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HomeMy WebLinkAboutResolution 638 Revenue Bonds RESOLUTION NO. 638 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF WINTER SPRINGS, FLORIDA, AUTHORIZING THE ISSUANCE OF NOT EXCEEDING $12,300,000 WATER AND SEWER REVENUE BONDS SERIES 1990 OF THE CITY TO BE APPLIED TO ACQUIRE THE EXISTING WATER AND SEWER ASSETS OF SEMINOLE UTILITIES COMPANY; PROVIDING FOR THE PAYMENT OF THE SERIES 1990 BONDS FROM THE NET REVENUES OF SUCH SYSTEM; MAKING OTHER COVENANTS AND AGREEMENTS IN CONNECTION THEREWITH; AND PROVIDING AN EFFECTIVE DATE. BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF WINTER SPRINGS, FLORIDA: SECTION 1. AUTHORITY FOR THIS RESOLUTION. This Resolution is adopted pursuant to the Constitution of the State of Florida; Chapter 166, Part II, Florida Statutes, Chapter 72-718, Laws of Florida, Special Act of 1972 as amended and supplemented, being the Charter of the City of Winter Springs, and other applicable provisions of laws. SECTION 2. DEFINITIONS. Unless the context otherwise requires, the terms defined in this section shall have the meanings specified in this section. Words importing singular number shall include the plural number in each case and vice versa, and words importing persons shall include firms and corporations. "Acquired Obligations II shall mean and include any of the following securities, if and to the extent the same are at the time legal for investment of funds of the Issuer: (i) any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America, including obligations of any Federal agency or corporation which has been or may hereafter be created pursuant to an act of Congress as an agency or instrumentality of the United States of America to the extent unconditionally guaranteed by the united States of America or any other evidences of an ownership interest in obliga- tions or in specified portions thereof (which may consist of specified portions of the interest thereon) of the character described in this clause (i) 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 on the obligations described in this clause (i), and which underlying obligations are not available to satisfy any claim of the custodian or any person claiming through the custodian or to whom the custodian may be obligated; and (ii) any bonds or other obligat}ons of any state or governmental unit thereof, the interest on which is excluded from gross income for federal income tax purposes and which are rated at such time in the then highest rating category of two or more nationally recognized municipal rating agencies; and (iii) 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 (a) which are not callable at the option of the obligor prior to maturity or as to which ir- revocable notice has been given by the obligor to call such bonds or obligations on the date specified in the notice, (b) which are fully s28ured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described in clause (i) hereof which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, 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 appropriate, and (c) as to which the principal of and interest on the bonds and obligations of the character described in clause (i) hereof which have been deposited in such fund along with any cash on deposit in such fund is sufficient to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (iii) on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (a) of this clause (iii), as appropriate. " Acquisition Fund" shall mean the Acquisition Fund created and established pursuant to Section 16 of this Resolution. "Act" shall mean Chanter 166, Part II, Florida Statutes, Chapter 72-718, Laws of Flo~ida, Special Act of 1972 as amended and supplemented, 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 ap- pointed 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 2 218.503, Florida Statutes, shall not, in and of itself, constitute 'an Act of Bankruptcy. "Additional Parity Obligations" shall mean additional obliga- tions issued in compliance with the terms, conditions and limita- tions contained herein and which (i) shall have a lien on the Pledged Revenues equal to that of the Series 1990 Bonds, (ii) shall be payable from the Net Revenues on a parity with the Series 1990 Bonds, and (iii) rank equally in all other respects with the Series 1990 Bonds. "Amortization Installment" with respect to any Term Bonds of a Series, shall mean an amount so designated for mandatory prin- cipal installments (for mandatory call or otherwise) payable on any Term Bonds issued under the provisions of this Resolution or any subsequent resolution authorizing Additional Parity Obligations. "Authorized Newspapers" shall mean a financial newspaper of general circulation in the Borough of Manhattan, City and State of New York (including, at such times as they are published, The New York Times, The Daily Bond Buyer or The Wall Street Journal) and a newspaper or general circulation in the City of Winter Springs, Florida, which in each case, is customarily published at least once a day for at least five days (other than legal holidays) in each calendar week, printed in the English language. "Average Annual Bond Service Requirement" means, as of each date on which a series of Bonds is issued, the total amount of Bond Service Requirement which is to become due on all Bonds deemed to be Outstanding immediately after the issuance of such series of Bonds divided by the total number of years for which Bonds are deemed to be Outstanding, except that with respect to any Bonds for which Amortization Installments have been established, the amount of principal coming due on the final maturity date with respect to such Bonds shall be reduced by the aggregate principal amount of such Bonds that are to be redeemed from Amortization Installments to be made in prior Bond Years. "Bond Anticipation Notes II shall mean notes of the Issuer issued in anticipation of any Series of Bonds and shall be secured by a lien on the proceeds of the Bonds for which such Bond An- ticipation Notes were issued. "Bond Service Requirement" shall mean, for any Bond Year, at any time, the amount required to be deposited in such Bond Year into the Bond Service Fund, as provided herein. For purpose of calculating Bond Service Requirement with respect to Designated Maturity Obligations, the unamortized principal coming due on the final maturity date thereof shall not be included and in lieu thereof there shall be added to Bond Service Requirement for the Bond Year in which such final maturity occurs and to each Bond Year thereafter through the 25th anniversary of the final maturity of 3 such Designated Maturity Obligation (the "Reamortization Period") 'the amount of substantially level principal and interest payments (using the same interest rate actually applicable to such unamor- tized Bonds before maturity) that if paid in each year during the Reamortization Period would be sufficient to pay in full the unamortized portion of such Designated Maturity Obligations by such anniversary (the "Amortization Payment"); provided, however, for the current Bond Year interest coming due on such Designated Maturity Obligations shall be deducted from the Amortization Payment. With respect to Variable Rate Bonds, the interest rate used to calculate the Bond Service Requirement shall be assumed to be one hundred ten percent (110%) of the greater of (a) the daily average interest rate on such Variable Rate Bonds during the twelve months ending with the month preceding the date of calculation or (b) the most recent effective interest on such Variable Rate Bonds prior to the date of calculation. If such Variable Rate Bonds were not outstanding for a full twelve months ending with the month immediately preceding the date of calculation, the rate described in clause (b) of the immediately preceding sentence shall be used. If Bonds are Option Bonds, the date or dates of tender shall be disregarded, unless actually tendered and not remarketed, and the stated maturity dates thereof shall be used for purposes of this calculation, if such Option Bonds are required to be paid from Pledged Revenues hereunder on such date of tender. "Bonds" shall mean (i) the Water and Sewer Revenue Bonds herein authorized to be issued, including but not limited to the Series 1990 Bonds and (ii) any Additional Parity Obligations issued hereafter in accordance with the provisions hereof. "Bond Counsel" shall mean a firm of nationally recognized attorneys at law experienced in the issuance of bonds the interest on which is excluded from gross income of the Holders thereof for purposes of Federal income taxation under the Internal Revenue Code of 1986, as amended. "Bond Service Fund" shall mean such Bond Service Fund created and established pursuant to Section 16 of this Resolution. "Bond Year" shall mean such period as shall be determined by subsequent resolution of the Issuer. "Business Day" or "business day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions within the State of New York or Florida are authorized by law to remain closed. "Capacity Reservation Fees" means those payments, a developer must pay to the Issuer to support financially the fixed and nonvariable costs of maintaining existing capacity reserved for future use by specific developers. II Capaci ty Reservation Fees" 4 means "Guaranteed Revenue" as defined in the Developer Agreement 'and vice versa. "Capital Appreciation Bonds" shall mean the aggregate prin- cipal amount of the Bonds that bear interest payable solely at maturity or upon redemption prior to maturity in the amounts determined by reference to the Compounded Amounts, all as shall be determined by subsequent resolution of the Issuer. 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. "Capital Appreciation Income Bonds" means those Bonds initial- ly issued as Capital Appreciation Bonds and which become Current Interest Bonds when the original issue amount and the Compounded Amount equals $5,000 principal amount or an integral multiple thereof as determined by subsequent resolution of the Issuer. "Clerk" shall mean the City Clerk 6f the Issuer. "Compounded Amounts" means the amounts as to which reference is made that establish the amounts payable at maturity or upon redemption prior to maturity on the Capital Appreciation Bonds. Such amounts shall be determined by subsequent resolution of the Issuer. "Connection Charges" shall mean the charges imposed on those connecting to the System for the actual cost of physically connect- ing into the System. "Consulting Engineers" shall mean one or more qualified and recognized consulting engineer or firm of consulting engineers having favorable repute, skill and experience with respect to the planning and operation of the System who shall be retained from time to time by the Issuer. "Contributions in Aid of Construction" shall mean any amount or item of money, services, or property received by the Issuer, any portion of which is provided at no cost to the utility, which represents an addition or transfer to the capital of the System, and which is utilized to offset the acquisition, improvement or construction costs of the System. "Cost of Operation and Maintenance" of the System shall mean the then current expenses, paid or accrued, in the operation, maintenance and repair of the System, as calculated in accordance with generally accepted accounting principles, but shall not include expenses not annually recurring, such as any reserve for renewals and replacements, extraordinary repairs or any allowance 5 for depreciation, and Bond' Service Requirement or any payments in 'lieu of taxes. "Current Interest Bonds" means the aggregate principal amount of the Bonds that bear interest payable semiannually on such dates as shall be determined by subsequent resolution of the Issuer. "Defeasance Obligations" means (a) U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series -- "SLGS" ), (b) direct obligations of the Treasury which have been stripped by the Treasury itself, (c) CATS, TIGRS and similar securities and obligations issued by the following agencies which are backed by the full faith and credit of the U.S.: i. U.S. Export-Import Bank Direct obligations or fully guaranteed certifi- cates of beneficial ownership ii. Farmers Home Administration Certificates of beneficial ownership iii. Federal Financing Bank iv. Federal Housing Administration Debentures v. General Services Administration Participation certificates vi. U.S. Maritime Administration Guaranteed Title XI financing vii. New Communities Debentures U.S. government guaranteed debentures viii. U.S. Public Housing Notes and Bonds U.S. government guaranteed public housing notes and bonds ~x. U.S. Department of Housing and Urban Development Project Notes Local Authority Bonds x. Prerefunded municipal bonds rated" Aaa" by Moody's or "AAA" by S&P. If the issue is only rated by S&P (i.e., there is no Moody's rating), then the prerefunded bonds must have been prerefunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA-rated prerefunded municipals that satisfy this condition. "Designated Maturity Obligations" shall mean all of the Bonds of a Series or a particular maturity thereof, so designated by the 6 Issuer by resolution prior to the issuance thereof, for which no 'Amortization Installments have been established. "Developer" means any person or other entity seeking to secure water and/or sewer services for properties within the Authority's service area for the benefit of itself or prospective future consumers. "Developer Agreement Payments" shall mean all amounts paid to the Issuer pursuant to that certain Developer Agreement (the "Developer Agreement") by and between the Issuer and Winter Springs Development Joint Venture (the "Developer") as a result of the Developer's obligation in accordance with the provisions of said Developer Agreement to provide 1100 additional connections to the System. "Developer Agreement Payments Account" shall mean the special account of the same name created within the Revenue Fund. "Financial Guaranty Agreement" shall between the Issuer and MBIA providing for, payment of the annual premium, if any, and MBIA of amounts drawn under the Surety Bond. mean the agreement among other things, the reimbursement to "Fiscal Year" shall mean the period commencing on October 1 of each year and ending on the next succeeding September 30 or such other annual period as may be prescribed by law from time to time for the Issuer. "Gross Revenues" or "Revenues" shall mean all. income or earnings, including Capacity Reservation Fees and Developer Agreement Payments, received by the Issuer or accrued to the Issuer from the ownership, use or operation of the System and all parts thereof, including investment income, if any, earned on any fund or account created pursuant to this Resolution and on any fund or account established by the Issuer for the System, except that interest earned on the Construction Fund shall remain in the Construction Fund, all as calculated in accordance with generally accepted accounting principles, but "Gross Revenues" or "Revenues" shall not include proceeds from the sale or other disposition of the System or any part thereof, condemnation awards or proceeds of insurance received with respect to the System. Notwithstanding the foregoing, "Gross Revenues" or "Revenues" shall not include Contributions in Aid of Construction or Impact Fees, or Connection Charges. "Holder of Bonds" or "Bondholders" or any similar term shall mean any person who shall be the registered owner of any outstand- ing Bond. "Impact Fees" shall mean the fees imposed by the Issuer on new users connecting to the System which represent a pro rata share of 7 the costs of the System which are attributable to the increased 'demand such additional connections create upon the System. "Initial Project" shall mean the acquisition of the existing System. "Interest Account" shall mean the special account of the same name created within the Bond Service Fund. "Investment Securities" shall mean any of the following, if and to the extent that the same are legal for the investment of the proceeds of the Bonds and the Revenues: (i) direct obligations of, or obligations the prin- cipal of and interest on which are unconditionally guaranteed by the United States of America; (ii) bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States: (a) U.S. Export-Import Bank: Direct obliga- tions or fully guaranteed certificates of beneficial ownership (b) Farmers Home Administration Certificates of beneficial ownership (c) Federal Financing Bank (d) Federal Housing Administration Debentures (e) General ticipation certificates Services Administration Par- (f) Government National Mortgage Association ("GNMA") : GNMA - guaranteed mortgage-backed bonds; GNMll. - guaranteed pass-through obligations (not acceptable for certain cash-flow sensitive issues.) (g) U.S. Maritime Administration Guaranteed Title XI financing (h) New Communi ties Debentures U. S. government guaranteed debentures (i) U.S. Public Housing Notes and Bonds U.S. government guaranteed public housing notes and bonds (j) U.S. Department of Housing and Urban Development: Project Notes; Local Authority Bonds . 