bonds or
portions of Bonds shall cease to bear interest. Upon surrender of
such Bonds for redemption in accordance with said notice, such
Bonds shall be paid by the Registrar and/or Paying Agent at the
appropriate Redemption Price, plus accrued interest. Ail Bonds
which have been redeemed shall be cancelled and destroyed by the
Registrar and shall not be reissued.
32
ARTICLE IV
SECURITY, SPECIAL FUNDS AND
APPLICATION THEREOF
SECTION 4.01. BONDS NOT TO BE INDEBTEDNESS OF ISSUER. The
Bonds shall not be or constitute general obligations or
indebtedness of the Issuer as "bonds" within the meaning of any
constitutional or statutory provision, but shall be special
obligations of the Issuer, payable solely from and secured by a
lien upon and pledge of the Pledged Funds, in the manner and to the
extent provided in this Resolution. No Holder of any Bond shall
ever have the right to compel the exercise of any ad valorem taxing
power to pay such Bond, or be entitled to payment of such Bond from
any moneys of the Issuer, except from the Pledged Funds in the
manner and to the extent provided herein.
SECTION 4.02. SECURITY FOR BONDS. The payment of the
principal of, or Redemption Price, if applicable, and interest on
the Bonds shall be secured forthwith equally and ratably by a
pledge of and lien upon the Pledged Funds; provided, however, a
Series of Bonds may be further secured by a Credit Facility or
insurance policy of an Insurer in addition to the security provided
herein; and provided, further, that each Series of Bonds shall be
secured independently of any other Series of Bonds by the
corresponding subaccount in the Reserve Subaccount, except as
otherwise provided herein. The Issuer does hereby irrevocably
pledge the Pledged Funds to the payment of the principal of, or
Redemption Price, if applicable, and interest on the Bonds in
accordance with the provisions hereof. Any obligations owed to the
issuer of a Reserve Subaccount Credit Instrument shall be deemed to
be subordinate to the lien on and pledge of the Pledged Funds to
the Holders of the Bonds, solely in respect of the principal of and
interest due thereon. The Pledged Funds shall immediately be
subject to the lien of this pledge without any physical delivery
thereof or further act, and the lien of this pledge shall be valid
and binding as against all parties having claims of any kind in
tort, contract or otherwise against the Issuer.
SECTION 4.03. PROJECT ACCOUNT. The Issuer covenants and
agrees to establish a special account in a bank, trust company or
other entity in the State which is eligible under the laws of the
State to be a depository for public funds, to be known as the
"Utilities System Project Account," which shall be used only for
payment of the Cost of the Project. Moneys in the Project Account,
until applied in payment of any item of the Cost of a Project in
the manner hereinafter provided, shall be subject to a lien and
charge in favor of the Holders of the Bonds and for the further
security of such Holders.
33
There shall be paid into the Project Account the amounts
required to be so paid by the provisions of this Resolution, and
there may be paid into the Project Account, at the option of the
Issuer, any moneys received for or in connection with a Project by
the Issuer from any other source.
The Issuer shall establish within the Project Account a
separate subaccount for each Project, the Cost of which is to be
paid in whole or in part out of the Project Account.
Subject to the provisions of Section 5.08 hereof, the proceeds
of insurance maintained pursuant to this Resolution against
physical loss of or damage to a Project, or of contractors'
performance bonds with respect thereto pertaining to the period of
construction thereof, shall be deposited or credited to the
appropriate subaccount of the Project Account.
Any moneys received by the Issuer from the State or from the
United States of America or any agencies thereof for the purpose of
financing part of the Cost of a Project shall be deposited or
credited to the appropriate subaccount of the Project Account and
used in the same manner as other Bond proceeds are used therein;
provided that separate subaccounts may be established in the
Project Account for moneys received pursuant to the provisions of
this paragraph whenever required by Federal or State law.
The Issuer covenants that the acquisition, construction and
installation of each Project will be completed without delay and in
accordance with sound engineering practices. The Issuer shall make
disbursements or payments from the Project Account to pay the Cost
of a Project upon the filing with the Clerk of certificates and/or
documents signed by an Authorized Issuer Officer or by the
Consulting Engineers, as appropriate, stating with respect to each
disbursement or payment to be made: (A) the item number of the
payment, (B) the name and address of the Person to whom payment is
due, (C) the amount to be paid, (D) the Project Account subaccount
from which payment is to be made, (E) the purpose, by general
classification, for which payment is to be made, and (F) that (i)
each obligation, item of cost or expense mentioned therein has been
properly incurred, is in payment of a part of the Cost of a Project
and is a proper charge against the subaccount of the Project
Account from which payment is to be made and has not been the basis
of any previous disbursement or payment, or (ii) each obligation,
item of cost or expense mentioned therein has been paid by the
Issuer, is a reimbursement of a part of the Cost of a Project, is
a proper charge against the subaccount of the Project Account from
which payment is to be made, has not been theretofore reimbursed to
the Issuer or otherwise been the basis of any previous disbursement
or payment and the Issuer is entitled to reimbursement thereof.
The Clerk shall retain all such certificates and/or documents of an
Authorized Issuer Officer and the Consulting Engineers for three
(3) years from the dates of such certificates and/or documents.
The Clerk shall make available the certificates and/or documents at
34
all reasonable times for inspection by any Holder of any of the
Bonds or the agent or representative of any Holder of any of the
Bonds. Notwithstanding the foregoing, a certification of the
Consulting Engineers shall not be required to make disbursements or
payments from the Project Account to pay (1) costs related to
zssuance of the Bonds to the extent funds are deposited in the
Project Account for such purpose, (2) costs not directly associated
with the physical acquisition of the System and (3) any portions of
the Cost of a Project which do not, in the aggregate, exceed 1
percent of the amount initially deposited or credited to the
Project Account in respect of such Project after deducting any
amounts described in clause (1) above.
Notwithstanding any of the other provisions of this
Section 4.03, to the extent that other moneys are not available
therefor, amounts in the Project Account shall be applied to the
payment of principal and interest on Bonds when due.
The date of completion of the Project or any Additional
Project shall be determined by the Consulting Engineers which shall
certify such fact in writing to the Governing Body. Promptly after
the date of the completion of a Project, and after paying or making
provision for the payment of all unpaid items of the Cost of such
Project, the Issuer shall deposit or credit in the following order
of priority any balance of moneys remaining in the Project Account
in (1) another subaccount of the Project Account for which the
Consulting Engineers have stated that there are insufficient moneys
present to pay the Cost of the related Project, (2) the applicable
Reserve Subaccount, to the extent of a deficiency therein, and (3)
such other account or subaccount established hereunder as shall be
determined by the Governing Body, provided the Issuer has received
an opinion of Bond Counsel to the effect that such transfer shall
not adversely affect the exclusion,, if any, of interest on the
Bonds from gross income of the Holder for federal income tax
purposes.
SECTION 4.04. CREATION OF ACCOUNTS. The Issuer covenants and
agrees to establish the "Utilities System Enterprise Fund" with a
bank, trust company or such other entity in the State, which is
eligible under the laws of the State to be a depository for public
funds which shall include the following accounts and subaccounts:
(A) The "Utilities System Revenue Account."
(B) The "Utilities System Operation and Maintenance Account."
(C) The "Utilities System Debt Service Account." The Issuer
shall maintain three (3) separate accounts in the Utilities System
Debt Service Account: the "Payment Subaccount," the "Term Bonds
Redemption Subaccount" and the "Reserve Subaccount.!'
(D) The "Utilities System Renewal and Replacement Account."
35
(E) The "Utilities System Rebate Account."
(F) The "Utilities System Surplus Reserve Account."
(G) The "Sewer Impact Fees Account."
(H) The "Water Impact Fees Account."
(I) The "Special Assessments Account."
(J) The "Rate Stabilization Account."
Moneys in the aforementioned accounts and subaccounts (except
for moneys in the Rebate Account and the Surplus Reserve Account),
until applied in accordance with the provisions hereof, shall be
subject to a lien and charge in favor of the Holders of the Bonds
and for the further security of such Holders.
The Issuer may, at any time and from time to time, appoint one
or more depositaries to hold, for the benefit of the Bondholders,
any one or more of the accounts and subaccounts established hereby.
Such depositary or depositaries shall perform, at the direction of
the Issuer, the duties of the Issuer in depositing, transferring
and disbursing moneys to and from each of such accounts or
subaccounts as herein set forth, and all records of such depositary
in performing such duties shall be open at all reasonable times to
inspection by the Issuer and its agents and employees. Any such
depositary shall be a bank or trust company duly authorized to
exercise corporate trust powers and subject to examination by
federal or state authority, of good standing, and be qualified
under applicable State law.
SECTION 4.05. DISPOSITION OF REVENUES.
(A) The Issuer shall deposit or credit all Gross Revenues
(other than Special Assessment Proceeds), as received, into the
Revenue Account. In the event the Issuer receives a Government
Grant, the use and withdrawal of moneys from such Government Grant
shall be governed by the terms of the Government Grant and
applicable law. The Issuer shall deposit into the Special
Assessments Account, as received, all Special Assessment Proceeds.
Operation and Maintenance Account. Moneys in the Revenue
Account shall first be used each month to deposit or credit to the
Operation and Maintenance Account such sums as are necessary to pay
Operating Expenses for the month, taking into account other moneys
on deposit in such Account or other moneys reasonably expected to
be available for such purpose; provided that the Issuer may
transfer moneys from the Revenue Account to the Operation and
Maintenance Account at any time to pay Operating Expenses to the
extent there is a deficiency in the Operation and Maintenance
Account for such purpose. Amounts in the Operation and Maintenance
Account shall be paid out from time to time by the Issuer for
36
reasonable and necessary Operating Expenses; provided, however,
that no such payment shall be made unless the provisions of Section
5.03 hereof, in regard to the current Annual Budget, are complied
with.
Redemptions from Special Assessments. In the event the Issuer
by Supplemental Resolution provides for all or a portion of any
Special Assessments to the payment of all or a portion of a
particular Series of Bonds, the Issuer may establish separate
accounts or subaccounts for the deposit of such Special Assessments
if necessary to provide for the earlier redemption of such Bonds
from such Special Assessments.
(B) Amounts remaining in the Revenue Account after the
aforementioned deposits or credits to the Operation and Maintenance
Account and all amounts on deposit in the Special Assessments
Account shall be applied by the Issuer on or before the twenty-
fifth (25th) day of each month, commencing in the month immediately
following the delivery of any of the Bonds to the purchasers
thereof, or such later date as hereinafter provided, first from the
Special Assessments Account and then from the Revenue Account in
the following manner and in the following order of priority:
(1) P~yment Subaccount. The Issuer shall deposit or credit
to the Payment Subaccount the sum which, together with the balance
in said Subaccount, shall equal the interest on all Bonds
Outstanding (except as to Capital Appreciation Bonds) accrued and
unpaid and to accrue to the end of the then current calendar month.
The Issuer shall also deposit or credit to the Payment Subaccount
the sum which, together with the balance in said Subaccount, shall
equal the principal amounts on all Bonds Outstanding due and unpaid
and that portion of the principal next due which would have accrued
on such Bonds during the then current calendar month if such
principal amounts were deemed to accrue monthly (assuming that a
year consists of twelve (12) equivalent calendar months having
thirty (30) days each) in equal amounts from the next preceding
principal payment due date, or, if there be no such preceding
payment due date from a date one year preceding the due date of
such principal amount. Moneys in the Payment Subaccount shall be
applied by the Issuer for deposit with the Paying Agent to pay the
principal of and interest on the Bonds on or prior to the date the
same shall become due. Serial Capital Appreciation Bonds shall be
payable from the Payment Subaccount in the Bond Years in which such
Bonds mature, and monthly payments into the Payment Subaccount on
account of such Bonds shall commence in the first month of the
respective Bond Years in which such Bonds mature. The Issuer shall,
on a pro-rata basis for each Series, adjust the amount of the
deposit or credit to the Payment Subaccount not later than the
month immediately preceding any Interest Date and/or principal
payment date so as to provide sufficient moneys in the Payment
Subaccount to pay the principal of and interest on the Bonds coming
due on such Interest Date and/or principal payment date. No
further deposit need be made to the Payment Subaccount when the
37
moneys therein are equal to the principal of and interest coming
due on the Bonds on the next succeeding Payment Date.
