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Res 39-88 CITY OF DELRAY BEACH, FLORIDA $30~000~000 Water and Sewe~ Refunding Revenue Bonds Series 1988 Water and Sewer Refunding Revenue Bond Resolution Adopted July 12, 1988 Res. No. 39-88 PART I TABLE OF CONTEN~ Page ARTICLE I STATUTORY AUTHORITY, FINDINGS AND DEFINITIONS SECTION 1. AUTHORITY OF THIS RESOLUTION ....... 4 SECTION 2 · FINDINGS ........................... 4 SECTION 3. DEFINITIONS ........................ 6 SECTION 4. RESOLUTION CONSTITUTES CONTRACT .... 18 ARTICLE II AUTHORIZATION, TERMS, EXECUTION AND REGIS TRATION OF BONDS SECTION 1. AUTHORIZATION OF BONDS ............. 1 SECTION 2. DESCRIPTION OF BONDS ............... 1 SECTION 3. REDEMPTION PROVISIONS .............. 3 SECTION 4. EXECUTION OF BONDS ................. 3 SECTION 5. NEGOTIABILITY, REGISTRATION AND CANCELLATION .................... 5 SECTION 6. BONDS MUTILATED, DESTROYED, STOLEN OR LOST ......................... 7 SECTION 7. Preparation of Definitive Bonds; Temporary Bonds ................. 7 SECTION 8. Form of Bonds ...................... 8 -1- Res. No. 39-88 PART_.~ TABLE OF CONTEN~S (Continued) Page ARTICLE III COVENANTS, FUNDS AND APPLICATION THEREOF SECTION 1. BONDS NOT TO BE INDEBTEDNESS OF THE CITY ............................ 1 SECTION 2. BONDS SECURED BY PLEDGE OF NET REVENUES AND ADDITIONAL SECURITY OF SPECIAL ASSESSMEN~ AND PLEDGED IMPACT CHARGES .......... 1 SECTION 3. APPLICATION OF BOND PROCEEDS ....... 2 SECTION 4. COVENAN~ OF THE CITY .............. 3 A. TAX COVENANT ................. 3 B. RATES ........................ 4 C. Combined Public Utility Revenue Fund ................. 5 D. CREATION AND ESTABLISHMENT OF VARIOUS FUNDS AND ACCOUN~ AND THE DISPOSITION OF NET REVENUES AND PLEDGED IMPACT CHARGES ...................... 5 E. SALE OF THE COMBINED PUBLIC UTILITY ...................... 15 F. ISSUANCE OF OTHER OBLIGATIONS PAYABLE OUT OF NET REVENUES.. 17 G. ISSUANCE OF PARI PASSU ADDITIONAL BONDS ............. 18 H. INSURANCE .................... 24 I. BOOKS AND RECORDS ............ 24 J. OPERATING BUDGET ............. 25 K. MAINTENANCE OF THE COMBINED PUBLIC UTILITY ............... 26 L. NO FREE SERVICE .............. 26 -2- Res. No. 39-88 PART I TABLE OF CONTEN~ (Continued) Page M. REMEDIES ..................... 27 N. ENFORCEMENT OF COLLECTIONS . . . 3 0 O. CONNECTIONS WITH THE SEWER SYSTEM ....................... 30 P. NO COMPETING FACILITIES ...... 31 Q. CONSULTING ENGINEER .......... 31 R. DISCHARGE AND SATISFACTION OF BONDS ........................ 31 S . VALUATION .................... 33 ARTICLE IV MISCELLANEOUS PROVIS IONS SECTION 1. MODIFICATION OR AMENDMENT .......... 1 SECTION 2. SEVERABILITY OF INVALID PROVISIONS. 2 SECTION 3. VALIDATION AUTHORIZED .............. 2 SECTION 4. SALE OF BONDS ...................... 2 SECTION 5. REPEAL ER ........................... 2 SECTION 6. BOND INSURER; DEFAULT .............. 2 -3- Res. No. 39-88 PART II TABLE OF CON~EN~ Page ARTICLE I STATUTORY AUTRORITY, FINDINGS AND DEFINITIONS SECTION 1. AUTHORITY OF THIS RESOLUTION ....... 4 SECTION 2 . FINDINGS ........................... 4 SECTION 3. DEFINITIONS ........................ 6 SECTION 4. RESOLUTION CONSTITUTES CONTRACT .... 18 ARTI(IE II AUTHORIZATION, TERMS, EXECUTION AND REGISTRATION OF BOND~ SECTION 1. AUTHORIZATION OF BONDS ............. 1 SECTION 2. DESCRIPTION OF BONDS ............... 1 SECTION 3. REDEMPTION PROVIS IONS .............. 3 SECTION 4. EXECUTION OF BONDS ................. 3 SECTION 5. NEGOTIABILITY, REGISTRATION AND CANCELLATION .................... 5 SECTION 6. BONDS MUTILATED, DESTROYED, STOLEN OR LC~T ......................... 7 SECTION 7. Preparation of Definitive Bonds; Temporary Bonds ................. 7 SECTION 8. Form of Bonds ...................... 8 -1- Res. No. 39-88 PART II TABLE OF CONTEN~ (Cont~.nued) Page ARTI ~_.~ III COVENANTS, FUNDS AND APPLICATION THEREOF SECTION 1. BONDS NOT TO BE INDEBTEDNESS OF THE CITY ............................ 1 SECTION 2. BONDS SECURED BY PLEDGE OF NET REVENUES AND ADDITIONAL SECURITY OF SPECIAL ASSESSMEN~ AND PLEDGED IMPACT CHARGES .......... 1 SECTION 3. APPLICATION OF BOND PROCEEDS ....... 2 SECTION 4. COVENAN~ OF THE CITY .............. 3 A. TAX COVENANT ................. 3 B. RATES ........................ 4 ARTICLE IV MIS CELLANEOUS PROVIS IONS SECTION 1 . ADDITIONAL BONDS .................. 1 SECTION 2. SEVERABILITY OF INVALID PROVISIONS. 2 SECTION 3. VALIDATION AUTHORIZED .............. 2 SECTION 4. SALE OF BONDS ...................... 2 SECTION 5 . REPEALER ........................... 2 SECTION 6. BOND INSURER; DEFAULT .............. 2 -2- Res. No. 39-88 RESOLUTION NO. 39-88 A RESOLUTION OF THE CITY COMMISSION OF THE CIT~ OF D~r.P, AY BEACH, FLORIDA, ANENDING, SUPPLENENTING AND RESTATING A RESOLUTION ENTITLED 'A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF D~r. RAY BEACH, FLORIDA, ADT~ORIZII~3 T~E ISSI]~ OF NOT EXCEEDING $30,000,000 WATER ~ SNa'ER REFUltDING REV- ENUE BONDS OF THE CITY OF DELRAY BEACH, FLORIDA, FOR THE PURPOSE OF REFUNDING ALL OR A PORTION OF THE CITY'S WATER AND SEWER ~ BOI~)S, SERIES 1984; ~ PROVIDING FOR THE TERNS AND PAYNENT OF SAID WATER ~ SW~IER ~ING REVENUE BONDS, AND T~E RIGHTS, P, ENI3)IES ~ SEC~tlTY OF THE H(H/)ERS OF THE WATER ANO SEWER ~ING REVEIllE ~, MAKING CER- TAIN COVENANTS AND AGREEMENTS IN CONNECTION THEREWITIt; AUTHORIZING THE PROPER OFFICIALS OF THE CITY TO DO ALL OTHER THINGS DEENEI) NECESSARY OR ADVISABLE IN C(RINECTION WITH THE ISSUANCE OF THE WATER ~ SEWER REFUI~)ING REVENUE BONDS; AND PROVIDING FOR AN EFFECTIVE DATE.' WHEREAS, the City of Delray Beach, Florida, a Florida municipal corporation (the "City"), is authorized by law to issue revenue bonds to finance improvements, additions and extensions to its Combined Public Utility (as herein defined); and WHEREAS, the City Commission of the City of Delray Beach, Florida (referred to herein as the "City Commission"), did, on June 12, 1984, adopt Resolution No. 45-84, which was amended and sup- plemented on June 26, 1984 , and October 17, 1984 (collectively, the "Prior Resolution"), authorizing the issuance of its Water and Sewer Revenue Bonds, Series 1984 (the "1984 Bonds"); and WHEREAS, the City Commission has, pursuant to Resolution No. 36-88 entitled "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DELRAY BEACH, FLORIDA, AUTHORIZING THE ISSUANCE OF NOT EXCEEDING $30,000,000 WATER AND SEWER REFUNDING REVENUE BONDS OF THE CITY OF DELRAY BEACH, FLORIDA, FOR THE PURPOSE OF REFUNDING ALL OR A PORTION OF THE CITY'S WATER AND SEWER REVENUE BONDS, SERIES 1984; AND PROVID- ING FOR THE TERMS AND PAYMENT OF SAID WATER AND SEWER REFUNDING REVENUE BONDS, AND THE RIGHTS, REMEDIES AND SECURITY OF THE HOLDERS OF THE WATER AND SEWER REFUNDING REVENUE BONDS, MAKING CERTAIN I-1 Res. No. 39-88 COVENANTS AND AGREEMENTS IN CONNECTION THEREWITH; AUTHORIZING THE PROPER OFFICIALS OF THE CITY TO DO ALL OTHER T~INGS DEEMED NECESSARY OR ADVISABLE IN CONNECTION WITH THE ISSUANCE OF THE WATER AND S~ER REFUNDING REVENUE BONDS; AND PROVIDING FOR AN EFFECTIVE DATE" deter- mined that it is deemed necessary and desirable and in the best financial and economic interest of the City to issue its water and sewer refunding revenue bonds in the aggregate principal amount of not exceeding $30,000,000 (the "Bonds") for the purpose of paying and refunding all or a portion of the outstanding 1984 Bonds (such 1984 Bonds to be paid and refunded herein called the "Refunded Bonds"); and W~EREAS, at the time of adoption of Resolution No. 36-88, the City Commission contemplated that all of the 1984 Bonds would be paid and refunded from the proceeds of the Bonds and other legally available sources, if any (herein called a "Complete Refunding"); and W~EREAS, as a result of a Complete Refunding, the Bonds would be subject to the terms and provisions of Resolution No. 36-88; and W~EREAS, the City Commission has been advised by the City's underwriter for the Bonds that it may be more economical for the City to refund only a portion of the 1984 Bonds from the proceeds of the Bonds and other legally available sources, if any (herein called a "Partial Refunding"); and WHEREAS, if the City Commission elects to issue the Bonds for the purpose of a Partial Refunding, the Bonds would be subject to the terms and provisions of the Prior Resolution, as may be supplemented by terms and provisions not inconsistent therewith; and I-2 Res. No. 39-88 WHEREAS, in order to provide maximum flexibility to accomplish either a Complete Refunding or a Partial Refunding, the City Commission hereby finds it to be in the best interest of the City to amend, supplement and restate Resolution No. 36-88. NOW, T~EREFORE, BE IT RESOLVED BY THE CITY CO~MISSIONOF THE CITY OP DELRAY BEACH, FLORIDA, AS ~S: I-3 Res. No. 39-88 PART I ARTICLE I STATUTORY AUTHORITY, FINDINGS AND DEFINITIONS SECTION 1. AUTHORITY OF THIS RES(XZ~ION. This Resolution is adopted pursuant to the provisions of the City Charter of the City, as amended and supplemented~ the Florida Constitution~ Chapter 166, Florida Statutes, as amended and supplemented~ and other applicable provisions of law. SECTION 2. FINDINGS. It is hereby ascertained, determined and declared: A. That all terms not otherwise defined in this Section 2 shall have the meaning ascribed to such terms in Section 3 of this Article 1, Part I. B. That the City has heretofore issued and now has out- standing and unpaid the 1984 Bonds and there is hereby authorized the payment and refunding of the 1984 Bonds. C. That, if by subsequent resolution of the City Commission, the City elects to pay and refund all of the Outstanding 1984 Bonds, the Bonds shall be subject to the terms and provisions of Part I of this Resolution. D. That, if by subsequent resolution of the City Commission, the City elects to pay and refund a part of the Outstanding 1984 Bonds, the Bonds shall be subject to the terms and provisions of the Prior Resolution and Part II of this Resolution. E. That, for the payment and refunding of the Refunded Bonds, the City shall deposit a portion of the proceeds derived from the sale of the Bonds in an escrow deposit trust fund, which together with other available funds, if any, and the income and earnings derived from the investment thereof shall be sufficient to pay and refund the Refunded Bonds as the same become due and payable or are redeemed prior to maturity in accordance with the proceedings which authorized their issuance, all as provided in the Escrow Deposit I-4 Res. No. 39-88 PARTI Agreement and a details resolution to be subsequently adopted by the City Commission. F. That the estimated Revenues to be derived in each year hereafter from the operation of the Combined Public Utility will be sufficient at all times to pay all the costs of operation and mainte- nance of the Combined Public Utility and the principal of and inter- est on the Bonds, as the same become due and payable, and all sinking fund, reserve and other payments provided for in this Resolution in accordance with the requirements of this Resolution. G. That the principal of and interest on the Bonds and all of the reserve, sinking fund and other payments provided for in this Resolution will be paid from the Net Revenues derived from the operation of the Combined Public Utility in the manner provided herein; and the ad valorem taxing power of the City will never be necessary or authorized to pay the principal of and interest on the Bonds to be issued pursuant to this Resolution, or to make any of the reserve, sinking fund or other payments provided for in this Resolution, and the Bonds issued pursuant to this Resolution shall not constitute a lien upon the Combined Public Utility or upon any other property whatsoever of or in the City but shall be payable solely from the Net Revenues derived from the operation of the Combined Public Utility in the manner provided herein. H. The proceeds derived from the sale of the Bonds shall be used to finance the cost of paying and refunding the Refunded Bonds; such cost shall be deemed to include the costs of issuance of the Bonds, the premium for the Bond Insurance Policy, if any, the initial premium or fee for a Reserve Account Credit Facility Substitute, if any, legal expenses, fees for financial services, the costs associated with the purchase and subsequent management of the U.S. Obligations deposited pursuant to the terms and provisions of I-5 Res. No. 39-88 PART I the Escrow Deposit Agreement, expenses in connection with the performance of the duties of the trustee under the provisions of the Escrow Deposit Agreement and such other costs and expenses necessary and incidental to the refunding of the 1984 Bonds. SECTION 3. DEFINITIONS. That, as used in Part I of this Resolution, the following terms shall have the following meanings unless the text otherwise expressly requires: A. "ACCRETED VALUE" shall mean, as of any date of compu- tation with respect to any Capital Appreciation Bond, the amount set forth as of such date in the supplemental resolution authorizing such Capital Appreciation Bond plus, with respect to matters related to the payment upon redemption or acceleration of such Capital Appreciation Bond, if such date of computation shall not be an Interest Payment Date, a portion of the difference between the Accreted Value as of the immediately preceding Interest Payment Date (or the date of original issuance if the date of computation is prior to the first Interest Payment Date succeeding the date of original issuance) and the Accreted Value as of the immediately succeeding Interest Payment Date, calculated based on the assumption that Accreted Value accrues during any semiannual period in equal daily amounts on the basis of a year of twelve 30-day months. B. "ACT" shall mean the Florida Constitution; the City Charter of the City, as amended and supplemented; Chapter 166, Florida Statutes, as amended and supplemented; and other applicable provisions of law. C. "ANNUAL DEBT SERVICE REQUIREMENT" shall mean, at any time, the amount required to be deposited in the then current Fiscal Year into the Interest Account, Principal Account, and Bond Redemption Account, as provided in this Resolution provided, however, that such amount shall be reduced by any earnings or investment I-6 Res. No. 39-88 PARdi income in the then current Fiscal Year on moneys and investments on deposit in the Debt Service Reserve Account and transferred to the Interest Account, as provided in this Resolution; and provided fur- ther, however, that in computing such Annual Debt Service Requirement for any future period, any Variable Rate Bonds shall be deemed to bear interest at all times to the maturity thereof at a constant rate of interest equal to either the rate borne by such Variable Rate Bonds on the date they were issued plus one-half of the difference between such rate and the maximum interest rate for such Variable Rate Bonds as such maximum interest rate shall be determined by sub- sequent proceedings of the City Commission, or the actual rate of interest borne by such Variable Rate Bonds on such date of calcula- tion, whichever is higher. For the purpose of this definition, the amount to be deposited to the aforementioned accounts with respect to Capital Appreciation Bonds and Capital Appreciation and Income Bonds shall be the amounts set forth in subsequent proceedings of the City Commission. D. "APPRECIATED VALUE" shall mean, (i) as of any date of computation with respect to any Capital Appreciation and Income Bonds up to the Interest Commencement Date set forth in subsequent proceedings of the City Commission providing for the issuance of such Bonds, the amount set forth as of such date in the supplemental reso- lution authorizing such Capital Appreciation and Income Bonds plus, if such date of computation shall not be an interest Payment Date, a portion of the difference between the Appreciated Value as of the immediately preceding Interest Payment Date (or the date of original issuance if the date of computation is prior to the first Interest Payment Date succeeding the date of original issuance) and the Appreciated Value as of the immediately succeeding Interest Payment Date calculated based upon an assumption that Appreciated Value I-7 Res. No. 39-88 PAR~ ! accrues during any semiannual period in equal daily amounts on the basis of a year of twelve 30-day months and (ii) as of any date of computation on and after the Interest Commencement Date, the Appreciated Value on the Interest Commencement Date. E. "BOND COUNSEL" shall mean a firm or firms of nation- ally recognized attorneys-at-law selected by the City and experienced in the financing of capital projects for governmental units through the issuance of tax-exempt revenue bonds under the exemption provided under section 103(a) of the Code. F. "BOND INSURANCE POLICY" shall mean an insurance policy issued for the benefit of the Holders of any Bonds, pursuant to which the Bond Insurer shall be obligated to pay when due the principal of and interest on such Bonds to the extent of any defi- ciency in the amounts in the funds and accounts held under this Resolution, in the manner and in accordance with the terms provided in such Bond Insurance Policy. G. "BOND INSURER" shall mean the issuer of a Bond Insurance Policy and its successors. H. "BONDHOLDER" OR "HOLDER OF BONDS" or any similar term, shall mean any person who shall be the registered owner of any Bond or Bonds Outstanding under the terms of this Resolution. I. "BONDS" shall mean the $30,000,000 Water and Sewer Refunding Revenue Bonds authorized to be issued pursuant to this Resolution, together with any pari passu additional bonds hereafter issued in the manner hereinafter provided. J. "1984 BONDS" shall mean the outstanding Water and Sewer Revenue Bonds, Series 1984, of the City of Delray Beach, Florida, dated October 1, 1984, originally issued in the principal amount of $24,860,000. I-8 Res. No. 39-88 PAR~ I K. "CAPITAL APPRECIATION BONDS" shall mean those Bonds issued under this Resolution as to which interest is compounded periodically on each of the applicable periodic dates designated for compounding and payable in an amount equal to the then current Accreted Value only at the maturity, earlier redemption or other pay- ment date therefor, all as so designated by subsequent proceedings of the City Commission relating to the issuance thereof, and which may be either Serial Bonds or Term Bonds. L. "CAPITAL APPRECIATION AND INCOME BONDS" shall mean any Bonds issued under this Resolution as to which accruing interest is not paid prior to the Interest Commencement Date specified in the resolution authorizing such Bonds and the Appreciated Value for such Bonds is compounded periodically on certain designated dates prior to the Interest Commencement Date for such Capital Appreciation and Income Bonds, all as so designated by subsequent proceedings of the City Commission relating to the issuance thereof, and which may be either Serial Bonds or Term Bonds. M. "CITY" shall mean the City of Delray Beach, Florida. N. "CITY COMMISSION" shall mean the governing body of the City. O. "CODE" shall mean the Internal Revenue Code of 1986, as amended, and all subsequent tax legislation duly enacted by the Congress of the United States. Each reference to a section of the Code herein shall be deemed to include, if applicable, temporary or proposed regulations, revenue rulings and proclamations issued or amended with respect thereto, and any rules and regulations promul- gated under the Internal Revenue Code of 1954, as amended, by the Treasury Department or Internal Revenue Service of the United States. I-9 Res. No. 39-88 PART I P. "COMBINED PUBLIC UTILITY" shall mean the combined Water System and Sewer System of the City. Q. "CONSULTING ENGINEERS" shall mean the firm of Post, Buckley, Schuh & Jernigan, Inc., or such other qualified engineer or engineering firm at the time retained by the City to perform the acts and carry out the duties provided for such Consulting Engineers in this Resolution. R. "CREDIT.FACILITY" shall mean Bond Insurance, surety bond, a letter of credit, line of credit, or such other instrument that would enhance the credit of the Bonds. S. "DEBT SERVICE RESERVE REQUIREMENT" shall mean an amount required to be on deposit in the Debt Service Reserve Account, which amount shall be determined by subsequent proceedings of the City Commission. Such Debt Service Reserve Requirement, with respect to the Bonds issued hereunder, may be satisfied in whole or in part by obtaining a Reserve Account Credit Facility Substitute with the requisite coverage. T. "DEFEASANCE OBLIGATIONS" shall mean to the extent permitted by law and acceptable to the Bond Insurer if the principal of and interest on the Bonds is guaranteed under a Bond Insurance Policy and such Bond Insurer is not in default under such policy or acceptable to the ~ating Agency or Agencies then rating the Bonds: (a) U. S. Obligations which are not callable prior to maturity except by the holder thereof; (b) any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state (i) which are not callable prior to maturity or as to which irrevocable instructions have been given to the trustee of such bonds or other obligations by 1-10 Res. No. 39-88 PART I the obligor to give due notice of redemption and to call such bonds for redemption on the date or dates specified in such instructions, (ii) which are secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described in clause (a) hereof which fund may be applied only to the pay- ment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the redemption date or dates specified in the irrevocable instruc- tions referred to in subclause (i) of this clause (b), as appropriate, and (iii) as to which the principal of and interest on the bonds and obligations of the char- acter described in clause (a) hereof which have been deposited in such fund along with any cash on deposit in such fund are sufficient to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (b) on the maturity date or dates thereof or on the redemp- tion date or dates specified in the irrevocable instructions referred to in subclause (i) of this clause (b), as appropriate; and (c) Evidences of ownership of proportionate interests in future interest and principal payments on obligations described in (a) held by a bank or trust company as custodian. U. "ESCROW DEPOSIT AGREEMENT" shall mean the Escrow Deposit Agreement, entered into by and between the City and a bank or trust company or national banking association, as trustee, to be 1-11 Res. No. 39-88 PARTI hereafter designated by subsequent proceedings of the City Commission, in connection with the refunding of the Refunded Bonds. V. "FACILITIES" shall mean all the facilities of the Combined Public Utility, and all parts thereof, and any facilities which may hereafter be a part of the Combined Public Utility, or any part thereof, by any additions, betterments, extensions, improvements thereto, or property of any kind or nature, real or personal, tangi- ble or intangible, hereafter constructed or acquired by the City. W. "FISCAL YEAR" shall mean that period commencing on October 1 and continuing to and including the next succeeding September 30, or such other annual period as may be prescribed by law. X. "INTEREST COMMENCEMENT DATE" shal 1 mean, with respect to any particular Capital Appreciation and Income Bond, the date specified in the resolution providing for the issuance of such Bonds (which date must be prior to the maturity date for such Bonds) after which interest accruing on such Bonds shall be payable semi- annually, with the first such payment date being the applicable Interest Payment Date immediately succeeding such Interest Commencement Date. Y. "INTEREST PAYMENT DATE" shall mean such dates of each Fiscal Year on which interest on the Bonds is payable on Bonds (other than Capital Appreciation Bonds and Capital Appreciation and Income Bonds prior to the applicable Interest Commencement Date) that are then Outstanding and the date the principal of a Bond is to be paid. Z. "MAXIMUM ANNUAL DEBT SERVICE REQUIREMENT" shall mean, at any time, the maximum amount required to be deposited in the then current or any succeeding Fiscal Year into the Interest Account, Principal Account and Bond Redemption Account, as provided in this 1-12 Res. No. 39-88 PART I Resolution. The amount of Term Bonds maturing in any Fiscal Year which are subject to mandatory redemption prior to their stated date of maturity by operation of the Bond Redemption Account shall not be included in determining the Maximum Annual Debt Service Requirement in their final Fiscal Year of maturity. AA. MOODY'S shall mean Moody's Investors Service, Inc., a corporation organized and existing under the law of the State of Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the func- tions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. BB. "NET REVENUES" shall mean the Gross Revenues remain- ing after deduction of Operating Expenses and shall also include Special Assessments which the City Commission may elect, by subse- quent proceedings, to pledge for the payment of principal of and interest on any series of Bonds. CC. "OPERATING EXPENSES" shall mean the expenses of operation, maintenance and ordinary repairs of the Combined Public Utility and its Facilities and shall include, without limiting the generality of the foregoing, insurance premiums, administrative expenses of the City relating solely to the Combined Public Utility, and such other reasonable expenses as shall be in accordance with generally accepted accounting principles. "Operating Expenses" shall not include any allowance for depreciation or any extraordinary items arising from the early extinguishment of debt. DD. "OUTSTANDING" shall mean, when used with reference to the Bonds, as of any particular date, all Bonds theretofore, or thereupon being, authenticated and delivered by the Registrar under this Resolution, except (i) Bonds theretofore or thereupon cancelled 1-13 Res. No. 39-88 by the Registrar or surrendered to the Registrar for cancellation; (ii) Bonds with respect to which all liability of the City shall have been discharged in accordance with Article III, Section 4.R of Part I of this Resolution; (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Registrar pursuant to any provision of this Resolution; (iv) Bonds cancelled after purchase in the open market or because of payment at, or redemption prior to maturity; and (v) Bonds held or purchased by the City. EE. "PAYING AGENT" shall mean the bank or trust company and any successor bank or trust company appointed by the City to act as Paying Agent hereunder. FF. "PERMITTED INVESTMENTS" shall mean (i) to the extent permitted by law U.S. Obligations