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HomeMy WebLinkAboutResolution 822 Revenue Bonds .... RESOLUTION NO. 822 A RESOLUTION OF THE CITY OF WINTER SPRINGS, FLORIDA, AUTHORIZING THE ISSUANCE OF $3,025,000 IN AGGREGATE PRINCIPAL AMOUNT OF SUBORDINATE WATER AND SEWER REVENUE BONDS, SERIES 1997 TO FINANCE THE COST OF CONSTRUCTING AND ACQUIRING CERTAIN ADDITIONS, EXTENSIONS AND IMPROVEMENTS TO THE CITY OWNED AND OPERATED WATER AND SEWER SYSTEM; PLEDGING FOR THE PAYMENT OF SUCH BONDS THE PLEDGED REVENUES AS DEFINED HEREIN; PROVIDING FOR THE RIGHTS OF THE HOLDERS OF SUCH 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 Chapter 166, Part II, Florida Statutes, Chapter 72-718, Laws of Florida, Special Act of 1972, being the Charter of the City of winter Springs, section 19(M) of City Resolution No. 665, as amended and supplemented by Resolution No. 690 of the issuer (the "Original Resolution") and other applicable provisions of law. SECTION 2. DEFINITIONS. All terms used herein that are defined in the Original Resolution are used within the same meaning herein unless the context otherwise requires or they are expressly given a different meaning. In addition, the following terms used herein shall have the following meaning. "1997 Project" shall mean the improvements to the System to be financed in part with proceeds of the Series 1997 Subordinate Obligations as more particularly set forth in the plans and specifications on file with the Clerk as the same may be amended from time to time. "Pledged Revenues" shall mean all Revenues available for payment of the Series 1997 Subordinate Obligations after payment of Cost of Operation and Maintenance and making the deposits required to be made to the Debt Service Fund (including all accounts and subaccounts therein) and the Renewal and Replacement Fund pursuant to the provisions of the Original Resolution. "Senior Bonds" Outstanding Water and and Outstanding Water 1992. shall mean collectively the Issuer's Sewer Refunding Revenue Bonds, Series 1991 and Sewer Refunding Revenue Bonds, Series R#105167.3 "Series 1997 Subordinate obligations" shall mean the Subordinate Water and Sewer Revenue Bonds, Series 1997 authorized pursuant to this Resolution. The terms "herein," "hereunder," "hereby," "hereto," "hereof" and any similar terms shall refer to this Resolution; the term heretofore shall mean before the date of adoption of this Resolution; and the term "hereafter" shall mean after the date of adoption of this Resolution. SECTION 3. FINDINGS. It is hereby ascertained, determined and declared that: (A) The Issuer now owns, operates and maintains the System and will continue to derive revenue from rates, fees, rentals and other charges made and collected for the services of such System, which revenues and the other revenues pledged pursuant to the provisions hereof are not now pledged or encumbered in any manner, except for the paYment of the Senior Bonds. (B) It is in the best interests of the Issuer and the residents thereof that the Issuer authorize the issuance of the Series 1997 Subordinate Obligations for the purpose of designing, permitting, acquiring and constructing the 1997 Project. (C) The principal of and interest and redemption premium on the Series 1997 Subordinate Obligations shall be payable solely from the Pledged Revenues. 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 Series 1997 Subordinate Obligations herein authorized or to make any other paYments provided for herein. The Series 1997 Subordinate Obligations shall not constitute a lien upon any properties owned by or located within the boundaries of the Issuer or upon any property other than the Pledged Revenues. (D) The Pledged Revenues are expected to be sufficient to pay all principal of and interest and redemption premium on the Series 1997 Subordinate Obligations as the same become due. SECTION 4. AUTHORIZATION OF DESIGN, PERMITTING, ACQUISITION AND CONSTRUCTION OF THE 1997 PROJECT. There is hereby authorized as provided in the Resolution the design, permitting, acquisition and construction of the 1997 Project. SECTION 5. THIS RESOLUTION TO CONSTITUTE CONTRACT. In consideration of the acceptance of the Series 1997 Subordinate Obligations authorized to be issued hereunder by those who shall hold the same from time to time, this Resolution shall be deemed to be and shall constitute a contract between the Issuer and such Holders. The covenants and agreements herein set forth to be performed by the Issuer shall be for the equal benefit, protection R#105167.3 2 and security of the legal Holders of any and all of the Series 1997 Subordinate Obligations, all of which shall be of equal rank and without preference, priority or distinction of any of the Series 1997 Subordinate Obligations over any other thereof, except as expressly provided therein and herein. SECTION 6. AUTHORIZATION OF SERIES 1997 SUBORDINATE OBLIGATIONS. Subject and pursuant to the provisions hereof, obligations of the Issuer to be known as "Subordinate Water and Sewer Revenue