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Res 32-89 RESOLUTION NO. 32-89 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF DELRAY BEACH, FLORIDA AUTHORIZING THE ISSUANCE OF $4,300,000 AGGREGATE PRINCIPAL AMOUNT OF UTILITIES TAX REVENUE NOTES, SUBORDINATE SERIES 1989, OF THE CITY OF DELRAY BEACH, FLORIDA, FOR THE PURPOSE OF PROVIDING SHORT TERM FINANCING FOR THE COSTS OF CERTAIN CAPITAL PROGRAMS AND PROJECTS; PROVIDING FOR THE TERMS AND PAYMENT OF SAID UTILITIES TAX REVENUE NOTES, SUBORDINATE SERIES 1989, AND THE RIGHTS, REMEDIES AND SE(~JRITY OF THE OWNERS THEREOF; MAK/I~G CERTAIN COVENANTS R~LATING TO THE ISSUANCE OF SAID UTILITIES TAX REVENUE NOTES, SUBORDINATE SERIES 1989; AUTHORIZING THE PROPER OFFICEBS OF THE CITY TO DO ALT. OTHER THINGS D~ED NECESSARY OR ADVISABLE IN CONNECTION WITH T~E ISSUANCE OF SAID NOTES; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City Commission of the City of Delray Beach, Florida (the "City Commission"), has determined that it is in the best interest of the City of Delray Beach, Florida (the "City") to provide short term financing of the Projects (as such term is defined below); and, WHEREAS, the City has determined that it is necessary to authorize the issuance of $4,300,000 aggregate principal amount of City of Delray Beach, Florida, Utilities Tax Revenue Notes, Subordinate Series 1989 (the "Notes"), for the purpose of financing the construction, acquisition and equipping of the Projects; and WHEREAS, the Notes shall be secured by a pledge of and lien on the proceeds of the Utilities Tax (as defined below), subject and subordinate in all respects to the pledge of and lien on such Utilities Tax proceeds for the payment of the Outstanding Bonds (as such term is defined below), and the City Moneys (as defined below) budgeted and appropriated for the payment of the Notes pursuant to Section 3.4.A. of this Resolution. NOW, THEREFORE, be it resolved by the City Commission the City of Delray Beach, Florida, as follows: ARTICLE ~ STATUTORY AUTHORITY; FINDINGS AND DEFINITION~ SECTION 1.1. AUTHORITY FOR THIS RESOLUTION. This Resolution is adopted pursuant to the provisions of the Charter of the City of Delray Beach, Florida, as amended and supplemented, the Florida Constitution, Chapter 166, Florida Statutes, as amended and supplemented, and other applicable provisions of law. SECTION 1.2. FINDINGS. It is hereby ascertained, deter- mined and declared: -1- Res. No. 32-89 A. That the City hereby authorizes the following capital projects and the financing and refinancing of such capital projects subject to specific final approval by the City Commission of each component set forth below (i) acquisition and/or improvements to or for the Delray Beach Tennis Center; (ii) certain additions and improvements to the City Hall; (iii) historical renovation and resto- ration; (iv) drainage improvements; (v) improvements to East Atlantic Avenue; (vi) construction of Fire Station #2; (vii) certain infra- structure improvements and all other costs and expenses associated therewith, as more fully set forth in Section 1.2.G. hereof; and (viii) any other capital project permitted under the Act, provided that Bond Counsel shall first deliver to the City an opinion to the effect that the substitution of Projects will not adversely affect the exclusion of interest on the Notes from gross income for Federal income tax purposes (collectively, the "Projects"). Such Projects may be initially ~inanced from all or a part of the proceeds derived from the Notes issued pursuant to this Resolution, all in accordance with plans and specifications filed or to be filed with and approved or to be approved by the City Commission. B. That it is necessary and essential to construct and acquire the Projects in order to preserve and promote the safety and welfare of the citizens of the City. C. That the Projects will serve valid municipal purposes. D. That the City has heretofore issued and has now out- standing $290,000 principal amount of Utilities Tax Revenue Certificates, Series 1967, $3,280,000 principal a~ount of Utilities Tax Revenue Certificates, Series 1978, and $9,955,000 Utilities Tax Revenue Bonds, Series 1987, each of which debt obligations are at parity and rank equally with each other, as to lien on and source and security for payment from the Utilities Tax proceeds and in all other respects, under the applicable Certificate Resolution and 1987 Bond Resolution. E. That, pursuant to proceedings heretofore adopted, the city has been levying a tax on the purchase of certain utilities ser- vices (the "Utilities Tax"), the proceeds of which tax are not pledged or encumbered in whole or in part in any manner or for any purpose other than for the payment of the Outstanding Bonds (as herein defined). F. That the lien of the Notes authorized herein on the proceeds of the Utilities Tax, when issued, shall be junior and sub- ordinate, as to the lien of the Outstanding Bonds on the Utilities Tax proceeds and in all other respects to the pledge and lien granted to the Outstanding Bonds. G. That the cost of the Projects shall be deemed to include, but not be limited to, the cost of construction and improve- ments, the cost of real estate, including easements and other inter- ests therein, or any other property real or personal, necessary therefor; administrative expenses; engineering and legal expenses; expenses for fiscal agents or financial services; expenses for esti- mates of costs and of Utilities Tax proceeds; expenses for plans, specifications and surveys; and such other expenses as may be necessary or incidental to the Projects and the issuance of the Notes herein authorized. -2- Res. No. 32-89 H. That the principal of and interest on the Notes shall be paid solely from the Pledged Revenues (as defined herein); and the ad valorem taxing power of the City will never be necessary or autho- rized to pay the principal of and interest on the Notes, and the Notes issued pursuant to this Resolution shall not constitute a lien upon any other property whatsoever of or in the City. I. That the City, having previously solicited competitive bids for the sale of the Notes, has determined that the lowest bid for the Notes was delivered by Midlantic National Bank. SECTION 1.3. DEFINITIONS. That as used herein the follow- ing terms shall have the following meanings unless the context other- wise clearly requires: (a) "Act", shall mean the