and (ii) all other invest- ments permitted under the laws of Florida and acceptable to the Bond Insurer, if any. GG. "PLEDGED IMPACT CHARGES" shall mean the charges that may be imposed by the City on new users connecting to the Combined Public Utility which would represent a pro rata share of the costs of a Project which are attributable to the increased demand such additional connections create upon the Combined Public Utility, which Project has been financed with the proceeds of the Bonds, and which charges the City has pledged to payment of the principal of and interest on the Bonds. Pledged Impact Charges, however, shall not include the installation charges imposed by the City for the cost of physically connecting into the City's Combined Public Utility (including but not limited to the cost of excavation, plumbing, installation of meters and landscaping). HH. "PROJECT" shall mean any additions, extensions and improvements to the Combined Public Utility of the City. 1-14 Res. No. 39-88 PART I II. "RATING AGENCY" OR "AGENCIES" shall mean Moody's and/or S&P, whichever shall have a rating then in effect with respect to the Bonds. JJ. "REFUNDED BONDS" shall mean all or a portion of the outstanding 1984 Bonds that the City determines to refund pursuant to subsequent proceedings of the City Commission. KK. "REGISTRAR" "shall mean the bank or trust company and any successor bank or trust company appointed by the City to act as Registrar hereunder. LL. "RESOLUTION" shall mean this Water and Sewer Refunding Revenue Bond Resolution, as from time to time may be amended and supplemented in accordance with the terms hereof. MM. "RESERVE ACCOUNT CREDIT FACILITY SUBSTITUTE" shall mean any one of the facilities described in Section 4.D.4 of Article III of Part I of this Resolution. NN. "REVENUES" OR "GROSS REVENUES" shal 1 mean all rates, fees, charges, or other income, received by the City or any agency thereof in control of the management and operation of the Combined Public Utility, and all parts thereof, from the operation of the Combined Public Utility and shall also include the earnings and investment income derived from the investment of moneys on deposit in the various funds and accounts created and established by this Resolution, which by the terms and provisions of this Resolution are required to be deposited in the Revenue Fund and the Interest Account, provided, however, that Revenues shall not include (1) Pledged Impact Charges (2) Unpledged Impact Charges (3) Special Assessments and (4) capital contributions. OO. "S&P" shall mean Standard & Poor's Corporation, a corporation organized and existing under the laws of the State of New York, its successors and their assigns, and, if such corporation 1-15 Res. No. 39-88 PART I shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. PP. "SERIAL BONDS" shall mean the Bonds of an issue other than Term Bonds which shall be stated to mature annually. QQ. "SEWER SYSTEM" shall mean the complete sanitary sewer collection and transmission facility, any interests the City may have in the Ocean Outfall System, and the City's one-half (1/2) undivided interest in the treatment and disposal system and property operated by the South Central Regional Wastewater Treatment and Disposal Board (the "Board") as they now exist and as may hereafter be improved and extended consisting of all real and personal property of every nature owned by the City and used or useful in the operation thereof whether within or without the City, except that the Sewer System shall not include the Ocean Outfall System after the date on which the City shall have received payments from the Board for the use of the Ocean Outfall System totalling $1,155,646 in accordance with the terms of the Ocean Outfall Agreement dated July 12, 1979 among the City, the Board and the City of Boynton Beach, Florida. RR. "SPECIAL ASSESSMENTS" shall mean, for each series of Bonds additionally secured by Special Assessments, all proceeds derived by the City from the special assessments levied against the real property specially benefitted by the acquisition and construc- tion of a Project financed by such series of Bonds, including inter- est collected on such special assessments and any penalties or moneys received upon foreclosure of the liens of such special assessments. SS. "TAX CERTIFICATE" shall mean the Tax Certificate as to Arbitrage and Instructions as to Compliance with provisions of Section 103(a) of the Internal Revenue Code of 1986, executed by the 1-16 Res. No. 39-88 PAR~ I City on the date of initial issuance and delivery of the Bonds, as such Tax Certificate may be amended from time to time, and which serves as a source of guidance for achieving compliance with the Code. TT. "TERM BONDS" shall mean the Bonds of an issue which shall be stated to mature on one date and for the amortization of which mandatory payments are required to be made into the Bond Redemption Account in the Sinking Fund. UU. "UNPLEDGED IMPACT CHARGES" shall mean the charges that may be imposed by the City on new users connecting to the Combined Public Utility which would represent a p~ rata share of the costs of any Project which are attributable to the increased demand such additional connections created upon the Combined Public Utility, which Project may or may not be financed with the proceeds of the Bonds, but in any event, such charges are not pledged to the payment of the Bonds. Unpledged Impact Charges, however, shall not include the installation charges imposed by the City for the cost of physi- cally connecting into the City's Combined Public Utility (including but not limited to the cost of excavation, plumbing, installation of meters and landscaping). VV. "U. S. OBLIGATIONS" shall mean the direct obliga- tions of, or obligations on which the timely payment of principal and interest are unconditionally guaranteed by the United States of America, and, if determined by subsequent proceedings of the City Commission, certificates which evidence ownership of the right to the payment of the principal of, or interest on, such obligations. WW. "VARIABLE RATE BONDS" shall mean Bonds issued with a variable, adjustable, convertible or other similar rate which is not fixed in percentage for the entire term thereof at the date of issue. 1-17 Res. No. 39-88 PAR~ I XX. "WATER SYSTEM" shall mean the complete waterworks plant and system, within and without the City, now owned by the City, or hereafter constructed or acquired, including all improvements, extensions, and additions thereto hereafter constructed or acquired, together with all lands or interest therein, plants, buildings, machinery, franchises, pipes, fixtures, equipment and all property, real or personal, tangible or intangible, now or hereafter owned or used by the City in connection therewith. Words importing the singular number shall include the plural number in each case and vice versa, and words importing per- sons shall include firms and corporations. SECTION 4. RESOLUTION CONSTITUTES CONTRACT. In considera- tion of the acceptance of the Bonds authorized to be issued hereunder by those who shall hold the same from time to time, this Resolution shall be deemed to be and shall constitute a contract between the City and such Bondholders, and the covenants and agreements herein set forth to be performed by the City shall be for the equal benefit, protection and security of the Holders of any and all of such Bonds, all of which shall be of equal rank and without preference, priority, or distinction of any of the Bonds over any other thereof except as expressly provided therein and herein. 1-18 Res. No. 39-88 PI~T 'r ARTICLE II AI]THORIZATION, TER~S, EXECUTION AND REGISTRATION OF BOI~)S SECTION 1. AUTHORIZATION OF BOI~)S. Subject and pursuant to the provisions of this Resolution, obligations of the City to be known as "Water and Sewer Refunding Revenue Bonds" are hereby autho- rized to be issued in the aggregate principal amount of not exceeding THIRTY MILLION DOLLARS ($30,000,000) for the purpose provided in Article I, Section 2.H. of Part I of this Resolution. The Bonds authorized by this Resolution may be issued all at one time or in part, from time to time, as the City Commission may in its discretion hereafter determine by subsequent resolution; subject to the require- ment of Article III, Section 4.G of Part I of this Resolution. SECTION 2. DESCRIPTION OF BO~)S. The Bonds shall be issued in registered form, shall be in the denomination of $5,000 each, or any integral multiple thereof, provided, however, (i) if such Bonds are Capital Appreciation Bonds then in $5,000 maturity amounts or in $5,000 multiples thereof and (ii) Capital Appreciation and Income Bonds, which may be issued in any denomination, as long as their Appreciated Value at maturity shall be $5,000 or any integral multi- ple thereof; and shall mature on such dates in such years and in such amounts, all as provided by subsequent proceedings of the City Commission. Principal shall be payable at the principal corporate trust office of the Paying Agent. The Bonds shall be numbered in such manner as may be prescribed by the Registrar. The Bonds shall bear interest at not exceeding the maximum rate or rates permitted by law, payable by check or draft made payable to the Holder of Bonds and mailed to the address of such Holder of Bonds, as such name and address shall appear on the registration books of the City maintained by the Registrar at the close of business on the fifteenth day of the II-1 Res. No. 39-88 calendar month preceding each Interest Payment Date; provided, however, that if such 15th day is a Saturday, Sunday or holiday, then to the registered Holder and at the registered address shown on the registration books of the City maintained by the Registrar at the close of business on the day next preceding such 15th day of the month which is not a Saturday, Sunday or holiday (herein the "Record Date"); provided, however, that payment of interest on the Bonds may, at the option of any Holder of Bonds in an aggregate principal amount of at least $1,000,000 be transmitted by wire transfer to the Holder to the bank account number on file with the Paying Agent as of the Record Date, except for (i) Capital Appreciation Bonds which shall bear interest as described under the defined term Accreted Value, payable only upon redemption or maturity thereof and (ii) Capital Appreciation and Income Bonds which shall bear interest as described under the defined term Appreciated Value, such interest payable on the principal amount due at maturity but only from and after the Interest Commencement Date. The Bonds authenticated prior to the first Interest Payment Date shall be dated and bear interest from the date determined by subsequent proceedings of the City. Bonds authen- ticated subsequent to the first Interest Payment Date shall bear interest from the next preceding Interest Payment Date on which such interest has been paid, unless such Bond is registered on an Interest Payment Date or during the 15-day period preceding an Interest Payment Date, then from such Interest Payment Date if interest is then paid, as the case may be; provided, however, that if and to the extent there is a default in the payment of the interest due on such Interest Payment Date, such defaulted interest shall be paid to the persons in whose name Bonds are registered on the registration books of the City maintained by the Registrar at the close of business on the fifteenth day prior to a subsequent Interest Payment Date II-2 Res. No. 39-88 PART I established by notice mailed by the Registrar to the registered owner not less than the tenth day preceding such subsequent Interest Payment Date, such interest shall be payable semiannually on April 1 and October 1 of each year, except that (i) interest on any Capital Appreciation Bonds shall be paid only at maturity or upon redemption prior to maturity in the amount determined by reference to the Accreted Value, and (ii) interest on a Capital Appreciation and Income Bond shall be payable semiannually on April 1 and October 1 of each year only after the Interest Commencement Date. The Bonds shall be payable, with respect to interest, prin- cipal and premium, if any, in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts; The Bonds issued hereunder may be Serial Bonds or Term Bonds and such Term Bonds may be Variable Rate Bonds, and such Bonds issued hereunder may be Capital Appreciation Bonds and Capital Appreciation and Income Bonds as determined by subsequent proceedings of the City Commission. The payment of principal of and interest on the Bonds may, in addition to the Net Revenues, be secured by Bond Insurance or other Credit Facility and/or Pledged Impact Charges, all as shall be determined by subsequent proceedings of the City Commission. SECTION 3. REDEMPTION PROVISIONS. The Bonds may be subject to redemption prior to maturity at such times, at such redemption prices and upon such terms as shall be determined by subsequent pro- ceedings of the City Commission. SECTION 4. EXECUTION OF BONDS. The Bonds shall be executed in the name of the City by the signature of the Mayor and its offi- cial seal shall be affixed thereto or imprinted or reproduced thereon and attested by the City Clerk. The signatures of said Mayor and II-3 Res. No. 39-88 PAR~ I Clerk on the Bonds may be manual or facsimile signatures. In case any one or more of the officers who shall have signed or sealed any of the Bonds shall cease to be such officer of the City before the Bonds so signed and sealed shall have been actually sold and deliv- ered, such Bonds may nevertheless be sold and delivered as herein provided and may be issued as if the person who signed or sealed such Bonds had not ceased to hold such office. Any Bond may be signed and sealed on behalf of the City by such person who at the actual time of the execution of such Bond shall hold the proper office, although at the date such Bonds shall be actually delivered such person may not have held such office or may not have been so authorized. The Bonds shall bear thereon a certificate of authentica- tion, in the form set forth in Section 8 of this Article, executed manually by the Registrar. Only such Bonds as shall bear thereon such certificate of authentication shall be entitled to any right or benefit under this Resolution and no Bond shall be valid or obliga- tory for any purpose until such certificate of authentication shall have been duly executed by the Registrar. Such certificate of the Registrar upon any Bond executed on behalf of the City shall be con- clusive evidence that the Bond so authenticated has been duly authen- ticated and delivered under this Resolution and that the Holder thereof is entitled to the benefits of this Resolution. The validation certificate on the Bonds shall be signed with the facsimile signatures of the present or any future Mayor and Clerk, as aforesaid, and the City may adopt and use for that purpose the facsimile signature of any person who shall have been such Mayor and Clerk at any time on or after the date of the Bonds, notwith- standing that he may have ceased to be such Mayor or Clerk at the time when said Bonds shall be actually delivered. II-4 Res. No. 39-88 PART I SECTION 5. NEGOTIABILIT"I, R~GISTRA~ION A~) CA~C~K~ION. At the option of the registered Holder thereof and upon surrender thereof at the principal corporate trust office of the Registrar with a written instrument of transfer satisfactory to the Registrar duly executed by the registered Holder or his duly authorized attorney and upon payment by such Holder of any charges which the Registrar may make as provided in this Section, the Bonds may be exchanged for Bonds of the same series, interest rate and maturity of any other authorized denominations. The Registrar shall keep books for the registration of Bonds and for the registration of transfers of Bonds. The Bonds shall be transferable by the Holder thereof in person or by his attorney duly authorized in writing only upon the books of the City kept by the Registrar and only upon surrender thereof together with a written instrument of transfer satisfactory to the Registrar duly executed by the Holder or his duly authorized attorney. Upon the transfer of any such Bond, the City shall issue in the name of the transferee a new Bond or Bonds. The City, the Paying Agent and the Registrar may deem and treat the person in whose name any Bond shall be registered upon the books kept by the Registrar as the absolute Holder of such Bond, whether such Bond shall be overdue or not, for the purpose of receiv- ing payment of, or on account of, the principal of and interest on such Bond as the same become due and for all other purposes. All such payments so made to any such Holder or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the City, the Paying Agent nor the Registrar shall be affected by any notice to the contrary. II-5 Res. No. 39-88 PAR~ I In all cases in which the privilege of exchanging Bonds or transferring Bonds is exercised, the City shall execute and the Registrar shall authenticate and deliver Bonds in accordance with the provisions of this Resolution. All Bonds surrendered in any such exchanges or transfers shall forthwith be delivered to the Registrar and cancelled by the Registrar in the manner provided in this Section. There shall be no charge for any such exchange or transfer of Bonds, but the City or the Registrar may require the payment of a sum sufficient to pay any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer. Neither the City nor the Registrar shall be required (a) to transfer or exchange Bonds for a period of 15 days next preceding an interest payment date on such Bonds or 15 days next preceding any selection of Bonds to be redeemed or thereafter until after the mailing of any notice of redemption; or (b) to transfer or exchange any Bonds called for redemption. However, if less than all of a Term Bond is redeemed or defeased, the City shall execute and the Registrar shall authenti- cate and deliver, upon the surrender of such Term Bond, without charge to the Bondholder, for the unpaid balance of the principal amount of such Term Bond so surrendered, a registered Term Bond in the appropriate denomination and interest rate. All Bonds paid or redeemed, either at or before maturity shall be delivered to the Registrar when such payment or redemption is made, and such Bonds, together with all Bonds purchased by the City, shall thereupon be promptly cancelled. Bonds so cancelled may at any time be destroyed by the Registrar, who shall execute a cer- tificate of destruction in duplicate by the signature of one of its authorized officers describing the Bonds so destroyed, and one exe- cuted certificate shall be filed with the City and the other executed certificate shall be retained by the Registrar. II-6 Res. No. 39-88 PART I SECTION 6. BONDS MUTILATED, DESTROYED, STOLEN ORLO~T. In case any Bond shall become mutilated, destroyed, stolen or lost, the City may execute and the Registrar shall authenticate and deliver a new Bond of like date, maturity, denomination and interest rate as the Bond so mutilated, destroyed, stolen or lost; provided that, in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the City and, in the case of any lost, stolen or destroyed Bond, there shall first be furnished to the City and the Registrar evidence of such loss, theft, or destruction satisfactory to the City and the Registrar, together with indemnity satisfactory to them. In the event any such Bond shall be about to mature or have matured or have been called for redemption, instead of issuing a duplicate Bond, the City may pay the same without surrender thereof. The City and the Registrar may charge the Holder of such Bond their reasonable fees and expenses in connection with this transaction. Any Bond surrendered for replacement shall be cancelled in the same manner as provided in Section 5 of this Article. Any such duplicate Bonds issued pursuant to this Section shall constitute additional contractual obligations on the part of the City, whether or not the lost, stolen or destroyed Bonds be at any time found by anyone, and such duplicate Bonds shall be entitled to equal and proportionate benefits and rights as to lien on and source and security for payment from the Net Revenues derived from the operation of the Combined Public Utility and the Pledged Impact Charges, if any are so pledged hereunder, with all other Bonds issued hereunder. SECTION 7. PREPARATION OF DEFINITIVE BONDS; TEMPORARY BONDS. The definitive Bonds shall be lithographed or printed on steel engraved borders. Until the definitive Bonds are prepared, the ~ayor and the City Clerk may execute and the Registrar may authenticate, in II-7 Res. No. 39-88 PART I the same manner as is provided in Section 4 of this Article II, and deliver, in lieu of definitive Bonds, but subject to the same provi- sions, limitations and conditions as the definitive Bonds, one or more printed, lithographed or typewritten temporary fully registered Bonds, substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued, in authorized denomi- nations or any integral multiple thereof, and with such omissions, insertions and variations as may be appropriate to such temporary Bonds. The City, at its own expense, shall prepare and execute and, upon the surrender at the corporate trust office of the Registrar of such temporary Bonds for which no payment or only partial payment has been provided, for exchange and the cancellation of such surrender temporary Bonds, the Registrar shall authenticate and, without charge to the Holder thereof, deliver in exchange therefor, at the principal corporate trust office of the Registrar, definitive Bonds of the same aggregate principal amount, interest rate and maturity as the tempo- rary Bonds surrendered. Until so exchanged, the temporary Bonds shall in all respects be entitled to the same benefits and security as definitive Bonds issued pursuant to this Resolution. SECTION 8. FORM OF BO~)S. The text of the Bonds shall be of substantially the following tenor, with such omissions, insertions and variations as may be necessary and desirable: II-8 Res. No. 39-88 Pm I (Form of Bond)* * The text of the Bonds shall be of substantially the tenor set forth below. Provisions of the Bonds may be set forth on the back of the Bonds and shall for all purposes have the same effect as if set forth on the front of the Bonds. (Face of Bond with certain provisions applicable to a Capital Appreciation Bond or a Capital Appreciation and Income Bond as indicated) No. R $5,000 UNITED STATES OF AMERICA STATE OF FLORIDA PALM BEACH COUNTY CITY OF DELRAY BEACH WATER AND SEWER REFUNDING REVENUE BOND SERIES Interest Maturity Dated Rate Date Date CUSIP Registered Owner: Principal Amount: KNOW ALL MEN BY THESE PRESENTS, that the City of Delray Beach, Palm Beach County, Florida (the "City"), for value received, hereby promises to pay, from the Net Revenues and Pledged Impact Charges [if so pledged by the City], hereinafter mentioned, to the Registered Owner or registered assigns on the Maturity Date specified above, upon the presentation and surrender hereof at the principal corporate trust office of , as paying agent (said II-9 Res. No. 39-88 PART I and any bank or trust company becoming successor paying agent being herein called the "Paying Agent"), the Principal Amount stated hereon with interest thereon at the Interest Rate stated above, payable on the first day of and of each year until the City's obligation with respect to the payment of such Principal Amount shall be discharged. Interest on this Bond is pay- able by check or draft of the Paying Agent made payable to the regis- tered owner and mailed to the address of the registered owner as such name and address shall appear on the registration books of the City maintained by . . , as Registrar (said , and any successor Registrar being herein called the "Registrar") at the close of business on the fifteenth day of the calendar month pre- ceding each interest payment date or the date on which the principal of a Bond is to be paid; provided, however, that if such fifteenth day is a Saturday, Sunday or holiday, then to the registered owner and at the registered address shown on the registration books of the City maintained by the Registrar at the close of business on the day next preceding such fifteenth day of the month which is not a Saturday, Sunday or holiday (the "Record Date"); provided further, however, that payment of interest on the Bonds may, at the option of any Holder of Bonds in an aggregate principal amount of at least $1,000,000, be transmitted by wire transfer to the Holder to the bank account number on file with the Paying Agent as of the Record Date. Such interest shall be payable from the most recent interest payment date next preceding the date hereof to which interest has been paid, unless the date hereof is an __ 1 or 1 to which inter- est has been paid, in which case from the date hereof, or unless the date hereof is prior to , 19__, in which case from , 19__, or unless the date hereof is between a Record Date and the next succeeding interest payment date, in which case from II-10 Res. No. 39-88 P~RT I such interest payment date; p_~, however, that if and to the extent there is a default in the payment of the interest due on such interest payment date, such defaulted interest shall be paid to the persons in whose name Bonds are registered on the registration books of the City maintained by the Registrar at the close of business on the fifteenth day prior to a subsequent interest payment date estab- lished by notice mailed by the Registrar to the registered owner not less than the tenth day preceding such subsequent interest payment date. The Principal Amount and accrued interest thereon is payable in any coin or currency of the United States of America, which, on the date of payment thereof, shall be legal tender for the payment of public and private debts. II-11 Res. No. 39-88 PARdi [The following is applicable to Capital Appreciation Bonds only] No. UNITED STATES OF AMERICA STATE OF FLORIDA PALM BEACH COUNTY CITY OF DELRAY BEACH WATER AND SEWER REFUNDING REVENUE BONDS SERIES Interest Maturity Dated Rate Date Date CUSIP Registered Owner: Principal Amount: $ per $5,000 Amount Due at Maturity Amount Due at Maturity: KNOW ALL MEN BY THESE PRESENTS, that the City of Delray Beach, Palm Beach County, Florida, (the "City"), for value received, hereby promises to pay from the Net Revenues and Pledged Impact Charges [if so pledged by the City], hereinafter mentioned, to the Registered Owner or registered assigns on the Maturity Date specified above, upon presentation and surrender hereof at the principal corpo- rate