Bonds, Series 1997," are authorized to be issued in the aggregate principal amount of $3,025,000. SECTION 7. DESCRIPTION OF SERIES 1997 SUBORDINATE OBLIGATIONS. The Series 1997 Subordinate Obligations shall be issued in fully registered form as Serial Bonds or Term Bonds; shall be dated as determined by supplemental resolution of the Issuer adopted prior to the sale of the Series 1997 Subordinate Obligations; shall be numbered consecutively from one upward in order of Maturity preceded by the letter "R"; shall be issued in the denominations of $100,000 each, or multiples of $5,000 in excess thereof (an "Authorized Denominations"); shall have such Paying Agent and Registrar, and shall bear interest at such rate or rates not exceeding the maximum rate allowed by State law, all as approved by the governing body of the Issuer prior to or upon the sale of the Series 1997 Subordinate Obligations; such interest to be payable semiannually on each April 1 and October 1 commencing October 1, 1997 and shall mature annually commencing on October 1, 1998 and each October 1 thereafter through October 1, 2007 and in such amounts as will be fixed by supplemental resolution of the Issuer prior to or upon the sale of the Series 1997 Subordinate Obligations. Each Series 1997 Subordinate Obligation shall bear interest from the interest date next preceding the date on which it is authenticated, unless authenticated on an interest date, in which case it shall bear interest from such interest date, or, unless authenticated prior to the first interest 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 Series 1997 Subordinate Obligation shall bear interest from the date to which interest shall have been paid. The principal of and the interest on the Series 1997 Subordinate Obligations 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 Series 1997 Subordinate Obligations 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 R#105167.3 3 address as it appears on such registration books. Payment of the principal of all Series 1997 Subordinate Obligations shall be made upon the presentation and surrender of such Series 1997 Subordinate Obligations at the office of the paying Agent as the same shall become due and payable or as otherwise provided in a supplemental resolution of the Issuer. SECTION 8. EXECUTION OF SERIES 1997 SUBORDINATE OBLIGATIONS. The Series 1997 Subordinate Obligations shall be signed by, or bear the facsimile signatures of the Mayor of the Issuer, and shall be attested 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 1997 Subordinate Obligations. In case any officer whose signature or a facsimile of whose signature shall appear on any Series 1997 Subordinate Obligations shall cease to be such officer before the delivery of such Series 1997 Subordinate obligations, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes the same as if he has remained in office until such delivery. Any Series 1997 Subordinate Obligation may bear the facsimile signature of or may be signed by such persons who, at the actual time of the execution of such Series 1997 Subordinate Obligation, shall be the proper officers to sign such Series 1997 Subordinate Obligations although, at the date of such Series 1997 Subordinate Obligation, such persons may not have been such officers. SECTION 9. AUTHENTICATION OF SERIES 1997 SUBORDINATE OBLIGATIONS. only such of the Series 1997 Subordinate Obligations as shall have been endorsed thereon a certificate of authentication duly executed by the Registrar, as authenticating agent, shall be entitled to any benefit or security under this Resolution. No Series 1997 Subordinate obligation shall be valid or obligatory for any purpose unless and until such certificate of authentication shall have been duly executed by the Registrar, and such certificate of the Registrar upon any such Series 1997 Subordinate Obligation shall be conclusive evidence that such Series 1997 Subordinate Obligation has been duly authenticated and delivered under this Resolution. The Registrar's certificate of authentication on any Series 1997 Subordinate obligation 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 1997 Subordinate Obligations that may be issued hereunder at anyone time. SECTION 10. EXCHANGE OF SERIES 1997 SUBORDINATE OBLIGATIONS. Any Series 1997 Subordinate obligation, upon surrender thereof at the principal corporate trust office of the Registrar, together with an assignment duly executed by the Series 1997 Subordinate Obligation Holder or his attorney or legal representative in such form as shall be satisfactory to the Registrar, may, at the option R#lOS167.3 4 of the Series 1997 Subordinate Obligation Holder, be exchanged for an aggregate principal amount of Series 1997 Subordinate Obligations, in Authorized Denominations equal to the principal amount of the Series 1997 Subordinate Obligation or Series 1997 Subordinate Obligations so surrendered. The Registrar shall make provision for the exchange of Series 1997 Subordinate Obligations at the principal