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HomeMy WebLinkAboutR-96-16 RESOLUTION NO. R- '1 jp w J ~ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEBASTIAN, FLORIDA, AUTHORIZING THE ISSUANCE BY THE CITY OF A $527,993.46 CITY OF SEBASTIAN, FLORIDA IMPROVEMENT BOND, SERIES 1996, IN ORDER TO FINANCE THE COST OF THE ACQUISITION AND CONSTRUCTION OF WATER LINE IMPROVEMENTS WITHIN THE CITY; PLEDGING THE MONEYS RECEIVED BY THE CITY FROM SPECIAL ASSESSMENTS UPON PROPERTY BENEFITTED BY THE AFOREMENTIONED IMPROVEMENTS TO SECURE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON SAID BONDS; PROVIDING FOR THE RIGHTS OF THE HOLDERS OF SAID BONDS; AND PROVIDING FOR AN EFFECTIVE DATE FOR THIS RESOLUTION. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEBASTIAN, FLORIDA, AS FOLLOWS: 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: "Act" shall mean Chapter 170, Florida Statutes, and other applicable provisions of law. "Act of Bankruptcy" shall mean (1) the Issuer shall be adjudicated a bankrupt or become subject to an order for relief under federal bankruptcy law, (2) the Issuer shall institute any proceedings seeking an order for relief under federal bankruptcy law or seeking to be adjudicated a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy or insolvency, (3) there shall be appointed a receiver, liquidator or similar official for the Issuer under any law relating to bankruptcy or insolvency, or (4) without the application, approval or consent of the Issuer, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Issuer, or a proceeding described in (2) above shall be instituted against the Issuer, and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of thirty (30) consecutive days. The mere declaration of a state of financial emergency under Section ~ 218.503, Florida Statutes, shall not, in and of itself, constitute an Act of Bankruptcy. "Assessment Account" shall mean the separate account in the Improvement Fund established pursuant to Section 4.04 hereof. "Assessment Resolutions" shall mean, collectively, Resolution No. R-95-69 of the City Council of the Issuer, adopted December 20, 1995, Resolution No. R-96-04 of the City Council of the Issuer, adopted January 10, 1996, Resolution No. R-96-05, adopted by the City County of the Issuer on January 10, 1996 and Resolution No. R- 96-14 of the City Council of the Issuer, adopted January 24, 1996. "Assessments" shall mean the special assessments lawfully levied by the Issuer in accordance with the Assessment Resolutions against properties specifically benefitted by the acquisition and construction of the Project. "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: (1) (A) Direct obligations (other than an obligation subject to variation in principal repayment) of the United States of America, (B) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of America, (C) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumentality of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or (D) evidences of ownership of proportionate interests in future interest and principal payments on obligations described above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated (collectively, the "United States Obligations") . (2) Federal Housing Administration debentures. . (3) Obligations of the following government-sponsored agencies which are ~ backed by the full faith and credit of the U.S. government: - Federal Home Loan Mortgage Corporation (FHLMC) Participation certificates Debt obligations - Farm Credit Banks (formerly: Federal Land Banks, Federal Intermediate Credit Banks, and Banks for Cooperatives) Consolidated system-wide bonds and notes - Federal Home Loan Banks (FHL Banks) Consolidated debt obligations 2 Letter of credit (LOC)-backed issues - Federal National Mortgage Association (FNMA) Senior debt obligations Mortgage-backed securities (excluded are stripped mortgage securities which are valued greater than par on the portion of unpaid principal) - Student Loan Marketing Association (SLMA) Senior debt obligations (excluding securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date) - Financing Corporation (FICO) Debt obligations - Resolution Funding Corporation (REFCORP) Debt obligations (4) Unsecured certificates of deposit, time deposits, and bankers' acceptances (having maturities of not more than 30 days) of any bank the short-term obligations of which are rated 'A-1' or better by S&P. (5) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation (FDIC), in banks which have capital and surplus of at least $5 million. (6) Commercial paper (having original maturities of not more than 270 days) rated 'A-1+' by S&P and 'Prime-1' by Moody's. (7) Money market funds rated "AAm" or "AAm-G" by S&P, or better. (8) "State Obligations," which means: A. Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated "A3" by Moody's.and "A" by S&P, or better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated. B. Direct general short-term obligations of any state agency or subdivision or agency thereof described in (A) above and rated "A-1+" by S&P and "Prime-1" by Moody's. C. Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state, state agency or subdivision described in (A) above and rated "AA" or better by S&P and "Aa" or better by Moody's. (9) Pre-refunded municipal obligations rated "AAA" by S&P and "Aaa" by Moody's meeting the following requirements: A. The municipal obligations are (i) not subject to redemption prior to maturity, or (ii) the escrow agent therefor has been given irrevocable instructions concerning 3 their call and redemption and the issuer of the municipal obligations has covenanted or agreed not to redeem such municipal obligations other than as set forth in such instructions; B. The municipal obligations are secured by cash or United States Obligations which may be applied only to payment of the principal of, redemption premium, if any, and interest on such municipal obligations; C. The principal of and interest on the United States Obligations (plus any cash in the escrow) has been verified by a report of an independent certified public accountant to be sufficient to pay in full all principal of, redemption premium, if any, and interest due and to become due on the municipal obligations ("Verification"); D. The cash or United States Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations; E. No substitution of a United States Obligation shall be permitted except with another United States Obligation and cash and upon delivery of a new Verification; and F. The cash or United States Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent. (10) Repurchase agreements: A. With any domestic bank with debt rated "AA" or better by S&P, or any foreign bank rated at least "AA" by S&P and "Aa" by Moody's; provided the term of such repurchase agreement is for one year or less. B. With any broker-dealer with "retail customers" which has, or the parent company of which has, long-term debt rated at least "AA" by S&P and "Aa" by Moody's, which broker-dealer falls under the jurisdiction of the Securities Investors Protection Corporation (SIPC), provided that: i. The market value of the collateral is maintained for United States Treasury Obligations at the levels shown below under "Collateral Levels for United States Treasury Obligations"; ~~. Failure to maintain the requisite collateral percentage will require the holder of such collateral to liquidate it; ~~~. The Issuer or an independent third party acting solely as agent for the Issuer has possession of the collateral or that the collateral has been transferred to 4 the Issuer or such third party in accordance with applicable state and federal laws (other than by means of entries on the Repo entity's books); iv. The repurchase agreement shall state, and an opinion of counsel shall be rendered, that the Issuer or such third party has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Issuer or such third party is in possession) ; v. The collateral is free and clear of any third- party liens or claims; vi. An opinion is rendered that the repo is a "repurchase agreement" as defined in the United States Bankruptcy Code; v~~. There is or will be a written agreement governing the transaction; viii. The Issuer or such third party represents that it has no knowledge of any fraud involved in the repo transaction; and ix. The Issuer or such third party receives the opinion of counsel (which opinion shall be addressed to the Issuer) that such repurchase agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms. (11) Investment