Florida Constitution, Chapter 166 of the Florida Statutes, as amended and supplemented and the Charter of the City of Delray Beach, Florida, as amended and supplemented, and other applicable provisions of the law. (b) "Bank" shall mean Midlantic National Bank, the initial Noteholder. (c) "Bond Counsel" shall mean Mudge Rose Guthrie Alexander & Ferdon or any other firm of nationally recognized bond counsel selected by the Issuer. (d) "City" shall mean the City of Delray Beach, Florida, a municipal corporation in the County of Palm Beach, State of Florida, and its successors and assigns. (e) "City Commission" or "City Council" shall mean the duly constituted governing body of the City. (f) "City Moneys" shall mean the moneys budgeted and appropriated by the City from not otherwise pledged, restricted or encumbered Non-Ad Valorem Revenues pursuant to the City's covenant to budget and appropriate such Non-Ad Valorem Revenues contained in Section 3.4.A. of this Resolution. City Moneys shall not include the proceeds from the Utilities Tax. (g) "Code" shall mean the Internal Revenue Code of 1986, as amended, the applicable Treasury Regulations promulgated thereun- der and any administrative or judicial interpretations of the same published in a form on which the City may rely as a matter of law. (h) "Debt Service Fund" shall mean the Delray Beach Subordinate Note Debt Service Fund, created and established pursuant to this Resolution and which is the fund in which the Pledged Revenues shall be deposited by the City for the payment of the Notes. (i) "Defeasance Obligations" shall mean, to the extent permitted by law, the following securities: (a) U.S. Obligations; (b) Any bonds or other obligations of any state of the United States of America or of any agency, -3- Res. No. 32-89 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) to and including the maturity date or dates thereof or to and including the redemption date or dates specified in the irrevocable instructions referred to in sub- clause (i) of this clause (b), as appropriate; (c) Evidences of indebtedness issued by the Federal Home Loan Banks, Federal Home Loan Mortgage Corporation (including participation certificates), Federal Financing Banks, or any other agency or instrumentality of the United States of America cre- ated by an act of Congress provided that the obliga- tions of such agency or instrumentality are uncondi- tionally guaranteed by the United States of America or any other agency or instrumentality of the United States of America or of any corporation wholly-owned by the United States of America; and (d) 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. (j) "Interest Rate" shall mean the rate of interest on the Notes which, when calculated on a 360-day basis, shall be equal to seven and one-eighth percent (7.125%) per annum. (k) "1987 Bonds" shall mean the outstanding Utilities Tax Revenue Bonds, Series 1987, authorized by the 1987 Bond Resolution. (1) "Non-Ad Valorem Revenues" shall mean all legally available revenues (excluding the proceeds from the Utilities Tax) of the city, contained in the City's General Fund, derived from any source whatever other than ad valorem taxation on real and personal property which are legally available for payment of debt service by the City. -4- Res. No. 32-89 (m) "Notes" shall mean the $4,300,000 aggregate principal amount of Utilities Tax Revenue Notes, Subordinate Series 1989, authorized by this Resolution. (n) "Noteholder" or "Owner" or "Holder" or any similar term shall mean any person who shall be the registered owner of any Note or Notes outstanding under this Resolution. (o) "Original Resolution" sha 1 1 mean Resolut ion Number 1429, adopted by the City Council on November 26, 1962, autho- rizing the issuance of $1,100,000 Utilities Tax Revenue Certificates, Series 1962. (p) "Outstanding Bonds" shall mean the Utilities Tax Revenue Certificates, Series 1967 (the "1967 Certificates"), issued pursuant to the O~iginal Resolution, and Resolution Number 26-67, adopted by the City Council on October 30, 1967, the Utilities Tax Revenue Certificates, Series 1978 (the "1978 Certificates"), issued pursuant to the Original Resolution, and Resolution Number 65-78, adopted by the City Council on July 24, 1978, and the Utilities Tax Revenue Bonds, Series 1987 (the "1987 Bonds"), issued pursuant to the Original Resolution, and Resolution No. 69-86, adopted by the City Commission on December 30, 1986, as amended and supplemented by Resolution No. 7-87, adopted by the City Commission on February 17, 1987 (the "1987 Resolution") and any additional parity obligations issued pursuant to the Original Resolution. (q) "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. (r) "Payment Date" shall mean each June 1 and December 1 commencing December 1, 1989, or any date the principal of the Notes is optionally prepaid in whole or in part. (s) "Pledged Revenues" shall mean, (i) with respect to the payment of interest on the Notes, the Utilities Tax proceeds depos- ited in the Debt Service Fund each month after the deposits required by Section 5 of the Original Resolution have been made by the Issuer, subject to the prior lien on such moneys for the payment of the Outstanding Bonds, and, (ii) the City Moneys deposited in the Debt Service Fund in accordance with the terms of this Resolution for pur- poses of payment of the principal and/or interest on the Notes. (t) "Registrar" shall mean the bank or trust company and any successor bank or trust company appointed by the City to act as Registrar hereunder. (u) "Resolution" shall mean this Resolution as the same may from time to time be amended and supplemented in accordance with the terms hereof. (v) "U. S. Obligations" shall mean the direct obligations 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. -5- Res. No. 32-89 (w) "Utilities Tax" shall mean the tax imposed by the City on each and every purchase in the City of electricity, metered and bottled gas (natural liquified petroleum gas or manufactured) and water service. Said term shall also apply to all taxes imposed by the City on the purchase of utility services, whether levied in the amounts prescribed by the Utilities Tax Ordinance or in any other amounts and whether imposed on the purchase of the same utilities services or any other or additional utilities services, either by amendment to the Utilities Tax Ordinance or otherwise. (x) "Utilities