corporate trust office of the Registrar. SECTION 11. NEGOTIABILITY, REGISTRATION AND TRANSFER OF SERIES 1997 SUBORDINATE OBLIGATIONS. The Registrar shall keep books for the registration of and for the registration of transfers of Series 1997 Subordinate obligations as provided in this Resolution. The transfer of any Series 1997 Subordinate Obligations may be registered only upon such books and only upon surrender thereof to the Registrar together with an assignment duly executed by the Series 1997 Subordinate Obligation Holder or his attorney or legal representative in such form as shall be satisfactory to the Registrar and shall be otherwise subject to such limitations as may be set forth in a supplemental resolution adopted by the Issuer prior to the initial delivery of the Series 1997 Subordinate Obligations. Upon any such registration of transfer, the Issuer shall execute and the Registrar shall authenticate and deliver in exchange for such Series 1997 Subordinate Obligation, a new Series 1997 Subordinate obligation or Series 1997 Subordinate Obligations, in Authorized Denominations, registered in the name of the transferee, and in an aggregate principal amount equal to the principal amount of such Series 1997 Subordinate Obligation or Series 1997 Subordinate Obligations so surrendered. In all cases in which Series 1997 Subordinate Obligations shall be exchanged, the Issuer shall execute and the Registrar shall authenticate and deliver, at the earliest practicable time, a new Series 1997 Subordinate Obligation or Series 1997 Subordinate Obligations in accordance with the provisions of this Resolution. All Series 1997 Subordinate Obligations 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 1997 Subordinate Obligations 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 Series 1997 Subordinate obligation Holder for the privilege of exchanging or registering the transfer of Series 1997 Subordinate Obligations under the provisions of this Resolution. SECTION 12. OWNERSHIP OF SERIES 1997 SUBORDINATE OBLIGATIONS. The person in whose name any Series 1997 Subordinate Obligation shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the R#lOS167.3 5 principal of any such Series 1997 Subordinate Obligation, and the interest on any such Series 1997 Subordinate Obligations 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 such Series 1997 Subordinate Obligation and interest thereon to the extent of the sum or sums so paid. SECTION 13. SERIES 1997 SUBORDINATE OBLIGATIONS MUTILATED, DESTROYED, STOLEN OR LOST. In case any Series 1997 Subordinate Obligation 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 1997 Subordinate Obligation of like date and tenor as the Series 1997 Subordinate Obligation so mutilated, destroyed, stolen or lost in exchange and substitution for such mutilated Series 1997 Subordinate Obligation upon surrender and cancellation of such mutilated Series 1997 Subordinate Obligation or in lieu of and substitution for the Series 1997 Subordinate Obligation destroyed, stolen or lost, and upon the Holder furnishing the Issuer and the Registrar proof of his ownership thereof and satisfactory indemnity and complying with such other reasonable regulations and conditions as the Issuer and the Registrar may prescribe and paying such expenses as the Issuer and the Registrar may incur. All Series 1997 Subordinate Obligations so surrendered shall be canceled by the Issuer. If any of the Series 1997 Subordinate Obligations shall have matured or be about to mature, instead of issuing a substitute Series 1997 Subordinate Obligation, the Issuer may pay the same, upon being indemnified as aforesaid, and if such Series 1997 Subordinate Obligation be lost, stolen or destroyed, without surrender thereof. Any such duplicate Series 1997 Subordinate Obligations issued pursuant to this section shall constitute original, additional contractual Obligations on the part of the Issuer whether or not the lost, stolen or destroyed Series 1997 Subordinate Obligations be at any time found by anyone, and such duplicate Series 1997 Subordinate Obligations shall be enti tIed 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 1997 Subordinate Obligations issued hereunder. SECTION 14. PROVISIONS FOR REDEMPTION. The Series 1997 Subordinate Obligations maturing on or prior to October 1, 2002, are not redeemable prior to their respective maturities. The Series 1997 Subordinate Obligations maturing on or after October 1, 2003, are subject to optional redemption prior to their maturities on or after october 1, 2002, at the option of the Issuer in whole or in part at any time, in such manner as shall be determined by the Issuer and by lot within a maturity if less than a full maturity from any legally available moneys at a redemption price of R#lOS167.3 6 the principal amount thereof, together with accrued interest to the redemption date. The Series 1997 Subordinate Obligations may otherwise be subject to redemption prior to their maturity, at such times and in such manner as shall be