8 (iii) Bonds, debentures, notes or other evidence of 'indebtedness issued or guaranteed by any of the following U. S. government agencies (non-full faith and credit agencies): (a) Federal Home Loan Bank system: Senior debt obligations (b) Federal Home Loan Mortgage Corporation: Participation Certificates; Senior debt obligations (c) Federal National Mortgage Association: Mortgage-backed securities and senior debt obligations (d) Student Loan Marketing Association: Senior debt obligations (iv) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G; AAAm; or AAm. (v) Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. (vi) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC or FSLIC. (vii) Investment Agreements, including GIC' s, acceptable to MBIA. (viii) Commercial paper rated, at the time of purchase, "Prime - I" by Moody's or "A-I" or better by S&P. (ix) Bonds or notes issued by any state or municipality which are rated by Moody's & S&P in one of the two highest rating categories assigned by such agencies. (x) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - I" or "A3" or better by Moody's and "A-I" or "A" or better by S&P. (xi) Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the 9 cash plus a yield to the' municipal entity in exchange for the securities at a specified date. Repurchase Agreements must satisfy the following criteria or be approved by MBIA: (a) Repos must be between the municipal entity and a dealer bank for securities firm 1. Primary dealers on the Federal Reserve reporting dealer list, or 2. Banks rated II A II or above by Standard & Poor's Corporation and Moody's Investors Services. (b) The written repo contract must include the followina: 1. Securities which are acceptable for transfer are: (A) Direct U.S. governments, or (B) Federal agencies backed by the full faith and credit of the U.S. government 2. The term of the repo may be up to 30 days 3. The collateral must be delivered to the municipal entity, trustee (if trustee is not supply the collateral) or third party acting as agent for the trustee (if the Trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities). 4. Valuation of Collateral (A) The securities must be valued weekly, marked- to-market at current market price plus accrued interest (a) The value of collateral must be equal to 102% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 102% of the value of the cash transferred by municipality, then additional cash and/or acceptable securities must be transferred. (c) Legal opinion which must be delivered to the municioal entity: 1. Repo meets guidelines under state law for legal investment of public funds. 10 ~ (xii) units of participation in the Local Government Surplus Funds Trust Fund established pursuant to Chapter 218, Part IV, Florida Statutes, or any similar common trust fund which is established pursuant to the laws of the State of Florida as a legal depository of public moneys and for which the Florida State Board of Administration acts as custodian; and (viii) any other invest- ment permitted under applicable Florida and United States law. "Issuer" shall mean the City of Winter Springs, Florida. "Maximum Bond Service Requirement" shall mean, as of any particular date of calculation, the greatest amount of aggregate Bond Service Requirement for the then current or any future Bond Year, except that with respect to any Bonds for which Amortization Installments have been established, the amount of principal corning due on the final maturity date with respect to such Bonds shall be reduced by the aggregate principal amount of such Bonds that are to be redeemed from Amortization Installments which were to be made in prior Bond Years. "MBIA" shall mean Municipal Bond Investors Assurance Corpora- tion, a new York domiciled stock insurance company. "Municipal Bond Insurance Policy" with respect to the Seiies 1990 Bonds shall mean the municipal bond insurance policy issued by MBIA insuring the payment when due of the principal of and interest on the Series 1990 Bonds as provided therein. "Net Revenues" of the System shall mean the Revenues or Gross Revenues, after ded~ction of the Cost of Operation and Maintenance. "Option Bonds" shall mean Bonds subject to tender for payment prior to their maturity at the option of the Holder thereof. "Outstanding" or "Bonds Outstanding" means all Bonds which have been issued pursuant to this Resolution, except: (i) Bonds canceled after purchase in the open market or because of payment at or redemption prior to maturity; (ii) Bonds for the payment or redemption of which cash funds or Acquired Obligations or any combination thereof shall have been theretofore irrevocably set aside in a special account with an escrow agent (whether upon or prior to the maturity or redemp- tion date of any such Bonds) in an amount which, together with earnings on such Acquired Obligations, will be sufficient to pay the principal of and interest on such Bonds at maturity or upon their earlier redemption; provided that, if such Bonds are to be redeemed before the maturity thereof, notice of such redemption shall have been given according to the requirements of this Reso- lution or irrevocable instructions directing the timely publica- tion of such notice and directing the payment of the principal of 11 '. and interest on all such Bonds at such redemption dates shall have been given to the Escrow Agent; and (iii) Bonds which are deemed paid pursuant to this Resolution or in lieu of which other Bonds have been issued under Sections 11 and 13 hereof. "Paying Agent" means any authorized depositary designated by the Issuer to serve as a Paying Agent or as the place of payment for any Series of Bonds issued hereunder that shall have agreed to arrange for the timely payment of the principal of, interest on and redemption premium, if any, with respect to such Series of Bonds to the owners thereof, from funds made available therefor by the Issuer and any successors designated by subsequent resolution of the Issuer. Nothing shall prohibit the Issuer from serving as Paying Agent hereunder. "Pledged Revenues" shall mean the Net Revenues of the System. Notwithstanding the foregoing, moneys on deposit in any account in the Reserve Fund shall be pledged only to the payment of the Series of Bonds for which such account was established, all as more fully provided in Section 20 of this Resolution. "Principal Account" shall mean the special account of the same name created within the Bond Service Fund. "Project" or "Projects" shall mean any lawful purpose related to the System, all as determined by the Issuer. "Project Costs" shall mean all costs authorized to be paid from the Acquisition Fund pursuant to Section 18 hereof to the extent permitted under the laws of the State. It is intended that this definition be broadly construed to encompass all costs, expenses and liabilities of the Issuer related to the System which on the date of this Resolution or in the future shall be permitted to be funded with the proceeds of any Series of Bonds pursuant to the laws of the State. "Prudent Utility Practice" shall mean, in respect of any particular utility industry, any of the practices, methods and acts which, in the exercise of reasonable judgment, in the light of the facts, including but not limited to the practices, methods and acts engaged in or approved by a significant portion of such utility industry prior thereto, known at the time the decision was made, would have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability, safety, and expedition. It is recognized that Prudent Utility Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather is a spectrum of possible practices, methods or acts which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability, safety and expedition. 12 "Qualified Independent Consultant" shall mean one or more qualified and recognized independent consultants, having favorable repute, skill and experience with respect to the acts and duties of the Qualified Independent Consultant to be provided to the Issuer, as shall from time to time be retained by the Issuer to perform the acts and carry out the duties herein provided for such consultants. "Qualified Surety Bond" shall mean a surety bond issued by an insurance company rated in the highest rating category by A.M. Best & Company, Standard & Poor I s Corporation, or Moody I s Investor Service, Inc. "Redemption Account" shall mean the special account of the same name created within the Bond Service Fund. "Refunded Bonds" shall mean (i) any of the Bonds of any Series or any particular maturity thereof which shall be refunded with the proceeds of any Series of Bonds or portion thereof; and (ii) any other outstanding obligations of the Issuer which shall be refunded with the proceeds of any Series of Bonds or portion thereof, all as shall be determined by subsequent resolution of the Issuer. "Refunding Bonds" shall mean that amount of any Series of Bonds, the proceeds of which will be applied to the refunding of any Refunded Bonds. "Registrar" shall mean the trust company or bank with trust powers appointed from time to time by subsequent resolution of the Issuer to serve under this Resolution. Nothing herein shall prohibit the Issuer from serving as Registrar hereunder. "Renewal, Replacement and Improvement Fund" shall mean the Renewal, Replacement and Improvement Fund created and established pursuant to Section 16 of this Resolution. "Reserve Fund" shall mean established pursuant to Section accounts therein. the Reserve Fund created and 16 of this Resolution and all "Reserve Requirement" shall mean in any Bond Year the lesser of the Maximum Bond Service Requirement or 125% of the Average Annual Bond Service Requirement, or ten percent (10%) of the proceeds of the Bonds, or such other amount as shall be set forth in a resolution of the Issuer adopted prior to the delivery of any Bonds. "Resolution" shall mean this resolution as from time to time amended or supplemented, in accordance with the terms hereof. 13 "Revenue Fund" shali mean the Revenue Fund created and established pursuant to Section 16 of this Resolution. "Serial Bonds" shall mead the Bonds of a Series, which mature on more than one date. "Series" or "Series of Bonds" or "Bonds of a Series" shall mean all Bonds designated as being of the same Series issued and delivered on original issuance in a simultaneous transaction, and any Bonds thereafter delivered in lieu thereof or in substitution therefor pursuant to this Resolution. "Series 1990 Bonds" shall mean the Bonds initially issued under this Resolution for the principal purpose of providing funds necessary to acquire the System. "State" shall mean the State of Florida. "Subordinated Debt" shall mean any obligations payable from the Subordinated Debt Service Fund pursuant to Section 16 hereof. "Subordinated Debt Service Fund" shall mean the Subordinated Debt Service Fund created and established pursuant to Section 16 hereof. "Surety Bond" shall mean the debt service reserve fund surety bond to be issued by MBIA. "System" shall mean, collectively, the existing water and sewer system curreptly owned by Seminole Utility Company in the jurisdiction of the Issuer, including certain land necessary to the operation of such water and sewer system, together with any and all improvements, extensions and additions thereto thereafter con- structed or acquired, together with all lands or interests therein, including plants, buildings, machinery, franchises, pipes, mains, fixtures, equipment and all property, real or personal, tangible or intangible, now or hereafter owned or used in connection therewith. Upon compliance with the provisions of Section 26 hereof, the term "System" may be deemed to include other utility functions added to the System, such as the acquisition, distribu- tion and sale of natural gas, the providing of cable television services, the providing of telecommunication services or other utility functions that are, in accordance with Prudent Utility Practice, reasonably related to the services provided by the System. Notwithstanding the foregoing definition of the term System, such term shall not include any properties or interests in properties of the Issuer which the Issuer determines shall not constitute a part of the System for the purpose of this Resolu- tion. 14 "Term Bonds" shall mean the Bonds of a series, all of which shall be stated to mature on one date for which Amortization Installments have been established. "Trustee" means Sun Bank, National Association, Orlando, Florida, and its successors in interest as trustee under this Indenture and any indenture supplemental hereto. "Variable Rate Bonds II shall mean obligations issued with a variable, adjustable, convertible or other similar rate which is not fixed in percentage at the date of issue for the entire term thereof. SECTION 3. FINDINGS. It is hereby ascertained, determined and declared that: A. It is in the best interests of the Issuer and the residents thereof that the Issuer authorize the issuance of the Series 1990 Bonds to provide for the acquisition of the Initial Project. B. Following the acquisition of the Initial Project which will occur prior to or at the time of issuance of the Series 1990 Bonds the Pledged Revenues will not be pledged or encumbered in any manner other than for the payment of the Series 1990 Bonds. C. Any Series of Bonds, after the issuance of the Series 1990 Bonds, shall be issued upon approval by subsequent resolution of the Issuer. The proceeds of any Series of Bonds shall be applied as set forth in Section 17 hereof and as provided in a supplemental resolution authorizing such Series of Bonds. D. The principal of and interest and redemption premium on the Bonds and all reserve and other payments shall be payable solely from the Pledged Revenues as herein provided. The Issuer shall never be required to levy ad valorem taxes on any real or personal property therein to pay the principal of and interest on the Bonds herein authorized or to make any other payments provided for herein. The Bonds shall not constitute a lien upon any properties owned by or located within the boundaries of the Issuer. E. The estimated Pledged Revenues will be sufficient to pay all principal of and interest and redemption premium on the Bonds to be issued hereunder, as the same become due, and to make all required deposits or payments required by this Resolution. F. The acquisition of the Initial proj ect by the Issuer pursuant to this Resolution will not adversely effect the revenues pledged to the Issuer's outstanding Water and Sewer Refunding Revenue Bonds, Series 1985. 15 SECTION 4. AUTHORIZATION OF INITIAL PROJECT. There is hereby authorized the acquisition of the Initial Project in the manner provided herein. SECTION 5. THIS RESOLUTION TO CONSTITUTE CONTRACT. In consideration of the acceptance of the Bonds authorized to be issued hereunder by those who shall hold the same from time to time, this Resolution shall be deemed to be and shall constitute a contract between the Issuer and such Holders. The covenants and agreements herein set forth to be performed by the Issuer shall be for the equal benefit, protection and security of the legal Holders of any and all of the Bonds, all of which shall be of equal rank and without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided therein and herein. SECTION 6. AUTHORIZATION OF SERIES 1990 BONDS. Subject and pursuant to the provisions hereof, obligations of the Issuer to be known as "Water and Sewer Revenue Bonds, Series 1990", are autho- rized to be issued in the aggregate principal amount of not exceeding $12,300,000, which such amounts may mature at a higher amount to include the maturity amount of Capital Appreciation Bonds and which may be issued in Series from time to time. SECTION 7. DESCRIPTION OF SERIES 1990 BONDS. The Series 1990 Bonds shall be issued in fully registered form; may be Capital Appreciation Series 1990 Bonds and/or Current Interest paying Bonds; shall be dated; shall be numbered; shall be in the denomina- tion of $5,000 each, or integral multiples thereof for the Current Interest Bonds and in $5,000 maturity amounts for the Capital Appreciation Bonds or in $5,000 multiples thereof, or such other denominations as shall be approved by the Issuer in a subsequent resolution prior to the delivery of the Series 1990 Bonds; shall bear interest at such rate or rates not exceeding the maximum rate allowed by Florida law, the actual rate or rates to be determined by the governing body of the Issuer prior to or upon the sale of the respective Series of Bonds; may be issued with variable, adjustable, convertible or other rates with original issue dis- counts and as zero interest rate bonds; such interest to be payable semiannually at such times as are fixed by resolution of the Issuer if Current Interest Paying Bonds and shall mature annually on such date in such years and amounts as will be fixed by resolution of the Issuer prior to or upon the sale of the respective Series of Bonds; and may be Serial and/or Term Bonds. Each Current Interest Bond shall bear interest from the interest payment date next preceding the date on which it is authenticated, unless authenticated on an interest payment date, in