trust office of , as paying agent (said and any bank or trust company to become successor paying agent being herein called the "Paying Agent"), the Amount Due at Maturity (stated above), constituting the Principal Amount per $5,000 Amount Due at Maturity (stated above) and interest thereon at the Interest Rate (stated above) from the Dated Date (stated above) compounded on and thereafter on and . , of each year until payment of said maturity amount or upon earlier redemption, as set forth on the reverse side hereof, payment to be made at the II-12 Res. No. 39-88 PAR~ I Accreted Value as of the date of redemption or other date of payment. The "Accreted Value" of this Bond shall mean, as of any date of computation, an amount equal to the principal amount hereof plus the compounded interest accrued hereon to the 1 or 1 next preceding the date of computation or the date of computation if a 1 or 1, plus, if such date of computation shall not be a 1 or 1, a portion of the difference between the Accreted Value as of the ia~ediately pre- ceding 1 or 1 (or the Dated Date if the date of computation is prior to , 19__) and the Accreted Value as of the immediately succeeding 1 or 1, calculated based upon the assumption that Accreted Value accrues during any semi-annual period in equal daily amounts on the basis of a year of twelve 30-day months. The Accreted Value per $5,000 maturity amount of this Bond on each 1 or 1 is set forth in a table on the reverse hereof. The table should not be construed as a representation as to the market value of this Bond at any time in the future but may bear a relationship to the amount of tax-exempt inter- est and taxable gain with respect to this Bond if sold prior to maturity. II-13 Res. No. 39-88 PART I [The following is applicable to Capital Appreciation and Income Bonds only] No. $ UNITED STATES OF AMERICA STATE OF FLORIDA PALM BEACH COUNTY CITY OF DELRAY BEACH WATER AND SEWER REFUNDING REVENUE BONDS SERIES INTEREST MATURITY DATED RATE DATE DATE CUSIP REGISTERED OWNER: PRINCIPAL AMOUNT: $__ PER $5,000 AMOUNT DUE AT MATURITY AMOUNT DUE AT MATURITY: KNOW ALL MEN BY THESE PRESENTS, that the City of Delray Beach, Palm Beach County, Florida, (the "City"), for value received, hereby promises to pay from the Net Revenues and Pledged Impact Charges [if so pledged by the City], hereinafter mentioned, to the Registered Owner or registered assigns on the Maturity Date specified above, upon presentation and surrender hereof at the principal corpo- rate trust office of , as paying agent (said and any bank or trust company to become successor paying agent being herein called the "Paying Agent"), the Amount Due at Maturity (stated above), constituting the Principal Amount (stated above) per $5,000 Amount Due at Maturity and interest thereon at the · nterest Rate (stated above) from the Dated Date (stated above), com- pounded on each 1 and 1 during the period from the Dated Date (stated above) to , (the "Interest Commencement Date"). The City further promises to pay to the II-14 Res. No. 39-88 PAR~ I Registered Owner hereof by check or draft of the Paying Agent made payable to the registered owner and, mailed to such registered owner at the address shown on the registration books of the City kept for that purpose at the principal corporate trust office of , as Registrar (said and any successor Registrar being herein called the "Registrar") as of the fifteenth day of the month preced- ing such interest payment date, interest on the Amount Due at Maturity from the Interest Commencement Date, at the rate per annum equal to the Interest Rate (stated above), payable on the first days of and in each year (commencing 1, ), until the City's obligation with respect to the payment of such Amount Due at Maturity shall be discharged. Upon earlier redemption or other payment prior to the Interest Commencement Date, as set forth on the reverse hereof, payment shall be made at the Appreciated Value as of the date of redemption or other payment of this Bond. The "Appreciated Value" of this Bond shall mean (i) as of any date of computation up to and including, 1, , an amount equal to the Principal Amount hereof plus the interest accrued thereon to the 1 or 1 next preceding the date of computation or the date of computation if a 1 or 1, plus, if such date of computation shall not be a 1 or 1, a portion of the difference between the Appreciated Value as of the immediately preceding 1 or 1 (or the Dated Date if the date of computation is prior to 1, 19 ) and the Appreciated Value as of the immedi- ately succeeding 1 or 1, calculated based upon an assumption that Appreciated Value accrues during any semi-annual period in equal daily amounts on the basis of a year of twelve 30-day months, and (ii) after the Interest Commencement Date, the Appreciated Value at the Interest Commencement Date. The Appreciated II-15 Res. No. 39-88 PAR~! Value per $5,000 Amount Due at Maturity of this Bond on each 1 and 1 is set forth in a table on the reverse hereof. Upon redemption or other payment subsequent to the Interest Commencement Date and prior to the Maturity Date in accordance with the provisions set forth on the reverse hereof, payment of this Bond shall be made in an amoun, t equal to the Amount Due at Maturity plus any applicable premium plus accrued and unpaid interest on such Amount Due at Maturity. The following is applicable to all Bonds This Bond is one of an authorized issue of Bonds of the City designated as its Water and Sewer Refunding Revenue Bonds, Series (herein called the "Bonds"), in the aggregate principal amount of $ of like date, tenor, and effect, except as to number, date of maturity and interest rate, issued for the purpose of paying the cost of refunding the Refunded Bonds (as defined in the Resolution hereinafter referred to) under the authority of and in full compliance with the Constitution, the City Charter, as amended and supplemented, and Statutes of the State of Florida, including particularly Chapter 166, Florida Statutes, as amended and supple- mented and other applicable provisions of law, and a resolution duly adopted by the City Commission on , 1988, as amended (herein referred to as the "Resolution"), and is subject to all the terms and conditions of the Resolution. This Bond is payable from and secured by a lien upon and pledge of the Net Revenues, as defined in the Resolution, derived from the operation of the City's Combined Public Utility, as defined in the Resolution, and the Pledged Impact Charges, as defined in the Resolution [if so pledged by the City], all in the manner provided in II-16 Res. No. 39-88 PART I the Resolution. The full faith and credit of the City is not pledged for the payment of this Bond and this Bond does not constitute an indebtedness of the City within the meaning of any Constitutional, statutory or other provision or limitation; and it is expressly agreed by the Holder of this Bond that such Holder shall never have the right to require or compel the exercise of the ad valorem taxing power of the City for the payment of the principal of and interest on this Bond or the making of any sinking fund or reserve payments pro- vided for in the Resolution. It is further agreed between the City and the Holder of this Bond that this Bond and the obligation evidenced thereby shall not constitute a lien upon the City's Combined Public Utility, 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 City's Combined Public Utility and the Pledged Impact Charges [if so pledged by the City], all in the manner provided in the Resolution. The City has covenanted in the Resolution that in each Fiscal Year it will fix, establish and maintain such rates and col- lect such fees, rentals or other charges for the services and facili- ties of its Combined Public Utility and revise the same from time to time whenever necessary, as will always provide in each Fiscal Year, Net Revenues which together with the Pledged Impact Charges [if so pledged by the City] received in such Fiscal Year shall be adequate to pay at least one hundred twenty percent (120%) of the Annual Debt Service Requirement (as defined in the Resolution) for the Bonds and any pari passu additional Bonds hereafter issued, provided that Net Revenues alone received in such Fiscal Year shall at all times be adequate to pay at least one hundred percent (100%) of the Annual Debt Service Requirement for the Bonds and any pari passu additional II-17 Res. No. 39-88 Bonds hereafter issued unless there are no Pledge Impact Charges being considered, in which case, Net Revenues shall be adequate to pay at least one hundred ten percent (110%) of the Annual Debt Service Requirement of the Bonds; and that such Net Revenues together with the Pledged Impact Charges [if so pledged by the City] shall be sufficient to make all of the payments required by the terms of the Resolution and that such rates, fees, rentals or other charges shall not be so reduced so as to be insufficient for such purposes. The original registered owner, and each successive regis- tered owner of this Bond shall be conclusively deemed to have agreed and consented to the following terms and conditions: (1) The Registrar shall maintain the books of the City for the registration of Bonds and for the registration of transfers of Bonds as provided in the Resolution. The Bonds shall be transferable by the registered owner thereof in person or by his attorney duly authorized in writing only upon the books of the City maintained by the Registrar and only upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or his duly authorized attorney. Upon the transfer of any such Bond, the City shall issue in the name of the transferee a new Bond or Bonds. (2) The City, the Paying Agent and the Registrar may deem and treat the person in whose name any Bond shall be registered upon the books kept by the Registrar as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiv- ing payment of, or on account of, the principal of and interest on such Bond as the same becomes due, and for all other purposes. Ail such payments so made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither II-18 Res. No. 39-88 PART I the City, the Paying Agent, nor the Registrar shall be affected by any notice to the contrary. (3) At the option of the registered owner thereof and upon surrender hereof at the principal corporate trust office of the Registrar with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or his duly autho- rized attorney and upon payment by such registered owner of any charges which the Registrar or the City may make as provided in the Resolution, the Bonds may be exchanged for Bonds of the same interest rate and maturity of any other authorized denominations. (4) In all cases in which the privilege of exchanging Bonds or transferring Bonds is exercised, the City shall execute and the Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Resolution. There shall be no charge for any such exchange or transfer of Bonds, but the City or the Registrar may require payment of a sum sufficient to pay any tax, fee or other gov- ernmental charge required to be paid with respect to such exchange or transfer. Neither the City nor the Registrar shall be required (a) to transfer or exchange Bonds for a period of 15 days next preceding an interest payment date on such Bonds or 15 days next preceding any selection of Bonds to be redeemed or thereafter until after the mail- ing of any notice of redemption; or (b) to transfer or exchange any Bonds called for redemption. However, if less than all of a Bond is redeemed or defeased, the City shall execute and the Registrar shall authenticate and deliver, upon the surrender of such Bond, without charge to the Bondholder, for the unpaid balance of the principal amount of such Bond so surrendered, a registered Bond in the appro- priate denomination and interest rate. II-19 Res. No. 39-88 PAR~ I This Bond shall not be valid or obligatory for any purpose until the certificate of authentication set forth hereon shall have been duly executed by the Registrar. It is hereby certified and recited that all acts, condi- tions 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 this Bond, and of the issue of Bonds of which this Bond is one, is in full compliance with all con- stitutional or statutory limitations or provisions. II-20 Res. No. 39-88 PAR~ I IN WITNESS WHEREOF the City of Delray Beach, Florida, has issued this Bond and has caused the same to be executed by the manual or facsimile signature of its Mayor and the corporate seal of the City to be affixed hereto or lithographed or imprinted or reproduced hereon, and attested by the manual or facsimile signature of the City Clerk of the City, all as of the Dated Date. CITY OF DELRAY BEACH, FLORIDA By Mayor (SEAL) Attest: City Clerk (FORM OF CERTIFICATE OF AUTHENTICATION) Date of Authentication: This Bond is one of the Bonds delivered pursuant to the within mentioned Resolution. as Registrar By Authorized Officer II-21 Res. No. 39-88 PAR~ I (FORM OF VALIDATION CERTIFICATE) This Bond is one of a series of Bonds which were validated by judgment of the Circuit Court of Palm Beach County, Florida, rendered on the day of , 198_. May o r City Clerk II-22 Res. No. 39-88 PART I [For Capital Appreciation Bonds only] ACCRETED VALUE PER $5,000 MATURITY AMOUNT Accreted Accreted Date Value Date Val~e II-23 Res. No. 39-88 PART I [For Capital Appreciation and Income Bonds only] APPRECIATED VALUE PER $5,000 MATURITY AMOUNT Appreciated Appreciated Date Value Date Value II-24 Res. No. 39-88 PARTI [The following paragraph is applicable to Capital Appreciation Bonds only] The Capital Appreciation Bonds, of which this Bond is one, pay principal and compound accrued interest only at maturity or upon prior redemption or acceleration. For the purposes of (i) receiving payment of the redemption price if a Capital Appreciation Bond is redeemed prior to maturity, or (ii) computing the amount of Bonds held by the registered owner of a Capital Appreciation Bond in giving to the City any notice, consent, request, or demand pursuant to the Resolution for any purpose whatsoever, or (iii) computing the amount of Bonds to be redeemed and the selection of Bonds to be redeemed, the principal amount of a Capital Appreciation Bond shall be deemed to be its Accreted Value. [The following paragraph is applicable only to Capital Appreciation and Income Bonds] For the purposes of (i) receiving payment of the redemption price if a Capital Appreciation and Income Bond is redeemed prior to maturity, or (ii) computing the amount of Bonds held by the regis- tered owner of a Capital Appreciation and Income Bond in giving to the City any notice, consent, request or demand pursuant to the Resolution for any purpose whatsoever, the principal amount of a Capital Appreciation and Income Bond shall be deemed to be its Appreciated Value. II-25 Res. No. 39-88 PARdi ASSIGNMENT AND TRANSFER FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto (please print or typewrite name and address of transferee) the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints Attorney to transfer the within bond on the books kept for registra- tion thereof, with full power of substitution in the premises. Dated: In the presence of: [STATEMENT OF INSURANCE, if any] II-26 Res. No. 39-88 PART I ARTICLE III COVENANTS, FUNDS AND APPLICATION THEREOF SECTION 1. BONDS NOT TO BE INDEBTEDNESS OF THE CITY. The Bonds shall not be and shall not constitute an indebtedness of the City within the meaning of any constitutional, statutory, charter or other limitation of indebtedness, but shall be payable solely from the Net Revenues derived from the operation of the Combined Public Utility, and the Pledged Impact Charges, if any are so pledged, as herein provided. No Holder or Holders of any Bonds issued hereunder shall ever have the right to compel the exercise of the ad valorem taxing power of the City, or taxation in any form of any real prop- erty therein to pay the Bonds or the interest thereon. SECTION 2. BONDS SECURED BY PLEDGE OF NET REVENUES AND ADDITIONAL SECURITY OF SPECIAL ASSESSMENTS AND PLEDGED IMPACT CHARGES. The payment of the principal of and interest on all of the Bonds issued hereunder shall be secured forthwith equally and ratably by a first lien on and pledge of the Net Revenues derived from the operation of the Combined Public Utility. The Net Revenues derived from the operation of the Combined Public Utility in an amount suffi- cient to pay the principal of and interest on the Bonds herein autho- rized and to make the payments into the reserve and sinking fund and all other payments provided for in the Resolution, are hereby irrevo- cably pledged to the payment of the principal of and interest on the Bonds authorized herein, and other payments provided for herein, as the same become due and payable. In addition, the City may by subse- quent resolution of the City Commission elect to pledge Special Assessments for the payment of principal of and interest on any series of Bonds authorized under this Resolution. If the City makes such election, the Special Assessments so pledged shall be treated for all purposes under this Resolution as Net Revenues, except with III-1 Res. No. 39-88 PART I respect to Section 4.B and Section 4.G of this Article III. The City may also, by subsequent proceedings of the City Commission, elect to pledge Pledged Impact Charges for the payment of principal of and interest on any series of Bonds. SECTION 3. APPLICATION OF BOND PROCEEDS. All moneys received by the City from the sale of the Bonds originally authorized and issued pursuant to the Resolution shall be disbursed as follows: A. The accrued interest derived from the sale of the Bonds shall be deposited in the Interest Account, hereinafter created and established, and used for the purpose of paying interest on the Bonds as the same becomes due and payable. B. From the proceeds of the Bonds there may be deposited in the Debt Service Reserve Account, hereinafter created and estab- lished, such amount as shall be determined by subsequent proceedings of the City Commission. C. From the proceeds of the Bonds an amount which together with any other moneys lawfully available therefor, including moneys and investments transferred from the funds and accounts cre- ated and established by the proceedings authorizing the issuance of the 1984 Bonds (such amounts to be determined by subsequent proceed- ings of the City Commission) shall be deposited in an escrow deposit trust fund to be held by a bank or trust company, as trustee, under the terms and provisions of the Escrow Deposit Agreement, and such proceeds shall be held irrevocably in trust in the escrow deposit trust fund under the terms and provisions of the Escrow Deposit Agreement; such moneys shall be invested at the time of deposit in U.S. Obligations, which are not callable prior to maturity except by the holder thereof, the principal and interest of which shall be suf- ficient to pay the principal of and interest on the Refunded Bonds as III-2 Res. No. 39-88 PART I the same mature and become due and payable or are redeemed prior to maturity, as provided in the Escrow Deposit Agreement. D. The balance of the proceeds derived from the sale of the Bonds shall be applied to pay the costs of issuing the Bonds including, but not limited to, payment of the premium for the Bond Insurance Policy, if any, and the initial payment of the premium or fee for the Reserve Account Credit Facility Substitute, if any. The proceeds of the sale of the Bonds (other than amounts deposited under the Escrow Deposit Agreement and amounts reserved to pay the costs of issuing the Bonds) shall be and constitute trust funds for the purposes hereinabove provided and there is hereby cre- ated a lien upon such moneys, until so applied, in favor of the Holders of said Bonds. SECTION 4. COVENANTS OF THE CITY. As long as any of the principal of or interest on any of the Bonds shall be Outstanding and unpaid, or until there shall have been set apart in the Sinking Fund, consisting of the Interest Account, Principal Account, Bond Redemption Account and the Debt Service Reserve Account, herein cre- ated and established, a sum sufficient to pay, when due, the entire principal of the Bonds remaining unpaid, together with interest accrued and to accrue thereon, or until the provisions of Article III, Section 4.R. of Part I of this Resolution have been com- plied with, the City covenants with the Holders of any and all of the Bonds issued pursuant to the Resolution as follows: A. TAX COVENANT. 1. The City covenants to maintain the exclusion of the interest on the Bonds from gross income for Federal income tax purposes pursuant to Section 103(a) of the Code. In fur- therance of the covenant contained in the preceding sentence, the City agrees to comply with the provisions of the Tax Certificate. III-3 Res. No. 39-88 PAR~ I 2. The City shall make any and all payments required to be made to the United States Department of the Treasury in connection with the Bonds pursuant to Section 148(f) of the Code from amounts on deposit in the funds and accounts established under this Resolution and available therefor. 3. Notwithstanding any other provision of this Resolution to the contrary, as long as necessary in order to maintain the exclu- sion of interest on the Bonds from gross income for Federal income tax purposes, the covenants contained in this Section shall survive the payment of the Bonds, including any payment or defeasance thereof pursuant to Article III, Section 4.R of Part I of this Resolution. B. RATES. The City, in each Fiscal Year, will fix, establish and maintain such rates and collect such fees, rentals or other charges for the services and Facilities of its Combined Public Utility, and revise the same from time to time whenever necessary, as will always provide in each Fiscal Year Net Revenues, which shall be adequate to pay at least one hundred ten percent (110%) of the Annual Debt Service Requirement for the Bonds and any pari passu additional Bonds hereafter issued; provided, however, that if the City shall elect by subsequent resolution of the City Commission to pledge Pledged Impact Charges for any series of Bonds, Net Revenues, which together with such Pledged Impact Charges received in such Fiscal Year shall be adequate to pay at least one hundred twenty percent (120%) of the Annual Debt Service Requirement for the Bonds and any pari passu additional Bonds hereafter issued and, provided further, that the Net Revenues alone received in such Fiscal Year shall at all times be adequate to pay at least one hundred percent (100%) of the Annual Debt Service Requirement for the Bonds and any pari passu additional Bonds hereafter issued; and that such Net Revenues shall be sufficient to make all of the payments required by the terms of III-4 Res. No. 39-88 PART I this Resolution and that such rates, fees, rentals or other charges shall not be so reduced so as to be insufficient for such purposes. C. COMBINED PUBLIC UTILITY REVENUE FUND. The Revenues derived from the operation of the Combined Public Utility shall be deposited in a fund in a bank or trust company in the State of Florida which is eligible under state laws to receive deposits of city funds, which fund is hereby created, established and designated as the "Combined Public Utility Revenue Fund" (hereinafter referred to as the "Revenue Fund"). Said Revenue Fund shall constitute a trust fund for the purposes provided in the ~esolution, and shall be kept separate and distinct from all other funds of the City and used only for the purposes and in the manner provided for in Article III, Section 4.D. of Part I of this Resolution. D. CREATION AND ESTABLISHMENT OF VARIOUS FUNDS AND ACCOUNTS AND THE DISPOSITION OF NET REVENUES AND PLEDGED IMPACT C~ARGES. There are hereby created and established the following funds and accounts: The "Water and Sewer System Sinking Fund" (hereinafter referred to as the "Sinking Fund"). There are also hereby created and established four (4) separate accounts in the Sinking Fund to be known as the "Interest Account", the "Principal Account", the "Bond Redemption Account" and the "Debt Service Reserve Account". The "Water and Sewer System Renewal, Replacement and Improvement Fund" (hereinafter referred to as the "Renewal, Replacement and Improvement Fund"). The "Water and Sewer System Pledged Impact Charge Fund" (hereinafter referred to as "Pledged Impact Charge Fund"). Revenues: The Revenues at any time on deposit in the Revenue Fund shall be disposed of only in the following manner: III-5 Res. No. 39-88 PART I 1. Revenues shall be used, to the full extent necessary, to pay Operating Expenses that are due and payable during the current calendar month. 