fixed by supplemental resolution of the Issuer adopted prior to or at the time of sale of the Series 1997 Subordinate Obligations. Notice of such redemption shall, at least thirty (30) days prior to the redemption date, be filed with the Registrar, and mailed, first class mail, postage prepaid, to all Holders of Series 1997 Subordinate Obligations to be redeemed at their addresses as they appear on the registration books hereinbefore provided for, but failure to mail such notice to one or more Holders of Series 1997 Subordinate Obligations shall not affect the validity of the proceedings for such redemption with respect to Holders of Series 1997 Subordinate Obligations 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 1997 Subordinate Obligations of one maturity are to be called, the distinctive numbers of such Series 1997 Subordinate Obligations to be redeemed and in the case of Series 1997 Subordinate Obligations to be redeemed in part only, the portion of the principal amount thereof to be redeemed. Official notice of redemption having been given as aforesaid, the Series 1997 Subordinate Obligations or portions of Series 1997 Subordinate Obligations to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the Issuer shall default in the payment of the redemption price) such Series 1997 Subordinate Obligations or portions of Series 1997 Subordinate Obligations shall cease to bear interest. Upon surrender of such Series 1997 Subordinate Obligations for redemption in accordance with said notice, such Series 1997 Subordinate Obligations shall be paid by the Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. Upon surrender for any partial redemption of any Series 1997 Subordinate Obligation, there shall be prepared for the Holder, in Authorized Denominations, a new Series 1997 Subordinate obligation or series 1997 Subordinate obligations of the same maturity in the amount of the unpaid principal of such partially redeemed Series 1997 Subordinate Obligation or such partial redemption shall be as otherwise determined by supplemental resolution of the Issuer adopted prior to the sale of the Series 1997 Subordinate Obligations. All Series 1997 Subordinate Obligations which have been redeemed shall be canceled and destroyed by the Registrar and shall not be reissued. SECTION 15. FORM OF SERIES 1997 SUBORDINATE OBLIGATIONS. The form of the Series 1997 Subordinate obligations, shall be as determined by supplemental resolution of the Issuer adopted prior to the initial delivery thereof. R#lOS167.3 7 SECTION 16. CREATION OF FUNDS. There are hereby created and established the following funds and accounts, which funds and accounts shall be trust funds held by the Finance Director or as otherwise directed by such officer for the purposes herein provided and used only in the manner herein provided: (A) The "City of Winter Springs Water and Sewer System 1997 Acquisition and Improvement Fund" (hereinafter sometimes called the "Acquisition Fund") to be held by the Issuer and to the credit of which deposits shall be made as required by Section 17 hereof, and from which disbursements shall be made in accordance with Section 18 of the Original Resolution. (B) The "City of winter Springs Water and Sewer system Subordinate Debt Service Fund" (hereinafter sometimes called the "Subordinate Debt Service Fund") to be held by the Issuer and to the credit of which deposits shall be made as required by Section 19 (A) (1) hereof. In such fund there shall be maintained the following accounts: the Principal Account, the Interest Account and the Redemption Account. (C) The "city of winter Springs Water and Sewer System 1997 Cost of Issuance Fund" (hereinafter sometimes called the "1997 Cost of Issuance Fund") to be held by the Issuer and to the credit of which deposits to and disbursements from shall be made as provided by Section 17(B) hereof. SECTION 17. APPLICATION OF SERIES 1997 SUBORDINATE OBLIGATIONS PROCEEDS. The proceeds received from the sale of the Series 1997 Subordinate Obligations shall be applied by the Issuer simultaneously with the delivery of such Series 1997 Subordinate Obligations to the purchaser thereof, as follows: (A) Any accrued interest shall be deposited as provided in a supplemental resolution of the Issuer adopted prior to the delivery of the Series 1997 Subordinate Obligations. (B) A sufficient amount of the Series 1997 Subordinate Obligation proceeds shall be deposited to the 1997 Cost of Issuance Fund to provide for the payment of costs and expenses relating to the issuance of the Series 1997 Subordinate Obligations. Disbursements from the 1997 Cost of Issuance Fund shall be made upon written directions of the City Manager of the Issuer or his designee. (C) The balance of the proceeds of the Series 1997 Subordinate Obligations shall be deposited into the Acquisition Fund and used for the purpose of paying costs of the 1997 Project. SECTION 18. SPECIAL OBLIGATIONS OF ISSUER. The Series 1997 Subordinate Obligations shall not be or constitute general obligations or