R-00-1162RESOLUTION NO. 1162
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CLERMONT, FLORIDA, AMENDING AND RESTATING IN ITS
ENTIRETY RESOLUTION NO. 901 ADOPTED FEBRUARY 27,
1996; PROVIDING FOR THE REFUNDING OF CERTAIN
~~`7 OUTSTANDING OBLIGATIONS OF THE CITY AND THE
~ ACQUISITION, CONSTRUCTION AND INSTALLATION O
~ EXTENSIONS AND IMPROVEMENTS TO THE COMBINED
MUNICIPAL WATER AND SF,WER SYSTEM OF THE CITZ';
~ 9,,. AUTHORIZING THE ISSUANCE BY THt~ CITY OF NOT
I ~ ~\() EXCEEDING $18,200,000 IN AGGREGATE PRINCIPAL
\~ D AMOUNT OF WATER AND SEWER REVENUE AND
\~\~l~:. REFUNDING BONDS, SERIES 2000, TO FINANCE A PART OF
v ~~ ~~ THE COST THEREOF, FUND A DEBT SERVICE RESERVE AND
PAY THE COSTS OF ISSUANCE OF SUCH BONDS; PLEDGING
TO SECURE PAYMENT OF THE PRINCIPAL OF AND
INTEREST ON SUCH BONDS CERTAIN PLEDGED FUNDS
INCLUDING THE NET REVENUES OF SUCH SYSTEM, IMPACT
FEES, ALL MONEYS ON DEPOSIT IN AND INVESTMENTS
HELD FOR THE CREDIT OF CERTAIN FUNDS CREATED
HEREUNDER AND THE EARNINGS ON SUCH INVESTMENTS;
AUTHORIZING A NEGOTIATED SALE AND THE AWARD OF
THE SALE OF THE SERIES 2000 BONDS, AND APPROVING
THE CONDITIONS AND CRITERIA FOR SUCH SALE;
APPROVING THE FORM AND AUTHORIZING THE
EXECUTION OF A PURCHASE CONTRACT WITH RESPECT TO
THE SERIES 2000 BONDS; AUTHORIZING A PRELIMINARY
OFFICIAL STATEMENT AND A FINAL OFFICIAL STATEMENT
WITH RESPECT TO THE SERIES 2000 BONDS; APPOINTING
THE REGISTRAR AND PAYING AGENT FOR THE SERIES 2000
BONDS AND APPROVING THE FORM AND AUTHORIZING
THE EXECUTION OF A REGISTRAR AND PAYING AGENCY
AGREEMENT BETWEEN THE AUTHORITY AND SUCH
REGISTRAR AND PAYING AGENT; APPROVING THE FORM
AND AUTHORIZING THE EXECUTION OF A CONTINUING
DISCLOSURE CERTIFICATE; APPROVING THE FORM AND
AUTHORIZING THE EXECUTION OF AN ESCROW DEPOSIT
AGREEMENT TO PROVIDE FOR THE PAYMENT OF THE
NOTES; APPOINTING THE ESCROW AGENT TO SERVE
UNDER THE ESCROW DEPOSIT AGREEMENT; SELECTING AN
INSURER AND ACCEPTING THE INSURER'S COMMITMENTS
RELATING TO A BOND INSURANCE POLICY FOR THE SERIES
2000 BONDS AND A RESERVE FUND INSURANCE POLICY TO
MEET THE RESERVE FUND REQUIREMENT; MAKING
CERTAIN COVENANTS AND AGREEMENTS FOR THE
BENEFIT OF THE HOLDERS OF SUCH BONDS; AND
PROVIDING AN EFFECTIVE DATE.
004.219416.8
TABLE OF CONTENTS
ARTICLE 1
GENERAL
Section 1.1. Definitions ........................................................................................................... 1
Section 1.2. Authority for Resolution ................................................................................... 15
Section 1.3. Resolution to Constitute Contract ..................................................................... 15
Section 1.4. Findings ............................................................................................................ 15
Section 1.5. Authorization of Initial Project ......................................................................... 17
Section 1.6. Authorization of Refunding .............................................................................. 17
Section 1.7. Refunding of Notes ........................................................................................... 17
ARTICLE 2
AUTHORIZATION, TERMS, EXECUTION
AND REGISTRATION OF BONDS
Section 2.1. Authorization of Bonds ..................................................................................... 17
Section 2.2. Authorization and Description of Series 2000 Bonds ....................................... 18
Section 2.3. Application of Series 2000 Bond Proceeds ...................................................... 20
Section 2.4. Execution of Bonds ........................................................................................... 21
Section 2.5. Authentication ................................................................................................... 21
Section 2.6. Temporary Bonds .............................................................................................. 21
Section 2.7. Bonds Mutilated, Destroyed, Stolen or Lost ..................................................... 22
Section 2.8. Interchangeability, Negotiability and Transfer ................................................. 22
Section 2.9. Form of Bonds .................................................................................................. 23
ARTICLE 3
REDEMPTION OF BONDS
Section 3.1. Privilege of Redemption ................................................................................... 33
Section 3.2. Selection of Bonds to be Redeemed ................................................................. 33
Section 3.3. Notice of Redemption ....................................................................................... 33
Section 3.4. Redemption of Portions of Bonds ..................................................................... 34
004.219416.8
Section 3.5. Payment of Redeemed Bonds ........................................................................... 34
ARTICLE 4
SECURITY, SPECIAL FUNDS AND
APPLICATION THEREOF
Section 4.1. Bonds not to be Indebtedness of Issuer ............................................................. 35
Section 4.2. Security for Bonds ............................................................................................ 35
Section 4.3. Construction Fund ............................................................................................. 35
Section 4.4. Funds and Accounts .......................................................................................... 37
Section 4.5. Flow of Funds ................................................................................................... 37
Section 4.6. Rebate Fund ...................................................................................................... 44
Section 4.7. Investments ....................................................................................................... 45
Section 4.8. Separate Accounts ............................................................................................. 46
ARTICLE 5
COVENANTS
Section 5.1. General .............................................................................................................. 47
Section 5.2. Operation and Maintenance .............................................................................. 47
Section 5.3. Annual Budget .................................................................................................. 47
Section 5.4. Rates .................................................................................................................. 48
Section 5.5. Books and Records ........................................................................................... 49
Section 5.6. Annual Audit ..................................................................................................... 49
Section 5.7. No Mortgage or Sale of the System .................................................................. 49
Section 5.8. Insurance ........................................................................................................... 50
Section 5.9. No Free Service ................................................................................................. 51
Section 5.10. No Impairment .................................................................................................. 51
Section 5.11. Compulsory Connections .................................................................................. 51
Section 5.12. Enforcement of Charges ................................................................................... 51
Section 5.13. Covenants With Credit Banks and Insurers ...................................................... 51
Section 5.14. Special Covenants Relating to Reserve Fund Insurance Policy or
Reserve Fund Letter of Credit Generally ...................................................... 52
Section 5.15. Collection of Impact Fees ................................................................................. 52
Section 5.16. Consulting Engineers ........................................................................................ 52
004.219416.8
Section 5.17. Federal Income Tax Covenants; Taxable Bonds .............................................. 52
Section 5.18. Continuing Disclosure ...................................................................................... 53
ARTICLE 6
SUBORDINATED INDEBTEDNESS AND
ADDITIONAL BONDS
Section 6.1. Subordinated Indebtedness ............................................................................... 54
Section 6.2. Issuance of Additional Bonds ........................................................................... 54
Section 6.3. Bond Anticipation Notes ................................................................................... 58
Section 6.4. Accession of Subordinated Indebtedness to Parity Status with Bonds ............. 58
ARTICLE 7
DEFAULTS AND REMEDIES
Section 7.1. Events of Default .............................................................................................. 58
Section 7.2. Remedies ........................................................................................................... 59
Section 7.3. Directions to Trustee as to Remedial Proceedings ........................................... 59
Section 7.4. Remedies Cumulative ....................................................................................... 60
Section 7.5. Waiver of Default ............................................................................................. 60
Section 7.6. Application of Moneys After Default ............................................................... 60
Section 7.7. Control by Insurer or Credit Bank .................................................................... 61
ARTICLE 8
SUPPLEMENTAL RESOLUTIONS
Section 8.1. Supplemental Resolution Without Bondholders' Consent ............................... 61
Section 8.2. Supplemental Resolution With Bondholders', Insurer's and Credit
Bank's Consent ............................................................................................. 62
Section 8.3. Amendment with Consent of Insurer and/or Credit Bank Only ....................... 63
ARTICLE 9
MISCELLANEOUS
Section 9.1. Defeasance ........................................................................................................ 64
Section 9.2. Capital Appreciation Bonds .............................................................................. 65
004.219416.8
Section 9.3. Sale of Series 2000 Bonds; Authorization of Execution and Delivery of
Purchase Contract ......................................................................................... 66
Section 9.4. Approval of Preliminary Official Statement and Authorization of
Official Statement ......................................................................................... 67
Section 9.5. Registrar and Paying Agent .............................................................................. 67
Section 9.6. Authorization of Execution and Delivery of Registrar and Paying
Agency Agreement ....................................................................................... 67
Section 9.7. Authorization of Execution and Delivery of Continuing Disclosure
Certificate ...................................................................................................... 68
Section 9.8. Escrow Holder .................................................................................................. 68
Section 9.9. Authorization of Execution and Delivery of Escrow Deposit Agreement ....... 68
Section 9.10. Provisions Relating to Insurers Generally ........................................................ 68
Section 9.11. Authorization of Execution and Delivery of Commitments for a Bond
Insurance Policy and Reserve Fund Insurance Policy for the Series
2000 Bonds ................................................................................................... 70
Section 9.12. Provisions Relating to the Bond Insurance Policy for the Series 2000
Bonds ............................................................................................................ 70
Section 9.13. Provisions Relating to the FSA Reserve Fund Insurance Policy ...................... 73
Section 9.14. General Authority ............................................................................................. 75
Section 9.15. No Personal Liability ........................................................................................ 75
Section 9.16. No Third Party Beneficiaries ............................................................................ 75
Section 9.17. Severability of Invalid Provisions ..................................................................... 75
Section 9.18. Repeal of Inconsistent Resolutions ................................................................... 75
Section 9.19. Table of Contents and Headings not Part Hereof ............................................ . 75
Section 9.20. Effective Date .................................................................................................. . 76
Exhibit A - - Purchase Contract
Exhibit B - - Preliminary Official Statement
Exhibit C - - Registrar and Paying Agency Agreement
Exhibit D - - Continuing Disclosure Certificate
Exhibit E - - Escrow Deposit Agreement
Exhibit F - - Commitments for Bond Insurance Policy and Reserve Fund Insurance Policy
004.219416.8
WHEREAS, the City Council of the City of Clermont, Florida (the "Issuer"),
previously adopted Resolution No. 901 on February 27, 1996 authorizing the issuance by the
Issuer of its Water and Sewer Revenue and Refunding Bonds, Series 2000; and
WHEREAS, it is necessary, desirable and in the best interest of the Issuer that
said resolution be amended and restated in its entirety in order to assure and improve the
marketability of said bonds;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF CLERMONT, FLORIDA:
ARTICLE 1
GENERAL
Section 1.1. Definitions. When used in this Resolution, the following terms
shall have the following meanings, unless the context clearly otherwise requires:
"Accountant" shall mean the independent certified public accountant or firm of
certified public accountants at the time employed by the Issuer under the provisions of this
Resolution to perform and carry out the duties imposed on the Accountant by this Resolution.
"Accreted Value" shall mean, as of any date of computation with respect to any
Capital Appreciation Bond, an amount equal to the principal amount of such Capital
Appreciation Bond (the principal amount at its initial offering) plus the interest accrued on
such Capital Appreciation Bond from the date of delivery to the original purchasers thereof to
the Interest Date next preceding the date of computation or the date of computation if an
Interest Date, such interest to accrue at a rate not exceeding the legal rate, compounded
semiannually, plus, with respect to matters related to the payment upon redemption or
acceleration of the Capital Appreciation Bonds, if such date of computation shall not be an
Interest Date, a portion of the difference between the Accreted Value as of the immediately
preceding Interest Date and the Accreted Value as of the immediately succeeding Interest
Date, calculated based on the assumption that Accreted Value accrues during any semiannual
period in equal daily amounts on the basis of a 360-day year.
"Act" shall mean Chapter 166, Part II, Florida Statutes, as amended, and other
applicable provisions of law.
"Additional Bonds" shall mean the obligations issued at any time under the
provisions of Section 6.2 hereof on a parity with the Series 2000 Bonds.
"Additional Project" shall mean the acquisition, construction, erection,
renovation or reconstruction of additions, extensions and improvements to the System and
shall include all property rights, appurtenances, easements, rights of way, franchises and
equipment relating thereto and deemed necessary or convenient for the acquisition,
construction, erection, renovation, reconstruction, or the operation thereof which shall be
financed or refinanced in whole or in part with the proceeds of Additional Bonds.
004.219416.8 1
"Amortization Installment" shall mean the amount designated and established as
an Amortization Installment with respect to any Term Bonds by Supplemental Resolution.
"Annual Audit" shall mean the annual audit prepared pursuant to the
requirements of Section 5.5 hereof.
"Annual Budget" shall mean the annual budget prepared pursuant to the
requirements of Section 5.3 hereof.
"Assessments" shall mean the proceeds to be derived from the assessments to
be levied against the lands and properties to be specially benefited by the construction of any
improvements to the System, including interest on such assessments and any penalties thereon
and moneys received upon the foreclosure of the liens of any such assessments.
"Authorized Depository" shall mean the State Board of Administration of
Florida or a bank or trust company in the State which is eligible under the laws of the State to
receive funds of the Issuer.
"Authorized Investments" shall mean any of the following which shall be
authorized from time to time by applicable laws of the State for deposit or purchase by the
Issuer for the investment of its funds:
(I) Direct obligations of (including obligations issued or held in book entry
form on the books of the Department of the Treasury of the United States of America and
stripped and zero coupon obligations), or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America.
(2) Bonds, debentures or notes or other evidences of indebtedness issued or
guaranteed by any federal agencies, provided such obligations are backed by the full faith and
credit of the United States of America. Stripped securities are only permitted if they have
been stripped by the agency itself.
(3) Bonds, debentures or notes or other evidences of indebtedness issued or
guaranteed by any federal agencies but not backed by the full faith and credit of the United
States of America. Stripped securities are only permitted if they have been stripped by the
agency itself.
(4) Certificates of deposit properly secured at all times by collateral security
described in either or both of paragraphs (1) and (2) of this definition. Such certificates must
be issued by commercial banks, savings and loan associations or mutual savings banks
chartered by the State or the United States of America. The collateral must be held by a third
party and the Bondholders must have a perfected first security interest in the collateral.
(S) The following investments fully insured by the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance Corporation: (A)
certificates of deposit, (B) savings accounts, (C) deposit accounts, or (D) money market
deposits.
004.219416.8 2
(6) Commercial paper rated, at the time of purchase, Prime-1 by Moody's
Investors Service and A-1 or better by Standard & Poor's.
(7) Bankers acceptances with a maximum term of one year, of any bank
which has an unsecured, uninsured and unguaranteed obligation rating of Prime-1 or A3 or
better by Moody's Investors Service and A-1 or A or better by Standard & Poor's.
(8) Written repurchase agreements with primary dealers on the Federal
Reserve reporting dealer list which are rated A or better by Standard & Poor's and A2 or
better by Moody's Investors Service, or any bank, savings institution or trust company which
is rated A or better by Standard & Poor's or A2 or better by Moody's Investors Service.
Purchased securities will be limited to those described in paragraphs (1), (2) and (3) of this
definition at a margin percentage of 102%. Purchased securities must be held in a separate,
segregated account by a tri-party custodian for the benefit of the Issuer, and the Issuer must
have a first perfected security interest in all purchased securities. Repurchase agreements
must be approved by the Insurer, if any.
(9) Investment agreements with providers initially rated at least AA- and
Aa3 by Standard & Poor's and Moody's Investors Service, respectively, with a provision that
(i) if the provider is downgraded below AA- or Aa3 by Standard & Poor's and Moody's
Investors Service, respectively, the provider must deliver collateral of the type described in
paragraph (1) of this definition at a margin percentage of 103%, or of the type described in
paragraphs (2) or (3) of this definition at a margin percentage of 104%, and (ii) if the provider
is further downgraded below A- or A3 by Standard & Poor's or Moody's, respectively, the
Issuer will have the right to terminate the agreement and receive all invested amounts plus
accrued but unpaid interest without penalty. Investment agreements must be approved by the
Insurer, if any.
(10) Money market funds registered under the Investment Company Act of
1940, whose shares are registered under the Securities Act of 1933, as amended, and having a
rating by Standard & Poor's of AAAm-G, AAA-m or AA-m, or by Moody's Investors Service
of Aaa, Aal or Aa2.
(11) Obligations of state or local government municipal bond issuers that are
rated in one of the two highest rating categories by Moody's Investors Service and Standard &
Poor's.
(12) Units of participation in the Local Government Surplus Funds Trust
Fund established pursuant to Part IV, Chapter 218, Florida Statutes, as amended, or any
similar common trust fund which is established pursuant to State law as a legal depository of
public moneys.
(13) Such other obligations as shall be permitted to be legal investments of
the Issuer by the laws of the State and which are approved in writing by the Insurer or Credit
Bank.
004.219416.8 3
Rating categories when referred to herein shall be without regard to gradations
within such categories, such as "plus" or "minus," unless otherwise specified.
"Authorized Issuer Officer" for the performance on the behalf of the Issuer of
any act of the Issuer or the execution of any instrument on behalf of the Issuer shall mean any
person authorized by resolution or certificate of the Issuer to perform such act or sign such
document.
"Available Impact Fees" shall mean the Impact Fees to the extent that such fees
or charges have been lawfully levied and collected by the Issuer and may under applicable law
be used for the acquisition or construction of the Expansion Facilities or for Impact Fees Debt
Service Components.
"Bond Amortization Account" shall mean the separate account of that name in
the Sinking Fund established pursuant to Section 4.4 hereof.
