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HomeMy WebLinkAboutResolution 665 Refunding Revenue Bonds RESOLUTION NO. 665 A RESOLUTION AUTHORIZING THE ISSUANCE OF NOT EXCEEDING $7,100,000 WATER AND SEWER REFUNDING REVENUE BONDS, SERIES 1991, OF THE CITY OF WINTER SPRINGS, FLORIDA TO BE APPLIED TO REFUND THE CITY'S PRESENTLY OUTSTANDING WATER AND SEWER REFUNDING REVENUE BONDS, SERIES 1985 AND TO CONSTRUCT AND ACQUIRE CERTAIN ADDITIONS, EXTENSIONS AND IMPROVEMENTS TO THE WATER AND SEWER SYSTEM OF THE CITY; PLEDGING THE NET REVENUES OF THE WATER AND SEWER SYSTEM OF THE CITY FOR THE PAYMENT OF SAID BONDS; 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, as amended and supplement- ed, 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 law. 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. (A) "ACQUISITION AND IMPROVEMENT FUND" shall mean the city of winter Springs Acquisition and Improvement Fund created pursuant to section 16 hereof. (B) "ACT" shall mean Chapter 166, Part II, Florida Statutes, as amended and supplemented, the Charter of the Issuer and other applicable provisions of law. (C) "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 insol vency, (3) there shall be appointed a receiver, liquidator or similar official for the Issuer under any law relating to bankruptcy or insolvency, or (4) without the application, approval or consent of the Issuer, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Issuer, or a proceeding described in (2) above shall be instituted against the Issuer, and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of thirty (30) consecutive days. The mere declaration of a state of financial emergency under section 218.503, Florida statutes, shall not, in and of itself, constitute an Act of Bankruptcy. (D) "ADDITIONAL PARITY OBLIGATIONS" shall mean additional obligations issued in compliance with the terms, conditions and limitations contained herein and which (i) shall have a lien on the Net Revenues equal to that of the Series 1991 Bonds, (ii) shall be payable from the Net Revenues on a parity with the Series 1991 Bonds, and (iii) rank equally in all other respects with the Series 1991 Bonds. (E) "AGREEMENT" or "ESCROW DEPOSIT AGREEMENT" shall mean that certain Escrow Deposit Agreement by and between the Issuer and a trust company or bank with trust powers selected by subsequent resolution of the Issuer for the purpose of providing for the payment of Refunded Bonds hereinafter mentioned, which Agreement shall be in substantially the form attached hereto as Exhibit A and incorporated herein by reference. (F) "AMORTIZATION INSTALLMENT" with respect to any Term Bonds of a series, shall mean an amount so designated for mandatory principal 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 Obliga- tions. (G) "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 of general circulation in the ci ty 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. (H) "AVERAGE ANNUAL BOND SERVICE REQUIREMENT" means as of each date on which a Series of Bonds is issued, the total amount of the Bond Service Requirement 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 (including any partial years), 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. (I) "BOND ANTICIPATION NOTES" 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 Series of Bonds for which such Bond Anticipation Notes were issued. 2 (J) "BOND SERVICE REQUIREMENT" shall mean, for any Bond Year, at any time, the amount required to be deposited in such Bond Year into the Debt 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 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 Net Revenues hereunder on such date of tender. (K) "BONDS" shall mean the Series 1991 Bonds issued hereun- der, together with any Additional Parity Obligations hereafter issued under the terms, conditions and limitations contained herein. (L) "BOND YEAR" shall mean the period beginning with October 2 of each year and extending for a period of twelve (12) months thereafter. (M) "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. (N) "BUSINESS DAY" shall mean any day other than on Saturday, Sunday or a day on which banking institutions located in the State of Florida are required or authorized to remain closed. 3 (0) "CAPITAL APPRECIATION BONDS" shall mean the aggregate principal 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. (P) "CAPITAL APPRECIATION INCOME BONDS" means those Bonds initially 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. (Q) "CLERK" shall mean the City Clerk of the Issuer. (R) "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. (S) "CONNECTION CHARGES" shall mean all fees and charges assessed by the Issuer to users for the actual cost of connecting to the System, but shall not include any Impact Fees. (T) "CONSULTING ENGINEERS" shall mean qualified and recog- nized consulting engineers, having a favorable reputation for skill and experience in the management and operation of facilities of comparable size and character as the System, at the time retained by the Issuer to perform the acts and carry out the duties as herein provided for such consulting engineers. (U) "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 system, which represents an addition or transfer to the capital of the System, and which is utilized to offset the acquisition, improve- ment or construction costs of the System. (V) "COST OF OPERATION AND MAINTENANCE" of the System shall mean the 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 any reserve for renewals and replacements, extraordinary repairs or any allowance for depreciation. (W) "CURRENT INTEREST BONDS" means the aggregate principal amount of the Bonds that bear interest payable semiannually on such 4 dates as shall be determined by subsequent resolution of the Issuer. (X) "DEBT SERVICE FUND" shall mean the City of winter Springs Water and Sewer Debt Service Fund, which fund shall have within it an Interest Account, a Principal Account, a Redemption Account and a Reserve Account. (Y) "DEFEASANCE OBLIGATIONS" shall mean u.S. Treasury Certificates, Notes and Bonds (inclUding State and Local Government Series -- "SLGS"), direct obligations of the Treasury which have been stripped by the Treasury itself, "CATS" and "TIGRS" and obligations issued by the following agencies which are backed by the full faith and credit of the united . States: a. u.S. Export-Import Bank: Direct obligations or fully guaranteed certificates of beneficial ownership b. Farmers Home Administration: Certificates of beneficial ownership c. Federal Financinq Bank d. Federal Housinq Administration Debentures e. General Services Administration: Participation certifi- cates f. U. S. Mari time Administration: Guaranteed Title XI financing g. New Communities Debentures: u.S. government guaranteed debentures h. u.S. Public Housinq Notes and Bonds: u.S. government guaranteed public housing notes and bonds i. u.S. Department of Housinq and Urban Development: Project Notes; Local Authority Bonds j . Prerefunded municipal bonds rated "Aaa II 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. (Z) "DESIGNATED MATURITY OBLIGATIONS" shall mean all of the Bonds of a Series or a particular maturity thereof, so designated by the Issuer by resolution prior to the issuance thereof, for which no Amortization Installments have been established. (AA) "ESCROW AGENT" shall mean a bank with trust powers or a trust company appointed by the Issuer as a party to any Agreement approved by the Issuer for the purposes set forth in Section 24 of this Resolution. (BB) "FISCAL YEAR" shall mean the period commencing on October 1 of each year and ending on the succeeding September 30. 5 (CC) "GROSS REVENUES" or "REVENUES" shall mean all income or earnings, including Connection Charges, from any source received by the Issuer or accrued to the Issuer from the ownership or operation of the System and all parts thereof, including investment income, if any, earned on any fund or account established by the Issuer for the System, 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. Gross Revenues also do not include contributions in and of Construction or Impact Fees. (DD) "IMPACT FEES" shall mean the fees imposed by the Issuer on new users connecting to the System which represent a pro rata share of the costs of the System which are attributable to the increased demand such additional connections create upon the System. (EE) "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: A. Direct obligations of the united States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. B. Bonds, debentures, notes or other evidence of indebted- ness 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 of America: 1. U.S. Export-Import Bank: Direct obligations or fully guaranteed certificates of beneficial owner- ship 2. Farmers Home Administration: certificates of beneficial ownership 3. Federal Financinq Bank 4. Federal Housing Administration Debentures 5. General Services Administration: Participation certificates 6. Government National Mortqaqe Association ("GNMA"): GNMA - guaranteed mortgage-backed bonds; GNMA - guaranteed pass-through obligations (not acceptable for certain cash-flow sensitive issues.) 7. U.S. Maritime Administration: Guaranteed Title XI financing 8. New Communities Debentures: U.S. government guar- anteed debentures 6 9. U.S. Public Housinq Notes and Bonds: U.S. govern- ment guaranteed public housing notes and bonds 10. u.s. De~artment of Housing and Urban Development: Project Notes; Local Authority Bonds C. Bonds, debentures, notes or other evidence of indebted- ness issued or guaranteed by any of the following u.s. government agencies (non-full faith and credit agencies) : 1. Federal Home Loan Bank System: Senior debt obliga- tions 2. Federal Home Loan Mortqaqe Corporation: Participa- tion Certificates; Senior debt obligations 3. Federal National Mortqaqe Association: Mortgage- backed securities and senior debt obligations 4. Student Loan Marketinq Association: Senior debt obligations D. Money market funds registered under the Federal Invest- ment 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. E. certificates of deposit secured at all times by collater- al 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 collater- al. F. certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC or FSLIC. G. Investment Agreements, including GIC's, acceptable to MBIA. H. Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's or "A-1" or better by S&P. I. Bonds or notes issued by any state or municipality which are rated by Moody's or S&P in one of the two highest rating categories assigned by such agencies. J. Federal funds or bankers acceptances with a minimum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - 1" or "A3" or better by Moody's and "A-1" or "A" or better by S&P. K. Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (sell- 7 er/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 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. 1. Repos must be between the municipal entity and a dealer bank or securities firm a. Primary dealers on the Federal Reserve report- ing dealer list, or b. Banks rated "A" or above by Standard & Poor's Corporation and Moody's Investor Services. 2. The written repo contract must include the follow- inq: a. Securities which are acceptable for transfer are: (1) Direct u.S. governments, or (2) Federal agencies backed by the full faith and credit of the u.S. government b. The term of the repo may be UP to 30 days c. The collateral must be delivered to the munic- ipal entity, trustee (if trustee is not sup- plying 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). (1) 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 103% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued inter- est. If the value of securities held as collateral slips below 103% of the value of the cash transferred by municipality then additional cash and/or acceptable securities must be transferred. 