(2) Term Bonds Redemption Subaccount. Commencing in the
month which is one year prior to the first Amortization
Installment, there shall be deposited or credited to the Term Bonds
Redemption Subaccount the sum which, together with the balance in
such Subaccount, shall equal the Amortization Installments on all
Term Bonds Outstanding due and unpaid, and that portion of the
Amortization Installments of all Term Bonds Outstanding next due
which would have accrued on such Term Bonds during the then current
calendar month if such Amortization Installments were deemed to
accrue monthly (assuming that a year consists of twelve (12)
equivalent calendar months having thirty (30) days each) in equal
amounts from the next preceding Amortization Installment due date,
or, if there is no such preceding Amortization Installment due
date, from a date one year preceding the due date of such
Amortization Installment. Moneys in the Term Bonds Redemption
Subaccount shall be used to purchase or redeem Term Bonds in the
manner herein provided, and for no other purpose. The Issuer shall
adjust the amount of the deposit or credit to the Term Bonds
Redemption Subaccount in the month immediately preceding any
Amortization Installment Date so as to provide sufficient moneys in
the Term Bonds Redemption Subaccount to pay the Amortization
Installments becoming due on such date. Payments to the Term Bonds
Redemption Subaccount shall be on a parity with payments to the
Payment Subaccount.
Amounts accumulated in the Term Bonds Redemption Subaccount
with respect to any Amortization Installment (together with amounts
accumulated in the Payment Subaccount with respect to interest, if
any, on the Term Bonds for which such Amortization Installment was
established) may be applied by the Issuer, on or prior to the
sixtieth (60th) day preceding the due date of such Amortization
Installment, (a) to the purchase of Term Bonds of the Series and
maturity for which such Amortization Installment was established,
or (b) to the redemption at the applicable Redemption Prices of
such Term Bonds, if then redeemable by their terms. The applicable
Redemption Price (or principal amount of maturing Term Bonds) of
any Term Bonds so purchased or redeemed shall be deemed to
constitute part of the Term Bonds Redemption Subaccount until such
Amortization Installment date, for the purposes of calculating the
amount of such Subaccount. As soon as practicable after the
sixtieth (60th) day preceding the due date of any such Amortization
Installment, the Issuer shall proceed to call for redemption on
such due date, by causing notice to be given as provided in Section
3.03 hereof, Term Bonds of the Series and maturity for which such
Amortization Installment was established (except in the case of
Term Bonds maturing on a Amortization Installment date) in such
amount as shall be necessary to complete the retirement of the
unsatisfied balance of such Amortization Installment. The Issuer
shall pay out of the Term Bonds Redemption Subaccount and the
Payment Subaccount to the appropriate Paying Agents, on or before
38
the day preceding such redemption date (or maturity date), the
amount required for the redemption (or for the payment of such Term
Bonds then maturing), and such amount shall be applied by such
Paying Agents to such redemption (or payment). Ail expenses in
connection with the purchase or redemption of Term Bonds may be
paid by the Issuer from the Operation and Maintenance Account.
(3) Reserve Subaccount. Except as otherwise provided by
Section 8.01(H) hereof, the Issuer shall establish within the
Reserve Subaccount a separate subaccount for each Series of Bonds
issued hereunder. The moneys in each such subaccount shall be
applied in the manner provided herein solely for the payment of the
principal of, or Redemption Price, if applicable, and interest on
the Series of Bonds for which it is designated and shall not be
available to pay debt service on any other Series.
There shall be deposited to each subaccount of the Reserve
Subaccount an amount which would enable the Issuer to restore the
funds on deposit in each such subaccount to an amount equal to the
Reserve Subaccount Requirement applicable thereto, whether such
shortfall was caused by decreased market value or withdrawal. Ail
deficiencies in the Reserve Subaccount must be made up no later
than twelve (12) months from the date such deficiency first
occurred; provided, deficiencies resulting from a decrease in
market value of investments in any subaccount of the Reserve
Subaccount must be remedied only if the market value of such
investments is less than ninety-five percent (95%) of the Reserve
Subaccount Requirement on the immediately preceding date of
valuation provided in Section 4.10 hereof. Payments of such
deficiencies shall be made in twelve (12) substantially equal
monthly payments, unless paid on an accelerated basis. On or prior
to each principal and interest payment date for the Bonds (in no
event earlier than the twenty-fifth (25th) day of the month next
preceding such payment date), moneys in each subaccount of the
Reserve Subaccount shall be applied by the Issuer to the payment of
the principal of, or Redemption Price, if applicable, and interest
on related Series of Bonds to the extent moneys in the Payment
Subaccount and the Term Bonds Redemption Subaccount, shall be
insufficient for such purpose, but only to the extent the moneys
transferred from the Surplus Reserve Account for such purposes
pursuant to Section 4.05(B) (7) hereof shall be inadequate to fully
provide for such insufficiency. Whenever there shall be surplus
moneys in any subaccount of the Reserve Subaccount by reason of a
decrease in the Reserve Subaccount Requirement, increase in the
market value of the instruments in any subaccount of the Reserve
Subaccount or as a result of a deposit in such subaccount of a
Reserve Subaccount Credit Instrument, such surplus moneys shall be
deposited or credited by the Issuer first, on a pro rata basis into
other subaccounts, if any, containing less than the Reserve
Subaccount Requirement applicable thereto, and second, into the
Surplus Reserve Account. The Issuer shall inform each Insurer of
any draw upon the Reserve Subaccount for purposes of paying the
principal of and interest on the Bonds.
39
Upon the issuance of any Series of Bonds under the terms,
limitations and conditions as herein provided, the Issuer shall, on
the date of delivery of such Series of Bonds, fund the
corresponding subaccount of the Reserve Subaccount established for
such Series in an amount at least equal to the Reserve Subaccount
Requirement applicable to such Series of Bonds. Such required
amount may be paid in full or in part from the proceeds of such
Series of Bonds. The requirement that the Reserve Subaccount be
fully funded upon the issuance of Additional Bonds may be waived at
the discretion of each Insurer.
Notwithstanding the foregoing provisions, in lieu of the
required deposits into the Reserve Subaccount or moneys on deposit
in the Reserve Subaccount, the Issuer may cause to be deposited
into the Reserve Subaccount a Reserve Subaccount Credit Instrument
for the benefit of the Bondholders in an amount equal to the
difference between the Reserve Subaccount Requirement applicable
thereto and the sums then on deposit in the Reserve Subaccount, if
any. Such Reserve Subaccount Credit Instrument shall be payable to
the Paying Agent (upon the giving of notice as required thereunder)
on any principal payment date or Interest Date on which a
deficiency exists which cannot be cured by moneys in any other fund
or account held pursuant to this Resolution and available for such
purpose. A Reserve Subaccount Insurance Policy issued to the
Paying Agent, as agent of the Bondholders, by a company licensed to
issue an insurance policy guaranteeing the timely payment of debt
service on the Bonds (a "municipal bond insurer") may be deposited
in the Reserve Subaccount to meet the Reserve Subaccount
Requirement if the claims-paying ability of the issuer thereof
shall be rated at least "AAA" by Standard & Poor's or at least
"Aaa" by Moody's. A Reserve Subaccount Insurance Policy issued to
the Paying Agent, as agent of the Bondholders, by an entity other
than a municipal bond insurer, may be deposited in the Reserve
Subaccount to meet the Reserve Subaccount Requirement if the form
and substance of such Reserve Subaccount Insurance Policy and the
issuer thereof shall be approved by each Insurer.
Whenever moneys in a subaccount of the Reserve Subaccount,
together with the other available amounts in the Debt Service
Account, are sufficient to fully pay the corresponding Series of
Bonds in accordance with their terms (including principal and
interest thereon), the funds in such subaccount of the Reserve
Subaccount may be applied to the payment of such Series of Bonds.
A Reserve Subaccount Letter of Credit issued to the Paying
Agent, as agent of the Bondholders, by a bank may be deposited in
the Reserve Subaccount to meet the Reserve Subaccount Requirement
if the issuer thereof is rated at least "AA" by Standard & Poor's.
The Reserve Subaccount Letter of Credit shall be payable in one or
more draws upon presentation by the beneficiary of a sight draft
accompanied by its certificate that it then holds insufficient
funds to make a required payment of principal or interest on the
Bonds. The draws shall be payable within two (2) days of
4O
presentation of the sight draft. The Reserve Subaccount Letter of
Credit shall be for a term of not less than three (3) years and
shall be subject to an "evergreening" feature so as to provide the
Issuer with at least thirty (30) months notice of termination. The
issuer of the Reserve Subaccount Letter of Credit shall be required
to notify the Issuer and the Paying Agent, not later than thirty
(30) months prior to the stated expiration date of the Reserve
Subaccount Letter of Credit, as to whether such expiration date
shall be extended, and if so, shall indicate the new expiration
date. If such notice indicates that the expiration date shall not
be extended, the Issuer shall deposit in the Reserve Subaccount an
amount sufficient to cause the cash or Authorized Investments on
deposit in the Reserve Subaccount, together with any other Reserve
Subaccount Credit Instruments, to equal the Reserve Subaccount
Requirement on all Outstanding Bonds, such deposit to be paid in
equal installments on at least a semiannual basis over the
remaining term of the Reserve Subaccount Letter of Credit, unless
the Reserve Subaccount Letter of Credit is replaced by a Reserve
Subaccount Credit Instrument meeting the requirements of this
Section 4.05(B) (3). The Reserve Subaccount Letter of Credit shall
permit a draw in full not less than two (2) weeks prior to the
expiration or termination of such Reserve Subaccount Letter of
Credit if the Reserve Subaccount Letter of Credit has not been
replaced or renewed. The Paying Agent shall draw upon the Reserve
Subaccount Letter of Credit prior to its expiration or termination
unless an acceptable replacement is in place or the Reserve
Subaccount is fully funded in its required amount.
The use of any Reserve Subaccount Credit Instrument pursuant
to this Section 4.05(B) (3) shall be subject to receipt of an
opinion of counsel acceptable to each Insurer in form and substance
satisfactory to each Insurer as to the due authorization,
execution, delivery and enforceability of such instrument in
accordance with its terms, subject to applicable laws affecting
creditors' rights generally, and, in the event the issuer of such
Reserve Subaccount Credit Instrument is not a domestic entity, an
opinion of foreign counsel in form and substance satisfactory to
each Insurer. In addition, the use of a Reserve Subaccount Letter
of Credit shall be subject to receipt of an opinion of counsel
acceptable to each Insurer in form and substance satisfactory to
each Insurer to the effect that payments under such Reserve
Subaccount Letter of Credit would not constitute avoidable
preferences under Section 547 of the United States Bankruptcy Code
or similar state laws with avoidable preference provisions in the
event of the filing of a petition for relief under the United
States Bankruptcy Code or similar state laws by or against the
issuer of the Bonds (or any other account party under the Reserve
Subaccount Letter of Credit).