2. Net Revenues shall next be used, to the full extent necessary, for deposit into the Interest Account in the Sinking Fund, on the fifteenth (15th) day of each month, beginning with the fif- teenth (15th) day of the first full calendar month following the date on which any or all of the Bonds are delivered to the purchaser thereof, such sums as shall be sufficient to pay one-sixth (1/6th) of the interest becoming due on the Bonds on the next semi-annual Interest Payment Date, provided, however, that such monthly deposits for interest shall not be required to be made into the Interest Account to the extent that money is on deposit therein for such pur- pose and, provided further, that in the event the City has issued pari passu additional Variable Rate Bonds pursuant to the provisions of this Resolution, Net Revenues shall be deposited at such other or additional times and amounts as necessary to pay the interest becom- ing due on the Bonds on the next Interest Payment Date, all in the manner provided in the supplemental resolution authorizing such pari passu additional Variable Rate Bonds. The earnings and investment income derived from the moneys and investments on deposit in the Principal Account, the Bond Redemption Account and the Debt service Reserve Account which are to be deposited in the Interest Account as required by the terms of this Resolution, shall be credited against the amount of Net Revenues required to be deposited in the Interest Account. In the event that the period to elapse between the date of the delivery of the Bonds and the next semi-annual Interest Payment Date will be less or more than six (6) months, then such monthly payments shall be increased or decreased accordingly in sufficient III-6 Res. No. 39-88 PA~ I amounts to provide the required semi-annual interest amount maturing on the next Interest Payment Date. 3. Net Revenues shall next be used, to the full extent necessary, (a) for deposit in the Principal Account in the Sinking Fund, on the fifteenth (15th) day of each month in each year, one twelfth (1/12th) of the prin- cipal amount or Accreted Value of the Serial Bonds which will mature and become due on the next annual maturity date, as shall be determined by subsequent proceedings of the City Commission. In the event the period to elapse between the date of delivery of the Bonds and the next principal payment date will be less or more than twelve (12) months, then such monthly payments shall be increased or decreased accordingly in sufficient amounts to provide the required princi- pal amount maturing on the next principal payment date. (b) for deposit into the Bond Redemption Account in the Sinking Fund, on the fifteenth (15th) day of each month in each year, one twelfth (1/12th) of the amount required for the payment of the Term Bonds, as shall hereafter be determined by subsequent proceedings of the City Commission, until the amount on deposit therein is equal to the amount required to be paid on the next installment payment date. The moneys in the Bond Redemption Account shall be used solely for the purchase or redemption of the Term Bonds payable therefrom. The City may purchase any of the Term Bonds at prices not greater than par III-7 Res. No. 39-88 PAR~ I and accrued interest and may purchase Capital Appreciation Bonds and/or Capital Appreciation and Income Bonds (if such Capital Appreciation Bond or Capital Appreciation and Income Bond is a Term Bond) at prices not greater than the Accreted Value or Appreciated Value, as the case may be, as of the date of purchase. If, by the application of moneys in the Bond Redemption Account, the City shall purchase or call for redemption in any year Term Bonds in excess of the installment requirement for such year, such excess of Term Bonds so purchased or redeemed shall at the option of the City either be credited on a pro rata basis over the remaining installment payment dates or credited against the following year's installment requirement. The City shall, to the extent of any moneys in the Bond Redemption Account, be mandatorily obligated to use such moneys for the redemption prior to matu- rity of Term Bonds in such manner and at such times as shall hereafter be determined by subsequent proceed- ings of the City Commission. No distinction or preference shall exist in the use of moneys on deposit in the Revenue Fund for pay- ment into the Interest Account, the Principal Account and the Bond Redemption Account in the Sinking Fund, such accounts being on a parity with each other. 4. To the extent not funded from Bond proceeds, Net Revenues shall next be used, to the full extent necessary, for depos- its into the Debt Service Reserve Account in the Sinking Fund, on the fifteenth (15th) day of each month in each year, beginning with the III-8 Res. No. 39-88 fifteenth (lSth) day of the first full Calendar month fo/lowing the date on which any or all of the Bonds iSSued hereunder are delivered to the PUrchaser thereof, such SUms as Shall be sufficient to pay an amount equal to one-twelfth of twenty percent (1/12th of 20%) of the Debt SerVice Reserve Requirement; Provided, hOWever, that if Bond PrOCeeds are deposited in the Debt Service Reserve Account in an amount less than the Debt Service Reserve Requirement, the City Shall (except as hereafter Provided in the fo/lowing Paragraph) cause Net Revenues to be deposited in an amount equal to one-sixtieth of the difference between the amount on deposit in the Debt Service Reserve Account and the Debt Service Reserve ~equirement, and Pro- Vided further, that no Payments Shall be required to be made into the Debt Service Reserve Account Whenever and as lOng as the amount deposited therein shall be Requirement. equal to the Debt Service Reserve Notwithstanding the foregoing provisions, in lieu of the deposits of Net Revenues into the Debt Service Reserve Account, the City may cause to be deposited into the Debt Service Reserve Account a SUrety bond, an unCOnditiOnal direct pay letter of Credit iSSued by a bank, a reserve account line of credit or a municipal bOnd insur- ance Policy iSSued by a reputable and recognized municipal bond inSUrer for the benefit of the Bondholders (Sometimes referred to herein as a "Reserve Account Credit Facility Substitute.) in an amount equal to the difference between the Debt Service Reserve Requirement and the SUms then on deposit in the Debt Service Reserve Account, Which Reserve Account Credit Facility Substitute shall be Payable (Upon the giving of notice as required thereunder) on any Interest Payment Date on Which a deficiency exists Which cannot be cured by funds in any Other account held pursuant to this Resolution and available for Such PUrpose Under the terms and Order of Priority III-9 Res. No. 39-88 PAR~ I as established by this Resolution. In addition, the City, at any time by subsequent proceedings of the City Commission, may substitute a Reserve Account Credit Facility Substitute for all moneys on deposit in the Debt Revenue Reserve Account. Under such circum- stances, the Reserve Account Credit Facility Substitute shall be in an amount equal to the Debt Service Reserve Requirement. Such munic- ipal bond insurer or bank in the case of a letter of credit or line of credit shall be one whose municipal bond insurance policies or unconditional direct pay letters of credit or other type of credit enhancement insuring or guaranteeing the payment, when due, of the principal of and interest on municipal bond issues results in such issues being rated in the highest rating category by either S&P or Moody's. If a disbursement is made from a Reserve Account Credit Facility Substitute, provided pursuant to this paragraph, the City shall be obligated to reinstate the maximum limits of such Reserve Account Credit Facility Substitute immediately following such dis- bursement or to replace such Reserve Account Credit Facility Substitute by depositing into the Debt Service Reserve Account from the Net Revenues and the Pledged Impact Charges, if any are so pledged, as herein provided, funds in the maximum amount originally payable under such Reserve Account Credit Facility Substitute, or any combination of such alternatives. Whenever there is on deposit in the Debt Service Reserve Account an amount in excess of the Debt Service Reserve Requirement, the amount of such excess shall be reduced at the option of the City in the following manner: (a) if there is on deposit in the Debt Service Reserve Fund a Reserve Account Credit Facility Substitute, as provided herein, the principal amount thereof shall be reduced by the amount of such excess and (b) by reducing the amount of moneys and/or securities in the Debt Service Reserve Account in an amount equal to III-10 Res. No. 39-88 PARdi such excess. The moneys and/or securities so withdrawn under subsection (b) above shall be deposited in the Renewal, Replacement and Improvement Fund and used for the purposes provided therein; pro- vided, however, that all of the income and expenses incurred from the investment and reinvestment of moneys on deposit in the Debt Service Reserve Account shall be deposited in the Interest Account as herein provided in this Resolution. Moneys in the Debt Service Reserve Account shall be used only for the purpose of making payments into the Interest Account, the Principal Account and the Bond Redemption Account when the moneys in the Revenue Fund are insufficient therefor; and provided further, however, that moneys on deposit in the Debt Service Reserve Account may, upon final maturity of the Bonds, be used to pay principal of and interest on the Bonds. In the event that any moneys shall be withdrawn from the Debt Service Reserve Account for payments into the Interest Account, the Principal Account and the Bond Redemption Account such withdraw- als shall be subsequently restored from the first Net Revenues avail- able after all required payments have been made into the Interest Account, the Principal Account and the Bond Redemption Account including any deficiencies for prior payments to the extent such deficiencies are not paid from moneys on deposit in the Pledged Impact Charge Fund as hereinafter provided. No distinction or preference shall exist in the use of the moneys on deposit in the Debt Service Reserve Account for payment into the Interest Account, the Principal Account and the Bond Redemption Account, such accounts being on a parity with each other. 5. Net Revenues shall next be used, to the full extent necessary, for deposits into the Renewal, Replacement and Improvement Fund on the fifteenth (15th) day of each month, beginning with the III-11 Res. No. 39-88 PA~ I fifteenth (15th) day of the first full calendar month following the date on which any or all of the Bonds issued hereunder are delivered to the purchaser thereof, in such sums as shall be sufficient to pay one-twelfth (1/12th) of five per centum (5%) of the Gross Revenues derived from the operation of the Combined Public Utility during the preceding Fiscal Year. No further deposits need be made if the Consulting Engineer shall certify that no additional deposits are necessary for the purposes of the Renewal, Replacement and Improvement Fund. The moneys in the Renewal, Replacement and Improvement Fund shall be used for the purpose of paying the costs of extensions, improvements or additions to, or the replacement or renewal of capi- tal assets of the Combined Public Utility, or extraordinary repairs of the Combined Public Utility; provided, however, that moneys in the Renewal, Replacement and Improvement Fund shall be used for payment into the Interest Account, the Principal Account and the Bond Redemption Account when the moneys in the Revenue Fund, the Debt Service Reserve Account and the Pledged Impact Charge Fund, if any, are insufficient therefor. 6. Net Revenues shall next be used, first, for the repay- ment of any obligations owed to the provider(s) of a Reserve Account Credit Facility Substitute, and second, for the payment of any subor- dinated indebtedness hereafter issued by the City in connection with the Combined Public Utility in accordance with the proceedings autho- rizing such subordinated indebtedness. 7. Thereafter, the balance of any Net Revenues remaining in the Revenue Fund shall be used by the City to make improvements to the Combined Public Utility, to purchase or redeem Bonds prior to maturity or for any other lawful purpose, provided, however, that none of such Net Revenues shall ever be used for the purposes III-12 Res. No. 39-88 PARdi provided in this paragraph (7) unless all payments required in paragraphs (1) to (6) above, including any deficiencies for prior payments, have been made in full to the date of such use. Pledged Impact Charges: There shall be deposited in the Pledged Impact Charge Fund all Pledged Impact Charges as received by the City and such Pledged Impact Charges shall be used by the City to the extent permitted by law in the following manner and order of priority: (a) For the payment into the Interest Account, the Principal Account and the Bond Redemption Account when the moneys in the Revenue Fund and the Debt Service Reserve Account are insufficient therefor. (b) To restore any withdrawals or to make up any deficiencies that may exist from time to time in the Debt Service Reserve Account whenever the moneys in the Revenue Fund are insufficient for such purpose. (c) To pay the cost of capital improvements to the Combined Public Utility. (d) The balance of any Pledged Impact Charges remaining in the Pledged Impact Charge Fund shall be deposited in the Interest Account and used to pay interest becoming due on the Bonds; provided, however, that none of such Pledged Impact Charges shall ever be used for the purposes provided in this subparagraph 7(d) unless all payments required under subparagraphs 7(a) through 7(c), including any deficiencies for prior payments are made in full to date of such use. 8. The Sinking Fund, including the Interest Account, Principal Account, Bond Redemption Account and Debt Service Reserve III-13 Res. No. 39-88 PARdi Account therein, the Renewal, Replacement and Improvement Fund, the Pledged Impact Charge Fund and all other special funds and accounts created and established by the Resolution shall constitute trust funds. The amounts required to be accounted for in each of the funds and accounts designated herein, except for the Sinking Fund, may be deposited in a single bank account maintained by the City provided that adequate accounting procedures are maintained to reflect and control the restricted allocations of the amounts on deposit therein for the various purposes of such funds and accounts as herein provided. The designation and establishment of funds and accounts in and by the Resolution shall not be construed to require the estab- lishment of any completely independent funds and accounts but rather is intended solely to constitute an allocation of certain revenues and assets of the Combined Public Utility for certain purposes and to establish such certain priorities for application of certain revenues and assets as herein provided. Moneys on deposit in the Revenue Fund, the Renewal, Replacement and Improvement Fund, the Sinking Fund and the Pledged Impact Charge Fund may be invested in U.S. Obligations or any other Permitted Investments maturing not later than such date or dates as the City shall determine. Subject to the requirements under the Code and the Tax Certificate, all income and earnings received from the investment and reinvestment of moneys on deposit in the Renewal, Replacement and Improvement Fund shall be transferred to the Revenue Fund and used in the same manner as other moneys on deposit therein. Subject to the requirements under the Code and the Tax Certificate, all the income and earnings received from the investment and reinvestment of moneys on deposit in the Principal Account, Bond III-14 Res. No. 39-88 PART I Redemption Account and Debt Service Reserve Account in the Sinking Fund shall be transferred to the Interest Account and be credited against any moneys required to be deposited into the Interest Account as provided in the Resolution. Subject to the requirements under the Code and the Tax Certificate, all the income and earnings received from the investment and reinvestment of moneys on deposit in the Interest Account in the Sinking Fund shall be retained therein and be credited against any moneys required to be deposited into the Interest Account as provided in the Resolution. Subject to the requirements under the Code and the Tax Certificate, all the income and earnings received from the investment and reinvestment of moneys on deposit in the Pledged Impact Charge Fund and shall be retained therein and used in the manner provided for in this Resolution. E. SALE OF THE COMBINED PUBLIC UTILITY. Except as oth- erwise provided herein, the Combined Public Utility may be sold, leased or otherwise disposed of only as a whole or substantially as a whole, and only if the net proceeds to be realized, together with other moneys lawfully available for such purpose, if any, shall be sufficient to retire all of the Bonds issued pursuant to the Resolution and to pay all interest thereon to their respective dates of maturity or earlier redemption dates in the manner provided in Article III, Section 4.R. of Part I of this Resolution. The proceeds from such sale, lease or other disposition of the Combined Public Utility and such other available moneys shall be applied in the manner provided in Article III, Section 4.R. of Part I of this Resolution and shall be used solely for the purposes of paying the principal of the Bonds, the interest thereon and redemption premiums, if any, as the same shall become due on the Bonds on or prior to the III-15 Res. No. 39-88 PARdi redemption date or the maturity date thereof as shall be hereafter determined by subsequent proceedings of the City Commission. Except as above provided, prior to any sale, lease or other disposition of the Combined Public Utility or any portion thereof, if the amount to be received therefor is not in excess of one per centum (1%) of the original cost before depreciation of the fixed assets to be sold, leased or otherwise disposed, the City manager or other duly authorized officer in charge of the Combined Public Utility shall make a finding in writing determining that such property comprising a part of such Combined Public Utility is no longer necessary or useful or profitable in the operation thereof, and such proceeds shall be deposited in the Renewal, Replacement and Improvement Fund to the extent necessary to make the amount then on deposit therein equal to the maximum amount required to be on deposit therein and the balance of such moneys not needed for said Renewal, Replacement and Improvement Fund shall be deposited in the Bond Redemption Account and used in the manner provided therein. If the amount to be received from such sale, lease or other disposition of said property shall be in excess of one per centum (1%) of the original cost before depreciation of the fixed assets, the City manager or other duly authorized officer in charge of such Combined Public Utility and the Consulting Engineer, shall first each make a finding in writing determining that such property comprising a part of such Combined Public Utility is no longer necessary or useful or profitable in the operation thereof, and the City Commission shall, by resolution duly adopted, approve and concur in the findings of the City manager or other duly authorized officer and the Consulting Engineer, and authorize such sale, lease or other disposi- tion of said property and such proceeds shall be deposited into the Renewal, Replacement and Improvement Fund to the extent necessary to III-16 Res. No. 39-88 PA~ I make the amount then on deposit therein equal to the maximum amount required to be on deposit therein, and the balance of such moneys not needed for said deposit into the Renewal, Replacement and Improvement Fund shall be deposited in the Bond Redemption Account and used in the manner provided therein. Notwithstanding the foregoing provisions of this Section E, the City shall have the authority to sell for fair and reasonable consideration any land comprising a part of the Combined Public Utility which is no longer necessary or useful in the operation of the Combined Public Utility and the proceeds derived from the sale of such land shall be deposited in the Renewal, Replacement and Improvement Fund and applied to the purposes provided therein. Fair and reasonable consideration shall be determined by a finding in writing by the City Commission upon the advice of the Consulting Engineer. F. ISSUANCE OF OTHER OBLIGATIONS PAYABLE OUT OF NET REVENUES. The City will not issue any other obligations, except upon the conditions and in the manner provided herein, payable from the Net Revenues, nor voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or any other charge having priority or being on a parity with the lien of the Bonds issued pursuant to the Resolution and the interest thereon upon any of the Net Revenues and the Pledged Impact Charges, if any are so pledged. Any obligations issued by the City other than the Bonds authorized by the Resolution and any pari passu additional Bonds issued under the terms, restrictions and conditions contained in the Resolution, shall contain an express statement that such obligations are junior, inferior and subordinate in all respects to the Bonds issued pursuant to the Resolution as to lien on and source and III-17 Res. No. 39-88 PAR~ I security for payment from the Net Revenues and in all other respects. G. ISSUANCE OF PARI PASSU ADDITIONAL BONDS. N o p a r i passu additional Bonds, as in this subsection defined, payable pari passu with Bonds issued pursuant to the Resolution out of Net Revenues shall be issued after the issuance of any Bonds pursuant to the Resolution except upon the conditions and in the manner herein pr ov ided. No such pari passu additional Bonds shall be issued unless the following conditions are complied with: (1) The City must be current in all deposits into the various funds and accounts and all payments required to have been theretofore deposited or made by it under the provisions of the Resolution and any supplemental resolu- tions hereafter adopted for the issuance of pari passu additional Bonds and has complied with the covenants and provisions of the Resolution and any supplemental resolu- tions hereafter adopted for the issuance of pari passu additional Bonds. (2) The amount of the Net ~evenues derived from the operation of the Combined Public Utility, as may be adjusted by subparagraphs (a), (b) or (c) as hereinafter provided, received during any twelve (12) consecutive months of the eighteen (18) months immediately preceding the issuance of said pari passu additional Bonds, as certi- fied by the City, will either (i) be at least equal to one hundred and twenty per centum (120%) of the Maximum Annual Debt Service Requirement or (ii) if further adjusted by subparagraphs (d) and/or (e) of this Section 4.G. the Net Revenues derived from the operation of the Combined Public III-18 Res. No. 39-88 PART I Utility received during any twelve (12) consecutive months of the eighteen (18) months in~ediately preceding the issu- ance of said pari passu additional Bonds, as certified by the City, will be at least equal to one hundred thirty per centum (130%) of the Maximum Annual Debt Service Requirement; on (li the Bonds originally issued pursuant to the Resolution then Outstanding, (2) any pari passu addi- tional Bonds theretofore issued and then Outstanding, and (3) the pari passu additional Bonds then proposed to be issued; provided that for the purpose of determining the Maximum Annual Debt Service Requirement under this Section, the interest rate on Variable Rate Bonds then outstanding shall be the greater of (i) the average daily interest rate on such Variable Rate Bonds during the preceding Fiscal Year or (ii) the actual rate of interest applicable to such Variable Rate Bonds on the date of issuance of such Variable Rate Bonds; and provided, further, that if pari passu additional Variable Rate Bonds are to be issued the interest rate thereon shall be calculated in accordance with the 30 year Revenue Bond Index as published by The Bond Buyer as of the last week of the month preceding the date of issuance of such Variable Rate Bonds, or if that index is no longer published, the interest rate as of the last week of such month as published in an index that is deemed to be substantially equivalent. (3) In the event any pari passu additional Bonds are issued for the purpose of refunding any Bonds then Outstanding, the condition of (2) above shall not apply, provided that the issuance of such pari passu additional Bonds shall result in a reduction or shall not increase the III-19 Res. No. 39-88 PART I annual debt service payments over the life of the Bonds so refunded. For the purpose of this Section 4.G., the phrase "twelve (12) consecutive months of the eighteen (18) months immediately preceding the issuance of said pari passu addi- tional Bonds" shall be sometimes referred to as "twelve (12) consecutive months". The adjustment of Net Revenues which are permitted by the foregoing subsection (2) hereof shall be certified to the City by the Consulting Engineer and shall be computed as follows: (a) If the City, prior to the issuance of the proposed pari passu additional Bonds, shall have increased the rates, fees, rentals or other charges for the services of the Combined Public Utility, the Net Revenues for the twelve (12) consecutive months immediately preceding the issuance of the pari passu additional Bonds shall be adjusted to include the Net Revenues which would have been derived from said Combined Public Utility in such twelve (12) consecu- tive months as if such increased rates, fees, rentals or other charges for the services of the Combined Public Utility had been in effect during all of such twelve (12) consecutive months. (b) If the City shall have acquired or has con- tracted to acquire any privately or publicly owned existing water system, sewer system or water and sewer system, the cost of which shall be paid from all or part of the proceeds of the issuance of the proposed pari passu additional Bonds, then the Net Revenues III-20 Res. No. 39-88 PART I derived from the Combined Public Utility during the twelve (12) consecutive months immediately preceding the issuance of said pari passu additional Bonds, shall be increased by adding to the Net Revenues for such twelve (12) consecutive months seventy-five per- cent (75%) of the Net Revenues which would have been derived from the existing water system, sewer system or water and sewer system as if such existing water system, sewer system or water and sewer system had been operated by the City as a part of the Combined Public Utility during such twelve (12) consecutive mon th s. (c) If the City shall have entered into a con- tract, which contract shall be for a duration of not less than the final maturity of the pari passu addi- tional Bonds authorized for the purposes of such financing from the date of the issuance of the pro- posed pari passu additional Bonds, with any public body whereby the City shall have agreed to furnish services for the collection, treatment and disposal of sewage or other waste matter and/or agreed to furnish services in connection with any water system, then the Net Revenues of the Combined Public Utility during the twelve (12) consecutive months immediately preceding the issuance of the pari passu additional Bonds shall be increased by the least amount which the public body shall guarantee to pay in any one year for the fur- nishing of the services by the City, after deducting from such payment the estimated proportion of III-21 Res. No. 39-88 PART I operating expenses and repair, renewal and replacement cost attributable in such year to such services. (d) If there is an estimated increase in Revenues to be received by the City as a result of additions, extensions or improvements to the Combined Public Utility during the period of three (3) years from delivery of the pari passu additional Bonds, then the Net Revenues derived from the Combined Public Utility during the twelve (12) consecutive months immediately preceding the issuance of said pari passu additional Bonds shall be increased by the average annual additional Revenues calculated for such three year period. (e) If the City shall impose and collect Pledged Impact Charges, then the Net Revenues derived from the Combined Public Utility during the twelve (12) consecutive months immediately preceding the issuance of said pari passu additional Bonds shall be increased by such Pledged