indebtedness of the Issuer as "bonds" within the R#105167.3 8 meaning of the Constitution of Florida, but shall be payable solely from and secured by a first lien upon and a pledge of the Pledged Revenues as herein provided. No Holder or Holders of any Subordinate Obligations 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, or to compel the Issuer to pay such principal and interest from any other funds of the Issuer. The paYment of principal of and interest on the Series 1997 Subordinate Obligations shall be secured forthwith equally and ratably by, and the Issuer hereby grants to the Series 1997 Subordinate Obligation Holders an irrevocable lien on the Pledged Revenues, prior and superior to all other liens or encumbrances on such Pledged Revenues and the Issuer does hereby irrevocably pledge such Pledged Revenues to the paYment of the principal of, redemption premium, if any, and interest on the Series 1997 Subordinate Obligations and for all other paYments required hereunder. Such amounts hereby pledged and assigned shall immediately be subject to the lien of this pledge without any further physical delivery thereof or any further act, and the lien of this pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the Issuer, irrespective of whether such parties have notice thereof. SECTION 19. COVENANTS OF THE ISSUER. For so long as any of the principal of and interest on any of the Series 1997 Subordinate Obligations shall be outstanding and unpaid or until the Issuer has made provision for paYment of principal and interest with respect to the Series 1997 Subordinate Obligations, as provided herein, the Issuer covenants with the Holders of any and all Series 1997 Subordinate Obligations as follows: (A) DISPOSITION OF PLEDGED REVENUES. All Pledged Revenues shall be disposed of monthly, but not later than the thirtieth (30th) day of each month commencing in the month immediately following the delivery of the Series 1997 Subordinate Obligations only in the following manner and the following order of priority: (1) The Issuer shall first deposit into the Subordinate 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: (a) Interest Account: Such sum as will be sufficient to pay one-sixth (1/6th) of all interest coming due on all outstanding Series 1997 Subordinate obligations 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 R#105167.3 9 not be required to be made to the extent that money on deposit within such Interest Account is sufficient for such purpose. Any monthly paYment out of Pledged Revenues to be deposited as set forth above, for the purpose of meeting interest paYments for the Series 1997 Subordinate obligations, shall be adjusted, as appropriate, to reflect the frequency of interest paYment dates applicable thereto. Moneys in the Interest Account may be used only for the purposes set forth in this paragraph (a). (b) Principal Account: Such sum as will be sufficient to pay one-twelfth (1/12th) of the principal amount of the Outstanding Series 1997 Subordinate Obligations which will mature and become due on such annual maturity dates beginning the month which is twelve (12) months prior to the first principal maturity date; 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 Pledged Revenues to be deposited as set forth above, for the purpose of meeting principal paYments for Series 1997 Subordinate Obligations, shall be adjusted, as appropriate, to reflect the frequency of principal paYment dates applicable thereto. 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-twelfth (1/12th) of any Amortization Installment established for the mandatory redemption of Outstanding Series 1997 Subordinate Obligations on such annual maturity date beginning the month which is twelve (12) months prior to the first Amortization Installment 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 Pledged Revenues to be deposited as set forth above, for the purpose of meeting Amortization Installments for the Series 1997 Subordinate Obligations, shall be adjusted, as appropriate, to reflect the frequency of dates established for Amortization Installments applicable to such obligations. The moneys in the Redemption Account shall be used solely for the purchase or redemption of the Term Series 1997 Subordinate Obligations payable therefrom. Moneys in the Redemption Account in the Subordinate Debt Service Fund may be used only for the purposes set forth in this paragraph (c). (2) The balance of any Pledged Revenues after the above required paYments have been made may be used for any lawful purpose; provided, however, that none of said money shall be used for any purposes other than those hereinabove specified unless all R#lOS167.3 10 current payments, including any deficiencies for prior payments, have been made in full. (3) The Debt Service Fund (including the accounts therein), and any other special funds herein established and created shall be deemed to be held in trust for the purposes provided herein for such funds. The moneys in all such funds shall be continuously