"Bond Counsel" shall mean any attorney at law or firm of attorneys, of
nationally recognized standing in matters pertaining to the federal tax exemption of interest on
obligations issued by states and political subdivisions, and duly admitted to practice law before
the highest court of any state of the United States of America.
"Bond Insurance Policy" shall mean the municipal bond new issue insurance
policy or policies issued by an Insurer guaranteeing the scheduled payment of the principal of
and interest on any portion of the Bonds when due.
"Bond Service Requirement" for any Series for any Bond Year shall mean the
sum of that portion of the Debt Service Requirement for such Bond Year allocable to the
Bonds of such Series and all other payments required by this Resolution to be paid in such
Bond Year with respect to the Bonds of such Series, which shall include such Series' pro rata
share of all deposits to the Reserve Fund in such Bond Year, and redemption premiums, if
any, payable in such Bond Year.
"Bond Year" pertaining to any Series shall mean the annual period commencing
each year on the day after the day of the year on which the Bonds of such Series mature,
whether or not Bonds of such Series mature in every year or in the Bond Year under
consideration (except that the first Bond Year for every Series shall commence on the date of
issuance of the Bonds of such Series), and ending on the next succeeding day of the year
which shall be such day of the year on which the Bonds of such Series mature. Each Bond
Year shall be designated with the number of the calendar year in which such Bond Year ends.
"Bondholder" or "Holder" or "holder" shall mean any Person who shall be the
registered owner of any Outstanding Bond or Bonds according to the registration books of the
Issuer.
"Bonds" shall mean the Series 2000 Bonds, together with any Additional Bonds
and any Subordinated Indebtedness which accedes to the status of Bonds pursuant to Section
6.4 hereof.
004.219416.8 4
"Book Entry Form" or "Book Entry System" means, with respect to the
Series 2000 Bonds, a form of system, as applicable, under which (1) the ownership of
beneficial interests in Series 2000 Bonds and debt service payments on Series 2000 Bonds may
be transferred only through a book entry and (2) physical Series 2000 Bond certificates in fully
registered form are registered only in the name of a Depository or its nominee as Holder, with
the physical Series 2000 Bond certificates "immobilized" in the custody of the Depository.
"Capital Appreciation Bonds" shall mean those Bonds so designated by
Supplemental Resolution, which may be either Serial Bonds or Term Bonds and which shall
bear interest payable at maturity or redemption. In the case of Capital Appreciation Bonds
that are convertible to Bonds with interest payable prior to maturity or prior to redemption of
such Bonds, such Bonds shall be considered Capital Appreciation Bonds only during the
period of time prior to such conversion.
"Clerk" shall mean the City Clerk of the Issuer or such other person as may be
duly authorized by the Issuer to act on his or her behalf.
"Code" shall mean the United States Internal Revenue Code of 1986, as the
same may be amended from time to time, and the regulations thereunder, whether proposed,
temporary or final, promulgated by the Department of the Treasury, Internal Revenue Service,
and all other promulgations of said service pertaining thereto.
"Construction Fund" shall mean the Construction Fund to be established
pursuant to Section 4.3 hereof.
"Consulting Engineers" shall mean one or more qualified and recognized
consulting engineers or firm of consulting engineers having favorable repute, skill and
experience with respect to the planning, construction and operation of public utility systems
similar to the System, who shall be retained or employed from time to time by the Issuer, and
may be the City Engineer.
"Continuing Disclosure Certificate" shall mean the Continuing Disclosure
Certificate relating to the Series 2000 Bonds to be executed by the Issuer, substantially in the
form attached hereto as Exhibit D.
"Cost" when used in connection with a Project, shall mean (1) the Issuer's cost
of physical construction; (2) costs of acquisition by or for the Issuer of such Project; (3) costs
of land and interests therein and the cost of the Issuer incidental to such acquisition; (4) the
cost of any indemnity and surety bonds and premiums for insurance during construction; (5)
all interest due to be paid on the Bonds and other obligations relating to the Project during the
construction period of such Project and for a reasonable period thereafter; (6) engineering,
legal and other consultant fees and expenses; (7) costs and expenses incidental to the issuance
of the Bonds including bond insurance premium, rating agency fees and the fees and expenses
of any auditors, insurers, Paying Agent, Registrar, Credit Bank or depository; (8) payments,
when due (whether at the maturity of principal or the due date of interest or upon redemption)
on any indebtedness of the Issuer (other than the Bonds) incurred for such Project; (9) costs of
machinery or equipment required by the Issuer for the commencement of operation of such
004.219416.8 5
Project; and (10) any other costs properly attributable to the issuance of the Bonds, and such
construction or acquisition, as determined by generally accepted accounting principles and may
include reimbursement to the Issuer for any such items of Cost heretofore paid by the Issuer.
Any Supplemental Resolution may provide for additional items to be included in the aforesaid
Costs.
"Credit Bank" shall mean as to any particular Series of Bonds, the Person
(other than an Insurer) providing a letter of credit, a line of credit or another credit or liquidity
enhancement facility, as designated in the Supplemental Resolution providing for the issuance
of such Bonds.
"Credit Facility" shall mean as to any particular Series of Bonds, a letter of
credit, a line of credit or another credit or liquidity enhancement facility (other than an
insurance policy issued by an Insurer), as approved in the Supplemental Resolution providing
for the issuance of such Bonds.
"Current Account" shall mean the separate account of that name in the Impact
Fees Fund established pursuant to Section 4.4 hereof.
"Debt Service Requirement" for any Bond Year shall mean the sum of:
(1) The aggregate amount required to pay the interest becoming due on the
Bonds, other than Capital Appreciation Bonds, during such Bond Year, except to the extent
that such interest shall have been provided by payments into the Interest Account out of Bond
proceeds or other sources for a specified period of time. For purposes of this definition, the
interest due on any such Bonds which shall have a variable rate of interest shall be assumed to
be the greater of (a) 110% of the daily average interest rate on such Variable Rate Bonds
during the 12 months ending with the month preceding the date of calculation, or such shorter
period that such Bonds shall have been outstanding, or (b) the actual rate of interest borne by
such Variable Rate Bonds on the date of calculation.
(2) The aggregate amount required to pay the principal becoming due on the
.Bonds, other than Capital Appreciation Bonds, for such Bond Year. For purposes of this
definition: (a) the stated maturity date of any Term Bonds shall be disregarded and the
principal of such Term Bonds shall be deemed to be due in the Bond Years and in the amounts
of the Amortization Installments applicable to such Term Bonds; and (b) the principal amount
of any single maturity of Term Bonds for which the Issuer shall have established no
Amortization Installments shall be deemed to be due in the Bond Years and in such amounts as
shall provide for the amortization of such principal amount over a term equal to the number of
years such Term Bonds shall be Outstanding to such maturity and in equal annual installments
of combined principal and interest; provided, however, that if the Issuer has employed a
Credit Facility in connection with any such Term Bonds having no Amortization Installments
the amortization of such Term Bonds shall be deemed to correspond to the applicable terms of
such Credit Facility.
(3) The aggregate amount required to pay the Accreted Value due on any
Capital Appreciation Bonds maturing in such Bond Year.
004.219416.8 6
"Depository" means any securities depository that is a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934,
operating and maintaining, with its participants or otherwise, a Book Entry System to record
ownership of beneficial interests in Series 2000 Bonds, and to effect transfers of Series 2000
Bonds, in Book Entry Form, and includes and means initially The Depository Trust Company
(a limited purpose trust company), New York, New York.
"Escrow Account" shall mean the Escrow Account held for the benefit of the
holders of the Notes by the Escrow Holder under the Escrow Deposit Agreement.
"Escrow Deposit Agreement" shall mean the Escrow Deposit Agreement which
shall be executed and delivered by and between the Issuer and the Escrow Holder, which
agreement shall be in substantially the form attached hereto as Exhibit E.
"Escrow Holder" shall mean the bank or trust company which shall execute the
Escrow Deposit Agreement with the Issuer and which shall be appointed pursuant to Section
9.8 hereof.
"Escrow Requirement" shall have the meaning assigned to such term in the
Escrow Deposit Agreement.
"Expansion Facilities" shall mean all those improvements, extensions and
additions to the System, including all lands and interests therein, franchises, plants, buildings,
machinery, fixtures, equipment, pipes, mains, and all other property, real and personal,
tangible and intangible, which shall be constructed or acquired in order to meet the increased
demand upon the System, whether actual or anticipated, created by new users connecting to
the System.
"Expansion Percentage" as applied to each Series of Bonds issued wholly or in
part to finance or refinance Expansion Facilities shall mean a fraction having a numerator
equal to the principal amount of the Bonds of such Series which are attributable to Expansion
Facilities, as shall be determined by the Qualified Independent Consultant and set forth in the
Project Certificate relating to such Series, and a denominator equal to the original aggregate
principal amount of all Bonds of such Series. Provided, however, that if amounts on deposit
in the Impact Fee Stabilization Account are, pursuant to Section 4.5(A) hereof, withdrawn
therefrom and applied to the purchase or redemption of Bonds prior to maturity, then the
numerator of the foregoing fraction shall be reduced by the amounts so withdrawn and the
denominator shall be reduced by the total principal amount of the Bonds so purchased or
redeemed. For purposes of the preceding sentence, Term Bonds redeemed from amounts on
deposit in the Bond Amortization Account shall not be considered to have been redeemed prior
to their maturity date.
"Federal Securities" shall mean direct obligations of the United States of
America and obligations the principal of and interest on which are unconditionally guaranteed
by the United States of America, none of which permit redemption prior to maturity at the
option of the obligor. Federal Securities shall include any certificates or any other evidences
004.219416.8 7
of an ownership interest in the aforementioned obligations or in specified portions thereof
(which may consist of specified portions of the interest thereon).
"Fiscal Year" shall mean the period commencing on October 1 of each year and
continuing through the next succeeding September 30, or such other period as may be
prescribed by law.
"Fitch" shall mean Fitch, Inc., the nationally recognized securities rating firm,
and any successor or successors thereto; and if such corporation shall be dissolved or
liquidated or shall no longer perform securities rating functions, shall mean any other
nationally recognized securities rating firm designated by the Issuer and approved by the
Insurer and/or the Credit Bank, as applicable.
"FSA" shall mean Financial Security Assurance Inc., a New York stock
insurance company, or any successor thereto or assignee thereof.
"FSA Reserve Fund Insurance Policy" shall mean the Municipal Bond Debt
Service Reserve Fund Insurance Policy issued by FSA.
"Governing Body" shall mean the City Council of the Issuer or its successor in
function.
"Gross Revenues" shall mean all income and moneys, excluding Assessments
and Impact Fees, received by the Issuer from the Rates, or otherwise received by the Issuer or
accruing to the Issuer in the management and operation of the System, calculated in
accordance with generally accepted accounting principles employed in the operation of public
utility systems similar to the System, including, without limiting the generality of the
foregoing, all earnings and income derived from the investment of moneys under the
provisions of this Resolution which are transferred to the Revenue Fund or the Interest
Account as herein provided.
"Impact Fees" shall mean all non-refundable (except at the option of the Issuer)
system development fees, capital expansion fees, utility improvement fees or other similar fees
and charges separately imposed by the Issuer upon new customers of the System as a nonuser
capacity charge for a proportionate share of the cost of the acquisition or construction of
Expansion Facilities, which are imposed by the Issuer for the purpose of allocating to such
customers a portion of the cost of the additional System capacity made necessary by the
extension or expected extension of System services to such new customers.
"Impact Fees Debt Service Component" for any Bond Year shall mean the
amount of Available Impact Fees equal to the total of the products determined for all Series of
Bonds issued wholly or in part to finance Expansion Facilities by multiplying the Bond Service
Requirement for each such Series by the Expansion Percentage for such Series.
"Impact Fees Fund" shall mean the Impact Fees Fund established pursuant to
Section 4.4 hereof.
004.219416.8 g
"Impact Fees Stabilization Account" shall mean the separate account of that
name in the Impact Fees Fund established pursuant to Section 4.4 hereof.
"Initial Project" shall mean the acquisition, construction, erection, renovation
or reconstruction of additions, extensions and improvements to the System, as more
particularly described in and in accordance with certain plans on file or to be on file with the
Issuer, with such changes, deletions, additions or modification to the enumerated
improvements, equipment and facilities, or such other improvements as shall be designated
and approved by Supplemental Resolution in accordance with the Act.
"Insurer" shall mean such Person as shall be in the business of insuring or
guaranteeing the payment of principal of and interest on municipal securities and whose credit
is such that, at the time of any action or consent required or permitted by the Insurer pursuant
to the terms of this Resolution, all municipal securities insured or guaranteed by it are then
rated, because of such insurance or guarantee, in one of the two highest rating categories
(without regard to gradations) by Moody's Investors Service, Fitch or Standard and Poor's,
and with respect to any Series of Bonds, the Insurer which shall have insured or guaranteed
payment of the principal of or interest on such Bonds.
"Interest Account" shall mean the separate account of that name in the Sinking
Fund established pursuant to Section 4.4hereof.
"Interest Date" shall mean such date or dates for the payment of interest on a
Series of Bonds as shall be provided by Supplemental Resolution.
"Issuer" shall mean the City of Clermont, Florida.
"Maximum Debt Service Requirement" shall mean, as of any particular date of
calculation, the greatest annual Debt Service Requirement for the Bonds for the then current or
any future Bond Year.
"Maximum Interest Rate" shall mean, with respect to any particular Variable
Rate Bonds, a numerical rate of interest, which shall be set forth in the Supplemental
Resolution delineating the details of such Bonds, that shall be the maximum rate of interest
such Bonds may at any time bear in the future in accordance with the terms of such
Supplemental Resolution.
"Mayor" shall mean the Mayor of the Issuer or such other person as may be
duly authorized by the Issuer to act on his or her behalf.
"Moody's Investors Service" shall mean Moody's Investors Service, the
nationally recognized securities rating firm, and any successor or successors thereto; and if
such corporation shall be dissolved or liquidated or shall no longer perform securities rating
functions, shall mean any other nationally recognized securities rating firm designated by the
Issuer and approved by the Insurer and/or the Credit Bank, as applicable.
"Net Revenues" shall mean Gross Revenues less Operating Expenses.
004.219416.8 9
"Notes" shall mean the Issuer's Water and Sewer Revenue and Refunding Bond
Anticipation Notes, Series 1996, dated as of March 1, 1996, or any series of refunding notes
issued pursuant to the Note Resolution to refund any series of refunding notes previously
issued pursuant to the Note Resolution.
"Note Resolution" shall mean the resolution adopted by the Governing Body of
the Issuer on February 27, 1996, as supplemented, authorizing the issuance of the Notes.
"Operating Expenses" shall mean the Issuer's expenses for operation,
maintenance and repairs with respect to the System and shall include, without limiting the
generality of the foregoing, administration expenses, insurance and surety bond premiums, the
fees to the provider of a Reserve Fund Insurance Policy or Reserve Fund Letter of Credit (but
excluding any expenses or reimbursement obligations for draws made thereunder), the fees of
any rebate compliance service or of Bond Counsel relating to compliance with the provisions
of Section 148 of the Code, legal and engineering expenses, ordinary and current rentals of
equipment or other property, refunds of moneys lawfully due to others, payments to others for
disposal of sewage or other wastes, payments to pension, retirement, health and hospitalization
funds, and any other expenses required to be paid for or with respect to proper operation or
maintenance of the System, all to the extent properly attributable to the System in accordance
with generally accepted accounting principles employed in the operation of public utility
systems similar to the System, and disbursements for the expenses, liabilities and
compensation of any Paying Agent or Registrar under this Resolution, but does not include
any costs or expenses in respect of original construction or improvement other than
expenditures necessary to prevent an interruption or continuance of an interruption of the
Gross Revenues, or any provision for interest, depreciation, amortization or similar charges.
"Outstanding" shall mean all Bonds theretofore and thereupon being
authenticated and delivered, except (1) any Bond in lieu of which another Bond or other Bonds
have been issued under an agreement to replace lost, mutilated or destroyed Bonds, (2) any
Bond surrendered by the Holder thereof in exchange for another Bond or other Bonds under
Section 2.6 and Section 2.8 hereof, (3) Bonds deemed to have been paid pursuant to Section
9.1 hereof, and (4) Bonds canceled after purchase in the open market or because of payment at
or redemption prior to maturity.
"Paying Agent" shall mean the entity appointed pursuant to Section 9.5 hereof,
when acting in its capacity as paying agent for the Series 2000 Bonds under the Registrar and
Paying Agency Agreement.
"Person" shall mean an individual, a corporation, a partnership, an association,
a joint stock company, a trust, any unincorporated organization or governmental entity.
"Pledged Funds" shall mean the Pledged Revenues and, until applied in
accordance with the provisions of this Resolution, the proceeds of the Bonds and all moneys,
including investments thereof, in the funds and accounts established hereunder, except the
Rebate Fund and the Impact Fee Stabilization Account.
004.219416.8 10
"Pledged Revenues" shall mean the Net Revenues and the Impact Fees Debt
Service Components.
"Preliminary Official Statement" shall mean the Preliminary Official Statement
relating to the Series 2000 Bonds, substantially in the form attached hereto as Exhibit B.
"Prerefunded Obligations" shall mean any bonds or other obligations of any
state of the United States of America or of any agency, instrumentality or local governmental
unit of any such state (1) which are (a) not callable prior to maturity or (b) as to which
irrevocable instructions have been given to the fiduciary for 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, (2) which are fully secured as to principal, redemption
premium, if any, and interest by a fund consisting only of cash or Federal Securities, secured
in the manner set forth in Section 9.1 hereof, which fund may be applied only to the payment
of such principal of, redemption premium, if any, and interest on such bonds or other
obligations on the maturity date or dates thereof or the specified redemption date or dates
pursuant to such irrevocable instructions, as the case may be, (3) as to which the principal of
and interest on the Federal Securities deposited in such fund with any cash on deposit in such
fund, are sufficient, as verified by an independent certified public accountant, to pay principal
of, redemption premium, if any, and interest on the bonds or other obligations on the maturity
date or dates thereof or on the redemption date or dates specified in such irrevocable
instructions, and (4) which are rated in the highest rating category of Standard & Poor's and of
Moody's Investors Service.