Impact Charges collected during such twelve (12) consecutive month period. Tne term "pari passu additional Bonds" as used in this sub- section shall be deemed to mean additional obligations evidenced by Bonds or other form of indebtedness permitted under the Act issued under the provisions and within the limitations of this subsection payable from the Net Revenues of the Combined Public Utility pari passu with Bonds originally authorized and issued pursuant to the Resolution. Such Bonds shall be deemed to have been issued pursuant to the Resolution the same as the Bonds originally authorized and issued pursuant to the Resolution and all of the covenants and other provisions of the Resolution (except as to details of such Bonds III-22 Res. No. 39-88 PA~T I evidencing such pari passu additional obligations inconsistent therewith), shall be for the equal benefit, protection and security of the Holders of any Bonds originally authorized and issued pursuant to the Resolution and the holders of any Bonds evidencing pari passu additional obligations subsequently issued within the limitations of and in compliance with this subsection. All of such Bonds, regard- less of the time or times of their issuance shall rank equally with respect to their lien on the Net Revenues of the Combined Public Utility and. the Pledged Impact Charges, and their sources and secu- rity for payment therefrom without preference of any Bonds, over any other. ~he term "pari passu additional Bonds" as used in this sub- section shall not be deemed to include bonds, notes, certificates or other obligations subsequently issued, the lien of which on the Net Revenues of the Combined Public Utility is subject to the prior and superior lien on the Net Revenues for the payment of Bonds issued pursuant to the Resolution, as provided in Article III, Section 4.F. of Part I of this Resolution, and the City shall not issue any obli- gations whatsoever payable from the Net Revenues of the Combined Public Utility, which rank equally as to lien on and source and secu- rity for their payment from such Net Revenues, with Bonds issued pur- suant to the Resolution except in the manner and under the conditions provided in this subsection. In the event that the total amount of the Bonds herein authorized to be issued are not issued simultaneously but from time to time, such Bonds which are subsequently issued from time to time shall not be subject to the restrictions, conditions and limitations as to the issuance of pari passu additional Bonds as provided in this Section 4G of the Resolution, provided, that such Bonds which are III-23 Res. No. 39-88 PART I subsequently issued shall be issued within six (6) months from the date the Bonds originally authorized hereunder are issued. If at any time the City shall enter into an agreement or contract for an ownership interest in any public or privately owned water and/or sewer system or for the reservation of capacity therein whereby the City has agreed as part of the cost thereof to pay part of the debt service on the obligations of such public or privately owned water and/or sewer system issued in connection therewith, such payments to be made by the City shall be junior, inferior and subor- dinate in all respects to the Bonds issued hereunder and to any other obligations hereafter issued by the City subject to the provisions of Article III, Section 4.F. of Part I of this Resolution. H. INSURANCE. The City may carry such insurance as is ordinarily carried by private or public corporations owning and oper- ating utilities similar to the Combined Public Utility with a reputa- ble insurance carrier or carriers, including public and product liability insurance in such amounts as the City shall determine to be sufficient and such other insurance against loss or damage by fire, explosion (including underground explosion), hurricane, tornado or other hazards and risks, and said property loss or damage insurance shall be in an amount or amounts, as shall be determined by the City. The City may, alternatively or additionally, establish cer- tain levels of insurance for which the City may self-insure. I. BOOKS AND RECORDS. The City will keep books and records of the Combined Public Utility, which shall be separate and apart from ali other books, records and accounts of the City, in which complete and correct entries shall be made of all transactions relating to the Combined Public Utility, in accordance with generally accepted accounting principles for governmental units, and any Holder III-24 Res. No. 39-88 PART I or Holders of Bonds or their agents issued pursuant to the Resolution, shall have the right at reasonable times and under rea- sonable conditions to inspect all records, accounts and data of the City relating to the operation of the Combined Public Utility. The City shall, within six (6) months after the close of each Fiscal Year, be required to obtain an audit by a qualified and independent firm of certified public accountants of the books, records and accounts of the Combined Public Utility for the preceding Fiscal Year and the financial statement prepared by such certified public accountants shall be filed with the City, which such financial statement shall cover in reasonable detail the operation of the Combined Public Utility, the funds and fund balances and the City shall make available upon request a reasonable summary thereof, to any Holder or Holders of the Bonds issued pursuant to the Resolution. J. OPERATING, BUDGET. The City shall annually, prior to the start of each Fiscal Year, prepare and adopt by proper proceed- ings of its governing body a detailed budget of the estimated expen- ditures for operation and maintenance of the Combined Public Utility and budgeted reserves and the estimated Revenues of the Combined Public Utility during the succeeding Fiscal Year. No expenditures for the operation and maintenance of the Combined Public Utility shall be made in any Fiscal Year in excess of the amounts provided therefor in such budget without a written finding and recommendation by the general manager of the Combined Public Utility or other duly authorized officer in charge thereof, which finding and recommenda- tion shall state in detail the purpose of and necessity for such increased expenditures for the operation and maintenance of the Combined Public Utility, and no such increased expenditures shall be made until the City Commission shall have approved such finding and III-25 Res. No. 39-88 PART I recommendation. ~he City shall mail copies of such annual budget and all resolutions authorizing increased expenditures for operation and maintenance to the Holder or Holders of Bonds who shall file his address with the City and request in writing that copies of all such budgets and resolutions be furnished him or them, and shall make available such budgets and all resolutions authorizing increased expenditures for operation and maintenance of the Combined Public Utility at all reasonable times to any Holder or Holders of Bonds issued pursuant to the Resolution. K. MAINTENANCE OF THE COMBINED PUBLIC UTILITY. City will maintain said Combined Public Utility in good condition and continuously operate the same in an efficient manner and at a reason- able cost as a City revenue producing enterprise. L. NO FREE SERVICE. ~he City will not render or cause to be rendered any free services of any nature by its Combined Public Utility or any part thereof, nor will any preferential rates or charges be established for users of the same class, and in the event the City, or any department, agency or instrumentality, officer or employee thereof, shall avail itself of the Facilities or services provided by said Combined Public Utility or any part thereof, the same rates, fees or charges applicable to other customers receiving like services under similar circumstances shall be charged the City and any such department, agency, instrumentality, officer or employ- ee, provided, however, that this subsection shall not affect any rights of person, firm or corporation under pre-existing agreements or contracts. Such charges shall be paid as they accrue, and the City shall transfer from its general funds sufficient moneys to pay such charges. The revenues so received shall be deemed to be Revenues derived from the operation of the Combined Public Utility, and shall be deposited and accounted for in the same manner as other III-26 Res. No. 39-88 PART I Revenues. Notwithstanding any of the foregoing, the City may from time to time establish different classes and subclasses of users with respect to rates and charges, provided the City finds a rational basis for such classes or subclasses which would further the health, welfare or safety of the residents of the City. M. REMEDIES. Any Holder of Bonds issued under the provi- sions of the Resolution or any trustee acting for such Bondholders in the manner hereinafter provided, may either at law or in equity, by suit, action, mandamus or other proceedings in any court of competent jurisdiction, protect and enforce any and all rights under the laws of the State of Florida, or granted and contained in the Resolution, and may enforce and compel the performance of all duties required by the Resolution or by any applicable statutes to be performed by the City or by any officer thereof, including the fixing, charging and collecting of rates, fees or other charges for the services and Facilities of the Combined Public Utility. In the event that default shall be made in the payment of the interest on or the principal of any of the Bonds issued pursuant to the Resolution as the same shall become due, or in the making of the payments into any reserve or sinking fund or any other payments required to be made by the Resolution, or in the event that the City or any officer, agent or employee thereof shall fail or refuse to comply with the provisions of the Resolution or shall default in any covenant made herein, and in the further event that any such default shall continue for a period of sixty (60) days, any Holder of such Bonds, or any trustee appointed to represent Bondholders as hereinaf- ter provided, shall be entitled as of right to the appointment of a receiver of the Combined Public Utility in an appropriate judicial proceeding in a court of competent jurisdiction, whether or not such Holder or trustee is also seeking or shall have sought to enforce any III-27 Res. No. 39-88 PART I other right or exercise any other remedy in connection with Bonds issued pursuant to the Resolution. The receiver so appointed shall forthwith, directly or by his agents and attorneys, enter into and upon and take possession of the Combined Public Utility, and each and every part thereof, and shall hold, operate and maintain, manage and control the Combined Public Utility, and each and every part thereof, and in the name of the City shall exercise all the rights and powers of the City with respect to the Combined Public Utility as the City itself might do. Such receiver shall collect and receive all Revenues and Pledged Impact Charges, if any are so pledged, and maintain and operate the Combined Public Utility in the manner provided in the Resolution and comply under the jurisdiction of the court appointing such receiver, with all of the provisions of the Resolution. Whenever all that is due upon Bonds issued pursuant to the Resolution, and interest thereon, and under any covenants of the Resolution for reserve, sinking fund or other funds, and upon any other obligations and interest thereon having a charge, lien or encumbrance upon the Revenues of the Combined Public Utility and the Pledged Impact Charges, if any are so pledged, shall have been paid and made good, and all defaults under the provisions of the Resolution shall have been cured and made good, possession of the Combined Public Utility shall be surrendered to the City upon the entry of an order of the court to that effect. Upon any subsequent default, any Holder of Bonds issued pursuant to the Resolution, or any trustee appointed for Bondholders as hereinafter provided, shall have the right to secure the further appointment of a receiver upon any such subsequent default. Such receiver shall in the performance of the powers hereinabove conferred upon him be under the direction and supervision III-28 Res. No. 39-88 · nt, shall at all times be subject · ch aPP°~ntme r em(Ned thereby of the court making su -s of such court and may b.e -~ such cou:t- to the orders and decree -inted in the discretion u~ ~' tion of and a succeSSor receiver aPP.°1 limit or restrict the ]ur~s~c s such Nothing here~n contained ~Sh~ealr and further orders and decre~aby thex such court t° enter sUChaYor appropriate f°r the e ~in' court may deem neceS~on~not specifically set fo£th n al1 hOld and eceiver of any funct~ - ~ ~s nrovided here~n sh _ A Y · '-ed public utility zn u~e ~" operate the ComDln ' the joint protection and benefit of the City and Holders of Bonds issued pursuant to the Resolution' such receiver shall have no power to sell, assign, mortgage or otherwise dispose of any assets of any kind or character belonging or pertaining to the Combined Public utility, except as provided herein, but the authority of such receiver shall be limited to the possession, operation and mainte- nance of the Combined public utility for the sole purpose of the pro- tection of both the City and the BondholderS' ~e Holder or Holders of Bonds in an aggregate principal amount of not less than fiftY-one per centum (51%) of Bonds issued under the Resolution then Outstanding may by a duly executed certifi- cate in writing appoint a trustee for Holders of Bonds issued purSU- ant to the Resolution with authority to represent such Bondholders in any legal proceedings for the enforcement and protection of the rights of such BondholderS' such certificate shall be executed by such Bondholders or their duly authorized attorneys or representa- tives, and shall be filed in the office of the City Clerk. Any exercise of a remedy set forth in this section 4.M shall be subject to the consent of the Bond insurer, and the Bond insurer shall have the right, acting alone, to exerciSe said remedies iii-29 Res. No. 39-88 PART I as long as it has not defaulted in its obligations under the Bond Insurance Policy. N. ENFORCEMENT OF COLLECTIONS. ~he City will diligently enforce and collect all fees, rentals or other charges for the ser- vices and Facilities of the Combined Public Utility, and take all steps, actions and proceedings reasonably necessary for the enforce- ment and collection of such fees, rentals or other charges which shall become delinquent to the full extent permitted or authorized by the laws of the State of Florida. ~he City may, to the full extent permitted by law, under reasonable rules and regulations shut off and discontinue the supply- ing of the services and Facilities of the Combined Public Utility for the nonpayment of fees, rentals or other charges for said water and sewer services, and will not restore said water and sewer services until all delinquent charges, together with interest and reasonable penalties, have been prOVided for or paid in full. Where the user of the Sewer System is also a customer of the Water System, the City shall furnish to such a customer a single bill containing the charges due for the use of the services and Facilities of the Sewer System and Water System and the City will, to the full extent permitted by law, discontinue furnishing water service to such user in the event of the non-payment of charges imposed for the services of the Sewer System. O. CONNECTIONS WITH THE SEWER SYSTEM. The City will, to the full extent permitted by law, require all lands, buildings and structures within the area of the Combined Public Utility which can use the Facilities and services of the Sewer System of the Combined Public Utility, to connect with and use the Facilities and services of such Sewer System, and to cease all other means and methods for III-30 Res. No. 39-88 PART I the collection, purification, treatment and disposal of sewage and waste matter. P. NO COMPETING FACILITIES. ~he City will, to the full extent permitted by law, not grant any franchise, license or permit, for the construction or operation of any water and sewer facilities which will be competitive with the services and Facilities of the Water and/or Sewer System; provided, however, that this subsection shall not affect any vested rights of any persons, firms or corpora- tions now owning or operating water and sewer facilities. Q. CONSULTING ENGINEER. The City will retain a Consulting Engineer, on an biannual basis to inspect the Combined Public Utility, to make a report concerning the same, and will fur- ther retain the Consulting Engineer as may be necessary in order to perform the duties provided in the Resolution for the Consulting Engineer. R. DISCHARGE AND SATISFACTION OF BONDS. ~he covenants, liens and pledges entered into, created or imposed pursuant to the Resolution may be fully discharged and satisfied with respect to the Bonds in any one or more of the following ways: (a) by paying the principal of and interest on Bonds when the same shall become due and payable; or (b) by depositing in the Interest Account, Principal Account, Debt Service Reserve Account and the Bond Redemption Account, or in such other accounts which are irrevocably pledged to the payment of the Bonds, as the City may hereafter create and establish by resolution, certain moneys which together with other moneys lawfully available therefor shall be suf- ficient at the time of such deposit to pay the Bonds, the interest thereon and the redemption premium, if III-31 Res. No. 39-88 PART I any, as the same become due on said Bonds on or prior to the redemption date or maturity date thereof; or (c) by depositing in the Interest Account, Principal Account, Debt Service Reserve Account and the Bond Redemption Account, or such other accounts which are irrevocably pledged to the payment of the Bonds as the City may hereafter create and establish by resolution, moneys which, together with other moneys lawfully available therefor, when invested in Defeasance Obligations will provide moneys which shall be sufficient to pay the Bonds, the interest thereon and the redemption premium, if any, as the same shall become due on said Bonds on or prior to the redemption date or maturity date thereof. (d) Notwithstanding the foregoing all refer- ences to the discharge and satisfaction of Bonds shall include the discharge and satisfaction of any issue of Bonds, any portion of an issue of Bonds, any maturity or maturities of an issue of Bonds, any portion of a maturity of an issue of Bonds or any combination thereof. Notwithstanding the foregoing, in the event that the pay- ment or deposit in the amount and manner provided in this Resolution has been made by the Bond Insurer under the terms of the Bond Insurance Policy, the Bond Insurer shall be subrogated to the rights of the Holders of the Bonds and the liability of the City, with respect thereto, shall not be discharged or extinguished. For the purposes of determining the amount of interest on Variable Rate Bonds whether discharged and satisfied under the provisions of subsections (a), (b) and (c) above, the amount required III-32 Res. No. 39-88 PA~T I for the interest thereon shall be calculated at the maximum rate permitted by the terms of the provisions which authorized the issu- ance of such Variable Rate Bonds. Upon such payment or deposit in the amount and manner pro- vided in Article III, Section 4.R. of Part I of this Resolution, the Bonds shall no longer be deemed to be Outstanding for the purposes of the Resolution and all liability of the City with respect to the Bonds shall cease, terminate and be completely discharged and extin- guished, and the Holders thereof shall be entitled for payment solely out of the moneys or securities so deposited. S. VALUATION. The value of Permitted Investments on deposit in the funds and accounts created and established under this Resolution shall be the lower of par, or if purchased at other than par, amortized value. Amortized value, when used with respect to securities purchased at a premium above or a discount below par, shall mean the value at any given date obtained by dividing the total premium or discount at which such securities were purchased by the number of interest payment dates remaining to maturity on such secu- rities after such purchase and by multiplying the amount so calcu- lated by the number of interest payment dates having passed since the date of purchase; and (i) in the case of securities purchased at a premium, by deducting the product thus obtained from the purchase price, and (ii) in the case of securities purchased at a discount, by adding the product thus obtained to the purchase price. ~he value of Permitted Investments on deposit in the Debt Service Reserve Account shall be determined by the terms and provisions of the Tax Certificate. III-33 Res. No. 39-88 PART I ARTICLE IV MIS CELLANEO~S PROVIS IG~S SECTION 1. MODIFICATION OR AMENDMENT. Except as otherwise provided in the second paragraI/~ hereof, no material modification or amendment of the Resolution, or of any resolution amendatory thereof or supplemental thereto, may be made without the consent in writing of the Holders of two-thirds or more in principal amount of the Bonds then Outstanding~ provided, however, that no modification or amend- ment shall permit a change in the maturity of such Bonds or a reduc- tion in the rate of interest thereon, or affecting the unconditional promise of the City to fix, maintain and collect fees, rentals and other charges for the Combined Public Utility or to pay the interest of and principal on the Bonds, as the same mature or become due, from the Net Revenues of the Combined Public Utility and the Pledged Impact Charges, if any are so pledged, or reduce the percentage of Holders of Bonds required above for such modification or amendments, without the consent of the Holders of all the Bonds. This Resolution may be amended, changed, modified and altered without the consent of the Owners of Bonds, (i) to cure any ambiguity, correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions contained herein, (ii) to provide other changes which will not adversely affect the interest of such Owners, (iii) to implement a Credit Facility, (iv) to maintain the exclusion of interest on the Bonds from gross income for federal income tax purposes, or (v) to secure or maintain a rating on the Bonds. For purposes of this Section 1 of Article IV of Part I, to the extent the Bonds are insured by a Bond Insurance Policy and such Bonds are then rated in as high a rating category in which such Bonds was rated at the time of initial issuance and delivery thereof, by IV-1 Res. No. 39-88 PART I either S&P's or Moody's, then the consent of the Bond Insurer shall constitute the consent of the Holders of the Bonds provided such Bond Insurer is not in default under the Bond Insurance Policy. SECTION 2. SEVERABILITY OF INVALID PROVI~IO~. If any one or more of the covenants, agreements or provisions of the Resolution should be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separate from the remaining covenants, agreements or provisions, and shall in no way affect the validity of any of the other provisions of the Resolution or of the Bonds. SECTION 3. VALIDATION AUTHORIZED. That Herbert W. A. Tniele, as attorney for the City or his successor, shall take appropriate proceedings in the Circuit Court of the Fifteenth Judicial Circuit of Florida in and for Palm Beach County for the val- idation of the Bonds, and the Mayor and City Clerk are hereby autho- rized to sign any pleadings in such proceedings for and on behalf of the City Commission of the City of Delray Beach. SECTION 4. SALE OF BONDS. The Bonds shall be issued and sold at one time or from time to time, in such manner and at such price or prices consistent with the provisions of the Act and the requirements of the Resolution as the City Commission shall hereafter determine by subsequent proceedings. SECTION 5. REPEALER. ~hat all resolutions or riders or parts thereof in conflict herewith are to the extent of such conflict hereby repealed. SECTION 6. BOND INSURER; DEFAULT. Notwithstanding any of the provisions of this Resolution to the contrary, all of the rights IV-2 Res. No. 39-88 P~T I of the Bond Insurer granted herein, shall be null and void if the Bond Insurer is in default under the Bond Insurance Policy. END OF PART I IV-3 Res. No. 39-88 adopted Pursuant to the Provisions of the City charter of the City, O&UTION. This Resolution is as amended and sUpPlemented; the FlOrida ConstitUtion; Chapter 166, FlOrida StatUtes, as amended and Provisions of law. sUPPlemented; and Other aPPlicable and declared: FINDINGs. It is hereby ascertained, determined A. ~at all terms not Otherwise defined in this Section 2 Shall have the meaning ascribed to such terms in Section 3 of this Article 1, Part II. B. That the City has heretofore isSUed and now has out- standing and UnPaid the 1984 BOnds and there is hereby Payment and refunding of the 1984 BOnds. authorized the CommiSsioC~,' That, if by SubseqUent reSOlution of the City the City elects to Pay a~d refund all of the Outstanding 1984 BOnds, the Bonds Shall be subject to the terms and Provisions of Part I of this ReSolution. D. C°mmisSio_ That, if by Subs 0..~ '~, the Cit. equent ~ ~ ucs. tandlng 1984 Bon~y elects to Pay a_~esOlutlOn of the provisions oF ~L us, the BOnd.~ sh ~o refund a ~- E. - ~ue Prior ReSOlu~.