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HomeMy Public PortalAboutRES 94/18RESOLUTION #94 -18 A RESOLUTION OF THE TOWN COMMISSION OF THE TOWN OF GULF STREAM, FLORIDA; AUTHORIZING THE ISSUANCE OF NOT EXCEEDING $250,000 UTILITY SYSTEM REVENUE BONDS, SERIES 1994 TO FINANCE CERTAIN CAPITAL IMPROVEMENTS IN CONNECTION WITH THE TOWN'S WATER UTILITY SYSTEM, INCLUDING IMPROVEMENTS OUTSIDE THE CORPORATE LIMITS OF THE TOWN; AUTHORIZING SUCH BONDS TO BE IN THE FORM OF A NON - REVOLVING LINE OF CREDIT; PROVIDING FOR THE PAYMENT OF SUCH BONDS FROM CERTAIN REVENUES OF THE SYSTEM; ADDITIONALLY COVENANTING TO BUDGET AND APPROPRIATE ADDITIONAL FUNDS, FROM LEGALLY AVAILABLE NON -AD VALOREM REVENUES, TO MAKE SUCH PAYMENTS; PRESCRIBING THE FORM, TERMS AND DETAILS OF SUCH BONDS; AWARDING THE BONDS TO SUNBANK /SOUTH FLORIDA, NATIONAL ASSOCIATION BY NEGOTIATED SALE; MAKING CERTAIN COVENANTS AND AGREEMENTS IN CONNECTION THEREWITH; DESIGNATING THE BONDS AS A "QUALIFIED TAX- EXEMPT OBLIGATION" WITHIN THE MEANING OF SECTION 265(b)(3) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED; AND PROVIDING AN EFFECTIVE DATE. BE IT RESOLVED BY THE TOWN COMMISSION OF THE TOWN OF GULF STREAM, FLORIDA, THAT: ARTICLE I GENERAL SECTION 1.01. DEFINITIONS. As used herein, unless the context otherwise requires: "Act" means, as applicable, Part I of Chapter 159, Florida Statutes, Part II of Chapter 166, Florida Statutes, as amended, the Charter of the Town of Gulf Stream and other applicable provisions of law. "Additional Debt" means any obligation described in Section 10.01 hereof. "Annual Budget" means the annual budget for the System prepared by the Issuer for each Fiscal Year in accordance with Section 9.04 below and in accordance with the laws of the State of Florida. "Authorized Depository" means any bank, trust company, national banking association, savings and loan association, savings bank or other banking association selected by the Issuer as a depository, which is authorized under Florida law to be a depository of municipal funds and which has qualified with all applicable state and federal requirements concerning the receipt of Issuer funds. 1 "Average Monthly Cost of Operation and Maintenance" means an amount equal to one - twelfth of the Cost of Operation and Maintenance shown in the then - current Annual Budget of the Issuer. "Bond Counsel" means counsel experienced in matters relating to the validity of, and the exclusion from gross income for federal income tax purposes of interest on, obligations of states and their political subdivisions. "Bond Service Requirement" means for a given Bond Year the amount required to pay the principal and interest coming due on the Bonds during that Bond Year. "Bond Year" means the annual period beginning on the first day of the month in which the Bonds are issued and ending on the last day of the preceding month of the following year. "Bondholders" or "Holders" means the registered owners (or their authorized representatives) of Bonds. "Bonds" means the Issuer's Utility System Revenue Bonds, Series 1994, authorized to be issued hereunder in an aggregate principal amount not to exceed $250,000. "Business Day" means any day which is not a Saturday, Sunday or legal holiday in Palm Beach County, Florida. "Chief Financial Officer" means the chief financial officer of the Issuer as defined in Section 218.403, Florida Statutes. "Clerk" means the Clerk or any Deputy Clerk of the Issuer. "Code" means the Internal Revenue Code of 1986, as amended, including the applicable regulations of the Department of the Treasury (including applicable final regulations, temporary regulations and proposed regulations), the applicable rulings of the Internal Revenue Service (including published Revenue Rulings and private letter rulings) and applicable court decisions. "Completion Date" means for each Project, the cost of which is to be paid from proceeds of the Bonds, the date on which such Project is completed as evidenced by a certificate of the Engineer of Record. "Construction Fund" means the Construction Fund established pursuant to Section 5.01 hereof. "Consulting Engineers" means any engineering firm of reputation for skill and experience with respect to the construction and operation of facilities similar to the System, which is duly licensed under the laws of the State of Florida and designated by the Issuer to perform the duties of Consulting 2 Engineer hereunder. "Cost of Operation and Maintenance" means the current expenses, paid or accrued, of operation, maintenance and repair of the System and its facilities, as calculated in accordance with generally accepted accounting principles, consistently applied, and shall include, without limiting the generality of the foregoing, administrative expenses relating to the System, purchase of water (if the same may be treated as an operating cost under generally accepted accounting principles), engineering and other professional services, paying agent, registrar and other fiduciary fees, other fees, fines and penalties, insurance premiums and charges for the accumulation of appropriate reserves for self - insurance, and any other cost or expense identified as a "Cost of Operation and Maintenance" by resolution of the Issuer, which costs and expenses are not necessarily annually recurrent but which are reasonably expected to be incurred on a periodic basis in accordance with generally accepted accounting principles, consistently applied. The Cost of Operation and Maintenance shall not include (i) the deposits made to the Renewal and Replacement Fund and expenditures made therefrom, or any other reserve for renewals and replacements, extraordinary repairs or any allowance for depreciation or amortization, (ii) the payment of any principal of and interest on the Bonds and any other notes, bonds and similar obligations of the Issuer, and (iii) payments made by the Issuer under leases that are capitalized in accordance with generally accepted accounting principles. "Costs of the Project" means, with respect to each Project authorized pursuant to the terms hereof, those costs described in Section 4.02 hereof. "Dated Date" means the date of the first drawing on the Bonds. "Engineer of Record" means, for any Project, the engineering firm or firms engaged by the Issuer to design and monitor the construction of such Project, which shall be duly licensed under the laws of the State of Florida to perform the services for which engaged. "Fiscal Year" means the period commencing on October 1 of each year and ending on the succeeding September 30, or such other consecutive 12 -month period as may be hereafter designated as the fiscal year of the Issuer pursuant to general law. "Governing Body" means the Town Commission of the Issuer, or its successor in function. "Gross Revenues" means all income or earnings derived by the Issuer from the ownership, operation, leasing or use of the System, or any part thereof including the proceeds of any business interruption insurance carried by the Issuer, and any income from 3 the investment of moneys in the funds and accounts created hereunder except for the Construction Fund, but shall not include (i) proceeds from the sale of the Bonds or other obligations of the Issuer, (ii) Impact Fees, (iii) customer deposits, (iv) moneys received by the Issuer for capital projects from federal, state or local governmental grants or stipends, or (v) proceeds from hazard insurance, condemnation awards or proceeds from the sale of all or a part of the System. "Impact Fees" means all capital expansion fees, improvement fees or other similar fees and charges separately imposed by the Issuer as a nonuser capacity charge allocable to the cost of expanding, oversizing, separating or constructing new additions to the System. "Initial Purchaser" means SunBank /South Florida, National Association. "Investment Obligations" means any obligation permitted by law and approved by the Holder. "Issuer" means the Town of Gulf Stream, Florida. "Mayor" means the Mayor of the Issuer and such other person as may be duly authorized to act on his or her behalf. "Net Revenues" with respect to any period of time shall be the remainder of the Gross Revenues, after deducting the Cost of Operation and Maintenance for such period. "Pledged Funds" shall mean (1) Net Revenues and (2) until applied in accordance with the provisions of this Resolution, all moneys, including investments thereof, in the funds and accounts established hereunder. "Prime Rate" shall mean the per annum interest rate announced by Sun Banks, Inc., a Florida corporation ( "Sun Banks, Inc. ") from time to time as its "Prime Rate" (which interest rate is only a benchmark, is purely discretionary and is not necessarily the best or lowest interest rate charged borrowing customers of any subsidiary bank of Sun Banks, Inc.). In the event Sun Banks, Inc. ceases to announce its "Prime Rate ", "Prime Rate" shall mean a rate designated by the Holder which is, in the opinion of the Holder, substantially equivalent to the "Prime Rate" previously announced by Sun Banks, Inc. "Projects" means the capital improvements described in Exhibit "A" attached hereto, and, with the written consent of the Initial Purchaser, the construction or acquisition of other additions, extensions and improvements to various components of the System, including repairs and replacements, as described from time to time by ordinance or resolution of the Issuer. 