Agreements with (A) a domestic bank the long- term debt of which is rated at least "AA" by S&P and "Aa" by Moody's; or (B) a foreign bank the long-term debt of which is rated "MA" by S&P and at least "Aa" by Moody's, or at least "AA" by S&P and "Aaa" by Moody IS; provided, tha t , by the terms of the Agreement: A. Interest payments are to be made to the Issuer at times and in amounts as necessary to pay debt service (or, if the agreement is for the construction fund, construction draws) on the Bonds; B. The invested funds are available for withdrawal without penalty or premium, at any time upon not more than seven days I prior notice (which notice may be amended or withdrawn at any time prior to the specified withdrawal date) ; the Issuer agrees that the Issuer shall give notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid; C. The investment agreement shall state that it is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof; 5 D. A fixed guaranteed rate of interest is to be paid on invested funds and all future deposits, if any, required to be made to restore the amount of such funds to the level specified under this Resolution; E. years; The term of the agreement does not exceed seven F. The Issuer receives the opinion of counsel (which opinion shall be addressed to the Issuer) to the effect that such investment agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms; G. The investment agreement must provide that if during its term (i) the provider's rating by either Moody's or S&P falls below "A", the provider must, at the direction of the Issuer, within ten days of receipt of such direction, either (a) collateralize the investment agreement by delivering or transferring in accordance with applicable state and federal laws (other than by means of entries on the provider's books) to the Issuer or a" third party acting solely as agent for the Issuer United States Treasury Obligations which are free and clear of any third-party liens or claims at the Collateral Levels set forth below; or (b) repay the principal of and accrued but unpaid interest on the investment (the choice of (a) or (b) above shall be that of the Issuer), and (ii) the provider's rating by either S&P or Moody's is withdrawn or suspended or falls below "BBB+" or "Baa- l," respectively, the provider must, at the direction of the Issuer, within 10 days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the Issuer; 6 H. The investment agreement shall state and an opinion of counsel shall be rendered that the Issuer or third party has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Issuer or third party is in possession); and I. The investment agreement must provide that if during its term (i) the provider shall default in its payment obligations, the provider's obligations under the investment agreement shall, at the direction of the Issuer, be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Issuer, and (ii) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. ("event of insolvency"), the provider's obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Issuer. (12) Such other obligations as shall be permitted to be legal investments of the Issuer by the laws of the State. (13) Units of participation in the Local Government Surplus Funds Trust Fund established pursuant to Part IV, Chapter 218, Florida Statutes. Collateral Levels for United States Treasury obligations Remaining Maturitv 1 year 5 years 10 years 15 years 30 years or less or less or less or less or less Frequency of valuation Daily Weekly Monthly Quarterly 102 103 105 107 105 111 117 120 106 112 120 130 108 114 125 133 114 120 133 140 Valuation ~equirements: described ~n paragraphs "Authorized Investments" For purposes ( 10 ) and ( 11 ) of valuing collateral of the definition of (1) On each valuation date the market value (exclusive of accrued interest) of the collateral will be an amount equal to the requisite collateral percentage of the obligation (including unpaid accrued interest) that is being secured; (2) In the event the collateral level is below its collateral percentage on a valuation date, such percentage shall be restored wi thin the following restoration periods: one business day for daily valuations, two business days for weekly and monthly valuations, and one month for quarterly valuations; and (3) The Issuer agrees to terminate the repurchase agreement or investment agreement, as appropriate, upon a failure to maintain the requisite collateral percentage after the restoration period and, if not paid by the counterpart in federal funds against transfer of the collateral, liquidate the collateral. "Authorized Issuer Officer" shall mean the Mayor of the Issuer, or his assignee, and when used in reference to any act or document also means any other person authorized by resolution of the Issuer to perform such act or sign such document. "Bond 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 7 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" or "Bonds" shall mean the Issuer's Improvement Bonds, Series 1996, issued pursuant to the Resolution. "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. "Business Day" shall mean any day other than (1) a Saturday or Sunday or a legal holiday on which banking institutions in the Issuer are located are required or authorized by law to remain closed or (2) a day on which the New York Stock Exchange is closed. "Clerk" shall mean the City Clerk of the Issuer, and such other person as may be duly authorized to act on his or her behalf. " Code II shall mean the Internal Revenue Code of 1986, as amended, and the regulations, procedures and rules thereunder in effect or proposed. "Collection Costs" shall mean all costs and ~xpenses for collection of the Assessments which shall be billed by the Issuer as part of the Assessments, or installments thereof, or which may be billed separately from the Assessments. "Construction Fund" shall mean the City of Sebastian, Florida Special Assessment Bonds, Series 1996 Construction Fund established pursuant to Section 4.03 hereof. "Cost" or "Costs," as the same relates to the Project, to the extent permitted by the Act, shall mean (1) the cost of physical construction, reconstruction or completion, (2) the cost of acquisition or purchase, (3) the cost of all labor, materials, machinery and equipment, (4) the cost of land and interests therein, property rights, easements and franchises of any nature whatsoever, (5) the cost of any indemnity or surety bonds and premiums for insurance during construction, (6) all interest due to be paid on the Bonds and other obligations relating to the Project during the periOd of construction and for such period of time subsequent to completion of acquisition and construction as the Board deems appropriate, (7) engineering, financial, legal and other consultant fees and expenses, (8) the cost of plans and specifications, construction plans, surveys and estimates of costs, (9) costs and expenses of audits, (10) payments, when due (whether at the maturity of principal or the due date of interest or upon redemption) on any interim or temporary indebtedness incurred for any portion of the Project, (11) costs and expenses related to the issuance of the Bonds or other indebtedness related to the Project, (12) costs related to the levy and collection of the Assessments, and (13) any other costs and expenses properly attributable to acquisition or construction of the Project, and such other expenses 8 as may be necessary or incidental to the issuance of the Bonds; and shall include reimbursement to the Issuer or any other Person, for any moneys advanced for any costs incurred by the Issuer or such Person, in connection with any such items of cost. Any Supplemental Resolution may provide for additional items to be included in the aforesaid Costs. "Council" shall mean the City Council of the Issuer. "Defeasance Obligations" shall mean (1) cash, (2) direct, noncallable obligations of the United States of America ("Government Obligations"), (3) evidences of ownership of proportionate interests in future interest and principal paYments on Government Obligations held by a bank or trust company or custodian, under which the owner of the investment.is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Government Obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated, or (4) pre- refunded municipal obligations as described in paragraph (9) of the definition of "Authorized Investments." "Delinquent Assessments" shall mean any and all installments