3. Leqal opinion which must be delivered to the munic- ipal entity: a. Repo meets guidelines under state law for legal investment of public funds. (FF) "ISSUER" or "CITY" shall mean the City of Winter Springs, Florida. 8 (GG) "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. (HH) "MBIA" shall mean Municipal Bond Investors Assurance Corporation. (II) "MOODY'S" shall mean Moody's Investors Service, and any assigns or successors thereto. (JJ) "NET REVENUES" of the System shall mean the Revenues or Gross Revenues after deduction of the Cost of Operation and Maintenance. (KK) "OPTION BONDS" shall mean Bonds subject to tender for payment prior to their maturity at the option of the Holder thereof. (LL) "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 Defeasance 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 redemption date of any such Bonds) in an amount which, together with earnings on such Defeasance 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 Resolution or irrevocable instructions directing the timely publication of such notice and directing the payment of the principal of 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. (MM) "OWNER OF BONDS" or "OWNER" or "HOLDER" or any similar term shall mean any person who shall be the registered owner of any such Bond or Bonds. (NN) "PAYING AGENT" shall mean the paying agent, the co-paying agent or any successor paying agent to be appointed by subsequent resolution of the Issuer and at the time serving under this Resolution. 9 (00) "PROJECT" or "PROJECTS" shall mean any actual, proposed or potential addition, extension, supplement, or replacement of the System or joint ownership of similar properties or any interest therein or any right to use the capacity from any facilities or services thereof, or any other lawful purpose related to the System, all as determined by the Issuer. (PP) "PROJECT COSTS" shall mean all costs authorized to be paid from the Acquisition and Improvement Fund pursuant hereto and 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. (QQ) "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. (RR) "REFUNDED BONDS" shall mean (i) the outstanding bonds of the City of winter Springs, Florida Water and Sewer Refunding Revenue Bonds, Series 1985; (ii) any other obligations of the Issuer currently outstanding and payable from the Revenues of the System; (iii) 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 (iv) 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. (SS) "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. (TT) "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 the Resolution. Nothing in the Resolution shall prohibit the Issuer from serving as Registrar thereunder. 10 . . (00) "RENEWAL AND REPLACEMENT FUND" shall mean the City of winter Springs Water and Sewer Renewal and Replacement Fund created and established pursuant to section 18B(3) of this Resolution. (VV) "RESERVE REQUIREMENT" shall mean, as of any date of calculation, an amount equal to the lesser of (1) the Maximum Bond Service Requirement, (2) 125% of the Average Annual Bond Service Requirement, or (3) 10% of the proceeds of all outstanding Bonds. In computing the Reserve Requirement, the interest rate on Variable Rate Bonds shall be assumed to be the greater of (a) 110% of the daily average interest rate on such Variable Rate Bonds during the 12 months ending with the month preceding the date of calculation, or such shorter period of time that such Bonds shall have been Outstanding, or (b) the actual rate of interest borne by the Variable Rate Bonds on such date of calculation. (WW) "RETAINED EARNINGS" shall have the same meaning as is ascribed to such term by generally recognized principles and standards of public financial reporting, and notwithstanding the generality of the foregoing, shall mean the accumulated earnings of the System which have been retained in the Revenue Fund and which are not reserved for any specific purpose. (XX) "SERIAL BONDS" shall mean the Bonds of a Series, which mature on more than one date. (YY) "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 substitu- tion therefore pursuant to this Resolution. (ZZ) "SERIES 1985 REFUNDED BONDS" shall mean the remaining bonds outstanding of the City of winter Springs, Florida, Water and Sewer Refunding Revenue Bonds, Series 1985. (AAA) "SERIES 1991 BONDS" shall mean the not to exceed $7,100,000 City of winter Springs, Florida Water and Sewer Refunding Revenue Bonds, Series 1991, authorized pursuant to this Resolution. (BBB) "S&P" shall mean Standard & Poor's Corporation, and any assigns or successors thereto. (CCC) "STATE" shall mean the State of Florida. (DDD) "SYSTEM" shall mean the properties and assets, real and personal, tangible and intangible, owned or operated by the Issuer, other than those properties and assets constituting the system as such term is defined in Resolution No. 638 of the Issuer adopted by the City commission of the Issuer on April 23, 1990, used or useful for the collection, transmission, treatment, and disposal of 11 sewage, and for the supply, storage, treatment, transmission and distribution of water, and all properties and assets hereafter constructed or acquired as additions, improvements, betterments or replacements thereto and extensions thereof. (EEE) "TERM BONDS" shall mean the Bonds of a series, all of which shall be stated to mature on one date. (FFF) "VARIABLE RATE BONDS" 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. and declared: It is hereby ascertained, determined (A) The Issuer now owns, operates and maintains the System and derives revenues from rates, fees rentals and other charges made and collected for the services of the System. (B) The Issuer has previously issued the Series 1985 Refunded Bonds, of which $5,215,000 principal amount is outstanding and unpaid as of April 1, 1991. (C) The Issuer deems it necessary, beneficial and in its best interest to provide for the refunding of the Series 1985 Refunded Bonds and the acquisition and construction of the Project. The refunding program herein described will be advantageous to the Issuer by (1) effecting an overall reduction in debt service applicable to bonded indebtedness issued to finance the System, and (2) revising certain terms and covenants previously made for the benefit of the holders of the Series 1985 Refunded Bonds and restructuring of debt to the advantage of the Issuer. The acquisition and construction of the Project will benefit the public health of the residents of the Issuer. (D) The sum required for the refunding of the Series 1985 Refunded Bonds will be derived from a portion of the proceeds of the sale of the Series 1991 Bonds, together with certain other funds available to the Issuer more fully described herein and in the Agreement. (E) A portion of the proceeds of the Bonds and other funds available for such purpose, shall be deposited pursuant to the Agreement, in sufficient amounts to make timely payments of all presently outstanding principal, interest and redemption premiums, if any, in respect to the Series 1985 Refunded Bonds, as the same become due or are redeemed prior to maturity as hereinafter provided. Such funds shall be invested pursuant to the Agreement in such investments as will produce escrow deposit income suffi- cient to make timely payments of all principal of, redemption premiums and interest on the Series 1985 Refunded Bonds. 12 (F) The acquisition and construction of the Project to be financed with a portion of the proceeds of the Series 1991 Bonds is in the best interest of the Issuer and its residents. (G) The principal of and interest on the Bonds and all required reserve and other payments shall be payable solely from the Net Revenues as provided herein. 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. (H) The Net Revenues are estimated to be sufficient to pay all principal of and interest on the Bonds to be issued hereunder, as the same become due, and to make all required payments required by this Resolution, including payments required to be made to the Debt Service Fund. (I) The Net Revenues are now pledged or encumbered in any manner, except for the prior payment of the principal and interest on the Series 1985 Refunded Bonds, which pledge and encumbrance shall be defeased pursuant to the refunding herein authorized. Section 4. AUTHORIZATION OF REFUNDING AND PROJECT. There is hereby authorized the refunding of the Refunded Bonds, and the acquisition and construction of the 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 own the same from time to time, this Resolution shall be deemed to be and shall constitute and contract between the Issuer and such Owners. 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 Owners of any and all of the Bonds, all of which shall be of equal rank 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 1991 BONDS. Subject and pursuant to the provisions hereof, obligations of the Issuer to be known as "Water and Sewer Refunding Revenue Bonds, Series 1991", are authorized to be issued in the aggregate principal amount of not exceeding $7,100,000. Section 7. DESCRIPTION OF SERIES 1991 BONDS. The Series 1991 Bonds shall be issued in fully registered form; may be Capital Appreciation Bonds and/or Current Interest Bonds; shall be dated; shall be numbered; shall be in the denomination of $5,000 each, or integral multiples thereof for the Current Interest Bonds and in 13 $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 1991 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 discounts 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 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 respec- tive 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 interest which is due and payable has not been made, such Current Interest 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 1991 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 on the fifteenth day of the month prior to each interest payment date. 