4 "Renewal and Replacement Fund" means the fund by that name established pursuant to Section 7.01 hereof. "Renewal and Replacement Fund Requirement" means $50,000 or such other amount as may be designated by certificate of the Consulting Engineer from time to time to be adequate for the purposes described in clause (ii) of Section 7.03 hereof. "Resolution" means this resolution, as the same may from time to time be amended, modified or supplemented. "Revenue Fund" means the fund established by that name pursuant to Section 7.01 hereof. "State" means the State of Florida. "Supplemental Resolution" means any resolution of the Issuer amending or supplementing this Resolution in accordance with the terms and provisions hereof. "Surplus Fund" means the fund by that name established pursuant to Section 7.01 hereof. "System" means the entire water supply, treatment and distribution system and all parts and components thereof or interests therein, owned, operated or used by the Issuer, and all such parts and components hereafter constructed, contracted for or acquired, the improvements, extensions and additions thereto to be constructed or acquired either from the proceeds of the Bonds authorized by this Resolution or from any other sources, together with all land and interests therein, plants, buildings, machinery, franchises, pipes, fixtures, equipment, contract rights and all property, real or personal, tangible or intangible, now or hereafter owned, operated or used by the Issuer in connection therewith. SECTION 1.02. AUTHORITY FOR RESOLUTION. This Resolution is adopted pursuant to the provisions of the Act. The Issuer has ascertained and hereby determined that adoption of this Resolution is necessary to carry out the powers, purposes and duties expressly provided in the Act, that each and every matter and thing as to which provision is made herein is necessary in order to carry out and effectuate the purposes of the Issuer in accordance with the Act and to carry out and effectuate the plan and purpose of the Act, and that the powers of the Issuer herein exercised are in each case exercised in accordance with the provisions of the Act and in furtherance of the purposes of the Issuer. SECTION 1.03. RESOLUTION TO CONSTITUTE CONTRACT. In consideration of the purchase and acceptance of any or all of the Bonds by those who shall hold the same from time to time, the 5 provisions of this Resolution shall be a part of the contract of the Issuer with the Holders of the Bonds, and shall be deemed to be and shall constitute a contract between the Issuer and the Holders from time to time of the Bonds. The pledge made in this Resolution and the provisions, covenants and agreements herein set forth to be performed by or on behalf of the Issuer shall be for the equal benefit, protection and security of the Holders of any and all of said Bonds in accordance with the terms hereof. All of the Bonds, regardless of the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof except as expressly provided in or pursuant to this Resolution. SECTION 1.04. FINDINGS. It is hereby ascertained, determined and declared that: (A) The Issuer now owns, operates and maintains the System and derives Gross Revenues therefrom. (B) For the benefit of its inhabitants, the Issuer finds, determines and declares that it is necessary for the continued preservation of the health, welfare, convenience and safety of the Issuer and its inhabitants to acquire and construct the Projects in accordance with certain plans and specifications now on file or to be on file with the Clerk. (C) The Issuer deems it necessary and in its best interests to acquire and construct the Projects and to finance a portion of the Cost of the Projects through the issuance of the Bonds. (D) That the Pledged Funds are not pledged or encumbered in any manner. (E) The Issuer is authorized under the Act to issue Bonds and to use the proceeds thereof to pay the Cost of the Projects. (F) The principal of, interest on and premium, if any, with respect to the Bonds shall be secured solely by and payable from the Pledged Funds pursuant to this Resolution, which the Issuer has full authority to irrevocably pledge. In addition, the Issuer has covenanted to budget and appropriate from all legally available non -ad valorem revenues sufficient moneys to pay the debt service on the Bonds if at any time the Pledged Funds are insufficient for such purpose. The Issuer shall never be required to levy ad valorem taxes on any property to pay the principal of or interest on the Bonds and the Bonds shall not constitute a lien on any property owned by or situated within the limits of the Issuer. (G) The estimated Gross Revenues to be derived in each year hereafter from the operation of the System, together with Impact Fees to the extent available as herein described, after payment of the Costs of Operation and Maintenance, will be sufficient to pay 0 all of the principal of and interest on the Bonds as the same shall become due and to make all other payments in connection with the Bonds required by this Resolution. ARTICLE II AUTHORIZATION, DESCRIPTION, FORM AND TERMS OF BONDS SECTION 2.01. AUTHORITY FOR ISSUANCE OF BONDS. Subject and pursuant to the provisions hereof, the Bonds to be known as "Town of Gulf Stream, Florida Utility System Revenue Bonds, Series 1994" are hereby authorized to be issued in an aggregate principal amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000.00) for the purpose of acquiring, constructing and equipping the Projects. SECTION 2.02. DESCRIPTION OF OBLIGATIONS. The Bonds (initially issued in one (1) typewritten certificate) shall be dated the date of the first drawing. The Bonds shall bear interest at the rate of 6.10% per annum, with interest calculated on the basis of a 360 day year for the actual number of days the loan balance is outstanding. Accrued interest on the Bonds will be payable on the first day of each month, beginning January 1, 1995. Principal payments will be due on the Bonds on the first day of each month, beginning October 1, 1995, through and including September 1, 2004. The principal repayment schedule will be based upon the principal balance outstanding on September 1, 1995, and the amount of principal to be repaid each month beginning October 1, 1995 shall be that amount which will result in 108 equal monthly payments of principal and interest. Additional details of the Bonds shall be as provided in the form of bond set forth in Section 2.06 below. All Bonds hereunder shall be in registered form, contain substantially the same terms and conditions as set forth in Section 2.06 below, shall be payable in lawful money of the United States of America, and the principal thereof, interest thereon and any other payments thereunder shall be payable by check, wire, draft or bank transfer to the Holders at such address as may be provided in writing by such Holders to the Clerk of the Issuer. So long as any of the Bonds shall remain outstanding, the Issuer shall maintain and keep books for the registration and transfer of the Bonds. The Bonds issued under this Resolution shall be and have all the qualities and incidents of negotiable instruments under the law merchant and the Uniform Commercial Code of the State of Florida, subject to the provisions for registration of transfer contained in this Resolution and in the Bonds. The Bonds may be assigned as to principal and interest by the Initial Purchaser, or any assignee or successor -in- interest of the 7 Initial Purchaser. Such assignment shall only be effective, and the Issuer obligated to pay such assignee, upon written notice of assignment being provided to the Clerk of the Issuer at 100 Sea Road, Gulf Stream, Florida 33483; provided, however, the written notice of assignment must be received by the Clerk no later than the close of business on the last Business Day prior to a payment date in order to carry the right to receive the interest and principal payment due on such payment date. The Issuer may charge the registered owners of such Bonds for the registration of every such assignment of such Bonds sufficient to reimburse it for any tax, fee or any other governmental charge required to be paid, except for any such governmental charge imposed by the Issuer, with respect to the registration of such assignment, and may require that such amounts be paid before any such assignment of Bonds shall be effective. If any date for payment of the principal of, premium, if any, or interest on any Bond is not a Business Day, then payment shall be due on the last Business Day prior to the nominal date of payment. SECTION 2.03. EXECUTION OF BONDS. The Bonds shall be executed in the name of the Issuer by the Mayor and the seal of the Issuer shall be imprinted, reproduced or lithographed on the Bonds and attested to and countersigned by the Clerk. The signatures of either the Mayor or the Clerk (but not both) on the Bonds may be by facsimile. If any officer whose signature appears on the Bonds ceases to hold office before the delivery of the Bonds, such signature shall nevertheless be valid and sufficient for all purposes. In addition, any Bond may bear the signature of, or may be signed by, such persons as at the actual time of execution of such Bond shall be the proper officers to sign such Bond although at the date of such Bond or the date of delivery thereof such persons may not have been such officers. SECTION 2.04. BONDS MUTILATED, DESTROYED, STOLEN OR LOST. If any Bond is mutilated, destroyed, stolen or lost, the Issuer or its agent may, in its discretion (i) deliver a duplicate replacement Bond, or (ii) pay a Bond that has matured or is about to mature. A mutilated Bond shall be surrendered to and cancelled by the Clerk or its duly authorized agent. The Bondholder must furnish the Issuer or its agent proof of ownership of any destroyed, stolen or lost Bond; post satisfactory indemnity; comply with any reasonable conditions the Issuer or its agent may prescribe; and pay the Issuer's or its agent's reasonable expenses. Any such duplicate Bond shall constitute an original contractual obligation on the part of the Issuer whether or not the destroyed, stolen, or lost Bond be at any time found by anyone, and such duplicate Bond shall be entitled to equal and proportionate benefits and rights as to lien on, and source of and security for payment from, the funds pledged to the payment of the Bond so 3 mutilated, destroyed, stolen or lost. SECTION 2.05. LINE OF CREDIT; CONDITIONS FOR DRAWING AGAINST THE LINE OF CREDIT. A. The Initial Purchaser, by acceptance of delivery of the Bonds, acknowledges that a non - revolving Line of Credit in favor of the Issuer will be created (the "Line of Credit ") pursuant to the terms and provisions hereof, in an aggregate principal amount of not to exceed $250,000 which shall be available to the Issuer in one or more drawings prior to September 1, 1995. On September 1, 1995 the outstanding principal amount of any drawings, including interest thereon, shall be repaid as provided in Section 2.02 above. B . In connection with each drawing under the Line of Credit (a "Drawing ") the following shall be provided: 1. A written request from the Issuer (signed by the Town Manager of the Issuer) for a Drawing at least two (2) Business Days prior to the date specified for such Drawing (such notice to be in substantially the form attached hereto as Exhibit "B "); 2. Only with respect to the first Drawing, a fully executed Tax Certificate, dated as of the date of such Drawing; 3. Only with respect to the