of any Assessments which are not paid when due. "Determination of Taxability" shall mean the circumstance of interest paid or payable on the Bonds becoming includable for federal income tax purposes in the gross income of the Bondholders as a consequence of any act, omission or event whatsoever and regardless of whether the same was within or beyond the control of the Issuer, including (a) the receipt by the Issuer or a Bondholder of an original or a copy of an Internal Revenue Service Technical Advice Memorandum or Statutory Notice of Deficiency which holds that any interest payable on its Bond is includable in the gross income of such Bondholder; (b) the issuance of any pUblic or private ruling of the Internal Revenue Service that any interest payable on such Bond is includable in the gross income of the Bondholder; or (c) receipt by the Issuer or a Bond~older of an opinion of Bond Counsel that any interest on the Bond has become includable in the gross income of the Bondholder for federal income tax purposes. For all purposes of this definition, a Determination of Taxability will be deemed to occur on the date as of which the interest on a Bond is deemed includable in the gross income of a Bondholder. A Determination of Taxability shall not occur in the event such interest is taken into account in determining adjusted current earnings for the purpose of the alternative minimum income tax imposed on corporations or in the event interest on the Bonds is treated as an indirect tax preference item under the Code. "Event of Default" shall mean any Event of Default specified in Section 6.01 of this Resolution. "Expense Fund" shall mean the Expense Fund established pursuant to Section 4.04 hereof. 9 "Fiscal Year" shall mean the period commencing on April 1 of each year and continuing through the next succeeding September 30, or such other period as may be prescribed by law. "Improvement Fund" shall mean the City of Sebastian, Florida Special Assessment Bonds, Series 1996 Improvement Fund established pursuant to Section 4.04 hereof. "Issuer" shall mean the City of Sebastian, Florida. "Mayor" shall mean the Mayor of the Issuer or such other person as may be duly authorized to act on his or her behalf. "Moody's" shall mean Moody's Investors Service, and any assigns or successors thereto. "Non-Ad Valorem Funds" shall mean all revenues of the Issuer derived from any source whatsoever other than ad valorem taxation on real or personal property, which are legally available to make the payments required herein, but only after provision has been made by the Issuer for the payment of all essential or legally mandated services. "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 another Bond or other Bonds have been issued under agreement to replace lost, stolen, mutilated or destroyed Bonds under Section 2 .04 hereof, (2) any Bond surrendered by the Holder thereof in exchange for another Bond or other Bonds under Section 2.05 hereof, (3) Bonds deemed to have been paid pursuant to Section 8.01 hereof, and (4) Bonds cancelled after purchase by the Issuer in the open market or because of payment at or redemption prior to maturity. "Payment Account" shall mean the separate account of the Improvement Fund established pursuant to Section 4.04 hereof. "Payment Date" shall mean the dates for payment of principal and/or interest on the Bonds as provided in Section 2.01 hereof. "Person" shall mean an individual, a corporation, a partnership, an association, a joint stock company, a trust, any unincorporated organization or governmental entity. "Pledged R.evenues" shall mean (1) the Special Assessment Proceeds, and (2) until applied in accordance with the provisions of this Resolution, all moneys, including investments thereof, in the funds and accounts established hereunder. "Prepayments" shall mean any Assessments, or portions thereof, which shall be paid to the Issuer prior to the t:i,.me the same becomes due. "Project" shall mean certain water line extensions and improvements of the Issuer authorized pursuant to the Assessment 10 Resolutions, all as more particularly set forth in the plans and specifications on file or to be on file with the Issuer, as the same may be modified or amended from time to time. A general description of the Project is provided in Exhibit A attached hereto. "Redemption Account" shall mean the separate account of the Improvement Fund established pursuant to Section 4.04 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. "Resolution" shall mean this Resolution, as the same may from time to time be amended, modified or supplemented by Supplemental Resolution. "Special Assessment Proceeds" shall mean the proceeds of the Assessments lawfully collected and received by the Issuer, including the interest and penalties on such Assessments. Special Assessment Proceeds shall include moneys lawfully received by the Issuer on account of collection of Delinquent Assessments and Prepayments. Special Assessment Proceeds shall also include proceeds of any re-assessment pursuant to Section 5.06 hereof and any other amounts made available by the Issuer, in its sole discretion, pursuant to Section 5.07 hereof. "S&P" shall mean the Standard and Poor's Rating Group, a Division of McGraw Hill, and any assigns and successors thereto. "State" shall mean the State of Florida. "Supplemental Resolution" shall mean any resolution of the Issuer amending or supplementing this Resolution enacted and becoming effective in accordance with the terms of Sections 7.01, 7.02 or 7.03 hereof. The terms "herein," "hereunder," "hereby," "hereto," "hereof," and any similar terms, shall refer to this Resolution; the term and "heretofore" shall mean before the date of adoption of this Resolution; and the term "hereafter" shall mean after the date of adoption of this Resolution. Words importing the masculine gender include every other gender. Words importing the singular number include the plural number, and vice versa. SECTION 1.02. AUTHORITY FOR RESOLUTION. This Resolution is adopted pursuant to the provisions of the Act. SECTION 1.03. RESOLUTION TO CONSTITUTE CONTRACT. In consideration of the purchase and acceptance of any or all of the 11 . . 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 this Resolution and the provisions, covenants and agreements herein set forth to be performed by or on behalf of the Issuer shall be for the equal benefit, protection and security of the Holders of any and all of said Bonds. All of the Bonds, regardless of the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof except as expressly provided in or pursuant to this Resolution. SECTION 1.04. FINDINGS. It is hereby ascertained, determined and declared that: (A) The Issuer has infrastructure needs and requirements in the form of the Project which it desires to acquire and construct in order to maintain and protect the health and welfare of the citizens of the Issuer. (B) The most efficient and fairest method of financing the acquisition and construction of the Project is by the issuance of Bonds secured by the Pledged Revenues including, in particular, the Special Assessment Proceeds as provided herein. (C) The principal of, Redemption Price, if applicable, and interest on the Bonds shall be paid from the Pledged Revenues. The Issuer shall never be required to use any ad valorem taxes for the payment of the Bonds. The Bonds shall not constitute a direct obligation of the Issuer or a pledge of its faith and credit, nor shall the Bondholders have any lien or encumbrance on any property in the Issuer, including the Proj ect, other than the Pledged Revenues. (D) Due to the present volatility of the market for tax- exempt obligations such as the Bonds and the complexity of the transactions relating to such Bonds, it is in the best interest of the Issuer to sell the Bonds by a negotiated sale, allowing the Issuer to enter the market at the most advantageous time and conditions, thereby permitting the Issuer to obtain the best possible price and interest rate for the Bonds. The Issuer acknowledges receipt of the information required by Section 218.385, Florida Statutes, in connection with the negotiated sale of the Bonds. A copy of the disclosure statement provided by the Bondholder of the Bonds containing the aforementioned information is attached to the Commitment referred to below. (E) The Issuer has received a commitment to purchase the Bonds from Barnett Bank of the Treasure Coast (the "Bondholder"), as set forth in Exhibit B attached hereto. The Issuer does hereby find and determine that it is in the best financial interest of the Issuer that such commitment be accepted. 