"Principal Account" shall mean the separate account of that name in the Sinking
Fund established pursuant to Section 4.4 hereof.
"Project" shall mean the Initial Project and any Additional Project.
"Project Certificate" shall mean that certificate of the Qualified Independent
Consultant filed with the Issuer at or prior to the delivery of any Series of Bonds issued wholly
or in part to finance Expansion Facilities setting forth the estimated total cost of the Project,
the estimated cost of the Expansion Facilities portion of the Project and the Expansion
Percentage.
"Purchase Contract" shall mean the Bond Purchase Agreement to be executed
by the Issuer and the Underwriter, substantially in the form attached hereto as Exhibit A.
"Qualified Independent Consultant" shall mean one or more qualified and
recognized independent consultants, having favorable repute, skill and experience with respect
to the acts and duties required of a qualified independent consultant to be provided to the
Issuer, as shall from time to time be retained by the Issuer to perform the acts and carry out
the duties herein provided for such consultants. The Qualified Independent Consultant may be
also the Accountant or the Issuer's Consulting Engineers.
004.2 7 9416.8 11
"Rates" shall mean the rates, fees, rentals and other charges which shall be
made and collected by the Issuer for the use of the product, services and facilities to be
provided by the System.
"Rate Stabilization Fund" shall mean the Rate Stabilization Fund established
pursuant to Section 4.4 hereof.
hereof.
"Rebate Fund" shall mean the Rebate Fund established pursuant to Section 4.4
"Redemption Price" shall mean, with respect to any Bond or portion thereof,
the principal amount or portion thereof, plus the applicable premium, if any, payable upon
redemption thereof pursuant to such Bond or Supplemental Resolution.
"Registrar" shall mean the entity appointed pursuant to Section 9.5 hereof,
when acting in its capacity as registrar for the Series 2000 Bonds under the Registrar and
Paying Agency Agreement.
"Registrar and Paying Agency Agreement" shall mean the Registrar and Paying
Agency Agreement to be executed by the Issuer and the Registrar and Paying Agent,
substantially in the form attached hereto as Exhibit C.
"Renewal and Replacement Fund" shall mean the Renewal and Replacement
Fund established pursuant to Section 4.4 hereof.
"Renewal and Replacement Fund Requirement" shall mean, on the date of
calculation, an amount of money equal to the lesser of (1) $250,000 or (ii) such other amount
as may be recommended to the Issuer by the Qualified Independent Consultant and approved
by the Governing Body as an amount appropriate for the purposes of this Resolution.
4.4 hereof.
"Reserve Fund" shall mean the Reserve Fund established pursuant to Section
"Reserve Fund Insurance Policy" shall mean the insurance policy deposited in
the Reserve Fund in lieu of or in partial substitution for cash on deposit therein pursuant to
Section 4.5(D).
"Reserve Fund Letter of Credit" shall mean a Credit Facility (other than a
Reserve Fund Insurance Policy) issued by any bank or national banking association, insurance
company or other financial institution and then on deposit in the Reserve Fund in lieu of or in
partial substitution for cash on deposit therein pursuant to Section 4.5(D) hereof.
"Reserve Fund Requirement" shall mean, as of any date of calculation, an
amount equal to the lesser of (1) the Maximum Debt Service Requirement, (2) 125% of the
average annual Debt Service Requirement, or (3) 10% of the proceeds of each Series of
Outstanding Bonds. In computing the Reserve Fund Requirement, the interest rate on
Variable Rate Bonds shall be assumed to be the greater of (a) 110% of the daily average
004.219416.8 12
interest rate on such Variable Rate Bonds during the twelve (12) months ending with the
month preceding the date of calculation, or such shorter period of time that such Bonds shall
have been Outstanding, or (b) the actual rate of interest borne by the Variable Rate Bonds on
such date of calculation.
"Resolution" and "this Resolution" shall mean this instrument, as the same may
from time to time be amended, modified or supplemented by any and all Supplemental
Resolutions.
"Revenue Fund" shall mean the Revenue Fund established pursuant to Section
4.4 hereof.
"Securities" shall mean Federal Securities and Prerefunded Obligations.
"Serial Bonds" shall mean all of the Bonds other than the Term Bonds.
"Series" shall mean all the Bonds delivered on original issuance in a
simultaneous transaction and identified pursuant to Section 2.1 and Section 2.2 hereof or in a
Supplemental Resolution authorizing the issuance by the Issuer of such Bonds as a separate
Series, regardless of variations in maturity, interest rate, Amortization Installments or other
provisions.
"Series 2000 Bonds" shall mean the Issuer's Water and Sewer Revenue and
Refunding Bonds, Series 2000, authorized pursuant to Section 2.2 hereof.
"Sinking Fund" shall mean the Sinking Fund established pursuant to Section 4.4
hereof.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a division
of The McGraw Hill Companies, Inc., the nationally recognized securities rating firm, and
any successor and successors thereto; and if such corporation shall be dissolved or liquidated
or shall no longer perform securities rating functions, shall mean any other nationally
recognized securities rating firm designated by the Issuer and approved by the Insurer and/or
the Credit Bank, as applicable.
"State" shall mean the State of Florida.
"Subordinated Indebtedness" shall mean that indebtedness of the Issuer,
subordinate and junior to the Bonds, issued in accordance with the provisions of Section 6.1
hereof and any Variable Rate Bonds which become Subordinated Indebtedness in accordance
with Section 6.2 hereof.
' "Supplemental Resolution" shall mean any resolution of the Issuer amending or
supplementing this Resolution, adopted and becoming effective prior to the issuance of the
Series 2000 Bonds or in accordance with the terms of Section 8.1, Section 8.2 and Section 8.3
hereof.
ooa.2is4is.a 13
"System" shall mean any and all water production, transmission, purification
and distribution facilities and appurtenant facilities, and all sewage collection, transmission,
treatment and disposal facilities and appurtenant facilities now owned and operated or hereafter
owned and operated by the Issuer, which System shall also include any and all improvements,
extensions and additions thereto hereafter constructed or acquired which shall be financed
either from the proceeds of Bonds or from any other funds or sources, together with all
property, real or personal, tangible or intangible, now or hereafter owned or used in
connection therewith.
"Taxable Bond" shall mean any Bond which states, in the body thereof, that the
interest income thereon is includable in the gross income of the Holder thereof for federal
income taxation purposes.
"Term Bonds" shall mean those Bonds which shall be designated as Term
Bonds hereby or by Supplemental Resolution and which are subject to mandatory redemption
by Amortization Installments.
"Underwriter" shall mean PaineWebber Incorporated.
"Variable Rate Bonds" shall mean Bonds issued with a variable, adjustable,
convertible or other interest rate which at the date of issue is not fixed as one or more stated
percentages for the entire term of such Bonds.
The terms "herein," "hereunder," "hereby," "hereto," "hereof," and any
similar terms, shall refer to this Resolution; the term "heretofore" shall mean before the date
of adoption of this Resolution; and the term "hereafter" shall mean after the date of adoption
of this Resolution.
Words importing the singular number include the plural number, and vice
versa.
004.219416.8 14
Section 1.2. Authority for Resolution. This Resolution is adopted pursuant to
the provisions of the Act.
Section 1.3. 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 provisions of this Resolution shall be deemed to be and shall constitute a
contract between the Issuer and the Holders from time to time of the Bonds and shall be a part
of the contract of the Issuer with any Credit Bank and any Insurer. 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 the Bonds and for the benefit, protection and security of any Credit Bank and
any Insurer. 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 1.4. Findin s. It is hereby ascertained, determined and declared as
follows:
(A) For the benefit of its inhabitants, the Issuer presently owns,
operates and maintains the System for the supply and distribution of water for domestic,
commercial and industrial use and for the collection, treatment and disposal of sewage.
(B) The Issuer deems it necessary, desirable and in the best interest of
the Issuer that the Initial Project be acquired and constructed. The Cost of the Initial Project
shall be financed with the proceeds of the Series 2000 Bonds.
(C) The Issuer has heretofore issued and has presently outstanding and
unpaid the Notes.
(D) The Issuer deems it necessary, desirable and in the best financial
interest of the Issuer that the Notes be refunded. Simultaneously with the issuance of the
Series 2000 Bonds, a sufficient portion of the proceeds of the Series 2000 Bonds and other
funds available will be paid by the Issuer to the Escrow Holder for deposit by the Escrow
Holder into the Escrow Account established pursuant to the Escrow Deposit Agreement, to
effectuate the refunding and defeasance of the Notes pursuant to the provisions of the Note
Resolution.
(E) The Issuer deems it necessary, desirable and in the best interest of
the Issuer that the Pledged Funds be pledged to the payment of the principal of and interest on
the Bonds. No part of the Pledged Funds has been pledged or encumbered in any manner
except that a portion of the Pledged Funds are presently pledged for the payment of the
principal of and interest on the Notes.
(F) The estimated Gross Revenues to be derived in each year hereafter
from the operation of the System will be sufficient to pay Operating Expenses, the principal of
and interest on the Bonds, as the same become due, and all other payments provided for in this
Resolution.
004.219416.8 15
(G) The principal of and interest on the Bonds and all other payments
provided for in this Resolution will be paid solely from the sources herein provided in
accordance with the terms hereof; and no ad valorem taxing power of the Issuer will ever be
exercised nor will any Holder of any Bond or any Credit Bank or any Insurer have the right to
compel the exercise of such ad valorem taxing power to pay the principal of or interest on the
Bonds or to make any other payments provided for in this Resolution, and the Bonds shall not
constitute a lien upon the System or upon any other property of the Issuer or situated within its
corporate territorial limits, except the Pledged Funds.
(H) The Issuer is advised that due to the present volatility of the market
for public obligations such as the Series 2000 Bonds, it is in the best interest of the Issuer to
sell the Series 2000 Bonds by a negotiated sale, allowing the Issuer to enter into the market at
the most advantageous time, rather than any specified advertised future date, thereby
permitting the Issuer to obtain the best possible price, interest rates and other terms for the
Series 2000 Bonds and, accordingly, the Issuer does hereby find and determine that it is in the
best financial interest of the Issuer that a negotiated sale of the Series 2000 Bonds be
authorized.
(I) The Underwriter has orally agreed to use its best efforts to submit
to the Issuer an offer to purchase the Series 2000 Bonds in the form of the Purchase Contract
upon terms acceptable to the Issuer as hereinafter authorized, and it is in the best financial
interest of the Issuer to accept the offer of the Underwriter to purchase the Series 2000 Bonds
at a negotiated sale and to authorize the execution and delivery of the Purchase Contract in the
manner and upon the terms hereinafter provided; and upon the execution of the Purchase
Contract by the Issuer and the Underwriter, the Series 2000 Bonds shall be sold to the
Underwriter pursuant to the terms and provisions of the Purchase Contract.
(J) The Issuer is advised that because the terms of the Series 2000
Bonds cannot be determined on the date of adoption of this Resolution, it is in the best interest
of the Issuer to delegate to the Mayor or the Issuer's Finance Director, in the manner
hereinafter provided, the authority to determine the terms of the Series 2000 Bonds not
specified herein, including but not limited to their date, amortization schedule, maturity dates,
'interest rates and redemption provisions.
(K) It is appropriate that the Issuer approve the Preliminary Official
Statement for the purpose of acquainting potential investors with pertinent information with
respect to the Issuer and the Series 2000 Bonds and that the Issuer authorize the distribution of
a final official statement prior to or contemporaneously with the issuance and delivery of the
Series 2000 Bonds. For this purpose, it is appropriate that the Preliminary Official Statement
be approved and that preparation and distribution of a Final Official Statement in the manner
hereinafter provided be authorized in substantially the form of the Preliminary Official
Statement, the final form thereof to be approved by the Mayor or the Issuer's Finance Director
at any time at or prior to the issuance of the Series 2000 Bonds.
(L) It is necessary and appropriate that the Issuer appoint a Registrar
and Paying Agent for the Series 2000 Bonds. In order to provide for the services of a
ooa.2i sai s.s 16
Registrar and Paying Agent for the Series 2000 Bonds, it is necessary and appropriate that the
Issuer authorize the execution and delivery of the Registrar and Paying Agency Agreement
between the Issuer and the Registrar and Paying Agent in the manner hereinafter provided.
(M) In order to provide for compliance with the requirements with
Securities and Exchange Commission Rule 15c2-12, it is necessary and appropriate that the
Issuer authorize the execution and delivery of the Continuing Disclosure Certificate in the
manner hereinafter provided.
(N) It is appropriate that the Issuer select an Insurer to provide a Bond
Insurance Policy to secure the payment of the Series 2000 Bonds and a Reserve Fund
Insurance Policy to satisfy the portion of the Reserve Fund Requirement attributable to the
Series 2000 Bonds. For this purpose, it is necessary and appropriate that the Issuer authorize
the execution and delivery of commitments for a Bond Insurance Policy for the Series 2000
Bonds and the FSA Reserve Fund Insurance Policy in the manner hereinafter provided.
Section 1.5. Authorization of Initial Project. The acquisition and construction
of the Initial Project in the manner herein provided is hereby authorized.
Section 1.6. Authorization of Refunding. The refunding of the Notes in the
manner herein provided is hereby authorized.
Section 1.7. Refunding of Notes. Simultaneously with the delivery of the
Series 2000 Bonds to the purchaser or purchasers thereof, the Issuer will enter into the Escrow
Deposit Agreement with the Escrow Holder. At the time the Escrow Deposit Agreement is
executed, the Issuer will furnish to the Escrow Holder appropriate documentation to
demonstrate that the sum being deposited with the Escrow Holder pursuant to this Resolution,
together with other funds deposited into the Escrow Account pursuant to the provisions of the
Escrow Deposit Agreement, shall be equal to the Escrow Requirement and that such moneys
and the investments to be made pursuant to the Escrow Deposit Agreement will be sufficient to
produce the moneys required to make all payments described in the Escrow Deposit
Agreement for the full and complete refunding and defeasance of the Notes.
ARTICLE 2
AUTHORIZATION, TERMS, EXECUTION
AND REGISTRATION OF BONDS
Section 2.1. Authorization of Bonds. The Issuer hereby authorizes the
issuance of Bonds of the Issuer to be designated as "City of Clermont, Florida, Water and
Sewer Revenue Bonds," which may be issued in one or more Series as hereinafter provided.
The aggregate principal amount of the Bonds which may be executed and delivered under this
Resolution is not limited except as may hereafter be provided by Supplemental Resolution or
as limited by the Act or by other applicable law.
The Bonds may, if and when authorized by the Issuer pursuant to this
Resolution or Supplemental Resolution, be issued in one or more Series, with such further
004.219416.8 17
appropriate particular designations added to or incorporated in such title for the Bonds of any
particular Series as the Issuer may determine and as may be necessary to distinguish such
Bonds from the Bonds of any other Series. Each Bond shall bear upon its face the designation
so determined for the Series to which it belongs.
The Bonds shall be issued for such purpose or purposes; shall bear interest at
such rate or rates not exceeding the maximum rate permitted by law; and shall be payable in
lawful money of the United States of America on such dates; all as determined by this
Resolution or by Supplemental Resolution. From and after any maturity date of any of the
Bonds (deposit of moneys and/or Securities for the payment of the principal and interest on
such Bonds having been made by the Issuer with the Paying Agents), notwithstanding that any
of such Bonds shall not have been surrendered for cancellation, no further interest shall accrue
upon the principal or upon the interest which shall have accrued and shall then be due on such
date, and such Bonds shall cease to be entitled to any lien, benefit or security under this
Resolution, and the Holders shall have no rights in respect of such Bonds except to receive
payment of such principal and unpaid interest accrued to the maturity date.
The Bonds shall be issued in such denomination or denominations and such
form, whether coupon or registered; shall be dated such date or dates; shall bear such
numbers; shall be payable at such place or places; shall contain such redemption provisions;
shall have such Paying Agents and Registrars; shall mature in such years and amounts; and the
proceeds shall be used in such manner all as determined by this Resolution or by Supplemental
Resolution. The Issuer may issue Bonds which may be secured by a Credit Facility or by a
Bond Insurance Policy all as shall be determined by this Resolution or by Supplemental
Resolution.
Section 2.2. Authorization and Description of Series 2000 Bonds. A Series of
Bonds entitled to the benefit, protection and security of this Resolution is hereby authorized to
be issued in an aggregate principal amount not to exceed $18,200,000 for the principal
purpose of financing a part of the cost of acquiring and constructing the Initial Project,
refunding the Notes, funding the Reserve Fund and paying certain costs of issuance incurred
with respect to such Series. Such Series shall be designated as, and shall be distinguished
from the Bonds of all other Series by the title "City of Clermont, Florida, Water and Sewer
Revenue and Refunding Bonds, Series 2000," provided the Issuer may change such
designation in the event that the Series 2000 Bonds are not issued in calendar year 2000.
The Series 2000 Bonds shall be dated as of the first day of the month in which
occurs the delivery of the Series 2000 Bonds to the purchaser or purchasers thereof or such
other date as may be set forth by Supplemental Resolution; shall be issued as fully registered
Bonds; and shall be numbered consecutively from one upward in order of maturity preceded
by the letter "R;" shall be in such denominations and shall bear interest at a rate or rates not
exceeding the maximum rate permitted by law (calculated on the basis of a 360-day year of
twelve 30-day months), payable in such manner and on such dates; shall consist of such
amounts of Serial Bonds, Term Bonds, Variable Rate Bonds and Capital Appreciation Bonds,
maturing in such amounts and in such years not exceeding thirty (30) years from their date;
004.219416.8 18
shall have such Paying Agents and Registrars; and shall contain such redemption provisions;
all as the Issuer shall hereafter provide by Supplemental Resolution.