first Drawing, a copy of a completed and executed Form 8038 -G to be filed with the Internal Revenue Service; 4. Only with respect to the first Drawing, an Opinion of Bond Counsel, satisfactory in form and substance to the Initial Purchaser, regarding the due authorization, execution, delivery, validity and enforceability of the Bonds and the due adoption of this Resolution (enforceability of such instruments may be subject to standard bankruptcy exceptions and the like) and the exclusion of interest on the Bonds from gross income for Federal income tax purposes; 5. Only with respect to the first Drawing, an Opinion of the Attorney for the Issuer, in form and substance satisfactory to the Initial Purchaser, regarding the due authorization, execution, delivery, validity and enforceability of the Bonds and the due adoption of this Resolution (enforceability may be subject to standard bankruptcy exceptions and the like); and 6. Only with respect to the first Drawing, a general certificate of the Issuer in form and substance satisfactory to the Initial Purchaser. C. With respect to Drawings on the Line of Credit, the Initial Purchaser's notation on each draw request that such Drawing 01 has been advanced shall evidence the amount so drawn by the Issuer. SECTION 2.06. FORM OF BONDS. The text of the Bonds, the forms of assignment for such Bonds and the forms of certificates of authentication, if any shall be in substantially the following forms, with such omissions, insertions and variations as may be necessary or desirable and authorized or permitted by this Resolution: 10 REGISTERED No. R- UTILITY Interest Rate: 6.10% (Form of Bond) UNITED STATES OF AMERICA STATE OF FLORIDA TOWN OF GULF STREAM SYSTEM REVENUE BOND, SERIES 1994 Maturity Date: September 1, 2004 Dated Date: November REGISTERED , 1994 REGISTERED OWNER: SunBank /South Florida, National Association PRINCIPAL AMOUNT: NOT TO EXCEED TWO HUNDRED FIFTY THOUSAND DOLLARS KNOW ALL MEN BY THESE PRESENTS, that the Town of Gulf Stream, Florida, a municipal corporation of the State of Florida (hereinafter called the "Issuer ") for value received, hereby promises to pay to the Registered Owner identified above, or to registered assigns or legal representatives, but solely from the revenues hereinafter mentioned, on the dates hereinafter provided, the Principal Amount identified above or such lesser amount as may be advanced by the Initial Purchaser (as defined in the hereinafter described Resolution), and to pay, solely from such revenues, interest on the Principal Amount remaining unpaid from time to time, at the Interest Rate per annum identified above, until the entire Principal Amount has been repaid, such interest being payable on the 1st day of each month commencing on January 1 1995. Principal of and interest on this Bond will be paid by bank wire, check, draft or bank transfer delivered to the Registered Owner hereof at his address as it appears on the registration books of the Issuer at the close of business on the last Business Day (as defined in the Resolution), of the month next preceding the interest payment date (the "Record Date "). Principal payments will be due on this Bond on the first day of each month, beginning October 1, 1995, through and including September 1, 2004. The principal repayment schedule will be based upon the principal balance outstanding on September 1, 1995, and the amount of principal to be repaid each month beginning October 1, 1995 shall be that amount which will result in 108 equal monthly payments of principal and interest. Such monthly payment amount shall remain the same, notwithstanding any partial prepayment of the amounts due hereunder, until this Bond shall have been paid in full. Any payment of principal hereof or interest hereon not paid 11 when due shall bear interest from the due date until paid at the higher of the Interest Rate per annum stated above or the Prime Rate (as herein defined). This Bond is the entire authorized issue of Bonds in the aggregate principal amount not to exceed $250,000, issued to finance the acquisition and construction of the Projects (as defined in the Resolution), pursuant to the authority of and in full compliance with the Constitution and laws of the State of Florida, including particularly Chapter 159, Florida Statutes, Chapter 166, Florida Statutes, the Charter of the Issuer and other applicable provisions of law (the "Act "), and a resolution duly adopted by the Town Commission of the Issuer on November 18, 1994, as amended and supplemented (the "Resolution "). This Bond is also subject to the terms and conditions of the Resolution. This Bond and the interest hereon are secured solely by and payable from a prior lien upon and pledge of the Net Revenues (as defined in the Resolution) derived by the Issuer from the operation of its water supply, treatment and distribution system (the "System ") and certain other funds and investment earnings thereon, all in the manner and to the extent provided in the Resolution. In addition, the Issuer has covenanted to budget and appropriate from all legally available non -ad valorem revenues sufficient moneys to pay the principal of and interest on the Bonds if at any time such funds are insufficient for such purpose. Reference is hereby made to the Resolution for the provisions, among others, relating to the terms, lien and security of the Bonds, the custody and application of the proceeds of the Bonds, the rights and remedies of the Registered Owners of the Bonds, and the extent of and limitations on the Issuer's rights, duties and obligations, to all of which provisions the Registered Owner hereof for himself and his successors in interest assents by acceptance of this Bond. All terms used herein in capitalized form, unless otherwise defined herein, shall have the meanings ascribed thereto in the Resolution. THIS BOND SHALL NOT BE DEEMED TO CONSTITUTE A GENERAL DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE ISSUER, OR A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL, LEGISLATIVE OR CHARTER PROVISION OR LIMITATION, AND IT IS EXPRESSLY AGREED BY THE REGISTERED OWNER OF THIS BOND THAT SUCH REGISTERED OWNER SHALL NEVER HAVE THE RIGHT, DIRECTLY OR INDIRECTLY, TO REQUIRE OR COMPEL THE EXERCISE OF THE AD VALOREM TAXING POWER OF THE ISSUER OR ANY OTHER POLITICAL SUBDIVISION OF THE STATE OF FLORIDA OR TAXATION IN ANY FORM ON ANY REAL OR PERSONAL PROPERTY FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THIS BOND OR FOR THE PAYMENT OF ANY OTHER AMOUNTS PROVIDED FOR IN THE RESOLUTION. It is further agreed between the Issuer and the Registered Owner of this Bond that this Bond and the indebtedness evidenced 12 hereby shall not constitute a lien upon the System, or any part thereof, or any other tangible personal property of or in the Issuer, but shall constitute a lien only on the Net Revenues and certain other funds and investment earnings thereon, all in the manner and to the extent provided in the Resolution. Neither the members of the governing body of the Issuer nor any person executing the Bonds shall be liable personally on the Bonds by reason of their issuance. If for any reason the interest on this Bond becomes includable in the gross income of the Holder for Federal income tax purposes or the Preference Reduction Rate (as defined herein) becomes 1000 (each, an "Event of Taxability "), the interest rate on this Bond shall be revised to a rate equal to the Prime Rate (as defined herein) adjusted daily on the date changes in the Prime Rate are announced, effective from the earliest date as of which the interest on this Bond was included in the gross income of the Holder for Federal income tax purposes or the Preference Reduction Rate became 100 %. In addition to the foregoing, the Issuer shall pay any additions to tax, penalties and interest, and any arrears in interest imposed upon the Holder on account of an Event of Taxability. All such additional interest, additions to tax and penalties shall be paid not more than 180 days next succeeding the date the Holder was advised of such Event of Taxability. A certificate of the Holder as to any such additional amount or amounts, in the absence of manifest error, shall be final and conclusive. In determining such amount, the Holder may use any reasonable averaging and attribution methods. For purposes of this Bond, (1) "Prime Rate" shall mean the per annum interest rate announced by Sun Banks, Inc., a Florida Corporation ( "Sun Banks, Inc. "), from time to time, as its "Prime Rate ") (which interest rate is only a benchmark, is purely discretionary and is not necessarily the best or lowest interest rate charged borrowing customers of any subsidiary bank of Sun Banks, Inc.). In the event Sun Banks, Inc., ceases to announce its "Prime Rate ", "Prime Rate" shall mean a rate designated by the Holder which is, in the opinion of the Holder, substantially equivalent to the "Prime Rate" previously announced by Sun Banks, Inc.; (2) "Code" means the Internal Revenue Code of 1986, as amended; (3) "Preference Reduction Rate" means the percentage reduction to be applied to the amount allowable as a deduction under Chapter I of the Code with respect to any financial institution preference item (as such term is defined in Section 291(e) of the Code). The Issuer has designated this 13 Bond as a "qualified tax- exempt obligation" within the meaning of Section 265(b)(3) of the Code. If this Bond is not a qualified tax- exempt obligation under the Code or ceases to be a qualified tax - exempt obligation within the meaning of Section 265(b)(3) of the Code, the Preference Reduction Rate shall be deemed to increase from twenty percent (20 %) to one hundred percent (100 %). This Bond may be prepaid in whole or in part by the Issuer at any time prior to maturity without premium or penalty. In the event of any partial prepayment of this Bond, each partial prepayment shall be first applied to accrued interest hereon, and then to the principal installments next coming due in inverse order of their maturities. Any prepayments shall be evidenced by the customary documentation of the Holder, and a copy of such documentation shall be provided to the Issuer after each prepayment. The registration of this Bond may be assigned upon the registration books upon delivery to the Clerk of the Issuer accompanied by a written instrument or instruments of assignment in form and with guaranty of signature satisfactory to the Clerk, duly executed by the owner of this Bond or by his attorney -in -fact or legal representative, containing written instructions as to the details of assignment of this Bond, along with the social security number or federal employer identification number of such assignee. In all cases of an assignment of this Bond the Issuer shall at the earliest practical time in accordance with the provisions of the Resolution enter the change of ownership in the registration books. The Issuer may charge the owner of such Bond for the registration of every such assignment of a Bond an amount sufficient to reimburse it for any tax, fee or any other governmental charge required (other than by the Issuer) to be paid with respect to the registration of such assignment, and may require that such amounts be paid before any such assignment of a Bond shall be effective. If the date for payment of the principal of, premium, if any, or interest on this Bond shall not be a Business Day, then the payment shall be due on the last Business Day prior to the nominal date of payment. THE HOLDER HEREOF AND THE ISSUER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS BOND, THE RESOLUTION OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER PARTY. 