- ~all be Subject to ~,~rt of the BOnds, the 7hat, for the Pa clon and Part II of t une terms and ~, City Sha~ ~ Yment and reF ...... his Resolution U~e sale of the B .... '~ Ueposlt a Portion _. ~ulng of the R~ - ' with Other ay-._~us in an escrow ~_ ur the PrOceeds d--. ~Unded '= funds, if an,, ~ust fL~ld, Which ~, and th~ · U°gether = income and earnings Res. No. 39~88 PART II derived from the investment thereof shall be sufficient to pay and refund the Refunded Bonds as the same become due and payable or are redeemed prior to maturity in accordance with the proceedings which authorized their issuance, all as provided in the Escrow Deposit Agreement and a details resolution to be subsequently adopted by the City Commission. F. That the estimated Revenues to be derived in each year hereafter from the operation of the Combined Public Utility will be sufficient at all times to pay all the costs of operation and mainte- nance of the Combined Public Utility, and together with the Pledged Impact Charges, the principal of and interest on the Bonds, as the same become due and payable, and all sinking fund, reserve and other payments provided for in this Resolution in accordance with the requirements of this Resolution. G. That the principal of and interest on the Bonds and all of the reserve, sinking fund and other payments provided for in this Resolution will be paid from the Net Revenues derived from the operation of the Combined Public Utility and the Pledged Impact Charges, in the manner provided herein; and the ad valorem taxing power of the City will never be necessary or authorized to pay the principal of and interest on the Bonds to be issued pursuant to this Resolution, or to make any of the reserve, sinking fund or other pay- ments provided for in this Resolution, and the Bonds issued pursuant to this Resolution shall not constitute a lien upon the Combined Public Utility or upon any other property whatsoever of or in the City but shall be payable solely from the Net Revenues derived from the operation of the Combined Public Utility and the Pledged Impact Charges, in the manner provided herein. H. The proceeds derived from the sale of the Bonds shall be used to finance the cost of paying and refunding the Refunded I-2 Res. No. 39-88 PART II Bonds; such cost shall be deemed to include the costs of issuance of the Bonds, the premium for the Bond Insurance Policy, if any, the initial premium or fee for a Reserve Account Credit Facility Substitute, if any, legal expenses, fees for financial services, the costs associated with the purchase and subsequent management of the U.S. Obligations deposited pursuant to the terms and provisions of the Escrow Deposit Agreement, expenses in connection with the per- formance of the duties of the trustee under the provisions of the Escrow Deposit Agreement and such other costs and expenses necessary and incidental to the refunding of the 1984 Bonds. SECTION 3. DEFINITIONS. That, as used in Part II of this Resolution, any term not otherwise defined shall have the meaning ascribed to such term in the Prior Resolution, and in addition, the following terms shall have the following meanings unless the text otherwise expressly requires: A. "ACCRETED VALUE" shall mean, as of any date of compu- tation with respect to any Capital Appreciation Bond, the amount set forth as of such date in the supplemental resolution authorizing such Capital Appreciation Bond plus, with respect to matters related to the payment upon redemption or acceleration of such Capital Appreciation Bond, if such date of computation shall not be an Interest Payment Date, a portion of the difference between the Accreted Value as of the immediately preceding Interest Payment Date (or the date of original issuance if the date of computation is prior to the first Interest Payment Date succeeding the date of original issuance) and the Accreted Value as of the immediately succeeding Interest Payment Date, calculated based on the assumption that Accreted Value accrues during any semiannual period in equal daily amounts on the basis of a year of twelve 30-day months. I-3 Res. No. 39-88 PA~T II B. "ACT" shall mean the Florida Constitution; the City Charter of the City, as amended and supplemented; Chapter 166, Florida Statutes, as amended and supplemented; and other applicable provisions of law. C. "ANNUAL DEBT SERVICE REQUIREMENT" shall mean, at any time, the amount required to be deposited in the then current Fiscal Year into the Interest Account, Principal Account, and Bond Redemption Account, as provided in this Resolution provided, however, that such amount shall be reduced by any earnings or investment income in the then current Fiscal Year on moneys and investments on deposit in the Debt Service Reserve Account and transferred to the Interest Account, as provided in this Resolution; and provided fur- ther, however, that in computing such Annual Debt Service Requirement for any future period, any Variable Rate Bonds shall be deemed to bear interest at all times to the maturity thereof at a constant rate of interest equal to either the rate borne by such Variable Rate Bonds on the date they were issued plus one-half of the difference between such rate and the maximum interest rate for such Variable Rate Bonds as such maximum interest rate shall be determined by sub- sequent proceedings of the City Commission, or the actual rate of interest borne by such Variable Rate Bonds on such date of calcula- tion, whichever is higher. For the purpose of this definition, the amount to be deposited to the aforementioned accounts with respect to Capital Appreciation Bonds and Capital Appreciation and Income Bonds shall be the amounts set forth in subsequent proceedings of the City Commission. D. "APPRECIATED VALUE" shall mean, (i) as of any date of computation with respect to any Capital Appreciation and Income Bonds up to the Interest Commencement Date set forth in subsequent proceedings of the City Commission providing for the issuance of such I-4 Res. No. 39-88 PART II Bonds, the amount set forth as of such date in the supplemental resolution authorizing such Capital Appreciation and Income Bonds plus, if such date of computation shall not be an Interest Payment Date, a portion of the difference between the Appreciated Value as of the immediately preceding Interest Payment Date (or the date of orig- inal issuance if the date of computation is prior to the first Interest Payment Date succeeding the date of original issuance) and the Appreciated Value as of the immediately succeeding Interest Payment Date calculated based upon an assumption that Appreciated Value accrues during any semiannual period in equal daily amounts on the basis of a year of twelve 30-day months and (ii) as of any date of computation on and after the Interest Commencement Date, the Appreciated Value on the Interest Commencement Date. E. "BOND COUNSEL" shall mean a firm or firms of nation- ally recognized attorneys-at-law selected by the City and experienced in the financing of capital projects for governmental units through the issuance of tax-exempt revenue bonds under the exemption provided under Section 103(a) of the Code. F. "BOND INSURANCE POLICY" shall mean an insurance policy issued for the benefit of the Holders of any Bonds, pursuant to which the Bond Insurer shall be obligated to pay when due the principal of and interest on such Bonds to the extent of any defi- ciency in the amounts in the funds and accounts held under this Resolution, in the manner and in accordance with the terms provided in such Bond Insurance Policy. G. "BOND INSURER" shall mean the issuer of a Bond Insurance Policy and its successors. H. "BONDHOLDER" OR "HOLDER OF BONDS" or any similar term, shall mean any person who shall be the registered owner of any Bond or Bonds Outstanding under the terms of this Resolution. I-5 Res. No. 39-88 I. "BONDS" shall mean the $30,000,000 Water and Sewer Refunding Revenue Bonds authorized to be issued pursuant to this Resolution, together with any pari passu additional bonds hereafter issued in the manner hereinafter provided. J. "1984 BONDS" shall mean the outstanding Water and Sewer Revenue Bonds, Series 1984, of the City of Delray Beach, Florida, dated October 1, 1984, originally issued in the principal amount of $24,860,000. K. "CAPITAL APPRECIATION BONDS" shall mean those Bonds issued under this Resolution as to which interest is compounded peri- odically on each of the applicable periodic dates designated for com- pounding and payable in an amount equal to the then current Accreted Value only at the maturity, earlier redemption or other payment date therefor, all as so designated by subsequent proceedings of the City Commission relating to the issuance thereof, and which may be either Serial Bonds or Term Bonds. L. "CAPITAL APPRECIATION AND INCOME BONDS" shall mean any Bonds issued under this Resolution as to which accruing interest is not paid prior to the Interest Commencement Date specified in the resolution authorizing such Bonds and the Appreciated Value for such Bonds is compounded periodically on certain designated dates prior to the Interest Commencement Date for such Capital Appreciation and Income Bonds, all as so designated by subsequent proceedings of the City Commission relating to the issuance thereof, and which may be either Serial Bonds or Term Bonds. M. "CITY" shall mean the City of Delray Beach, Florida. N. "CITY COMMISSION" shall mean the governing body of the City. O. "CODE" shall mean the Internal Revenue Code of 1986, as amended, and all subsequent tax legislation duly enacted by the I-6 Res. No. 39-88 PART II Congress of the United States. Each reference to a section of the Code herein shall be deemed to include, if applicable, temporary or proposed regulations, revenue rulings and proclamations issued or amended with respect thereto, and any rules and regulations premul- gated under the Internal Revenue Code of 1954, as amended, by the Treasury Department or Internal Revenue Service of the United States. P. "COMBINED PUBLIC UTILITY" shall mean the combined Water System and Sewer System of the City. Q. "CONSULTING ENGINEERS" shall mean the firm of Post, Buckley, Schuh & Jernigan, Inc., or such other qualified engineer or engineering firm at the time retained by the City to perform the acts and carry out the duties provided for such Consulting Engineers in this Resolution. R. "CREDIT FACILITY" shall mean Bond Insurance, surety bond, a letter of credit, line of credit, or such other instrument that would enhance the credit of the Bonds. S. "DEBT SERVICE RESERVE REQUIREMENT" shall mean an amoun~t required to be on deposit in the Debt Service Reserve Account, which amount shall be determined by subsequent proceedings of the City Commission. Such Debt Service Reserve Requirement, with respect to the Bonds issued hereunder, may be satisfied in whole or in part by obtaining a Reserve Account Credit Facility Substitute with the requisite coverage. T. "DEFEASANCE OBLIGATIONS" shall mean to the extent permitted by law and acceptable to the Bond Insurer if the principal of and interest on the Bonds is guaranteed under a Bond Insurance Policy and such Bond Insurer is not in default under such policy or acceptable to the Rating Agency or Agencies then rating the Bonds: I-7 Res. No. 39-88 PART II (a) U. S. Obligations which are not callable prior to maturity except by the holder thereof; (b) any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state (i) which are not callable prior to maturity or as to which irrevocable instructions have been given to the trustee of such bonds or other obligations by the obligor to give due notice of redemption and to call such bonds for redemption on the date or dates specified in such instructions, (ii) which are secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described in clause (a) hereof which fund may be applied only to the pay- ment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the redemption date or dates specified in the irrevocable instruc- tions referred to in subclause (i) of this clause (b), as appropriate, and (iii) as to which the principal of and interest on the bonds and obligations of the char- acter described in clause (a) hereof which have been deposited in such fund along with any cash on deposit in such fund are sufficient to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (b) on the maturity date or dates thereof or on the redemp- tion date or dates specified in the irrevocable I-8 Res. No. 39-88 PART instructions referred to in subclause (i) of this clause (b), as appropriate; and (c) Evidences of ownership of proportionate interests in future interest and principal payments on obligations described in (a) held by a bank or trust company as custodian. U. "ESCROW DEPOSIT AGREEMENT" shall mean the Escrow Deposit Agreement, entered into by and between the City and a bank or trust company or national banking association, as trustee, to be hereafter designated by subsequent proceedings of the City Commission, in connection with the refunding of the Refunded Bonds. V. "FACILITIES" shall mean all the facilities of the Combined Public Utility, and all parts thereof, and any facilities which may hereafter be a part of the Combined Public Utility, or any part thereof, by any additions, betterments, extensions, improvements thereto, or property of any kind or nature, real or personal, tangi- ble or intangible, hereafter constructed or acquired by the City. W. "FISCAL YEAR" shall mean that period commencing on October 1 and continuing to and including the next succeeding September 30, or such other annual period as may be prescribed by 1 aw. X. "INTEREST COMMENCEMENT DATE" sh al 1 mean , with respect to any particular Capital Appreciation and Income Bond, the date specified in the resolution providing for the issuance of such Bonds (which date must be prior to the maturity date for such Bonds) after which interest accruing on such Bonds shall be payable semi- annually, with the first such payment date being the applicable Interest Payment Date immediately succeeding such Interest Commencement Date. I-9 Res. No. 39-88 PART II Y. "INTEREST PAYMENT DATE" shall mean such dates of each Fiscal Year on which interest on the Bonds is payable on Bonds (other than Capital Appreciation Bonds and Capital Appreciation and Income Bonds prior to the applicable Interest Commencement Date) that are then Outstanding and the date the principal of a Bond is to be paid. Z. "MAXIMUM ANNUAL DEBT SERVICE REQUIREMENT" shall mean, at any time, the maximum amount required to be deposited in the then current or any succeeding Fiscal Year into the Interest Account, Principal Account and Bond Redemption Account, as provided in this Resolution. The amount of Term Bonds maturing in any Fiscal Year which are subject to mandatory redemption prior to their stated date of maturity by operation of the Bond Redemption Account shall not be included in determining the Maximum Annual Debt Service Requirement in their final Fiscal Year of maturity. AA. MOODY'S shall mean Moody' s Investors Service, Inc., a corporation organized and existing under the law of the State of Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the func- tions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. BB. "NET REVENUES" shall mean the Gross Revenues remain- ing after deduction of Operating Expenses and shall also include Special Assessments which the City Commission may elect, by subse- quent proceedings, to pledge for the payment of principal of and interest on any series of Bonds. CC. "OPERATING EXPENSES" shall mean the expenses of operation, maintenance and ordinary repairs of the Combined Public Utility and its Facilities and shall include, without limiting the 1-10 Res. No. 39-88 PART II generality of the foregoing, insurance premiums, administrative expenses of the City relating solely to the Combined Public Utility, and such other reasonable expenses as shall be in accordance with generally accepted accounting principles. "Operating Expenses" shall not include any allowance for depreciation or any extraordinary items arising from the early extinguishment of debt. DD. "OU~TANDING" shall mean, when used with reference to the Bonds, as of any particular date, all Bonds theretofore, or thereupon being, authenticated and delivered by the Registrar under this Resolution, except (i) Bonds theretofore or thereupon cancelled by the Registrar or surrendered to the Registrar for cancellation; (ii) Bonds with respect to which all liability of the City shall have been discharged in accordance with Article III, Section 4.R of the Prior Resolution; (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Registrar pursuant to any provision of this Resolution; (iv) Bonds cancelled after purchase in the open market or because of payment at, or redemption prior to maturity; and (v) Bonds held or purchased by the City. EE. "PAYING AGENT" shall mean the bank or trust company and any successor bank or trust company appointed by the City to act as Paying Agent hereunder. FF. "PERMITTED INVESTMENt" shall mean (i) to the extent permitted by law U.S. Obligations and (ii) all other invest- ments permitted under the laws of Florida and acceptable to the Bond Insurer, if any. GG. "PLEDGED IMPACT CHARGES" shall mean the charges that may be imposed by the City on new users connecting to the Combined Public Utility which would represent a pro rata share of the costs of a Project which are attributable to the increased demand 1-11 Res. No. 39-88 PART II such additional connections create upon the Combined Public Utility, which Project has been financed with the proceeds of the Bonds, and which charges the City has pledged to payment of the principal of and interest on the Bonds. Pledged Impact Charges, however, shall not include the installation charges imposed by the City for the cost of physically connecting into the City's Combined Public Utility (including but not limited to the cost of excavation, plumbing, installation of meters and landscaping). HH. "PROJECT" shall mean any additions, extensions and improvements to the Combined Public Utility of the City. II. "RATING AGENCY" OR "AGENCIES" shall mean Moody's and/or S&P, whichever shall have a rating then in effect with respect to the Bonds. JJ. "REFUNDED BONDS" shall mean all or a portion of the outstanding 1984 Bonds that the City determines to refund pursuant to subsequent proceedings of the City Commission. KK. "REGISTRAR" "shall mean the bank or trust company and any successor bank or trust company appointed by the City to act as Registrar hereunder. LL. "RESOLUTION" shall mean this Water and Sewer Refunding Revenue Bond Resolution, as from time to time may be amended and supplemented in accordance with the terms hereof. MM. "RESERVE ACCOUNT CREDIT FACILITY SUBSTITUTE" shall mean any one of the facilities described in Section 4.D.4 of Article III of the Prior Resolution. NN. "REVENUES" OR "GROSS REVENUES" sh al 1 mean all rates, fees, charges, or other income, received by the City or any agency thereof in control of the management and operation of the Combined Public Utility, and all parts thereof, from the operation of the Combined Public Utility and shall also include the earnings and 1-12 Res. No. 39-88 PART II investment income derived from the investment of moneys on deposit in the various funds and accounts created and established by this Resolution, which by the terms and provisions of this Resolution are required to be deposited in the Revenue Fund and the Interest Account, provided, however, that Revenues shall not include (1) Pledged Impact Charges (2) Unpledged Impact fharges (3) Special Assessments and (4) capital contributions. OO. "S&P" shall mean Standard & Poor's Corporation, a corporation organized and existing under the laws of the State of New York, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the func- tions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized securities rating agency desig- nated by the City. PP. "SERIAL BONDS" shall mean the Bonds of an issue other than Term Bonds which shall be stated to mature annually. QQ. "SEWER SYSTEM" shall mean the complete sanitary sewer collection and transmission facility, any interests the City may have in the Ocean Outfall System, and the City's one-half (1/2) undivided interest in the treatment and disposal system and property operated by the South Central Regional Wastewater Treatment and Disposal Board (the "Board") as they now exist and as may hereafter be improved and extended consisting of all real and personal property of every nature owned by the City and used or useful in the operation thereof whether within or without the City, except that the Sewer System shall not include the Ocean Outfall System after the date on which the City' shall have received payments from the Board for the use of the Ocean Outfall System totalling $1,155,646 in accordance with the terms of the Ocean Outfall Agreement dated July 12, 1979 among the City, the Board and the City of Boynton Beach, Florida. 1-13 Res. No. 39-88 PART II RR. "SPECIAL ASSESSMENt" shall mean, for each series of Bonds additionally secured by Special Assessments, all proceeds derived by thee City from the special assessments levied against the real property specially benefitted by the acquisition and construc- tion of a Project financed by such series of Bonds, including inter- est collected on such special assessments and any penalties or moneys received upon foreclosure of the liens of such special assessments. SS. "TAX CERTIFICATE" shall mean the Tax Certificate as to Arbitrage and Instructions as to Compliance with provisions of Section 103(a) of the Internal Revenue Code of 1986, executed by the City on the date of initial issuance and delivery of the Bonds,. as such Tax Certificate may be amended from time to time, and which serves as a source of guidance for achieving compliance with the Code. TT. "TERM BONDS" shall mean the Bonds of an issue which shall be stated to mature on one date and for the amortization of which mandatory payments are required to be made into the Bond Redemption Account in the Sinking Fund. UU. "UNPLEDGED IMPACT CHARGES" shall mean the charges that may be imposed by the City on new users connecting to the Combined Public Utility which would represent a pro rata share of the costs of any Project which are attributable to the increased demand such additional connections created upon the Combined Public Utility, which Project may or may not be financed with the proceeds of the Bonds, but in any event, such charges are not pledged to the payment of the Bonds. Unpledged Impact Charges, however, shall not include the installation charges imposed by the City for the cost of physi- cally connecting into the City's Combined Public Utility (including but not limited to the cost of excavation, plumbing, installation of meters and landscaping). 1-14 Res. No. 39-88 PART II VV. "U. S. OBLIGATIONS" sh al 1 mean th e di r ect obligations of, or obligations on which the timely payment of princi- pal and interest are unconditionally guaranteed by the United States of America, and, if determined by subsequent proceedings of the City Commission, certificates which evidence ownership of the right to the payment of the principal of, or interest on, such obligations. WW. "VARIABLE RATE BONDS" shall mean Bonds issued with a variable, adjustable, convertible or other similar rate which is not fixed in percentage for the entire term thereof at the date of issue. XX. "WATER SYSTEM" shall mean the complete waterworks plant and system, within and without the City, now owned by the City, or hereafter constructed or acquired, including all improvements, extensions, and additions thereto hereafter constructed or acquired, together with all lands or interest therein, plants, buildings, machinery, franchises, pipes, fixtures, equipment and all property, real or personal, tangible or intangible, now or hereafter c~ned or used by the City in connection therewith. Words importing the singular number shall include the plural number in each case and vice versa, and words importing per- sons shall include firms and corporations. SECTION 4. RESOLUTION CONSTITUTES CON~ACT. In considera- tion of the acceptance of the Bonds authorized to be issued hereunder by those who shall hold the same from time to time, this Resolution shall be deemed to be and shall constitute a contract between the City and such Bondholders, and the covenants and agreements herein set forth to be performed by the City shall be for the equal benefit, protection and security of the Holders of any and all of such Bonds, all of which shall be of equal rank and without preference, priority, 1-15 Res. No. 39-88 PAR? II or distinction of any of the Bonds over any other thereof except as expressly provided therein and herein. 1-16 Res. No. 39-88 PART II ARTICLE II AUTHORIZATION, TERNS, EXECUTION AND REGISTRATION OF SECTION 1. AUTHORIZATION OF BGHI~. Subject and pursuant to the provisions of the Prior Resolution, particularly Article III, Section 4.G., regarding the issuance of pari passu additional Bonds and Part II of this Resolution, obligations of the City to be known as "Water and Sewer Refunding Revenue Bonds" are hereby authorized to be issued in the aggregate principal amount of not exceeding THIRTY MILLION DOLLARS ($30,000,000) for the purpose provided in Article I, Section 2.H. of Part II of this Resolution. ~he Bonds authorized by this Resolution may be issued all at one time or in part, from time to time, as the City Commission may in its discretion hereafter determine by subsequent resolution. SECTION 2. DESCRIPTION OF B(l~S. ~he Bonds shall be issued in registered form, shall be in the denomination of $5,000 each, or any integral multiple thereof, provided, however, (i) if such Bonds a=e Capital Appreciation Bonds then in $5,000 maturity amounts or in $5,000 multiples thereof and (ii) Capital Appreciation and Income Bonds, which may be issued in any denomination, as long as their Appreciated Value at maturity shall be $5,000 or any integral multi- ple thereof; and shall mature on such dates in such years and in such amounts, all as provided by subsequent proceedings of the City Commission. Principal shall be payable at the principal corporate trust office of the Paying Agent. such manner as may be prescribed by the Registrar. ~he Bonds shall bear interest at not exceeding the maximum rate or rates permitted by law, payable by check or draft made payable to the Holder of Bonds and mailed to the address of such Holder of Bonds, as such name and address shall appear on the registration books of the City maintained II-1 Res. No. 39-88 PART II by the Registrar at the close of business on the fifteenth day of the calendar month preceding each Interest Payment Date; provided, how- ever, that if such 15th day is a Saturday, Sunday or holiday, then to the registered Holder and at the registered address shown on the reg- istration books of the City maintained by the Registrar at the close of business on the day next preceding such 15th day of the month which is not a Saturday, Sunday or holiday (herein the "Record Date"); provided, however, that payment of interest on the Bonds may, at the option of any Holder of Bonds in an aggregate principal amount of at least $1,000,000 be transmitted by wire transfer to the Holder to the bank account number on file with the Paying Agent as of the Record Date, except for (i) Capital Appreciation Bonds which shall bear interest as described under the defined term Accreted Value, payable only upon redemption or maturity thereof and (ii) Capital Appreciation and Income Bonds which shall bear interest as described under the defined term Appreciated Value, such interest payable on the principal amount due at maturity but only from and after the Interest Commencement Date. ~ne Bonds authenticated prior to the first Interest Payment Date shall be dated and bear interest from the date determined by subsequent proceedings of the City. Bonds authen- ticated subsequent to the first Interest Payment Date shall bear interest from the next preceding Interest Payment Date on which such interest has been paid, unless such Bond is registered on an Interest Payment Date or during the 15-day period preceding an Interest Payment Date, then from such Interest Payment Date if interest is then paid, as the case may be; provided, however, that if and to the extent there is a default in the payment of the interest due on such Interest Payment Date, such defaulted interest shall be paid to the persons in whose name Bonds are registered on the registration books of the City maintained by the Registrar at the close of business on II-2 Res. No. 39-88 PART II the fifteenth day prior to a subsequent Interest Payment Date established by notice mailed by the Registrar to the registered owner not less than the tenth day preceding such subsequent Interest Payment Date, such interest shall be payable semiannually on April 1 and October 1 of each year, except that (i) interest on any Capital Appreciation Bonds shall be paid only at maturity or upon redemption prior to maturity in the amount determined by reference to the Accreted Value, and (ii) interest on a Capital Appreciation and Income Bond shall be payable semiannually on April 1 and October 1 of each year only after the Interest Commencement Date. The Bonds shall be payable, with respect to interest, prin- cipal and premium, if any, in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts; The Bonds issued hereunder may be Serial Bonds or Term Bonds and such Term Bonds may be Variable Rate Bonds, and such Bonds issued hereunder may be Capital Appreciation Bonds and Capital Appreciation and Income Bonds as determined by subsequent proceedings of the City Commission. ~he payment of principal of and interest on the Bonds may, in addition to the Net Revenues and Pledged Impact Charges, be secured by Bond Insurance or other Credit Facility, all as shall be determined by subsequent proceedings of the City Commission. SECTION 3. REDEMPTION PROVISIONS. 