secured in the same manner as state and municipal deposits are authorized to be secured by the laws of the State of Florida. Moneys in any fund or account created hereunder may be invested and reinvested in Investment Securities which mature not later than the dates on which the moneys on deposit therein will be needed for the purpose of such fund. All income on such investments, except as otherwise provided, 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 (or, with respect to the 1997 Acquisition Fund, the amount required to acquire, construct and erect the 1997 Project) is on deposit therein, and thereafter shall be deposited in the Subordinate Debt Service Fund. (4) In determining the amount of any of the payments required to be made pursuant to this Section, credit may be given for all investment income accruing to the respective funds and accounts described herein, except as otherwise provided. (5) The cash required to be accounted for in each of the funds and accounts described in this section may be deposited in a single bank account, provided that adequate accounting records are maintained to reflect and control the restricted allocation of the cash on deposit therein for the various purposes of such funds and accounts as herein provided. The designation and establishment of the various funds in and by 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 consti tute 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. (B) NO ADDITIONAL PARITY OBLIGATIONS OTHER THAN REFUNDING BONDS. The Issuer will not, so long as any Series 1997 Subordinate Obligations are Outstanding, issue any Additional Parity Obligations payable on a parity with the Senior Bonds other than Refunding Bonds complying with the provisions of section 19N(6) of the Original Resolution. (C) APPLICATION OF PROVISIONS OF THE ORIGINAL RESOLUTION, AND LIMITATIONS THEREOF. The covenants of the Issuer contained in sections 19(C) through 19(N) of the Original Resolution shall be R#105167.3 11 applicable to the Series 1997 Subordinate Obligations as though such obligations were Bonds within the meaning of the said Original Resolution. Notwithstanding the immediately preceding sentence, the Holders of the Series 1997 Subordinate Obligations shall have no right to enforce any of the covenants granted to them pursuant to this Resolution that adversely affect the interests of the Holders of the Senior Bonds, including, but not limited to the failure of the Issuer to pay principal and interest on the Series 1997 Subordinate Obligations unless such action is based upon the failure of the Issuer to deposit Pledged Revenues as provided in this Resolution. By purchase of the Series 1997 Subordinate Obligations the Holders of such obligations agree to the provisions of the immediately preceding sentence and agree that an injunction may be entered against them by a court of appropriate jurisdiction if such Holders take action in violation of such terms. (D) ISSUANCE OF ADDITIONAL SUBORDINATE OBLIGATIONS. The Issuer will not, as long as the Series 1997 Subordinate Obligations are Outstanding, issue any other obligations payable on a parity from the Pledged Revenues with the Series 1997 Subordinate Obligations. SECTION 20. 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": (A) Default in the due and punctual paYment of any interest on the Series 1997 Subordinate Obligations; (B) Default in the due and punctual paYment of the principal of and premium, if any, on any Series 1997 Subordinate Obligations, at the stated maturity thereof, or upon proceedings for redemption thereof; (C) 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 Series 1997 Subordinate Obligations 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 Series 1997 Subordinate Obligations then Outstanding (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); (D) 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; or R#lOS167.3 12 (E) Any 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 this Resolution, any supplemental resolution or in the Series 1997 Subordinate Obligations, exclusive of any period of grace required to constitute a default or an "Event of Default" as hereinabove provided. Any Holder of Series 1997 Subordinate obligations issued under the provisions hereof or any trustee acting for the Holders of such Series 1997 Subordinate Obligations, 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. Notwithstanding the immediately preceding paragraph, the Holders of the Series 1997 Subordinate obligations shall have no right to protect and enforce any of the rights granted to them pursuant to this Resolution that adversely affect the interests of the Holders of the Senior Bonds, including, but not limited to the failure of the Issuer to pay principal and interest on the Series 1997 Subordinate Obligations unless such action is based upon the failure of the Issuer to deposit Pledged Revenues as provided in this Resolution. By purchase of the Series 1997 Subordinate Obligations the Holders of such obligations