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 14 required by the laws and Constitution of the State of Florida applicable hereto, and that the issuance of the Bonds of this Series does not violate any constitutional or statutory limitation or provision. IN WITNESS WHEREOF, the Town Commission of the Town of Gulf Stream has issued this Bond and has caused the same to be executed by the manual or facsimile signature of the Mayor, and attested by the manual or facsimile signature of the Clerk and its corporate seal or a facsimile thereof to be affixed or reproduced hereon, all as of the day of , (SEAL) TOWN OF GULF STREAM, FLORIDA Mayor ATTEST: Clerk [Form of Abbreviations] The following abbreviations, when used in the inscription on the face of the within Bond, shall be construed as though they were written out in full according to the applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with the right of sur- vivorship and not as tenants in common UNIFORM TRANS MIN ACT - Custodian for (Cust.) (Minor) under Uniform Transfers to Minors Act of (State) Additional abbreviations may also be used though not in the above list. 15 ASSIGNMENT FOR VALUE RECEIVED, the undersigned (the "Assignor "), hereby se assigns and transfers unto (the "Assignee ") PLEASE INSERT SOCIAL SECURITY OR FEDERAL EMPLOYER IDENTIFICATION NUMBER OF TRANSFEREE S, the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to register the assignment of the within Bond on the books kept for registration of assignment thereof, with full power of substitution in the premises. Date: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange, a member firm of any other recognized national securities exchange or a commercial bank or trust company. NOTICE: No assignment will be registered in the name of the Assignee, unless the signature(s) to this assignment correspond(s) with the name as it appears upon the face of the within Bond in every particular without alteration or enlargement or any change whatever and the Social Security or Federal Employer Identification Number of the Assignee is supplied. [End of Bond Form] SECTION 2.07. APPLICATION OF BOND PROCEEDS. The proceeds received from each draw on the Bonds shall be immediately deposited by the Issuer into the Construction Fund and used to acquire, construct and equip the Projects and pay the costs of issuance of the Bonds. SECTION 2.08. AWARD OF BONDS BY NEGOTIATED SALE. Because of the nature of the Bonds, the small size of the issue of the Bonds and the prevailing market conditions, the negotiated sale of the Bonds to the Initial Purchaser in substantial accordance with the 16 Initial Purchaser's Commitment Letter to the Issuer dated October 7, 1994 (the "Commitment "), is hereby found to be in the best interests of the Issuer. Provided, however, that the provisions of this Resolution shall control to the extent of any conflict with the Commitment. ARTICLE III REDEMPTION SECTION 3.01. PROVISIONS FOR REDEMPTION. The Bonds may be prepaid in whole or in part by the Issuer at any time prior to maturity without premium or penalty. In the event of any partial prepayment of this Bond, each partial prepayment shall be first applied to accrued interest hereon, and then to the principal installments next coming due in inverse order of their maturities. Any prepayments shall be evidenced by the customary documentation of the Holder, and a copy of such documentation shall be provided to the Issuer after each prepayment. ARTICLE IV AUTHORIZATION OF CONSTRUCTION AND ACQUISITION OF PROJECTS; COST OF PROJECTS SECTION 4.01. AUTHORIZATION OF PROJECTS. The Issuer hereby authorizes the acquisition, construction and equipping of the Projects. SECTION 4.02. COST OF PROJECTS. Proceeds received from the sale of the Bonds are hereby authorized to be used to pay the Costs of the Projects. The Costs of each Project shall include, without limiting the items of cost permitted under the Act, the following items to the extent they relate to such Project: ( i ) all direct costs of the Project items described in the plans and specifications for such Project; (ii) all costs of planning, designing, acquiring, constructing, financing and placing such Projects in operation; (iii) all costs of issuance of the Bonds, including the cost of bond counsel, bank counsel, Issuer's counsel, financial advisors, printing costs, initial acceptance fees of paying agents, registrars, trustees and depositaries, and any other costs of issuance of Bonds; (iv) the cost of any lands or interests therein and all of the properties deemed necessary or convenient for the maintenance and operation of the Projects; (v) all other engineering, legal and financial costs and expenses; (vi) all expenses for estimates of costs and of revenues; (vii) costs of obtaining governmental and regulatory permits, licenses, covenants and approvals; (viii) all fees of special advisors and consultants associated with one or more aspects of the Projects or the financing thereof; (ix) all costs relating to claims or judgments arising out of the construction of the System; (x) all federal, 17 state and local taxes and payments in lieu of taxes required to be paid in connection with the acquisition and construction of the System; (xi) interest on the Bonds prior to and during construction of any Project, and for such additional periods as the Issuer may reasonably determine to be necessary for the placing of such Projects in operation; (xii) the reimbursement to the Issuer of all such costs of any Project that have been advanced by the Issuer from its available funds before the adoption of this Resolution; (xiii) the principal, interest, premium, if any, and costs related thereto, payable with respect to any note or other obligation issued by the Issuer to pay any part of the Costs of the Project enumerated in this Section 4.02; and (xiv) such other costs and expenses which shall be necessary or incidental to the financing herein authorized and the Projects herein described and the placing of same in operation. ARTICLE V CONSTRUCTION FUND SECTION 5.01. CONSTRUCTION FUND. The "Utility System Revenue Bonds Construction Fund" (the "Construction Fund ") is hereby created and established. There shall be paid into the Construction Fund funds which, together with investment earnings thereon, will be sufficient to pay the Costs of each Project to be funded hereunder as designated hereby. All such moneys shall be and constitute trust funds for such purposes, and shall be delivered to and held by the Chief Financial Officer (or his designated Authorized Depository) who shall act as trustee of such funds for the purposes of this Resolution. There is hereby created a lien upon such funds in favor of the Holders of the Bonds until applied as herein provided. Any funds on deposit in the Construction Fund that, in the opinion of the Issuer, are not immediately necessary for expenditure, as hereinabove provided, shall be held and shall be invested, in the manner provided by law, in Investment Obligations pursuant to Section 8.02 below. All income derived from such investments of funds shall be retained therein. Any liquidated damages or settlement payments received by the Issuer as a result of the breach by any contractor, subcontractor or supplier working or supplying goods for the Projects, of any representation, warranty or performance guaranty, and all insurance and condemnation proceeds received with respect to damages to or the taking of the Projects during construction may be deposited into the Construction Fund to ensure completion of the Projects, or, if a Consulting Engineer shall certify that the failure to complete a Project and the modification of a Project or the acquisition or construction of a different Project will not materially adversely affect the projected or estimated Net Revenues, shall be applied to the redemption of Bonds, as shall be HK determined by the Issuer. The Issuer covenants to commence each Project authorized hereunder, promptly upon the delivery of the Bonds, and to thereafter work with due diligence to complete each such Project. The Issuer may, however, abandon or defer any Project if it first obtains the written opinion of the Consulting Engineer that such abandonment or deferral (and the use of the remaining proceeds set aside for the construction of such Project to acquire or construct a different Project or redeem Bonds according to the following paragraph) will not have an adverse effect on the Issuer's ability to meet its rate covenant and other obligations hereunder. To the extent the Costs of a Project are to be paid in part from other revenues of the Issuer (for example, from the Renewal and Replacement Fund), or from other sources (for example, from county funding or state or federal grants and loans), the Issuer shall take all legally available actions to ensure the receipt of such funds and shall cause such funds to be deposited into the Construction Fund or otherwise set aside in a separate fund or account and used for the purposes herein provided. For the purposes of this Section 5.01, "deferral" of a Project shall refer to situations where the Issuer shall not have formally taken action to abandon or cancel a Project, but shall have determined not to currently proceed with such Project and not to finance such Project with funds then