which case it shall bear interest from such interest payment date, or, unless authenticated prior to the first interest payment date, in which case it shall bear interest from its date; provided, however, that if at the time of authentication payment of any 16 interest which is due and payable has not been made, such Current Interest Paying Bond shall bear interest from the date to which interest shall have been paid. The Capital Appreciation Bonds shall bear interest only at maturity or upon redemption prior to maturity in the amount determined by reference to the Compounded Amount. The principal of and the interest and redemption premium, if any, on the Series 1990 Bonds shall be payable in any coin or currency of the United States of America which on the respective dates of payment thereof is legal tender for the payment of public and private debts. The interest on the Current Interest Bonds shall be payable by the Paying Agent on each interest payment date to the person appearing on the registration books of the Issuer hereinafter provided for as the registered Holder thereof, by check or draft mailed to such registered Holder at his address as it appears on such registration books. Payment of the principal of all Current Interest Bonds and the Compounded Amount with respect to the Capital Appreciation Bonds shall be made upon the presenta- tion and surrender of such Bonds as the same shall become due and payable. The Series 1990 Bonds shall be initially issued in the form of a separate single certificated fully registered Bond for each of the maturities of the Series 1990 Bonds. Upon initial issuance, the ownership of each such Series 1990 Bond shall be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of Depository Trust Company ("DTC"). Except as provided in this Section, all of the outstanding Bonds shall be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC. With respect to Series 1990 Bonds registered in the registra- tion books kept by the Registrar in the name of Cede & Co., as nominee of DTC, the Issuer, the Registrar and the Paying Agent shall have no responsibility or obligation to any DTC participant or to any indirect participant. without limiting the immediately preceding sentence, the Issuer, the Registrar and the Paying Agent shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & CO. or any DTC participant with respect to any ownership interest in the Series 1990 Bonds, (ii) the delivery to any DTC participant or any other person other than a Bondholder, as shown in the registration books kept by the Registrar, of any notice with respect to the Series 1990 Bonds, including any notice of redemption, or (iii) the payment to any DTC participant or any other person, other than a Bondholder, as shown in the registration books kept by the Registrar, of any amount with respect to principal of, premium, if any, or interest on the Series 1990 Bonds. The Issuer, the Registrar and the paying Agent may treat and consider the person in whose name each Series 1990 Bond is registered in the registration books kept by the Registrar as 17 the holder and absolute owner of such Series 1990 Bond for the purpose of payment of principal, premium and interest with respect to such Series 1990 Bond, for the purpose of giving notices of redemption and other matters with respect to such Series 1990 Bond, for the purpose of registering transfers with respect to such Series 1990 Bond, and for all other purposes whatsoever. The Paying Agent shall pay all principal of, premium, if any, and interest on the Series 1990 Bonds only to or the respective Holders, as shown in the registration books kept by the Registrar, or their respective attorneys duly authorized in writing, as provided herein and all such payments shall be valid and effective to fully satisfy and discharge the Issuer's obligations with respect to payment of principal of, premium, if any, and interest on the Series 1990 Bonds to the extent of the sum or sums so paid. No person other than a Holder, as shown in the registration books kept by the Registrar, shall receive a certificated Series 1990 Bond evidencing the obligation of the Issuer to make payments of principal, premium, if any, and interest pursuant to the provisions hereof. Upon delivery by DTC to the Issuer of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to transfers, the words "Cede & Co." in this Resolution shall refer to such new nominee of DTC; and upon receipt of such a notice the Issuer shall promptly deliver a copy of the same to the Registrar and the Paying Agent. Upon receipt by the Issuer of written notice from DTC (i) to the effect that DTC has received written notice from the Issuer to the effect that a continuation of the requirement that all of the outstanding Series. 1990 Bonds be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, is not in the best interest of the beneficial owners of the Series 1990 Bonds or (ii) to the effect that DTC is unable or unwilling to discharge its responsibilities and no substitute depository willing to undertake the functions of DTC hereunder can be found which is willing and able to undertake such functions upon reasonable and customary terms, the Series 1990 Bonds shall no longer be restricted to being registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or names Holders transferr- ing or exchanging Series 1990 Bonds shall designate, in accordance with the provision hereof. In connection with such book-entry system, the Issuer will execute and deliver a Letter of Representations substantially in the form attached hereto as Exhibit A with such changes, insertions and omissions as requested by DTC and approved by the office of the City executing such Letter of Representations. SECTION 8. EXECUTION OF SERIES 1990 BONDS. The Series 1990 Bonds shall be signed by, or bear the facsimile signature of, the Mayor of the Issuer and shall be signed by, or bear the facsimile 18 signature of, the Clerk and a facsimile of the official seal of the Issuer shall be imprinted on the Series 1990 Bonds. In case any officer whose signature or a facsimile of whose signature shall appear on any Series 1990 Bonds shall cease to be such officer before the delivery of such Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes the same as if he has remained in office until such delivery. Any Bond may bear the facsimile signature of or may be signed by such persons who, at the actual time of the execution of such Bond, shall be the proper officers to sign such Bonds although at the date of such Bond such persons may not have been such officers. SECTION 9. AUTHENTICATION OF SERIES 1990 BONDS. Only such of the Series 1990 Bonds as shall have endorsed thereon a certifi- cate of authentication substantially in the form hereinbelow set forth, duly executed by the Registrar, as authenticating agent, shall be entitled to any benefit or security under this Resolu- tion. No Bond shall be valid or obligatory for any purpose unless and until such certificate of authentication shall have been duly executed by the Registrar, and such certificate of the Registrar upon any such Bond shall be conclusive evidence that such Bond has been duly authenticated and delivered under this Resolution. The Registrar's certificate of authentication on any Bond shall be deemed to have been duly executed if signed by an authorized officer of the Registrar, but it shall not be necessary that the same officer sign the certificate of authentication of all of the Series 1990 Bonds that may be issued hereunder at anyone time. SECTION 10. EXCHANGE OF SERIES 1990 BONDS. Any Series 1990 Bonds, upon surrender thereof at the principal corporate trust office of the Registrar, together with an assignment duly executed by the Bondholder or his attorney or legal representative in such form as shall be satisfactory to the Registrar, may, at the option of the Bondholder, be exchanged for an aggregate principal amount of Series 1990 Bonds equal to the principal amount of the Bond or Bonds so surrendered. The Registrar shall make provision for the exchange of Series 1990 Bonds at the principal corporate trust office of the Registrar. SECTION 11. NEGOTIABILITY, REGISTRATION AND TRANSFER OF SERIES 1990 BONDS. The Registrar shall keep books for the regis- tration of and for the registration of transfers of Series 1990 Bonds as provided in this Resolution. The transfer of any Series 1990 Bonds may be registered only upon such books and only upon surrender thereof to the Registrar together with an assignment duly executed by the Bondholder or his attorney or legal representative in such form as shall be satisfactory to the Registrar. Upon any such registration of transfer the Issuer shall execute and the 19 Registrar shall authenticate and deliver in exchange for such Bond, a new Bond or Bonds registered in the name of the transferee, and in an aggregate principal amount equal to the principal amount of such Bond or Bonds so surrendered. In all cases in which Series 1990 Bonds shall be exchanged, the Issuer shall execute and the Registrar shall authenticate and deliver, at the earliest practicable time, a new Bond or Bonds of the same type (i.e. Current Interest Bonds will be exchanged for Current Interest Bonds and Capital Appreciation Bonds will be exchanged for Capital Appreciation Bonds) in accordance with the provisions of this Resolution. All Series 1990 Bonds surrendered in any such exchange or registration of transfer shall forthwith be cancelled by the Registrar. The Issuer or the Registrar may make a charge for every such exchange or registration of transfer of Series 1990 Bonds sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer, but no other charge shall be made to any Bondholder for the privilege of exchanging or register- ing the transfer of Series 1990 Bonds under the provisions of this Resolution. SECTION 12. OWNERSHIP OF SERIES 1990 BONDS. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal or redemption price of any such Bond, and the interest on any such Series 1990 Bonds shall be made only to or upon the order of the registered owner thereof or his legal representative. All such payments shall be valid and effectual to satisty and discharge the liability upon such Bond including the premium, if any, and interest thereon to the extent of the sum or sums so paid. SECTION 13. SERIES 1990 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 cause to be executed, and the Registrar shall authenticate and deliver, a new Bond of like date and tenor as the Bond so mutilated, destroyed, stolen or lost (i.e., Current Interest Bonds shall be issued in exchange for Current Interest Bonds and Capital Appreciation Bonds shall be issued in exchange for Capital Appreciation Bonds), in exchange and substitution for such mutilated Bond upon surrender and cancellation of such mutilated Bond or in lieu of and substitu- tion 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 and the Registrar may prescribe and paying such expenses as the Issuer and the Registrar may incur. All Series 1990 Bonds so surrendered shall be canceled by the Issuer. If any of the Series 1990 Bonds shall have matured or be about to mature, instead of issuing a substitute Bond, the Issuer may pay the same, upon being indem- 20 nified as aforesaid, and if such Bond be lost, stolen or destroyed, without surrender thereof. Any such duplicate Series 1990 Bonds issued pursuant to this Section shall constitute original, additional contractual obliga- tions on the part of the Issuer whether or not the lost, stolen or destroyed Series 1990 Bonds be at any time found by anyone, and such duplicate Series 1990 Bonds shall be entitled to equal and proportionate benefits and rights as to lien on and source and security for payment from the funds, as hereinafter pledged, to the same extent as all other Series 1990 Bonds issued hereunder. SECTION 14. PROVISIONS FOR REDEMPTION. The Series 1990 Bonds shall be subject to redemption prior to their maturity, at the option of the Issuer, at such times and in such manner as shall be fixed by resolution of the Issuer prior to or at the time of sale of the Series 1990 Bonds. Notice of such redemption shall, at least thirty (30) days prior to the redemption date, be filed with the Registrar; and mailed, first class mail, postage prepaid, to all Holders of Series 1990 Bonds to be redeemed at their addresses as they appear on the registration books hereinbefore provided for, but failure to mail such notice to one or more Holders of Series 1990 Bonds shall not affect the validity of the proceedings for such redemption with respect to Holders of Series 1990 Bonds to which notice was duly mailed hereunder. Each such notice shall set forth the date fixed for redemption, the redemption price to be paid and, if less than all of the Series 1990 Bonds of one maturity are to be called, the distinctive numbers of such Series 1990 Bonds to be redeemed and in the case of Series 1990 Bonds to be redeemed in part only, the portion of the principal amount thereof to be redeemed. When notice of redemption is given, Series 1990 Bonds called for redemption will become due and payable on the redemption date at the redemption price stated in such notice. When a notice of redemption is given and funds sufficient for redemption are deposited with the Registrar, interest on the Series 1990 Bonds to be redeemed will cease to accrue on the date fixed for redemption, such Series 1990 Bonds shall cease to be entitled to any lien, benefit or security under this Resolution and the Holders of such Series 1990 Bonds will have no right in respect thereof except to receive payment of the redemption price. Upon surrender of any Series 1990 Bond for redemption in part only, the Registrar shall authenticate and deliver to the Bond- holder thereof, the cost of which shall be paid by the Issuer, a new Series 1990 Bond of an authorized denomination equal to the unredeemed portion of the Series 1990 Bond surrendered. SECTION 15. FORM OF SERIES 1990 BONDS. The text of the Series 1990 Bonds, together with the certificate of authentication, 21 shall be in substantially the following form, with such omissions, insertions and variations as may be necessary, desirable, autho- rized or permitted by this Resolution or by any subsequent resolu- tion adopted prior to the issuance thereof, or as may be necessary of the Bonds or a portion thereof are issued as Capital Apprecia- tion Bonds, Option Bonds, Designated Maturity Obligations, Variable Rate Bonds, or as may be necessary to comply with applicable laws, rules and regulations of the United States and of the State in effect upon the issuance thereof. The text of any Series of Bonds, other than the Series 1990 Bonds shall be as determined by subse- quent resolution of the Issuer. 22 No. R- $ UNITED STATES OF AMERICA STATE OF FLORIDA COUNTY OF SEMINOLE CITY OF WINTER SPRINGS WATER AND SEWER REVENUE BONDS, SERIES 1990 MATURITY DATE: INTEREST RATE: DATED DATE: CUSIP: April 1, 1990 Registered Owner: Principal Amount: KNOW ALL MEN BY THESE PRESENTS, THAT THE CITY OF WINTER SPRINGS, FLORIDA (the "Issuer" or the "City"), for value received, promises to pay to the order of the Registered Owner identified above, or registered assigns, upon the presentation and surrender hereof at the principal corporate office of the Paying Agent, on the Maturity Date identified above or at prior redemption, the Principal Amount identified above and in like manner to pay interest on said principal sum at the Interest Rate identified above on each April 1 and October I, commencing October I, 1990. Principal of this Bond is payable at the principal corporate trust office of Sun Bank, National Association, Orlando, Florida, as Paying Agent (the term "Paying Agent" where used herein refers to said Paying Agent or its successors), and interest is payable to the Registered Owner by check or draft to the person in whose name this Bond is registered on the registration books of the Issuer maintained by Sun Bank, National Association, Orlando, Florida, as Registrar (the term "Registrar" where used herein refers to said Registrar or its successors). (Insert Optional or Mandatory Redemption Provisions) Notice of such redemption shall be given in the manner required by the Resolution described below. This Bond is one of an authorized issue of Bonds in the aggregate principal amount of $12,300,000 of like date, tenor and effect, except as to number, principal amount, maturity redemption provisions and interest rate, issued, to finance the cost of acquiring a water and sewer system, all in full compliance with the Constitution and Statutes of the State of Florida, including 23 particularly Chapter 166, 'part II, Florida Statutes, Chapter 72- 718, Laws of Florida, Special Act of 1972 as amended and supple- mented, and Resolution No. duly adopted by the Issuer on April 23, 1990, as supplemented (hereinafter collectively called the "Resolution"), and is subject to all the terms and conditions of such Resolution. All capitalized undefined terms used herein shall have the meaning set forth in the Resolution. This Bond is payable solely from and secured by a prior lien upon and pledge of the Pledged Revenues, as defined in the Resolu- tion, which consists of the Net Revenues derived from the opera- tion of the System of the Issuer in the manner provided in the Resolution. Reference is made to the Resolution for more complete definition and description of Pledged Revenues. This Bond does not constitute a general indebtedness of the Issuer within the meaning of any constitutional, statutory or charter provision or limitation, and it is expressly agreed by the Holder of this Bond that such Bondholder shall never have the right to require or compel the exercise of the ad valorem taxing power of the Issuer or taxation of any real or personal property therein for the payment of the principal of and interest on this Bond or the making of any debt service fund, reserve or other payments provided for in the Resolution. It is further agreed between the Issuer and the Holder of this Bond that this Bond and the indebtedness evidenced thereby shall not constitute a lien upon the System, or any part thereof, or on any other property of or in the Issuer, but shall constitute a lien only on the Net Revenues all in the manner provided in the Resolu- tion. The Issuer has covenanted, in the Resolution, to fix, es- tablish, revise from time to time whenever necessary, maintain and collect always such fees, rates, rentals and other charges for the use of the products, services and facilities of the System which will always provide Revenues in each year sufficient to pay (i) the aggregate of one hundred percent (100%) of all Cost of Operation and Maintenance as the same shall become due in such year, one hundred ten percent (110%) of the Bond Service Requirement becoming due in such year on the Outstanding Bonds, one hundred percent (100%) of all amounts due MBIA under the Financial Guaranty Agree- ment and one hundred percent (100%) of all other deposits to be made pursuant to the Resolution. Such rates, fees, rentals or other charges shall not be reduced so as to render them insuffi- cient to provide revenues for such purposes. The Issuer has entered into certain further covenants with the Holders of the Bonds of this issue for the terms of which reference is made to the Resolution. 