12 -' SECTION 1.05. AUTHORIZATION OF PROJECT. The Issuer hereby authorizes the acquisition and construction of the Project. SECTION 1.06. DESIGNATION FOR BANI( QUALIFICATION. The Issuer does hereby designate the Bonds "Qualified tax-exempt Obligations" within the meaning of Section 265(b) (3) of the Internal Revenue Code of 1986, as amended, and hereby certifies that it does not anticipate that more than $10,000,000 in tax-exempt obligations will be issued by the Issuer and its subordinate governmental entities during calendar year 1996. 13 -' ARTICLE II AUTHORIZATION, TERMS, EXECtlTION AND REGISTRATION OF BONDS SECTION 2.01. AUTHORIZATION AND DESCRIPTION OF BONDS. This Resolution creates an issue of bonds of the Issuer to be designated as "City of Sebastian, Florida, Improvement Bonds, Series 1996," issued in the aggregate principal amount of $527,993.46. The Bonds are issued for the principal purposes of acquiring and ,constructing the Project, capitalizing interest on the Bonds and paying certain costs of issuance incurred with respect to the Bonds. The Bonds shall be in the form of one registered Series 1996 Bond in the principal amount of $527,993.46, which shall be dated January 24, 1996 and mature on April 1, 2005, shall be issued in fully registered form and shall bear interest from January 24, 1996. The Bonds shall be issued in the denomination of $527,993.46, or in such lesser amount resulting from a partial redemption thereof. The Bonds shall be payable as to interest and principal by check or draft of the Clerk of the Issuer, mailed to the owner of record thereof, as such owner shall appear on the registration books of the Issuer on the 15th day of the month prior to such Payment Date. The final payment of principal of and interest on the respective Bonds shall be payable at the office of the Clerk of the Issuer, upon presentation and surrender of such Bonds on the maturity date thereof, or if such maturity date is a Saturday, Sunday or holiday, on the next succeeding business day. Principal of and interest on the Bonds shall be payable in any coin or currency of the United States of America which, on the date of payment, are legal tender for the payment of public and private debts. Interest on the Bonds shall accrue to the maturity date thereof at the rate of 5.75% per annum, subject to adjustment from time to time as set forth in Section 2.06 hereof, computed based on a 360-day year comprised of twelve 3D-day months, and shall be payable on each April 1 commencing on April 1, 1996. Principal on the Bonds shall be payable on April 1, 1996 and annually thereafter in the amount set forth below on April 1 of each year, through and including April 1, 2005: Year Year (1\pril 1) Amount (J.\pril 1) Amount 1996 $67,035.58 2001 $50,687.81 1997 40,530.50 2002 53,602.36 1998 42,861. 01 2003 56,684.49 1999 45,325.51 2004 59,943.85 2000 47,931. 73 2005 63,390.62 SECTION 2.02. APPLICATION OF BOND PROCEEDS. The proceeds derived from the sale of the Bonds, including accrued interest and premium, if any, shall, simultaneously with the delivery of the Bonds to the purchaser or purchasers thereof, be applied by the Issuer as follows: 14 (i) An amount of the Bond proceeds shall be applied to the payment of costs and expenses relating to the issuance of the Bonds to the extent such costs and expenses shall not be paid from the Construction Fund. (ii) The balance of the Series 1996 Bond proceeds shall be deposited in the Construction Fund. SECTION 2.03. 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 Clerk and the official seal of the Issuer shall be imprinted thereon, attested and countersigned with the manual or facsimile signature of the Clerk. In case anyone 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 npt 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. 04 . 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 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 proof of his ownership thereof and indemnity satisfactory to the Issuer, and complying with such other reasonable regulations and conditions as the Issuer may prescribe and paying such expenses as the Issuer may incur. All Bonds so surrendered or otherwise substituted shall be cancelled by the Clerk. If any of the Bonds shall have matured or been called for redemption or be about to mature or be called for redemption, 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 2.04 shall constitute original, additional 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 Revenues to the same extent as all other Bonds issued hereunder. 15 SECTION 2.05. INTERCHANGEABILITY, NEGOTIABILITY AND TRANSFER. Bonds, upon surrender thereof at the office of the Clerk with a written instrument of transfer satisfactory to the Clerk, duly executed by the Holder thereof or his attorney duly authorized in writing, may, at the option of the Holder thereof, be exchanged for an equal aggregate principal amount of registered Bonds of the same maturity of any other authorized denominations. The Bonds issued under this Resolution shall be and have all the qualities and incidents of negotiable instruments under the law merchant and the Uniform Commercial Code of the State of Florida, sUbject to the provisions for registration 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 Clerk, books for the registration of transfer of the Bonds. The transfer of any Bond shall be registered only upon the books of the Issuer, at the office of the Clerk, 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 Clerk duly executed by the Holder or his duly authorized attorney with signature guaranteed. 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 maturity as the surrendered Bond. In all cases in which Bonds shall be exchanged or the transfer of Bonds shall be registered, the Issuer shall execute and authenticate and deliver such Bonds in accordance with the provisions of this Resolution. For every such exchange or registration of transfer, the Issuer 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 shall not be Obligated to make any such exchange or registration of transfer of Bonds during the fifteen (15) days next preceding a Payment Date on the Bonds, or, in the case of any proposed redemption of 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. SECTION 2.06. ADJUSTMENTS TO INTEREST RATE. (a) The interest rate on the Bonds shall be SUbject to adjustment as described in this Section. Any adjustments shall be payable only after the Bondholder or its assigns has provided the Issuer written notice of such adjustments. (b) Subject to the provisions of Section 2.06(a) above, the interest rate on the Bonds shall be adjusted as follows. If the tax laws or regulations are amended or any administrative ruling or other change is promulgated which would cause the interest on the Bonds to become taxable to the extent not 16 otherwise taxable on the date of issuance thereof, to be sUbject to a minimum tax or an alternative minimum tax or to otherwise decrease the after tax yield on the Bonds to the Bondholder (directly or indirectly, including, without limitation, an increase in the maximum corporate tax rate) or in the event of a Determination of Taxability, then the interest rate on the Bonds shall be adjusted to cause the after tax yield on the Bonds, after payment of any increase in tax, to equal what the after tax yield on the Bonds would have been in the absence of such change or amendment in the tax laws or regulations, all calculated pursuant to such formula as acceptable to the Bondholder. (c) The above adjustments shall be cumulative, but in no event shall the interest rate on the Bonds exceed the maximum rate permitted by law. The above adjustments to the interest rate on the Bonds shall be effective on the effective date of the applicable change in the tax laws or regulations, provided such adjustment shall not become payable until after notice has been given pursuant to Section 2.06 (a) hereof. Interest on the Bonds and all other tax rates and interest rates are expressed as annual rates. However, proper partial adjustment shall be made if the tax law change is effective after the first day of the Bondholder's tax year or if interest on the Bonds does not accrue for the entire tax year of the Bondholder. Adjustments which create a circular calculation because the interest rate on the Bonds is affected by the calculation shall be carried out sequentially, increasing the