held in the Construction Fund. The date of completion of any Project shall be determined by the Engineer of Record which shall certify such fact in writing to the Governing Body. Such certificate shall identify those costs of construction and acquisition not paid as of the date of such certificate, if any. Upon completion of each Project, or upon the abandonment or deferral thereof pursuant to the foregoing, any amounts then remaining in the Construction Fund and not reserved by the Issuer for the payment of any remaining part of the cost of construction and acquisition thereof or for the payment of the cost of another Project, shall, at the option of the Issuer, be transferred to the Renewal and Replacement Fund and used for the purposes therein described, or shall be used to redeem Bonds, or upon receipt of an opinion from Bond Counsel that the interest on the Bonds will not become includable in gross income for federal income tax purposes as a result of such action, either (i) shall be used to pay principal and interest next coming due on the Bonds, or (ii) shall be paid to the Issuer to be used for any lawful purpose connected with the System. ARTICLE VI SOURCE OF PAYMENT OF BONDS; SPECIAL OBLIGATIONS OF THE ISSUER SECTION 6.01. BONDS NOT TO BE GENERAL INDEBTEDNESS OF THE 19 ISSUER. The Bonds shall not be or constitute general obligations or indebtedness of the Issuer within the meaning of the Constitution of Florida, but shall be payable solely from and secured by a lien upon and a pledge of the Pledged Funds, in the manner and to the extent herein provided. No Bondholder shall ever have the right to compel the exercise of the ad valorem taxing power of the Issuer or taxation in any form on any real or personal property to pay such Bonds or the interest thereon, nor shall any Bondholder be entitled to payment of such principal and interest from any other funds of the Issuer other than the Pledged Funds, all in the manner and to the extent herein provided. The Bondholders shall have no lien upon the System or the Projects. SECTION 6.02. PLEDGE OF REVENUES. The payment of the principal of and interest on the Bonds shall be secured forthwith equally and ratably by an irrevocable lien on the Pledged Funds and all earnings thereon, all in the manner and to the extent provided herein, prior and superior to all other liens or encumbrances on the Pledged Funds, and, as provided herein, the Issuer does hereby irrevocably pledge the Pledged Funds, and all earnings thereon, all to the payment of the principal of, premium, if any, and interest on the Bonds, the funding and maintaining of the reserves therefor as required herein and for all other payments as provided herein. SECTION 6.03. COVENANT TO BUDGET AND APPROPRIATE. In addition to the foregoing lien on and pledge of the Pledged Funds, the Issuer covenants to budget and appropriate from all legally available non -ad valorem revenues sufficient moneys to pay the principal of and interest on the Bonds if at any time the Pledged Funds are insufficient for such purpose. ARTICLE VII CREATION AND USE OF FUNDS AND ACCOUNTS; DISPOSITION OF REVENUES SECTION 7.01. CREATION OF FUNDS AND ACCOUNTS. There are hereby created and established the following funds and accounts to be known as: the "Utility System Revenue Fund" (the "Revenue Fund "), the "Utility System Renewal and Replacement Fund" (the "Renewal and Replacement Fund "), and the "Utility System Surplus Fund" (the "Surplus Fund "). Such funds and accounts shall constitute trust funds for the purposes herein provided, shall be delivered to and held by the Chief Financial Officer (or an Authorized Depository designated by the Chief Financial Officer), in each case who shall act as trustee of such funds for the purposes hereof, shall be subject to a lien and charge in favor of the Holders and registered owners of the Bonds, and shall at all times be kept separate and distinct from all other funds of the Issuer and used only as herein provided. 20 SECTION 7.02. DISPOSITION OF GROSS REVENUES. Commencing on the day following the delivery of the first Bonds issued hereunder, except as otherwise provided herein, all Gross Revenues shall be deposited by the Issuer into the Revenue Fund immediately upon receipt. Moneys in the Revenue Fund shall be disposed of only in the following order and priority: A) First, to pay the Cost of Operation and Maintenance as the same shall become due from time to time. B) Then, on or before the first day of each month payment to the Bondholders of an amount which will equal the principal and interest then due and payable on the Bonds. C) Then, on or before the first day of each month, by deposit into the Renewal and Replacement Fund, all remaining moneys until the amount on deposit therein is equal to the Renewal and Replacement Fund Requirement. D) Then, on or before the first day of each month, by deposit into the Surplus Fund, the balance of such moneys to be used for any lawful purpose, including but not limited to the prepayment of Bonds. Provided, however, that the funds on deposit in the Revenue Fund shall at all time be at least equal to the Average Monthly Cost of Operation and Maintenance for two months. SECTION 7.03. USE OF MONEYS IN THE RENEWAL AND REPLACEMENT FUND. The moneys in the Renewal and Replacement Fund shall be used only (i) at any time, to pay the principal of and interest on the Bonds when the moneys in the Revenue Fund are insufficient for such purpose, or (ii) when no such insufficiency exists, as needed for the purpose of paying the cost of the replacement of capital assets of the System, including land, or any unusual repairs or maintenance items of a type not recurring annually or at shorter intervals or (iii) if the funds on deposit in the Renewal and Replacement Fund exceed the Renewal and Replacement Fund Requirement and so long as no insufficiency described in clause (i) above exists, to redeem Bonds to the extent of such excess funds in the manner hereinabove provided. SECTION 7.04. ACCOUNTING FOR FUNDS. For the purposes of this Resolution, each Fund created hereunder shall be a series of self - balancing accounts within the book of accounts of the Issuer and shall connote a segregation of accounts, which will support special purpose disclosure reports, not to be construed as a separate set of books of accounts. For the purpose of investing or reinvesting, the Issuer may commingle moneys in the Funds created and established hereunder in 21 order to achieve greater investment income; provided that the Issuer shall separately account for the amounts so commingled. The amounts required to be accounted for in each of the Funds designated herein may be deposited in a single bank account for the System 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 as herein provided. The designation and establishment of funds and by this Resolution shall not be construed to require the establishment of any completely independent funds but rather is intended solely to constitute an allocation of certain revenues and assets of the System for certain purposes and to establish certain priorities for application of certain revenues and assets as herein provided. ARTICLE VIII DEPOSITARIES OF MONEYS, SECURITY FOR DEPOSITS AND INVESTMENT OF FUNDS SECTION 8.01. DEPOSITS CONSTITUTE TRUST FUNDS. All funds or other property which at any time may be owned or held in the possession of or deposited with the Issuer in the Construction Fund, Revenue Fund and Renewal and Replacement Fund, under the provisions of this Resolution shall be held in trust and applied only in accordance with the provisions of this Resolution, and shall not be subject to lien or attachment by any creditor of the Issuer. All funds or other property which at any time may be owned or held in the possession of or deposited with the Issuer pursuant to this Resolution shall be continuously secured, for the benefit of the Issuer and the Bondholders, either (a) by lodging with an Authorized Depository, as custodian, with collateral security consisting of obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America having a market value (exclusive of accrued interest) not less than the amount of such deposit, or (b) in such other manner as permitted hereunder and as may then be required or permitted by applicable state or federal laws and regulations regarding the security for, or granting a preference in the case of, the deposit of trust funds, including, without limitation, the provisions of Chapter 280, Florida Statutes, as from time to time amended. All moneys deposited with each Authorized Depository shall be credited to the particular fund or account to which such moneys belong. SECTION 8.02. INVESTMENT OF MONEYS. Moneys held for the credit of the funds created hereby shall be invested and reinvested by the Issuer only in Investment Obligations. Such investments or reinvestments shall mature not later than the respective dates, as 22 estimated by the Issuer, that the moneys held for the credit of said funds will be needed for the purposes of such funds. Obligations so purchased as an investment of moneys in any such Fund shall be deemed at all times to be a part of such Fund and shall at all times, for the purposes of this Resolution, be valued annually on September 30 of each year at the cost thereof at the time of purchase or market value, whichever is less. Except as otherwise provided herein all income and profits derived from the investment of money each fund created hereunder shall be retained in such fund and used for the purposes specified for such funds. All such investments shall be made in compliance with Section 12.02 below. ARTICLE IX GENERAL COVENANTS OF THE ISSUER SECTION 9.01. REPRESENTATIONS OF THE ISSUER. The Issuer makes the following representations on which the Bondholders are hereby entitled to rely: (A) Adoption of this Resolution and the compliance by the Issuer with the requirements hereof will not conflict with or result in a breach of or a default under any law, ordinance, resolution, agreement or instrument to which the Issuer is now a party or by which it is bound. (B) The Issuer is duly authorized and empowered to operate the System and comply with the terms of this Resolution under the laws, rulings, regulations and ordinances of the United States, the State and the departments, agencies and political subdivisions thereof. (C) As of the date of issuance of the Bonds, there will exist no event of default, as defined in Section 11.01 hereof, or any condition or event which would constitute, or with the passage of time or the giving of notice, or both, would constitute an event of default hereunder. (D) There are no pending, or to the knowledge of the Issuer, threatened actions or proceedings before any court of the State or any federal court in the State or any administrative agency which are likely in any case or in the aggregate to materially adversely affect the financial condition or operations of the Issuer or its obligations under this Resolution, nor is the Issuer aware of any facts or circumstances that would give rise to any such actions or proceedings. 