The principal of or Redemption Price, if applicable, on the Series 2000 Bonds is
payable upon presentation and surrender of the Series 2000 Bonds at the office of the Paying
Agent. Interest payable on any Series 2000 Bond on any Interest Date will be paid by check
or draft of the Paying Agent to the Holder in whose name such Bond shall be registered at the
close of business on the date which shall be the fifteenth day (whether or not a business day)
of the calendar month next preceding such Interest Date, or, unless otherwise provided by
Supplemental Resolution, at the option of the Paying Agent, and at the request and expense of
such Holder, by bank wire transfer for the account of such Holder. In the event the interest
payable on any Series 2000 Bond is not punctually paid or duly provided for by the Issuer on
such Interest Date, such defaulted interest will be paid to the Holder in whose name such Bond
shall be registered at the close of business on a special record date for the payment of such
defaulted interest as established by notice to such Holder, not less than ten (10) days preceding
such special record date. All payments of principal of or Redemption Price, if applicable, and
interest on the Series 2000 Bonds shall be payable 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.
A Depository may act as securities depository for the Series 2000 Bonds. The
ownership of one fully-registered, certificated Series 2000 Bond for each maturity, each in the
aggregate principal amount of such maturity, may be registered in the name of a Depository or
its nominee.
The Series 2000 Bonds in a Book Entry System registered in the name of a
Depository or its nominee shall be payable in lawful money of the United States of America in
immediately available funds (i) in the case of principal of and any premium on such
Series 2000 Bonds, delivered or transmitted to the Depository or its authorized representative
when due, and (ii) in the case of interest on the Series 2000 Bonds, delivered or transmitted on
any date interest is due to the Depository or nominee that was the Holder of that Series 2000
Bond (or one or more predecessor Series 2000 Bonds) at the close of business on the record
date applicable to that interest payment date.
The Issuer will recognize the Depository or its nominee as the Holder for all
purposes, including notices. Conveyance of notices and other communications by the
Depository to participants, by participants to indirect participants, and by participants and
indirect participants to beneficial owners will be governed by arrangements among them,
subject to any statutory and regulatory requirements as may be in effect from time to time.
In the event that (i) the Depository determines to discontinue providing its
service with respect to the Series 2000 Bonds by giving written notice to the Issuer and
discharging its responsibilities with respect thereto under applicable law, and the Issuer fails to
appoint a successor Depository for the Series 2000 Bonds, or (ii) the Issuer determines to
discontinue the Book Entry System through a Depository, then bond certificates are required
to be delivered as described in the Series 2000 Bonds. The purchasers of beneficial ownership
004.219416.8 19
interests in the Series 2000 Bonds (the "Beneficial Owners"), upon registration of certificates
held in the Beneficial Owner's name, will become the registered owner of the Series 2000
Bonds.
Neither the Issuer nor the Registrar and Paying Agent will have any
responsibility or obligation to any Beneficial Owner or any other person with respect to (i) the
accuracy of any records maintained by the Depository or any persons participating by or
through the Depository; (ii) the payment by the Depository or any persons participating by or
through the Depository of any amount with respect to the principal or Redemption Price, if
applicable, or interest on the Series 2000 Bonds; (iii) any notice which is permitted or required
to be given to Holders pursuant to this Resolution; (iv) the selection by the Depository or any
persons participating by or through the Depository of any person to receive payment in the
event of a partial redemption of the Series 2000 Bonds; or (v) any consent given or other
action taken by the Depository as Holder.
Section 2.3. Application of Series 2000 Bond Proceeds. Except as otherwise
provided by Supplemental Resolution, the proceeds derived from the sale of the Series 2000
Bonds, including accrued interest and premium, if any, shall, simultaneously with the delivery
of the Series 2000 Bonds to the purchaser or purchasers thereof, be applied by the Issuer as
follows:
(A) Accrued and capitalized interest shall be deposited in the Interest
Account.
(B) An amount shall be deposited in the Reserve Fund which, together
with any moneys and securities on deposit therein and any Reserve Fund Insurance Policy
and/or Reserve Fund Letter of Credit obtained in accordance with Section 4.5(D) hereof, shall
equal the Reserve Fund Requirement.
(C) A sufficient amount of the Series 2000 Bond proceeds which,
together with other funds deposited in the Escrow Account pursuant to the provisions of the
Escrow Deposit Agreement, shall equal the Escrow Requirement, shall be deposited with the
Escrow Holder under the Escrow Deposit Agreement and applied only in the manner provided
in the Escrow Deposit Agreement.
(D) The Issuer covenants and agrees to establish a separate account
with an Authorized Depository to be known as the "City of Clermont Water and Sewer
Revenue Bonds Costs of Issuance Account" (the "Costs of Issuance Account"), which shall be
used only for the payment of costs and expenses described in this subsection. A sum sufficient
to pay all costs and expenses in connection with the preparation, issuance and sale of the
Series 2000 Bonds, including fees of financial advisors, insurers, engineering and other
consulting fees, legal fees, bond insurance premiums, printing fees, rating agency fees and
other similar costs shall be deposited to the credit of the Cost of Issuance Account, and all
such costs and expenses shall be promptly paid by the Issuer to the persons respectively
entitled to receive the same. When all moneys on deposit to the credit of the Costs of Issuance
Account shall have been disbursed by the Issuer for the payment of such costs and expenses,
004.219416.8 20
the Costs of Issuance Account shall be closed; provided, however, that if any balance shall
remain in the Costs of Issuance Account six months after issuance of the Series 2000 Bonds,
such moneys shall be transferred by the Issuer to the Construction Fund and the Costs of
Issuance Account shall be closed. After the Cost of Issuance Account shall be closed, the
Issuer may pay from the Construction Fund any unpaid issuance expenses.
(E) The balance of the Series 2000 Bond proceeds shall be deposited in
the Construction Fund.
Section 2.4. Execution of Bonds. The Bonds shall be executed in the name of
the Issuer with the manual or facsimile signature of the Mayor and the official seal of the
Issuer shall be imprinted thereon, attested and countersigned with the manual or facsimile
signature of the Clerk. In case any one or more of the officers who shall have signed or
sealed any of the Bonds or whose facsimile signature shall appear thereon shall cease to be
such officer of the Issuer before the Bonds so signed and sealed have been actually sold and
delivered such Bonds may nevertheless be sold and delivered as herein provided and may be
issued as if the person who signed or sealed such Bonds had not ceased to hold such office.
Any Bond may be signed and sealed on behalf of the Issuer by such person who at the actual
time of the execution of such Bond shall hold the proper office of the Issuer, although at the
date of such Bond such person may not have held such office or may not have been so
authorized. The Issuer may adopt and use for such purposes the facsimile signatures of any
such persons who shall have held such offices at any time after the date of the adoption of this
Resolution, notwithstanding that either or both shall have ceased to hold such office at the time
the Bonds shall be actually sold and delivered.
Section 2.5. Authentication. No Bond of any Series shall be secured
hereunder or entitled to the benefit hereof or shall be valid or obligatory for any purpose
unless there shall be manually endorsed on such Bond a certificate of authentication by the
Registrar or such other entity as may be approved by the Issuer for such purpose. Such
certificate on any Bond shall be conclusive evidence that such Bond has been duly
authenticated and delivered under this Resolution. The form of such certificate shall be
substantially in the form provided in Section 2.9 hereof.
Section 2.6. Temporar}! Bonds. Until the' definitive Bonds of any Series are
prepared, the Issuer may execute, in the same manner as is provided in Section 2.4, and
deliver, upon authentication by the Registrar pursuant to Section 2.5 hereof, in lieu of
definitive Bonds, but subject to the same provisions, limitations and conditions as the
definitive Bonds, except as to the denominations thereof, one or more temporary Bonds
substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or
Bonds are issued, in denominations authorized by the Mayor and the Clerk, such authorization
to be evidenced conclusively by their execution of such temporary Bond or Bonds, and with
such omissions, insertions and variations as may be appropriate to temporary Bonds. The
Issuer, at its own expense, shall prepare and execute definitive Bonds, which shall be
authenticated by the Registrar. Upon the surrender of such temporary Bonds for exchange,
the Registrar, without charge to the Holder thereof, shall deliver in exchange therefor
definitive Bonds, of the same aggregate principal amount and Series and maturity as the
004.219416.8 21
temporary Bonds surrendered. Until so exchanged, the temporary Bonds shall in all respects
be entitled to the same benefits and security as definitive Bonds issued pursuant to this
Resolution. All temporary Bonds surrendered in exchange for another temporary Bond or
Bonds or for a definitive Bond or Bonds shall be forthwith canceled by the Registrar.
Section 2.7. Bonds Mutilated, Destroyed, Stolen or Lost. In case any Bond
shall become mutilated, or be destroyed, stolen or lost, the Issuer may, in its discretion, issue
and deliver, and the Registrar shall authenticate, a new Bond of like tenor as the Bond so
mutilated, destroyed, stolen or lost, in exchange and substitution for such mutilated Bond upon
surrender and cancellation of such mutilated Bond or in lieu of and substitution for the Bond
destroyed, stolen or lost, and upon the Holder furnishing the Issuer and the Registrar proof of
such Holder's ownership thereof and satisfactory indemnity and complying with such other
reasonable regulations and conditions as the Issuer or the Registrar may prescribe and paying
such expenses as the Issuer and the Registrar may incur. All Bonds so surrendered or
otherwise substituted shall be canceled by the Registrar. If any of the Bonds shall have
matured or be about to mature, instead of issuing a substitute Bond, the Issuer may pay the
same or cause the Bond to be paid, upon being indemnified as aforesaid, and if such Bonds be
lost, stolen or destroyed, without surrender thereof.
Any such duplicate Bonds issued pursuant to this Section 2.7 shall constitute
original, additional contractual obligations on the part of the Issuer whether or not the lost,
stolen or destroyed 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 the Pledged Funds to the
same extent as all other Bonds issued hereunder and shall be entitled to the same benefits and
security as the Bond so lost, stolen or destroyed.
Section 2.8. Interchangeabilit~gotiability and Transfer. Bonds, upon
surrender thereof at the office of the Registrar with a written instrument of transfer satisfactory
to the Registrar, duly executed by the Holder thereof or such Holder's attorney duly
authorized in writing, may, at the option of the Holder thereof, be exchanged for an equal
aggregate principal amount of registered Bonds of the same Series and maturity of any other
authorized denominations.
The Bonds issued under this Resolution shall be and have all the qualities and
incidents of negotiable instruments under the laws of the State of Florida, subject to the
provisions for registration and transfer contained in this Resolution and in the Bonds. So long
as any of the Bonds shall remain Outstanding, the Issuer shall cause to be maintained and kept,
at the office of the Registrar, books for the registration and transfer of the Bonds.
Each Bond shall be transferable only upon the books of the Issuer, at the office
of the Registrar, under such reasonable regulations as the Issuer may prescribe, by the Holder
thereof in person or by such Holder's attorney duly authorized in writing upon surrender
thereof together with a written instrument of transfer satisfactory to the Registrar duly
executed and guaranteed by the Holder or such Holder's duly authorized attorney. Upon the
transfer of any such Bond, the Issuer shall issue, and cause to be authenticated, in the name of
the transferee a new Bond or Bonds of the same aggregate principal amount and Series and
004.219416.8 22
maturity as the surrendered Bond. The Issuer, the Registrar and any Paying Agent or
fiduciary of the Issuer may deem and treat the Person in whose name any Outstanding Bond
shall be registered upon the books of the Issuer as the absolute owner of such Bond, whether
such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of,
the principal or Redemption Price, if applicable, and interest on such Bond and for all other
purposes, and all such payments so made to any such Holder or upon such Holder's order
shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent
of the sum or sums so paid and neither the Issuer nor the Registrar nor any Paying Agent or
other fiduciary of the Issuer shall be affected by any notice to the contrary.
The Registrar, in any case where it is not also the Paying Agent in respect to
any Series of Bonds, shall forthwith (a) following the fifteenth day prior to an Interest Date for
such Series, (b) following the fifteenth day next preceding the date of first mailing of notice of
redemption of any Bonds of such Series, and (c) at any other time as reasonably requested by
the Paying Agent of such Series, certify and furnish to such Paying Agent the names,
addresses and holdings of Bondholders and any other relevant information reflected in the
registration books.
In all cases in which the privilege of exchanging Bonds or transferring Bonds is
exercised, the Issuer shall execute and the Registrar shall authenticate and deliver such Bonds
in accordance with the provisions of this Resolution. Execution of Bonds by the Mayor and
the Clerk for purposes of exchanging, replacing or transferring Bonds may occur at the time of
the original delivery of the Series of which such Bonds are a part. All Bonds surrendered in
any such exchanges or transfers shall be canceled by the Registrar. For every such exchange
or transfer of Bonds, the Issuer or the Registrar may make a charge sufficient to reimburse it
for any tax, fee, expense or other governmental charge required to be paid with respect to
such exchange or transfer. The Issuer and the Registrar shall not be obligated to make any
such exchange or transfer of Bonds of any Series during the fifteen (15) days next preceding
an Interest Date on the Bonds of such Series (other than Capital Appreciation Bonds and
Variable Rate Bonds), or, in the case of any proposed redemption of Bonds, during the fifteen
(15) days next preceding the redemption date established for such Bonds.
The Issuer may elect to issue any Bonds as uncertificated registered public
obligations (not represented by instruments), commonly known as book-entry obligations,
provided it shall establish a system of registration therefor by Supplemental Resolution.
Section 2.9. Form of Bonds. Except for Capital Appreciation Bonds and
Variable Rate Bonds, the form of which shall be provided by Supplemental Resolution, the
Bonds shall be in substantially the following form with such omissions, insertions and
variations as may be necessary and/or desirable and approved by the Mayor or the Clerk prior
to the issuance thereof (which necessity and/or desirability and approval shall be evidenced
conclusively by the Issuer's delivery of the Bonds to the purchaser or purchasers thereof):
004.219416.8 2,3
No. R-
UNITED STATES OF AMERICA
STATE OF FLORIDA
COUNTY OF LAKE
CITY OF CLERMONT, FLORIDA
WATER AND SEWER REVENUE AND REFUNDING BOND, SERIES
Interest Maturity Date of
Rate Date Original Issue CUSIP
Registered Holder:
Principal Amount:
KNOW ALL MEN BY THESE PRESENTS, that the City of Clermont, a
municipality created and existing under and by virtue of the laws of the State of Florida (the
"Issuer"), for value received, hereby promises to pay, solely from the sources of payment
hereinafter described, to the Registered Holder identified above, or registered assigns as
hereinafter provided, the Principal Amount identified above on the Maturity Date identified
above and interest (calculated on the basis of a 360-day year of twelve 30-day months) on such
Principal Amount from the Date of Original Issue identified above or from the most recent
interest payment date to which interest has been paid, at the Interest Rate per annum identified
above on and of each year commencing ,
until such Principal Amount shall have been paid or provided for, except as the
provisions hereinafter set forth with respect to redemption prior to maturity may be or become
applicable hereto.
Such Principal Amount and interest and the premium, if any, on this bond are
payable in any coin or currency of the United States of America which, on the respective dates
of payment thereof, shall be legal tender for the payment of public and private debts. Such
Principal Amount and the premium, if any, on this bond, aze payable, upon presentation and
surrender hereof, at the office of , , as paying agent, or
such other paying agent as the Issuer shall hereafter duly appoint (the "Paying Agent").
Payment of each installment of interest shall be made to the person in whose name this bond
shall be registered on the registration books of the Issuer maintained by ,
as registrar, or such other registrar as the Issuer shall
hereafter duly appoint (the "Registrar"), at the close of business on the date which shall be the
fifteenth day (whether or not a business day) of the calendaz month next preceding each
interest payment date and shall be paid by a check or draft of the Paying Agent mailed to such
Registered Holder at the address appearing on such registration books or, at the option of the
004.219416.8 24
Paying Agent, and at the request and expense of such Registered Holder, by bank wire
transfer for the account of such Holder. In the event interest payable on this bond is not
punctually paid or duly provided for by the Issuer on such interest payment date, payment of
each installment of such defaulted interest shall be made to the person in whose name this
bond shall be registered at the close of business on a special record date for the payment of
such defaulted interest as established by notice to such Registered Holder, not less than ten
(10) days preceding such special record date.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF
THIS BOND SET FORTH ON THE REVERSE SIDE HEREOF AND SUCH FURTHER
PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET
FORTH IN THIS PLACE.
This bond shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been manually signed by the Registrar.
[The remainder of this page has been intentionally left blank.)
004.219416.8 2.5
IN WITNESS WHEREOF, the City of Clermont, Florida, has issued this bond
and has caused the same to be executed by the manual or facsimile signature of its Mayor and
attested and countersigned by the manual or facsimile signature of its City Clerk and its
official seal or a facsimile thereof to be affixed or reproduced hereon, all as of the ~ day
of ~~~~_, 20~.
(SEAL)
CITY OF CLERMONT, FLORIDA
r~-
ayor
ATTESTED AND COUNTERSIGNED:
Clerk
004.219416.8 26
CERTIFICATE OF AUTHENTICATION
Resolution.
This bond is one of the Bonds of the issue described in the within-mentioned
DATE OF AUTHENTICATION:
Registrar
By:
Authorized Signatory
(Provisions on Reverse Side of Bond)
This bond is one of an authorized issue of bonds of the Issuer in the aggregate
principal amount of $ (the "Bonds") of like date, tenor and effect,
except as to maturity date, interest rate, denomination and number, issued to finance the cost
of , in and for the Issuer, under the authority of and in
full compliance with the Constitution and laws of the State of Florida, particularly Chapter
166, Part II, Florida Statutes, as amended, and other applicable provisions of law (the "Act"),
and an amended and restated resolution duly adopted by the City Council of the Issuer on
2000, as supplemented (the "Resolution"), and is subject to all the
terms and conditions of the Resolution.