interest rate on the Bonds accordingly in each successive rate on the Bonds, until the change on the interest rate on the Bonds caused by the next successive calculation of the adjustment is de minimis. (d) To the extent an adjustment to the interest rate on the Bonds is not effected within three (3) months of the event giving rise to the adjustment, the additional interest due as a result of such adjustment shall be paid with interest thereon compounded monthly at the rate which is equal to the interest rate on the Bonds. All unpaid amounts determined to be owing as a result of such calculation shall be due and payable within ten (10) days after delivery of notice of the amount of such adjustment, and shall be paid to the Bondholder of record during the period to which the adjustment relates. This obligation shall survive the payment and cancellation of the Bonds. (e) If any adjustments made to the interest rate on the Bonds pursuant to the terms of this Section shall cause such interest rate to be in violation of the maximum interest rate provisions of Section 215.84, Florida Statutes, the Bonds shall be subject to mandatory redemption within 30 days thereof, upon notice from the Bondholder or its assigns to redeem the Bonds. SECTION 2.07. FORM OF BONDS. The text of the Bonds 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 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): 17 No. R-l $527,993.46 UNITED STATES OF AMERICA STATE OF FLORIDA CITY OF SEBASTIAN, FLORIDA IMPROVEMENT BOND, SERIES 1996 KNOW ALL MEN BY THESE PRESENTS that the City of Sebastian, Florida (the "Issuer"), for value received, hereby promises to pay, in the manner provided herein, to Barnett Bank of the Treasure Coast, as registered owner, or registered assigns, the principal sum of $527,993.46 solely from the Pledged Revenues (hereinafter defined) and to pay interest on the unpaid balance thereof from the date hereof. Interest shall be payable on the dates set forth below, at an annual rate equal to 5.75% per annum, computed based on a 360-day year comprised of twelve 3D-day months. The principal of this Bond shall be payable on April 1, 1996 and annually thereafter on April 1 of each year in the amounts set forth below, through and including April 1, 2005: Year Year (April 1) Amount (April 1) Amount 1996 $67,035.58 2001 $50,687.81 1997 40,530.50 2002 53,602.36 1998 42,861. 01 2003 56,684.49 1999 45,325.51 2004 59,943.85 2000 47,931.73 2005 6~,390.62 Interest shall be paid on each April 1, commencing April 1, 1996, in an amount equal to the interest accrued and unpaid to such date. The interest rate on this Bond is subject to adjustment upon a Determination of Taxability (as defined in the Resolution) and certain other events affecting the tax status of the Issuer and the registered owner hereof, all as set forth in the Resolution defined below. Both principal of and interest on this Bond are payable in lawful money of the United States of America by check or draft of the City Clerk of the Issuer to the owner of record as such owner shall appear in the registration books of the Issuer on the 15th day of the month prior to such payment date. The final payment of principal of and interest on the Bonds shall be payable, upon presentation, at the office of the City Clerk of the Issuer. If a payment date for this Bond is not a business day, such payment date shall be the next succeeding business day. 18 This Bond is issued for the principal purpose of providing moneys to acquire and construct water line improvements (as specified and defined in the Resolution) of the Issuer (the "Project"), under the authority of and in full compliance with the Constitution and laws of the State of Florida, particularly Chapter 170, Florida Statutes, the Issuer's Resolution Nos. R-94-47, adopted September 14, 1994, and R-94-53, adopted September 28, 1994, and other applicable provisions of law (the "Act"), and Resolution No. R-96- duly adopted by the City Council of the Issuer on January 24~96 (the "Resolution"), and is subject to all the terms and conditions of the Resolution. This Bond and the interest hereon are payable from and secured by a lien upon and a pledge of (1) proceeds of special assessments levied, collected and received by the Issuer upon property benefited by the Project within the City of Sebastian, Florida, as more particularly described in the Resolution, and (2) until applied in accordance with the provisions of the Resolution, all moneys, including investments thereof, in certain of the funds and accounts established by the Resolution, all in the manner and to the extent described in the Resolution (collectively, the "Pledged Revenues") . It is expressly agreed by the Registered Holder of this Bond that the full faith and credit of the Issuer, the State of Florida, or any political subdivision thereof, 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, the State of Florida, or any political subdivision thereof, to the payment of such principal, premium, if any, and interest. This Bond and the obligation evidenced hereby shall not constitute a lien upon any property of the Issuer or the Project, but shall constitute a lien only on, and shall be payable from, the Pledged Revenues. Neither the members of the Issuer nor the Mayor 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 S IDE HEREOF AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH ON THE FRONT SIDE HEREOF. 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 office of the Clerk by the registered owner 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 Clerk duly executed by the registered owner 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 fully registered 19 form in the denomination of $527,993.46 (or such lesser amount resulting from a partial redemption of the Bonds). The Issuer 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 Bonds are subject to redemption prior to their stated date of maturity, in whole or in part at any time upon 5 days prior written notice to the registered owners thereof and are subject to mandatory redemption upon a rate adjustment which would cause the rate of interest on the Bonds to exceed the maximum rate allowed by Section 215.84, Florida Statutes, as described in the Resolution. By execution below, the City Clerk does hereby certify within the meaning of Section 170.11, Florida Statutes, that the amount of assessment liens levied, the proceeds of which are pledged to the payment of this Bond, are equal to the principal amount of this Bond. Reference to the Resolution and any and all resolutions supplemental thereto and modifications and amendments thereof and to the Act is made for a description of the pledge and covenants securing this Bond, the nature, manner and extent of enforcement of such pledge and covenants and the rights, duties, immunities and obligations of the Issuer. It is hereby certified and recited that all acts, conditions and things required to exist, to happen and to be performed precedent to and in the issuance of this Bond, exist, have happened and have been performed, in regular and due form and time as required by the laws and Constitution of the State of Florida applicable thereto, and that the issuance of the Bonds does not violate any constitutional or statutory limitations or provisions. IN WITNESS WHEREOF, 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, its official seal or a facsimile thereof to be affixed or reproduced hereon, and countersigned and attested to by the manual or facsimile signature of its Clerk, all as of the 24th day of January, 1996. CITY OF SEBASTIAN, FLORIDA (SEAL) 6I/;;;J9._m_. . --. ... /J~X~~ Mayor 20 ASSIGNMENT FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto Insert Social Security or Other Identifying Number of Assignee (Name and Address of Assignee) the within Bond and does hereby irrevocably constitute and appoint , as attorneys to register the transfer of the said Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature guaranteed: NOTICE: Signature(s) must be guaranteed by 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. 