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 presentation and surrender of such Bonds at the principal corporate trust office of the Paying Agent as the same shall become due and payable. Notwi thstanding any other provisions of this section, the Issuer may, at its option, prior to the date of issuance of any Series of Bonds, elect to use an immobilization system or pure book-entry system with respect to issuance of such Series of Bonds, provided adequate records will be kept with respect to the 14 ownership of such Series of Bonds issued in book-entry form or the beneficial ownership of Bonds issued in the name of a nominee. As long as any Series of Bonds are outstanding in book-entry form the provisions or sections 8, 9, 10 and 13 of this Resolution shall not be applicable to such Bonds. The details of any al ternati ve system of issuance, as described in this paragraph, shall be set forth in a resolution of the Issuer duly adopted at or prior to the sale of such Series of Bonds. section 8. EXECUTION OF SERIES 1991 BONDS. The Series 1991 Bonds shall be signed by, or bear the facsimile signature of the Mayor and shall be signed by, or bear the facsimile signature of the Clerk and a facsimile of the official seal of the Issuer shall be imprinted on the Series 1991 Bonds. In case any officer whose signature or a facsimile of whose signature shall appear on any Series 1991 Bonds shall cease to be such officer before the delivery of such Series 1991 Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes the same as if he had remained in office until such delivery, and also any Series 1991 Bond may bear the facsimile signature of or may be signed by such persons who, as at the actual time of the execution of such Series 1991 Bond, shall be the proper officers to sign such Series 1991 Bonds although at the date of such Series 1991 Bond such persons may not have been such officers. section 9. AUTHENTICATION OF SERIES 1991 BONDS. Only such of the Series 1991 Bonds as shall have endorsed thereon a certificate of authentication substantially in the form herein set forth, duly executed by the Registrar, as authenticating agent, shall be entitled to any benefit or security under this Resolution. No Series 1991 Bond shall be valid or obligatory for any purpose unless and until such certificates of authentication shall have been duly executed by the Registrar, and such certificate of the Registrar upon any such Series 1991 Bonds shall be conclusive evidence that such Series 1991 Bonds has been duly authenticated and delivered under this Resolution. The Registrar's certificate of authentication on any Series 1991 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 1991 Bonds that may be issued hereunder at anyone time. section 10. EXCHANGE OF SERIES 1991 BONDS. Any Series 1991 Bond, upon surrender thereof at the principal corporate trust office of the Registrar, together with an assignment duly executed by the Owner or his attorney or legal representative in such form a shall be satisfactory to the Registrar, may, at the option of the Owner, be exchanged for a Bond of the same type ( i. e. Current Interest Bonds shall be exchanged for Current Interest Bonds and Capital Appreciation Bonds shall be exchanged for Capital Apprecia- 15 tion Bonds) and in an aggregate principal amount of Series 1991 Bonds equal to the principal amount of the Series 1991 Bonds or Series 1991 Bonds so surrendered. The Registrar shall make provisions for the exchange of Series 1991 Bonds at the principal corporate trust office of the Regis- trar. section 11. NEGOTIABILITY, REGISTRATION AND TRANSFER OF SERIES 1991 BONDS. The Registrar shall keep books for the registration of and for the registration of transfers of Series 1991 Bonds as provided in this Resolution. The transfer of any Series 1991 Bonds may be registered only upon such books upon surrender thereof to the Registrar together with an assignment duly executed by the Owner 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 Registrar shall authenticate and delivery in exchange for such Series 1991 Bond, a new Series 1991 Bond or Series 1991 Bonds registered in the name of the transferee, and in an aggregate principal amount equal to the principal amount of such Series 1991 Bond or Series 1991 Bonds so surrendered. In all cases in which Series 1991 Bonds shall be exchanged, the Issuer shall execute and the Registrar shall authenticate and deliver, at the earliest practicable time, Series 1991 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 provisions of this Resolution. All Series 1991 Bonds surrendered in any such exchange or registration of transfer shall forthwith be canceled by the Registrar. The Issuer or the Registrar may make a charge for every such exchange or registration of transfer of Series 1991 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 Owner for the privilege of exchanging or registering the transfer of Series 1991 Bonds under the provisions of this Resolution. Neither the Issuer nor the Registrar shall be required to make any such exchange or registration of transfer of Series 1991 Bonds during the fifteen (15) days immediately preceding any interest payment date. section 12. OWNERSHIP OF SERIES 1991 BONDS. The person in whose name any Series 1991 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 Series 1991 Bond, and the interest on any such Series 1991 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 satisfy and discharge the liability upon 16 such Series 1991 Bond including the premium, if any, and interest thereon to the extent of the sum or sums so paid. section 13. SERIES 1991 BONDS MUTILATED, DESTROYED, STOLEN OR LOST. In case any Series 1991 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 Series 1991 Bond of like date and tenor (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) as the Series 1991 Bond so mutilated, destroyed, stolen or lost, in exchange and substitution for such mutilated Series 1991 Bond upon surrender and cancellation of such mutilated Series 1991 Bond or in lieu of and substitution for the Series 1991 Bond destroyed, stolen or lost, and upon the Owner 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 1991 Bonds so surrendered shall be canceled by the Issuer. If any of the Series 1991 Bonds shall have matured, or be about to mature, instead of issuing a substitute Series 1991 Bond, the Issuer may pay the same, upon being indemnified as aforesaid, and if such Series 1991 Bond be lost, stolen or destroyed, without surrender thereof. Any such duplicate Series 1991 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 1991 Bonds be at any time found by anyone, and such duplicate Series 1991 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 1991 Bonds issued hereunder. section 14. PROVISIONS FOR REDEMPTION. The Series 1991 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 1991 Bonds. Notice of such redemption shall, at least thirty (30) days prior to the redemption date, be filed with the Registrar; and mailed, postage prepaid, to all Owners of Series 1991 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 Owners of Series 1991 Bonds shall not affect the validity of the proceedings for such redemption with respect to Owners of Series 1991 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 1991 Bonds of one maturity are to be called, the 17 distinctive numbers of such Series 1991 Bonds to be redeemed and in the case of Series 1991 Bonds to be redeemed in part only, the portion of the principal amount thereof to be redeemed. In addition to the foregoing notice, further notice shall be given by the Issuer as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. (1) Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus (a) the CUSIP numbers of all Bonds being redeemed; (b) the date of issue of the Bonds as originally issued; (c) the rate of interest borne by each Bond being redeemed; (d) the maturity date of each Bond being redeemed; and (e) any other descriptive information needed to identify accurately the Bonds being redeemed. (2) Each further notice of redemption shall be sent at least thirty-five (35) days before the redemption date by registered or certified mail or overnight delivery service to any insurer which shall have insured, or any credit bank which shall have provided a credit facility for, any of the Bonds being redeemed and to al registered securities depositories then in the business of holding substantial amounts of obligations of types similar to the type of which the Bonds consist (such depositories now being Depository Trust Company of New York, New York, Midwest Securities Trust Company of Chicago, Illinois, and Philadelphia Depository Trust Company of Philadelphia, Pennsylvania) and to one or more national information services that disseminate notices of redemption of obligations such as the Bonds. (3) Each such further notice shall be published one time in the Bond Buyer of New York, New York or, if such publication is impractical or unlikely to reach a substantial number of the Holders of the Bonds, in some other financial newspaper or journal which regularly carries notices of redemption of obligations similar to the Bonds, such publication to be made at least 30 days prior to the date fixed for redemption. When notice of redemption is given, Bonds called for redemp- tion will become due and payable on the redemption date at the redemption price stated in such notice. When a notice of redemp- tion is given and funds sufficient for redemption are deposited with the Registrar, interest on the Bonds to be redeemed will cease to accrue on the date fixed for redemption, such Bonds shall cease to be entitled to any lien, benefit or security under this Resolution and the Holders of such Bonds will have no right in respect thereof except to receive payment of the redemption price. 18 Upon surrender of any Series 1991 Bond for redemption in part only, the Registrar shall authenticate and deliver to the Owner thereof, the cost of which shall be paid by the Issuer, a new Series 1991 Bond of an authorized denomination equal to the unredeemed portion of the Series 1991 Bond surrendered. Section 15. FORM OF SERIES 1991 BONDS. The text of the Series 1991 Bonds, together with the certificate of authentication, 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 resolution adopted prior to the issuance thereof, or as may be necessary if the Bonds or a portion thereof are issued as Capital Appreciation 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 1991 Bonds shall be as determined by subsequent resolution of the Issuer. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 19 No. R - $ UNITED STATES OF AMERICA STATE OF FLORIDA COUNTY OF SEMINOLE CITY OF WINTER SPRINGS WATER AND SEWER REFUNDING REVENUE BOND, SERIES 1991 MATURITY DATE: INTEREST RATE: DATED DATE: aJSIP: Registered Owner: Principal Amount: KNOW ALL MEN BY THESE PRESENTS, that the Ci ty of winter Springs, Florida (hereinafter called "city"), for value received, hereby promises to pay to the order of , or registered assigns, as herein provided, on the day of , upon the presentation and surrender hereof at the principal corporate trust office of in the City of from the revenues , , Florida (the "Paying Agent"), hereinafter mentioned, the principal sum of DOLLARS in any coin or currency of the united States of America which on the date of payment thereof is legal tender for the payment of public and private debts, and to pay, solely from said sources, by check or draft mailed to the person in whose name this Bond is registered at his address as it appears on the Bond registration books of the City, at the close of business on the fifteenth day of the month (whether or not a business day) next preceding each interest payment date, interest on said principal sum on each April 1 and October 1 commencing October 1, 1991 from the interest payment date next preceding the date of registration and authentication of this Bond, unless this Bond is registered and authenticated as of an interest payment date, in which case it shall bear interest from said interest payment date, or unless this Bond is registered and authenticated prior to October 1, 1991, in which event this Bond shall bear interest from May 1, 1991. The Bonds of this issue shall be subject to redemption prior to their maturity at the option of the City. (Insert Optional or Mandatory Redemption Provisions) Notice of such redemption shall be gi yen in the manner required by the Resolution. 