5he Bonds may be subject to redemption prior to maturity at such times, at such redemption prices and upon such terms as shall be determined by subsequent pro- ceedings of the City Commission. SECTION 4. EXECUTION OF BONI~. ~he Bonds shall be executed in the name of the City by the signature of the Mayor and its official seal shall be affixed thereto or imprinted or reproduced II-3 Res. No. 39-88 PART II thereon and attested by the City Clerk. ~he signatures of said Mayor and Clerk on the Bonds may be manual or facsimile signatures. In case any one or more of the officers who shall have signed or sealed any of the Bonds shall cease to be such officer of the City before the Bonds so signed and sealed shall have been actually sold and delivered, such Bonds may nevertheless be sold and delivered as herein provided and may be issued as if the person who signed or sealed such Bonds had not ceased to hold such office. Any Bond may be signed and sealed on behalf of the City by such person who at hhe actual time of the execution of such Bond shall hold the proper office, although at the date such Bonds shall be actually delivered such person may not have held such office or may not have been so authorized. The Bonds shall bear thereon a certificate of authentica- tion, in the form set forth in Section 8 of this Article, executed manually by the Registrar. Only such Bonds as shall bear thereon such certificate of authentication shall be entitled to any right or benefit under this Resolution and no Bond shall be valid or obliga- tory for any purpose until such certificate of authentication shall have been duly executed by the Registrar. Such certificate of the Registrar upon any Bond executed on behalf of the City shall be con- clusive evidence that the Bond so authenticated has been duly authen- ticated and delivered under this Resolution and that the Holder thereof is entitled to the benefits of this Resolution. The validation certificate on the Bonds shall be signed with the facsimile signatures of the present or any future Mayor and Clerk, as aforesaid, and the City may adopt and use for that purpose the facsimile signature of any person who shall have been such Mayor and Clerk at any time on or after the date of the Bonds, II-4 Res. No. 39-88 PART 'ri notwithstanding that he may have ceased to be such Mayor or Clerk at the time when said Bonds shall be actually delivered. SECTION 5. NEGOTIABILITY, R~GIS~RATION AND CANC~Z.%TION. At the option of the registered Holder thereof and upon surrender thereof at the principal corporate trust office of the Registrar with a written instrument of transfer satisfactory to the Registrar duly executed by the registered Holder or his duly authorized attorney and upon payment by such Holder of any charges which the Registrar may make as provided in this Section, the Bonds may be exchanged for Bonds of the same series, interest rate and maturity of any other authorized denominations. The Registrar shall keep books for the registration of Bonds and for the registration of transfers of Bonds. The Bonds shall be transferable by the Holder thereof in person or by his attorney duly authorized in writing only upon the books of the City kept by the Registrar and only upon surrender thereof together with a written instrument of transfer satisfactory to the Registrar duly executed by the Holder or his duly authorized attorney. Upon the transfer of any such Bond, the City shall issue in the name of the transferee a new Bond or Bonds. The City, the Paying Agent and the Registrar may deem and treat the person in whose name any Bond shall be registered upon the books kept by the Registrar as the absolute Holder of such Bond, whether such Bond shall be overdue or not, for the purpose of receiv- ing payment of, or on account of, the principal of and interest on such Bond as the same become due and for all other purposes. All such payments 'so made to any such Holder or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the City, II-5 Res. No. 39-88 PART II the Paying Agent nor the Registrar shall be affected by any notice to the contrary. In all cases in which the privilege of exchanging Bonds or transferring Bonds is exercised, the City shall execute and the Registrar shall authenticate and deliver Bonds in accordance with the provisions of this Resolution. All Bonds surrendered in any such exchanges or transfers shall forthwith be delivered to the Registrar and cancelled by the Registrar in the manner provided in this Section. ]here shall be no charge for any such exchange or transfer of Bonds, but the City or the Registrar may require the payment of a sum sufficient to pay any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer. Neither the City nor the Registrar shall be required (a) to transfer or exchange Bonds for a period of 15 days next preceding an interest payment date on such Bonds or 15 days next preceding any selection of Bonds to be redeemed or thereafter until after the mailing of any notice of redemption; or (b) to transfer or exchange any Bonds called for redemption. However, if less than all of a Term Bond is redeemed or defeased, the City shall execute and the Registrar shall authenti- cate and deliver, upon the surrender of such Term Bond, without charge to the Bondholder, for the unpaid balance of the principal amount of such Term Bond so surrendered, a registered Term Bond in the appropriate denomination and interest rate. All Bonds paid or redeemed, either at or before maturity shall be delivered to the Registrar when such payment or redemption is made, and such Bonds, together with all Bonds purchased by the City, shall thereupon be promptly cancelled. Bonds so cancelled may at any time be destroyed by the Registrar, who shall execute a cer- tificate of destruction in duplicate by the signature of one of its authorized officers describing the Bonds so destroyed, and one II-6 Res. No. 39-88 PART II executed certificate shall be filed with the City and the other executed certificate shall be retained by the Registrar. SECTION 6. BOND~ MUTILATED, DES~OYED, S~EN CR L~T. In case any Bond shall become mutilated, destroyed, stolen or lost, the City may execute and the Registrar shall authenticate and deliver a new Bond of like date, maturity, denomination and interest rate as the Bond so mutilated, destroyed, stolen or lost; provided that, in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the City and, in the case of any lost, stolen or destroyed Bond, there shall first be furnished to the City and the Registrar evidence of such loss, theft, or destruction satisfactory to the City and the Registrar, together with indemnity satisfactory to them. In the event any such Bond shall be about to mature or have matured or have been called for redemption, instead of issuing a duplicate Bond, the City may pay the same without surrender thereof. ~he City and the Registrar may charge the Holder of such Bond their reasonable fees and expenses in connection with this transaction. Any Bond surrendered for replacement shall be cancelled in the same manner as provided in Section 5 of this Article. Any such duplicate Bonds issued pursuant to this Section shall constitute additional contractual obligations on the part of the City, whether or not the lost, stolen or destroyed Bonds be at any time found by anyone, and such duplicate Bonds shall be entitled to equal and proportionate benefits and rights as to lien on and source and security for payment from the Net Revenues derived from the operation of the Combined Public Utility and the Pledged Impact Charges with all other Bonds issued hereunder. SECTION 7. PREPARATION OF DEFINITIVE BONDS; TEMPORARY BONDS. ~he definitive Bonds shall be lithographed or printed on steel engraved borders. Until the definitive Bonds are prepared, the Mayor II-7 Res. No. 39-88 PAI~T II and the City Clerk may execute and the Registrar may authenticate, in the same manner as is provided in Section 4 of this Article II, and deliver, in lieu of definitive Bonds, but subject to the same provi- sions, limitations and conditions as the definitive Bonds, one or more printed, lithographed or typewritten temporary fully registered Bonds, substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued, in authorized denomi- nations or any integral multiple thereof, and with such omissions, insertions and variations as may be appropriate to such temporary Bonds. ~he City, at its own expense, shall prepare and execute and, upon the surrender at the corporate trust office of the Registrar of such temporary Bonds for which no payment or only partial payment has been provided, for exchange and the cancellation of such surrender temporary Bonds, the Registrar shall authenticate and, without charge to the Holder thereof, deliver in exchange therefor, at the principal corporate trust office of the Registrar, definitive Bonds of the same aggregate principal amount, interest rate and maturity as the tempo- rary Bonds surrendered. Until so exchanged, the temporary Bonds shall in all respects be entitled to the same benefits and security as definitive Bonds issued pursuant to this Resolution. SECTION 8. FORM OF BOND~. ~he text of the Bonds shall be of substantially the following tenor, with such omissions, insertions and variations as may be necessary and desirable: II-8 Res. No. 39-88 P~T II (Form of Bond)* * The text of the Bonds shall be of substantially the tenor set forth below. Provisions of the Bonds may be set forth on the back of the Bonds and shall for all purposes have the same effect as if set forth on the front of the Bonds. (Face of Bond with certain provisions applicable to a Capital Appreciation Bond or a Capital Appreciation and Income Bond as indicated) No. R $5,000 UNITED STATES OF AMERICA STATE OF FLORIDA PALM BEACH COUNTY CITY OF DELRAY BEACH WATER AND SEWER REFUNDING REVENUE BOND S ER IES Interest Maturity Dated Rate Date Date CUSIP Registered Owner: Principal Amount: KNOW ALL MEN BY THESE PRESENt, that the City of Delray Beach, Palm Beach County, Florida (the "City"), for value received, hereby promises to pay, from the Net Revenues and Pledged Impact Charges hereinafter mentioned, to the Registered Owner or registered assigns on the Maturity Date specified above, upon the presentation and surrender hereof at the principal corporate trust office of , as paying agent (said and any bank II-9 Res. No. 39-88 PART II or trust company becoming successor paying agent being herein called the "Paying Agent"), the Principal Amount stated hereon with interest thereon at the Interest Rate stated above, payable on the first day of and of each year until the City's obligation with respect to the payment of such Principal Amount shall be discharged. Interest on this Bond is payable by check or draft of the Paying Agent made payable to the registered owner and mailed to the address of the registered owner as such name and address shall appear on the registration books of the City maintained by , as Registrar (said , and any succes- sor Registrar being herein called the "Registrar") at the close of business on the fifteenth day of the calendar month preceding each interest payment date or the date on which the principal of a Bond is to be paid; provided, however, that if such fifteenth day is a Saturday, Sunday or holiday, then to the registered owner and at the registered address shown on the registration books of the City main- tained by the Registrar at the close of business on the day next pre- ceding such fifteenth day of the month which is not a Saturday, Sunday or holiday (the "Record Date"); provided further, however, that payment of interest on the Bonds may, at the option of any Holder of Bonds in an aggregate principal amount of at least $1,000,000, be transmitted by wire transfer to the Holder to the bank account number on file with the Paying Agent as of the Record Date. Such interest shall be payable from the most recent interest payment date next preceding the date hereof to which interest has been paid, unless the date hereof is an 1 or 1 to which inter- est has been paid, in which case from the date hereof, or unless the date hereof is prior to , 19__, in which case from , 19 , or unless the date hereof is between a Record Date and the next succeeding interest payment date, in which case from II-10 Res. No. 39-88 PART such interest payment date; provided, however, that if and to the extent there is a default in the payment of the interest due on such interest payment date, such defaulted interest shall be paid to the persons in whose name Bonds are registered on the registration books of the City maintained by the Registrar at the close of business on the fifteenth day prior to a subsequent interest payment date estab- lished by notice mailed by the Registrar to the registered owner not less than the tenth day preceding such subsequent interest payment date. ~he Principal Amount and accrued interest thereon is payable in any coin or currency of the United States of America, which, on the date of payment thereof, shall be legal tender for the payment of public and private debts. II-11 Res. No. 39-88 PART II [Tne following is applicable to Capital Appreciation Bonds only] No. UNITED STATES OF AMERICA STATE OF FLORIDA PALM B EACH COUNTY CITY OF DELRAY BEACH WATER AND SEWER REFUNDING REVENUE BONDS S ERIES Interest Maturity Dated Rate Da te Da te CUSIP Regi stet ed Owner: Principal Amount: $__ per $5,000 Amount Due at Matur i ty Amount Due at Maturity: KNOW ALL MEN BY THESE PRESENt, that the City of Delray Beach, Palm Beach County, Florida, (the "City"), for value received, hereby promises to pay from the Net Revenues and Pledged Impact Charges hereinafter mentioned, to the Registered Owner or registered assigns on the Maturity Date specified above, upon presentation and surrender hereof at the principal corporate trust office of , as paying agent (said and any bank or trust company to become successor paying agent being herein called the "Paying Agent"), the Amount Due at Maturity (stated above), con- stituting the Principal Amount per $5,000 Amount Due at Maturity (stated above) and interest thereon at the Interest Rate (stated above) from the Dated Date (stated above) compounded on and thereafter on and . , of each year until payment of said maturity amount or upon earlier redemption, as set forth on the reverse side hereof, payment to be made at the Accreted Value as of II-12 Res. No. 39-88 PART II the date of redemption or other date of payment. ~he "Accreted Value" of this Bond shall mean, as of any date of computation, an amount equal to the principal amount hereof plus the compounded interest accrued hereon to the 1 or 1 next pre- ceding the date of computation or the date of computation if a 1 or 1, plus, if such date of computation shall not be a 1 or 1, a portion of the difference between the Accreted Value as of the immediately preceding 1 or 1 (or the Dated Date if the date of compu- tation is prior to ., 19 ) and the Accreted Value as of the immediately succeeding 1 or 1, calculated based upon the assumption that Accreted Value accrues during any semi-annual period in equal daily amounts on the basis of a year of twelve 30-day months. The Accreted Value per $5,000 maturity amount of this Bond on each 1 or 1 is set forth in a table on the reverse hereof. 9he table should not be construed as a representation as to the market value of this Bond at any time in the future but may bear a relationship to the amount of tax-exempt inter- est and taxable gain with respect to this Bond if sold prior to maturity. II-13 Res. No. 39-88 PART I! [~ne following is applicable to Capital Appreciation and Income Bonds only] NO. $ UNITED STATES OF AMERICA STATE OF FLORIDA PALM BEACH COUNTY CITY OF DELRAY BEACH WATER AND SEWER REFUNDING REVENUE BONDS S ER IES IN TERES T MA~3R I TY DATED RATE DATE DATE CUS I P REG IS TERED OWNER: PRINCIPAL AMOUNT: $__ PER $5,000 AMOUNT DUE AT MA~3RITY AMOUNT DUE AT MATURITY: KNOW ALL MEN BY THESE PRESENt, that the City of Delray Beach, Palm Beach County, Florida, (the "City"), for value received, hereby promises to pay from the Net Revenues and Pledged Impact Charges hereinafter mentioned, to the Registered Owner or registered assigns on the Maturity Date specified above, upon presentation and surrender hereof at the principal corporate trust office of , as paying agent (said and any bank or trust company to become successor paying agent being herein called the "Paying Agent"), the Amount Due at Maturity (stated above), con- stituting the Principal Amount (stated above) per $5,000 Amount Due at Maturity and interest thereon at the Interest Rate (stated above) from the Dated Date (stated above), compounded on each 1 and 1 during the period from the Dated Date (stated above) to , (the "Interest Commencement Date"). ~he City further promises to pay to the Registered Owner hereof by check or II-14 Res. No. 39-88 P~T II draft of the Paying Agent made payable to the registered owner and, mailed to such registered owner at the address shown on the registra- tion books of the City kept for that purpose at the principal corpo- rate trust office of , as Registrar (said and any successor Registrar being herein called the "Registrar") as of the fifteenth day of the month preceding such interest payment date, interest on the Amount Due at Maturity from the Interest Commencement Date, at the rate per annum equal to the Interest Rate (stated above), payable on the first days of and in each year (commencing 1, ), until the City's obliga- tion with respect to the payment of such Amount Due at Maturity shall be discharged. Upon earlier redemption or other payment prior to the Interest Commencement Date, as set forth on the reverse hereof, pay- ment shall be made at the Appreciated Value as of the date of redemp- tion or other payment of this Bond. ~e "Appreciated Value" of this Bond shall mean (i) as of any date of computation up to and includ- ing, 1, , an amount equal to the Principal Amount hereof plus the interest accrued thereon to the 1 or 1 next preceding the date of computation or the date of computation if a 1 or 1, plus, if such date of computation shall not be a 1 or 1, a portion of the difference between the Appreciated Value as of the immediately preceding 1 or 1 (or the Dated Date if the date of computation is prior to 1, 19 ) and the Appreciated Value as of the immediately succeeding 1 or 1, calculated based upon an assumption that Appreciated Value accrues during any semi-annual period in equal daily amounts on the basis of a year of twelve 30-day months, and (ii) after the Interest Commencement Date, the Appreciated Value at the Interest Commencement Date. Tne Appreciated Value per $5,000 Amount Due at Maturity of II-15 Res. No. 39-88 PART this Bond on each 1 and 1 is set forth in a table on the reverse hereof. Upon redemption or other payment subse- quent to the Interest Commencement Date and prior to the Maturity Date in accordance with the provisions set forth on the reverse hereof, payment of this Bond shall be made in an amount equal to the Amount Due at Maturity plus any applicable premium plus accrued and unpaid interest on such Amount Due at Maturity. The following is applicable to all Bonds This Bond is one of an authorized issue of Bonds of the City designated as its Water and Sewer Refunding Revenue Bonds, Series (herein called the "Bonds"), in the aggregate principal amount of $ of like date, tenor, and effect, except as to number, date of maturity and interest rate, issued for the purpose of paying the cost of refunding the Refunded Bonds (as defined in the Resolution hereinafter referred to) under the authority of and in full compliance with the Constitution, the City Charter, as amended and supplemented, and Statutes of the State of Florida, including particularly Chapter 166, Florida Statutes, as amended and supple- mented and other applicable provisions of law, and a resolution duly adopted by the City Commission on , 1988, as amended (herein referred to as the "Resolution"), and is subject to all the terms and conditions of the Resolution. ~his Bond is payable from and secured by a lien upon and pledge of the Net Revenues, as defined in the Resolution, derived from the operation of the City's Combined Public Utility, as defined in the Resolution, and the Pledged Impact Charges, as defined in the Resolution, all in the manner provided in the Resolution. ~e full faith and credit of the City is not pledged for the payment of this II-16 Res. No. 39-88 PART II Bond and this Bond does not constitute an indebtedness of the City within the meaning of any Constitutional, statutory or other provi- sion or limitation; and it is expressly agreed by the Holder of this Bond that such Holder shall never have the right to require or compel the exercise of the ad valorem taxing power of the City for the pay- ment of the principal of and interest on this Bond or the making of any sinking fund or reserve payments provided for in the Resolution. It is further agreed between the City and the Holder of this Bond that this Bond and the obligation evidenced thereby shall not constitute a lien upon the City's Combined Public Utility, 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 City's Combined Public Utility and the Pledged Impact fharges, all in the manner provided in the Resolution. The City has covenanted in the Resolution that in each Fiscal Year it will fix, establish and maintain such rates and col- lect such fees, rentals or other charges for the services and facili- ties of its Combined Public Utility and revise the same from time to time whenever necessary, as will always provide in each Fiscal Year, Net Revenues which together with the Pledged Impact fharges received in such Fiscal Year, shall be adequate to pay at least one hundred and twenty-five percent (125%) of the Annual Debt Service Requirement (as defined in the Resolution) for the Bonds and any pari passu addi- tional Bonds hereafter issued, provided that Net Revenues received in such Fiscal Year shall at all times be adequate to pay at least one hundred ten percent (110%) of the Annual Debt Service Requirement for the Bonds and-any pari passu additional Bonds hereafter issued; and that such Net Revenues together with the Pledged Impact Charges shall be sufficient to make all of the payments required by the terms of II-17 Res. No. 39-88 the Resolution and that such rates, fees, rentals or other charges shall not be so reduced so as to be insufficient for such purposes. ~ne original registered owner, and each successive regis- tered owner of this Bond shall be conclusively deemed to have agreed and consented to the following terms and conditions: (1) The Registrar shall maintain the books of the City for the registration of Bonds and for the registration of transfers of Bonds as provided in the Resolution. ~he Bonds shall be transferable by the registered owner thereof in person or by his attorney duly authorized in writing only upon the books of the City maintained by the Registrar and only upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or his duly authorized attorney. Upon the transfer of any such Bond, the City shall issue in the name of the transferee a new Bond or Bonds. (2) The City, the Paying Agent and the Registrar may deem and treat the person in whose name any Bond shall be registered upon the books kept by the Registrar as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiv- ing payment of, or on account of, the principal of and interest on such Bond as the same becomes due, and for all other purposes. All such payments so made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the City, the Paying Agent, nor the Registrar shall be affected by any notice to the contrary. II-18 Res. No. 39-88 PART II (3) At the option of the registered owner thereof and upon surrender hereof at the principal corporate trust office of the Registrar with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or his duly autho- rized attorney and upon payment by such registered owner of any charges which the Registrar or the City may make as provided in the Resolution, the Bonds may be exchanged for Bonds of the same interest rate and maturity of any other authorized denominations. (4) In all cases in which the privilege of exchanging Bonds or transferring Bonds is exercised, the City shall execute and the Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Resolution. ~here shall be no charge for any such exchange or transfer of Bonds, but the City or the Registrar may require payment of a sum sufficient to pay any tax, fee or other gov- ernmental charge required to be paid