The principal of, premium, if any, and interest on this bond are payable solely
from and secured by a lien upon and a pledge of the Pledged Revenues (as defined in the
Resolution), including the Net Revenues (as defined in the Resolution) to be derived from the
operation of the Issuer's water and sewer system (the "System"), and, until applied in
accordance with the provisions of the Resolution, the proceeds of the Bonds and all moneys,
including investments thereof, in certain of the funds and accounts established pursuant to the
Resolution, all in the manner and to the extent described in the Resolution (collectively, the
"Pledged Funds"). It is expressly agreed by the Registered Holder of this bond that the full
faith and credit of neither the Issuer, the State of Florida, nor any political subdivision thereof,
is pledged to the payment of the principal of or premium, if any, or interest on this bond and
that the Registered Holder shall never have the right to require or compel the exercise of any
taxing power of the Issuer, the State of Florida, or any political subdivision thereof, to the
payment of such principal, premium, if any, and interest. This bond and the obligation
evidenced hereby shall not constitute a lien upon the System or any other property of the
Issuer, except the Pledged Funds, and shall be payable solely from the Pledged Funds in
accordance with the terms of the Resolution.
Neither the members of the City Council of the Issuer nor any person executing
this bond shall be liable personally hereon or be subject to any personal liability or
accountability by reason of the issuance hereof.
004.219416.8 2'7
The Bonds maturing prior to ,shall not be subject to
redemption prior to maturity. The Bonds maturing on , or thereafter may be
redeemed prior to maturity at the option of the Issuer, as a whole or in part on
or on any date thereafter (if in part, from such maturity or maturities
as the Issuer shall designate and by lot within a maturity), at the following redemption prices
(expressed as a percentage of the principal amount of the Bonds to be redeemed) plus accrued
interest to the redemption date, if redeemed during the following periods:
Redemption Period Redemption
(both dates inclusive) Price
through
through
and thereafter
The Bonds maturing ,are subject to mandatory redemption
in part prior to maturity by lot at a redemption price equal to the principal amount thereof,
without premium, plus accrued interest to the redemption date, beginning on
,and on each thereafter in the years and in the principal
amounts corresponding to the Amortization Installments (as defined in the Resolution) as
follows:
Amortization
Year Installments
(maturity)
Notice of redemption, unless waived, is to be given by the Registrar by mailing
an official redemption notice by first class mail, postage prepaid, at least 30 days and not more
than 60 days prior to the date fixed for redemption to the registered holders of the Bonds to be
redeemed at such holders' addresses shown on the registration books maintained by the
Registrar or at such other addresses as shall be furnished in writing by such registered holders
to the Registrar; provided, however, that no defect in any such notice to any registered holder
of Bonds to be redeemed nor failure to give such notice to any such registered holder nor
failure of any such registered holder to receive such notice shall in any manner defeat the
effectiveness of a call for redemption as to all other registered holders of Bonds to be
redeemed. Notice of redemption having been given as aforesaid, the Bonds or portions of
Bonds to be redeemed shall, on the redemption date, become due and payable at the
redemption price therein specified, and from and after such date (unless the Issuer shall default
in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear
interest.
This bond is and has all the qualities and incidents of a negotiable instrument
under the laws of the State of Florida, but may be transferred only in accordance with the
004.219416.8 2g
terms of the Resolution only upon the books of the Issuer kept for that purpose at the office of
the Registrar by the Registered Holder in person or by such Holder's attorney duly authorized
in writing, upon the surrender of this bond together with a written instrument of transfer
satisfactory to the Registrar duly executed by the Registered Holder or such Holder's attorney
duly authorized in writing, and thereupon a new Bond or Bonds in the same aggregate
principal amount shall be issued to the transferee in exchange therefor, and upon the payment
of the charges, if any, prescribed in the Resolution. Each of the Bonds is issuable in fully
registered form in the denomination of $5,000 or any integral multiple thereof not exceeding
the aggregate principal amount of the Bonds having the same maturity. The Issuer, the
Registrar and any Paying Agent may treat the Registered Holder of this bond as the absolute
owner hereof for all purposes, whether or not this bond shall be overdue, and shall not be
affected by any notice to the contrary. The Issuer and the Registrar shall not be obligated to
make any exchange or transfer of any Bonds during the fifteen (15) days next preceding an
interest payment date or, in the case of any proposed redemption of any Bonds, during the
fifteen (15) days next preceding the redemption date established for such Bonds.
[The Bonds when issued will be registered initially in the name of Cede & Co. ,
as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will
act as the initial securities depository for the Bonds. Individual purchases of the Bonds may be
made in book entry form only, and such purchasers will not receive certificates representing
their interests in the Bonds. While the Bonds are registered in the name of a securities
depository (a "Depository") or its nominee the Issuer will recognize the Depository or its
nominee as the Holder of the Bonds for all purposes, including notices. Conveyance of
notices and other communications by the Depository to participants, by participants to indirect
participants, and by participants and indirect participants to beneficial owners will be governed
by arrangements among them, subject to any statutory and regulatory requirements as may be
in effect from time to time.
The Bonds are issuable only as fully-registered bonds and, except as hereinafter
provided, in printed or typewritten form, registered in the name of Cede & Co., as nominee of
DTC, which shall be considered to be the Registered Holder for all purposes of the
Resolution, including without limitation, payment by the Issuer of principal of, premium, if
any, and interest on the Bonds, and receipt of notices and exercise of rights of holders of the
Bonds. There shall be a single Bond which shall be immobilized in the custody of DTC with
the beneficial owners having no right to receive the Bonds in the form of physical securities or
certificates. Ownership of beneficial interest in the Bonds shall be shown by book entry on the
system maintained and operated by DTC and its participants, and transfers of ownership or
beneficial interests shall be made only by DTC and its participants, by book entry, the Issuer
having no responsibility therefor. DTC is expected to maintain records of the positions of
participants in the Bonds, and the participants and persons acting through participants are
expected to maintain records of the purchasers of beneficial interests in the Bonds. The Bonds
as such shall not be transferable or exchangeable, except for transfer to another Depository or
to another nominee of a Depository, without further action by the Issuer.
If any Depository determines not to continue to act as a Depository for the
Bonds for use in a book entry system, the Issuer may attempt to have established a securities
004.219416.8 29
depository/book entry system relationship with another qualified Depository under the
Resolution. If the Issuer does not or is unable to do so, the Issuer and the Registrar and
Paying Agent, after the Registrar and Paying Agent has made provision for notification of the
beneficial owners by the then Depository, shall permit withdrawal of the Bonds from the
Depository, and authenticate and deliver Bond certificates in fully registered form (in
denominations of $5,000 or multiples thereof) to the assigns of the Depository or its nominee.
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 connection with the issuance of this
bond, exist, have happened and have been performed, in regular and due form and time as
required by the Constitution and laws of the State of Florida applicable thereto, and that the
issuance of the bonds does not violate any constitutional or statutory limitations or provisions.]
LEGAL OPINION
[Insert appropriate approving opinion of bond counsel.]
The above is a true copy of the opinion rendered by Foley & Lardner,
Jacksonville, Florida, in connection with the issuance of, and dated as of the original delivery
of, the Bonds of the issue of which this bond is one. An executed copy of that opinion is on
file in my office.
City Clerk
004.219416.8 30
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 applicable laws or
regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants in common
UNIF TRANS MIN ACT --
(Gust.)
Custodian for
under Uniform Transfer to Minors Act of
(State)
Additional abbreviations may also be used though not in list above.
004.219416.8 3 I
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto
Insert Social Security or Other
Identifying Number of Assignee
(Name and Address of Assignee)
the within bond and does hereby irrevocably constitute and appoint
as attorneys to register the transfer of the said bond on the books kept for registration thereof
with full power of substitution in the premises.
Dated:
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed
by an institution which is a participant in the
Securities Transfer Agent Medallion Program
(STAMP) or similar program.
NOTICE: The signature to this assignment
must correspond with the name of the
Registered Holder 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 other
identifying number of such assignee must be
supplied.
004.219416.8 32
ARTICLE 3
REDEMPTION OF BONDS
Section 3.1. Privilege of Redemption. The terms of this Article 3 shall apply
to redemption of Bonds other than Capital Appreciation Bonds or Variable Rate Bonds. The
terms and provisions relating to redemption of Capital Appreciation Bonds and Variable Rate
Bonds shall be provided by Supplemental Resolution.
Section 3.2. Selection of Bonds to be Redeemed. The Bonds shall be
redeemed only in the principal amount of $5,000 each and integral multiples thereof. The
Issuer shall, at least sixty (60) days prior to the redemption date (unless a shorter time period
shall be satisfactory to the Registrar) notify the Registrar of such redemption date and of the
principal amount of Bonds to be redeemed. For purposes of any redemption of less than all of
the Outstanding Bonds of a single maturity, the particular Bonds or portions of Bonds to be
redeemed shall be selected not more than forty-five (45) days prior to the redemption date by
the Registrar from the Outstanding Bonds of the maturity or maturities designated by the
Issuer by such method as the Registrar shall deem fair and appropriate and which may provide
for the selection for redemption of Bonds or portions of Bonds in principal amounts of $5,000
and integral multiples thereof.
If less than all of the Outstanding Bonds of a single maturity are to be
redeemed, the Registrar shall promptly notify the Issuer and Paying Agent (if the Registrar is
not the Paying Agent for such Bonds) in writing of the Bonds or portions of Bonds selected for
redemption and, in the case of any Bond selected for partial redemption, the principal amount
thereof to be redeemed.
Section 3.3. Notice of Redemption. Unless waived by any Holder of Bonds
to be redeemed, notice of any redemption made pursuant to this section shall be given by the
Registrar on behalf of the Issuer by mailing a copy of an official redemption notice by first
class mail, postage prepaid, at least thirty (30) days and not more than sixty (60) days prior to
the date fixed for redemption to each Holder of Bonds to be redeemed at the address of such
Holder shown on the registration books maintained by the Registrar or at such other address as
shall be furnished in writing by such Holder to the Registrar; provided, however, that no
defect in any notice given pursuant to this section to any Holder of Bonds to be redeemed nor
failure to give such notice shall in any manner defeat the effectiveness of a call for redemption
as to all other Holders of Bonds to be redeemed.
Every official notice of redemption shall be dated and shall state:
(1) the redemption date,
(2) the Redemption Price,
(3) if less than all outstanding Bonds are to be redeemed, the number (and, in
the case of a partial redemption of any Bond, the principal amount) of each Bond to be
redeemed,
004.219416.8 33
(4) that on the redemption date the Redemption Price will become due and
payable upon each such Bond or portion thereof called for redemption, and that interest
thereon shall cease to accrue from and after said date, and
(5) that such Bonds to be redeemed, whether as a whole or in part, are to be
surrendered for payment of the Redemption Price plus accrued interest at the office of the
Paying Agent.
Prior to any redemption date, the Issuer shall deposit with the Paying Agent an
amount of money sufficient to pay the Redemption Price of and accrued interest on all the
Bonds or portions of Bonds which are to be redeemed on that date.
In addition to the foregoing notice, further notice may be given by the Issuer as
set out below, but no defect in said further notice nor any failure to give all or any portion of
such further notice shall in any manner defeat the effectiveness of a call for redemption if
notice thereof is given as above prescribed.
(1) Each further notice of redemption given hereunder shall contain the
information required above for an official notice of redemption plus (a) the CUSIP numbers of
all Bonds being redeemed; (b) the date of issue of the Bonds as originally issued; (c) the rate
of interest borne by each Bond being redeemed; (d) the maturity date of each Bond being
redeemed; and (e) any other descriptive information needed to identify accurately the Bonds
being redeemed.
(2) Each further notice of redemption shall be sent at least thirty-five (35) days
before the redemption date by registered or certified mail or overnight delivery service to any
Insurer which shall have insured, or any Credit Bank which shall have provided a Credit
Facility for, any of the Bonds being redeemed and to all registered securities depositories then
in the business of holding substantial amounts of obligations of types similar to the type of
which the Bonds consist (such depositories now being Depository Trust Company of New
York, New York, Midwest Securities Trust Company of Chicago, Illinois, and Philadelphia
Depository Trust Company of Philadelphia, Pennsylvania) and to one or more national
information services that disseminate notices of redemption of obligations such as the Bonds.
Section 3.4. Redemption of Portions of Bonds. Any Bond which is to be
redeemed only in part shall be surrendered at any place of payment specified in the notice of
redemption (with due endorsement by, or written instrument of transfer in form satisfactory to
the Registrar duly executed by, the Holder thereof or such Holder's attorney duly authorized
in writing) and the Issuer shall execute and the Registrar shall authenticate and deliver to the
Holder of such Bond, without service charge, a new Bond or Bonds, of the same interest rate
and maturity, and of any authorized denomination as requested by such Holder, in an
aggregate principal amount equal to and in exchange for the unredeemed portion of the
principal of the Bonds so surrendered.
Section 3.5. Payment of Redeemed Bonds. Official notice of redemption
having been given substantially as aforesaid, the Bonds or portions of Bonds to be redeemed
shall, on the redemption date, become due and payable at the Redemption Price therein
004.219416.8 34
specified, and from and after such date (unless the Issuer shall default in the payment of the
Redemption Price) such Bonds or portions of Bonds shall cease to bear interest. Upon
surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be
paid by the Registrar and/or Paying Agent at the appropriate Redemption Price, plus accrued
interest. Each check or other transfer of funds issued by the Registrar and/or Paying Agent
for the purpose of the payment of the Redemption Price of Bonds being redeemed shall bear
the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the
proceeds of such check or other transfer. Installments of interest due on or prior to the
redemption date shall be payable as herein provided for payment of interest. All Bonds which
have been redeemed shall be canceled by the Registrar and shall not be reissued.
ARTICLE 4
SECURITY, SPECIAL FUNDS AND
APPLICATION THEREOF
Section 4.1. Bonds not to be Indebtedness of Issuer. The Bonds shall not be
or constitute general obligations or indebtedness of the Issuer as "bonds" within the meaning
of any constitutional or statutory provision, but shall be special obligations of the Issuer,
payable solely from and secured by a lien upon and pledge of the Pledged Funds in accordance
with the terms of this Resolution. The Issuer may cause any Series of Bonds to be payable
from and secured by a Credit Facility or a Bond Insurance Policy not applicable to any one or
more other Series of Bonds. No Holder of any Bond or any Credit Bank or any Insurer shall
ever have the right to compel the exercise of the ad valorem taxing power of the Issuer to pay
such Bond or shall be entitled to payment of such Bond from any moneys of the Issuer except
the Pledged Funds, in the manner provided herein.
The Pledged Funds shall be subject to the lien of this pledge immediately upon
the issuance and delivery of the Series 2000 Bonds, without any physical delivery by the Issuer
of the Pledged Funds or further act, and the lien of this pledge shall be valid and binding as
against all parties having claims of any kind against the Issuer, in tort, contract or otherwise.
Section 4.2. Security for Bonds. The payment of the principal of or
Redemption Price, if applicable, and interest on the Bonds shall be secured forthwith equally
and ratably by a pledge of and lien upon the Pledged Funds; provided, however, a Series of
Bonds may be further secured by a Credit Facility or a Bond Insurance Policy not applicable
to any one or more other Series of Bonds, as shall be provided by Supplemental Resolution, in
addition to the security provided herein. The Issuer does hereby irrevocably pledge the
Pledged Funds to the payment of the principal of or Redemption Price, if applicable, and
interest on the Bonds.
Section 4.3. Construction Fund. The Issuer covenants and agrees to establish
a separate fund with an Authorized Depository to be known as the "City of Clermont Water
and Sewer Revenue Bond Construction Fund," which shall be used only for payment of the
Cost of Projects. Moneys in the Construction Fund, until applied in payment of any item of
the Cost of a Project in the manner hereinafter provided, shall be held in trust by the Issuer
004.219416.8 35
and shall be subject to a lien and charge in favor of the Bondholders and for the further
security of such Holders.
There shall be paid into the Construction Fund the amounts required to be so
paid by the provisions of this Resolution or any Supplemental Resolution, and there may be
paid into the Construction Fund, at the option of the Issuer, any moneys received for or in
connection with a Project by the Issuer from any other source.
The Issuer shall establish within the Construction Fund a separate account for
the Initial Project and each Additional Project, the Cost of which is to be paid in whole or in
part out of the Construction Fund.
The proceeds of insurance maintained pursuant to this Resolution against
physical loss of or damage to a Project, or of contractors' performance bonds with respect
thereto pertaining to the period of construction thereof, shall be deposited into the appropriate
account of the Construction Fund.
The Issuer covenants that the acquisition and construction of each Project will
be completed without delay and in accordance with sound engineering practices. The Issuer
shall make disbursements or payments from the Construction Fund to pay the Cost of a Project
upon the filing with the Clerk of documents and/or certificates signed by an Authorized Issuer
Officer stating with respect to each disbursement or payment to be made: (1) the item number
of the payment, (2) the name and address of the Person to whom payment is due, (3) the
amount to be paid, (4) the Construction Fund account from which payment is to be made, (5)
the purpose, by general classification, for which payment is to be made, and (6) that (A) each
obligation, item of cost or expense mentioned therein has been properly incurred, is in
payment of a part of the Cost of a Project and is a proper charge against the account of the
Construction Fund from which payment is to be made and has not been the basis of any
previous disbursement or payment, or (B) each obligation, item of cost or expense mentioned
therein has been paid by the Issuer, is a reimbursement of a part of the Cost of a Project, is a
proper charge against the account of the Construction Fund from which payment is to be
made, has not been theretofore reimbursed to the Issuer or otherwise been the basis of any
previous disbursement or payment and the Issuer is entitled to reimbursement thereof. The
Clerk shall retain all such documents and/or certificates of the Authorized Issuer Officers for
seven (7) years from the dates of such documents and/or certificates. The Clerk shall make
available the documents and/or certificates at all reasonable times for inspection by any
Bondholder or the agent or representative of any Bondholder.
Notwithstanding any of the other provisions of this Section 4.3, to the extent
that other moneys are not available therefor, amounts in the Construction Fund shall be
applied to the payment of principal of or Redemption Price, if applicable, and interest on
Bonds when due.
The date of completion of a Project shall be determined by the Authorized
Issuer Officer who shall certify such fact in writing to the Governing Body. Promptly after
the date of the completion of a Project, and after paying or making provisions for the payment
004.219416.8 36
of all unpaid items of the Cost of such Project, the Issuer shall deposit in the following order
of priority any balance of moneys remaining in the Construction Fund in (1) another account
of the Construction Fund for which the Authorized Issuer Officer has stated that there are
insufficient moneys present to pay the Cost of the related Project, (2) the Reserve Fund, to the
extent of a deficiency therein, and (3) such other fund or account of the Issuer, including those
established hereunder, as shall be determined by the Governing Body, provided the Issuer has
received an opinion of Bond Counsel to the effect that such transfer shall not adversely affect
the exclusion, if any, of interest on the Bonds from gross income for federal income tax
purposes.