20 This Bond is one of an authorized issue of Bonds in the aggregate principal amount of $ of like date, tenor and effect, except as to number, maturity and interest rate, issued to finance the cost of refunding certain obligations of the City and to acquire and construct certain improvements to the City owned water and sewer system, pursuant to and in full compliance with the Constitution and statutes of the state of Florida, including particularly Chapter 166, Part II, Florida statutes, the Charter of the City, other applicable provisions of law and a resolution duly adopted by the City commission of the City on , 1991, as amended and supplemented (hereinafter COllectively called the "Resolution"). This Bond is payable solely from and secured by a prior lien upon and pledge of the Net Revenues, as defined in the Resolution, derived and collected by the City from the operation of the City's water and sewer system (the "System"), in the manner provided in the Resolution. Reference is made to the Resolution for more complete definition and description of Net Revenues and the System. This Bond does not constitute an indebtedness of the City wi thin the meaning of any constitutional, statutory or charter provision or limitation, and it is expressly agreed by the Owner of this Bond that such Owner shall never have the right to require or compel the exercise of the ad valorem taxing power of the City 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 City and the Owner of this Bond that this Bond and the indebtedness evidenced hereby shall not constitute a lien upon the System, or any part thereof, or on any other property of or in the City, but shall constitute a lien only on the Net Revenues derived from the operation of the System all in the manner provided in the Resolution. The City in the Resolution has covenanted and agreed with the Owners of the Bonds of this issue to 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 under the Financial Guaranty Agreement and one hundred percent (100%) of all other deposits to be made pursuant to the Resolution, and that such rates, fees, rentals and other charges will not be reduced so as to be insuff icient to provide Revenues for such purposes. The City has reserved the right in the Resolution to 21 issue in the future Additional Parity Obligations having a lien on the Net Revenue equal to the lien thereon of this Bond. The city has entered into certain further covenants with the Owners of the Bonds of this issue for the terms of which reference is made to the Resolution. 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 limitations or provisions. This Bond is and has all the qualities and incidents of a negotiable instrument under the Uniform commercial Code - Invest- ment Securities Law of the State of Florida. 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. The 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 authorized 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 day of , 1991. CITY OF WINTER SPRINGS, FLORIDA (SEAL) Mayor ATTESTED AND COUNTERSIGNED: Clerk 22 CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds issued under the provisions of the within mentioned Resolution. Date of Authentication: Registrar, as Authenticating Agent By: (Manual Siqnature) ASSIGNMENT AND TRANSFER For value received the undersigned hereby sells, assigns and transfers unto Social Security or other identifying number of the attached bond of the City of Florida and does hereby constitute and appoint , attorney, to transfer the said bond on the books kept for registration thereof, with full power of substitution in the premises. (Please insert assignee) winter Springs, Date Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. NOTICE: No transfer will be reg- istered and no new Bonds will be issued in the name of the Trans- feree, unless the signature to this assignment shall correspond wi th the name as it appears upon the face of the wi thin Bond in every particular with- out alteration or enlargement or any change whatever and the Social Security or Federal Em- ployer Identification Number of the Transferee is supplied. If the Transferee is a trust, the names and Social Security or Federal Employer Identification Numbers of the settlor and ben- ef iciar ies of the trust, the Federal Employer Identification Number and date of the trust and the name of the trustee should be supplied. (Bond Counsel Opinion) [End of Form of Series 1991 Bond] 23 section 16. APPLICATION OF SERIES 1991 BOND PROCEEDS. The proceeds, including accrued interest and premium, if any, received from the sale of any or all of the Series 1991 Bonds shall be applied by the Issuer simultaneously with the delivery of such Series 1991 Bonds to the purchaser thereof, as follows: (A) The accrued interest, and at the option of the Issuer interest to accrue on the Series 1991 Bonds in such amount and for a period of time as shall be approved by subsequent resolution of the Issuer, on the Series 1991 Bonds shall be deposited in the Interest Account in the winter Springs Water and Sewer Refunding Debt Service Fund hereby created and shall be used only for the purpose of paying interest becoming due on the Series 1991 Bonds. (B) Unless provided from other funds of the Issuer on the date of issuance of the Series 1991 Bonds, or unless provided for through the purchase of a guaranty or an insurance policy, an irrevocable letter of credit, a surety bond, or similar credit facility, or any combination thereof, the Issuer shall deposit to the special subaccount in the Reserve Account established for the benefit of the Series 1991 Bonds, a sum sufficient equal to the Reserve Requirement on the Series 1991 Bonds. (C) To the extent not reimbursed therefor by the original purchaser of the Series 1991 Bonds, the Issuer shall pay all costs and expenses incurred in connection with the issuance of the Series 1991 Bonds. (D) A sum as specified by a supplemental resolution of the Issuer shall, together with other legally available funds of the Issuer, if any, as determined by subsequent resolution of the Issuer, be used to defease the Series 1985 Refunded Bonds by depositing such sums of money for investment in appropriate Federal Securities pursuant to the Escrow Deposit Agreement so as to produce sufficient funds to make all the payments described in such Escrow Deposit Agreement. At the time of execution of such Escrow Deposit Agreement, the Issuer shall furnish to the Escrow Agent named therein appropriate documentation to demonstrate that the sums being deposited and the investment to be made will be sufficient for such purposes. Simultaneously with the issuance of the Series 1991 Bonds, the Issuer shall enter into an Agreement substantially in the form attached hereto as Exhibit A with the Escrow Agent. Such escrowed funds shall be kept separate and apart from all other funds of the Issuer and the moneys on deposit under the Agreement shall be withdrawn, used and applied by the Issuer solely for the purposes set forth in the Agreement. (E) The balance of the Series 1991 Bond proceeds after providing for the payments required by A, B, C and D above, shall be deposited to the "city of winter Springs Water and Sewer Revenue Refunding Acquisition and Improvement Fund" which fund is hereby 24 created and established and which may be used for the purposes set forth herein. section 17. 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 lien upon and a pledge of the Net Revenues as herein provided. No Owner or Owners 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 property therein to pay such principal and interest from any other funds of the Issuer except from the special funds in the manner provided herein. The payment of the principal of and interest on the Bonds shall be secured forthwith equally and ratably by an irrevocable lien on the Net Revenues, and the Issuer does irrevocably pledge such Net Revenues to the payment of the principal of and interest on the Bonds, for the reserves therefor and for all other required payments hereunder. Such amounts hereby pledged and assigned shall immediately be subj ect 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. SECTION 18. DISBURSEMENTS FROM ACQUISITION AND IMPROVEMENT FUND. Moneys on deposit from time to time in the Acquisition and Improvement Fund shall be used as provided in this Resolution and to payor reimburse the following Project Costs: (A) Costs incurred directly or indirectly for or in connec- tion with a Project or a proposed or future Project including, but not limited to, those for preliminary planning and studies, architectural, legal, financial, engineering and supervisory services, labor, services, materials, equipment , acquisitions, land, rights-of-way, improvements and installation. (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 proj ect or costs incurred directly or indirectly in defending any claim by a contractor or subcontractor with respect to a Project. 25 (D) Financial, legal, accounting, appraisals, title evidence and printing and engraving fees, charges and expenses, and all 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 Debt 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. Section 19. COVENANTS OF THE ISSUER. For as long as any of the principal of and interest on any of the Bonds shall be Outstanding 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 Owners of any and all Bonds as follows: A. REVENUE FUND. The entire Gross Revenues derived from the operation of the system shall upon receipt thereof be deposited in the "City of winter Springs Water and Sewer Revenue Fund" (hereinafter called the "Revenue Fund"), hereby created and established. Such Revenue Fund shall constitute a trust fund for the purposes herein provided and shall be 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 1991 Bonds only in the following manner and the following order of priority: (1) The Issuer shall first deposit into Debt 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: 26 (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 provi- sions 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 outstanding Bonds which will mature and come due on such semi-annual maturity dates and one-twelfth (1/12th) of the principal 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 deposits 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 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 27 Bonds, shall 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). (d) The Issuer will initially provide for the Reserve Requirement for the Series 1991 Bonds by the purchase of a surety bond from MBIA pursuant to the terms of a Finan- cial Guaranty Agreement between MBIA and the Issuer, the form of which shall be approved by subsequent resolution of the Issuer. The Issuer shall next deposit from moneys remaining in the Revenue Fund an amount, if any, required by each resolution authorizing the issuance of each Series of Bonds into each subaccount wi thin the Reserve Account. Any wi thdra- wals from any subaccount in the Reserve Account shall be subsequently restored from the first moneys available in the Revenue Fund, on a pro rata basis as to all subaccounts in the Reserve Account, after all current applications and alloca- tions to the Debt Service Fund, including all deficiencies for prior payments have been made in full. Notwithstanding any provision of this Resolution to the contrary, in no event shall the Issuer be required to deposit cash or moneys into any subaccount in the Reserve Account in an amount greater than that amount necessary to ensure that the difference between the Reserve Requirement for the Series of Bonds for which such subaccount was established and the amounts on deposit in such subaccount on the date of calculation shall be restored not later than twelve (12) months after the initial date of such deficiency (assuming equal monthly payments into such account for such twelve (12) month period). The Issuer may provide that the difference between the amounts on deposit in such subaccount and the Reserve Requirement for such Series of Bonds shall be an amount covered by obtaining bond insur- ance issued by a reputable and recognized municipal bond insurer, by a surety bond, by a letter of credi t or any combination thereof or by such other form of credit