21 SCHEDULE OF PARTIAL REDEMPTIONS D.a.t..e. Redemption Amount 22 Bondholder Acknowledgment ARTICLE III REDEMPTION OF BONDS SECTION 3.01. NOTICE OF REDEMPTION. Except as otherwise provided herein, notice of any redemption, which shall specify the Bond or Bonds (or portions thereof) to be redeemed and the date and place for redemption, shall be mailed first class, postage prepaid, at least five (5) 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 Clerk. SECTION 3.02. REDEMPTION OF PORTIONS OF BONDS. Any Bond which is to be redeemed only in part shall (i) 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 Clerk duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Issuer shall execute and the Clerk shall authenticate and deliver to the Holder of such Bond, without service charge, a new Bond or Bonds, of the same interest rate and maturity, and of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bonds so surrendered or, at the option of the Issuer or (ii) be presented by the Bondholder to the Clerk and the partial redemption noted on the schedule attached thereto. Any partial redemption of a Bond shall adjust the scheduled payments of principal on such Bond by reamortizing the succeeding installments of principal due thereon over the remaining term of the Bonds on a level debt service basis. SECTION 3.03. 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. SECTION 3.04. PURCHASE OF BONDS BY ISSUER. purchased by the Issuer shall be cancelled. Any Bonds SECTION 3.05. PERMITTED AND REQUIRED REDEMPTIONS. (A) The Bonds shall be subject to optional redemption at any time, in whole or in part, and if in part in such manner as may be designated by the Issuer, upon 5 days' prior written notice by the Issuer to the Bondholders, at a price equal to 100% of the principal amount thereof to be redeemed, plus accrued interest to the redemption date. The Issuer covenants and agrees that, in addition to any other optional redemption of Bonds it may wish to make, amounts on deposit in the Redemption Account shall be used to make such redemptions in accordance with the provisions of Section 4.05(A) (4) hereof. 23 (B) The Bonds shall be subject to mandatory redemption in whole, at a price equal to 100% of the principal amount thereof plus interest accrued to the redemption date, upon the occurrence of the circumstances described in Section 2.06(e) hereof. 24 .' .' 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 from and secured by a lien upon and pledge of the Pledged Revenues in accordance with the terms of 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 Revenues, in the manner 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 Revenues. The Issuer does hereby irrevocably pledge the Pledged Revenues to the payment of the principal of or Redemption Price, if applicable, and interest on the Bonds in accordance with the provisions hereof. The Pledged Revenues 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. CONSTRUCTION FUND. The Issuer covenants and agrees to establish a special fund to be known as the "City of Sebastian, Florida Special Assessment Bonds, Series 1996 Construction Fund," which shall be used only for payment of the Cost of the Project. Moneys in the Construction Fund shall be applied immediately upon deposit therein to pay Indian River County for the cost of constructing the Project and, to the extent the Issuer has previously paid any portion of such cost, to reimburse the Issuer for said payment. The Issuer does hereby certify that the Issuer incurred expenditures for the Project on December 14, 1995 in the amount of $300,000 for which it intends to reimburse itself with proceeds of the Bonds. The maximum amount of obligations to be issued for the Project is $527,993.46. Promptly after paying or making provisions for the payment of all unpaid items of the Cost of the Project, the Issuer shall deposit any balance of moneys remaining in the Construction Fund to the Redemption Account. SECTION 4.04. FUND AND ACCOUNTS. The Issuer covenants and agrees to establish a special fund to be known as the "City of Sebastian, Florida Improvement Bonds, Series 1996 Improvement Fund." The Issuer shall maintain in the Improvement Fund three 25 .... accounts: the "Assessment Account," the "Payment Account" and the "Redemption Account." The Issuer also agrees to, establish a special fund to be known as the "City of Sebastian, Florida Improvement Bonds, Series 1996 Expense Fund." Moneys in the aforementioned fund and accounts, until applied in accordance with the provisions hereof, shall be held in trust for and be subject to a lien and charge in favor of the Holders of the Bonds and for the further security of such Holders. SECTION 4.05. FLOW OF FUNDS. (A) All Special Assessment Proceeds shall be deposited, as received, into the Assessment Account of the Improvement Fund. Collection Costs may be paid directly to any Person which is due such Costs without being deposited to the Assessment Account. Within three (3) Business Days of receipt of moneys in the Assessment Account, the Issuer shall apply such moneys in the following manner and in the following order of priority: (1) Payment Account. The Issuer shall deposit or credit to the Payment Account of the Improvement Fund, from the Assessment Account, the sum which, together with the balance in said Account, shall equal the interest on all Outstanding Bonds due or to become due on the next subsequent Payment Date and the principal due or to become due on the Outstanding Bonds on the next subsequent Payment Date on which principal is due which shall be not greater than one year from the date of such deposit. Moneys in the Payment Account shall be used for payment of principal of and interest on the Bonds when the same become due and payable. In the event the Issuer shall determine that any moneys in the Payment Account shall not be required to pay the principal or interest of Bonds coming due on the otherwise corresponding Payment Date because such Bonds have been called or redeemed, the Issuer shall transfer such moneys to the Redemption Account. (2) Expense Fund. The Issuer shall deposit into the Expense Account, amounts required for the expenses and the payment of Collection Costs and other administrative expenses relating to the Bonds or the Assessments; all such fees, costs and expenses shall be limited to reasonable fees and expenses. Moneys on deposit in the Expense Fund shall also be used to pay principal of and interest on the Bonds (whether at maturity or by redemption) in the event there is a deficiency in the Payment or Redemption Accounts. (3) Redemption Account. The balance of any funds remaining in the Assessment Account after the deposit and payments required by Sections 4.05(A) (1) and 4.05(A) (2) hereof shall be deposited into the Redemption Account. Excess moneys on deposit in the Construction Fund shall be deposited to the Redemption Account in accordance with the provisions of Section 4.03 hereof. If, on the sixth (6th) day prior to any Payment Date, moneys in the Payment Account shall be insufficient to pay the interest on or principal of the Bonds 26 coming due on such Payment Date, moneys in an amount equal to such insufficiency shall be transferred from the Redemption Account to the Payment Account. Except as applied above, moneys in the Redemption Account shall be used for the retirement of principal on the Bonds through redemption. (B) On or before the date established for payment of any principal of or Redemption Price, if applicable, or interest on the Bonds, the Issuer shall withdraw from the appropriate account of the Improvement Fund sufficient moneys to pay such principal or Redemption Price, if applicable, and interest. SECTION 4.06. INVESTMENTS. The Construction Fund and the Improvement Fund shall be continuously secured in the manner by which the deposit of pUblic funds are authorized to be secured by the laws of the State. Moneys on deposit in the Construction Fund and the Improvement Fund may be invested and reinvested in Authorized Investments maturing not later than the date on which the moneys therein will be needed. Any and all income received by the Issuer from the investment of moneys in the Construction Fund and the Assessment Account shall be retained in such respective Fund or Account. Any and all income received by the Issuer from the investment of moneys in the Expense Account and the Redemption Account shall be transferred to the Assessment Account. All investments shall be valued at amortized cost. Nothing contained in this Resolution shall prevent any Authorized Investments acquired as investments of or security for funds held under this Resolution from being issued or held in book- entry form on the books of the Department of the Treasury of the United States. SECTION 4.07. SEPARATE ACCOUNTS. The moneys required to be accounted for in each of the foregoing funds and accounts established herein may be deposited in a single bank account, and funds