agree to the provisions of the immediately preceding sentence and agree that an injunction may be entered against them by a court of appropriate jurisdiction if such Holders take action in violation of such terms. Nothing herein, however, shall be construed to grant to any Holder of the Series 1997 Subordinate Obligations any lien on any property of the Issuer, except the Pledged Revenues. The foregoing notwithstanding: (i) No remedy conferred upon or reserved to the 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 the Holders hereunder. (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 R#lOS167.3 13 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 hereunder by the Holders shall extend to or subsequent default or Event of Default or shall or remedies consequent thereon. Event of Default shall affect any impair any rights (iv) Acceleration of the paYment of principal of and interest on the Series 1997 Subordinate Obligations shall not be a remedy hereunder in the case of an Event of Default. SECTION 21. AMENDING AND SUPPLEMENTING OF RESOLUTION WITHOUT CONSENT OF HolderS OF SERIES 1997 SUBORDINATE OBLIGATIONS. The Issuer, from time to time and at any time and without the consent or concurrence of any Holder of any Series 1997 Subordinate Obligations, may adopt a resolution amendatory hereof or supplemental hereto, if the provisions of such supplemental resolution shall not materially adversely affect the rights of the Holders of the Senior Bonds and the Series 1997 Subordinate Obligations then Outstanding, for anyone or more of the following purposes: (A) To make any changes or corrections in this Resolution as to which the Issuer shall have been advised by counsel that are required for the purpose of curing or correcting any ambiguity or defective or inconsistent provisions or omission or mistake or manifest error contained in this Resolution, or to insert in this Resolution such provisions clarifying matters or questions arising under this 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 Series 1997 Subordinate Obligations; (C) To surrender any right, power or privilege reserved to or conferred upon the Issuer by the terms of this 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 this 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 federal "arbitrage" provisions in effect from time to time; and (G) To modify any of the provisions of this Resolution in any other aspects provided that such modifications shall not be effective until after the Series 1997 Subordinate Obligations R#105167.3 14 outstanding at the time such supplemental resolution is adopted shall cease to be Outstanding, or until the Holders thereof consent thereto pursuant to section 22 hereof, and any Series 1997 Subordinate obligations issued subsequent to any such modification shall contain a specific reference to the modifications contained in such supplemental resolution. Except for supplemental resolutions providing for the issuance of Series 1997 Subordinate Obligations pursuant hereto, the Issuer shall not adopt any supplemental resolution authorized by the foregoing provisions of this Section unless in the opinion of Bond Counsel the adoption of such supplemental resolution is permitted by the foregoing provisions of this section. SECTION 22. AMENDMENT OF RESOLUTION WITH CONSENT OF HolderS OF SERIES 1997 SUBORDINATE OBLIGATIONS. Except as provided in section 21 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 Series 1997 Subordinate Obligations so affected and then Outstanding. No modification or amendment shall permit a change in the maturity of such Series 1997 Subordinate Obligations 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 Series 1997 Subordinate obligations as the same shall become due from the Pledged Revenues or reduce the percentage of the Holders of the Series 1997 Subordinate Obligations required to consent to any material modification or amendment hereof without the consent of the Holder or Holders of all such obligations. SECTION 23. 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 Series 1997 Subordinate Obligations the principal, redemption premium, if any, and interest due or to become due thereon, at the times and in the manner stipulated herein, then the pledge of the Pledged Revenues and all covenants, agreements and other obligations of the Issuer to the Series 1997 Subordinate Obligation Holders, 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 Series 1997 Subordinate Obligations 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 Series 1997 Subordinate Obligations shall cease to be entitled to any lien, benefit or security unde~ this ReSOlution, and all covenants, agreements and obligations of the Issuer to the Holders of such Series 1997 R#1OS167.3 15 Subordinate obligations shall thereupon cease, terminate and become void and be discharged and satisfied. (B) The Series 1997 Subordinate Obligations, 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 (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 23. Any