Tax Ordinance" shall mean all proceedings imposing the Utilities Tax, including Ordinance No. 535 of the City adopted on July 9, 1945, as amended, and every supplementary ordi- nance or other ordinance in lieu thereof as may hereafter be adopted. Words importing singular number shall include the plural number and vice versa, as the case may be, and words importing per- sons shall include firms and corporations. SECTION 1.4. RESOLUTION CONSTITUTES CONTRACT. In consid- eration of the acceptance of the Notes authorized to be issued here- under by those who shall own the same from time to time, this Resolution shall be deemed to be and shall constitute a contract between the City and the Noteholder and the covenants and agreements herein and therein set forth to be performed by said City shall be for the benefit, protection and security of the Noteholder. ARTICLE II AUTHORIZATION, TERMS, EXECUTION AND REGISTRATION OF NOTES SECTION 2.1. AUTHORIZATION OF NOTES. Subject and pursuant to the provisions of this Resolution, obligations of the City of Delray Beach, Florida, to be known as "Utilities Tax Revenue Notes, Subordinate Series 1989" are hereby authorized to be issued in the aggregate principal amount of Four Million Three Hundred Thousand Dollars ($4,300,000) for the purpose of providing short term financ- ing for the costs of the Projects. SECTION 2.2. DESCRIPTION OF NOTES. The text of the Notes shall be substantially in the form attached hereto as Exhibit A with such omissions, insertions and variations as may be necessary and desirable, as evidenced by the City's execution thereof. The Notes shall bear interest at the Interest Rate payable on each Payment Date of each year, commencing December 1, 1989. Interest only on the Notes shall be payable on each Payment Date until June 1, 1994 (the "Maturity Date"). The principal of the Notes and all accrued and unpaid interest on the Notes shall be payable on the Maturity Date. The Notes shall be issued in registered form, shall be in the denomination of $100,000 each or any integral multi- ple thereof. Principal shall be payable at the principal corporate trust office of the Paying Agent. Each Note shall be numbered in such manner as may be prescribed by the Registrar. The Notes shall be -6- Res. No. 32-89 payable by check or draft made payable to the Holder of Notes and mailed to the address of such Holder of Notes, 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 calendar month preceding each Payment Date or the date the principal amount is paid; provided, however, that, if such 15th day is a Saturday, Sunday or holiday, then to the registered Holder and at the 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 inter- est on the Notes may, at the option of any Holder of Notes 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. The Notes authenticated prior to the first,Payment Date shall be dated and bear interest from June 14, 1989. Notes authenticated subsequent to the first Payment Date shall bear interest from the next preceding Payment Date on which such interest has been paid, unless such Note is registered on a Payment Date or between a Record Date and the next succeeding Payment Date, then from such 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 Payment Date, such defaulted interest shall be paid to the persons in whose name Notes are registered on the registration books of the City main- tained by the Registrar at the close of business on the fifteenth day prior to a subsequent Payment Date established by notice mailed by the Registrar to the registered owner not less than the tenth day preceding such subsequent Payment Date. The Notes 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 Notes shall be subject to prepayment, at the option of the City, in whole or in part, at any time without premium or penalty. The Registrar shall provide written notice to the Noteholders, whose Notes were selected by the Registrar (by lot) for early redemption, at least twenty (20) days prior to the redemption date. The City shall deposit the amount of prepayment plus accrued interest to the date of redemption with the Paying Agent prior to the aforementioned notice being sent by the Registrar. SECTION 2.3. EXECUTION OF NOTES. The Notes shall be exe- cuted in the name of the City by the signature of the Mayor of the City and its official seal shall be affixed thereto or imprinted or reproduced thereon and attested by the City Clerk. The signatures of the Mayor of the City and City Clerk on the Notes may be manual or facsimile signatures. In case any one or more of the officers who shall have signed or sealed any of the Notes shall cease to be such officer of the City before the Notes so signed and sealed shall have been actually sold and delivered, such Notes may nevertheless be sold and delivered as herein provided and may be issued as if the person who signed or sealed such Notes had not ceased to hold such office. ~ny Note may be signed and sealed on behalf of the City by such person who at the actual time of the execution of the Note shall hold the proper office, although at the date the Notes shall be actually -7- Res. No. 32-89 delivered such person may not have held such office or may not have been so authorized. The Notes shall bear thereon a certificate of authentica- tion, in the form set forth on Exhibit A attached hereto, executed manually by the Registrar. Only the Notes as shall bear thereon such certificate of authentication shall be entitled to any right or bene- fit under this Resolution and no Note shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Registrar. The certificate of authentica- tion of the Registrar upon any Note executed on behalf of the City shall be conclusive evidence that the Note so authenticated has been duly authenticated and delivered under this Resolution and that the Owner thereof is entitled to the benefits of this Resolution. SECTION ~.4. NEGOTIABILITY, R]~GI~TIONAND CANC~rZ~TION. At the option of the registered Owner 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 Owner or his duly authorized attorney and upon payment by the registered Owner of any charges which the Registrar may make as provided in this Section, the Notes may be exchanged for other Notes of the same maturity of any other autho- rized denominations. The Registrar shall keep books for the registration of the Notes and for the registration of transfers of the