The obligation to reimburse the issuer of a Reserve Subaccount
Insurance Credit Instrument for any fees or expenses or claims or
draws upon such Reserve Subaccount Credit Instrument shall be
subordinate to the payment of debt service on the Bonds. The right
41
of the issuer of a Reserve Subaccount Credit Instrument to payment
or reimbursement of its fees and expenses shall be subordinated to
cash replenishment of the Reserve Subaccount, and, subject to the
further provisions of this paragraph, its right to reimbursement
for claims or draws shall be on a parity with the cash
replenishment of the Reserve Subaccount. Each Reserve Subaccount
Credit Instrument shall provide for a revolving feature under which
the amount available thereunder will be reinstated to the extent of
any reimbursement of draws or claims paid. If the revolving
feature is suspended or terminated for any reason, the right of the
issuer of the Reserve Subaccount Credit Instrument to reimbursement
will be further subordinated to cash replenishment of the Reserve
Subaccount to an amount equal to the difference between the full
original amount available under the Reserve Subaccount Credit
Instrument and the amount then available for further draws or
claims. In the event (a) the issuer of a Reserve Subaccount Credit
Instrument becomes insolvent, or (b) the issuer of a Reserve
Subaccount Credit Instrument defaults in its payment obligations
thereunder, or (c) the claims-paying ability of the issuer of the
Reserve Subaccount Insurance Policy falls below "AAA" by Standard
& Poor's or "Aaa" by Moody's, or (d) the rating of the issuer of
the Reserve Subaccount Letter of Credit falls below "AA" by
Standard & Poor's, the obligation to reimburse the issuer of such
Reserve Subaccount Credit Instrument shall be subordinate to the
cash replenishment of the Reserve Subaccount.
In the event (a) the revolving reinstatement feature described
in the preceding paragraph is suspended or terminated, or (b) the
rating of the claims-paying ability of the issuer of the Reserve
Subaccount Insurance Policy falls below "AAA" by Standard & Poor's
or "Aaa" by Moody's, or (c) the rating of the issuer of the Reserve
Subaccount Letter of Credit falls below "AA" by Standard & Poor's,
the Issuer shall either (i) deposit into the Reserve Subaccount an
amount sufficient to cause the cash or Authorized Investments on
deposit in the Reserve Subaccount to equal the Reserve Subaccount
Requirement on all Outstanding Bonds, such amount to be paid over
the ensuing five (5) years in equal installments deposited at least
semiannually or (ii) replace such Reserve Subaccount Credit
Instrument with a Reserve Subaccount Credit Instrument meeting the
requirements provided herein within six (6) months of such
occurrence. In the event (a) the rating of the claims-paying
ability of the issuer of the Reserve Subaccount Insurance Policy
falls below "A", or (b) the rating of the issuer of the Reserve
Subaccount Letter of Credit falls below "A", or (c) the issuer of
the Reserve Subaccount Credit Instrument defaults in its payment
obligations hereunder, or (d) the issuer of the Reserve Subaccount
Credit Facility becomes insolvent, the Issuer shall either (i)
deposit into the Reserve Subaccount an amount sufficient to cause
the cash or Authorized Investments on deposit in the Reserve
Subaccount to equal the Reserve Subaccount Requirement on all
Outstanding Bonds, such amount to be paid over the ensuing year in
equal installments on at least a monthly basis, or (ii) replace
such instrument with a Reserve Subaccount Credit Instrument meeting
42
the requirements provided herein within six (6) months of such
occurrence. The amount available for draws or claims under the
Reserve Subaccount Credit Instrument may be reduced by the amount
of cash or Authorized Investments deposited in the Reserve
Subaccount.
Cash on deposit in the Reserve Subaccount shall be used (or
investments purchased with such cash shall be liquidated and the
proceeds applied as required) prior to any drawing on any Reserve
Subaccount Credit Instrument. If and to the extent that more than
one Reserve Subaccount Credit Instrument is deposited in the
Reserve Subaccount, drawings thereunder and repayments of costs
associated therewith shall be made on a pro rata basis, calculated
by reference to the maximum amounts available thereunder.
If a disbursement is made from a Reserve Subaccount Credit
Instrument provided pursuant to this Section 4.05(B) (3), the Issuer
shall reinstate the maximum limits of such Reserve Subaccount
Credit Instrument immediately following such disbursement from Net
Revenues received in accordance with the provisions of this Section
4.05 (B) (3).
If three (3) days prior to an interest payment or redemption
date, the Issuer shall determine that a deficiency exists in the
amount of moneys available to pay in accordance with the terms
hereof interest and/or principal due on the Bonds on such date, the
Issuer shall immediately notify (A) the issuer of the applicable
Reserve Subaccount Credit Instrument and (B) the Insurer, if any,
of the amount of such deficiency and the date on which such payment
is due, and shall take all action to cause such issuer or Insurer
to provide moneys sufficient to pay all amounts due on such
interest payment date.
The Issuer may evidence its obligation to reimburse the issuer
of any Reserve Subaccount Credit Instrument by executing and
delivering to such issuer a promissory note therefor, provided,
however, any such note (a) shall not be a general obligation of the
Issuer the payment of which is secured by the full faith and credit
or taxing power of the Issuer, and (b) shall be payable solely from
the Pledged Funds in the manner provided herein.
Any consent or approval of any Insurer described in this
Section 4.05(B) (3) shall be required only so long as there are
Outstanding Bonds secured by a Bond Insurance Policy issued by such
Insurer which is in full force and effect and the commitments of
which have been honored by such Insurer. The term "Paying Agent"
as used in this Section 4.05(B) (3) may include one or more Paying
Agents for the Outstanding Bonds.
(4) Payments to Issuer of Reserve Subaccount Credit
Instrument. The Issuer shall next make any payments required to be
made to the issuer of any Reserve Subaccount Credit Instrument.
Payments pursuant to this subsection (4), other than payments which
43
are not incurred as a result of a draw against the Reserve
Subaccount Credit Instrument, shall be on a parity with all
payments made to the Reserve Subaccount pursuant to subsection (3)
above.
(5) Renewal and Replacement Account. There shall be
deposited or credited to the Renewal and Replacement Account an
amount equal to one-twelfth (1/12th) of the Renewal and Replacement
Requirement until the amount accumulated in such Account is equal
to the Renewal and Replacement Account Requirement, taking into
account the market value of investments in such Account; provided,
however, that (a) such Renewal and Replacement Account Requirement
may be increased or decreased as the Consulting Engineers shall
certify to the Issuer is necessary for the purposes of the Renewal
and Replacement Account, and (b) in the event that the Consulting
Engineers shall certify that the Renewal and Replacement Account
Requirement is excessive for the purposes of the Renewal and
Replacement Account such excess amount as may be on deposit therein
may be transferred by the Issuer from the Renewal and Replacement
Account for deposit into the Surplus Reserve Account. The moneys
in.the Renewal and Replacement Account shall be applied by the
Issuer for the purpose of paying the cost of major extensions,
improvements or additions to, or the replacement or renewal of
capital assets of, the System, or extraordinary repairs of the
System; provided, however, that on or prior to each principal and
interest payment date for the Bonds (in no event earlier than the
twenty-fifth (25th) day of the month next preceding such payment
date), moneys in the .Renewal and Replacement Account shall be
applied for the payment into the Payment Subaccount, and the Term
Bonds Redemption Subaccount, when the moneys therein are
insufficient to pay the principal of and interest on the Bonds
coming due, but only to the extent moneys transferred from the
Surplus Reserve Account pursuant to Section 4.05(B) (7) hereof and
moneys available in the Reserve Subaccount for such purpose
pursuant to Section 4.05(B) (3) hereof shall be inadequate to fully
provide for such insufficiency. Moneys in the Renewal and
Replacement Account may also be transferred to the Operation and
Maintenance Account to fund Operating Expenses to the extent Gross
Revenues shall be insufficient for such purpose; provided, however,
such transfer shall be treated as an interfund loan and shall be
repaid from Gross Revenues as described in this Section 4.05(B) (5)
within one year from the date of such transfer.
(6) Subordinated Indebtedness. Gross Revenues shall next be
applied by the Issuer for the payment of any accrued debt service
on Subordinated Indebtedness incurred by the Issuer in connection
with the System and in accordance with the proceedings authorizing
such Subordinated Indebtedness.
(7) Administrative. Expenses. Gross Revenues shall next be
applied by the Issuer for the payment of Administrative Expenses.
44
(8) SurDlus Reserve Account. The balance of any Gross
Revenues remaining in said Revenue Account after the foregoing
shall be deposited or credited to the Surplus Reserve Account.
Moneys in the Surplus Reserve Account shall be applied monthly by
the Issuer, to the extent necessary, in the following order of
priority, (i) to pay Operating Expenses whenever the moneys in the
Operation and Maintenance Account shall be insufficient for such
purpose, (ii) to pay debt service on the Bonds in the event amounts
in the Debt Service Account are insufficient for such purpose, and
(iii) to cure any deficiency in the Reserve Subaccount. Moneys not
required to meet such deficiencies shall be deposited to the Water
Impact Fees Account or Sewer Impact Fees Account to make up any
withdrawal therefrom pursuant to Sections 4.07(A) and 4.08(A)
hereof, respectively. Thereafter, whenever no Event of Default
shall have occurred and be continuing under this Resolution, and
after setting aside in the Surplus Reserve Account a sum which,
together with the moneys in the Operation and Maintenance Account,
shall be sufficient to pay Operating Expenses for the succeeding
twelve (12) months according to the Annual Budget, the balance of
any moneys remaining in the Surplus Reserve Account may be applied
by the Issuer to reimburse the Issuer for any ad valorem, taxes
previously paid to the Issuer from portions of the System prior to
public ownership and for any lawful purpose. Notwithstanding the
foregoing, the Issuer shall have the right, at any time, to apply
any money in the Surplus Reserve Account for deposit or credit to
the Renewal and Replacement Account and the Rebate Account.
Additionally, the Issuer shall have the right, but may never be
compelled by any Holder, to apply any moneys in the Surplus Reserve
Account, at any time, to the payment of all or any part of
principal of, Redemption Price or interest, on the Bonds or any
Subordinated Indebtedness.
(C) Whenever moneys in the Reserve Subaccount, together with .
the other amounts in the Debt Service Account, are sufficient to
fully pay all Outstanding Bonds in accordance with their terms
(including principal or applicable Redemption Price and interest
thereon), no further deposits or credits to the Debt Service
Account need be made. If, on any payment date, the Gross Revenues
are insufficient to deposit the required amount in any of the funds
or accounts or for any of the purposes provided above, the
deficiency shall be made upon on the subsequent payment date.
The Issuer, in its discretion, may use moneys in the Payment
Subaccount to purchase or redeem Bonds coming due on the next
principal payment date; provided such purchase or redemption does
not adversely affect the Issuer's ability to pay the principal or
interest coming due on such principal payment date on the Bonds not
so purchased or redeemed.
(D) In the event the Issuer shall issue a Series of Bonds
secured by a Credit Facility, the Issuer may establish separate
subaccounts in the Payment Subaccount and the Term Bonds Redemption
Subaccount to provide for payment of the principal of and interest
45
on such Series; provided payment from the Pledged Funds of one
Series of Bonds shall not have preference over payment of any other
Series of Bonds. The Issuer may also deposit or credit moneys to
such subaccounts at such other times and in such other amounts from
those provided in Section 4.05(B) as shall be necessary to pay the
principal of and interest on such Bonds as the same shall become
due, all as provided by the Supplemental Resolution authorizing
such Bonds.
In the case of Bonds secured by a Credit Facility, amounts in
the Debt Service Account may be applied as provided in the
applicable Supplemental Resolution to reimburse the Credit Bank for
amounts drawn under such Credit Facility to pay the principal of,
premium, if any, and interest on such Bonds; provided such Credit
Facility shall have no priority over Bondholders or the Insurer
with respect to amounts in the Debt Service Account.
SECTION 4.06. REBATE ACCOUNT. Amounts in the Rebate Account
shall be held in trust by the Issuer and used solely to make
required rebates to the United States (except to the extent the
same may be transferred to the Revenue Account), and the
Bondholders shall have no right to have the same applied for debt
service on the Bonds. The Issuer agrees to undertake all actions
required of it in its arbitrage certificate, dated the date of
issuance of the Series 1993 Bonds, as well as any successor
certificate relating to other Series of Bonds relating to such
Series 1993 Bonds, including, but not limited to:
(A) making a determination in accordance with the Code of the
amount required to be deposited or credited to the Rebate Account;
(B) depositing or crediting the amount determined in clause
(A) above into the Rebate Account;
(C) paying on the dates and in the manner required by the
Code to the United States Treasury from the Rebate Account and any
other legally available moneys of the Issuer, such amounts as shall
be required by the Code to be rebated to the United States
Treasury; and
(D) keeping such records of the determinations made pursuant
to this Section 4.06 as shall be required by the Code, as well as
evidence of the fair market value of any investments purchased with
proceeds of the Bonds.