enhance- 28 ment as shall be approved by subsequent resolution of the Issuer authorizing the Series of Bonds for which such subac- count is established. In the event a subaccount in the Reserve Account is funded with a combination of credit enhancements, any drawings will be on a pro rata basis. Such resolution may also provide for the substitution or replace- ment of such credit enhancement or of amounts on deposit in such subaccount. Moneys or other security on deposit in each respective subaccount in the Reserve Account shall only be applied for payment of principal of, redemption premium, if any, or interest on the outstanding Series of Bonds for which such subaccount was established and for no other Series of Bonds. Investments on depos it in each subaccount in the Reserve Account shall be valued as determined by the resolu- tion authorizing such Series of Bonds for which such subac- count was established. Investments, if any, on deposit in the subaccount in the Reserve Account established for the Series 1991 Bonds shall be valued at cost. In the event of the refunding of any Series of Bonds, the Issuer may withdraw from the subaccount within the Reserve Account for such Series of Bonds, all or any portion of the amounts accumulated therein with respect to the Bonds being refunded and deposit such amounts as required by the resolution authorizing the refund- ing 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 Section 24 hereof, and (b) the amount remaining in such subaccount hereafter 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 that Series then Outstanding. Cash, if any, on deposit in the subaccount in the Reserve Account established for the Series 1991 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. Any amounts owing to MBIA will be reimbursed before cash is replenished in the subaccount in the Reserve Account established for the Series 1991 Bonds. The Issuer agrees to payor to cause to be paid, solely from the Net Revenues (which pledge shall be junior, inferior and subordinate in all respects to the lien thereon in favor of the Holders of the Bonds), all amounts, including interest due thereon, due MBIA under the terms of the Financial Guara- nty Agreement. All such amounts due MBIA must be paid before 29 this Resolution can be defeased pursuant to Section 24 of this Resolution. There may be no optional redemption or refunding of Bonds or distribution of Net Revenues to the Issuer unless all amounts owed to MBIA under the terms of the Financial Guaranty Agreement have been paid. (2) Upon the issuance of any Additional Parity Obliga- tions under the terms, limitations and conditions as are herein provided, the payments into the several accounts in the Debt Service Fund, including, if Term Bonds are issued, the Redemption Account, shall be increased in such amounts as shall be necessary to make the payment for the principal of, interest on and reserves for such Additional Parity Obligations on the same basis as hereinabove provided with respect to the Bonds initially issued under this Resolution. (3) The Issuer shall next apply and deposit monthly from the moneys remaining on deposit in the Revenue Fund into a special account to be known as the "City of winter Springs Water and Sewer Renewal and Replacement Fund" (hereinafter called the "Renewal and Replacement Fund"), which fund is hereby created and established, an amount equal to one-twelfth (1/12th) of five percent (5%) of the Gross Revenues received during the immediately preceding Fiscal Year, such deposit to be continued to be made for the purpose of this fund; provided that no deposit shall be required to be made so long as there is an amount on deposit in the Renewal and Replace- ment Fund in the amount of 5% of the Gross Revenues received during the immediately preceding Fiscal Year. The moneys in the Renewal and Replacement 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 and emergency repairs thereto. Such moneys on deposit in such account shall also be used to supplement the Reserve Account in the Debt Service Fund, if necessary, in order to prevent a default in the payment of the principal of and interest on the Bonds. (4) The balance of any moneys remaining in the Revenue Fund after the above required payments have been made may be used for any lawful purposes 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. (5) The Debt Service Fund (including the Reserve Account and all subaccounts therein), the Renewal and Replacement Fund, the Revenue Fund, the Acquisition and Improvement Fund and any other special funds herein established and created shall constitute trust funds for the purposes provided herein for such funds. The money in all such funds shall be continuously secured in the same manner as 30 municipal deposits are authorized to be secured by the laws of the state of Florida. Moneys on deposit 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 or account. All income on such investments 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. (6) In determining the amount of any of the payments required to be made pursuant to this section 19B, credit shall be given for all investment income accruing to the respective funds and accounts described herein, except as otherwise provided. (7) 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 and accounts for and by this Resolution shall not be construed to require the establishment of any completely independent, self-balancing funds as such term is commonly defined and used in governmental accounting, but rather is intended solely to constitute an earmarking of certain revenues 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 the Resolution. Such rates, fees, rentals or other charges shall not be reduced so as to be insufficient to provide Revenues for such purposes. In the event the audit referred to in 19E thereof 31 shows that the Issuer is not in compliance with the rate covenant set forth in this 19D, within thirty (30) days after such audit, the Consulting Engineer will recommend suggested fees, rates, rentals and other charges for the use of the products, services and facilities of the System sufficient to meet the requirements of this Section 19D. The Issuer hereby covenants and agrees to immediately following receipt of the Consulting Engineer's recommendations to adjust (to the extent permitted by law), such rates, fees and other charges to comply with the requirements of this Section 19D. 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 Owners of any of the Bonds or any duly authorized agent or agents of such Owners shall have the 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 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 expenditures of the System for such Fiscal Year; (2) Comments regarding any non-compliance by the City, in carrying out the accounting requirements of this Resolution. Copies of each such audit report shall be placed on file with the Issuer and be made available at reasonable times for inspection by Owners of Bonds, and shall be sent to the nationally recognized bond rating agencies and to the initial purchasers 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 including any subsequently issued parity 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 percentum (.5%) of the value of the gross plant investment in the System, the finding set forth above and required to be made by the 32 Consulting Engineer may be made by an authorized representative of the Issuer. The proceeds derived from any sale or disposal of any properties or parts of the System as provided for in the above paragraph, shall be deposited in the Renewal and Replacement Fund and used exclusively for the purpose of paying the costs 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 acquisi tion of additions, extensions and improvements to the System. However, if the Consulting Engineer certifies that it is neither necessary nor desirable 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. 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 or 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 deduct- ibles, 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 and Replacement Fund or at the option of the Issuer may be used to redeem Bonds. 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 free of charge or for a nominal charge to 33 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. Notwithstanding the foregoing, the Issuer shall not be required to impose any fees or charges for the collection, transmission, treatment or disposal of storm water runoff or the supply of water to fire service. I. ENFORCEMENT OF COLLECTIONS. The Issuer will diligently enforce and collect the rates, fees and other charges for the services and facilities of the System herein pledged; 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 authorized by law; and will maintain accurate records with respect thereof. All such fees, rates, charges and revenues herein pledged shall, as collected, be held in trust to be applied as herein provided. J. CONSULTING ENGINEERS. The Issuer shall employ qualified Consulting Engineers in an advisory capacity to inspect the facilities of the System and to make reports and recommendations with respect thereto and concerning the operation, maintenance, replacements, property additions and improvements thereto as requested by the Issuer. A copy of each report shall be available and shall remain on file with the Clerk for public inspection. K. MANDATORY CONNECTIONS. The Issuer will, to the full extent permitted by law, require all lands, buildings and struc- tures within the Issuer'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 to connect with and use such facilities within ninety (90) 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 until all Bonds issued hereunder together with the interest thereon have been paid in full; provided however, nothing in this Resolu- tion shall effect the validity of any franchises existing on the effective date of this Resolution for the operation of any utility system within the City. L. 