with respect to such exchange or transfer. Neither the City nor the Registrar shall be required (a) to transfer or exchange Bonds for a period of 15 days next preceding an interest payment date on such Bonds or 15 days next preceding any selection of Bonds to be redeemed or thereafter until after the mail- ing of any notice of redemption; or (b) to transfer or exchange any Bonds called for redemption. However, if less than all of a Bond is redeemed or defeased, the City shall execute and the Registrar shall authenticate and deliver, upon the surrender of such Bond, without charge to the Bondholder, for the unpaid balance of the principal amount of such Bond so surrendered, a registered Bond in the appro- priate denomination and interest rate. ~nis Bond shall not be valid or obligatory for any purpose until the certificate of authentication set forth hereon shall have been duly executed by the Registrar. II-19 Res. No. 39-88 PART I~' 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 appli- cable thereto, and that the issuance of this Bond, and of the issue of Bonds of which this Bond is one, is in full compliance with all constitutional or statutory limitations or provisions. II-20 Res. No. 39-88 PART IN WITNESS WHEREOF the City of Delray Beach, Florida, has issued this Bond and has caused the same to be executed by the manual or facsimile signature of its Mayor and the corporate seal of the City to be affixed hereto or lithographed or imprinted or reproduced hereon, and attested by the manual or facsimile signature of the City Clerk of the City, all as of the Dated Date. CITY OF DELRAY BEACH, FLORIDA By Mayor (SEAL) Attest: City Clerk (FORM OF CERTIFICATE OF AUTHENTICATION) Date of Authentication: This Bond is one of the Bonds delivered pursuant to the wi thin mentioned Resolution. as Registrar By. Authorized Officer II-21 Res. No. 39-88 PART II (FORM OF VALIDATION CERTIFICATE) This Bond is one of a series of Bonds which were validated by judgment of the Circuit Court of Palm Beach County, Florida, rendered on the day of , 198_. Mayor City Clerk II-22 Res. No. 39-88 P~T [For Capital Appreciation Bonds only] ACCRETED VALUE PER $5,000 MA~3RITY AMOUNT Accreted Accreted Da te Va,.1 ue Da te Value II-23 Res. No. 39-88 ~AR? II [For Capital ApPreciation and Income Bonds only] APPRECIATED VALUE PER $5,000 MATURITY AMOUNT Qat9 Appreciated Appreciated Va~ Date Value II-24 Res. No. 39-88 P~T II [The following paragraph is applicable to Capital Appreciation Bonds only] ~ne Capital Appreciation Bonds, of which this Bond is one, pay principal and compound accrued interest only at maturity or upon prior redemption or acceleration. For the purposes of (i) receiving payment of the redemption price if a Capital Appreciation Bond is redeemed prior to maturity, or (ii) computing the amount of Bonds held by the registered owner of a Capital Appreciation Bond in giving to the City any notice, consent, request, or demand pursuant to the Resolution for any purpose whatsoever, or (iii) computing the amount of Bonds to be redeemed and the selection of Bonds to be redeemed, the principal amount of a Capital Appreciation Bond shall be deemed to be its Accreted Value. [Tne following paragraph is applicable only to Capital Appreciation and Income Bonds] For the purposes of (i) receiving payment of the redemption price if a Capital Appreciation and Income Bond is redeemed prior to maturity, or (ii) computing the amount of Bonds held by the regis- tered owner of a Capital Appreciation and Income Bond in giving to the City any notice, consent, request or demand pursuant to the Resolution for any purpose whatsoever, the principal amount of a Capital Appreciation and Income Bond shall be deemed to be its Appreciated Value. II-25 Res. No. 39-88 P~T II ASS IGNMENT AND TRANSFER FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto (please print or typewrite name and address of transferee) the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints Attorney to transfer the within bond on the books kept for registra- tion thereof, with full power of substitution in the premises. Da ted: In the presence of: [STATEMENT OF INSURANCE, if any] II-26 Res. No. 39-88 PART II ARTICLE III COVENANt, FUND~ AND APPLICATION THEREOF SECTION 1. BONI~ NOT TO BE INDEBTEDNESS OF THE CITY. ]he Bonds shall not be and shall not constitute an indebtedness of the City within the meaning of any constitutional, statutory, charter or other limitation of indebtedness, but shall be payable solely frcln the Net Revenues derived from the operation of the Combined Public Utility, and the Pledged Impact Charges, as'herein provided. No Holder or Holders of any Bonds issued hereunder shall ever have the right to compel the exercise of the ad valorem taxing power of the City, or taxation in any form of any real property therein to pay the Bonds or the interest thereon. SECTION 2. BONDS SECURED BY PLEDGE OF NET REVENUES AND PLEDGED IMPACT CHARGES. ~he payment of the principal of and interest on all of the Bonds issued hereunder shall be secured forthwith equally and ratably by a first lien on and pledge of the Net Revenues derived from the operation of the Combined Public Utility and a first lien on and pledge of the Pledged Impact Charges. ]he Net Revenues derived from the operation of the Combined Public Utility and the Pledged Impact Charges in an amount sufficient to pay the principal of and interest on the Bonds herein authorized and to make the pay- ments into the reserve and sinking fund and all other payments pro- vided for in the Resolution, are hereby irrevocably pledged to the payment of the principal of and interest on the Bonds authorized herein, and other payments provided for herein, as the same become due and payable. In addition, the City may by subsequent resolution of the City Commission elect to pledge Special Assessments for the payment of principal of and interest on any series of Bonds autho- rized under this Resolution. If the City makes such election, the Special Assessments so pledged shall be treated for all purposes III-1 Res. No. 39-88 P~? II under this Resolution as Net Revenues, except with respect to Section 4.B and Section 4.G of Article III of the Prior Resolution. SECTION 3. APPLICATION OF BOND PROCEEDS. All moneys received by the City from the sale of the Bonds originally authorized and issued pursuant to the Resolution shall be disbursed as follows: A. The accrued interest derived from the sale of the Bonds shall be deposited in the Interest Account, created and estab- lished Under the Prior Resolution, and used for the purpose of paying interest on the Bonds as the same becomes due and payable. B. From the proceeds of the Bonds, there may be deposited in the Debt Service Reserve Account, created and established under the Prior Resolution, such amount as shall be determined by subse- quent proceedings of the City Commission. C. From the proceeds of the Bonds an amount which together with any other moneys lawfully available therefor, including moneys and investments transferred from the funds and accounts cre- ated and established by the proceedings authorizing the issuance of the 1984 Bonds (such amounts to be determined by subsequent proceed- ings of the City Commission) shall be deposited in an escrow deposit trust fund to be held by a bank or trust company, as trustee, under the terms and provisions of the Escrow Deposit Agreement, and such proceeds shall be held irrevocably in trust in the escrow deposit trust fund under the terms and provisions of the Escrow Deposit Agreement; such moneys shall be invested at the time of deposit in U.S. Obligations, which are not callable prior to maturity except by the holder thereof, the principal and interest of which shall be suf- ficient to pay the principal of and interest on the Refunded Bonds as the same mature and become due and payable or are redeemed prior to maturity, as provided in the Escrow Deposit Agreement. III-2 Res. No. 39-88 PART II D. 7he balance of the proceeds derived from the sale of the Bonds shall be applied to pay the costs of issuing the Bonds including, but not limited to, payment of the premium for the Bond Insurance Policy, if any, and the initial payment of the premium or fee for the Reserve Account Credit Facility Substitute, if any. ~he proceeds of the sale of the Bonds (other than amounts deposited under the Escrow Deposit Agreement and amounts reserved to pay the costs of issuing the Bonds) shall be and constitute trust funds for the purposes hereinabove provided and there is hereby cre- ated a lien upon such moneys, until so applied, in favor of the Holders of said Bonds. SECTION 4. COVENAN~ OF THE CITY. As long as any of the principal of or interest on any of the Bonds shall be Outstanding and unpaid, or until there shall have been set apart in the Sinking Fund, consisting of the Interest Account, Principal Account, Bond Redemption Account and the Debt Service Reserve Account, created and established under the Prior Resolution, a sum sufficient to pay, when due, the entire principal of the Bonds remaining unpaid, together with interest accrued and to accrue thereon, or until the provisions of Article III, Section 4.R. of the Prior Resolution have been com- plied with, the City covenants with the Holders of any and all of the Bonds issued pursuant to the Resolution as follows: A. TAX COVENANT. 1. The City covenants to maintain the exclusion of the interest on the Bonds from gross income for Federal income tax purposes pursuant to Section 103(a) of the Code. In fur- therance of the covenant contained in the preceding sentence, the City agrees to comply with the provisions of the Tax Certificate. 2. ~he City shall make any and all payments required to be made to the United States Department of the Treasury in connection with the Bonds pursuant to Section 148(f) of the Code from amounts on III-3 Res. No. 39-88 PART II deposit in the funds and accounts established under this Resolution and available therefor. 3. Notwithstanding any other provision of this Resolution to the contrary, as long as necessary in order to maintain the exclu- sion of interest on the Bonds from gross income for Federal income tax purposes, the covenants contained in this Section shall survive the payment of the Bonds, including any payment or defeasance thereof pursuant to Article III, Section 4.R. of the Prior Resolution. B. RATES. ~he City in each Fiscal Year, will fix, estab- lish and maintain such rates and collect such fees, rentals or other charges for the services and Facilities of its Combined Public Utility, and revise the same from time to time whenever necessary, as will always provide in each Fiscal Year Net Revenues, which together with the Pledged Impact Charges received in such Fiscal Year, shall be adequate to pay at least one hundred and twenty-five percent (125%) of the Annual Debt Service Requirement for the Bonds and any pari passu additional Bonds hereafter issued, provided that Net Revenues receive in such Fiscal Year shall at all times be adequate to pay at least one hundred ten percent (110%) of the Annual Debt Service Requirement for the Bonds and any pari passu additional Bonds hereafter issued; and that such Net Revenues together with the Pledged Impact Charges shall be sufficient to make all of the pay- ments required by the terms of the Resolution and that such rates, fees, rentals or other charges shall not be so reduced so as to be insufficient for such purposes. III-4 Res. No. 39-88 PART II ARTICLE IV MIS CELLANEOUS PROVIS SECTION 1. ADDITIONAL BONDS. In addition to the terms and provisions of Part II of this Resolution, the Bonds shall be issued to be in conformity with Article III, Section 4.G. of the Prior Resolution. SECTION 2. SEVERABILITY OF INVALID PROVISIONS. If any one or more of the covenants, agreements or provisions of the Resolution should be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separate from the remaining covenants, agreements or provisions, and shall in no way affect the validity of any of the other provisions of the Resolution or of the Bonds. SECTION 3. VALIDATION AUTHORIZED. That Herbert W. A. ~hiele, as attorney for the City or his successor, shall, if directed by the City Commission, take appropriate proceedings in the Circuit Court of the Fifteenth Judicial Circuit of Florida in and for Palm Beach County for the validation of the Bonds, and the Mayor and City Clerk are hereby authorized to sign any pleadings in such pro- ceedings for and on behalf of the City Commission of the City of Del ray Beach. SECTION 4. SALE OF BONDS. The Bonds shall be issued and sold at one time or from time to time, in such manner and at such price or prices consistent with the provisions of the Act and the requirements of the Resolution as the City Cc~mission shall hereafter determine by subsequent proceedings. IV-1 Res. No. 39-88 PART II SECTION 5. REPEALER. ~hat all resolutions or riders or parts thereof in conflict herewith are to the extent of such conflict hereby repealed. SECTION 6. BOND INSURER; DEFAULT. Notwithstanding any of the provisions of this Resolution to the contrary, all of the rights of the Bond Insurer granted herein, shall be null and void if the Bond Insurer is in default under the Bond Insurance Policy. PART I and PART II EFFECTIVE DATE. This Resolution shall take effect immedi- ately upon its passage. PASSED AND ADOPTED in regular session on this the 12hh day of July, 1988. CITY OF DELRAY BEACH, FLORIDA Attest: Mayor Cit~Cl~rk IV-2 Res. No. 39-88 The foregoing resolution and the forms of Bonds therein contained are hereby approved by me as to form, language and execu- tion this the day of , 1988. City Attorney STATE OF FLORIDA) COUNTY OF PALM BEACH) I, ELIZABET~ ARNAU, do hereby certify that I am the duly qualified City Clerk of the City of Delray Beach, Palm Beach County, Florida. I further certify that the above and foregoing constitutes a true and correct copy of the minutes of a meeting of the City Commission of said City held on July 12, 1988, and of a resolution adopted at said meeting, as said minutes and resolution are offi- cially of record in my possession. IN WITNESS WHEREOF, I have hereunto subscribed my official signature and impressed hereon the official seal of the City of Delray Beach this the day of , 1988. City Clerk (SEAL) Res. No. 39-88 PART I~' (FORM OF VALIDATION CERTIFICATE) This Bond is one of a series of Bonds which were validated by judgment of the Circuit Court of Palm Beach County, Florida, rendered on the day of , 198_. Mayor City Clerk II-22 Res. No. 39-88 PART [For Capital Appreciation Bonds only] ACCRETED VALUE PER $5,000 MA~3RITY AMOUNT Accreted Accreted Date Va~ Date ~ II-23 Res. No. 39-88 PART 'ri [For Capital Appreciation and Income Bonds only] APPRECIATED VALUE PER $5,000 MA~JRITY AMOUNT Appr ecl ated Appr ecl ated Da te Value Da te Value II-24 Res. No. 39-88 PART ~'I [The following paragraph is applicable to Capital Appreciation Bonds only] The Capital Appreciation Bonds, of which this Bond is one, pay principal and compound accrued interest only at maturity or upon prior redemption or acceleration. For the purposes of (i) receiving payment of the redemption price if a Capital Appreciation Bond is redeemed prior to maturity, or (ii) computing the amount of Bonds held by the registered owner of a Capital Appreciation Bond in giving to the City any notice, consent, request, or demand pursuant to the Resolution for any purpose whatsoever, or (iii) computing the amount of Bonds to be redeemed and the selection of Bonds to be redeemed, the principal amount of a Capital Appreciation Bond shall be deemed to be its Accreted Value. [The following paragraph is applicable only to Capital Appreciation and Income Bonds] For the purposes of (i) receiving payment of the redemption price if a Capital Appreciation and Income Bond is redeemed prior to maturity, or (ii) computing the amount of Bonds held by the regis- tered owner of a Capital Appreciation and Income Bond in giving to the City any notice, consent, request or demand pursuant to the Resolution for any purpose whatsoever, the principal amount of a Capital Appreciation and Income Bond shall be deemed to be its Appreciated Value. II-25 Res. No. 39-88 ASS IGNMENT AND TRANSFER FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto (please print or typewrite name and address of transferee) the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints Attorney to transfer the within bond on the books kept for registra- tion thereof, with full power of substitution in the premises. Da ted: In the presence of: [STATEMENT OF INSURANCE, if any] II-26 Res. No. 39-88 PART II ARTICLE III COVENANt, FUNDS AND APPLICATION THEREOF SECTION 1. BONI~ NOT TO BE INDEBTEDNESS OF THE CITY. ~he Bonds shall not be and shall not constitute an indebtedness of the City within the meaning of any constitutional, statutory, charter or other limitation of indebtedness, but shall be payable solely frcm the Net Revenues derived from the operation of the Combined Public Utility, and the Pledged Impact Charges, as herein provided. No Holder or Holders of any Bonds issued hereunder shall ever have the right to compel the exercise of the ad valorem taxing power of the City, or taxation in any form of any real property therein to pay the Bonds or the interest thereon. SECTION 2. BONDS SECURED BY PLEDGE OF NET REVENUES AND PLEDGED IMPACT CHARGES. ~he payment of the principal of and interest on all of the Bonds issued hereunder shall be secured forthwith equally and ratably by a first lien on and pledge of the Net Revenues derived from the operation of the Combined Public Utility and a first lien on and pledge of the Pledged Impact Charges. ~he Net Revenues derived from the operation of the Combined Public Utility and the Pledged Impact Charges in an amount sufficient to pay the principal of and interest on the Bonds herein authorized and to make the pay- ments into the reserve and sinking fund and all other payments pro- vided for in the Resolution, are hereby irrevocably pledged to the payment of the principal of and interest on the Bonds authorized herein, and other payments provided for herein, as the same become due and payable. In addition, the City may by subsequent resolution of the City commission elect to pledge Special Assessments for the payment of principal of and interest on any series of Bonds autho- rized under this Resolution. If the City makes such election, the Special Assessments so pledged shall be treated for all purposes III-1 Res. No. 39-88 PART under this Resolution as Net Revenues, except with respect to Section 4.B and Section 4.G of Article III of the Prior Resolution. SECTION 3. APPLICATION OF BOND PROCEEDS. All moneys received by the City from the sale of the Bonds originally authorized and issued pursuant to the Resolution shall be disbursed as follows: A. The accrued interest derived from the sale of the Bonds shall be deposited in the Interest Account, created and estab- lished under the Prior Resolution, and used for the purpose of paying interest on the Bonds as the same becomes due and payable. B. From the proceeds of the Bonds, there may be deposited in the Debt Service Reserve Account, created and established under the Prior Resolution, such amount as shall be determined by subse- quent proceedings of the City Commission. C. From the proceeds of the Bonds an amount which together with any other moneys lawfully available therefor, including moneys and investments transferred from the funds and accounts cre- ated and established by the proceedings authorizing the issuance of the 1984 Bonds (such amounts to be determined by subsequent proceed- ings of the City Commission) shall be deposited in an escrow deposit trust fund to be held by a bank or trust company, as trustee, under the terms and provisions of the Escrow Deposit Agreement, and such proceeds shall be held irrevocably in trust in the escrow deposit trust fund under the terms and provisions of the Escrow Deposit Agreement; such moneys shall be invested at the time of deposit in U.S. Obligations, which are not callable prior to maturity except by the holder thereof, the principal and interest of which shall be suf- ficient to pay the principal of and interest on the Refunded Bonds as the same mature and become due and payable or are redeemed prior to maturity, as provided in the Escrow Deposit Agreement. III-2 Res. No. 39-88 PAR? II D. ~he balance of the proceeds derived from the sale of the Bonds shall be applied to pay the costs of issuing the Bonds including, but not limited to, payment of the premium for the Bond Insurance Policy, if any, and the initial payment of the premium or fee for the Reserve Account Credit Facility Substitute, if any. ~e proceeds of the sale of the Bonds (other than amounts deposited under the Escrow Deposit Agreement and amounts reserved to pay the costs of issuing the Bonds) shall be and constitute trust funds for the purposes hereinabove provided and there is hereby cre- ated a lien upon such moneys, until so applied, in favor of the Holders of said Bonds. SECTION 4. CO~E~AN~ OF T~E CITY. As long as any of the principal of or interest on any of the Bonds shall be Outstanding and unpaid, or until there shall have been set apart in the Sinking Fund, consisting of the Interest Account, Principal Account, Bond Redemption Account and the Debt Service Reserve Account, created and established under the Prior Resolution, a sum sufficient to pay, when due, the entire principal of the Bonds remaining unpaid, together with interest accrued and to accrue thereon, or until the provisions of Article III, Section 4.R. of the Prior Resolution have been com- plied with, the City covenants with the Holders of any and all of the Bonds issued pursuant to the Resolution as follows: A. TAX COVENANT. 1. ~he City covenants to maintain the exclusion of the interest on the Bonds from gross income for Federal income tax purposes pursuant to Section 103(a) of the Code. In fur- therance of the covenant contained in the preceding sentence, the City agrees to comply with the provisions of the Tax Certificate. 2. ~he City shall make any and all payments required to ~be made to the United States Department of the Treasury in connection with the Bonds pursuant to Section 148(f) of the Code from amounts on III-3 Res. No. 39-88 P~RT I~' deposit in the funds and accounts established under this Resolution and available therefor. 3. Notwithstanding any other provision of this Resolution to the contrary, as long as necessary in order to maintain the exclu- sion of interest on the Bonds from gross income for Federal income tax purposes, the covenants contained in this Section shall survive the payment of the Bonds, including any payment or defeasance thereof pursuant to Article III, Section 4.R. of the Prior Resolution. B. RATES. ~he City in each Fiscal Year, will fix, estab- lish and maintain such rates and collect such fees, rentals or other charges for the services and Facilities of its Combined Public Utility, and revise the same from time to time whenever necessary, as will always provide in each Fiscal Year Net Revenues, which together with the Pledged Impact Charges received in such Fiscal Year, shall be adequate to pay at least one hundred and twenty-five percent (125%) of the Annual Debt Service Requirement for the Bonds and any pari passu additional Bonds hereafter issued, provided that Net Revenues receive in such Fiscal Year shall at all times be adequate to pay at least one hundred ten percent (110%) of the Annual Debt Service Requirement for the Bonds and any pari passu additional Bonds hereafter issued; and that such Net Revenues together with the Pledged Impact Charges shall be sufficient to make all of the pay- ments required by the terms of the Resolution and that such rates, fees, rentals or other charges shall not be so reduced so as to be insufficient for such purposes. III-4 Res. No. 59-88 PAINT II ARTICLE IV NISCELLANEOUS PROVIS I(lI5 SECTION 1. ADDITIONAL BONDS. In addition to the terms and provisions of Part II of this Resolution, the Bonds shall be issued to be in conformity with Article III, Section 4.G. of the Prior Resolution. SECTION 2. SEVERABILITY OF INVALID PROVI~IOI~. If any one or more of the covenants, agreements or provisions of the Resolution should be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separate from the remaining covenants, agreements or provisions, and shall in no way affect the validity of any of the other provisions of the Resolution or of the Bonds. SECTION 3. VALIDATION AUTHORIZED. That Herbert W. A. ~hiele, as attorney for the City or his successor, shall, if directed by the City Commission, take appropriate proceedings in the Circuit Court of the Fifteenth Judicial Circuit of Florida in and for Palm Beach County for the validation of the Bonds, and the Mayor and City Clerk are hereby authorized to sign any pleadings in such pro- ceedings for and on behalf of the City Commission of the City of Del ray Beach. SECTION 4. SALE OF BONDS. The Bonds shall be issued and sold at one time or from time to time, in such manner and at such price or prices consistent with the provisions of the Act and the requirements of the Resolution as the City Commission shall hereafter determine by subsequent proceedings. IV-1 Res. No. 39-88 PART II SECTION 5. REPEALER. ~hat all resolutions or riders or parts thereof in conflict herewith are to the extent of such conflict hereby repealed. SECTION 6. BOND INSURER; DEFAULT. Notwithstanding any of the provisions of this Resolution to the contrary, all of the rights of the Bond Insurer granted herein, shall be null and void if the Bond Insurer is in default under the Bond Insurance Policy. PART I and PART II EFFECTIVE DATE. This Resolution shall take effect immedi- ately upon its passage. PASSED AND ADOPTED in regular session on this the 12th day of July, 1988. CITY OF DELRAY BEACH, FLORIDA Attest: Mayor IV-2 Res. No. 39-88 The foregoing resolution and the forms of Bonds therein contained are hereby approved by me as to form, language and execu- tion this the day of ., 1988. City Attorney STATE OF FLORIDA) COUNTY OF PALM BEACH) I, ELIZABETH ARNAU, do hereby certify that I am the duly qualified City Clerk of the City of Delray Beach, Palm Beach County, Florida. I further certify that the above and foregoing constitutes a true and correct copy of the minutes of a meeting of the City Commission of said City held on July 12, 1988, and of a resolution adopted at said meeting, as said minutes and resolution are offi- cially of record in my possession. IN WITNESS WHEREOF, I have hereunto subscribed my official signature and impressed hereon the official seal of the City of Delray Beach this the day of , 1988. City Clerk (S EAL ) Res. No. 39-88