The provisions of the above-described arbitrage certificate
may be amended from time to time as shall be necessary, in the
opinion of Bond Counsel, to comply with the provisions of the Code.
.SECTION 4.07. WATER IMPACT FEES ACCOUNT. The Issuer shall
deposit into the Water Impact Fees Account all Water Impact Fees as
received, together with moneys transferred to such account pursuant
to Section 4.05(B) (7), and such Water Impact Fees shall be
46
accumulated in the Water Impact Fees Account and applied by the
Issuer in the following manner and order of priority:
(A) For the payments on or prior to each Interest Payment
Date (in no event earlier than the twenty-fifth (25th) day of the
month next preceding such payment date) into the Payment Subaccount
and the Term Bonds Redemption Subaccount, when the moneys therein
are insufficient to pay the principal of and interest on the Bonds
coming due, but only to the extent moneys transferred from the
Surplus Reserve Account, the Rate Stabilization Account and the
Renewal and Replacement Account for such purpose pursuant to
Sections 4.05(B) (7), 4.09 and 4.05(B) (5) hereof shall be inadequate
to fully provide for such insufficiency; provided moneys shall be
transferred to the aforementioned accounts from the Water Impact
Fees Account and the Sewer Impact Fees Account on a pro-rata basis
in relation to the amount of moneys in each account at the time of
transfer. Any moneys transferred to the aforementioned accounts
shall be treated as an interfund loan and shall be repaid, together
with reasonable interest thereon, from Gross Revenues as described
in Section 4.05(B) (7) hereof on or prior to the date such amounts
are needed for the purposes described in Sections 4.07(B) and (C)
hereof, but in no event later than one year from the date of such
transfer, unless the Issuer shall determine that such transfer
constitutes an appropriate use of such Water Impact Fees.
(B) To pay the cost of acquiring and/or constructing new user
water improvements or additions to the System in accordance with
the plans and specifications provided by the Consulting Engineers
and the requisitions for disbursement of moneys provided by the
Issuer.
(c)
System.
To be used for any other lawful purpose relating to the
SECTION 4.08. SEWER IMPACT FEES ACCOUNT. The Issuer shall
deposit into the Sewer Impact Fees Account all Sewer Impact Fees as
received, together with moneys transferred to such Fund pursuant to
Section 4.05(B) (7) hereof, and such Sewer Impact Fees shall be
accumulated in the Sewer Impact Fees Account and applied by the
Issuer in the following manner and order of priority:
(A) For the payments on or prior to each Interest Payment
Date (in no event earlier than the twenty-fifth (25th) day of the
month next preceding such payment date) into the Payment Subaccount
and the Term Bonds Redemption Subaccount, when the moneys therein
are insufficient to pay the principal of and interest on the Bonds
coming due, but only to the extent moneys transferred from the
Surplus Reserve Account and the Renewal and Replacement Account for
such purpose pursuant to Sections 4.05(B) (7) and 4.05(B) (5) hereof
shall be inadequate to fully provide for such insufficiency.;
provided moneys shall be transferred to the aforementioned accounts
from the Sewer Impact Fees Account and the Water Impact Fees
Account on a pro-rata basis in relation to the amount of moneys in
47
each account at the time of transfer. Any moneys transferred to
the aforementioned accounts described above shall be treated as an
interfund loan and shall be repaid, together with reasonable
interest thereon, from Gross Revenues as described in Section
4.05(B) (7) hereof on or prior to the date such amounts are needed
for the purposes described in Sections 4.08(B) and (C) hereof, but
in no event later than the date of such transfer, unless the Issuer
shall determine that such transfer constitutes an appropriate use
of such Sewer Impact Fees.
(B) To pay the cost of acquiring and/or constructing new user
related sewer improvements or additions to the System in accordance
with the plans and specifications provided by the Consulting
Engineers and the requisitions for disbursement of moneys provided
by the Issuer.
(c)
System.
To be used for any other lawful purpose relating to the
SECTION 4.09. RATE STABILIZATION ACCOUNT. The Issuer may
transfer into the Rate Stabilization Account such moneys which are
on deposit in the Surplus Reserve Account as it deems appropriate.
The Issuer may transfer such amounts of moneys from the Rate
Stabilization Account to the Revenue Account as it deems
appropriate; provided, however, that on or prior to each principal
and interest payment date for the Bonds (in no event earlier than
the twenty-fifth (25th) day of the month next preceding such
payment date), moneys in the Rate Stabilization Account shall be
applied for the payment into the Payment Subaccount and the Term
Bonds Redemption Subaccount when the moneys therein are
insufficient to pay the principal of and interest on the Bonds
coming due, but only to the extent moneys transferred from the
Surplus Reserve Account and Renewal and Replacement Account for
such purposes pursuant to Sections 4.05(B) (7) and 4.05(B) (5) hereof
shall be inadequate to fully provide for such insufficiency.
SECTION 4.10. INVESTMENTS. The Project Account, the Revenue
Account, the Debt Service Account, the Operation and Maintenance
Account, the Water Impact Fees Account, the Sewer Impact Fees
Account, the Surplus Reserve Account and the Renewal and
Replacement Account shall be continuously secured in the manner by
which the deposit of public funds are authorized to be secured by
the laws of the State. The moneys in the Project Account, the
Revenue Account, Operation and Maintenance Account, the Payment
Subaccount, the Term Bonds Redemption Subaccount, the Water Impact
Fees Account, the Sewer Impact Fees Account, the Renewal and
Replacement Account, the Rate Stabilization Account and the Surplus
Reserve Account shall be invested and reinvested by the Issuer in
Authorized Investments, maturing not later than the dates on which
such moneys will be needed for the purposes of such account or
subaccount. Moneys in the Reserve Subaccount shall be invested in
Authorized Investments, maturing no later than five (5) years from
the date of investment. All investments shall be valued at cost
48
except the Reserve Subaccount, which shall be valued by the Issuer
at least annually at the market value thereof, exclusive of accrued
interest. Any and all income received from the investment of
moneys in the accounts and subaccounts established hereunder shall
be deposited or credited upon receipt thereof in the Revenue
Account.
Any and all income received from the investment of moneys in
each separate account of the Project Account, the Payment
Subaccount, the Term Bonds Redemption Subaccount, the Renewal and
Replacement Account (to the extent such income and the other
amounts in such account do not exceed the Renewal and Replacement
Account Requirement), the Rate Stabilization Account, the Water
Impact Fees Account, the Sewer Impact Fees Account and each
subaccount of the Reserve Subaccount (to the extent such income and
the other amounts in such subaccount does not exceed the Reserve
Subaccount Requirement applicable thereto) shall be retained in
such respective account or subaccount. Any and all income received
from the investment of moneys in the Special Assessments Account
shall be deposited upon receipt thereof in the Payment Subaccount.
Any and all income received from the investment of moneys in
the Operation and Maintenance Account, the Surplus Reserve Account,
the Renewal and Replacement Account (only to the extent such income
and the other amounts in such account exceed the Renewal and
Replacement Account Requirement) and each subaccount of the Reserve
Subaccount (only to the extent such income and the other amounts in
such subaccount exceed the Reserve Subaccount Requirement), shall
be deposited or credited upon receipt thereof in the Revenue
Account.
Nothing in this Resolution shall prevent any Authorized
Investments acquired as investments, of or security for funds held
under this Resolution from being issued or held in book-entry form
on the books of the Department of the Treasury of the United
States.
SECTION 4.11. SEPARATE ACCOUNTS. The moneys required to be
accounted for in each of the foregoing funds, accounts and
subaccounts established herein may be deposited in a single bank
account, and funds allocated to the various funds, accounts and
subaccounts established herein may be invested in a common
investment pool; provided that adequate accounting records are
maintained to reflect and control the restricted allocation of the
moneys on deposit therein and such investments for the various
purposes of such funds, accounts and subaccounts as herein
provided.
The designation and establishment of the various funds,
accounts and subaccounts in and by this Resolution shall not be
construed to require the establishment of any completely
independent, self-balancing funds as such term is commonly defined
and used in governmental accounting, but rather is intended solely
49
to constitute an earmarking of certain revenues for certain
purposes and to establish certain priorities for application of
such revenues as herein provided.
50
ARTICLE V
COVENA/qTS
SECTION 5.01. GENERAL. The Issuer hereby makes the following
covenants, in addition to all other covenants in this Resolution,
with each and every successive Holder of any of the Bonds so long
as any of said Bonds remain Outstanding.
SECTION 5.02. OPERATION AND MAINTENANCE. The Issuer will
maintain or cause to be maintained the System and all portions
thereof in good condition and will operate or cause to be operated
the same in an efficient and economical manner, making or causing
to be made such expenditures for equipment and for renewals,
repairs and replacements as may be proper for the economical
operation and maintenance thereof. The Issuer covenants to comply
with all State and Federal laws and regulations applicable to its
ownership and operation of the System.
SECTION 5.03. ANNUAL BUDGET. The Issuer shall annually
prepare and adopt, prior to the beginning of each Fiscal Year, an
Annual Budget in accordance with applicable law. No expenditure
for the operation and maintenance of the System shall be made in
any Fiscal Year in excess of the amount provided therefor in the
Annual Budget, (A) without a written finding and recommendation by
an Authorized Issuer Officer, .which finding and recommendation
shall state in detail the purpose of and necessity for such
increased expenditures, and (B) until the Governing Body shall have
approved such finding and recommendation.
If, for any reason, the Issuer shall not have adopted the
Annual Budget before the first day of any Fiscal Year, other than
the first Fiscal Year, the Annual Budget for the preceding Fiscal
Year, shall be deemed to be in effect for such Fiscal Year until
the Annual Budget for such Fiscal Year is adopted.
The Issuer shall mail copies of such Annual Budgets and
amended Annual Budgets to any Credit Bank or Insurer of Bonds who
shall file his address with the Clerk and request, in writing, that
copies of all such Annual Budgets and resolutions be furnished to
him and shall make available all such Annual Budgets and
resolutions authorizing increased expenditures for operation and
maintenance of the System at all reasonable times to any Holder or
Holders of Bonds or to anyone acting for and on behalf of such
Molder or Holders.