Notes. Subject to the requirements of Section 4.5 hereof, the Notes shall be transfer- able by the Owner thereof in person or by his/her 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 Owner or his/her duly authorized attorney. Upon the transfer of any such Note, the city shall issue in the name of the transferee a new Note or Notes, provided an executed Purchaser Letter, the form of which is attached hereto as Exhibit B, is provided to the Registrar. The City, the Paying Agent and the Registrar may deem and treat the person in whose name any Note shall be registered upon the books kept by the Registrar as the absolute Owner of such Note, whether such Note shall be overdue or not, for the purpose of receiv- ing payment of, or on account of, the principal of and interest on such Note as the same become due and for all other purposes. All such payments so made to any such Owner or upon his/her order shall be valid and effectual to satisfy and discharge the liability upon such Note 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. In all cases in which the privilege of exchanging Notes or transferring the Notes is exercised, the City shall execute and the Registrar shall authenticate and deliver the Notes in accordance with the provisions of this Resolution. All Notes 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 Notes, but the City or the Registrar may require the payment of a sum sufficient to pay any tax, fee or other governmental charges required to be paid with respect to such exchange or transfer. -8- Res. No. 32-89 Neither the City nor the Registrar shall be required (a) to transfer or exchange Notes for a period of 15 days next preceding a Payment Date on such Notes or 15 days next preceding any selection of Notes to be redeemed or thereafter until after the mailing of any notice of redemption, or (b) to transfer or exchange any Notes called for redemption. All Notes paid or redeemed, either at or before maturity, shall be delivered to the Registrar when such payment or redemption is made, and such Notes, together with any Notes that may be pur- chased by the City, shall thereupon be promptly cancelled. The Notes so cancelled may at any time be destroyed by the Registrar, who shall execute a certificate of destruction in duplicate by the signature of one of its authorized officers describing the Notes so destroyed, and one executed certificate shall be filed with the City and the other executed certificate shall be retained by the Registrar. SECTION 2.5. NOTES MUTILATED, DESTROYED, STOLEN OR LOST. In case any Note shall become mutilated, destroyed, stolen or lost, the City may execute and the Registrar shall authenticate and deliver a new Note of like date, maturity and denomination as the Note so mutilated, destroyed, stolen or lost; provided that, in the case of any mutilated Note, such mutilated Note shall first be surrendered to the City and, in the case of any lost, stolen or destroyed Note, 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 Note shall be about to mature or have matured or have been called for redemption, instead of issuing a duplicate Note, the City may pay the same without surrender thereof. The City and the Registrar may charge the Owner of such Not~ their reasonable fees and expenses in connection with this transaction. Any Note surrendered for replacement shall be cancelled in the same manner as provided in Section 2.4 hereof. Any such duplicate Notes issued pursuant to this Section shall constitute additional contractual obligations on the part of the City, whether or not the lost, stolen or destroyed Notes be at any time found by anyone, and such duplicate Notes shall be entitled to equal proportionate benefits and rights as to lien on the source and security for payment from the Pledged Revenues, with all other Notes issued hereunder. SECTION 2.6. QUALIFIED TAX-EXEMPT OBLIGATIONS. The City hereby designates the Notes to be issued pursuant to this Resolution to be "qualified tax-exempt obligations" within the meaning of Section 265(b) (3) (B) of the Code. ARTICLE III COVENANTS, FUNDS AND APPLICATION THEREOF SECTION 3.1. NOTES NOT TO BE INDEBTEDNESS OF THE CITY. The Notes shall not be or constitute an indebtedness of the City within the meaning of any constitutional, statutory or other limita- tion of indebtedness, but shall be payable solely from the Pledged Revenues. No Noteholder shall ever have the right to compel the exercise of the ad valorem taxing power of the City, or taxation in -9- Res. No. 32-89 any form of any real property therein, to pay said Notes or the interest thereon. The pledge of the Pledged Revenues will not con- stitute a lien upon any property of the City. SECTION 3.2. NOTES JUNIOR AND SUBORDINATE TO OUTSTANDING BONDS. The lien of the Notes on the proceeds of the Utilities Tax shall be junior and subordinate, as to the lien of the Outstanding Bonds on the Utilities Tax proceeds and in all other respects, to the pledge and lien granted to the Outstanding Bonds. SECTION 3.3. NOTES SECURED BY PLEDGE OF PLEDGED~. From and after the issuance of any of the Notes, and continuing until the payment of all Notes as to principal and interest, the Pledged Revenues shall continue to be pledged, subject to the prior lien with respect to the Utilities Tax proceeds set forth in Section 3.2, for the prompt payment of principal of and interest on said Notes. SECTION 3.4. COVENANTS OF THE CITY. As long as any of the principal of or interest on any of the Notes shall be outstanding and unpaid, or until there shall have been set apart in the Debt Service Fund in accordance with Section 3.7 hereof a sum sufficient to pay, when due, the entire principal of the Notes remaining unpaid, together with interest accrued and to accrue thereon, the City cove- nants with the Noteholder as follows: A. Covenant to Budget and Appropriate. Until all of the Notes are paid or deemed paid pursuant to the provisions of this Resolution (to the extent that proceeds of the Utilities Tax depos- ited into the Debt Service Fund pursuant to Section 3.4.D. hereof shall be, insufficient to pay interest and principal on the Notes), the City hereby covenants to appropriate in its annual budget by amendment if necessary, City Moneys in each fiscal year of the City, in amounts sufficient to pay the principal of and interest on the Notes, as the same become due. Notwithstanding the foregoing cove- nant of the City, the City does not covenant to maintain any services or programs, as provided or maintained by the City, which generate Non-Ad Valorem Revenues other than such services or programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the City. To the extent that the City is in compliance above, this Resolution and the obligations of the City contained herein shall not be construed as a limitation on the ability of the City to pledge or covenant to pledge the Non-Ad Valorem Revenues for other legally permissible purposes. B. Tax Covenants Relating to the Internal Revenue Code of 1986, as amended. 