23 SECTION 9.02. PUNCTUAL PAYMENT. The Issuer covenants and agrees with the Bondholders that it will punctually pay or cause to be paid the principal of, premium, if any, and interest on the Bonds as the same shall become due and that it will be unconditionally and irrevocably obligated, so long as any of the Bonds are outstanding and unpaid, to take all lawful action necessary or required during each Fiscal Year so long as any of the Bonds are outstanding and unpaid, to make such payments from the funds pledged or appropriated hereunder. Further, the Pledged Funds shall not, in the aggregate, be reduced so as to be insufficient to provide adequate revenues for such purposes. Such covenant and agreement of the Issuer shall be cumulative and shall continue until such funds in amounts sufficient to make all payments required hereunder have been actually paid as herein provided. SECTION 9.03. MAINTENANCE OF SYSTEM. The Issuer will maintain the System and all parts thereof in good condition and will operate the same in an efficient and economical manner, making such expenditures for such equipment, maintenance and repairs and for renewals and replacements thereof as may be proper for its economical operation and maintenance. SECTION 9.04. OPERATING BUDGET. Before the first day of each Fiscal Year the Governing Body shall prepare, approve and adopt in the manner prescribed by law, a detailed Annual Budget of the Gross Revenues, Impact Fees and Cost of Operation and Maintenance. Such Annual Budget shall provide for Net Revenues sufficient to comply with the Issuer's obligations hereunder, including any unsatisfied obligations from prior Fiscal Years. Copies of its Annual Budgets and all authorizations for increases in the Cost of Operation and Maintenance shall be available for inspection at the offices of the Issuer and shall be mailed to any Bondholder requesting the same. The Issuer shall not expend any moneys for any purpose in excess of the budgeted appropriation therefor, or for a purpose for which there is no appropriation unless such expenditure will not have an appreciable effect upon the Issuer's anticipated or actual Net Revenues available to pay debt service on the Bonds and to make the other deposits required hereunder. SECTION 9.05. RATE COVENANT. The Issuer will enact (unless the existing rate ordinance or resolution is sufficient for the purposes hereof) and cause to be in effect at all times a rate ordinance or resolution, and the Issuer covenants with the Bondholders to fix, establish, revise from time to time whenever necessary, maintain and collect fees, rates, rentals and other charges for the use of the products, services and facilities of the System that will always provide Net Revenues in each Fiscal Year at least equal to one hundred twenty percent (120 %) of the Bond Service Requirement for that Fiscal Year. SECTION 9.06. WATER ENTERPRISE FUND EQUITY. The Issuer shall maintain a minimum total fund equity of $200,000 in its water 24 enterprise fund, to be measured as of the end of each Fiscal Year. SECTION 9.07. BOOKS AND RECORDS. The Issuer shall keep separately identifiable financial books, records, accounts and data concerning the operation of the System and the receipt and disbursement of Gross Revenues and Impact Fees and any Bondholder shall have the right at all reasonable times to inspect the same. SECTION 9.08. REPORTS AND ANNUAL AUDITS. (A) The Issuer shall require that an annual audit of its accounts and records be completed within six (6) months after the end of each Fiscal Year by an independent certified public accountant of recognized standing. Such audit shall be conducted in accordance with generally accepted auditing standards as applied to governments and shall include a calculation showing whether the Issuer met the requirements contained in Section 9.05 hereof for such Fiscal Year and a statement by the auditors stating that no default on the part of the Issuer of any covenant herein has been disclosed by reason of such audit or, alternatively, specifying in reasonable detail the nature of such default or failure to comply. (B) A copy of the comprehensive annual financial report as certified according to the requirements stated herein, shall be available for inspection at the offices of the Issuer and shall be mailed to any Bondholder requesting the same. SECTION 9.09. NO MORTGAGE OR SALE OF SYSTEM. (A) The Issuer will not mortgage, pledge or otherwise encumber the System. (B) The Issuer will not in any Fiscal Year, except in the ordinary course of business, sell or otherwise dispose of any part of the System or any component thereof, or any portion of the future capacity thereof, the total fair market value of which, as determined by the Consulting Engineer, exceeds two percent (2 %) of the Cost of Operation and Maintenance for the previous Fiscal Year, unless the Consulting Engineer shall first find in writing that the sale or disposition of such property will not materially and adversely affect the Net Revenues of the System in any of the five (5) Fiscal Years following the Fiscal Year in which such property is sold, and the Governing Body, by affirmative vote at a meeting duly called and held, shall then find that such property is no longer necessary or useful in the operations of the Issuer, and authorize the sale or other disposition of such property. The proceeds derived from any sale or disposition of any part of the System or any component thereof pursuant to this Section shall be deposited into the Renewal and Replacement Fund for the uses therein provided, and any remaining proceeds shall be used for 25 the purchase or redemption of Bonds. Proceeds received from the sale or disposition of the System or a substantial part thereof, are hereby pledged as security for the Bondholders for the purposes herein provided. (C) The System may be sold or disposed of in whole or in substantial part only upon the following conditions: 1) The System may be sold or disposed of as a whole or in substantial part only if the net proceeds to be realized shall be sufficient to fully retire all of the Bonds issued pursuant to this Resolution and all other obligations payable pursuant to the terms hereof shall be paid in full. Proceeds from such sale or disposition shall be immediately deposited in a special account established with the Issuer for such purpose and shall be used for the immediate payment and redemption of the Bonds Outstanding. 2) The Issuer may also sell, lease, transfer or dispose of all or a substantial part of the System to any other public entity or agency thereof in the State provided (i) such public entity or agency assumes the covenants, duties and obligations of the Issuer hereunder by ordinance, resolution or other appropriate written instrument, (ii) in the written opinion of the Consulting Engineer, the rates, fees, rentals and charges from the operation of the System by such public entity or agency, together with the remaining Gross Revenues from that part of the System not sold, leased, transferred or disposed of, will be sufficient to satisfy the Issuer's rate covenants contained herein and to pay in each year the debt service on the Bonds and the Cost of Operation and Maintenance and the deposits into the Renewal and Replacement Fund as herein provided, (iii) in the opinion of Bond Counsel, such action will not cause the interest on any of the Bonds outstanding hereunder to become included in gross income for federal income tax purposes, and (iv) the documents evidencing such sale, lease, transfer or disposition shall otherwise comply in all material respects, in form and substance, with the written recommendations of the Consulting Engineer. 3) The Issuer may also lease the System or any part thereof to any other legal entity provided (i) the System or such part shall, concurrently with such lease, be subleased to the Issuer or to any other public entity or agency thereof in the State qualifying under the conditions provided in Section 9.09(C)(2) above, pursuant to an agreement with a term no shorter than the final maturity date of any Bonds issued under this Resolution, 26 and (ii) the Issuer shall first comply with all of the provisions of clauses (ii) through (iv) of Section 9.09(C)(2). SECTION 9.10. INSURANCE AND CONDEMNATION AWARDS. The Issuer will carry adequate fire, windstorm and explosion insurance on the components of the System that are subject to loss through fire, windstorm or explosion; adequate public liability insurance; other insurance of the kinds and amounts normally carried in the operation of similar facilities and properties in Florida; and in time of war, such insurance as may be available at reasonable cost against loss or damage by the risks and hazards of war in an amount or amounts equal to the fair market value of the System as determined by the Consulting Engineer. The Issuer may, upon appropriate authorization by its Governing Body, self- insure against such risks on a sound actuarial basis. Any such insurance shall be carried for the benefit of the Issuer and, to the extent herein provided, the Bondholders. All proceeds received from property damage or destruction insurance and all proceeds received from the condemnation of the System or any part thereof are hereby pledged by the Issuer as security for the Bonds and shall be deposited at the option of the Issuer but subject to the limitations hereinafter described either (i) into the Renewal and Replacement Fund, in which case such proceeds shall be held in the Renewal and Replacement Fund and used to remedy the loss, damage or taking for which such proceeds are received, either by repairing the damaged property or replacing the destroyed or taken property, as soon as practicable after the receipt of such proceeds, or (ii) for the purpose of purchasing or redeeming Bonds. The Issuer shall not be entitled to