SECTION 5.04 RATES. The Issuer shall fix, establish and
maintain such rates and collect such fees, rates, or other charges
for the product, services and facilities of its System, and revise
the same from time to time, whenever necessary, as will always
provide in each Fiscal Year either:
51
(A) Net Revenues which at least equal (1) one hundred five
percent (105%) of the Annual Debt Service on all Outstanding Bonds
becoming due in such Fiscal Year plus (2) one hundred percent
(100%) of (a) any amounts required by the terms hereof to be
deposited or credited to the Reserve Subaccount or with any issuer
of a Reserve Subaccount Letter of Credit or Reserve Subaccount
Insurance Policy as a result of a withdrawal from the Reserve
Subaccount, (b) any amount required to be deposited in the Renewal
and Replacement Account pursuant to Section 4.05(B) (5) hereof, and
(c) any amounts required by the terms of Sections 4.07(A) and
4.08(A) to be repaid to the Water Impact Fees Account and Sewer
Impact Fees Account in such Fiscal Year, respectively, or
(B) (1) Net Revenues, Water Impact Fees and Sewer Impact
Fees in each Fiscal Year adequate to pay at least one hundred
twenty percent (120%) of the Annual Debt Service becoming due in
such Fiscal Year on all Outstanding Bonds plus (2) one hundred
percent (100%) of any amounts (a) required by the terms hereof, to
be deposited or credited to the Reserve Subaccount or with any
issuer of a Reserve Subaccount Letter of Credit or Reserve
Subaccount Insurance Policy as a result of a withdrawal from the
Reserve Subaccount, (b) any amount required to be deposited in the
Renewal and Replacement Account pursuant to Section 4.05(B) (5)
hereof, and (c) any amount required by the terms of Sections
4.07(A) and 4.08(A) hereof to be repaid to the Water Impact Fees
Account and Sewer Impact Fees Account, respectively, in such Fiscal
Year; provided, however, Net Revenues shall, at all times, equal at
least one hundred percent (100%) of the Annual Debt Service on all
Outstanding Bonds becoming due in such Fiscal Year. Such rates,
fees or other charges shall not be so reduced so as to be
insufficient to provide adequate Net Revenues, Water Impact Fees
and Sewer Impact Fees for the purposes provided therefor by this
Resolution. To the extent at the end of any Fiscal Year it is
determined that Impact Fees must be included in the calculation to
comply with the above-referenced rate covenant, the Issuer will
supply each Insurer with an opinion of counsel to the Issuer to the
effect that such Impact Fees are lawfully levied, collected and
available to pay debt service on the Bonds. The Issuer hereby
represents that it has the power to raise such rates and charges
without the approval of any regulatory body.
For purposes of this Section 5.04, Variable Rate Bonds shall
be assumed to bear interest at the higher of the actual rate on the
date of calculation and the average rate borne over the twelve (12)
months preceding the date of calculation.
If, in any Fiscal Year, the Issuer shall fail to comply with
the requirements contained in this Section 5.04, it shall
immediately cause the Rate Consultant to review its rates, fees,
charges, income, Gross Revenu.es, Operating Expenses and methods of
operation, and to, within sixty (60) days of such request by the
Issuer, make written recommendations as to the methods by which the
Issuer may promptly seek to comply with the requirements set forth
52
in the preceding paragraph. The Issuer shall, within thirty (30)
days after receipt of such recommendations, commence to implement
such recommendations to the extent required so as to cause it to
thereafter comply with said requirements.
SECTION 5.05. BOOKS AND RECORDS. The Issuer shall keep
books, records and accounts of the revenues and operations of the
System, which shall be kept separate and apart from all other
books, records and accounts of the Issuer, and the Holders of any
Bonds Outstanding or the duly authorized representatives thereof
shall have the right, at all reasonable times, to inspect all
books, records and accounts of the Issuer relating thereto.
SECTION 5.06. ANNUAL AUDIT. The Issuer shall, immediately
after the close of each Piscal Year, cause the books, records and
accounts relating to the System to be properly audited by an
independent certified public accountant or firm of independent
certified public accountants, and shall require such accountants to
complete their report of such Annual Audit in accordance with
applicable law. Each Annual Audit shall be in conformity with
generally accepted accounting principles. A copy of each Annual
Audit shall regularly be furnished to any Insurer and to any Holder
of a Bond who shall have furnished his address to the Clerk and
requested, in writing, that the same be furnished to him.
SECTION 5.07. NO MORTGAGE OR SALE OF THE SYSTEM. Except as
permitted by this Section 5.07 hereof, the Issuer irrevocably
covenants, binds and obligates itself not to sell, lease, encumber
or in any manner dispose of the System as a whole or any
substantial part thereof until all of the Bonds and all interest
thereon shall have been paid in full or provision for payment has
been made in accordance with Section 9.01 hereof.
The foregoing provision notwithstanding, the Issuer shall have
and hereby reserves the right to sell, lease or otherwise dispose
of any of the property comprising a part of the System in the
following manner, if any one of the following conditions exist:
(A) such property is not necessary for the operation of the System,
(B) such property is not useful in the operation of the System, (C)
such property is not profitable in the operation of the System, or
(D) in the case of a lease of such property, such lease will be
advantageous to the System and will not adversely affect the
security for the Bondholders.
Prior to any such sale, lease or other disposition of said
property: (1) if the amount to be received therefor is not in
excess of one-half of one percent of the value of the fixed assets
of the System at original cost, an Authorized Issuer Officer shall
make a finding, in writing, determining that one or more of the
conditions for sale, lease or disposition of property provided for
in the second paragraph of this Section 5.07 have been met; or (2)
if the amount to be received from such sale, lease or other
disposition of said property shall be in excess of one-half of one
53
percent of the value of the gross plant of the System at original
cost, (a) an Authorized Issuer Officer, shall first make a finding,
in writing, determining that one or more of the conditions for
sale, lease or other disposition of property provided for in the
second paragraph of this Section 5.07 have been met, (b) the Issuer
shall, by resolution, duly adopt, approve and concur in the finding
of an Authorized Issuer Officer, and (c) the Issuer shall obtain an
opinion of Bond Counsel to the effect that such sale, lease or
other disposition is not in violation of the Act and will not
adversely affect the Federal tax exempt status of interest on the
Bonds (other than Taxable Bonds).
The proceeds from such sale or other disposition shall be
deposited or credited, first, to the Renewal and Replacement
Account to the extent necessary to make the amount therein equal to
the Renewal and Replacement Account Requirement, and, second, to
the Surplus Reserve Account. Proceeds of any such lease shall
constitute Gross Revenues and shall be deposited in the Revenue
Fund.
Notwithstanding the foregoing provisions of this Section 5.07,
the Issuer shall have the authority to sell for fair and reasonable
consideration or to transfer without charge from the System to
another department of the Issuer, any land comprising a part of the
System which, based upon the certification of an Authorized Issuer
Officer, is no longer necessary or useful in the operation of the
System and the proceeds derived from the sale of such land shall be
disposed of in accordance with the provisions of the fourth
paragraph of this Section 5.07.
The Issuer may make contracts or grant licenses for the
operation of, or grant easements or other rights with respect to,
any part of the System, if such contract, license, easement or
right does not, in the opinion of the Consulting Engineers, as
evidenced by a certificate to that effect filed with the Issuer,
impede or restrict the operation by the Issuer of the System, but
any payments to the Issuer under or in connection with any such
contract, license, easement or right in respect of the System or
any part thereof shall constitute Gross Revenues.
SECTION 5.08. INSURANCE. The Issuer will carry such
insurance as is ordinarily carried by private or public
corporations owning and operating utilities disposal systems
similar to the System with a reputable insurance carrier or
carriers, including public liability insurance in such amounts as
the Issuer shall determine to be sufficient and such other
insurance against loss or damage by fire, explosion (including
underground explosion), hurricane, tornado or other hazards and
risks, and said property loss or damage insurance shall at all
times be in an amount or amounts equal to the fair appraisal value
of the buildings, properties, furniture, fixtures and equipment of
the System, or such other amount or amounts as the Consulting
Engineers shall approve as sufficient.
54
The Issuer may establish certain minimum levels of insurance
for which the Issuer may self-insure. Such minimum levels of
insurance shall be in amounts as recommended, in writing, by an
insurance consultant who has a favorable reputation and experience
and is qualified to survey risks and to recommend insurance
coverage for Persons engaged in operations similar to the System.
The Issuer shall, immediately upon receipt, deposit the
proceeds from property loss and casualty insurance to the credit of
the Revenue Account. The proceeds from property loss and casualty
insurance shall be applied as follows: (A) If such proceeds,
together with other available funds of the Issuer, are sufficient
to repair or replace the damaged portion of the System, such
proceeds and other available funds shall be deposited to the credit
of the Renewal and Replacement Account and, together with any other
available funds of the Issuer, applied to such repair or
replacement; or (B) if such proceeds, together with other available
funds of the Issuer, are not sufficient to repair or replace the
damaged portion of the System or if the Issuer makes a
determination in accordance with Section 5.07 hereof that such
portion of the System is no longer necessary or useful in the
operation of the System, such proceeds shall (1) if such proceeds
equal or exceed $50,000, (a) be applied to the redemption or
purchase of Bonds or (b) be deposited in irrevocable trust for the
payment of Bonds in the manner set forth in Section 9.01, provided
the Issuer has received an opinion of Bond Counsel to the effect
that such deposit shall not adversely affect the exclusion, if any,
from gross income of interest on the Bonds for purposes of Federal
income taxation, or (2) if such proceeds are less than $50,000, be
deposited in the Revenue Account.
SECTION 5.09. NO FREE SERVICE. The Issuer will not render,
or cause to be rendered, any free services of any nature by its
System or any part thereof, nor will any preferential rates be
established for users of the same class.
SECTION 5.10. NO IMPAIRMENT OF RIGHTS. The Issuer will not
enter into any contract or contracts, nor take any action, the
results of which might impair the rights of the Holders of the
Bonds, and will not permit the operation of any competing water and
sewer facilities in the Issuer; provided, however, that the Issuer
reserves the right to permit the ownership and operation of water
or sewer service facilities or both by itself or by others in any
territory which is not in any service area now or hereafter served
by the System.
SECTION 5.11. COMPULSORY SEWER CONNECTIONS. To the extent
practicable, the Issuer shall comply with all requirements of
Florida law with respect to compulsory sewer connections.
SECTION 5.12. ENFORCEMENT OF CHARGES. The Issuer shall
compel the prompt payment of rates, fees and charges imposed for
service rendered on every lot or parcel connected with the System,
55
and, to that end, will vigorously enforce all of the provisions of
any ordinance or resolution of the Issuer having to do with sewer
and water connections and charges, and all of the rights and
remedies permitted the Issuer under law, including the requirement
for the making of a reasonable deposit by each user, the
requirement for disconnection of all premises delinquent in payment
for services, and the securing of an injunction against the
disposition of sewage or industrial waste into the sewer facilities
of the System by any premises delinquent in the payment of such
charges.
SECTION 5.13. COVENANTS WITH CREDIT BANKS AND INSURERS. The
Issuer may make such covenants as it may, in its sole discretion,
determine to be appropriate with any Insurer, Credit Bank or other
financial institution that shall agree to insure or to provide, for
Bonds of any one or more Series, credit or liquidity support that
shall enhance the security or the value of such Bonds; provided,
that any such covenants shall not adversely affect the Holders of
any Outstanding Bonds. Such covenants may be set forth in the
applicable Supplemental Resolution and shall be binding on the
Issuer, the Registrar, the Paying Agent. and all the Holders of
Bonds, the same as if such covenants were set forth in full in this
Resolution.
SECTION 5.14. CONSULTING ENGINEERS. The Issuer shall, at all
times, employ Consulting Engineers or other professionals with
expertise in utility systems, whose duties shall be to make any
certificates and perform any other acts required or permitted of
the Consulting Engineers or other professionals under this
Resolution, and also to review the construction and operation of
the System, to make an inspection of the System at least once every
two years, and to submit to the Issuer a report with
recommendations as to the proper maintenance, repair and operation
of the System during the ensuing Fiscal Year, including
recommendations for expansion and additions to the System to meet
anticipated service demands, and an estimate of the amount of money
necessary for such purposes. Copies of such reports,
recommendations and estimates made as hereinabove provided shall be
filed with the Issuer for inspection by Bondholders, if such
inspection is requested.
SECTION 5.15. UNIT WATER AND SEWER BILLS. In every instance
in which a building or structure on a lot is connected to the sewer
facilities of the System, which building or structure is also
connected to the water facilities of the System and receives water
therefrom, the Issuer shall submit to the owner or occupant of such
lot a single bill for both water and sewer service and shall refuse
to accept payment for either the water charge alone or sewer charge
alone without payment of the other.
SECTION 5.16. COLLECTION OF IMPACT FEES. The Issuer shall
proceed diligently to perform legally and effectively all steps
required in the imposition and collection of the Impact Fees. Upon
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the due date of any such Impact Fees, the Issuer shall diligently
proceed to collect the same and shall exercise all legally
available remedies to enforce such collections now or hereafter
available under State law.