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 the revenues of the System; provided however, nothing in this Resolution shall effect the validity of any franchise existing on the effective date of this resolution for the operation of any utility system within the City. 34 M. ISSUANCE OF OTHER OBLIGATIONS. The Issuer will not issue any other obligations payable from the Net Revenues of the System nor voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or other charge having priority to or being on a parity with the lien of the Bonds issued pursuant to this Resolution and the interest thereon, upon said Net Revenues except under the conditions and in the manner provided herein. Any obligations issued by the Issuer other than the Bonds herein authorized and Additional Parity Obligations provided for herein, payable from such Net Revenues, shall contain an express statement that such obligations are junior, inferior and subordinate in all respects to the Bonds herein authorized, as to lien on and source and security for payment from such Net Revenues. N. ISSUANCE OF ADDITIONAL PARITY OBLIGATIONS. No Additional Parity Obligations, payable on a parity from the Net Revenues of the System with the Bonds herein authorized, shall be issued after the issuance of any Bonds herein authorized, except upon the conditions and in the manner hereinafter provided: (1) There shall have been obtained and filed with the Issuer a certificate or other statement of an independent certified public accountant of suitable experience and responsibility stating: (a) that the books and records of the City relative to the System have been audited by him; (b) the amount of the Net Revenues of the System, derived for the Fiscal Year preceding the date of issuance of the proposed Additional Parity obligations with respect to which such certificate is made, adjusted as herein below provided; (c) that the aggregate amount of such Net Revenues, as adjusted from the System, for such preceding Fiscal Year is equal to not less than one hundred ten (110%) percent of the Maximum Bond Service Requirement on (i) all obligations issued under this Resolution, if any, then Outstanding, and (ii) on the Additional Parity Obligations with respect to which such certificate is made. (2) Upon recommendation of the Consulting Engineers, Net Revenues of the System may be adjusted for purposes of this Section by including 100% of the additional Net Revenues, which in the opinion of the Consulting Engineer would have been derived by the Issuer from rate increases adopted and in effect 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 includ- ing: 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 35 reflect the Issuer's 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 Fiscal Year, then the Net Revenues shall be adjusted to include the Net Revenues which would have been received in such Fiscal Year as if those additional connections had also been connected to the System during all of such Fiscal Year. (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, treatment or disposal of sewage or agreed to furnish services in connection with any water system, then the Net Revenues during the Fiscal Year 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 anyone year for the furniShing of services by the Issuer, after deducting from such payment the estimated Cost of Operation and Maintenance attribut- able in such year to such services. (6) 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 accountant setting forth the Average Annual Debt Service Require- ment (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. (7) 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. (8) The resolution authorizing the issuance of the Additional Parity Obligations shall recite that all of the covenants contained herein will be applicable to such Additional Parity Obligations, unless in the opinion of Bond Counsel the failure to make any covenant applicable to such Additional Parity Obligations will not adversely affect the rights of the Holders of any Outstanding Bonds. 36 No Additional Parity Obligations with interest payable at a variable rate may be issued without the consent of MBIA so long as the municipal bond insurance policy with respect to the Series 1991 Bonds shall be in effect and MBIA shall not be in default thereun- der. section 20. TAX COVENANTS. The Issuer shall not use or permit the use of any proceeds of the 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 Bonds in any manner, and shall not take or permit to be taken any other action or actions, which would cause any such Bonds to be an "arbitrage bond" within the meaning of Section 148, or "federally guaranteed" within 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 such Bonds to become included in gross income for federal income tax purposes. 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 such Bonds will be excluded from gross income for purposes of federal income tax and shall take no action that would result in such interest not being so excluded. The Issuer shall payor cause to be paid to the United States Government any amounts required by section 148(f) of 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 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 crates the City of winter Springs Utility System Rebate Fund to be held by Issuer. 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 united States Treasury; however, the Issuer may, as an administrative convenience, maintain and deposit funds in the Rebate Fund from time to time. Any moneys held in the Rebate Fund shall not be considered Net Revenues and shall not be pledged in any manner for the benefit of the holders of the 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 Bonds. Notwithstanding any provision of this Resolution to the contrary, 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. 37 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) 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 Issuer given by the Holders of not less than twenty-five percent (25%) of aggregate principal amount of Bonds then Outstand- ing (provided, however, that with respect to any obligation, covenant, agreement or condition which requires performance by a date certain, if the Issuer performs such obligation, covenant, agreement or condition within thirty (30) days of written notice as provided above, the default shall be deemed to be cured); (4) 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. (5) 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. Any Holder of Bonds issued under the provisions hereof or any trustee acting for the Holders of such Bonds, 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 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 officer thereof. Nothing herein, however, shall be construed to grant to any Holder of the Bonds any lien on any property of the Issuer, or 38 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 subsequent 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 appointment of a receiver or receivers of the System and the funds pending such proceedings, with such power as the court making such appointment shall confer. 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 hereafter 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 supplemental 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 39 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 charge, or the subjection to any lien, pledge or charge, created or to be created by the provisions of the Resolution; (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; (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; and (J) To modify any of the provisions of the Resolution in any other aspects provided that such modifications shall not be effective until after the Bond Outstanding at the time such supplemental 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 subsequent resolutions providing for the issuance of Bonds pursuant hereto, the Issuer shall not adopt any supplemen- tal resolution authorized by the foregoing provisions of this section unless in the opinion of Bond Counsel the adoption of such supplemental resolution is permitted by the foregoing provisions of this Section. 40 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 supplemental hereto shall be made 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 modification 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 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 delivery thereof by either S&P or Moody's, or successors and assigns, then the consent of the issuer of such municipal bond insurance policy or the issuer of such letter of credit shall be deemed to consti- tute the consent of the Holder of such Bonds. No such modification or amendment pursuant to this section 23 shall be made without the consent of the Bond insurer provided however, the consent of such Bond insurer shall not be required if such Bond insurer shall then be in default under its policy of municipal bond insurance. Copies of any such amendment consented to by MBIA shall be sent to S&P. 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 Net 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. 41 (B) The Bonds, redemption premium if any, and interest due or to become due for the payment or redemption of which moneys 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. Bonds shall 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 the Escrow Agent instructions accepted in writing by the Escrow Agent to notify Holders of outstanding Bonds in the manner required herein of the redemption of such Bonds on said date, (b) there shall have been deposited with the Escrow Agent either moneys in an amount which shall be sufficient, 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 the Escrow Agent at the same time, shall be sufficient, 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 subject 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 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. (C) For purposes of determining whether Variable Rate Bonds shall be deemed to have been paid prior to the maturity or redemption date thereof, as the case may be, by the deposit of moneys, or Defeasance Obligations and moneys, if any, the interest 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 resul t 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 , 42 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) The Issuer agrees that it will take no action in connection with any of the transactions referred to in this Section 24 which will cause interest on the Bonds to be included in the gross income of the Holders thereof for purposes of Federal income taxation. (E) 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 REORGANIZATION. Notwithstanding any other provisions of this ReSOlution, this Resolution shall not prevent any lawful reorganization of the governmental structure 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 and coupons, if any. SECTION 26. ADDITIONAL UTILITY FUNCTIONS. The Issuer may expand the utility functions of the System as they exist on the date hereof provided that the Issuer has adopted resolutions or 43 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 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) recelvlng payment of the redemption price of a Capital Appreciation 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 principal amount of a Capital Appreciation Bond shall be deemed to be its Compounded Amount. section 28. 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 29. 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 the 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 30. 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 authorize 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 31. SEVERABILITY. If anyone or more of the covenants, agreements or provisions of this Resolution should be held contrary to any express provision of law or contrary to the 44 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, agreements or provisions of this Resolution or of the Bonds issued hereunder. section 32. 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 33. NOTICES TO MBIA. For so long as the Series 1991 Bonds are outstanding, MBIA will be furnished a copy of all significant 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 MBIA POLICY. As long as the municipal bond insurance policy of MBIA (the "Policy") guaranteeing the payment of principal and interest on the Series 1991 Bonds shall be in full force and effect the Issuer and Paying Agent agree to comply with the following provisions: A. In the event that, on the second Business Day, and again on the Business Day, prior a the payment date on the Series 1991 Bonds, the Paying Agent has not received sufficient moneys to pay all principal of and interest on the Series 1991 Bonds due on the second following or following, as the case may be, Business Day, the Paying Agent shall immediately notify MBIA or its designee on the same Business Day by telephone or telegraph, 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 payment date, the Paying Agent shall so notify MBIA or its designee. C. In addition, if the Paying Agent has notice that any Series 1991 Bondholder has been required to disgorge payments of principal or interest on the Series 1991 Bonds to a trustee 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 Series 1991 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. 