deposit insurance proceeds or condemnation awards into the Renewal and Replacement Fund pursuant to clause (i) above (and such proceeds and awards shall be used to redeem Bonds pursuant to clause (ii) above) unless there shall have been filed with the Governing Body of the Issuer within a reasonable time (i) a certificate from the Consulting Engineer that the proceeds of insurance or condemnation awards deposited into the Renewal and Replacement Fund, together with other funds in the Renewal and Replacement Fund available for such purposes, will be sufficient to repair, rebuild, replace or restore such property to substantially the same condition as it was in prior to condemnation or destruction (taking into consideration any changes, alterations and modifications that the Issuer may desire), ii ) an opinion from the Consulting Engineer that the System can be repaired, rebuilt, replaced or restored within two (2) years following the destruction or condemnation thereof and (iii) an opinion of the Consulting Engineer that, in each of the three (3) Fiscal Years following completion of such repair, rebuilding, replacement or restoration, the Issuer will be in compliance with its obligations hereunder, including, without limitation, its obligations under Section 9.05 of this Resolution. If the certificate described in clause (i) above is not rendered because 27 such proceeds or awards, together with funds on deposit in the Renewal and Replacement Account are insufficient for such purposes, the Issuer may deposit other available funds in the Renewal and Replacement Fund in an amount required to enable the Consulting Engineer to render its certificate. Proceeds received from such insurance proceeds and condemnation awards shall not be deemed Gross Revenues for purposes of the rate covenant of the Issuer. SECTION 9.11. NO FREE SERVICES. The Issuer will not render or cause to be rendered any free services of any nature by the System, nor will any preferential rates be established for users of the same class; and in the event the Issuer or any department, agency, instrumentality, officer or employee thereof, shall avail itself of the facilities or services provided by the System, or any part thereof, the same rates, fees or charges applicable to other customers receiving like services under similar circumstances shall be charged to the Issuer and any such department, agency, instrumentality, officer or employee. Such charges shall be paid as they accrue, and the Issuer shall transfer from its general funds sufficient sums to pay such charges. The revenues so received shall be deemed to be revenues derived from the operation of the System, and shall be deposited and accounted for in the same manner as other revenue derived from such operation of the System. SECTION 9.12. ENFORCEMENT OF COLLECTIONS. The Issuer will diligently enforce its right to receive the Gross Revenues and will diligently enforce and collect the fees, rates, rentals and other charges for the use of the products, services and facilities of the System. The Issuer will not take any action that will impair or adversely affect its rights to levy, collect and receive the Gross Revenues, as herein pledged, or impair or adversely affect in any manner the pledge of the Net Revenues made herein or the rights of the Bondholders. The Issuer shall be unconditionally and irrevocably obligated, so long as any of the Bonds are outstanding and unpaid, to take all lawful action necessary or required to continue to entitle the Issuer to receive the Gross Revenues in at least the amounts required by this Resolution. SECTION 9.13. NO COMPETING SYSTEM. To the full extent permitted by law, the Issuer will not, after the date hereof, grant, cause, consent to, or allow the granting of, any franchise or permit to any person for the supply, treatment and distribution of water, except for the acquisition of water from the City of Delray Beach and the City of Boynton Beach, and except for the existing customers provided water directly by the City of Delray Beach or the City of Boynton Beach, within the boundaries or service areas of the Issuer. This section shall not, however, prevent the Issuer from granting permits for wells or from permitting the establishment and operation by others of a waste water reuse utility system. The Issuer will not own or operate a competing water supply, treatment or distribution system. 28 SECTION 9.14. CONSULTING ENGINEERS. The Issuer will retain Consulting Engineers and other professionals from time to time as necessary to comply with the requirements of this Resolution. ARTICLE X CONDITIONS TO THE ISSUANCE OF ADDITIONAL BONDS AND NOTES SECTION 10.01. ISSUANCE OF OBLIGATIONS. The Issuer will not issue any obligations payable from the Net Revenues, or voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or other charge having priority to the lien of the Bonds, upon the Net Revenues. The Issuer may issue obligations payable from the Net Revenues on a parity with or subordinate to the Bonds ( "Additional Debt ") so long as, in each Fiscal Year after the issuance of such Additional Debt (a) the Net Revenues in such Fiscal Year (as projected or forecast by the Consulting Engineers or a firm of certified public accountants) will equal at least one hundred twenty percent (1200) of the sum of (i) the Bond Service Requirement for such Fiscal Year and (ii) the principal and interest coming due on such Additional Debt in such Fiscal Year, and (b) the other covenants of the Issuer contained herein will continue to be met. For purposes of determining compliance with (a)(ii) immediately above, the interest rate on any Additional Debt which bears interest at a variable rate will be deemed to be the greater of (a) 1.5 times the actual rate of interest borne by such Additional Debt on the date of issuance thereof or (ii) eight percent (8.00 %) per annum. ARTICLE XI EVENTS OF DEFAULT; REMEDIES SECTION 11.01. EVENTS OF DEFAULT. Each of the following events is hereby declared an "event of default," that is to say if: (A) payment of principal of any Bond shall not be made when the same shall become due and payable; or (B) payment of any installment of interest shall not be made when the same shall become due and payable; or (C) the Issuer shall discontinue or unreasonably delay or fail to complete within a reasonable period of time a Project for which Bonds have been issued hereunder, unless the same shall be abandoned or deferred pursuant to Article V hereof; or (D) the Issuer shall for any reason be rendered incapable of fulfilling its obligations hereunder to the extent that the payment 29 of or security for the Bonds would be materially adversely affected, and such conditions shall continue unremedied for a period of thirty (30) days after the Issuer becomes aware of such conditions; or (E) an order or decree shall be entered, with the consent or acquiescence of the Issuer, appointing a receiver or receivers of the Issuer, the System, the Gross Revenues, or any part thereof or the filing of a petition by the Issuer for relief under federal bankruptcy laws or any other applicable law or statute of the United States of America or the State of Florida, which shall not be dismissed, vacated or discharged within thirty (30) days after the filing thereof; or (F) any proceedings shall be instituted, with the consent or acquiescence of the Issuer, for the purpose of effecting a composition between the Issuer and its creditors or for the purpose of adjusting the claims of such creditors, pursuant to any federal or state statutes now or hereafter enacted, if the claims of such creditors are under any circumstances payable from the Gross Revenues; or (G) the entry of a final judgment or judgments for the payment of money against the Issuer as a result of the ownership, operation or control of the System or which subjects any of the funds pledged hereunder to a lien for the payment thereof in contravention of the provisions of this Resolution for which there does not exist adequate insurance, reserves or appropriate bonds for the timely payment thereof, and any such judgment shall not be discharged within ninety (90) days from the entry thereof or an appeal shall not be taken therefrom or from the order, decree or process upon which or pursuant to which such judgment shall have been granted or entered, in such manner as to stay the execution of or levy under such judgment, order, decree or process or the enforcement thereof; or (H) the Issuer shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in this Resolution on the part of the Issuer to be performed, and such default shall continue for thirty (30) days after written notice specifying such default and requiring the same to be remedied shall have been given to the Issuer by the registered owners of not less than ten percent (10 %) of the Bond Obligation. Notwithstanding the foregoing, with respect to the events described in clauses (C), (D) and (H), the Issuer shall not be deemed in default hereunder if such default can be cured within a reasonable period of time and if the Issuer in good faith institutes appropriate curative action and diligently pursues such action until the default has been corrected. With respect to the event described in clause (C) above, the Issuer shall not be deemed 30 in default hereunder if the performance by the Issuer is prevented or delayed at any time by an act or the neglect of any contractor who is retained with due diligence by the Issuer or by the unavailability of labor, strikes, lockouts, fire, unusual delay in transportation, unavoidable casualties, war, hostilities, acts of God or other causes beyond the Issuer's control and arising without its fault or negligence, including the existence of any law, order, proclamation, regulation or ordinance of any government (excluding Issuer), provided the Issuer shall use its best efforts to remedy the delay. SECTION 11.02. ENFORCEMENT OF REMEDIES. Upon the happening and continuance of any event of default specified in Section 11.01 of this Resolution, then and in every such case the Holder may proceed to protect and enforce its rights under the laws of the State, including the Act, and under this Resolution, by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board, body or officer having jurisdiction, either for the specific performance of any covenant or agreement contained herein or in aid of execution of any power herein granted or for the enforcement of any proper legal or equitable remedy. In