24 The Issuer has reserved the right in the Resolution to issue Additional Parity Obligations having a lien on the Pledged Revenues on a parity with the lien thereon of the Bonds. 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 of this issue does not violate any constitutional, statutory, or charter limitation or provision. This Bond is and has all the qualities and incidents of a negotiable instrument under Article 8 of the Uniform Commercial Code, the State of Florida, Chapter 678, Florida Statutes. The transfer of this Bond is registrable by the Bondholder hereof in person or by his attorney or legal representative at the principal corporate trust office of the Registrar but only in the manner and subject to the conditions provided in the Resolution and upon surrender and cancellation of this Bond. This Bond has initially been registered pursuant to a global book-entry system and may be transferred therefrom only in accordance with section 7 of the Resolution. This Bond shall not be valid or become obligatory for any purpose or be entitled to any benefit or security under the Resolution until it shall have been authenticated by the execution by the Registrar of the certificate of authentication endorsed hereon. IN WITNESS WHEREOF, the City of Winter Springs, Florida, has issued this Bond and has caused the same to be signed by its Mayor and countersigned and attested to by its Clerk, (the signatures of the Mayor and the Clerk being authorizep to be facsimiles of such officers' signatures) and its seal or facsimile thereof to be affixed, impressed, imprinted, lithographed or reproduced hereon, all as of the 1st day of April, 1990. CITY OF WINTER SPRINGS, FLORIDA (SEAL) (manual or facsimile) Mayor ATTESTED AND COUNTERSIGNED: (manual or facsimile) Clerk 25 CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds issued under the provisions of the within mentioned Resolution. Sun Bank, National Association Registrar, as Authenticating Agent Date of Authentication: By: (Manual Signature) Authorized Officer ASSIGNMENT AND TRANSFER For value received the undersigned hereby sells, assigns and transfers unto (Please insert Social Security or other identifying number of transferee) the attached bond of the City of Winter Springs, Florida, and does hereby constitute and appoint , attorney, to transfer the said Bond on the books kept for registra- tion thereof, with full power of substitution in the premises. Date: Signature Guaranteed by [member firm of the New York Stock Exchange or a commercial bank or a trust company.] By: (manual signature) Title: NOTICE: No transfer will be registered and no new Bonds will be issued in the name of the Transferee, unless the signature to this assignment corresponds wi th the name as it appears upon the face of the within Bond in every particular, wi thout alteration or enlargement or any change whatever and the Social Security or Federal Employer Identification Number of the Transferee is supplied. [END OF FORM OF BOND] 26 SECTION 16. CREATION OF FUNDS. There are hereby created and established the following funds and accounts, which funds and accounts shall be trust funds for the purposes herein provided and used only in the manner herein provided: (A) The "City of Winter Springs Water and Sewer System Revenue Fund" (hereinafter sometimes called the "Revenue Fund"), to be held by the Issuer and to the credit of which deposits shall be made as required by Section 20(A) hereof. In such fund there shall be maintained a Developer Agreement Payments Account. (B) The "City of Winter Springs Water and Sewer System Bond Service Fund" (hereinafter sometimes called the "Bond Service Fund") to be held by the Issuer and to the credit of which deposits shall be made as required by Section 20(B)(1) hereof. In such fund there shall be maintained the following accounts: the Principal Account, the Interest Account and the Redemption Account. (C) The "City of winter Springs Water and Sewer System Reserve Fund" (hereinafter sometimes called the "Reserve Fund") to be held by the Issuer and to the credit of which deposits shall be made as required by Section 20(B)(2) hereof. In such fund there may be maintained separate accounts for each Series of Bonds. (D) The "City of Winter Springs Water and Sewer System Subor- dinated Debt Service Fund (hereinafter sometimes called the "Subordinated Debt Service Fund"), to be held by the Issuer and to the credit of which deposits shall be made as required by Section 20(B)(3) hereof. (E) The "City of Winter Springs Water and Sewer System Renewal, Replacement and Improvement Fund (hereinafter sometimes called the "Renewal, Replacement and Improvement Fund"), to be held by the Issuer and to the credit of which deposits shall be made as required by Section 20(B)(4) hereof. (F) The "City of Winter Springs Water and Sewer System Acquisition Fund" (hereinafter sometimes called the "Acquisition Fund"), to be held by the Issuer and to the credit of which deposits shall be made as required by Section 17 hereof. Within such fund there shall be maintained separate accounts for each Series of Bonds. There shall furthermore be maintained in such fund separate accounts for capitalized interest funded from the proceeds of any Series of Bonds. SECTION 17. APPLICATION OF BOND PROCEEDS. The proceeds, including accrued interest and premium, if any, received from the sale of any Series of Bonds shall be applied by the Issuer simul- taneously with the delivery of such Series of Bonds to the pur- chaser thereof, as follows and as further provided in a supplemen- tal resolution of the Issuer. The proceeds of the Series 1990 Bonds shall be applied as provided in the following paragraphs. 27 A. The accrued interest on the Series 1990 Bonds shall be deposited in the Interest Account in the Bond Service Fund and shall be used only for the purpose of paying interest becoming due on the Series 1990 Bonds for which it was so deposited. B. Unless provided from other funds of the Issuer [on the date of issuance of the Series 1990 Bonds] or unless provided for through the purchase of a guaranty or municipal bond insurance issued by a reputable and recognized municipal bond insurer, an irrevocable letter of credit rated in one of the two highest categories by a nationally recognized rating agency, a Qualified Surety Bond or any combination thereof, their shall be deposited to the Reserve Fund, or the account created therein for the benefit of such Series of Bonds, an amount equal to the Reserve Require- ment, which amount shall be used only for the purposes provided in Section 20(B)(2) of this Resolution. C. To pay the MBIA bond insurance premium and the fees and costs of the Underwriter of the Series 1990 Bonds. D. The balance of the proceeds of the Series 1990 Bonds shall be deposited in the Acquisition Fund and be used on the date of delivery of the Series 1990 Bonds to acquire the Initial Project. E. The remaining moneys from a Series of Bonds shall be deposited as provided in supplemental resolutions of the Issuer. SECTION 18. DISBURSEMENTS FROM ACQUISITION FUND. Moneys on deposit from time to time in the Acquisition Fund shall be used as provided in this Resolution and to payor reimburse the following Project Costs: (A) The costs of acquiring or constructing any Project. (B) Premiums attributable to all insurance required to be taken out and maintained during the period of construction with respect to a Project to be acquired or constructed, the premium on each surety bond, if any, required with respect to work on such facilities, and taxes, assessments and other charges hereof that may become payable during the period of construction with respect to such a Project. (C) Costs incurred directly or indirectly in seeking to enforce any remedy against a contractor or subcontractor in respect of any default under a contract relating to a project or costs incurred directly or indirectly in defending any claim by a contractor or subcontractor with respect to a Project. (D) Financial, legal, accounting, appraisals, title evidence and printing and engraving fees, charges and expenses, and all 28 other such fees, charges and expenses incurred in connection with .the authorization, sale, issuance and delivery of such Series of Bonds. (E) Interest funded from Bond proceeds for a reasonable period of time, which shall be deposited in the Interest Account within the Bond Service Fund and shall be used as provided in the Series Resolution authorizing such Series of Bonds. (F) Any other incidental and necessary costs including without limitation any expenses, fees and charges relating to the acquisition, construction or installation of a Project, and the making of extraordinary repairs, renewals and replacements, decommissioning or retirement of any portion of the System. (G) Costs incurred directly or indirectly in placing any Project in operation in order that completion of such project may occur. (H) Any other costs authorized pursuant to a supplemental resolution of the Issuer and permitted under the laws of the State. (I) Reimbursements to the Issuer for any of the above items theretofore paid by or on behalf of the Issuer. SECTION 19. SPECIAL OBLIGATIONS OF ISSUER. The Bonds shall not be or constitute general obligations or indebtedness of the Issuer as "bonds" within the meaning of the Constitution of Florida, but shall be payable solely from and secured by a first lien upon and a pledge of the Pledged Revenues as herein provided. No Holder or Holders of any Bonds issued hereunder shall ever have the right to compel the exercise of the ad valorem taxing power of the Issuer or taxation in any form of any real or personal proper- ty therein, or to compel the Issuer to pay such principal and interest from any other funds of the Issuer. The payment of principal of and interest on the Bonds shall be secured forthwith equally and ratably by, and the Issuer hereby grants to the Bondholder an irrevocable first lien on the Pledged Revenues, prior and superior to all other liens or encumbrances on such Pledged Revenues and the Issuer does hereby irrevocably pledge such Pledged Revenues to the payment of the principal of, redemp- tion premium, if any, and interest on the Bonds, for the reserves therefor and for all other payments required hereunder. Such amounts hereby pledged and assigned shall immediately be subject to the lien of this pledge without any further physical delivery thereof or any 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, irrespective of whether such parties have notice thereof. 29 SECTION 20. COVENANTS OF THE ISSUER. For so long as any of the principal of and interest on any of the Bonds shall be out- standing and unpaid or until the Issuer has made provision for payment of principal, interest and redemption premiums, if any, with respect to the Bonds, as provided herein, the Issuer covenants with the Holders of any and all Bonds as follows: (A) REVENUE FUND. All Gross Revenues shall upon receipt thereof be deposited in the Revenue Fund. Immediately upon deposit into the Revenue Fund any Developer Agreement Payments shall be transferred to the Developer Agreement Payments Account and used as provided in Section 20(B)(6) hereof. All deposits into such Revenue Fund shall be deemed to be held in trust for the purposes herein provided and used only for the purposes and in the manner herein provided. (B) DISPOSITION OF REVENUES. All revenues in the Revenue Fund after payment of Cost of Operation and Maintenance shall be disposed of monthly, but not later than the twenty-fifth (25th) day of each month commencing in the month immediately following the delivery of the Series 1990 Bonds only in the following manner and the following order of priority: (1) The Issuer shall first deposit with the Trustee into the Bond Service Fund and credit to the following accounts, in the following order (except that payments in the Principal Account and the Redemption Account shall be on a parity with each other), the following identified sums: (a) Interest Account: Such sum as will be suffi- cient to pay one-sixth (1/6) of all interest coming due on all Outstanding Bonds on the next interest payment date, together with any fees and charges of the Paying Agent and Registrar therefor. Provided, however, that monthly deposits of interest, or portions thereof, shall not be required to be made to the extent that money on deposit within such Interest Account is sufficient for such purpose. In the event the Issuer has issued Variable Rate Bonds pursuant to the pro- visions hereof, Net Revenues shall be deposited at such other or additional times and amounts as necessary to pay any interest coming due on such variable Rate Bonds on the next interest payment date, all in the manner provided in a supplemental resolution of the Issuer. Any monthly payment out of Net Revenues to be deposited as set forth above, for the purpose of meeting interest payments for any Series of Bonds, shall be adjusted, as appropriate, to reflect the frequency of interest payment dates applicable to such Series. Moneys in the Interest Account may be used only for the purposes set forth in this paragraph (a). (b) Principal Account: Such sum will be sufficient to pay one-sixth (1/6th) of the principal amount of the 30 Outstanding Bonds which will mature and come due on such semi- annual maturity dates and one-twelfth (1/12th) of the prin- cipal amount of the Outstanding Bonds which will mature and become due on such annual maturity dates, beginning on such dates, as shall hereafter be determined by a supplemental resolution of the Issuer. Provided, however, that monthly deposi ts for principal, or portions thereof, shall not be required to be made to the extent that money on deposit within such Principal Account is sufficient for such purpose. Any monthly payment out of Net Revenues to be deposited as set forth above, for the purpose of meeting principal payments for any Series of Bonds, shall be adjusted, as appropriate, to reflect the frequency of principal payment dates applicable to such Series. Moneys in the Principal Account may be used only for the purposes set forth in this paragraph (b). (c) Redemption Account: Such sum as will be sufficient to pay one-sixth (1/6th) of any Amortization Installment established for the mandatory redemption of Outstanding Bonds on such semi-annual maturity date and such sum as will be sufficient to pay one-twelfth (1/12th) of any Amortization Installment established for the mandatory redemption of Outstanding Bonds on such annual maturity date. Provided, however, that monthly deposits into the Redemption Account, or portions thereof, shall not be required to be made to the extent that money on deposit in the Redemption Account is sufficient for such purpose. Any monthly payment out of Net Revenues to be deposited as set forth above, for the purpose of meeting Amortization Installments for any Series of Bonds, sha~l be adjusted, as appropriate, to reflect the frequency of dates established for Amortization Installments applicable to such Series. The moneys in the Redemption Account shall be used