SECTION 5.17.
BONDS.
FEDERAL INCOME TAXATION COVENANTS; TAXABLE
(A) The Issuer covenants with the Holders of each Series of
Bonds (other than Taxable Bonds) that it shall not use the proceeds
of such Series of Bonds in any manner which would cause the
interest on such Series of Bonds to be or become includable in
gross income for purposes of Federal income taxation.
(B) The Issuer covenants with the Holders of each Series of
Bonds (other than Taxable Bonds) that neither the Issuer nor any
Person under its control or direction will make any use of the
proceeds of such Series of Bonds (or amounts deemed to be proceeds
under the Code) in any manner which would cause such Series of
Bonds to be "arbitrage bonds" within the meaning of Section 148 of
the Code, and neither the Issuer nor any other Person shall do any
act or fail to do any act which would cause the interest on such
Series of Bonds to become includable in gross income for purposes
of Federal income taxation.
(C) The Issuer hereby covenants with the Holders of each
Series of Bonds (other than Taxable Bonds) that it will comply with
all provisions of the Code necessary to maintain the exclusion from
gross income of interest on the Bonds for purposes of Federal
income taxation, including, in particular, the payment of any
amount required to be rebated to the U.S. Treasury pursuant to the
Code.
(D) The Issuer may, if it so elects, issue one or more Series
of Taxable Bonds, the interest on which is (or may be) includable
in the gross income of the Holder thereof for Federal income
taxation purposes, so long as each Bond of such Series states in
the body thereof that interest payable thereon is (or may be)
subject to Federal income taxation and provided that the issuance
thereof will not cause interest on any other Bonds theretofore
issued hereunder to be or become subject to federal income
taxation. The covenants set forth in paragraphs (A), (B) and (C)
above shall not apply to any Taxable Bonds.
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ARTICLE VI
SUBORDINATED INDEBTEDNESS AND
ADDITIONAL BONDS
SECTION 6.01. SUBORDINATED INDEBTEDNESS. The Issuer will not
issue any other obligations, except under the conditions and in the
manner provided herein, payable from the Pledged Funds or the Gross
Revenues or voluntarily create or cause to be created any debt,
lien, pledge, assignment, encumbrance or other charge having
priority to or being on a parity with the lien thereon in favor of
the Bonds and the interest thereon. The Issuer may, at any time or
from time to time, issue evidences of indebtedness payable in whole
or in part out of Pledged Funds and which may be secured by a
pledge of Pledged Funds; provided, however, that such pledge shall
be, and shall be expressed to be, subordinated in all respects to
the pledge of the Pledged Funds created by this Resolution; and
provided, further, that the issuance of such Subordinated
Indebtedness shall be subject to any provisions contained in
financing documents securing Outstanding Subordinated Indebtedness
to the extent such provisions impact on the ability of the Issuer
to issue Subordinated Indebtedness. The Issuer shall have the
right to covenant with the holders, from time to time, of any
Subordinated Indebtedness to add to the conditions, limitations and
restrictions under which any Additional Bonds maybe issued under
the provisions of Section 6.02 hereof. The Issuer agrees to pay
promptly any Subordinated Indebtedness as the same shall become
due. Notwithstanding anything contained herein to the contrary, no
Subordinated Indebtedness shall be subject to acceleration upon an
event of default.
SECTION 6.02. ISSUANCE OF ADDITIONAL BONDS. No Additional
Bonds, payable on a parity with the Bonds then Outstanding pursuant
to this Resolution, shall be issued except upon the conditions and
in the manner herein provided. The Issuer may issue one or more
Series of Additional Bonds for any one or more of the following
purposes: (i) financing the Cost of a Project, or the completion
thereof, or (ii) refunding all or any portion of any Outstanding
Bonds or of any Subordinated Indebtedness of the Issuer.
No such Additional Bonds shall be issued unless the following
conditions are complied with:
(A) The Issuer shall certify that it is current in all
deposits or credits to the various accounts and subaccounts
established hereby and all payments theretofore required to have
been deposited or credited by it under the provisions of this
Resolution and that no Event of Default shall have occurred and be
continuing.
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(B) An independent certified public accountant or the Rate
Consultant shall certify to the Issuer that either (1) the amount
of the Net Revenues received during the immediately preceding
Fiscal Year or any twelve (12) consecutive months selected by the
Issuer of the twenty-four (24) months immediately preceding the
issuance of said Additional Bonds, adjusted as hereinafter
provided, were equal to at least (a) one hundred five percent
(105%) of the Maximum Annual Debt Service of the Outstanding Bonds
and the Additional Bonds then proposed to be issued plus (b) one
hundred percent (100%) of (i) the maximum annual debt service for
all Subordinated Indebtedness then outstanding; (ii) any amounts
owed to the issuer of a Reserve Subaccount Letter of Credit as a
result of a draw against such Reserve Subaccount Letter of Credit;
(iii) any amounts required by the terms hereof to be deposited in
the Renewal and Replacement Account or the Reserve Subaccount; and
(iv) any amounts required by the terms of Sections 4.07(A) and
4.08(A) hereof to be repaid to the Water Impact Fees Account and
Sewer Impact Fees Account during such twelve (12) month period, or
(2) the amount of Net Revenues and Impact Fees, adjusted as
hereinafter provided, received by the Issuer during such twelve
(12) month period, will be equal to at least (a) one hundred twenty
percent (120%) of the Maximum Annual Debt Service of the
Outstanding Bonds and the Additional Bonds then proposed to be
issued plus (b) one hundred percent (100%) of (i) the maximum
annual debt service for all Subordinated Indebtedness then
outstanding; (ii) any amounts owed to the issuer of a Reserve
Subaccount Letter of Credit as a result of a drawdown on such
Reserve Subaccount Letter of Credit; (iii) any amounts required by
the terms hereof to be deposited in the Renewal and Replacement
Account or the Reserve Subaccount; and (iv) any amounts required by
the terms of Sections 4.07(A) and 4.08(A) hereof to be repaid to
the Water Impact Fees Account and Sewer Impact Fees Account during
such twelve (12) month period; provided, however, the amount of Net
Revenues received during such twelve (12) month period adjusted as
hereinafter provided, must equal to at least one hundred percent
(100%) of the Maximum Annual Debt Service of the Outstanding Bonds
and the Additional Bonds then proposed to be issued. To the extent
Impact Fees are necessary to meet the tests set forth in (b) above,
the Issuer will supply each Insurer with an opinion of counsel to
the Issuer that such Impact Fees are lawfully levied, collected and
pledged to the payment of debt service on the Bonds.
(C) For the purpose of determining the Maximum Annual Debt
Service under this Section 6.02, the additional parity Variable
Rate Bonds then proposed to be issued and on Variable Rate Bonds
then Outstanding shall be deemed to be the rate described for
Variable Rate Bonds under the definition of "Reserve Account
Requirement."
(D) For the purpose of this Section 6.02, the phrase
"immediately preceding Fiscal Year or the twelve (12) consecutive
months of the twenty-four (24) months immediately preceding the
issuance of said Additional Bonds" shall be sometimes referred to
59
as "twelve (12) consecutive months." Such twelve (12) consecutive
months may occur during a period of time during which the System
was not owned by the Issuer.
(E) The Net Revenues and Impact Fees calculated pursuant to
Section 6.02(B) may be adjusted by an independent certified public
accountant upon the written advice of the Consulting Engineers, at
the option of the Issuer, as follows:
(1) If the Issuer, prior to the issuance of the proposed
Additional Bonds, shall have put into effect or budgeted an
increase in the rates, fees or other charges for the product,
services or facilities of the System, the Net Revenues and
Impact Fees for the twelve (12) consecutive months shall be
adjusted to show the Net Revenues and Impact Fees which would
have been derived from the System in such twelve (12)
consecutive months as if such increased rates, fees or other
charges for the product, services or facilities of the System
had been in effect during all of such twelve (12) consecutive
months.
(2) If the Issuer shall have acquired or has contracted
to acquire any privately or publicly owned existing utilities
system, the cost of which shall be paid from all or part of
the proceeds of the issuance of the proposed Additional Bonds,
then the Net Revenues derived from the System during the
twelve (12) consecutive months immediately preceding the
issuance of said Additional Bonds shall be increased by adding
to the Net Revenues for said twelve (12) consecutive months
the Net Revenues which would have been derived from said
existing utilities system as if such existing utilities system
had been a part of the System during such twelve (12)
consecutive months. Such Net Revenues shall, to the extent
the Issuer has increased its rates as described in paragraph
(1) above, be calculated as if such increased rates were in
effect as described in paragraph (1). For the purposes of
this paragraph, the Net Revenues derived from said existing
utilities system during such twelve (12) consecutive months
shall be adjusted to determine such Net Revenues by deducting
what would have been the Issuer's costs of operation and
maintenance of said existing utilities system (the basis of
which shall be certified by the Consulting Engineers) as part
of the System from the gross revenues of said system.
(3) If the Issuer, in connection with the issuance of
Additional Bonds, shall enter into a contract (with a duration
not less than the final maturity of such Additional Bonds)
with any public or private entity whereby the Issuer agrees to
furnish services in connection with any utilities system, then
the Net Revenues of the System during the twelve (12)
consecutive months immediately preceding the issuance of said
Additional Bonds shall be increased by the least amount which
said public or private entity shall guarantee to pay in any
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one year for the furnishing of said services by the Issuer,
after deducting therefrom the proportion of operating expenses
and repair, renewal and replacement cost attributable in such
year to such services.
(4) If the Issuer covenants to levy Special Assessments
against property to be benefited by the improvements, the cost
of which shall be paid from the proceeds of the proposed
Additional Bonds, then the Special Assessment Proceeds derived
from the System during the twelve (12) consecutive months
shall be increased by an amount equal to the average amount
which the Rate Consultant estimates will be received in any
one year subsequent to completion of such improvements from
the levy of said Special Assessments, said amount to be the
total received, assuming no prepayments, from the installment
payments on the Special Assessments plus the interest paid on
the unpaid portion of the Special Assessments. The estimate
of the Rate Consultant shall be based upon the preliminary
assessment roll filed with the Issuer prior to the
construction of such improvements.
(5) In the event the Issuer shall be constructing or
acquiring additions, extensions or improvements to the System
from the proceeds of such Additional Bonds and shall have
established fees, rates or charges to be charged and collected
from users of such facilities when service is rendered, such
Net Revenues and Impact Fees may be adjusted by adding thereto
the Net Revenues estimated by the Consulting Engineers to be
derived during the first twelve (12) months of operation after
completion of the construction or acquisition of said
additions, extensions and improvements from the proposed users
of the facilities to be financed by Additional Bonds, together
with other funds on hand or lawfully obtained for such
purpose.
(6) The Net Revenues and Impact Fees shall be adjusted
for any period the System or any portion thereof was not owned
by the Issuer to reflect government ownership of the System or
such portion.
(7) If any customer of the Issuer shall have commenced
service by the System during the twelve (12) consecutive
months, the Net Revenues shall be adjusted to take into
account the Net Revenues which would have been derived during
such twelve (12) consecutive months if such customer had been
serviced by the System for such entire twelve (12) consecutive
month period.
(F) Additional Bonds shall be deemed to have been issued
pursuant to this Resolution the same as the Outstanding Bonds, and
all of the other covenants and other provisions of this Resolution
(except as to details of such Additional Bonds inconsistent
therewith) shall be for the equal benefit, protection and security
61
of the Holders of all Bonds issued pursuant to this Resolution.
Except as provided in Sections 4.02 and 4.05 hereof, all Bonds,
regardless of the time or times of their issuance, shall rank
equally with respect to their lien on the Pledged Funds and their
sources and security for payment therefrom without preference of
any Bonds over any other.