1. In order to maintain the exclusion from gross income for purposes of Federal income taxation of interest on the Notes, the city covenants to comply with each requirement of the Code. In furtherance of the covenant contained in the preceding sen- tence, the City agrees to continually comply with the provisions of the "Tax Certificate as to Arbitrage and Instructions as to Compliance with the provisions of Section 103(a) of the Internal Revenue Code of 1986" to be executed by the City and delivered on the date of issuance and delivery of the Notes, as such certificate may be amended from time to time, as a source of guidance for achieving compliance with the Code. -10- Res. No. 32-89 (2) The City covenants and agrees with the Noteholders that the City shall not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Notes, would cause any of the Notes to be "private activity bonds" or "arbitrage bonds" within the meaning of Sections 141(a) and 148(a), respec- tively, of the Code. (3) Notwithstanding any other provision of this Resolution to the contrary, so long as necessary in order to maintain the exclusion from gross income for purposes of Federal income taxa- tion of interest on the Notes, the covenants contained in this Section shall survive the payment of the Notes and the interest thereon, including any payment or discharge thereof pursuant to Section 3.7 of the Resolution. (4) The City covenants and agrees with the Noteholders that the City shall take all actions that are reasonably within its control to ensure that the Notes shall qualify as bank "qualified tax-exempt obligations" within the meaning of Section 265(b) (3) of the Code. C. Establishment of Debt Service F%~d. There is hereby created and established the following fund entitled the "Delray Beach Subordinate Note Debt Service Fund" (hereinafter referred to as the "Debt Service Fund"). The Debt Service Fund shall constitute a trust fund for the benefit of the Noteholder and shall be held by the City and shall be kept separate and distinct from all other funds of the City, and shall be used only for the purpose and in the manner pro- vided in this Resolution. Notwithstanding the provisions of the next preceding sentence, the City may deposit the Pledged Revenues in a single bank account for the City, provided that adequate accounting procedures are maintained to reflect and control the restricted allo- cations of the funds on deposit therein for the various purposes of such funds. The designation and establishment of the Debt Service Fund in and by this Resolution shall not be construed to require the establishment of any completely independent self-balancing fund, as such term is commonly defined and used in governmental accounting, but rather is intended solely to constitute an allocation of certain revenues of the City for certain purposes and to establish certain priorities for application of such revenues as provided herein. Any excess amounts remaining in the Debt Service Fund after payment has been made on the Notes on any Payment Date, may be with- drawn and deposited at the direction of the City to be used for any lawful municipal purpose. Moneys on deposit in the Debt Service Fund may be invested in U. S. Obligations or such other obligations as are permitted by the applicable laws of the State of Florida, provided such invest- ments mature not later than the next succeeding Payment Date. Subject to the terms and provisions of the Code, all income and earn- ings received from the investment and reinvestment of the moneys on deposit in the Debt Service Fund shall remain on deposit in the Debt Service Fund and be used in the same manner as other moneys on deposit therein. Any interest accrued on the Notes from their dated date to the date of delivery shall be deposited into the Debt Service Fund. -11- Res. No. 32-89 D. Disposition of Pledged Revenues. Not later than the fifteenth day of each month, the City shall deposit in the Debt Service Fund available Utilities Tax proceeds, subject to and depen- dent upon satisfaction of all current deposit requirements of such proceeds set forth in Section 5 of the Original Resolution, in an amount equal to one-sixth (1/6) of an amount sufficient to pay the interest becoming due on the Notes on the next Payment Date, and shall further cause to be deposited into the Debt Service Fund one business day prior to each Payment Date City Moneys necessary to sat- isfy any deficiency in the Debt Service Fund on such date; provided, however, that such deposit of the interest amount shall not be required to be made to the extent that moneys on deposit in the Debt Service Fund are sufficient for such purpose. The City covenants to deposit, on the business day prior to the Maturity Date, Pledged Revenues into the Debt Service Fund in an amount sufficient to pay the outstanding pDincipal of and interest on the Notes. SECTION 3.5. REMEDIES OF NOTEHOLDER. Should the City default in its obligation created by this Resolution, the Noteholders may, in addition to any remedy set forth in this Resolution, either at law or in equity, by suit, action, mandamus or other proceeding in any court of competent jurisdiction, protect and enforce any and all rights under the laws of the State of Florida, or granted and con- tained in this Resolution, and may enforce and compel the performance of all duties required by this Resolution, or by any applicable stat- utes to be performed by the City or by any officer thereof. SECTION 3.6. APPLICATION OF NOTE PROCEEDS. The proceeds of the Notes shall be used to provide short term financing for the costs of the Projects. The City may substitute any of the Projects for any other capital project permitted under the Act; provided that Bond Counsel shall first deliver to the City an opinion to the effect that the substitution of Projects