solely for the purchase or redemption of the Term Bonds payable therefrom. The Issuer may at any time purchase any of said Term Bonds at prices not greater than the then redemption price of said Term Bonds. If the Term Bonds are not then redeemable prior to maturity, the Issuer may purchase said Term Bonds at prices not greater than the redemption price of such Term Bonds on the next ensuing redemption date. If Term Bonds are so purchased by the Issuer, the Issuer shall credit the amount of such purchased Term Bonds against any current Amortization Installment to be paid by the Issuer. If the Issuer shall purchase or call for redemption in any year Term Bonds in excess of the Amortiza- tion Installment requirement for such year, such excess of Term Bonds so purchased or redeemed shall be credited in such manner and at such times as the Issuer shall determine. Moneys in the Redemption Account in the Debt Service Fund may be used only for the purposes set forth in this paragraph (c). (2) The Issuer shall next deposit with the Trustee from moneys remaining in the Revenue Fund an amount required by each 31 Series Resolution into the Reserve Fund or the account created ~herein for the benefit of such Series of Bonds, but in no event shall such amount be less than the amount required to meet the requirements of this Section 20(B)(2). No further deposits shall be required to be made into the Reserve Fund or any account therein whenever the Reserve Requirement is on deposit therein. Any withdrawals from the Reserve Fund or an account therein shall be subsequently restored from the first moneys available in the Revenue Fund, on a pro rata basis as to all accounts in the Reserve Fund, after all required current payments for Cost of Operation and Maintenance and all current applications and allocations to the Bond Service Fund, including all deficiencies for prior payments have been made in full. Notwithstanding the foregoing, in no event shall the Issuer be required to deposit into the Reserve Fund an amount greater than that amount necessary to ensure that the difference between the Reserve Requirement for the Bonds and the amounts on deposit in the Reserve Fund on the date of calculation shall be restored not later than sixty (60) months after the date of such deficiency (assuming equal monthly payments into such account for such sixty (60) month period). Any deposits from the Revenue Fund to the Reserve Fund shall be used first to reimburse MBIA for any amounts owing under the Financial Guaranty Agreement and second, to replenish the cash in the Reserve Fund. The Issuer will provide the Reserve Requirement for the Series 1990 Bonds by the purchase of a Surety Bond from MBIA pursuant to the terms of a Financial Guaranty Agreement. Any cash on deposit in the Reserve Fund applicable to the Series 1990 Bonds will be drawn down completely before any demand is made on the Surety Bond. In the event it is necessary to draw on the Surety Bond, the Paying Agent will deliver a Demand for Payment at least three days prior to the date on which funds are required. The Paying Agent will maintain accurate records, verified by MBIA as to the amount available to be drawn under the Surety Bond and as to the amounts paid and owing to MBIA under the terms of the Financial Guaranty Agreement. The Issuer agrees to payor to cause to be paid all amounts, including interest due thereon, due MBIA under the terms of the Financial Guaranty Agreement or any other documents. All such amounts due MBIA must be paid before this Resolution can be terminated. There may be no optional redemption of Bonds, refund- ing or distribution of funds to the Issuer unless all amounts owed to the MBIA under the terms of the Financial Guaranty Agreement have been paid. Moneys in the Reserve Fund shall be used only for the purpose of the payment of Amortization Installments, principal of, or interest on the Outstanding Bonds when the other moneys allocated to the Bond Service Fund are insufficient therefor, and for no other purpose. Moneys in the Reserve Fund shall be valued as their costs. Any excess in the Reserve Fund account shall be transferred 32 to the Bond Service Fund. In the event such valuation provides that a deficiency exists in such account, such deficiency shall be replenished as provided in the third sentence of this Section 20(B)(2). Notwithstanding any provision of this Resolution to the contrary, but subject to Section 35 G(4) hereof, moneys on deposit in the Reserve Fund shall only be applied for payment of Amortiza- tion Installments, principal of or interest on the Outstanding Bonds. In the event of the refunding of any Series of Bonds, the Issuer may withdraw from the Reserve Fund the applicable portion of the amounts accumulated therein with respect to the Bonds being refunded and deposit such amounts as required by the resolution authorizing the refunding of such Series of Bonds; provided that such withdrawal shall not be made unless (a) immediately thereafter the Bonds being refunded shall be deemed to have been paid pursuant to the provisions hereof and (b) the amount remaining in such account after giving effect to the issuance of such refunding obligations and the disposition of the proceeds thereof shall not be less than the Reserve Requirement for any Bonds of such Series then Outstanding. Notwithstanding any other provision of the Resolution, the Issuer may, at or prior to the issuance of any Series of Bonds, provide that a separate account in the Reserve Fund be created and funded as provided above, which special account in the Reserve Fund will be pledged solely to the Series of Bonds for which such account was created. (3) From the moneys remaining in the Revenue Fund, the Issuer shall next deposit into the Subordinated Debt Service Fund an amount required" to be paid as provided in the resolution or ordinance of the Issuer authorizing such Subordinated Debt for principal, interest, mandatory redemption payments, if any, and debt service reserve payments, if any, on Subordinated Debt, but for no other purposes. (4) The Issuer shall next apply and deposit monthly from the moneys remaining on deposit in the Revenue Fund into the Renewal, Replacement and Improvement Fund, an amount equal to one- twelfth (1/12) of five percent (5%) of the Gross Revenues received during the immediately preceding Fiscal Year. The moneys in the Renewal, Replacement and Improvement Fund shall be used only for the purpose of paying the cost of extensions, enlargements or additions to, or the replacement of capital assets of the System or emergency repairs thereto. No further deposits shall be required to be made to the Renewal, Replacement and Improvement Fund when there shall be on deposit therein an amount equal to or greater than five percent (5%) of book value of the fixed assets of the System pursuant to generally accepted accounting principles. Funds on hand in the Renewal, Replacement and Improvement Fund may be used to pay current Cost of Operation and Maintenance to the extent moneys on deposit in the Revenue Fund are insufficient for such purposes. The moneys on deposit in such fund may also be used to supplement the Reserve Fund, if necessary, in order to prevent 33 a default in the payment of the principal of and interest on the Bonds. Except to prevent a default in the payment of principal and interest on the Bonds as hereinbefore provided, no expenditure may be made from such fund without the affirmative vote of the City Commission of the Issuer voting at a regular or special meeting of such commission. (5) The balance of any moneys remaining in the Revenue Fund after the above required payments have been made may be used for, other than amounts or deposits in the Developer Agreement Payments Account which shall be used solely as provided in para- graph (6) hereof, any lawful purpose; provided, however, that none of said money shall be used for any purposes other than those hereinabove specified unless all current payments, including any deficiencies for prior payments, have been made in full and unless the Issuer shall have complied fully with all the covenants and provisions of this Resolution. (6) Whenever by reason of the insufficiency of moneys on deposit in the Revenue Fund (other than the Developer Payment Account therein) the Issuer is not able to make promptly the current monthly payments required to be made to the Bond Service Fund pursuant to Section 20(B)(1) hereof, there shall be deposited into the Revenue Fund from the moneys on deposit in the Developer Payments Account therein whatever sums are necessary to cure such existing deficit. The balance of any moneys remaining in the Developer Payments Account on May 1, 1995, at the discretion of the Issuer may be transferred, to the Revenue Fund or any other appropriate fund or account of the Issuer and used by the Issuer for any lawful purpose. (7) The Bond Service Fund (including the accounts therein), the Renewal, Replacement and Improvement Fund, the Reserve Fund, the Revenue Fund (including the Developer Payments Account therein) and any other special funds herein established and created shall be deemed to be held in trust for the purposes provided herein for such funds. The money in all such funds shall be continuously secured in the same manner as state and municipal deposits are authorized to be secured by the laws of the State of Florida. Moneys in any fund or account created hereunder may be invested and reinvested in Investment Securities which mature not later than the dates on which the moneys on deposit therein will be needed for the purpose of such fund. All income on such investments, except as otherwise provided by this Resolution, shall be deposited in the respective funds and accounts from which such investments were made and be used for the purposes thereof unless and until the maximum required amount is on deposit therein, and thereafter shall be deposited in the Revenue Fund. 34 (8) In determining the amount of any of the payments ,required to be made pursuant to this Section, credit may be given for all investment income accruing to the respective funds and accounts described herein, except as otherwise provided. (9) The cash required to be accounted for in each of the funds and accounts described in this Section, may be deposited in a single bank account, provided that adequate accounting records are maintained to reflect and control the restricted allocation of the cash on deposit therein for the various purposes of such funds and accounts as herein provided. The designation and establishment of the various funds in and by the Resolution shall not be con- strued 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 con- stitute an earmarking of certain revenues and assets of the System for certain purposes and to establish certain priorities for application of such revenues and assets as herein provided. (C) OPERATION AND MAINTENANCE. The Issuer will maintain the System and all parts thereof in good condition and will operate the same in an efficient and economical manner, making such expendi- tures for equipment and for renewals, repairs and replacements as may be proper for the economical operation and maintenance thereof. (D) RATE COVENANT. The Issuer will fix, establish, revise from time to time whenever necessary, maintain and collect always such fees, rates, rentals and other charges for the use of the products, services and facilities of the System which will always provide Revenues in each year sufficient to pay (i) the aggregate of the amount needed to pay all Cost of Operation and Maintenance as the same shall become due in such year, plus one hundred ten percent (110%) of the Bond Service Requirement becoming due in such year on the Outstanding Bonds one hundred percent (100%) of all amounts due MBIA under the Financial Guaranty Agreement and one hundred percent (100%) of all other deposits to be made pursuant to this Resolution. Such rates, fees, rentals or other charges shall not be reduced so as to render them insufficient to provide revenues for such purposes. The Issuer shall, at least sixty (60) days before the end of the Issuer's fiscal years 1990, 1991, and 1992 take account to increase the fees, rates, rentals and other charges for the use of the products, services and facilities of the System such that by October 1, 1992 the fees rates, rentals and other charges established for the System shall be equal to the fees, rates, rentals and other charges charged by Issuer for any other water and sewer system of the Issuer. (E) BOOKS AND ACCOUNTS; AUDIT. The Issuer shall keep proper books, records and accounts, separate and apart from all other records and accounts, showing correct and complete entries of all transactions of the System. The Holders of any of the Bonds or any duly authorized agent or agents of such Holders shall have the 35 right at any and all reasonable times to inspect such books, records and accounts. The Issuer shall, within one hundred eighty (180) days following the close of each Fiscal Year of the Issuer cause an audit of such books, records and accounts to be made by an independent firm of certified public accountants. Each such audit, in addition to whatever matters may be deemed proper by said firm of certified public accountants to be included therein, shall, without limiting the generality of the foregoing, include the following: (1) A statement in reasonable detail of the revenue and expense of the System for such Fiscal Year; and (2) A balance sheet as of the end of such Fiscal Year, in accordance with generally accepted accounting principles and a statement showing retained earnings for the System at the end of the Fiscal Year. Copies of each such audit report shall be placed on file with the Issuer and be made available at reasonable times for inspec- tion by Holders of the Bonds. (F) DISPOSITION OF SYSTEM. The Issuer shall not sell, lease, encumber or in any manner dispose of the System as a whole until all of the Bonds shall have been paid in full as to both principal and interest. The City may sell or dispose of, for fair market value, any properties or parts of the System which the Consulting Engineer shall certify in writing are not necessary for the continuing operation of the System, and that the sale or disposal of which will not adversely affect the Revenues derived from the System to such an extent that the Issuer might fail to comply with the covenants of this Resolution. To the extent the amount to be received therefor is not in excess of one-half (1/2) of one per centum (.5%) of the value of the gross plant investment in the System, the finding set forth above and required to be made by the Consulting Engineer may be made by an authorized representative of the Issuer. The proceeds derived from any sale or disposal of any proper- ties or parts of the System as provided for in the above para- graph, shall be deposited in the Renewal, Replacement and Improve- ment Fund and used exclusively for the purpose of paying the cost of extensions, enlargements or additions to, or the replacement of capital assets of the System and for any unusual or extraordinary repairs, or for the construction or acquisition of additions, extensions and improvements to the System. However, if the Con- sulting Engineer certifies that it is neither necessary nor desir- able to use all or any portion of the proceeds for such purposes, the Issuer may use such certified portion of the proceeds for the purchase or retirement of the Bonds. 