allocated to the various funds and accounts 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 and accounts as herein provided. The designation and establishment of the various funds and accounts in and by this Resolution shall not be construed to require the establishment of any completely independent, self- balancing funds as such term is commonly defined and used in governmental accounting, but rather is intended solely to constitute an earmarking of certain revenues for certain purposes and to establish certain priorities for application of such revenues as herein provided. SECTION 4.08. COVENANT TO BUDGET AND APPROPRIATE. The Issuer covenants and agrees to appropriate in its annual budget, by amendment, if necessary, from Non-Ad Valorem Funds lawfully available in each Fiscal Year, amounts sufficient (i) to make up 27 ," deficiencies in the Payment Account existing on the first day of each Fiscal Year in the event Pledged Revenues are insufficient for such purposes, and (ii) to complete the Project to the extent the proceeds of the Bonds are insufficient therefor. Such covenant and agreement on the part of the Issuer to budget and appropriate such amounts of Non-Ad Valorem Funds shall be cumulative to the extent not paid, and shall continue until such Non-Ad Valorem Funds or other legally available funds in amounts sufficient to make all such required paYments shall have been budgeted, appropriated and actually paid. Notwithstanding the foregoing covenant of the Issuer, the Issuer does not covenant to maintain any services or programs, now provided or maintained by the Issuer, which generate Non-Ad Valorem Funds. Such covenant to budget and appropriate does not create any lien upon or pledge of such Non-Ad Valorem Funds, nor does it preclude the Issuer from pledging in the future its Non-Ad Valorem Funds, nor does it require the Issuer to levy and collect any particular Non-Ad Valorem Funds, nor does it give the Bondholders a prior claim on the Non-Ad Valorem Funds as opposed to claims of general creditors of such Issuer. Such covenant to appropriate Non-Ad Valorem Funds is subject in all respects to the paYment of obligations secured by a pledge of such Non-Ad Valorem Funds heretofore or hereinafter entered into (including the payment of debt service on bonds and other debt instruments). However, the covenant to budget and appropriate in its general annual budget for the purposes and in the manner stated herein shall have the effect of making available for the payment of deficiencies in the Payment Account or completion of the Project, as applicable, in the manner described herein, Non-Ad Valorem Funds and placing on the Issuer a positive duty to appropriate and budget, by amendment, if necessary, amounts sufficient to meet its obligations hereunder; subject however, in all respects to any restrictions of Florida law, which provide that the governing body of the Issuer make appropriations for each fiscal year which, in anyone year, shall not exceed the amount to be received from taxation or other revenue sources; and subj ect, further, to the payment of services and programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the Issuer or which are legally mandated by applicable law. 28 ,j ARTICLE V COVENANTS OF THE ISSlJER SECTION 5.01. BOOKS AND RECORDS. The Issuer will keep books and records of the receipt of the Special Assessment Proceeds and the funds and accounts established hereunder in accordance with generally accepted accounting principles, and the Holder or Holders of Bonds shall have the right at all reasonable times to inspect the records, accounts and data of the Issuer relating thereto. SECTION 5.02. ANNUAL AUDIT. The Issuer shall, immediately after the close of each Fiscal Year, cause the financial statements of the Issuer to be properly audited by a recognized independent certified public accountant or recognized independent firm of certified public accountants, and shall require such accountants to complete their report on the annual financial statements in accordance with applicable law. The annual financial statement shall be prepared in conformity with generally accepted accounting principles. A copy of the audited financial statements for each Fiscal Year shall be furnished to the Bondholders promptly upon completion. SECTION 5.03. NO IMPAIRMENT. The pledging of the Pledged Revenues in the manner provided herein shall not be subject to repeal, modification or impairment by any subsequent ordinance, resolution or other proceedings of the Board without the prior written consent of the holders of all Bonds outstanding. SECTION 5.04. FEDERAL INCOME TAX COVENANTS. The Issuer covenants with the Holders of the Bonds that it shall not use the proceeds of such Bonds in any manner which would cause the interest on such Bonds to be included in gross income for purposes of federal income taxation to the extent not otherwise included therein on the date of issuance of the Bonds. The Issuer covenants with the Holders of the Bonds that neither the Issuer nor any Person under its control or direction will make any use of the proceeds of such Bonds (or amounts deemed to be proceeds under the Code) in any manner which would cause such 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 Bonds to be included in gross income for purposes of federal income taxation. The Issuer hereby covenants with the Holders of Bonds that it will comply with all provisions of the Code necessary to maintain the exclusion of interest on the Bonds from gross income for purposes of federal income taxation, including, in particular, the payment of any amount required to be rebated to the United States Treasury pursuant to the Code. 29 .q SECTION 5.05. ENFORCEMENT OF PAYMENT OF SPECIAL ASSESSMENT PROCEEDS. The Issuer will receive, collect and timely enforce the payment of Special Assessment Proceeds in the manner prescribed by the Act, this Resolution, the Assessment Resolutions and all other resolutions, ordinances or laws appertaining thereunto, and will pay and deposit the proceeds of Special Assessment Proceeds, as received, into the Assessment Account. Absent a. default or delinquency in the payment of any Assessment, nothing herein shall require the prepayment of any installment due on an Assessment prior to its due date, except as otherwise provided by the Assessment Resolutions. SECTION 5.06. RE-ASSESSHENTS. If any Assessment shall be either in whole or in part annulled, vacated or set aside by the judgment of any court, or if the Issuer shall be satisfied that any such Assessment is so irregular or defective that the same cannot be enforced or collected, or if the Issuer shall have omitted to make such Assessment when it might have done so, the Issuer shall either (A) take all necessary steps to cause a new Assessment to be made for the whole or any part of said improvement or against any property benefited by said improvement, or (B) in its sole discretion, make up the amount of such Assessment from legally available moneys, which moneys shall be deposited into the Assessment Account. In case such second Assessment shall be annulled, said Issuer shall obtain and make other Assessments until a valid Assessment shall be made. SECTION 5.07. OTHER MONEYS. The Issuer may, in its sole discretion, utilize other legally available moneys, in addition to the Pledged Revenues, to pay the principal of and interest on the Bonds. SECTION 5.08. ADDITIONAL OBLIGATIONS. The Issuer will not issue any additional debt or obligation secured by a pledge of the Pledged Revenues without the prior written consent of the Bondholders. 30 ARTICLE VI DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. The following events shall each constitute an "Event of Default": (A) Default shall be made in the payment of the principal of, redemption premium, if any, or interest on any Bond, when due. (B) 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. Notwithstanding the foregoing, and provided that no such grace period shall exceed sixty (60) days, the Issuer shall not be deemed in default hereunder if such default can be cured within a reasonable period of time and if the Issuer in good faith institutes curative action and diligently pursues such action until the default has been corrected. (C) An Act of Bankruptcy shall have occurred with respect to the Issuer. Notice of any default by the Issuer hereunder shall be given promptly to the Bondholders. SECTION 6.02. REMEDIES. Whenever any Default referred to in Section 6.01 hereof shall have happened and be continuing, the Bondholder or its assigns, may take one or any combination of the following remedial steps: (a) Have reasonable access to and inspect, examine and make copies of the books and records and any and all accounts and data of the Issuer during regular business hours; or (b) Take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the Issuer under this Resolution or to enforce the lien granted hereunder on the Pledged Revenues. SECTION 6.03. REMEDIES ctJKUL.ATIVE. 