Section 4.4. Funds and Accounts. The Issuer covenants and agrees to
establish with one or more Authorized Depositories the following separate funds and accounts:
(A) Water and Sewer System Revenue Fund.
(B) Water and Sewer Revenue Bond Sinking Fund. The Issuer shall
establish in the Sinking Fund three accounts: the "Interest Account," the "Principal Account"
and the "Bond Amortization Account."
(C) Water and Sewer Revenue Bond Reserve Fund.
(D) Water and Sewer System Impact Fees Fund. The Issuer shall
establish in the Impact Fees Fund two accounts: the "Current Account" and the "Impact Fee
Stabilization Account."
(E) Water and Sewer System Rate Stabilization Fund.
(F) Water and Sewer System Renewal and Replacement Fund.
(G) Water and Sewer Revenue Bond Rebate Fund.
The Issuer may establish by Supplemental Resolution such other funds and
accounts as it shall deem necessary or advisable.
The Issuer shall at any time and from time to time appoint one or more
Authorized Depositories to hold, for the benefit of the Issuer and/or the Bondholders, any one
or more of the funds and accounts established hereby. Such depository or depositaries shall
perform at the direction of the Issuer the duties of the Issuer in depositing, transferring and
disbursing moneys to and from each of such funds and accounts as herein set forth, and all
records of such depository in performing such duties shall be open at all reasonable times to
inspection by the Issuer and its agents and employees.
Section 4.5. Flow of Funds.
(A) Impact Fees. The Issuer shall deposit into the Current Account all
Available Impact Fees, promptly upon receipt thereof, until there shall have been deposited
therein an amount equal to the Impact Fees Debt Service Component for the then current Bond
004.219416.8 37
Year, together with the amount of any continuing deficiency in the deposits for the Impact
Fees Debt Service Component for any prior Bond Year, and thereafter the Issuer shall deposit
into the Impact Fee Stabilization Account all additional Available Impact Fees received in such
Bond Year.
On or before the last day of each month, the Issuer shall withdraw from
the moneys on deposit to the credit of the Current Account and deposit in the Sinking Fund a
sum equal to one-twelfth (1/12) of the Impact Fees Debt Service Component for the then
current Bond Year, together with the amount of any continuing deficiency in prior monthly
transfers from the Current Account to the Sinking Fund.
The moneys in the Impact Fee Stabilization Account may, to the extent
such moneys may be lawfully used for such purpose, be applied at the discretion of the Issuer
(1) for deposit to the Current Account whenever the moneys on deposit therein are insufficient
for the purposes set forth herein, (2) for the acquisition and construction of Expansion
Facilities or to the payment of debt service on indebtedness incurred to finance the acquisition
and construction of Expansion Facilities, and (3) for the purchase or redemption of Bonds;
provided, however, that the aggregate amount of Available Impact Fees applied by the Issuer
pursuant to clauses (1) and (3) and pursuant to the second paragraph of this subsection (A) to
Bond Service Requirements shall never exceed the aggregate Impact Fees Debt Service
Components determined for all Bonds.
(B) Revenues. The Issuer shall deposit all Gross Revenues into the
Revenue Fund promptly upon the receipt thereof. On or before the last day of each month,
commencing with the month in which delivery of the Series 2000 Bonds shall be made to the
purchasers thereof, the moneys in the Revenue Fund shall be deposited or credited in the
following manner and in the following order of priority:
(1) Operation and Maintenance. Amounts in the Revenue Fund
shall be used first to pay reasonable and necessary Operating Expenses for the next
ensuing month; provided, however, that no such payment shall be made unless the
provisions of Section 5.3 hereof in regard to the current Annual Budget are complied
with.
(2) Sinking_Fund. Next, the Issuer shall deposit into or credit to
the Sinking Fund such sums as are described in Section 4.5(C) hereof.
(3) Reserve Fund. Next, the Issuer shall deposit into or credit to
the Reserve Fund such sums as are described in Section 4.5(D) hereof.
(4) Renewal and Replacement Fund. Next, the Issuer shall
deposit into or credit to the Renewal and Replacement Fund such sums as shall be
sufficient to pay one-twelfth (1 / 12) of an amount equal to five percent (5 %) of the
Gross Revenues received by the Issuer in the immediately preceding Fiscal Year, until
the balance on deposit in the Renewal and Replacement Fund equals the Renewal and
Replacement Fund Requirement. If the balance on deposit in the Renewal and
Replacement Fund exceeds the Renewal and Replacement Fund Requirement such
004.219416.8 3g
excess amount shall be transferred by the Issuer from the Renewal and Replacement
Fund and deposited into the Revenue Fund. The moneys in the Renewal and
Replacement Fund shall be applied by the Issuer for the purpose of paying the cost of
extensions, improvements or additions to, or the replacement or renewal of capital
assets of, the System, or extraordinary repairs of the System; provided, however, that
on or prior to each principal and interest payment date for the Bonds (in no event
earlier than the fifteenth day of the month next preceding such payment date), moneys
in the Renewal and Replacement Fund shall be deposited into the Interest Account, the
Principal Account and the Bond Amortization Account when the moneys therein are
insufficient to pay the principal of and interest on the Bonds coming due, but only to
the extent moneys available in the Reserve Fund and the Rate Stabilization Fund for
such purpose pursuant to Section 4.5(D) hereof shall be inadequate to fully provide for
such insufficiency.
(5) Rate Stabilization Fund. The balance of any moneys
remaining in the Revenue Fund after the payments and deposits required by part (1)
through (4) of this Section 4.5(B) shall be deposited or credited to the Rate
Stabilization Fund. The moneys on deposit in the Rate Stabilization Fund may be
transferred, at the discretion of the Issuer, to any other appropriate fund or account of
the Issuer and be used by the Issuer for any lawful purpose, including, but not limited
to, the payment of the principal of, premium, if any, and interest on the Bonds or any
Subordinated Indebtedness hereafter issued by the Issuer; provided, however, that on
or prior to each principal and interest payment date for the Bonds (in no event earlier
than the fifteenth day of the month next preceding such payment date), moneys in the
Rate Stabilization Fund shall be deposited into the Interest Account, the Principal
Account and the Bond Amortization Account when the moneys therein are insufficient
to pay the principal of and interest on the Bonds coming due.
(C) Sinking Fund. The Issuer shall deposit into or credit to the Sinking
Fund from moneys in the Current Account the sums required by Section 4.5(A) hereof. To
the extent that moneys in the Current Account are insufficient or unavailable to make all of the
deposits into the Sinking Fund required by this Section 4.5(C), such deposits shall be made by
the Issuer from moneys in the Revenue Fund. The moneys on deposit in the Sinking Fund
shall be applied in the manner provided herein solely for the payment of the principal of or
Redemption Price, if applicable, and interest on the Bonds and shall not be available for any
other purpose. The moneys transferred to the Sinking Fund shall be deposited or credited in
the following manner and in the following order of priority:
(I) Interest Account. The Issuer shall deposit into or credit to
the Interest Account the sum which, together with the balance in said account, shall
equal the interest on all Outstanding Bonds accrued and unpaid and to accrue to the end
of the then current calendar month (assuming that a year consists of twelve (12) equal
calendar months of thirty (30) days each). Moneys in the Interest Account shall be
applied by the Issuer to pay interest on the Bonds as and when the same shall become
due, whether by redemption or otherwise, and for no other purpose. The Issuer shall
adjust the amount of the deposit into the Interest Account not later than the month
004.219416.8 39
immediately preceding any Interest Date so as to provide sufficient moneys in the
Interest Account to pay the interest coming due on the Bonds on such Interest Date.
(2) Principal Account. Next, the Issuer shall deposit into or
credit to the Principal Account the sum which, together with the balance in said
account, shall equal (a) the principal amount of all Outstanding Bonds other than Term
Bonds due and unpaid, (b) that portion of the principal amount of the Bonds other than
Term Bonds next due which would have accrued on such Bonds next due during the
then current calendar month if such principal amount thereof were deemed to accrue
monthly (assuming that a year consists of twelve (12) equal calendar months of thirty
(30) days each) in equal installments from a date one year preceding the due date of
such Bonds next due and (c) the portion of the principal amount of the Bonds other than
Term Bonds next due which shall have accrued on such basis in prior months. Serial
Capital Appreciation Bonds (including their respective interest components) shall be
payable entirely from moneys in the Principal Account on their respective maturity
dates, and monthly deposits or credits to the Principal Account to provide funds for
such purpose shall commence in the month which is one year prior to each such
maturity date. Not later than the month immediately preceding any principal payment
date, the Issuer shall adjust the amount of the deposit into the Principal Account so as
to provide sufficient moneys in the Principal Account to pay the principal on the Bonds
other than Term Bonds becoming due on such principal payment date. Moneys in the
Principal Account shall be applied by the Issuer to pay the principal of the Bonds other
than Term Bonds as and when the same shall become due, whether at maturity or
otherwise, and for no other purpose.
(3) Bond Amortization Account. Payments to the Bond
Amortization Account shall be on a parity with payments to the Principal Account.
Commencing in the month which is one year prior to the due date of each Amortization
Installment, the Issuer shall deposit into or credit to the Bond Amortization Account the
sum which, together with the balance in said account held for the credit of such
Amortization Installment and all Outstanding Term Bonds due and unpaid, shall equal
(a) the principal amount of all such Outstanding Term Bonds due and unpaid, (b) that
portion of such Amortization Installment which would have accrued during the then
current calendar month if such Amortization Installment were deemed to accrue
monthly (assuming that a year consists of twelve (12) equal calendar months of thirty
(30) days each) in equal amounts from a date one year preceding such due date and (c)
the portion of such Amortization Installment which shall have accrued on such basis in
prior months. Term Capital Appreciation Bonds (including their respective interest
components) shall be payable entirely from moneys in the Bond Amortization Account
on the respective due dates of the Amortization Installments applicable thereto, and
monthly deposits or credits to the Bond Amortization Account to provide funds for
such purpose shall commence in the month which is one year prior to each such
Amortization Installment due date. The Issuer shall adjust the amount of the deposit
into the Bond Amortization Account not later than the month immediately preceding
any date for payment of an Amortization Installment so as to provide sufficient moneys
in the Bond Amortization Account to pay such Amortization Installment on such date.
004.219416.8 40
Moneys in the Bond Amortization Account shall be applied by the Issuer to purchase or
redeem Term Bonds in the manner herein provided, and for no other purpose.
Amounts accumulated in the Bond Amortization Account with
respect to any Amortization Installment may be applied by the Issuer, on or prior to the
sixtieth (60th) day preceding the due date of such Amortization Installment (i) to the
purchase of Term Bonds of the Series and maturity for which such Amortization
Installment was established, at a price not greater than the Redemption Price at which
such Term Bonds may be redeemed on the first date thereafter on which such Term
Bonds shall be subject to redemption, or (ii) to the redemption at the applicable
Redemption Price of such Term Bonds. The applicable Redemption Price (or principal
amount of maturing Term Bonds) of any Term Bonds so purchased or redeemed shall
be deemed to constitute part of the Bond Amortization Account until such Amortization
Installment date, for the purposes of calculating the amount of such Account. As soon
as practicable after the sixtieth (60th) day preceding the due date of any such
Amortization Installment, the Issuer shall proceed to call for redemption on such due
date, by causing notice to be given as provided in Section 3.3 hereof, Term Bonds of
the Series and maturity for which such Amortization Installment was established
(except in the case of Term Bonds maturing on an Amortization Installment date) in
such amount as shall be necessary to complete the retirement of the unsatisfied balance
of such Amortization Installment. The Issuer shall pay out of the Bond Amortization
Account and the Interest Account to the respective Paying Agents, on or before the day
preceding such redemption date (or maturity date), the amount required for the
redemption (or for the payment of such Term Bonds then maturing), and such amount
shall be applied by such Paying Agents to such redemption (or payment). All expenses
in connection with the purchase or redemption of Term Bonds shall be paid by the
Issuer from the Restricted Revenue Fund.
(D) Reserve Fund. The Issuer shall deposit into or credit to the
Reserve Fund such sum, if any, as will be necessary to immediately restore the funds on
deposit therein to an amount equal to the Reserve Fund Requirement including the
reinstatement of any Reserve Fund Insurance Policy or Reserve Fund Letter of Credit on
deposit therein or the cash replacement thereof. On or prior to each principal and interest
payment date for the Bonds, moneys in the Reserve Fund shall be applied by the Issuer to the
payment of the principal of or Redemption Price, if applicable, and interest on the Bonds to
the extent moneys in the Interest Account, the Principal Account and the Bond Amortization
Account shall be insufficient for such purpose, but only to the extent moneys available in the
Rate Stabilization Fund for such purpose pursuant to Section 4.5(B)(5) hereof shall be
inadequate to fully provide for such insufficiency. Whenever there shall be surplus moneys in
the Reserve Fund by reason of a decrease in the Reserve Fund Requirement or as a result of a
deposit therein of a Reserve Fund Insurance Policy and/or a Reserve Fund Letter of Credit,
such surplus moneys shall be deposited by the Issuer into the Principal Account, or such other
appropriate fund or account of the Issuer, provided such deposit to such other fund or account
shall not adversely affect the exclusion from gross income of interest on the Bonds for federal
income tax purposes.
004.219416.8 41
Upon the issuance of any Series of Bonds, under the terms, limitations
and conditions as herein provided, the Issuer shall provide for the funding of the Reserve Fund
in an amount equal to the Reserve Fund Requirement. Such required amount may be paid in
full or in part from the proceeds of such Series of Bonds or may be accumulated in equal
monthly payments from the Revenue Fund, on a parity with the payments required by the first
sentence of this Section 4.5(D), to the Reserve Fund over a period of months from the date of
issuance of such Series of Bonds, which shall not exceed the greater of (a) sixty (60) months,
or (b) the number of months for which interest on such Series of Bonds has been capitalized,
as determined by Supplemental Resolution.
Whenever moneys on deposit in the Reserve Fund, together with the
other available amounts in the Sinking Fund, are sufficient to fully pay all Outstanding Bonds
(including principal and interest thereon) in accordance with their terms, the funds on deposit
in the Reserve Fund shall be applied to the payment of Bonds.
Notwithstanding the foregoing provisions, in lieu of the required
deposits into the Reserve Fund, the Issuer may, at its sole option and discretion, cause to be
deposited a Reserve Fund Insurance Policy and/or Reserve Fund Letter of Credit in an amount
equal to the difference between the Reserve Fund Requirement applicable thereto and the
sums, if any, remaining on deposit in the Reserve Fund after the deposit of such Reserve Fund
Insurance Policy and/or Reserve Fund Letter of Credit. Such Reserve Fund Insurance Policy
and/or Reserve Fund Letter of Credit shall be payable to the Paying Agent for such Series
(upon the giving of notice as required thereunder) on any interest payment or redemption date
on which a deficiency exists which cannot be cured by funds in any other fund or account held
pursuant to this Resolution and available for such purpose. The issuer providing such Reserve
Fund Insurance Policy and/or Reserve Fund Letter of Credit shall be either (a) an insurer (i)
whose municipal bond insurance policies insuring the payment, when due, of the principal of
and interest on municipal bond issues results in such issues being rated in one of the two
highest rating categories (without regard to gradations, such as "plus" or "minus" of such
categories) by either Standard & Poor's, Moody's Investors Service or Fitch, or (ii) who holds
one of the two highest policyholder ratings accorded insurers by A. M. Best & Company, or
any comparable service, or (b) a commercial bank, insurance company or other financial
institution the bonds payable or guaranteed by which have, or whose obligation to pay is
guaranteed by a commercial bank, insurance company or other financial institution which has,
been assigned a rating by either Moody's Investors Service, Standard & Poor's or Fitch in one
of the two highest rating categories (without regard to gradations, such as "plus" or "minus"
of such categories).
If fifteen (15) days prior to an interest payment or mandatory redemption
date, the Issuer shall determine that a deficiency exists in the amount of moneys available to
pay in accordance with the terms hereof interest and/or principal due on Bonds on such date,
the Issuer shall immediately notify (a) the issuer of the applicable Reserve Fund Insurance
Policy and/or the issuer of the Reserve Fund Letter of Credit, and (b) the Insurer, if any, of
the amount of such deficiency and the date on which such payment is due, and shall take all
action to cause such issuer or Insurer to provide moneys sufficient to pay all amounts due on
such interest payment or redemption date.
004.219416.8 42
If a disbursement is made from a Reserve Fund Insurance Policy and/or
Reserve Fund Letter of Credit provided pursuant to this Section 4.5(D), the Issuer shall
reinstate the maximum limits of such Reserve Fund Insurance Policy and/or Reserve Fund
Letter of Credit immediately following such disbursement from moneys available in the
Reserve Fund in accordance with the provisions of the first paragraph of this Section 4.5(D),
by depositing funds in the amount of the disbursement made under such instrument, with the
issuer thereof, together with interest thereon to the date of reimbursement at the rate set forth
in such Reserve Fund Insurance Policy or such Reserve Fund Letter of Credit, but in no case
greater than the maximum rate of interest permitted by law. In addition, and in the same
manner, the Issuer shall reimburse the issuer of the Reserve Fund Insurance Policy and/or the
issuer of the Reserve Fund Letter of Credit for all reasonable expenses incurred by such issuer
in connection with the draw on such Reserve Fund Insurance Policy or the Reserve Fund
Letter of Credit, as the case may be.
The Issuer may evidence its obligation to reimburse the issuer of any
Reserve Fund Letter of Credit or Reserve Fund Insurance Policy by executing and delivering
to such issuer a promissory note therefor and/or an agreement relating thereto, which shall be
approved by Supplemental Resolution, provided, however, any such note and any payment
obligations of the Issuer under such agreement (a) shall not be a general obligation of the
Issuer the payment of which is secured by the full faith and credit or taxing power of the
Issuer, and (b) shall be payable solely from moneys available in the Reserve Fund in
accordance with the provisions of the first paragraph of this Section 4.5(D). All of the
provisions of such promissory note or such agreement, when executed and delivered by the
Issuer, shall be deemed to be a part of this Resolution as fully and to the same extent as if
incorporated verbatim herein.