the enforcement of any remedy against the Issuer under this Resolution the Holder shall be entitled to sue for, enforce payment of and receive any and all amounts then or during any default becoming, and at any time remaining, due from the Issuer for principal, interest or otherwise under any provisions of this Resolution or of such Bonds and unpaid, with interest on overdue payments of principal and, to the extent permitted by law, on interest at the rate or rates of interest specified in such Bonds, together with any and all costs and expenses of collection and of all proceedings hereunder and under such Bonds, without prejudice to any other right or remedy of the Holder, and to recover and enforce any judgment or decree against the Issuer, but solely as provided herein and in such Bonds, for any portion of such amounts remaining unpaid and interest, costs and expenses as above provided, and to collect (but solely from the Pledged Funds and any other moneys available for such purpose) in any manner provided by law, the moneys adjudged or decreed to be payable. SECTION 11.03. ACCELERATION OF MATURITIES. Upon the happening and continuance of any event of default specified in Section 11.01 hereof, then and in every such case the Holder may, by a notice in writing to the Issuer, declare the principal of all of the Bonds then Outstanding (if not then due and payable) to be due and payable immediately, and upon such declaration the same shall become and be immediately due and payable, anything contained in the Bonds or in this Resolution to the contrary notwithstanding; provided, however, that if at any time after the principal of the Bonds shall have been so declared to be due and payable, and before the entry of final judgment or decree in any suit, action or 31 proceeding instituted on account of such default, or before the completion of the enforcement of any other remedy under this Resolution, moneys shall have accumulated in the appropriate funds and accounts created under this Resolution sufficient to pay the principal of all matured Bonds and all arrears of interest, if any, upon all Bonds then outstanding (except the principal of any Bonds not then due and payable by their terms and the interest accrued on such Bonds since the last interest payment date), and the charges, compensation, expenses, disbursements, advances and liabilities of the Holder and all other amounts then payable by the Issuer hereunder shall have been paid or a sum sufficient to pay the same shall have been set aside, and every other default known to the Holder, in the observance or performance of any covenant, condition, agreement or provision contained in the Bonds or in this Resolution (other than a default in the payment of the principal of such Bonds then due and payable only because of declaration under this Section) shall have been remedied, then and in every such case the Holder shall, by written notice to the Issuer, rescind and annul such declaration and its consequences, but no such rescission or annulment shall extend to or affect any subsequent default or impair any right consequent thereon. SECTION 11.04. EFFECT OF DISCONTINUING PROCEEDINGS. In case any proceeding taken by the Holder on account of any default shall have been discontinued or abandoned for any reason or shall have been determined adversely to such Holder, then and in every such case the Issuer and the Holder shall be restored to their former positions and rights hereunder, respectively. SECTION 11.05. APPOINTMENT OF A RECEIVER. Upon the happening and continuance of an event of default, and upon the filing of a suit or other commencement of judicial proceedings to enforce its rights under this Resolution, the Holder shall be entitled, as a matter of right, without regard to the solvency of the Issuer, to the appointment of a receiver or receivers of the System, pending such proceedings, with such powers as the court making such appointments shall confer, whether or not the Net Revenues and other funds pledged hereunder shall be deemed sufficient ultimately to satisfy the Bonds outstanding hereunder. ARTICLE XII MISCELLANEOUS PROVISIONS SECTION 12.01. MODIFICATION OR AMENDMENT. This Resolution may be modified and amended by the Issuer from time to time prior to the issuance of the first Series of Bonds hereunder. Thereafter, no modification or amendment of this Resolution, or of any resolution amendatory hereof or supplemental hereto, materially adverse to the Holder may be made without the consent in writing of 32 the Holder. Notwithstanding the foregoing, the Issuer may, from time to time and at any time without the consent of the Holder, enter into such supplemental resolutions (which supplemental resolutions shall thereafter form a part hereof): a) To cure any ambiguity, inconsistency or formal defect or omission in this Resolution or in any supplemental resolution, or b) To grant to or confer upon the Holder any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the Holder, or c) To modify, amend or supplement this Resolution or any resolution supplemental hereto in such manner as to permit the qualification hereof and thereof under the Trust Indenture Act of 1939 or any similar federal statute hereafter in effect or to permit the qualification of the Bonds for sale under the securities laws of any of the states of the United States of America, and, if the Issuer so determines, to add to this Resolution or any resolution supplemental hereto such other terms, conditions and provisions as may be permitted by said Trust Indenture Act of 1939 or similar federal statute, or d) To subject to the terms of this Resolution any additional funds, securities or properties, or e) To make any other change or modification of the terms hereof which, in the reasonable judgment of the Issuer is not prejudicial to the rights or interests of the holders of the Bonds hereunder. Notice of the proposed adoption of any such supplemental resolution shall be provided to each Bondholder prior to adoption and thereafter a copy of each such supplemental resolution shall be provided to each Bondholder. SECTION 12.02. TAX COVENANTS. It is the intention of the Issuer and all parties under its control that the interest on the Bonds issued hereunder be and remain excluded from gross income for federal income tax purposes and to this end the Issuer hereby represents to and covenants with each of the holders of the Bonds issued hereunder that it will comply with the requirements applicable to it contained in Section 103 and Part IV of Subchapter B of Chapter 1 of the Code to the extent necessary to preserve the exclusion of interest on the Bonds issued hereunder from gross income for federal income tax purposes. Specifically, without intending to limit in any way the generality of the foregoing, the Issuer covenants and agrees: 33 a) to refrain from using proceeds from the Bonds in a manner that might cause the Bonds to be classified as private activity bonds under Section 141(a) of the Code; and b) to refrain from taking any action that would cause the Bonds to become arbitrage bonds under Section 148 of the Code. The Issuer understands that the foregoing covenants impose continuing obligations of the Issuer that will exist as long as the requirements of Section 103 and Part IV of Subchapter B of Chapter 1 of the Code are applicable to the Bonds. SECTION 12.03. SEVERABILITY. 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 prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separate from the remaining covenants, agreements or provisions of this Resolution or of the Bonds issued hereunder, which remaining covenants, agreements and provisions shall remain in full force and effect. SECTION 12.04. NO THIRD -PARTY BENEFICIARIES. Except as herein otherwise expressly provided, nothing in this Resolution expressed or implied is intended or shall be construed to confer upon any person, firm or corporation other than the parties hereto and the owners and holders of the Bonds issued under and secured by this Resolution, any right, remedy or claim, legal or equitable, under or by reason of this Resolution or any provision hereof, this Resolution and all its provisions being intended to be and being for the sole and exclusive benefit of the parties hereto and the owners and holders from time to time of the Bonds issued hereunder. SECTION 12.05. CONTROLLING LAW; MEMBERS OF ISSUER NOT LIABLE. All covenants, stipulations, obligations and agreements of the Issuer contained in this Resolution shall be deemed to be covenants, stipulations, obligations and agreements of the Issuer to the full extent authorized by the Act and provided by the Constitution and laws of the State of Florida. No covenant, stipulation, obligation or agreement contained herein shall be deemed to be a covenant, stipulation, obligation or agreement of any present or future member, agent, officer or employee of the Issuer or the Governing Body of the Issuer in his or her individual capacity, and neither the members or officers of the Governing Body of the Issuer nor any official executing the Bonds shall be liable personally on the Bonds or this Resolution or shall be subject to any personal liability or accountability by reason of the issuance or the execution by the Issuer or such members thereof. 34 SECTION 12.06. BANK QUALIFIED ISSUE. The Issuer hereby designates the Series 1994 Bonds to be a "qualified tax - exempt obligation" within the meaning of Section 265(b) of the Code. SECTION 12.07. WAIVER OF JURY TRIAL. THE HOLDER, BY ACCEPTANCE OF THE BONDS AUTHORIZED TO BE ISSUED HEREUNDER, AND THE ISSUER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THE RESOLUTION, THE BONDS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER PARTY. SECTION 12.08. REPEAL OF INCONSISTENT RESOLUTIONS. All ordinances and other resolutions or parts thereof in conflict herewith are to the extent of such conflict superseded and repealed. SECTION 12.09. EFFECTIVE DATE. This Resolution shall become effective immediately upon its adoption. PASSED AND ADOPTED BY THE TOWN COMMISSION OF THE TOWN OF GULF STREAM, FLORIDA, this ��''day of Y�v� b pr , 1994. ATTEST: Town Clerk (SEAL) 35 TOWN OF GVL)F STREAM, FLORIDA BY lL z. r Vice -Mayor Commissioner Commissioner Commissioner EXHIBIT "A" The Initial Projects Project A - The replacement of a 360 (est.) foot water line under the Intracoastal Waterway in the Town of Gulf Stream, and any additional capital expenditures which are related to such replacement. 36