will not adversely affect the exclusion of interest on the Notes from gross income for Federal income tax purposes. The proceeds of the Notes shall be deposited in a fund established by the City (herein the "Note Proceeds Fund"). No with- drawals shall be made from the Note Proceeds Fund, except for legal, financial and engineering expenses and fees, and expenses and fees in connection with the construction of the Projects and the issuance of the Notes, without the written approval of the City Manager or his designee and only upon receipt of a written requisition executed by an authorized representative of the City, specifying the purpose for which such withdrawal is to be made and certifying that such purpose is one of the purposes provided for in this Resolution. If, for any reason, the moneys in said Note Proceeds Fund, or any part thereof, are not necessary for, or are not applied to the purposes provided in this Resolution, then such unapplied proceeds shall be deposited, upon certification of the City Manager or his designee that such sur- plus proceeds are not needed for the purposes of the Note Proceeds Fund, in the Debt Service Fund to the extent the moneys on deposit in the Debt Service Fund are insufficient for such purpose or to prepay all or a portion of the Notes and thereafter to the City to be used for any lawful municipal purpose. The moneys deposited in the Note Proceeds Fund may, pending their use for the purposes provided in this Resolution, be -12- Res. No. 32-89 temporarily invested'in any investment which is permitted by the applicable laws of the State of Florida. SECTION 3.7. DISCHARGE AND SATISFACTION OF NOTES. The covenants, liens and pledges entered into, created or imposed pursu- ant to this Resolution may be fully discharged and satisfied with respect to the Notes in any one or more of the following ways: (a) by paying the principal of and interest on the Notes when the same shall become due and payable; or (b) by depositing in the Debt Service Fund or such other accounts as the City may hereafter create and establish by resolution moneys sufficient at the time of such deposit to pay the Notes and all interest thereon as the same become due on said Notes on or prior to the maturity d&te thereof; or . (c) by depositing in the Debt Service Fund or such other accounts as the City may hereafter create and establish by resolution (which Debt Service Fund or other account and all moneys and securi- ties deposited therein shall be irrevocably pledged to the Noteholders for the payment of the Notes and all interest thereon) moneys which, when invested in Defeasance Obligations, will provide moneys which shall be sufficient to pay the Notes and, all interest thereon as the same shall become due on said Notes on or prior to the maturity date thereof. Upon such payment or deposit in the amount and manner provided in this Section 3.7, the Notes shall no longer be deemed to be outstanding for the purposes of this Resolution and all liability of the City with respect to the Notes shall cease, termi- nate and be completely discharged and.extinguished, and the Noteholders shall be entitled for payment solely out of the moneys or securities so deposited. ARTICLE IV MISCELLANEOUS PROVISIONS SECTION 4.1. MODIFICATION OR AMENDMENT. No material modification or amendment of this Resolution or of any resolution amendatory thereof or supplemental thereto, may be made without the consent in writing of all of the Noteholders; pro- vided, however, that no modification or amendment shall permit a change in the maturity of such Notes or a reduction in the rate of interest thereon. This Resolution may be amended, changed, modified and altered without the consent of the Noteholders, (i) to cure any ambi- guity, 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 Noteholders, or (iii) to maintain the exclusion of interest on the Notes from gross income for Federal income tax purposes. SECTION 4.2. ADDITIONAL AUTHORIZATION. The Mayor, the city Manager, the Finance Director and any other proper official of the City, be and each of them is hereby authorized and directed to -13- Res. No. 32-89 execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated by this Resolution. SECTION 4.3. SEVERABILITY OF INVALID PROVISIONS. If any one or more of the covenants, agreements or provisions of this Resolution should be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibit- ed, 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 cove- nants, agreements or provisions, and shall in no way affect the validity of any of the other provisions of this Resolution or of the Notes issued hereunder. SECTION ~.4. PAYING AGENT AND REGISTRAR. Midlantic National Bank and Trust Co./Florida, having its corporate trust office in Fort Lauderdale, Florida, is hereby appointed to act as Paying Agent and Registrar for the Notes. SECTION 4.5. SOPHISTICATED INVESTOR LETTER. Notwithstanding any provisions in this Resolution to the contrary as a condition to the registration of transfer of the Notes, the pro- posed Noteholder must provide the Registrar with an executed Purchaser Letter in substantially the form attached hereto as Exhibit B prior to or simultaneously with the registration of transfer. SECTION 4.6. AWARD OF NOTES. Having determined that the Bank submitted the lowest bid for the Notes consistent with the Notice of Sale published on May 6, 1989 in 'THE MIAMI HERALD, the City hereby awards the sale of Notes to the Bank. SECTION 4.7. REPEALER. All resolutions and orders, or parts thereof, in conflict herewith are, to the extent of such con- flict, hereby repealed, and this Resolution shall take effect upon its passage in the manner provided by law. SECTION 4.8. EFFECTIVE DATE. This Resolution shall be effective immediately upon its adoption. Passed and adopted in regular session on this 13th day of June, 1989. Mayor Attest: -14- Res. No. 32-89 The foregoing resolution and the form of Note therein contained are hereby approved by me as to form, language and execution this 13th day of June, 1989. City Attorney -15- Res. No. 32-89 Exhibit A FORM OF NOTE No. R- UNITED STATES OF AMERICA STATE OF FLORIDA CITY OF DELRAY BEACH, FLORIDA Utilities T~x Revenue Note, Subordinate Series 1989 Interest Maturity Dated Rate Date Date 7.125% June 1, 1994 June 1, 1989 Registered Owner: Principal Amount: DOLLARS KNOW ~TJ. MEN BY THESE PRESENTS, that the City of Delray Beach (the "City") in Palm Beach County, Florida, for value received, hereby promises to pay from the sources herein mentioned, to the Registered Owner specified above or registered assigns on the Mat~r~ty Date specified above, upon the presentation and surrender heL'~ - at the corporate trust office of Midlantic National Bank and Tr~ ~r ~o./Florida, as paying agent (said Midlantic National Bank and Tr~_~'~ ~o./Florida and any bank or trust company becoming successor pa~ agent being herein called the "Paying Agent"), the Principal Amc ~.