To the extent the Issuer causes to be deposited into the Reserve Fund, a
Reserve Fund Insurance Policy and/or a Reserve Fund Letter of Credit for a term of years
shorter than the life of the Series of Bonds so insured or secured, then the Reserve Fund
Insurance Policy and/or the Reserve Fund Letter of Credit shall provide, among other things,
that the issuer thereof shall provide the Issuer with notice as of each anniversary of the date of
the issuance of the Reserve Fund Insurance Policy and/or the Reserve Fund Letter of Credit of
the intention of the issuer thereof to either (a) extend the term of the Reserve Fund Insurance
Policy and/or the Reserve Fund Letter of Credit beyond the expiration dates thereof, or (b)
terminate the Reserve Fund Insurance Policy and/or the Reserve Fund Letter of Credit on the
initial expiration dates thereof or such other future date as the issuer thereof shall have
established. If the issuer of the Reserve Fund Insurance Policy and/or the Reserve Fund
Letter of Credit notifies the Issuer pursuant to clause (b) of the immediately preceding
sentence or if the Issuer terminates the Reserve Fund Letter of Credit and/or Reserve Fund
Insurance Policy, then the Issuer shall deposit into the Reserve Fund, on or prior to the
fifteenth (15th) day of the first full calendar month following the date on which such notice is
received by the Issuer, such sums as shall be sufficient to pay an amount equal to a fraction,
the numerator of which is one (1) and the denominator of which is equal to the number of
months remaining in the term of the Reserve Fund Insurance Policy and/or the Reserve Fund
Letter of Credit of the Reserve Fund Requirement on the date such notice was received (the
maximum amount available, assuming full reimbursement by the Issuer, under the Reserve
004.219416.8 43
Fund Letter of Credit and/or the Reserve Fund Insurance Policy to be reduced annually by an
amount equal to the deposit to the Reserve Fund during the previous twelve (12) month
period) until amounts on deposit in the Reserve Fund, as a result of the aforementioned
deposits, and no later than upon the expiration of such Reserve Fund Insurance Policy and/or
such Reserve Fund Letter of Credit, shall be equal to the Reserve Fund Requirement
applicable thereto.
If any Reserve Fund Letter of Credit or Reserve Fund Insurance Policy
shall terminate prior to the stated expiration date thereof, the Issuer agrees that it shall fund the
Reserve Fund over a period not to exceed sixty (60) months during which it shall make
consecutive equal monthly payments in order that the amount on deposit in such account at the
end of such period shall equal the Reserve Fund Requirement; provided, the Issuer may, with
the prior written consent of the Insurer, if any, obtain a new Reserve Fund Letter of Credit or
a new Reserve Fund Insurance Policy in lieu of making the payments required by this
paragraph.
Prior to deposit in the Reserve Fund, any Reserve Fund Letter of Credit
or Reserve Fund Insurance Policy shall be approved in writing by each Insurer and Credit
Bank and shall conform to such additional or different restrictions as such Insurer or Credit
Bank shall reasonably require.
(E) Purchase or Redemption of Bonds. The Issuer, in its discretion,
may use moneys in the Principal Account and the Interest Account to purchase or redeem
Bonds coming due on the next principal payment date, provided such purchase or redemption
does not adversely affect the Issuer's ability to pay the principal or interest coming due on
such principal payment date on the Bonds not so purchased or redeemed.
(F) Deposit of Moms with Pa~g_Agents. At least one (1) business
day prior to the date established for payment of any principal of or Redemption Price, if
applicable, or interest on the Bonds, the Issuer shall withdraw from the Sinking Fund
sufficient moneys to pay such principal or Redemption Price, if applicable, or interest and
deposit such moneys with the Paying Agent for the Bonds to be paid.
(G) Reimbursement of Credit Bank. In the case of Bonds secured by a
Credit Facility, amounts on deposit in any funds or accounts established for such Bonds may
be applied as provided in the applicable Supplemental Resolution to reimburse the Credit Bank
for amounts drawn under such Credit Facility to pay the principal of or Redemption Price, if
applicable, and interest on such Bonds or to pay the purchase price of any such Bonds which
are tendered by the Holders thereof for payment.
Section 4.6. Rebate Fund. Amounts on deposit in the Rebate Fund shall be
held in trust by the Issuer and used solely to make required rebates to the United States
Treasury (except to the extent the same may be transferred to the Revenue Fund) and the
Bondholders shall have no right to have the same applied for debt service on the Bonds. The
Issuer agrees to undertake all actions required of it in its arbitrage certificate relating to each
Series of Bonds (other than Taxable Bonds), and other instructions from Bond Counsel,
ooa.2i sai s.s 44
delivered in connection with or subsequent to the issuance of such Bonds, including, but not
limited to:
(A) making a determination in accordance with the Code of the amount
required to be deposited in the Rebate Fund;
(B) depositing from moneys in the Revenue Fund or from other moneys
of the Issuer derived from sources other than ad valorem taxation and legally available for
such purpose the amount determined in Section 4.6(A) above into the Rebate Fund;
(C) paying on the dates and in the manner required by the Code to the
United States Treasury from the Rebate Fund and any other legally available moneys of the
Issuer such amounts as shall be required by the Code to be rebated to the United States
Treasury; and
(D) keeping such records of the determinations made pursuant to this
Section 4.6 as shall be required by the Code, as well as evidence of the fair market value of
any investments purchased with proceeds of the Bonds.
The provisions of the above-described arbitrage certificate and instructions of
Bond Counsel may be amended from time to time as shall be necessary, in the opinion of Bond
Counsel, to comply with the provisions of the Code.
Section 4.7. Investments. Each fund and account established hereby shall be
continuously secured in the manner by which the deposit of public funds are authorized to be
secured by the laws of the State. Moneys on deposit in each fund and account, other than the
Reserve Fund, may be invested and reinvested in Authorized Investments maturing not later
than the date on which the moneys therein will be needed. Moneys on deposit in the Reserve
Fund may be invested or reinvested in securities provided in clauses (1) through (9) of the
definition of Authorized Investments which shall mature no later than five (5) years from the
date of acquisition thereof.
Any and all income received by the Issuer from the investment of moneys in the
Revenue Fund, the Construction Fund, the Rate Stabilization Fund and the Rebate Fund, in the
Interest Account, the Principal Account and the Bond Amortization Account in the Sinking
Fund, in the Current Account and the Impact Fee Stabilization Account in the Impact Fees
Fund, in the Renewal and Replacement Fund (to the extent such income and the other amounts
in the Renewal and Replacement Fund do not exceed the Renewal and Replacement Fund
Requirement), and in the Reserve Fund (to the extent such income and the other amounts in
the Reserve Fund do not exceed the Reserve Fund Requirement) shall be retained in such
respective fund or account.
Any and all income received from the investment of moneys in the Renewal and
Replacement Fund (only to the extent such income and other amounts therein exceed the
Renewal and Replacement Fund Requirement) shall be deposited upon receipt thereof in the
Revenue Fund. Any and all income received from the investment of moneys in the Reserve
004.219416.8 45
Fund (only to the extent such income and other amounts therein exceed the Reserve Fund
Requirement) shall be deposited upon receipt thereof in the Interest Account.
All investments shall be valued at cost. Nothing contained in this Resolution
shall prevent any Authorized Investments acquired as investments of or security for funds held
under this Resolution from being issued or held in book-entry form on the books of the
Department of the Treasury of the United States.
Section 4.8. SeQarate Accounts. The moneys required to be accounted for in
each of the foregoing funds and accounts established herein may be deposited in a single bank
account, and funds allocated to the various funds and accounts established herein may be
invested in a common investment pool, provided that adequate accounting records are
maintained to reflect and control the restricted allocation of the moneys on deposit therein and
such investments for the various purposes of such funds and accounts as herein provided.
The designation and establishment of the various funds and accounts in and by
this Resolution shall not be construed to require the establishment of any completely
independent, self-balancing funds as such term is commonly defined and used in governmental
accounting, but rather is intended solely to constitute an earmarking of certain revenues for
certain purposes and to establish certain priorities for application of such revenues as herein
provided.
004.219416.8 46
ARTICLE 5
COVENANTS
Section 5.1. General. In addition to all of the other covenants of the Issuer
contained in this Resolution, the Issuer hereby covenants with each and every successive
Holder of any of the Bonds so long as any of the Bonds shall remain Outstanding each and
every one of the covenants contained in this Article 5.
Section 5.2. Operation and Maintenance. The Issuer will maintain or cause to
be maintained the System and all portions thereof in good condition and will operate or cause
to be operated the same in an efficient and economical manner, making or causing to be made
such expenditures for equipment and for renewals, repairs and replacements as may be proper
for the economical operation and maintenance thereof.
Section 5.3. Annual Budget. The Issuer shall annually prepare and adopt,
prior to the beginning of each Fiscal Year, an Annual Budget in accordance with applicable
law. No expenditure for the operation and maintenance of the System shall be made in any
Fiscal Year in excess of the amount provided therefor in the Annual Budget (A) without a
written finding and recommendation by an Authorized Issuer Officer, which finding and
recommendation shall state in detail the purpose of and necessity for such increased
expenditures, and (B) until the Governing Body shall have approved such finding and
recommendation by resolution.
If for any reason the Issuer shall not have adopted the Annual Budget before the
first day of any Fiscal Year, other than the first Fiscal Year, the preliminary budget for such
Fiscal Year, if it be approved by the Consulting Engineers, shall be deemed to be in effect for
such Fiscal Year until the Annual Budget for such Fiscal Year shall be adopted; and if the
preliminary budget shall not have been approved by the Consulting Engineers, the Annual
Budget for the preceding Fiscal Year shall be deemed to continue in effect.
The Issuer may at any time adopt an amended Annual Budget for the then
current Fiscal Year, but no such amended Annual Budget shall supersede any prior budget
until it shall be approved by the Consulting Engineers as reasonable and necessary.
The Issuer shall mail copies of such Annual Budgets and amended Annual
Budgets and all resolutions authorizing increased expenditures for operation and maintenance
to any Holder who shall file an address with the Clerk and request in writing that copies of all
such Annual Budgets and resolutions be furnished to such Holder and shall make available all
such Annual Budgets and resolutions authorizing increased expenditures for operation and
maintenance of the System at all reasonable times to any Holder or to anyone acting for or on
behalf of any Holder. The Issuer shall be permitted to make a reasonable charge for
furnishing to any Holder such Annual Budgets and resolutions.
004.219416.8 47
Section 5.4. Rates. The Issuer shall fix, establish, maintain and collect such
Rates and revise the same from time to time, whenever necessary, as will always provide in
each Fiscal Year:
(A) Net Revenues, together with moneys on deposit in the Rate
Stabilization Fund, adequate at all times to pay in each Fiscal Year:
(i) at least one hundred ten percent (110%) of the current annual Debt
Service Requirement becoming due in such Fiscal Year on each Series of Outstanding Bonds,
provided that Net Revenues shall equal at least one hundred percent (100%) of the current
annual Debt Service Requirement becoming due in such Fiscal Year on each Series of
Outstanding Bonds, plus
(ii) at least one hundred percent (100%) of any amounts required by the
terms hereof to be deposited in the Reserve Fund or in the Renewal and Replacement Fund or
with any issuer of a Reserve Fund Letter of Credit or Reserve Fund Insurance Policy in such
Fiscal Year,
or
(B) Net Revenues, together with amounts deposited in the Current
Account in the Impact Fees Fund and moneys on deposit in the Rate Stabilization Fund,
adequate at all times to pay in each Fiscal Year:
(i) at least one hundred twenty percent (120%) of the current annual
Debt Service Requirement becoming due in such Fiscal Year on each Series of Outstanding
Bonds, provided that Net Revenues shall equal at least one hundred percent (100%) of the
current annual Debt Service Requirement becoming due in such Fiscal Year on each Series of
Outstanding Bonds, plus
(ii) at least one hundred percent (100%) of any amounts required by the
terms hereof to be deposited in the Reserve Fund or in the Renewal and Replacement Fund or
with any issuer of a Reserve Fund Letter of Credit or Reserve Fund Insurance Policy in such
Fiscal Year.
Such Rates shall not be so reduced so as to be insufficient to provide Net Revenues fully
adequate for the purposes provided therefor by this Resolution.
If, in any Fiscal Year, the Issuer shall fail to comply with the requirements
contained in Section 5.4(A) above, it shall cause the Consulting Engineers to review its Rates,
Gross Revenues, Operating Expenses and methods of operation and to make written
recommendations as to the methods by which the Issuer may promptly seek to comply with the
requirements set forth in Section 5.4(A) above. The Issuer shall forthwith commence to
implement such recommendations to the extent required so as to cause it to thereafter comply
with said requirements.
004.219416. S 4g
Section 5.5. Books and Records. The Issuer shall keep books, records and
accounts of the operation of the System, and of Gross Revenues, Operating Expenses and
Impact Fees, and the Holders of any Bonds Outstanding or the duly authorized representatives
thereof shall have the right at all reasonable times to inspect all books, records and accounts of
the Issuer relating thereto.
Section 5.6. Annual Audit. The Issuer shall, immediately after the close of
each Fiscal Year, cause the books, records and accounts relating to the System to be properly
audited by a recognized independent firm of certified public accountants, and shall require
such accountants to complete their report of such Annual Audit in accordance with applicable
law. Such Annual Audits shall contain, but not be limited to, a balance sheet, an income
statement, a statement of changes in financial position, a statement of changes in retained
earnings, a statement of the number and classification of users and services of the System and
rates associated with such services, a statement of insurance coverage, and any other
statements as required by law or accounting convention, and a certificate by such accountants
disclosing any material default on the part of the Issuer of any covenant or agreement herein.
Each Annual Audit shall be in conformity with generally accepted accounting principles. A
copy of each Annual Audit shall regularly be furnished to any Insurer, to any Credit Bank and
to any Holder who shall have furnished an address to the Clerk and requested in writing that
the same be furnished to such Holder. The Issuer shall be permitted to make a reasonable
charge for furnishing to any Holder such Annual Audit.
Section 5.7. No Mortgage or Sale of the System. The Issuer irrevocably
covenants, binds and obligates itself not to sell, lease, encumber or in any manner dispose of
the System as a whole or any substantial part thereof (except as provided below) until all of the
Bonds and all interest thereon shall have been paid in full or provision for payment has been
made in accordance with Section 9.1 hereof.
The foregoing provision notwithstanding, the Issuer shall have and hereby
reserves the right to sell, lease or otherwise dispose of any of the property comprising a part
of the System in the following manner, if any one of the following conditions exist: (A) such
property is not necessary for the operation of the System, (B) such property is not useful in the
operation of the System, (C) such property is not profitable in the operation of the System, or
(D) in the case of a lease of such property, will be advantageous to the System and will not
adversely affect the security for the Bondholders.
Prior to any such sale, lease or other disposition of said property: (1) if the
amount to be received therefor is not in excess of one-half (1/2) of one percent (1 %) of the
value of the gross plant of the System at original cost, an Authorized Issuer Officer shall make
a finding in writing determining that one or more of the conditions for sale, lease or
disposition of property provided for in the second paragraph of this Section 5.7 have been met;
or (2) if the amount to be received from such sale, lease or other disposition of said property
shall be in excess of one-half (1 /2) of one percent (1 %) of the value of the gross plant of the
System at original cost, an Authorized Issuer Officer and the Consulting Engineers shall each
first make a finding in writing determining that one or more of the conditions for sale, lease ~or
other disposition of property provided for in the second paragraph of this Section 5.7 have
004.219416.8 49
been met, and the Governing Body of the Issuer shall, by resolution, duly adopt, approve and
concur in the finding of an Authorized Issuer Officer and the Consulting Engineers.
The proceeds from such sale, lease or other disposition shall be deposited into
the Renewal and Replacement Fund to the extent necessary to make the amount therein equal
to the Renewal and Replacement Fund Requirement, and second, into the Revenue Fund.
The transfer of the System as a whole from the control of the Governing Body
to some other board or authority which may hereafter be created for such purpose and which
constitutes a governmental entity, interest on obligations issued by which is excluded from
gross income of the holders thereof for federal income tax purposes under Section 103 of the
Code, shall not be deemed prohibited by this Section 5.7 and such successor board or
authority shall fall within the definition of "Issuer" in Section 1.1 hereof.
Notwithstanding the foregoing provisions of this Section 5.7, the Issuer shall
have the authority to sell for fair and reasonable consideration any land comprising a part of
the System which is no longer necessary or useful in the operation of the System and the
proceeds derived from the sale of such land shall be disposed of in accordance with the
provisions of the fourth paragraph of this Section 5.7.
The Issuer may make contracts or grant licenses for the operation of, or grant
easements or other rights with respect to, any part of the System if such contract, license,
easement or right does not, in the opinion of the Consulting Engineers, as evidenced by a
certificate to that effect filed with the Issuer, impede or restrict the operation by the Issuer of
the System, but any payments to the Issuer under or in connection with any such contract,
license, easement or right in respect of the System or any part thereof shall constitute Gross
Revenues.
Section 5.8. Insurance. The Issuer will carry such insurance as is ordinarily
carried by private or public corporations owning and operating utilities similar to the System
with a reputable insurance carrier or carriers, including public and product liability insurance
in such amounts as the Issuer shall determine to be sufficient and such other insurance against
loss or damage by fire, explosion (including underground explosion), hurricane, tornado or
other hazards and risks, and said property loss or damage insurance shall at all times be in an
amount or amounts equal to the fair appraisal value of the buildings, properties, furniture,
fixtures and equipment of the System, or such other amount or amounts as the Consulting
Engineers shall approve as sufficient.