36 (G) INSURANCE. The Issuer shall provide protection for the System both in accordance with the requirements of all agreements, if any, to which the Issuer may at the time be a party with respect to joint ownership of properties by the Issuer with others which is part of the System, and in accordance with Prudent Utility Practice. Said protection may consist of insurance, self insurance and indemnities. The Issuer will keep, or cause to be kept, the works, plants and facilities comprising the properties of the System insured, and will carry such other insurance against fire and other risks, accidents or casualties at least to the extent and of the kinds that insurance is usually carried by utilities operating like properties. Any insurance shall be in the form of policies or contracts for insurance with insurers of good standing, shall be payable to the Issuer and may provide for such deduc- tibles, exclusions, limitations, restrictions, and restrictive endorsements customary in policies for similar coverage issued to entities operating properties similar to the properties of the System. Any self insurance shall be in the amounts, manner and of the type provided by entities operating properties similar to the properties of the System. In the event of any loss or damage to the System covered by insurance, the Issuer will, with respect to each such loss, promptly repair, reconstruct or replace the parts of the System affected by such loss or damage to the extent necessary to the proper conduct of the operation of the business of the System in accordance with Prudent Utility Practices, shall cause the proceeds of such insurance to be applied for that purpose to the extent required therefor, and pending such application shall hold the proceeds of any insurance policy covering such damage or loss in trust to be applied for that purpose to the extent required therefor. Any excess insurance proceeds received by the Issuer shall be transferred to the Renewal, Replacement and Improvement Fund or at the option of the Issuer may be used to redeem Bonds and/or Subordinated Debt. (H) NO FREE SERVICE. So long as any Bonds are Outstanding, the Issuer shall not furnish or supply the facilities, services and commodities of the System either free of charge or for a nominal charge to any person, firm or corporation, public or private. The Issuer shall promptly enforce the payment of any and all accounts owing to the Issuer and delinquent, by discontinuing service or by filing suits, actions or proceedings, or by both discontinuance of service and filing suit. (I) MANDATORY CUT OFF. Upon failure of any user to pay for services rendered by the System within ninety (90) days, the Issuer shall, to the full extent permitted by law, shut off the connection of such user and shall not furnish him or permit him to receive from the System further service until all obligations owed by him to the Issuer on account of services shall have been paid in full. This covenant shall not, however, prevent the Issuer from causing 37 the System connection to be shut off sooner, to the extent per- mitted by law. (J) ENFORCEMENT OF COLLECTIONS. The Issuer will diligently enforce and collect the rates, fees and other charges for the services and facilities of the System including the Developer Agreement Payments and will take all steps, actions and proceedings for the enforcement and collection of such rates, charges and fees as shall become delinquent to the full extent permitted or autho- rized by law; and will maintain accurate records with respect thereof. All such fees, rates, charges and revenues shall, as collected, be held in trust to be applied as herein provided. (K) OPERATING BUDGET. The Issuer shall annually, prior to commencement of each of its Fiscal Years, prepare and adopt a detailed budget of the estimated expenditures for the operation and maintenance of the System during such next succeeding Fiscal Year. The Issuer shall mail copies of such annual budgets (including any amendments thereto) to any Holder or Holders of Bonds who shall file his address with the Issuer and request in writing that copies of all such budgets be furnished him and shall make available such budgets of the System at all reasonable times to any Holder or Holders of Bonds or to anyone acting for and on behalf of such Holder or Holders. Bondholders shall pay reasonable actual cost of printing and mailing of such copies. (L) MANDATORY CONNECTIONS. The Issuer will, to the full extent permitted by law, require all lands, buildings and struc- tures within the System's service area fronting or abutting on the lines of the System, or any part thereof, or which can use the facilities of the System and which are not as of the date of issuance of the Series of 1990 Bonds connected to another water and/or sewer system to connect with and use such facilities within sixty (60) days after notification that service is available. To the extent permitted by law, the Issuer will not grant a franchise for the operation of any competing utility system within the service area existing as of the date of issuance of the Series 1990 Bonds until all Bonds issued hereunder together with the interest thereon, and premium, if any, have been paid in full. (M) SUPERVISORY PERSONNEL. The Issuer in operating the System will employ or designate as manager one or more of its qualified employees who have demonstrated ability and experience in operating similar facilities, and will require all employees who may have possession of money derived from the operation of the System to be covered by a fidelity bond, written by a responsible indemnity company in amounts fully adequate to protect the Issuer from loss. (N) PAYMENT OF TAXES, ASSESSMENTS AND OTHER CLAIMS. The Issuer shall from time to time duly pay and discharge, or cause to be paid and discharged, all taxes, assessments and other governmen- 38 tal charges, or payments in lieu thereof, lawfully imposed upon the properties constituting the System or the Revenues when the same shall become due, as well as all lawful claims for labor and materials and supplies which, if not paid, might become a lien or charge upon such properties or any part thereof, or upon the Reve- nues or which might in any way impair the security of the Bonds, except assessments, charges or claims which the Issuer shall in good faith contest by proper legal proceedings. (0) NO COMPETING SYSTEM. To the full extent permitted by law, the Issuer will not grant, or cause, consent to, or allow the granting of, any franchise or permit to any person, firm, corpora- tion or body, or agency or instrumentality whatsoever, for the furnishing of water or sewer services which the Issuer determines will adversely affect Revenues. (P) ISSUANCE OF OTHER OBLIGATIONS. The Issuer shall issue no bonds or obligations of any kind or nature payable from or enjoying a lien on the Pledged Revenues if such obligations have priority over the Bonds with respect to payment or lien, nor shall the Issuer create or cause or permit to be created any debt, lien, pledge, assignment, encumbrance or other charge having priority to or being on a parity with the lien of the Bonds upon said Net Revenues. However, the Issuer may issue Additional Parity Obliga- tions under the conditions and in the manner provided herein. Any obligations of the Issuer, other than the Bonds, which are payable from the Pledged Revenues shall contain an express statement that such obligations are junior and subordinate in all respects to the Bonds as to lien on and source and security for payment from such Pledged Revenues. (Q) ISSUANCE OF ADDITIONAL PARITY OBLIGATIONS. No Additional Parity Obligations shall be issued after the issuance of the Series 1990 Bonds herein authorized, except upon the conditions and in the manner hereinafter provided: (1) There shall have been obtained and filed with the Clerk a certificate of an independent certified public accountant stating: (a) that the books and records of the Issuer relative to the System have been audited by him; (b) the amount of the adjusted Pledged Revenues derived for any consecutive twelve (12) months out of the preceding twenty-four (24) months preceding the date of issuance of the proposed Additional Parity Obligations adjusted as herein below provided; (c) that the aggregate amount of such Pledged Revenues, as adjusted, pursuant to paragraph (2), (3), (4), (5) or (6) below, is equal to not less than 110% of Maximum Bond Service Requirement becoming due in any Fiscal Year thereafter on (i) all obligations issued under this Resolution, if any, then outstanding, (ii) on the parity obligations with respect to which such certificate is made and (iii) on any other parity obligations then outstanding. 39 (2) Upon recommendation of the Consulting Engineers, the . Net Revenues certified pursuant to (b) in the previous paragraph may be adjusted for purposes of this Subsection by including: 100% of the additional Net Revenues which in the opinion of the Consult- ing Engineer would have been derived by the Issuer from rate increases adopted before the Additional Parity Obligations are issued. (3) Upon recommendation of the Consulting Engineers if the Additional Parity Obligations are to be issued for the purpose of acquiring an existing water and/or sewer system the Net Revenues certified pursuant to paragraph 1(b) may be adjusted by including: 100% of the additional estimated Net Revenues which in the written opinion of the Consulting Engineers will be derived from the acquired facility during the first complete Fiscal Year after the issuance of such Additional Parity Obligations (the Consulting Engineers' report shall be based on the actual operating revenues of the acquired utility for a recent 12-month period adjusted to reflect the Issuer'6 ownership and the Issuer's rate structure in effect with respect to the System at the time of the issuance of the Additional Parity Obligations). (4) Upon recommendation of the Consulting Engineers, if the number of connections as of the first day of the month in which the proposed Additional Parity Obligations are to be issued exceeds the average number of such connections during such twelve (12) consecutive month period, then the Net Revenues shall be adjusted to include the Net Revenues which would have been received in such twelve (12) consecutive months of those additional connections had also been connected to the System during all of such twelve (12) consecutive months: (5) Upon recommendation of the Consulting Engineer, if the Issuer shall have entered into a contract, which contract shall be for a duration of not less than the final maturity of the proposed Additional Parity Obligations, with any public body, whereby the Issuer shall have agreed to furnish services for the collection, treetment or disposal of sewage or agreed to furnish services in con: ~ion with any water system, then the Net Revenues during the twel\ (12) consecutive months shall be increased (to the extent such amounts were not reflected in such Revenues) by the minimum amount which the public body shall guarantee to pay in any one year for the furnishing of services by the Issuer, after deducting from such payment the Estimated Cost of Operation and Maintenance attributable in such year to such services. (6) Upon recommendations of the Consulting Engineers, if there is an estimated increase in Net Revenues to be received by the Issuer as a result of additions, extensions or improvements to the System during the period of three (3) years following the completion of such additions, extensions or improvements, then the Net Revenues derived from the System during such. twelve (12) 40 consecutive months shall be increased by fifty percent (50%) of the average annual additional Net Revenues calculated for such three year period. (7) The Issuer need not comply with the provisions of paragraph (1) of this Section if and to the extent the Bonds to be issued are Refunding Bonds, if the Issuer shall cause to be delivered a certificate of an independent certified public accoun- tant setting forth the Average Annual Debt Service Requirement (i) for the Bonds then Outstanding and (ii) for all Series of Bonds to be immediately Outstanding thereafter and stating that the Average Annual Debt Service Requirement pursuant to (ii) above is not greater than that set forth pursuant to (i) above. (8) The Issuer shall not be in default in the carrying out of any of the obligations assumed under this Resolution, and all payments required by this Resolution to be made into the funds and accounts established hereunder shall have been made to the full extent required. (9) The Resolution Additional Parity Obligations nants contained herein will be Obligations. authorizing the issuance of the shall recite that all of the cove- applicable to such Additional parity (R) OTHER MONEYS. The Issuer may, in its discretion, utilize its legally available moneys, in addition to the Pledged Revenues, to pay the principal of, redemption premium, if any, and interest on the Bonds. SECTION 21. DEFAULTS: EVENTS OF DEFAULT AND REMEDIES. Except as provided below, if any of the following events occur it is hereby defined as and declared to be and to constitute an "Event of Default": (1) Default in the due and punctual payment of any interest on the Bonds; (2) Default in the due and punctual payment of the principal of and premium, if any, on any Bond, at the stated maturity thereof, or upon proceedings for redemption thereof; (3) The occurrence of an event of default under the Financial Guaranty Agreement. (4) Default in the performance or observance of any other of the covenants, agreements or conditions on the part of the Issuer contained in this Resolution or in the Bonds and the continuance thereof for a period of thirty (30) days after written notice to the or the Trustee given by the Holders of not less than twenty- five percent (25%) of aggregate principal amount of Bonds then Outstanding (provided, however, that with respect to any obliga- 41 tion, covenant, agreement or condition which requires performance by a date certain, if the Issuer performs such obligation, cove- nant, agreement or condition within thirty (30) days of written notice as provided above, the default shall be deemed to be cured); (5) Failure by the Issuer promptly to remove any execution, garnishment or attachment of such consequence as will materially impair its ability to carry out its obligations hereunder. (6) An Act of Bankruptcy or the rearrangement, adjustment or readjustment of the obligations of the Issuer under the provisions of any bankruptcy or moratorium laws or similar laws relating to or affecting creditors' rights. The term "default" shall mean default by the Issuer in the performance or observance of any of the covenants, agreements or conditions on its part contained in the Resolution or in the Bonds, exclusive of any period of grace required to constitute a default or an "Event of Default" as hereinabove provided. Subject to the provisions of this section 21, any Holder of Bonds issued under the provisions hereof or any trustee acting for the Holders of such Bonds or MBIA, 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, including the right to the appointment of a receiver, existing under State of Florida or federal law, or granted and contained herein, and may enforce and compel the performance of all duties required herein or by any applicable law to be performed by the Issuer or by any of.ficer thereof. Nothing herein, however, shall be construed to grant to any Holder of the Bonds any lien on any property of the Issuer, or shall be construed to grant to the Holders of the Bonds the right to declare the Bond immediately due and payable. The foregoing notwithstanding: (i) No remedy conferred upon or reserved to the Bond Holders is intended to be exclusive of any other remedy, but each remedy shall be cumulative and shall be in addition to any other remedy given to any trustee or to the Bond Holders hereunder or now or hereafter existing legally. (ii) No delay or omission to exercise any right or power accruing upon any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein, and every such right and power may be exercised as often as may be deemed expedient. (iii) No waiver of any default or Event of Default hereunder by the Bond Holders, shall extend to or shall affect any subse- 42 quent default or Event of-Default or shall impair any rights or remedies consequent thereon. Upon the occurrence of an Event of Default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Bond Holders under this Resolution, the Holders shall be entitled, as a matter of right, to the appoint- ment of a receiver or receivers of the System and the funds pending such proceedings, with such power as the court making such appoint- ment shall confer. Notwithstanding any provision of this Resolution to the contrary, for all purposes of this Section 21, except the giving of notice of any Event of Default to the Holder of the Bonds, MBIA shall be deemed to be the Holder of the Bonds it has insured. On the occurrence of an Event of Default, to the extent such rights may then lawfully be waived, neither the Issuer nor anyone claiming through or under it, shall set up, claim or seek to take advantage of any stay, extension or redemption laws now or here- after in force, in order to prevent or hinder the enforcement of this Resolution, and the Issuer, for itself and all who may claim through or under it, hereby waives, to the extent it may lawfully do so, the benefit of all such laws and all right of redemption to which it may be entitled. SECTION 22. AMENDING AND SUPPLEMENTING OF RESOLUTION WITHOUT CONSENT OF HOLDERS OF BONDS. The Issuer, from time to time and at any time and without the consent of concurrence of any Holder of any Bonds, may adopt a resolution amendatory hereof or supplemen- tal hereto, if the provisions of such supplemental resolution shall not adversely affect the rights of the Holders of the Bonds then Outstanding, for anyone or more of the following purposes: (A) To make any changes or corrections in the Resolution as to which the Issuer shall have been advised by counsel that are required for the purpose of curing or correcting any ambiguity or defective or inconsistent provisions or omission or mistake or manifest error contained in the Resolution, or to insert in the Resolution such provisions clarifying matters or questions arising under the Resolution as are necessary or desirable; (B) To add additional covenants and agreements of the Issuer for the purpose of further securing the payments of the Bonds; (C) To surrender any right, power or privilege reserved to or conferred upon the Issuer by the terms of the Resolution; (D) To confirm as further assurance any lien, pledge or change, or the subjection to any lien, pledge or change, created or to be created by the provisions of the Resolution; 43 (E) To grant to or confer upon the Holders