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. If any remedial action is discontinued or abandoned, the Bondholders shall be restored to their former position. 31 . l" SECTION 6.04. WAIVER OF DEFAtJLT. No delay or omission of any Bondholder to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default, or an acquiescence therein; and every power and remedy given by this Article VI to the Bondholders may be exercised from time to time, and as often as may be deemed expedient. 32 ... ... ARTICLE VII SUPPLEMENTAL RESOLUTIONS SECTION 7.01. SUPPLEMENTAL RESOLUTION WITHOUT BONDHOLDERS' CONSENT. The Issuer, from time to time and at any time, may adopt such Supplemental Resolutions without the consent of the Bondholders (which Supplemental Resolution shall thereafter form a part hereof) for any of the following purposes: (A) To 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. (B) 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. (C) 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. (D) To securities thereunder. achieve compliance with law or with the Code and any applicable federal applicable regulations SECTION 7.02. SUPPLEMENTAL RESOLUTION WITH BONDHOLDERS' CONSENT. Subject to the terms and provisions contained in this Section 7.02 and Sections 7.01 and 7.03 hereof, the Holder or Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, anything contained in this Resolution other than in this Section 7.02 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 maturity remain Outstanding, the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Outstanding Bonds under this Section 7.02. 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 Revenues other than the lien and pledge created by this Resolution or any other lien or pledge permitted by the terms of this Resolution which materially adversely affects any Bondholders, (D) a preference or priority of any Bond or Bonds over any other Bond or Bonds, or (E) a reduction 33 in the aggregate principal amount of the Bonds required for consent to such Supplemental Resolution. Nothing herein contained, however, shall be construed as making necessary the approval by Bondholders of the adoption of any Supplemental Resolution as authorized in Section 7.01 hereof. If at any time the Issuer shall determine that it is necessary or desirable to adopt any Supplemental Resolution pursuant to this Section 7.02, the Clerk shall 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 state that copies thereof are on file at the offices of the Clerk for inspection by all Bondholders. The Issuer shall not, however, be subject to any liability to any Bondholder by reason of its failure to cause the notice required by this Section 7.02 to be mailed and any such failure shall not affect the validity of such Supplemental Resolution when consented to and approved as provided in this Section 7.02. Whenever the Issuer shall deliver to the Clerk an instrument or instruments in writing purporting to be executed by the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding, which instrument or instruments shall refer to the proposed Supplemental Resolution described in such notice and shall specifically consent to and approve the adoption thereof in SUbstantially the form of the copy thereof referred to in such notice, thereupon, but not otherwise, the Issuer may adopt such Supplemental Resolution in substantially such form, without liability or responsibility to any Holder of any Bond, whether or not such Holder shall have consented thereto. If the Holders of not less than a majority in aggregate principal amount of the Bonds Outstanding at the time of the adoption of such Supplemental Resolution shall have 'consented to and approved the adoption thereof as herein provided, no Holder of any Bond shall have any right to object to the adoption of such Supplemental Resolution, or to obj ect to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the adoption thereof, or to enjoin or restrain the Issuer from adopting the same or from taking any action pursuant to the provisions thereof. Upon the adoption of any Supplemental Resolution pursuant to the provisions of this Section 7.02, this Resolution shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Resolution of the Issuer and all Holders of Bonds then Outstanding shall thereafter be determined, exercised and enforced in all respects under the provisions of this Resolution as so modified and amended. 34 .. " " ARTICLE VIII MISCELLANEOUS SECTION 8.01. DEFEASANCE. If the Issuer shall payor 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, then the pledge of the Pledged Revenues, 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. 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 8.01 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, (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 Defeasance Obligations, which in either case shall be verified by an independent 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 banking institution 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, and (C) the Issuer shall receive an opinion of Bond Counsel to the effect that refunded Bonds are defeased in accordance with this Section 8.01 and, therefore, are no longer Outstanding under this Resolution. Except as hereafter provided, neither the Defeasance Obligations nor any moneys so deposited with such banking institution or trust company nor any moneys received by such banking institution or trust company on account of principal of or Redemption Price, if applicable, or interest on said Defeasance Obligations 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 Defeasance Obligations and moneys for the deposited Defeasance Obligations and moneys if the new Defeasance Obligations and moneys are verified by an independent certified public accountant as being sufficient to pay the principal of or Redemption Price, if applicable, and interest on the refunded Bonds. In the event the Bonds for which moneys are to be deposited for the payment thereof in accordance with this Section 8.01 are 35 .... i " not by their terms subject to redemption within the next succeeding sixty (60) days, the Issuer shall mail a notice to the Holders of such Bonds that the deposit required by this Section 8.01 of moneys or Defeasance Obligations has been made and said Bonds are deemed to be paid in accordance with the provisions of this Section 8.01 and stating such maturity 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. SECTION 8.02. VALIDATION AUTHORIZED. To the extent deemed necessary or desirable by Bond Counsel, Bond Counsel is authorized to institute appropriate proceedings for validation of the Bonds pursuant to Chapter 75, Florida Statutes. SECTION 8.03. SEVERABILITY OF INVALID PROVISIONS. If anyone or more of the covenants, agreements or provisions of this Resolution shall be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited, or against pUblic policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separable from the remaining covenants, agreements and provisions of this Resolution and shall in no way affect the validity of any of the other covenants, agreements or provisions hereof or of the Bonds issued hereunder. SECTION 8.04. REPEAL OF INCONSISTENT RESOLUTIONS. All ordinances, resolutions or parts thereof in conflict herewith are hereby superseded and repealed to the extent of such conflict. SECTION 8.05. EFFECTIVE DATE. This Resolution shall take effect immediately upon its adoption. 36 ." PASSED AND ADOPTED by the City Council of the City of Sebastian, Florida this 24th day of January, 1996. CITY OF SEBASTIAN,. FLORIDA (SEAL) (J;l!J r:t1il:J Mayor ATTEST: / da. C*-.~ tf1 . 0 '. CtJl hi- Clerk APPROVED AS TO FORM AND CORRECTNESS: City Attorney 37 .. . ~ EXHIBIT A DESCRIPTION OF PROJECT The acquisition and construction of water transmission lines and appurtenances thereto, including the development of hydrant systems with respect thereto serving the area east of U.S. 1 to the Indian River running from the north City boundaries to the south City boundaries.