% specified above, with interest thereon at the Interest Rate specified above, payable on June 1 and December 1 of each year until the City's obligation with respect to the payment of such Principal Amount shall be discharged; provided, however, that interest shall be paid by check or draft 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 Midlantic National Bank and Trust Co./Florida, as Registrar (said Midlantic National Bank and Trust Co./Florida and any bank or trust company becoming successor 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 the principal amount is 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 Notes may, at the option of A-1 Res. No. 32-89 however, that payment of interest on the Notes may, at the option of any Holder of Notes 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 of registration to which interest has been paid, unless the date of registration is a June 1 or December 1 to which interest has been paid, in which case from such date, or unless the date of registration is prior to December 1, 1989, in which case from June 14, 1989, or unless the date hereof is between a Record Date and the next succeeding interest payment date, in which case from 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 Notes are registered on the registration books of the City maintained by the Registrar at the close of busi- ness on 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 pay- ment date. The Principal Amount and accrued interest thereon is pay- able 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. This Note is one of an authorized issue of Notes authorized to be issued in the aggregate principal amount of $4,300,000 of like tenor and effect, except as to number and date of issue, under the authority of and in full compliance with the Constitution and stat- utes of the State of Florida, including, particularly, Chapter 166, Florida Statutes, as amended and supplemented, the Charter of the City of Delray Beach, Florida, and other applicable provisions of law (the "Act"), and Resolution No. 32-89, duly adopted by the City on the 13th day of June, 1989, as such resolution may be amended and supplemented from time to time, and is subject to all terms and con- ditions of said resolution (the "Note Resolution"). Any term used in this Note and not otherwise defined, shall have the meaning ascribed to such term in the Note Resolution. This Note has been designated in the Note Resolution to be a "qualified tax-exempt obligation" within the meaning accorded that term by Section 265(b)(3)(B) of the Internal Revenue Code of 1986, as amended, and any successor to that provision. 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 Note 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 and the Charter of the City applicable thereto, and that the issuance of this Note, and of the issue of Notes of which this Note is one, is in full com- pliance with all constitutional or statutory limitations or provisions. This Note shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Note Resolution until the certificate of authentication hereon shall have been signed by an authorized officer of the Registrar. This Note shall bear interest at the Interest Rate. A-2 Res. No. 32-89 Payments of interest only shall be payable semiannually on each June 1 and December 1 (each a "Payment Date") of each year, beginning on December 1, 1989, until June 1, 1994 (the "Maturity Date"). The principal of and interest on the Notes shall be payable solely from: (i) the Utilities Tax proceeds deposited in the Debt Service Fund each month after the deposits required by Section 5 of the Original Resolution have been made by the City, subject to the prior lien on such moneys for the payment of the Outstanding Bonds, and (ii) the City Moneys deposited in the Debt Service Fund in accor- dance with the terms of the Note Resolution for purposes of payment of the Notes (collectively, the "Pledged Revenues"). "City Moneys" shall mean the moneys budgeted and appropri- ated by the City from not otherwise pledged, restricted or encumbered Non-Ad Valorem Revenues pursuant to the City's covenant to budget and appropriate such,Non-Ad Valorem Revenues contained in the Note Resolution. City Moneys shall not include the proceeds from the Utilities Tax. "Non-Ad Valorem Revenues" shall mean all legally avail- able revenues (excluding the proceeds from the Utilities Tax) of the City, contained in the City's General Fund, derived from any source whatever other than ad valorem taxation on real and personal property which are legally available for payment of debt service by the City. The City may prepay this Note in whole or in part, at any time or from time to time, without penalty or premium, by paying to the registered holder all or part of the principal amount of this Note, together with the unpaid interest accrued on the amount of principal so prepaid to the date of such prepayment. Each prepayment shall be made on such date and in such prihcipal amount as shall be specified by the City. in a written notice delivered to the Paying Agent not less than twenty (20) days prior thereto. The Registrar shall provide written notice to the holders of the Notes selected for early redemption not later than twenty (20) days prior to the pro- posed redemption date. Notice having been given as aforesaid, the principal amount stated in such notice or the whole thereof, as the case may be, shall become due and payable on the prepayment date stated in such notice, together with interest accrued and unpaid to the prepayment date on the principal amount then being paid; and the amount of principal and interest then due and payable shall be paid (i) in case the entire unpaid balance of the principal of this Note is to be paid, upon presentation and surrender of the Note to the principal corporate trust office of the Paying Agent of the City, and (ii) in case only part of the unpaid balance of principal of this Note is to be paid, upon presentation of such Note at the principal corporate trust office of the Paying Agent for notation thereon of the amount of principal and interest on the Note then paid or for issuance of a replacement Note in the principal amount not redeemed. If, on the prepayment date, funds for the payment of the principal amount to be prepaid, together with interest to the prepayment date on such principal amount, shall have been given to the Paying Agent, as above provided, then from and after the prepayment date interest on such principal amount of this Note shall cease to accrue. If said funds shall not have been so paid on the prepayment date, the princi- pal amount of the Note shall continue to bear interest until payment thereof at the rate or rates provided for herein. A-3 Res. No. 32-89 The Notes, when delivered by the City pursuant to the terms of the Note Resolution, shall not be or constitute an indebtedness of the City within the meaning of any constitutional, statutory or other limitations of indebtedness, but shall be payable solely from the Pledged Revenues, as provided in the Note Resolution. No Noteholder 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 within the territorial boundaries of the city, to pay the Notes or the interest thereon. Pursuant to the Note Resolution, the pledge of the Pledged Revenues will not constitute a lien upon any property of the City. THE LIEN OF THE NOTES ON THE PROCEEI~ OF THE UTILITIES TAX SHALL BE JUNIOR AND SUBORDINATE, AS TO THE LIEN OF THE OUTSTANDING BONDS ON THE UTILITIES TAX PROCEED~ AND IN ~T.T. OTH]~ ~.~~ TO TH~ PLEDGE AND LIEN GRANTED TO THE OUTSTANDING BONI~. IN WITNESS WHEREOF, the City of Delray Beach, Florida, has caused this Note to be signed by its Mayor, either manually or with his facsimile signature, and the seal of the City Council of the City of Delray Beach, Florida, to be affixed hereto or imprinted or repro- duced hereon, and attested by the Clerk of the City, either manually or with her facsimile signature, and this Note to be dated the Dated Date set forth above. (SEAL) CITY OF DELRAY BEACH, FLORIDA ATTEST: By: Mayor Clerk of the City of Delray Beach, Florida A-4 Res. No. 32-89 FORM OF CERTIFICATE OF AUTffENTICATION Date of Authentication: This Note is one of the Notes delivered pursuant to the within mentioned Note Resolution. MIDLANTIC NATIONAL BANK AND TRUST CO./FLORIDA, as Registrar By: Authorized Officer A-1 Res. No. 32-89 ASSIGNMENT FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto (please print or typewrite name, address and tax identification number of assignee) the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints Attorney to transfer the within Note on the books kept for registra- tion thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: In the presence of: NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Note in every particular, without alteration or enlargement, or any change whatever. A-2 Res. No. 32-89 Exhibit B [Form of Purchaser Letter] , 19__ [Name and Address of Registrar and Paying Agent] Dear sirs: Any term not defined in this letter shall have the meaning ascribed to such term in the herein referred to Resolution. In con- nection with the purchase by us of City of Delray Beach, Florida (the "City"), Utility Tax Revenue Notes, Subordinate Series 1989, (the "Notes"), issued pursuant to Resolution No. 32-89 adopted by the City on June 13, 1989 (the "Resolution"), we hereby certify as follows: 1. We understand that we will not receive from the City, or any of its officers, employees or agents, any information with respect to the Notes or the sufficiency of any security pledged for such Notes, except for such information which is included in the Resolution. 2. Neither the City nor any of its officers or employees or agents will have any responsibility to us for the accuracy or com- pleteness of information obtained by us from any source regarding the security for the Notes or, subject only to the exception stated in paragraph 1, for the accuracy of any such information; and we acknowledge that, as between us and the City, we assume responsibil- ity for obtaining such information and making such investigation as we deem necessary or desirable in connection with our decision to purchase the Notes. 3. We are a regulated investment company, regulated insur- ance company or other "accredited investor" as defined in Rule 501 of Regulation D of the Securities and Exchange Commission. If the undersigned is a trust or corporation, we are duly and validly orga- nized under the laws of our jurisdiction of incorporation or organization. We can bear the economic risk of the purchase of the Notes, and have such knowledge and experience in business and finan- cial matters, including the analysis of a participation in the pur- chase of similar investments, as to be capable of evaluating the merits and risks of an investment in such Notes. 4. We intend to purchase Notes for our own account for investment and not with a view to the distribution, transfer or B-1 Res. No. 32-89 resale thereof. We will invest only after receipt of all information we deem necessary to evaluate and make an informed investment deci- sion with respect to our purchase of the Notes, and our purchase of the Notes is confirmation that we have received such information. 5. In the event we sell, or issue a participation interest in, any Notes we have purchased at some future time, we shall comply with federal and state securities laws, at the time in effect as may be applicable. 6. We are duly and legally authorized to purchase the Notes. 7. Subject only to the exception stated in paragraph 1, we will not rely on any action taken by the City, including, but not limited to, issuance of the Notes, that the Notes, or the Projects built with the proceeds of the Notes comply with the provisions of any Federal or state law, rule or regulation. Very truly yours, By: Its: B-2 Res. No. 32-89 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 Council of said city held on June 13, 1989, and of a resolution adopted at said meeting, as said minutes and resolution are offi- cially of record in my possession. IN WITNESSWHEREOF, I have hereunto subscribed my official signature and impressed hereon the official seal of the City of Delray Beach this 13th day of June, 1989. City Clerk (SEAL) B-3 Res. No. 32-89