any additional right, remedies, powers, authority or security that lawfully may be granted to or conferred upon them; and (F) To assure compliance with provisions of the Internal Revenue Code of 1986, as amended, providing for the exclusion of interest on the Bonds from the gross income of the Holders of the Bonds for purposes of Federal income taxation, in effect from time to time. (G) To provide such changes as may be necessary in order to adjust the terms hereof so as to facilitate the issuance of Variable Rate Bonds, Option Bonds and Designated Maturity obliga- tions. (H) To provide for the combination of the System with the any other utility provided the conditions set forth in Section 26 hereof are satisfied. ( I) To provide for the transfer of the ownership and/or operation of the System pursuant to a Governmental Reorganization as set forth in Section 25 hereof. (J) To modify any of the provisions of the Resolution in any other aspects provided that such modifications shall not be effec- tive until after the Bond Outstanding at the time such supplemen- tal resolution is adopted shall cease to be Outstanding, or until the holders thereof consent thereto pursuant to Section 23 hereof, and any Bonds issued subsequent to any such modification shall contain a specific reference to the modifications contained in such supplemental resolution. Except for Series Resolutions providing for the issuance of Bonds pursuant hereto, the Issuer shall not adopt any supplemental resolution authorized by the foregoing provisions of this Section unless in the opinion of Bond Counsel the adoption of such supple- mental resolution is permitted by the foregoing provisions of this Section. SECTION 23. AMENDMENT OF RESOLUTION WITH CONSENT OF HOLDERS OF BONDS. Except as provided in Section 22 hereof, no material modification or amendment of this Resolution or of any resolution without the consent in writing of the Holders of fifty-one percent or more in the principal amount of the Bonds of each Series so affected and then outstanding; provided, however, that no modifi- cation or amendment shall permit a change in the maturity of such Bonds or a reduction in the rate of interest thereon or in the amount of the principal obligation thereof or affecting the promise of the Issuer to pay the principal of and interest on the Bonds as the same shall become due from the Net Revenues of the System or reduce the percentage of the Holders of the Bonds required to consent to any material modification or amendment hereof without 44 the consent of the Holder or Holders of all such obligations. For 'purposes of this Section, to the extent any Bonds are insured by a policy of municipal bond insurance or are secured by a letter of credit and such Bonds are then rated in as high a rating category as the rating category in which such Bonds were rated at the time of initial issuance and deliver thereof by either Standard & Poor's Corporation or Moody's Investor Service, Inc., or successors and assigns, then the consent of the issuer of such municipal bond insurance policy or the issuer of such letter of credit is required prior to the amendment or modification of the Resolution pursuant to this section but the consent of MBIA, which comment shall not be unreasonably withheld, as the issuer of a municipal bond insurance policy for the Series 1990 Bonds shall not be substituted for the consent of the Holders of such Series 1990 Bonds pursuant to this section. SECTION 24. DEFEASANCE. The covenants and obligations of the Issuer shall be defeased and discharged under terms of this Resolution as follows: (A) If the Issuer shall payor cause to be paid, or there shall otherwise be paid, to the Holders of all Bonds the principal, redemption premium, if any, and interest due or to become due thereon, at the times and in the manner stipulated herein, 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. If the Issuer shall payor cause to be paid, or there shall otherwise be paid, to the Holders of any Outstanding Bonds the principal or redemption premium, if any, and interest due or to become due thereon, at the times and in the manner stipulated herein, such Bonds shall cease to be entitled to any lien, benefit or security under this Resolution, and all covenants, agreements and obligations of the Issuer to the Holders of such Bonds shall thereupon cease, terminate and become void and be discharged and satisfied. (B) The Bonds, redemption premium if any, and interest due or to become due for the payment or redemption of which cash and/or Defeasance Obligations shall have been set aside and shall be held in trust by an escrow agent (through deposit by the Issuer of funds for such payment or redemption or otherwise) at the maturity or redemption date thereof shall be deemed to have been paid within the meaning and with the effect expressed in paragraph (A) of this Section 24. Subject to the provisions of paragraph (C) through (G) of this Section 24, any Outstanding Bonds shall prior to the maturity or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in paragraph A of this Section if (a) in case any of said Bonds are to be redeemed on any date prior to their maturity, the Issuer shall have given to an escrow agent instructions accepted in writing by an escrow agent to notify Holders of Outstanding Bonds in the manner required 45 herein of the redemption of such Bonds on said date, (b) there shall have been deposited with an escrow agent either cash in an amount which shall be sufficient, or cash and/or Defeasance Obligations the principal of and the interest on which when due will provide moneys which, together with the moneys, if any, deposited with an escrow agent at the same time, shall be suffi- cient, to pay when due the principal of or premium, if any, and interest due and to become due on said Bonds on or prior to the redemption date or maturity date thereof, as the case may be, and (c) in the event said Bonds are not by their terms subj ect to redemption within the next succeeding 60 days, the Issuer shall have published as soon as practicable, at least twice, at an interval of not less than seven days between publications, in the Authorized Newspapers a notice to the Holders of such Bonds that the deposit required by (b) above has been made and that said Bonds are deemed to have been paid in accordance with this Section 24 and stating such maturity or redemption date upon which moneys are expected, subject to the provisions of paragraph (G) of this Section 24 to be available for the payment of the principal, redemption premium, if any, on said Bonds (other than Bonds which have been purchased or otherwise acquired by the Issuer and prior to the giving of the notice of redemption referred to in clause (a) hereof). Any notice of redemption made pursuant to the preceding sentence with respect to Bonds which constitute less than all of the Outstanding Bonds of any maturity within a Series shall specify the letter and number or other distinguishing mark of each such Bond. The escrow agent shall, as and to the extent necessary, apply moneys held by it pursuant to this Section 24 to the retire- ment of said Bonds in amounts equal to the unsatisfied balances of the aggregate Bond Service Requirement with respect to such Bonds, all in the manner -provided herein. The escrow agent shall, if directed by the Issuer (i) prior to the maturity date of Bonds deemed to have been paid in accordance with this Section 24 which are not to be redeemed prior to their maturity date or (ii) prior to the giving of the notice of redemption referred to in clause (a) above with respect to any Bonds deemed to have been paid in accordance with this Section 24 which are to be redeemed on any date prior to their maturity, apply moneys deposited with the escrow agent in respect of such Bonds and redeem or sell Defeasance Obligations so deposited with the escrow agent and apply the proceeds thereof to the purchase of such Bonds and the escrow agent shall immediately thereafter cancel all such Bonds so purchased; provided, however, that the moneys and Defeasance Obligations remaining on deposit with the escrow agent after the purchase and cancellation of such Bonds shall be sufficient to pay when due the principal or redemption premium, if applicable, and interest due or to become due on all Bonds, in respect to which such cash and Defeasance Obligations are being held by the escrow agent on or prior to the redemption date or maturity date thereof, as the case may be. If, at any time (i) prior to the maturity date of Bonds deemed to have been paid in accordance with this Section 24 which are not to be redeemed prior to their maturity date or (ii) prior 46 to the giving of the notice of redemption referred to in clause (a) . with respect to any Bonds deemed to have been paid in accordance with this Section 24 which are to be redeemed on any date prior to their maturity, the Issuer shall purchase or otherwise acquire any such Bonds and deliver such Bonds to the escrow agent prior to their maturity date or redemption date, as the case may be, the escrow agent shall immediately cancel all such Bonds so delivered; such delivery of Bonds to the escrow agent shall be accompanied by directions from the Issuer to the escrow agent as to the manner in which such Bonds are to be applied against the obligation of the escrow agent to payor redeem Bonds deemed paid in accordance with this Section 24. The directions given by the Issuer to the escrow agent referred to in the preceding sentence shall also specify the portion, if any, of such Bonds so purchased or delivered and can- celled to be applied against the obligation of the escrow agent to pay Bonds deemed paid in accordance with this Section 24 upon their maturity date or dates and the portion, if any, of such Bonds so purchased or delivered and cancelled to be applied against the obligation of the escrow agent to redeem Bonds deemed paid in accordance with this Section 24 on any date or dates prior to their maturity. In the event that on any - date as a result of any purchases, acquisitions and cancellations of Bonds as provided in this Section 24 the total amount of cash and Defeasance Obliga- tions remaining on deposit with the escrow agent under this Section 24 is in excess of the total amount which would have been required to be deposited with the escrow agent on such-date in respect of the remaining Bonds in order to satisfy clause (b) of this para- graph B of this Section 24, the escrow agent shall, if requested by the Issuer, pay the amount of such excess to the Issuer free and clear of any trust,. lien, pledge or assignment securing said Bonds or otherwise existing under this Resolution. Except as otherwise provided in this paragraph B of this Section 24 and in paragraph (C) through paragraph (G) of this Section 24, neither Defeasance Obligations nor moneys deposited with the escrow agent pursuant to this Section 24 nor principal or interest payments on any such Defeasance Obligations shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal or redemption premium, if applicable, and interest on said Bonds; provided that any cash received from such principal or interest payments on such Defeasance Obligations deposited with the escrow agent, (A) to the extent such cash will not be required at any time for such purpose, shall be paid to the Issuer as received by the escrow agent, free and clear of any trust, lien or pledge securing said Bonds or otherwise existing under this Resolution, and (B) to the extent such cash will be required for such purpose at a later date, shall, to the extent practicable, be reinvested in Defeasance Obligations maturing at times and in amounts suffi- cient to pay when due the principal or redemption premium, if applicable, and interest to become due on said Bonds on or prior to such redemption date or maturity date thereof, as the case may be, and excess interest, if any, earned from such reinvestments shall be paid over to the Issuer, as received by the escrow agent, 47 free and clear of any trust, lien, pledge or assignment securing said Bonds or otherwise existing under this Resolution. (C) For purposes of determining whether Variable Rate Bonds shall be deemed to have been paid prior to the maturity or redemp- tion date thereof, as the case may be, by the deposit of moneys, or Defeasance Obligations and moneys, if any, in accordance with the second sentence of paragraph B of this Section 24, the inter- est to come due on such Variable Rate Bonds on or prior to the maturity date or redemption date thereof, as the case may be, shall be calculated at the maximum rate permitted by the terms thereof; provided, however, that if on any date, as a result of such Variable Rate Bonds having borne interest at less than such maximum rate for any period, the total amount of moneys and Defeasance Obligations on deposit with the escrow agent 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 with the escrow agent on such date in respect of such Variable Rate Bonds in order to satisfy the second sentence of paragraph B of this Section 24, the escrow agent shall, if requested by the Issuer, pay the amount of such excess to the Issuer free and clear of any trust, lien, pledge or assignment securing the Bonds or otherwise existing under this Resolution. (D) Option Bonds shall be deemed to have been paid in accordance with the second sentence of paragraph (B) of this Section 24 only if, in addition to satisfying the requirements of clauses (a) and (c) of such sentence, there shall have been deposited with the escrow agent moneys in an amount which shall be sufficient to pay when due the maximum amount of principal of and redemption premium,'- if any, and interest on such Bonds which could become payable to the Holders of such Bonds upon the exercise of any options provided to the Holders of such Bonds; provided, however, that if, at the time a deposit is made with the escrow agent pursuant to paragraph (B) of this Section, the options originally exercisable by the Holder of an Option Bond are no longer exercisable, such Bond shall not be considered an Option Bond for purposes of this paragraph (D). If any portion of the moneys deposited with the escrow agent for the payment of the principal of and redemption premium, if any, and interest on Option Bonds is not required for such purpose, the escrow agent shall, if requested by the Issuer, pay the amount of such excess to the Issuer free and clear of any trust, lien, security interest, pledge or assignment securing said Bonds or otherwise existing under the Resolution. (E) tion with which will income of taxation. The Issuer agrees that it will take no action in connec- any of the transactions referred to in this Section 24 cause interest on the Bonds to be included in the gross the Holders thereof for purposes of Federal income 48 (F) Anything in this Resolution to the contrary notwithstand- ing, any moneys held by an escrow agent in trust for the payment and discharge of any of the Bonds which remain unclaimed for six years after the date when such Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the escrow agent in trust pursuant to the provisions of this Section, at such date, or for six years after the date of deposit of such moneys if deposited with the escrow agent in trust pursuant to the provisions of this Section, after the said date when such Bonds become due and payable, shall, at the written request of the Issuer, be repaid by the escrow agent to the Issuer, as its absolute property and free from trust, and the escrow agent shall thereupon be released and discharged with respect thereto and the Holders shall look only to the Issuer for the payment of such Bonds; provided, however, that before being required to make any such payment to the Issuer, the escrow agent shall, at the expense of the Issuer, cause to be published at least twice, at an interval of not less than 7 days between publications, in the Authorized Newspapers, a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall be not less than 30 days after the date of the first publication of such notice, the balance of such moneys then unclaimed will be returned to the Issuer. SECTION 25. GOVERNMENTAL OR SYSTEM REORGANIZATION. Not- withstanding any other provisions of this Resolution, this Resolu- tion shall not prevent any lawful reorganization of the governmen- tal structure of the Issuer, or the merger of the System with any other water and/or sewer system of the Issuer, including a merger or consolidation of the Issuer with another public body or the transfer of a public function of the Issuer to another public body, provided that any reorganization which affects the System shall provide that the System shall be continued as a single enterprise and that any public body which succeeds to the ownership and operation of the System shall also assume all rights, powers, obligations, duties and liabilities of the Issuer under this Resolution and pertaining to all Bonds. Prior to the merger of the System with any other water and/or sewer system of the Issuer there shall be filed with the Clerk a report or statement or certificate of the consulting engineer that immediately following such merge the Issuer will