(G) In the event any Additional Bonds are issued for the
purpose of refunding any Bonds then Outstanding, the conditions of
Section 6.02(B) shall not apply; provided that the issuance of such
Additional Bonds shall not result in an increase in the aggregate
amount of principal of and interest on the Outstanding Bonds
becoming due in the current Fiscal Year and each subsequent Fiscal
Year thereafter. The conditions of Section 6.02(B) shall apply to
Additional Bonds issued to refund Subordinated Indebtedness and to
Additional Bonds issued for refunding purposes which cannot meet
the conditions of this paragraph.
(H) If, at any time, the Issuer shall enter into an agreement
or contract for an ownership interest in any public or privately
owned water and/or sewer system or for the reservation of capacity
therein whereby the Issuer has agreed, as part of the cost thereof,
to pay part of the debt service on the obligations of such public
or privately owned water or sewer system issued in connection
therewith, such payments to be made by the Issuer shall be junior,
inferior and subordinate in all respects to the Bonds issued
hereunder, unless such obligations (when treated as Additional
Bonds) shall meet the conditions of Section 6.02(B), in which case
such obligations shall rank on parity as to lien on the Pledged
Funds with the Bonds.
(I) For purposes of making a draw against any Reserve
Subaccount Letter of Credit, the Issuer's obligation to reinstate
the Reserve Subaccount Letter of Credit shall not be subject to the
Additional Bonds test set forth in the Resolution.
SECTION 6.03. BOND ANTICIPATION NOTES. The Issuer may issue
notes in anticipation of the issuance of Bonds which shall have
such terms and details and be secured in such manner not
inconsistent with this Resolution, as shall be provided by
Supplemental Resolution of the Issuer.
SECTION 6.04. ACCESSION OF SUBORDINATED INDEBTEDNESS TO
PARITY STATUS WITH BONDS. The Issuer may provide for the accession
of Subordinated Indebtedness to the status of complete parity with
the Bonds if (A) the Issuer shall meet all the requirements imposed
upon the issuance of Additional Bonds by Sections 6~02(A) and (B)
hereof, assuming for purposes of said requirements, that such
Subordinated Indebtedness shall be Additional Bonds, (B) the
facilities financed by such Subordinated Indebtedness shall be, or
become part of, the System, and (C) if such Bonds are to be secured
by the Reserve Subaccount, a subaccount in the Reserve Subaccount
is established, upon such accession, which shall contain an amount
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equal to the Reserve Subaccount Requirement in accordance with
Section 4.05(B) (4) hereof. If the aforementioned conditions are
satisfied, the Subordinated Indebtedness shall be deemed to have
been issued pursuant to this Resolution the same as the Outstanding
Bonds, and such Subordinated Indebtedness shall be considered Bonds
for all purposes provided in this Resolution.
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ARTICLE VII
DEFAULTS AND REMEDIES
SECTION 7.01. EVENTS OF DEFAULT. The following events shall
each constitute an "Event of Default":
(A) Default shall be made in the payment of the principal, of
Amortization Installment, redemption premium or interest on any
Bond when due; provided, however, that no effect shall be given to
payments made under a Bond Insurance Policy.
(B) There shall occur the dissolution or liquidation of the
Issuer, or the filing by the Issuer of a voluntary petition in
bankruptcy, or the commission by the Issuer of any act of
bankruptcy, or adjudication of the Issuer as a bankrupt, or
assignment by the Issuer for the benefit of its creditors, or
appointment of a receiver for the Issuer, or the entry by the
Issuer into an agreement of composition with its creditors, or the
approval by a court of competent jurisdiction of a petition
applicable to the Issuer in any proceeding for its reorganization
instituted under the provisions of federal bankruptcy law, or under
any similar act in any jurisdiction which may now be in effect or
hereafter enacted.
(C) The Issuer shall default in the due and punctual
performance of any other of the covenants, conditions, agreements
and provisions contained in the Bonds or in this Resolution on the
part.of the Issuer to be performed, and such default shall continue
for a period of thirty (30) days after written notice of such
default shall have been received from the Holders of not less than
twenty-five percent (25%) of the aggregate principal amount of
Bonds Outstanding or the Insurer of such amount of Bonds.
Notwithstanding the foregoing, the Issuer shall not be deemed to be
in default hereunder if such default can be cured within a
reasonable period of time and if the Issuer, in good faith,
institutes appropriate curative action and diligently pursues such
action until default has been corrected; provided however, that if
such default is not cured within sixty (60) days, it shall become
an Event of Default.
SECTION 7.02. REMEDIES. Any Holder of Bonds issued under the
provisions of this Resolution or any trustee or receiver acting for
such Bondholders may, either at law or in equity, by suit, action,
mandamus or other proceedings in any court of competent
jurisdiction, protect and enforce any and all rights under the Laws
of the State, or granted and contained in this Resolution, and may
enforce and compel the performance of all duties required by this
Resolution or by any applicable statutes to be performed by the
Issuer or by any officer thereof; provided, however, that no
64
Holder, trustee or receiver shall have the right to declare the
Bonds immediately due and payable.
The Holder or Holders of Bonds in an aggregate principal
amount of not less than twenty-five percent (25%) of the Bonds then
Outstanding may, by a duly executed certificate in writing, appoint
a trustee for Holders of Bonds issued pursuant to this Resolution
with authority to represent such Bondholders, in any legal
proceedings for the enforcement and protection of the rights of
such Bondholders, and such certificate shall be executed by such
Bondholders or their duly authorized attorneys or representatives,
and shall be filed in the office of the Clerk. Notice of such
appointment, together with evidence of the requisite signatures of
the Holders of not less than twenty-five percent (25%) in aggregate
principal amount of Bonds Outstanding and the trust instrument
under which the trustee shall have agreed to serve, shall be filed
with the Issuer and the trustee, and notice of such appointment
shall be given to all Holders of Bonds in the same manner as
notices of redemption are given hereunder. After the appointment
of the first trustee hereunder, no further trustees may be
appointed; however, the Holders of. a majority in aggregate
principal amount of all the Bonds then Outstanding may remove the
trustee initially appointed and appoint a successor and subsequent
successors at any time.
If any remedial action is discontinued or abandoned, the
Bondholders and Insurers shall be restored to their respective
positions held prior to commencement of such remedial action.
SECTION 7.03. DIRECTIONS TO TRUSTEE AS TO REMEDIAL
PROCEEDINGS. The Holders of a majority in principal amount of the
Bonds then Outstanding (or any Insurer insuring any then
Outstanding Bonds) have the right, by an instrument or concurrent
instruments in writing executed and delivered to the trustee, to
direct the method and place of conducting all remedial proceedings
to be taken by the trustee hereunder with respect to the Series of
Bonds owned by such Holders or insured by such Insurer; provided
that such direction shall not be otherwise than in accordance with
law or the provisions hereof, and that the trustee shall have the
right to decline to follow any direction which in the opinion of
the trustee would be unjustly prejudicial to Holders of Bonds not
parties to such direction.
SECTION 7.04. REMEDIES CUMULATIVE. No remedy herein
conferred upon or reserved to the Bondholders is intended to be
exclusive of any other remedy or remedies, and each and every such
remedy shall be cumulative, and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in
equity or by statute.
SECTION 7.05. WAIVER OF DEFAULT. No delay or omission of any
Bondholder to exercise any right or power accruing upon any default
shall impair any such right or power or shall be construed to be a
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i
I
i
i
I
waiver of any such default, or an acquiescence therein; and every
power and remedy given by Section 7.02 to the Bondholders may be
exercised from time to time, and as often as may be deemed
expedient.
SECTION 7.06. APPLICATION OF MONEYS AFTER DEFAULT. If an
Event of Default shall happen and shall not have been remedied
within the specified cure period, the Issuer or a trustee or
receiver appointed for the purpose shall apply all Pledged Funds
(except for amounts in the subaccounts of the Reserve Subaccount
which shall be applied to the payment of the Series of Bonds for
which they were established) as follows and in the following order:
A. To the payment of the reasonable and proper charges,
expenses and liabilities of the trustee or receiver and Registrar
hereunder;
B. To the payment of the amounts required for Operating
Expenses, and for the reasonable renewals, repairs and replacements
of the System necessary to prevent loss of Gross Revenues, as
certified by the Consulting Engineers;
C. To the payment of the interest and principal or
Redemption Price, if applicable, then due on the Bonds, as follows:
(1) Unless the principal of all the Bonds shall have become
due and payable, all such moneys shall be applied:
FIRST: to the payment to the Persons entitled
thereto of all installments of interest then due, in the
order of the maturity of such installments, and, if the
amount available shall not be sufficient to pay in full
any particular installment, then to the payment ratably,
according to the amounts due on such installment, to the
Persons entitled thereto, without any discrimination or
preference;
SECOND: to the payment to the Persons entitled
thereto of the unpaid principal of any of the Bonds which
shall have become due at maturity or upon mandatory
redemption prior to maturity (other than Bonds called for
redemption for the payment of which moneys are held
pursuant to the provisions of Section 9.01 of this
Resolution), in the order of their due dates, with
interest upon such Bonds from the respective dates upon
which they became due, and, if the amount available shall
not be sufficient to pay in full Bonds due on any
particular date, together with such interest, then to the
payment first of such interest, ratably according to the
amount of such interest due on such date, and then to the
payment of such principal, ratably according to the
amount of such principal due on such date, to the Persons
66
entitled thereto
preference; and
without any
discrimination or
THIRD: to the payment of the Redemption Price of
any Bonds called for optional redemption pursuant to the
provisions of this Resolution.
(2) If the principal of all the Bonds shall have become due
and payable, all such moneys shall be applied to the payment of the
principal and interest then due and unpaid upon the Bonds, with
interest thereon as aforesaid, without preference or priority of
principal over interest or of interest over principal, or of any
installment of interest over any other installment of interest, or
of any Bond over any other Bond, ratably, according to the amounts
due respectively for principal and interest, to the Persons
entitled thereto without any discrimination or preference.
In the event a Reserve Subaccount Insurance Policy or Reserve
Subaccount Letter of Credit provider shall fail to honor its
commitment in respect of a Series of Bonds, the Pledged Funds shall
be allocated on a pro rata basis by and among each Series of Bonds
Outstanding without regard to the availability of (i) monies in the
remaining reserve subaccounts or (ii) Reserve Subaccount Insurance
Policies or Reserve Subaccount Letters of Credit issued in respect
of the remaining reserve subaccounts.
SECTION 7.07. CONTROL BY INSURER. Upon the occurrence and
continuance of an Event of Default or any event which with notice
or the lapse of time or both would become an Event of Default, an
Insurer, if such Insurer shall have honored all of its payment
obligations under its Bond Insurance Policy, shall be entitled to
direct and control the enforcement of all right and remedies with
respect to the Bonds it shall insure, including any waiver of an
Event of Default and it shall be considered the sole Holder of such
Bonds for purposes of exercising remedies. The Issuer shall
provide each Insurer immediate notice of any Event of Default
described in Section 7.01(A) hereof and notice of any other Event
of Default occurring hereunder within thirty (30) days of the
occurrence thereof
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ARTICLE VIII
SUPPLEMENTAL RESOLUTIONS
SECTION 8.01. SUPPLEMENTAL RESOLUTION WITHOUT BONDHOLDERS'
CONSENT. The Issuer, from time to time and at any time, may adopt
such Supplemental Resolutions without the consent of the
Bondholders (which Supplemental Resolution shall thereafter form a
part hereof) for any of the following purposes:
(A) To cure any ambiguity or formal defect or omission or to
correct any inconsistent provisions in this Resolution or to
clarify any matters or questions arising hereunder.
(B) to grant to or confer upon the Bondholders any additional
rights, remedies, powers, authority or security that may lawfully
be granted to or conferred upon the Bondholders.
(C) To add to the conditions, limitations and restrictions on
the issuance of Bonds under the provisions of this Resolution other
conditions, limitations and restrictions thereafter to be observed.
(D) To add to the covenants and agreements of the Issuer in
this Resolution other covenants and agreements thereafter to be
observed by the Issuer or to surrender any right or power herein
reserved to or conferred upon the Issuer.