45 D. The Paying Agent is hereby irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for Holders of the Series 1991 Bonds as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Series 1991 Bonds, the Paying Agent shall (a) execute and deliver to Citibank, N.A., or its successors under the 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 Policy payment from the 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 1991 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 1991 Bonds surren- dered to the Insurance Paying Agent of so much of the princi- pal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) recei ve as designee of the respective Holders (and not as Paying Agent) in accordance with the tenor of the 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 principal of Series 1991 Bonds disbursed by the Paying Agent from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Series 1991 Bonds, and MBIA shall become the owner of such unpaid Series 1991 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 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 46 series 1991 Bonds, MBIA will be subrogated to the rights of such Holders to receive 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 1991 Bonds; and 2. They 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 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 1991 Bonds to Holders, and will otherwise treat MBIA as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of Additional Parity Obligations, the Issuer shall deliver to MBIA a copy of the disclosure document, if any, circulated wi th respect to such Additional Parity Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Series 1991 Bonds which are consented to by MBIA shall be sent to S&P. I. MBIA shall receive notice of the resignation or removal of the Paying Agent and the appointment of a successor thereto. J. MBIA shall receive copies of all notices required to be delivered to Series 1991 Bondholders and, on an annual basis, copies of the Issuer's audited financial statements and annual budget. K. Any notice that is required to be given to a Holder of the Series 1991 Bonds or to the Paying Agent pursuant to the Resolution shall also be provided to MBIA. All notices required to be given to MBIA under the Resolution shall be in writing and shall be sent by registered or certified mail addressed to Municipal Bond Investors Assurance corporation, 113 King Street, Armonk, New York 10504 Attention: Surveillance. 47 Section 35. EFFECTIVE DATE. This Resolution shall become effective immediately upon its adoption. ADOPTED this 29th day of April, 1991 CITY COMMISSION OF THE CITY OF WINTER SPRINGS, FLORIDA (SEAL) Mayor ATTEST: Mary T. Norton City Clerk Approved as to Form and Legal Sufficiency: City Attorney 28292CLN.RES 04/29/91 48 ESCROW DEPOSIT AGREEMENT THIS ESCROW DEPOSIT AGREEMENT, dated as of May 1, 1991, by and between the CITY OF WINTER SPRINGS, FLORIDA (the "Issuer"), and , , Florida, a national banking association organized under the laws of the United States of America, as Escrow Holder and its successors and assigns (the "Escrow Holder"); WIT N E SSE T H: WHEREAS, the Issuer has previously authorized and issued obligations, hereinafter defined as "Refunded Bonds", as to which the Total Debt Service (as hereinafter defined) is set forth on Schedule A; and WHEREAS, the Issuer has determined to provide for payment of the Total Debt Service of the Refunded Bonds by depositing with the Escrow Holder an amount which together with investment earnings thereon is at least equal to such Total Debt Service; and WHEREAS, in order to obtain the funds needed for such purpose, the Issuer has authorized and is, concurrently with the delivery of this Agreement, issuing the Series 1991 Bonds, as defined herein; and WHEREAS, the execution of this Escrow Deposit Agreement and full performance of the provisions hereof shall defease and discharge the Issuer from the aforestated obligations; NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Issuer and the Escrow Holder agree as follows: SECTION 1. Definitions. As used herein, the following terms mean: (a) "Agreement" means this Escrow Deposit Agreement. (b) "Annual Debt Service" means the interest and principal on the Refunded Bonds coming due in such year as shown on Schedule A attached hereto and made a part hereof. (c) "Bonds" means the Series 1991 Bonds (d) "Escrow Account" means the account hereby created and entitled Escrow Account established and held by the Escrow Holder pursuant to this Agreement, in which cash and investments will be held for payment of the principal of and accrued interest on the Refunded Bonds as they become due and payable. (e) "Escrow Holder" means having its primary corporate trust office in Florida, and its successors and assigns. (f) "Escrow Requirement" means, as of any date of calcula- tion, the sum of an amount in cash and principal amount of Federal Securities in the Escrow Account which together with the interest to become due on the Federal Securities will be sufficient to pay the Total Debt Service on the Refunded Bonds in accordance with Schedule A and to pay all Expenses then unpaid. (g) "Expenses" means the expenses set forth on Schedule B attached hereto and hereby made a part hereof. (h) "Federal Securities" means direct obligations of or obligations, principal and interest on which are unconditionally guaranteed by, the united States of America, none of which permit redemption at the option of the united States of America prior to the dates on which such Federal Securities shall be applied pursuant to this Agreement. (i) "Issuer" means the City of winter Springs, Florida, and its successors and assigns. (j) "Refunded Bonds" means the remaining bonds outstanding, of the $5,615,000 City of winter springs, Florida, Public Water and Sewer Refunding Revenue Bonds, Series 1985, dated June 1, 1985. (k) "Resolution" means the resolution adopted by the governing body of the Issuer on April ,1991, as amended and supplemented from time to time, authorizing issuance of the Bonds. (l) "Series 1991 Bonds" means the $ City of Winter Springs, Florida, Refunding Revenue Bonds, Series 1991, initially issued under the Resolution. (m) "Total Debt Service" means the sum of the principal and interest remaining unpaid with respect to the Refunded Bonds in accordance with Schedule A attached hereto. SECTION 2. Deposit of Funds. The Issuer hereby deposits $ with the Escrow Holder for deposit into the Escrow Account in immediately available funds, which funds the Escrow Holder acknowledges receipt of, to be held in irrevocable escrow by the Escrow Holder separate and apart from other funds of the Escrow Holder and applied solely as provided in this Agreement. The Issuer represents that such funds are derived from the net proceeds of the Bonds and other lawfully available funds of the Issuer and are at least equal to the Escrow Requirement as of the date of such deposit. 2 SECTION 3. Use and Investment of Funds. The Escrow Holder acknowledges receipt of the sum described in section 2 and agrees: (a) to hold the funds and investments purchased pursuant to this Agreement in irrevocable escrow during the term of this Agreement for the sole benefit of the holders of the Refunded Bonds; (b) to immediately invest $ of such funds in the Federal Securities set forth on Schedule C-1 attached hereto and to hold such funds in accordance with the terms of this Agreement; (c) to deposit in the Escrow Account, as received, all receipts of maturing principal of the Federal Securities and all receipts of interest on the Federal Securities in the Escrow Account and to apply such principal and interest only in the manner described in section 4 below; and (d) to reinvest, as received, excess receipts of interest on the Federal Securities described in (b) above in 0% United States Treasury Obligations State and Local Government Series, in accordance with Schedule C-2 attached hereto; (e) there will be no investment of funds except as set forth in this section 3. SECTION 4. Payment of Bonds and Expenses. (a) Refunded Bonds. On the dates and in the amounts set forth on Schedule A, the Escrow Holder shall transfer to the Paying Agent for the Refunded Bonds (the "Paying Agent"), in immediately available funds, a sum sufficient to pay that portion of the Annual Debt Service for the Refunded Bonds coming due on such dates, as shown on Schedule A. (b) Expenses. On each of the due dates as shown on Schedule B, the Escrow Holder shall pay the portion of the Expenses coming due on such date to the appropriate payee or payees designated on Schedule B or designated by separate certificate of the Issuer. (c) Surplus. After making the payments from the Escrow Account described in Subsections 4(a) and 4(b) above, the Escrow Holder shall retain in the Escrow Account any remaining cash in the Escrow Account in excess of the Escrow Requirement until the termination of this Agreement, and shall then pay any remaining funds to the Issuer for deposit to the Revenue Fund created in the Resolution. (d) Priority of Payments. The holders of the Refunded Bonds shall have an express first lien on the funds and Federal Securi- ties in the Escrow Account until such funds and Federal Securities are used and applied as provided in this Agreement. 3 SECTION 5. Reinvestment. (a) Except as provided in Section 3 and in this Section, the Escrow Holder shall have no power or duty to invest any funds held under this Agreement or to sell, transfer or otherwise dispose of or make substitutions of the Federal Securities held hereunder. (b) At the written request of the Issuer and upon compliance with the conditions hereinafter stated, the Escrow Holder shall sell, transfer or otherwise dispose of any of the Federal securi- ties acquired hereunder and shall substitute other Federal Securities. The Issuer will not request the Escrow Holder to exercise any of the powers described in the preceding sentence in any manner which will cause interest on the Bonds to be included in the gross income of the holders thereof for purposes of Federal income taxation. The transactions may be effected only if (i) an independent certified public accountant selected by the Issuer shall certify or opine in writing to the Issuer and the Escrow Holder that the cash and principal amount of Federal Securities remaining on hand after the transactions are completed will be not less than the Escrow Requirement, and (ii) the Escrow Holder shall recei ve an opinion from a nationally recognized bond counsel acceptable to the Issuer to the effect that the transactions, in and by themselves will not cause interest on such Bonds to be included in the gross income of the holders thereof for purposes of Federal income taxation. SECTION 6. No Redemption or Acceleration of Maturitv. The Issuer will not accelerate the maturity of, or exercise any option to redeem before maturity any Refunded Bonds. SECTION 7. Indemnity. To the extent permitted by law, the Issuer hereby assumes liability for, and hereby agrees to indemnify, protect, save and keep harmless the Escrow Holder and its respective successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against at any time, the Escrow Holder (whether or not also indemnified against the same by the Issuer or any other person under any other agreement or instrument) and in any way relating to or arising out of the execution and delivery of this Agreement, the establishment of the Escrow Account established hereunder, the acceptance of the funds and securities