outstanding Series 1997 Subordinate Obligations shall prior to the maturity or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in paragraph (A) of this section if (i) in case any of said Series 1997 Subordinate Obligations 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 Series 1997 Subordinate obligations in the manner required herein of the redemption of such Series 1997 Subordinate obligations on said date and (ii) there shall have been deposited with the escrow agent either moneys in an amount which shall be sufficient, or Acquired obligations (including any Acquired obligations issued or held in book-entry form on the books of the Department of the Treasury of the united States) 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 Series 1997 Subordinate Obligations on or prior to the redemption date or maturity date thereof, as the case may be. SECTION 24. TAX COVENANTS. with respect to any Series 1997 Subordinate Obligations for which the Issuer intends on the date of issuance thereof for the interest thereon to be excluded from gross income for purposes of Federal income taxation: (A) The Issuer shall not use or permit the use of any proceeds of any such Series 1997 Subordinate Obligations 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 such Series 1997 Subordinate Obligations in any manner, and shall not take or permit to be taken any other action or actions, which would cause any such Series 1997 Subordinate Obligations to be a "private activity bond" within the meaning of section 141 or 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 (the "Code"), or otherwise cause interest on such Series of Series 1997 Subordinate Obligations to become subject to federal income taxation. R#105167.3 16 (B) The Issuer shall at all times do and perform all acts and things permitted by law and this Resolution which are necessary or desirable in order to assure that interest paid on such Series 1997 Subordinate obligations will be excluded from gross income for purposes of federal income taxes and shall take no action that would result in such interest not being so excluded. (C) The Issuer shall payor cause to be paid to the United States Government any amounts required by Section 148(f) of the Code and the regulations thereunder (the "Regulations"). SECTION 25. 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 policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid or shall in any manner be held to adversely affect the validity of the Series 1997 Subordinate Obligations, 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 Series 1997 Subordinate obligations issued hereunder. SECTION 26. SALE OF SERIES 1997 SUBORDINATE OBLIGATIONS. The Series 1997 Subordinate Obligations shall be issued and sold at private sale at one time or in installments from time to time and at such price or prices as shall be consistent with the provisions of the requirements of this Resolution and other applicable provisions of law. SECTION 27. GENERAL AUTHORITY. The members of the City commission of the Issuer and the Issuer's officers, attorneys and other agents and employees are hereby authorized to perform all acts and things required of them by this Resolution or desirable or consistent with the requirements hereof for the full, punctual and complete performance of all of the terms, covenants and agreements contained in the Series 1997 Subordinate obligations and this Resolution, and they are hereby authorized to execute and deliver all documents which shall be required by Bond Counselor the initial purchasers of the Series 1997 Subordinate Obligations to effectuate the sale of the Series 1997 Subordinate Obligations to said initial purchasers. SECTION 28. NO THIRD PARTY BENEFICIARIES. Except such other persons as may be expressly described herein or in the Series 1997 Subordinate Obligations, nothing in this Resolution, or in the Series 1997 Subordinate Obligations, expressed or implied, is intended or shall be construed to confer upon any person other than the Issuer and the Holders any right, remedy or claim, legal or equitable, under and by reason of this Resolution or any provision hereof, or of the Series 1997 Subordinate Obligations, all provisions hereof and thereof being intended to be and being for R#10S167.3 17 the sole and exclusive benefit of the Issuer and the persons who shall from time to time be the Holders. SECTION 29. NO PERSONAL LIABILITY. Neither the members of the City commission of the Issuer nor any person executing the Series 1997 Subordinate Obligations shall be personally liable therefor or be subject to any personal liability or accountability by reason of the issuance thereof. SECTION 30. REPEAL OF INCONSISTENT INSTRUMENTS. Any resolutions, or parts thereof, in conflict herewith are hereby repealed to the extent of such conflict. SECTION 31. EFFECTIVE DATE. The provisions of this Resolution shall take effect immediately upon its passage. ADOPTED this 14th day of July, 1997. (SEAL) CITY WINT OF ATTEST: ~;I. ~ ity erk ' R#lOS167.3 18