(E) To specify and determine the matters and things referred
to in Sections 2.01, 2.02 or 2.09 hereof, and also any other
matters and things relative to such Bonds which are not contrary to
or inconsistent with this Resolution as theretofore in effect, or
to amend, modify or rescind any such authorization, specification
or determination at any time prior to the first delivery of such
Bonds.
(F) To authorize Additional Projects or to change or modify
the description of any Project.
(G) To specify and determine matters necessary or desirable
for the issuance of Variable Rate Bonds or Capital Appreciation
Bonds.
(H) To provide for the establishment of a subaccount in the
Reserve Subaccount which shall equally and ratably secure more than
one Series of Bonds issued hereunder; provided the establishment of
such subaccount shall not materially adversely affect the security
of any Outstanding Bonds.
(I) To revise the procedures provided in Section 4.05(B) (3)
hereof pursuant to which moneys are drawn on a Reserve Account
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Credit Instrument and moneys are reimbursed to the provider of such
Reserve Account Credit Instrument.
(J) With the written prior approval of each Insurer, to make
any other change that, in the opinion of the Issuer, would not
materially adversely affect the security for the Bonds. In making
such determination, the Issuer shall not take into consideration
any Bond Insurance Policy.
SECTION 8.02. SUPPLEMENTAL RESOLUTION WITH BONDHOLDERS' AND
INSURER'S CONSENT. Subject to the terms and provisions contained
in this Section 8.02 and Section 8.01 hereof, the Holder or Holders
of not less than a majority in aggregate principal amount of the
Bonds then Outstanding shall have the right, from time to time,
anything contained in this Resolution to the contrary
notwithstanding, to consent to and approve the adoption of such
Supplemental Resolution or Resolutions hereto as shall be deemed
necessary or desirable by the Issuer for the purpose of
supplementing, modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions
contained in this Resolution; provided, however, that if such
modification or amendment will, by its terms, not take effect so
long as any Bonds of any specified Series or maturity remain
Outstanding, the consent of the Holders of such Bonds shall not be
required and such Bonds shall not be deemed to be Outstanding for
the purpose of any calculation of Outstanding Bonds under this
Section 8.02. Any Supplemental Resolution which is adopted in
accordance with the provisions of this Section 8.02 shall also
require the prior written consent of each Insurer of Bonds which
are Outstanding at the time such Supplemental Resolution shall take
effect. No Supplemental Resolution may be approved or adopted
which shall permit or require (A) an extension of the maturity of
the principal of or the payment of the interest on any Bond issued
hereunder, (B) reduction in the principal amount of any Bond or the
Redemption Price or the rate of interest thereon, (C) the creation
of a lien upon or a pledge of the Pledged Funds, other than the
lien and pledge created by this Resolution, which adversely affects
any Bondholders, (D) a preference or priority of any Bond or Bonds
over any other Bond or Bonds, or (E) a reduction in the aggregate
principal amount of the Bonds required for consent to such
Supplemental Resolution. Nothing contained in this Section 8.02,
however, shall be construed as making necessary the approval by
Bondholders of the adoption of any Supplemental Resolution as
authorized in Section 8.01 hereof.
If, at any time, the Issuer shall determine that it is
necessary or desirable to adopt any Supplemental Resolution
pursuant to this Section 8.02, the Clerk shall cause the Registrar
to give notice of the proposed adoption of such Supplemental
Resolution and the form of consent to such adoption to be mailed,
postage prepaid, to all Bondholders at their addresses as they
appear on the registration books. Such notice shall briefly set
forth the nature of the proposed Supplemental Resolution and shall
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state that copies thereof are on file at the offices of the Clerk
and the Registrar for inspection by all Bondholders. The Issuer
shall not, however, be subject to any liability to any Bondholder
by reason of its failure to cause the notice required by this
Section 8.02 to be mailed and any such failure shall not affect the
validity of such Supplemental Resolution when consented to and
approved as provided in this Section 8.02.
Whenever the Issuer shall deliver to the Clerk an instrument
or instruments in writing purporting to be executed by the Holders
of not less than a majority in aggregate principal amount of the
Bonds then Outstanding, which instrument or instruments shall refer
to the proposed Supplemental Resolution described in such notice
and shall specifically consent to and approve the adoption thereof
in substantially the form of the copy thereof referred to in such
notice, thereupon, but not otherwise, the Issuer may adopt such
Supplemental Resolution in substantially such form, without
liability or responsibility to any Holder of any Bond, whether or
not such Holder shall have consented thereto.
If the Holders of not less than a majority in aggregate
principal amount of the Bonds Outstanding at the time of the
adoption of such Supplemental Resolution shall have consented to
and approved the adoption thereof as herein provided, no Holder of
any Bond shall have any right to object to the adoption of such
Supplemental Resolution, or to object to any of the terms and
provisions contained therein or the operation thereof, or in any
manner to question the propriety of the adoption thereof, or to
enjoin or restrain the Issuer from adopting the same or from taking
any action pursuant to the provisions thereof.
Upon the adoption of any Supplemental Resolution pursuant to
the provisions of this Section 8.02, this Resolution shall be
deemed to be modified and amended in accordance therewith, and the
respective rights, duties and obligations under this Resolution of
the Issuer and all Holders of Bonds then Outstanding shall
thereafter be determined, exercised and enforced in all respects
under the provisions of this Resolution as so modified and amended.
SECTION 8.03. AMENDMENT WITH CONSENT OF INSURER ONLY. If all
of the Bonds Outstanding hereunder are insured as to payment of
principal and interest by an Insurer or Insurers, the Issuer may
enact one or more Supplemental Resolutions amending all or any part
of Articles I, IV, V, VI and VII hereof with the written consent of
said Insurer or Insurers and the acknowledgment by said Insurer or
Insurers that its insurance or guaranty policy will remain in full
force and effect; provided, however, that such amendment shall not
have any adverse affect on the Holders of any Bonds Outstanding.
The consent of the Holders of any Bonds shall not be necessary.
The foregoing right of amendment, however, does not apply to any
amendment with respect to the exclusion, if applicable, of interest
on said Bonds from gross income of the holder for Federal income
tax purposes nor may any such amendment deprive the Holders of any
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Bond of right to payment of the Bonds from, and their lien on, the
Pledged Funds. Upon filing with the Clerk of evidence of such
consent of the Insurer or Insurers as aforesaid, the Issuer may
adopt such Supplemental Resolution. Copies of any Supplemental
Resolution proposed to be adopted pursuant to this Section 8.03
shall be provided to Moody's and Standard and Poor's at least
fifteen (15) days prior to its adoption. After the adoption by the
Issuer of such Supplemental Resolution, notice thereof shall be
mailed in the same manner as notice of an amendment under Section
8.02 hereof.
SECTION 8.04. TRANSCRIPT OF DOCUMENTS TO INSURERS. The
Issuer shall provide each Insurer of Bonds which are Outstanding at
the time any Supplemental Resolution is adopted with a complete
transcript of all proceedings relating to the execution of any
Supplemental Resolution.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. DEFEASANCE. If (i) the Issuer shall pay or
cause to be paid or there shall otherwise be paid to the Holders of
all Bonds the principal or Redemption Price, if applicable, and
interest due or to become due thereon, at the times and in the
manner stipulated therein and in this Resolution, (ii) the Issuer
shall pay all amounts owing to any issuer of any Reserve Subaccount
Letter of Credit or Reserve Subaccount Insurance Policy and all
amounts owing to any Insurer, and (iii) all provisions regarding
any amounts to be rebated to the United States government have been
complied with, then the pledge of the Pledged Funds, and all
covenants, agreements and other obligations of the Issuer to the
Bondholders, shall thereupon cease, terminate and become void and
be discharged and satisfied. In such event, the Paying Agents
shall pay over or deliver to the Issuer all money or securities
held by them pursuant to the Resolution which are not required for
the payment or redemption of Bonds not theretofore surrendered for
such payment or redemption.
Any Bonds or interest installments appertaining thereto,
whether at or prior to the maturity or redemption date of such
Bonds, shall be deemed to have been paid within the meaning of this
Section 9.01 if (A) in case any such Bonds are to be redeemed prior
to the maturity thereof, there shall have been taken all action
necessary to call such Bonds for redemption and notice of such
redemption shall have been duly given or provision shall have been
made for the giving of such notice, and (B) there shall have been
deposited in irrevocable trust with a banking institution or trust
company by or on behalf of the Issuer either moneys in an amount
which shall be sufficient, or Refunding Securities certified by an
independent nationally recognized certified public accountant to be
in such amount that the principal of and the interest on which when
due will provide moneys which, together with the moneys, if any,
deposited with such bank or trust company at the same time, shall
be sufficient to pay the principal of or Redemption Price, if
applicable, and interest due and to become due on said Bonds on and
prior to the redemption date or maturity date thereof, as the case
may be. Except as hereafter provided, neither the Refunding
Securities nor any moneys so deposited with such bank or trust
company nor any moneys received by such bank or trust company on
account of principal of or Redemption Price, if applicable, or
interest on said Refunding Securities, shall be withdrawn or used
for any purpose other than, and all such moneys shall be held in
trust for and be applied to, the payment, when due, of the
principal of or Redemption Price, if applicable, of the Bonds for
the payment or redemption of which they were deposited and the
interest accruing thereon to the date of maturity or redemption;
provided, however, the Issuer may substitute new Refunding
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Securities and moneys for the deposited Refunding Securities and
moneys if the new Refunding Securities and moneys are sufficient,
based upon the certification of an independent certified public
accountant, to pay the principal of or Redemption Price, if
applicable, and interest on the refunded Bonds.
For purposes of determining whether Variable Rate Bonds shall
be deemed to have been paid prior to the maturity or the redemption
date thereof, as the case may be, by the deposit of moneys, or
specified Refunding Securities and moneys, if any, in accordance
with this Section 9.01, the interest to come due on such Variable
Rate Bonds on or prior to the maturity or redemption date thereof,
as the case may be, shall be calculated at the Maximum Interest
Rate; provided, however, that if on any date, as a result of such
Variable Rate Bonds having borne interest at less than the Maximum
Interest Rate for any period, the total amount of moneys and
specified Refunding Securities on deposit for the payment of
interest on such Variable Rate Bonds is in excess of the total
amount which would have been required to be deposited on such date
in respect of such Variable Rate Bonds is in order to satisfy this
Section 9.01, such excess shall be paid to the Issuer free and
clear of any trust, lien, pledge or assignment securing the Bonds
or otherwise existing under this Resolution.
In the event the Bonds for which moneys are to be deposited
for the payment thereof in accordance with this Section 9.01 are
not by their terms subject to redemption within the next succeeding
sixty (60) days, the Issuer shall cause the Registrar to mail a
notice to the Holders of such Bonds that the deposit required by
this Section 9.01 of moneys or Refunding Securities has been made
and said Bonds are deemed to be paid in accordance with the
provisions of this Section 9.01 and stating such maturity or
redemption date upon which moneys are to be available for the
payment of the principal of or Redemption Price, if applicable, and
interest on said Bonds.
Nothing herein shall be deemed to require the Issuer to call
any of the Outstanding Bonds for redemption prior to maturity
pursuant to any applicable optional redemption provisions, or to
impair the discretion of the Issuer in determining whether to
exercise any such option for early redemption.
In the event that the principal of or Redemption Price, if
applicable, and interest due on the Bonds shall be paid by an
Insurer or Insurers, such Bonds shall remain Outstanding, shall not
be defeased and shall not be considered paid by the Issuer, and the
pledge of the Pledged Funds and all covenants, agreements and other
obligations of the Issuer to the Bondholders shall continue to
exist and such Insurer or Insurers shall be subrogated to the
rights of such Bondholders.
SECTION 9.02. CAPITAL APPRECIATION BONDS. For the purposes
of (A) receiving payment of the Redemption Price if a Capital
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