be in compliance with Section 20(D) hereof. SECTION 26. ADDITIONAL UTILITY FUNCTIONS. The Issuer may expand the utility functions of the System as they exist on the date hereof as permitted by the penultimate sentence in the defi- nition of "System" contained herein, and/or merge the System with any other water and sewer system of the Issuer, provided that the Issuer has adopted resolutions or ordinances of the Issuer to the effect that, based upon such certificates and opinions of its Consulting Engineers, independent certified public accountants, Bond Counsel, financial advisors or other appropriate advisors as the Issuer shall deem necessary, desirable or appropriate, the 49 addition of such utility functions (a) will not impair the ability . of the Issuer to comply with the provisions of this Resolution, and (b) will not materially adversely affect the rights of the Holders of the Bonds. SECTION 27. CAPITAL APPRECIATION BONDS. For the purposes of (i) receiving payment of the redemption price of a Capital Appre- ciation Bond if redeemed prior to maturity, (ii) receiving payment if the principal of all Bonds is declared immediately due and payable, (iii) computing Bond Service Requirement, and (iv) in computing the amount of Holders required for any notice, consent, request or demand hereunder for any purpose whatsoever, the prin- cipal amount of a Capital Appreciation Bond shall be deemed to be its Compounded Amount. SECTION 28. TAX COVENANTS. With respect to any Series 1990 Bonds for which the Issuer intends on the date of issuance thereof for the interest thereon to be excluded from gross income for purposes of Federal income taxation: (A) The Issuer shall not use or permit the use of any proceeds of the Series 1990 Bonds or any other funds of the Issuer, directly or indirectly, to acquire any securities or obligations, and shall not use or permit the use of any amounts received by the Issuer with respect to the Series 1990 Bonds in any manner, and shall not take or permit to be taken any other action or actions, which would cause any Series 1990 Bonds to be an "arbitrage bond" within the meaning of Section 148, or "federally guaranteed" wi thin the meaning of Section 149(b), of the Internal Revenue Code of 1986, as amended (in this Section called the "Code"), or otherwise cause interest on the Series 1990 Bonds to become subject to federal income taxation. (B) The Issuer shall at all times do and perform all acts and things permitted by law and this Resolution which are necessary or desirable in order to assure that interest paid on Series 1990 Bonds will be excluded from gross income for purposes of federal income taxes and shall take no action that would result in such interest not being so excluded. (C) The Issuer shall payor cause to be paid to the United States Government any amounts required by Section 148(f) of the Code and the regulations thereunder (the "Regulations"). In order to insure compliance with the rebate provisions of Section 148(f) of the Code with respect to any Series 1990 Bonds for which the Issuer intends on the date of issuance thereof to be excluded from gross income for purposes of Federal income taxation, the Issuer hereby creates the City of Winter Springs Water and Sewer System Rebate Fund to be held by the Trustee. within such fund there shall be maintained for each Series of Bonds a subaccount. The Rebate Fund need not be maintained so long as the Issuer timely satisfies its obligation to pay any rebatable earnings to the 50 United States Treasury; however, the Issuer may, as an adminis- trative convenience, maintain and deposit funds in the Rebate Fund from time to time. Any moneys held in the Rebate Fund shall not be considered Pledged Revenues and shall not be pledged in any manner for the benefit of the holders of the Series 1990 Bonds. Moneys in the Rebate Fund (including earnings and deposits therein) shall be held for future payment to the United States Government as required by the Regulations and as set forth in instructions of Bond Counsel delivered to the Issuer upon issuance of such Series 1990 Bonds. Notwithstanding any provision of this Resolution to the con- trary, to the extent the Issuer is required or elects to make deposits to the Rebate Fund, such amounts may be taken from any fund or account created hereunder. SECTION 29. DESIGNATED MATURITY OBLIGATIONS. No Designated Maturity Obligations may be issued under this Resolution or may be issued as Additional Parity Obligations without the consent of all companies which have issued a policy of municipal bond insurance insuring any Series of Bonds if the principal amount of Designated Maturity Obligations maturing in anyone year exceeds 15% of Maximum Bond Service Requirement. SECTION 30. OPTION BONDS. No Option Bonds may be issued under this Resolution or may be issued as Additional Parity Obligations unless the Issuer shall have provided for a liquidity facility to purchase such Option Bonds in the event of a tender for payment at the option of the Holder thereof. Any such liquidity facility must, on ~he date of issuance of such Option Bonds, be rated in one of the two highest rating categories of both Standard & Poor's Corporation, or any successors thereto, and Moody's Investors Service, Inc. or any successors thereto. SECTION 31. NOTES AUTHORIZED FOR INTERIM FINANCING. Pursuant to authority granted by Section 215.431, Florida Statutes, the Issuer is authorized to issue its negotiable notes from time to time for the purposes authorized by this Resolution and for the purpose of obtaining interim financing. Any such notes authorized by the Issuer shall be issued upon the adoption of a resolution by the Issuer specifying the amount of notes to be issued, the maturity of such notes, the denomination, date and rate of interest which shall be borne by such notes which shall not be greater than the highest rate authorized by law. Any such notes issued may be sold in the manner provided by Section 215.431, Florida Statutes. SECTION 32. PROVISIONS RELATING TO MBIA. MBIA is a third- party beneficiary under this Resolution and the terms, conditions and obligations of this Resolution which benefit MBIA are specifi- cally enforceable by MBIA for so long as the Series 1990 Bonds are Outstanding. 51 SECTION 33. NOTICES TO MBIA. For so long as the Series 1990 ,Bonds are outstanding, MBIA shall be furnished a copy of all notices with respect to this Resolution or the Bonds as follows: Municipal Bond Investors Assurance Corporation 113 King Street Armonk, New York 10504 Attention: Surveillance Department SECTION 34. PAYMENTS UNDER MUNICIPAL BOND INSURANCE POLICY APPLICABLE TO SERIES 1990 BONDS AND OTHER PROVISIONS APPLICABLE TO MBIA. A. In the event that, on the second Business Day, and again on the Business Day, the Paying Agent has not received sufficient moneys to pay all principal of and interest on the Series 1990 Bonds due on the second following or following, as the case may be, Business Day, the Paying Agent shall immediately notice MBIA or its designee on the same Business Day by telephone, telegraph, or telecopy confirmed in writing by registered or certified mail, of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the interest payment date, the paying Agent shall so notify MBIA or its designee. C. In addition, if the Paying Agent has notice that any Bondholder has been required to disgorge payments of principal or interest on the Series 1990 Bonds to the Issuer or its Paying Agent in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the paying Agent shall notify MBIA or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. D. The Paying Agent is hereby irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for Holders of the Series 1990 Bonds as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Series 1990 Bonds, the paying Agent shall (a) execute and deliver to Citibank, N.A., or its successors under the Municipal Bond Insurance policy (the "Insurance Paying Agent"), in form satisfactory to the Insurance Paying Agent, an instrument appointing MBIA as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to MBIA of the claims for interest to which such deficiency relates and which are paid by MBIA, (b) receive as designee of the respective Holders (and not as Paying Agent) in accordance with the tenor of the Municipal Bond Insurance Policy payment from the 52 Insurance Paying Agent with respect to the claims for interest so assigned and (c) disburse the same to such respective Holders; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Series 1990 Bonds, the Paying Agent shall (a) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing MBIA as agent for such Holder in any legal proceeding relating to the payment of such principal and an assignment to MBIA of any of the Series 1990 Bonds sur- rendered to the Insurance Paying Agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent and avail- able for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee of the respective Holders (and not as Paying Agent) in accordance with the tenor of the Municipal Bond Insurance Policy payment therefor from the Insurance Paying Agent and (c) disburse the same to such Holders. E. Payments with respect to claims for interest on and prin- cipal of Series 1990 Bonds disbursed by the Paying Agent from proceeds of the Municipal Bond Insurance Policy shall not be considered to discharge the obligation of the Issuer with respect to such Series 1990 Bonds, and MBIA shall become the owner of such unpaid Series 1990 Bonds and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the Issuer and to the necessary extent, the Paying Agent hereby agree for the benefit of MBIA that 1. they recognize that to the extent MBIA makes payments, directly or indirectly (as by paying through the Paying Agent), on account of principal of or interest on the Series 1990 Bonds, the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Resolution and the Series 1990 Bonds, and 2. the Issuer will accordingly pay to MBIA the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Municipal Bond Insurance policy, which principal and interest shall be deemed past due and not to have been paid), but only from the sources and in the manner provided herein for the payment of principal of and interest on the Series 1990 Bonds to Holders, and will otherwise treat MBIA as the owner of such rights to the amount of such principal and interest. Nothing contained in this S34 F shall 53 create an obligation on the part of paying Agent to expend its own funds in the payment of moneys to MBIA; all such payments to come from funds provided by the Issuer. G. In connection with the issuance of Additional Parity Obligations pursuant to this Resolution, the Issuer shall deliver to MBIA a copy of the disclosure document, if any, circulated with respect to such Additional Parity Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Series 1990 Bonds which are consented to by MBIA shall be sent to Standard & Poor's Corpora- tion. I. MBIA shall receive notice of the resignation or removal of the paying Agent and the appointment of a successor thereof. J. MBIA shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis, copies of the Issuer's audited financial statements and Annual Budget. K. MBIA has a security interest in the Net Revenues to the extent they have insured the debt service on any Series of Bonds, subj ect only to the interest therein of the Bondholders any additional security interest granted to the Bondholders shall also be granted to MBIA, to the extent they have insured the debt service on any Outstanding Series of Bonds, which interest shall be subject only to the interest of the Bondholders in such addi- tional security. SECTION 35. THE TRUSTEE. A. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Resolution; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conform- ing to the requirements of this Resolution; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Resolution. 54 - (b) In case an - Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Resolution, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Resolution shall be construed to relieve the Trustee from liability for its own grossly negligent action, its own grossly negligent failure to act, or its own wilful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (A) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was grossly negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of Outstanding Bonds relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Resolution; and (4) no provision of this Resolution shall require the Trustee to expend or risk its own funds or otherwise incur any financial liapility in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Resolution relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. B. Notice of Defaults. Within ninety (90) days after the occurrence of any Event of Default hereunder, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Bond register, notice of such Event of Default hereunder known to the Trustee, unless such Event of Default shall have been cured or waived; provided, however, that, except in the case of an Event of Default in the payment of the principal of (or premium, if any) or interest on any Bond or in the deposit to the Redemption Account, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust 55 committee of directors or a responsible officer of the Trustee in . good faith determine that the withholding of such notice is in the interest of the Holders. C. Certain Rights of Trustee. Subject to the provisions of (A) of this Section 35: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebted- ness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by a resolution of the City Commission of the Issuer; (c) whenever in the administration of this Resolution the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifical- ly prescribed) may, in the absence of bad faith on its part, rely upon a certificate of the City Manager or City Clerk of the Issuer; (d) the Trustee may consult with counsel and the written advice of such counselor any opinion of counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it be this Resolution at the request or direction of any of the Holders pursuant to this Resolution, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any inves- tigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and 56 (g) the Trustee 'may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be respon- sible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. D. Not Responsible for Recitals or Issuance of Bonds The recitals contained herein and in the Bonds, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this resolution or of the Bonds. The Trustee shall not be accountable for the use or application by the Issuer of Bonds or the proceeds thereof. E. May Holder Bonds. The Trustee, any authenticating agent, any Paying Agent, any Bond Registrar or any other agent of the Issuer, in its individual or any other capacity, may become the owner or pledgee of Bonds. F. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed herein or otherwise with the Issuer. G. Compensation and Reimbursement. The Issuer agrees (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Resolution (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its gross negligence or bad faith; (3) to indemnify the Trustee for, and to hold it harmless against, any loss , liability or expense incurred without gross negligence or bad faith on its part, arising out 57 of or in connection with the acceptance or administration of the trust created by this Resolution, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder; (4) following an Event of Default, the Trustee shall have a lien prior to any Holder of any Bonds for its fees and expenses, as listed in subparagraphs (1) through (3) above against any Funds held or received by it; and (5) notwithstanding any other provision contained herein apparently to the contrary, from and after the date when principal, interest or premium, if any, on the Bonds shall become due, the Trustee shall not be liable to the Issuer, the owner or any Holder of the Bonds for any interest in respect of moneys on deposit with the Trustee for the payment thereof, it being expressly agreed that all interest earned on such moneys shall constitute additional compensation to the Trustee for the services rendered by it hereunder. SECTION 36. SEVERABILITY. If anyone or more of the cove- nants, agreements or provisions of this Resolution should 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 separate from the remaining covenants, agree- ments or provisions of this Resolution or of the Bonds issued hereunder. SECTION 37. INCONSISTENT RESOLUTIONS. All prior resolutions of the Issuer inconsistent with the provisions of this Resolution are hereby modified, supplemented and amended to conform with the provisions herein contained. SECTION 38. EFFECTIVE DATE. The provisions of this Resolu- tion shall take effect immediately upon its passage. 58 PASSED AND ADOPTED BY THE CITY COMMISSION OF THE 'WINTER SPRINGS, FLORIDA this 23rd day of April, 1990. Leanne M. Grove Mayor (SEAL) ATTEST: Mary T. Norton Clerk Approved as to form and Legal Sufficiency City Attorney 59