deposited therein, the purchase of the Federal Securities, the retention of the Federal Securities or the proceeds thereof and any payment, transfer or other application of funds or securities by the Escrow Holder in accordance with the provisions of this Agreement; provided, however, that the Issuer shall not be required to indemnify the Escrow Holder against its own negligence or willful misconduct. In no event shall the Issuer be liable to any person by reason of the transactions contemplated hereby other than to the Escrow Holder as 4 set forth in this section. The indemnities contained in this Section shall survive the termination of this Agreement. The Escrow Holder shall not be liable for any deficiencies in the amounts necessary to pay the Escrow Requirement. Furthermore, the Escrow Holder shall not be liable for the accuracy of the calcula- tion as to the sufficiency of moneys and the principal amount of Federal Securities and the earnings thereon to pay the Escrow Requirement. SECTION 8. Responsibilities of Escrow Holder. The Escrow Holder and its respective successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort, contract, or otherwise, in connection with the execution and delivery of this Agreement, the establishment of the Escrow Account, the acceptance of the funds deposited therein, the purchase of the Federal Securities, the retention of the Federal Securities or the proceeds thereof or for any payment, transfer or other application of moneys or securities by the Escrow Holder in accordance with the provisions of this Agreement or by reason of any non-negligent or non-willful act, omission or error of the Escrow Holder made in good faith in the conduct of its duties. The Escrow Holder shall, however, be responsible for its negligent or willful failure to comply with its duties required hereunder, and its negligent or willful acts, omissions or errors hereunder. The duties and obligations of the Escrow Holder may be determined by the express provisions of this Agreement. The Escrow Holder may consult with counsel, who mayor may not be counsel to the Issuer, and in reliance upon the opinion of such counsel shall have full and complete authorization and protection in respect of any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Holder shall deem it necessary or desirable that a matter be proved or established prior to taking, sUffering or omitting any action under this Agreement, such matter may be deemed to be conclusively established by a certificate signed by an authorized officer of the Issuer. SECTION 9. Resiqnation of Escrow Holder. The Escrow Holder may resign and thereby become discharged from the duties and obligations hereby created, by notice in writing given to the Issuer, Moody's Investors Service, Standard & Poor's Corporation, and the Paying Agent for the Refunded Bonds not less than sixty (60) days before such resignation shall take effect. Such resigna- tion shall not take effect until the appointment of a new Escrow Holder hereunder. SECTION 10. Removal of Escrow Holder. (a) The Escrow Holder may be removed at any time by an instrument or concurrent instruments in writing, executed by the holders of not less than fifty-one percentum (51%) in aggregate principal amount of the Refunded Bonds then outstanding, such instruments to be filed with the Issuer, and notice in writing 5 given by such holders to the original purchaser or purchasers of the Bonds and published by the Issuer once in a newspaper of general circulation in the territorial limits of the Issuer, and in a daily newspaper or financial journal of general circulation in the City of New York, New York, not less than sixty (60) days before such removal is to take effect as stated in said instrument or instruments. A photographic copy of any instrument filed with the Issuer under the provisions of this paragraph shall be delivered by the Issuer to the Escrow Holder. (b) The Escrow Holder may also be removed at any time for any breach of trust or for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any provisions of this Agreement with respect to the duties and obligations of the Escrow Holder by any court of competent jurisdiction upon the application of the Issuer or the holders of not less than five percentum (5%) in aggregate principal amount of the Bonds then outstanding, or the holders of not less than five percentum (5%) in aggregate principal amount of the Refunded Bonds then outstanding. (c) The Escrow Holder may not be removed until a successor Escrow Holder has been appointed in the manner set forth herein. SECTION 11. Successor Escrow Holder. (a) If at any time hereafter the Escrow Holder shall resign, be removed, be dissolved or otherwise become incapable of acting, or shall be taken over by any governmental official, agency, department or board, the position of Escrow Holder shall thereupon become vacant. If the position of Escrow Holder shall become vacant for any of the foregoing reasons or for any other reason, the Issuer shall appoint an Escrow Holder to fill such vacancy. The Issuer shall either (i) publish notice of any such appointment made by it once in each week for four (4) successive weeks in a newspaper of general circulation published in the territorial limits of the Issuer and in a daily newspaper or financial journal of general circulation in the City of New York, New York, or (ii) mail a notice of any such appointment made by it to the Holders of the Refunded Bonds within thirty (30) days after such appointment. (b) At any time within one year after such vacancy shall have occurred, the holders of a majority in principal amount of the Bonds then outstanding or a majority in principal amount of the Refunded Bonds then outstanding, by an instrument or concurrent instruments in writing, executed by either group of such bondhold- ers and filed with the governing body of the Issuer, may appoint a successor Escrow Holder, which shall supersede any Escrow Holder theretofore appointed by the Issuer. Photographic copies of each such instrument shall be delivered promptly by the Issuer, to the predecessor Escrow Holder and to the Escrow Holder so appointed by the bondholders. In the case of conflicting appointments made by 6 the bondholders under this paragraph, the first effective appoint- ment made during the one year period shall govern. (c) If no appointment of a successor Escrow Holder shall be made pursuant to the foregoing provisions of this Section, the holder of any Refunded Bonds then outstanding, or any retiring Escrow Holder may apply to any court of competent jurisdiction to appoint a successor Escrow Holder. Such court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Escrow Holder. SECTION 12. Payment to Escrow Holder. The Escrow Holder hereby acknowledges that it has agreed to accept compensation under the Agreement on the dates and in the amounts reflected in Schedule B attached hereto, which the Issuer agrees to deposit into the Escrow Account on the date of delivery of the Bonds for services to be performed by the Escrow Holder pursuant to this Agreement, plus out-of-pocket expenses to be reimbursed at cost. SECTION 13. Term. This Agreement shall commence upon its execution and delivery and shall terminate when the Refunded Bonds have been paid and discharged in accordance with the proceedings authorizing the Refunded Bonds. SECTION 14. Severabilitv. If anyone or more of the covenants or agreements provided in this Agreement on the part of the Issuer or the Escrow Holder to be performed should be deter- mined by a court of competent jurisdiction to be contrary to law, such covenant or agreements herein contained shall be null and void and shall in no way affect the validity of the remaining provisions of this Agreement. SECTION 15. Amendments to this Aqreement. This Agreement is made for the benefit of the Issuer and the holders from time to time of the Refunded Bonds and the Bonds and it shall not be repealed, revoked, altered or amended in whole or in part without the written consent of all affected holders, the Escrow Holder and the Issuer; provided, however, that the Issuer and the Escrow Holder may, without the consent of, or notice to, such holders, enter into such agreements supplemental to this Agreement as shall not adversely affect the rights of such holders and as shall not be inconsistent with the terms and provisions of this Agreement, for anyone or more of the following purposes: (a) to cure any ambiguity or formal defect or omission in this Agreement; (b) to grant to, or confer upon, the Escrow Holder, for the benefit of the holders of the Bonds and the Refunded Bonds any additional rights, remedies, powers or authority that may lawfully be granted to, or conferred upon, such holders or the Escrow Holder; and 7 (c) to subject to this Agreement additional funds, securities or properties. The Escrow Holder shall, at its option, be entitled to rely conclusively upon an opinion of nationally recognized attorneys on the subj ect of municipal bonds acceptable to the Issuer wi th respect to compliance with this Section, including the extent, if any, to which any change, modification, addition or elimination affects the rights of the holders of the Refunded Bonds or that any instrument executed hereunder complies with the conditions and provisions of this section. SECTION 16. CounterDarts. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. SECTION 17. Governinq Law. This Agreement shall be construed under the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers and their corporate seals to be hereunto affixed and attested as of the date first above written. CITY OF WINTER SPRINGS, FLORIDA By Mayor ( SEAL) FLORIDA ATTEST: Mary T. Norton City Clerk Approved as to form and legal sufficiency City Attorney [ESCROW HOLDER] ( SEAL) By Title: ATTEST: Title: 8 DATE DUE SCHEDULE OF DEBT SERVICE SCHEDULE A FOR CITY OF WINTER SPRINGS, FLORIDA WATER AND SEWER REFUNDING REVENUE BONDS PRINCIPAL SERIES 1985 [TO BE PROVIDED] INTEREST PREMIUM TOTAL DEBT SERVICE A-1 SCHEDULE B EXPENSES TO BE PAID BY ESCROW HOLDER [TO BE PROVIDED] B-1 SCHEDULE C-1 [TO BE PROVIDED] SUBSCRIPTION FOR PURCHASE OF U.S. TREASURY SECURITIES STATE AND LOCAL GOVERNMENT SERIES TIME DEPOSIT SECURITIES CERTIFICATION ATTACHMENT The undersigned certifies that, in addition to certifications contained in 31 CFR 344.3 (c), one of the following statements is true (check a or b): a) no portion of the investment is being made (directly or indirectly) with amounts that are to be used to discharge a tax-exempt bond issue and that are derived or are to be de- rived (directly or indirectly) from the sale of securities after 5 p.m. (EDT) Thursday, October 22, 1987; the Proceeds of which were to be used to discharge a tax-exempt bond issue; or b) although a portion of the investment is being made (directly or indirectly) with amounts that are to be used to discharge a tax-exempt bond issue and that are derived or are to be derived (directly or indirectly) from the sale of securities after 5 p.m. (EDT) Thursday, October 22, 1987, the proceeds of which were to be used to discharge a tax-exempt bond issue, the composite yield to maturity of all investments being purchased with such amounts does not exceed the composite yield to maturity of the securities that were sold, based on the price at which they were sold. The undersigned agrees that this certification is part of the attached Subscription for Purchase in the amount of $ dated Dated this day of , 1991. Name of Government Body By Aqent Authorized Government Body Official ( Area Code Telephone Number C-l Reinvestment Date SCHEDULE C-2 REINVESTMENT IN 0% SLGS [TO BE PROVIDED] Amount Maturitv Date C-2