The Issuer may establish certain minimum levels of insurance for which the
Issuer may self-insure. Such minimum levels of insurance shall be in amounts as
recommended in writing by an insurance consultant who has a favorable reputation and
experience and is qualified to survey risks and to recommend insurance coverage for Persons
engaged in operations similar to the System.
004.219416.8 50
Section 5.9. No Free Service. The Issuer will not render, or cause to be
rendered, any free services of any nature by its System or any part thereof, nor will any
preferential rates be established for users of the same class.
Section 5.10. No Impairment. The Issuer will not enter into any contract or
contracts, nor take any action, the results of which might impair the rights of the Holders and
will not permit the operation of any competing water or sewer service facilities in the Issuer;
provided, however, the Issuer reserves the right to permit the ownership and operation of
water or sewer service facilities or both by itself or by others in any territory which is not in
any service area now or hereafter served by the System.
Section 5.11. Compulsory Connections. In order better to secure the prompt
payment of principal and interest on the Bonds, as well as for the purpose of protecting the
health and welfare of the inhabitants of the Issuer, and acting under authority of the Act or
other applicable laws of the State, the Issuer will require (A) every owner of each lot in the
Issuer which abuts upon any street or public way containing a water line forming a part of the
water facilities of the System and upon which lot a building shall subsequently be constructed
for residential, commercial or industrial use, to connect such building to such water facilities,
and (B) every owner of each lot in the Issuer which abuts upon any street or public way
containing a sewer line forming a part of the sewer facilities of the System and upon which lot
a building shall subsequently be constructed for residential, commercial or industrial use, to
connect such building to such sewer facilities and to cease to use any other method for the
disposal of sewage waste or other polluting matter.
Section 5.12. Enforcement of Charges. The Issuer shall compel the prompt
payment of Rates for service rendered on every lot or parcel connected with the System, and
to that end will vigorously enforce all of the provisions of any ordinance or resolution of the
Issuer having to do with connections to the facilities of the System and charges therefor, and
all of the rights and remedies permitted the Issuer under law, including the requirement for the
making of a reasonable deposit by each user, the requirement for disconnection of all premises
delinquent in the payment, and the securing of injunction against the disposition of sewage or
industrial waste into the sewer facilities of the System by any premises delinquent in the
payment of such charges.
Section 5.13. Covenants With Credit Bariks and Insurers. The Issuer may
make such covenants as it may in its sole discretion determine to be appropriate with any
Insurer, Credit Bank or other financial institution that shall agree to insure or to provide for
Bonds of any one or more Series credit or liquidity support that shall enhance the security or
the value of such Bonds. Such covenants may be set forth in the applicable Supplemental
Resolution and shall be binding on the Issuer, the Registrar, the Paying Agent and all the
Holders the same as if such covenants were set forth in full in this Resolution.
004.219416.8 51
Section 5.14. ~ecial Covenants Relating to Reserve Fund Insurance Policy or
Reserve Fund Letter of Credit Generally.
(A) The Issuer shall annually submit to the issuer of the Reserve Fund
Insurance Policy and/or the Reserve Fund Letter of Credit records of withdrawals on such
Reserve Fund Insurance Policy or such Reserve Fund Letter of Credit, as the case may be,
received by the Paying Agent and remaining unpaid, the respective dates of such withdrawals,
the interest accrued on such withdrawals and the aggregate amount of interest due by the
Issuer to the issuer of such Reserve Fund Insurance Policy or such Reserve Fund Letter of
Credit, as the case may be.
(B) The Issuer hereby acknowledges that the issuer of the Reserve Fund
Insurance Policy and/or the Reserve Fund Letter of Credit shall be deemed athird-party
beneficiary of this Resolution for the purpose of enforcing the terms, conditions and
obligations of this Resolution which benefit the issuer of such Reserve Fund Insurance Policy
or such Reserve Fund Letter of Credit, as the case may be.
Section 5.15. Collection of Impact Fees. The Issuer shall proceed diligently to
perform legally and effectively all steps required in the imposition and collection of the Impact
Fees. Upon the due date of any such Impact Fees, the Issuer shall diligently proceed to collect
the same and shall exercise all legally available remedies to enforce such collections now or
hereafter available under State law.
Section 5.16. Consulting En ing eers. The Issuer shall employ Consulting
Engineers from time to time whenever necessary for compliance with the provisions of this
Resolution, whose duties shall be to make any certificates and perform any other acts required
or permitted of the Consulting Engineers under this Resolution, and also to review the
construction and operation of the System.
Section 5.17. Federal Income Tax Covenants; Taxable Bonds.
(A) The Issuer covenants with the Holders of each Series of Bonds
(other than Taxable Bonds), that it shall not use the proceeds of such Series of Bonds in any
manner which would cause the interest on such Series of Bonds to be or become includable in
the gross income of the Holder thereof for federal income tax purposes.
(B) The Issuer covenants with the Holders of each Series of Bonds
(other than Taxable Bonds) that neither the Issuer nor any Person under its control or direction
will make any use of the proceeds of such Series of Bonds (or amounts deemed to be proceeds
under the Code) in any manner which would cause such Series of Bonds to be "arbitrage
bonds" within the meaning of Section 148 of the Code, and neither the Issuer nor any other
Person shall do any act or fail to do any act which would cause the interest on such Series of
Bonds to become includable in the gross income of the Holder thereof for federal income tax
purposes.
(C) The Issuer hereby covenants with the Holders of each Series of
Bonds (other• than Taxable Bonds) that it will comply with all provisions of the Code necessary
004.219416.8 52
to maintain the exclusion of interest on such series of Bonds from the gross income of the
Holder thereof for federal income tax purposes, including, in particular, the payment of any
amount required to be rebated to the United States Treasury pursuant to the Code.
(D) The Issuer may, if it so elects, issue one or more Series of Taxable
Bonds the interest on which is (or may be) includable in the gross income of the Holder
thereof for federal income taxation purposes, so long as each Bond of such Series states in the
body thereof that interest payable thereon is (or may be) subject to federal income taxation and
provided that the issuance thereof will not cause the interest on any other Bonds theretofore
issued hereunder to be or become includable in the gross income of the Holder thereof for
federal income tax purposes.
Section 5.18. Continuing Disclosure. The Issuer agrees that it will comply
with and carry out all of the provisions of the Continuing Disclosure Certificate executed by
the Issuer and dated the date of issuance of the Series 2000 Bonds, as originally executed and
as it may be amended from time to time in accordance with the terms thereof (the "Continuing
Disclosure Certificate"). Notwithstanding any other provision of this Resolution, failure of
the Issuer to comply with the Continuing Disclosure Certificate shall not be considered an
Event of Default; however, any Bondholder or Beneficial Owner (as hereinafter defined) may
take such actions as may be necessary and appropriate, including seeking mandamus or
specific performance by court order, to cause the Issuer to comply with its obligations under
this Section 5.18. For purposes of this Section 5.18, "Beneficial Owner" means any person
which (a) has the power, directly or indirectly, to vote or consent with respect to, or to
dispose of ownership of, any Series 2000 Bonds (including persons holding Series 2000 Bonds
through nominees, depositories or other intermediaries), or (b) is treated as the owner of any
Series 2000 Bonds for federal income tax purposes.
ooa.2 i sai s.a 53
ARTICLE 6
SUBORDINATED INDEBTEDNESS AND
ADDITIONAL BONDS
Section 6.1. Subordinated Indebtedness. The Issuer will not issue any other
obligations, except under the conditions and in the manner provided herein, payable from the
Pledged Funds or voluntarily create or cause to be created any debt, lien, pledge, assignment,
encumbrance or other charge having priority to or being on a parity with the lien thereon in
favor of the Bonds and the interest thereon. The Issuer may at any time or from time to time
issue evidences of indebtedness that are not Additional Bonds and that are payable in whole or
in part out of the Pledged Funds and which may be secured by a pledge of the Pledged Funds;
provided, however, that such pledge shall be, and shall be expressed to be, subordinated in all
respects to the pledge of the Pledged Funds created by this Resolution. The Issuer shall have
the right to covenant with the holders from time to time of any Subordinated Indebtedness to
add to the conditions, limitations and restrictions under which any Additional Bonds may be
issued pursuant to Section 6.2 hereof. The Issuer agrees to pay promptly any Subordinated
Indebtedness as the same shall become due.
Section 6.2. Issuance of Additional Bonds. The Issuer may issue one or more
Series of Additional Bonds for any one or more of the following purposes: financing the Cost
of any Project, or the completion thereof or of the Initial Project, or refunding any or all
Outstanding Bonds or of any Subordinated Indebtedness of the Issuer. Additional Bonds shall
be deemed to have been issued pursuant to this Resolution the same as the Outstanding Bonds,
and all of the other covenants and other provisions of this Resolution (except as to details of
such Additional Bonds inconsistent therewith) shall be for the equal benefit, protection and
security of the Holders of all Bonds issued pursuant to this Resolution; provided, however,
any Supplemental Resolution authorizing the issuance of Additional Bonds may provide that
any of the covenants herein contained will not be applicable to such Additional Bonds,
provided that such provision shall not, in the opinion of Bond Counsel, adversely affect the
rights of the Holders of any Bonds which shall then be Outstanding. Except as provided in
Section 4.2 and Section 4.5 hereof, all Bonds, regardless of the time or times of their
issuance, shall rank equally with respect to their lien on the Pledged Funds and their sources
and security for payment therefrom without preference of any Bonds over any other; provided,
however, that the Issuer shall include a provision in any Supplemental Resolution authorizing
the issuance of Variable Rate Bonds pursuant to this Section 6.2 that in the event the principal
thereof is accelerated due to such Bonds being held by the issuer of a Credit Facility, the lien
of such Bonds on the Pledged Funds shall be subordinate in all respects to the pledge of the
Pledged Funds created by this Resolution. No such Additional Bonds shall be issued by the
Issuer unless the following conditions are complied with:
(A) The Issuer shall certify that it is current in all deposits into the
various funds and accounts established hereby and all payments theretofore required to have
been deposited or made by it under the provisions of this Resolution and has complied with the
covenants and agreements of this Resolution.
004.219416.8 54
(B) There shall have been obtained and filed with the Issuer a
certificate of a Qualified Independent Consultant: (1) stating that such consultant has examined
the books and records of the Issuer relating to the collection and receipt of Gross Revenues
and Impact Fees and relating to Operating Expenses; (2) setting forth the amount of Net
Revenues and Impact Fees deposited into the Current Account during the most recent
preceding Fiscal Year for which audited financial statements are available or any twelve (12)
consecutive months selected by the Issuer of the twenty-four (24) months immediately
preceding the issuance of such Additional Bonds; (3) stating that:
(a) such Net Revenues, adjusted as provided in Section 6.2(D) hereof,
equal at least:
(i) 1.10 times the maximum annual Debt Service Requirement for the
next succeeding four Fiscal Years for all Outstanding Bonds and such Additional Bonds then
proposed to be issued, plus
(ii) 1.00 times any amounts required by the terms hereof to be
deposited in the Reserve Fund or in the Renewal and Replacement Fund or with any issuer of
a Reserve Fund Letter of Credit or Reserve Fund Insurance Policy during such period, plus
(iii) 1.00 times the maximum annual subordinated debt service for all
Subordinated Indebtedness then outstanding;
or
(b) such Net Revenues, adjusted as provided in Section 6.2(D) hereof,
and Impact Fees deposited into the Current Account, adjusted as provided in Section 6.2(E)
hereof, equal at least:
(i) 1.20 times the maximum annual Debt Service Requirement for the
next succeeding four Fiscal Years for all Outstanding Bonds and such Additional Bonds then
proposed to be issued, and that such Net Revenues, adjusted as provided in Section 6.2(D)
hereof, equal at least 1.00 times the maximum annual Debt Service Requirement for the next
succeeding four Fiscal Years for all Outstanding Bonds and such Additional Bonds then
proposed to be issued, plus
(ii) 1.00 times any amounts required by the terms hereof to be
deposited in the Reserve Fund or in the Renewal and Replacement Fund or with any issuer of
a Reserve Fund Letter of Credit or Reserve Fund Insurance Policy during such period, plus
(iii) 1.00 times the maximum annual subordinated debt service for all
Subordinated Indebtedness then outstanding;
and (4) stating that no Event of Default was disclosed in the report of the most recent Annual
Audit, or if such Event of Default was so disclosed, that it shall have been cured.
004.219416.8 55
(C) For the purpose of this Section 6.2, the phrase "immediately
preceding Fiscal Year or any twelve (12) consecutive months selected by the Issuer of the
twenty-four (24) months immediately preceding the issuance of such Additional Bonds" shall
be sometimes referred to as "twelve (12) consecutive months. "
(D) Such Net Revenues may be adjusted by the Qualified Independent
Consultant upon the written advice of the Consulting Engineers, at the option of the Issuer, as
follows:
(1) If the Issuer, prior to the issuance of the proposed Additional
Bonds, shall have increased the Rates, the Net Revenues for the twelve (12)
consecutive months shall be adjusted to show the Net Revenues which would have been
derived from the System in such twelve (12) consecutive months as if such increased
Rates had been in effect during all of such twelve (12) consecutive months.
(2) If the Issuer, prior to the issuance of the proposed Additional
Bonds, shall have acquired or has contracted to acquire any privately or publicly owned
existing water or sewer system, the cost of which shall be paid from all or part of the
proceeds of the issuance of the proposed Additional Bonds, then the Net Revenues
derived from the System during the twelve (12) consecutive months immediately
preceding the issuance of said Additional Bonds shall be increased by adding to the Net
Revenues for said twelve (12) consecutive months the Net Revenues which would have
been derived from said existing water or sewer system as if such existing water or
sewer system had been a part of the System during such twelve (12) consecutive
months. For the purposes of this paragraph, the Net Revenues derived from said
existing water or sewer system during such twelve (12) consecutive months shall be
adjusted to determine such Net Revenues by deducting the cost of operation and
maintenance of said existing water or sewer system from the gross revenues of said
system.
(3) If the Issuer, in connection with the issuance of Additional
Bonds, shall enter into a contract (with a duration not less than the final maturity of
such Additional Bonds) with any public or private entity whereby the Issuer agrees to
furnish services in connection with any water or sewer system, then the Net Revenues
of the System during the twelve (12) consecutive months immediately preceding the
issuance of said Additional Bonds shall be increased by the least amount which said
public or private entity shall guarantee to pay in any one year for the furnishing of said
services by the Issuer, after deducting therefrom the proportion of operating expenses
and repair, renewal and replacement cost attributable in such year to such services.
(4) In the event the Issuer shall be constructing or acquiring
additions, extensions or improvements to the System from the proceeds of such
Additional Bonds and shall have established Rates to be charged and collected from
users of such facilities when service is rendered, such Net Revenues may be adjusted
by adding thereto the Net Revenues estimated by the Consulting Engineers to be
derived during the first twelve (12) months of operation after completion of the
004.219416.8 56
construction or acquisition of said additions, extensions and improvements from the
proposed users of the facilities to be financed by Additional Bonds together with other
funds on hand or lawfully obtained for such purpose.
(E) The amount of such Impact Fees deposited into the Current
Account during such twelve (12) consecutive months may be adjusted by the Qualified
Independent Consultant upon the written advice of the Consulting Engineers, at the option of
the Issuer, to the amount of Impact Fees which would have been deposited into the Current
Account during such twelve (12) consecutive months if the Impact Fees Debt Service
Component to be in effect immediately after the issuance of such Additional Bonds had been in
effect during such twelve (12) consecutive months. If such twelve { 12) consecutive months
includes all or any part of the Fiscal Year ending September 30, 2000, the amount of such
Impact Fees deposited into the Current Account during such twelve (12) consecutive months
may be adjusted as provided in this Section 6.2(E) assuming that the Series 2000 Bonds and
such Additional Bonds had been outstanding and that the provisions of this Resolution relating
to the deposit of Impact Fees into the Current Account had been in effect, during the entire
Fiscal Year ending September 30, 2000.
(F) In the event any Additional Bonds are issued for the purpose of
refunding any Bonds then Outstanding, the conditions of Section 6.2(B) shall not apply,
provided that the issuance of such Additional Bonds shall not result in an increase in the
aggregate amount of principal of and interest on the Outstanding Bonds becoming due in the
current Fiscal Year and all subsequent Fiscal Years. The conditions of Section 6.2(B) hereof
shall apply to Additional Bonds issued to refund Subordinated Indebtedness and to Additional
Bonds issued for refunding purposes which cannot meet the conditions of this paragraph.
(G) In the event that the total amount of any Series of Bonds
authorized to be issued shall not be issued simultaneously, such Bonds which shall be issued
subsequently shall be subject to the conditions of Section 6.2(B) hereof.
(H) If at any time the Issuer shall enter into an agreement or contract
for an ownership interest in any public or privately owned water or sewer system or for the
reservation of capacity therein whereby the Issuer has agreed as part of the cost thereof to pay
part of the debt service on the obligations of such public or privately owned water or sewer
system issued in connection therewith, such payments to be made by the Issuer shall be junior,
inferior and subordinate in all respects to the Bonds issued hereunder, unless such obligations
(when treated as Additional Bonds) shall meet the conditions of Section 6.2(B) hereof, in
which case such obligations shall rank on parity as to lien on the Pledged Funds with the
Bonds.
(I) In addition to all of the other requirements specified in this Section
6.2, the Issuer must comply with any applicable provisions of any financing documents
relating to outstanding Subordinated Indebtedness to the extent such provisions impact on the
ability of the Issuer to issue Additional Bonds.
004.219416.8 57
Section 6.3. Bond Anticipation Notes. The Issuer may issue notes in
anticipation of the issuance of Bonds which shall have such terms and details and be secured in
such manner, not inconsistent with this Resolution, as shall be provided by resolution of the
Issuer.
Section 6.4. Accession of Subordinated Indebtedness to Parity Status with
Bonds. The Issuer may provide for the accession of Subordinated Indebtedness to the status of
complete parity with the Bonds, if (A) the Issuer shall meet all the requirements imposed upon
the issuance of Additional Bonds by Section 6.2 hereof, assuming, for purposes of said
requirements, that such Subordinated Indebtedness shall be Additional Bonds, (B) the facilities
financed by such Subordinated Indebtedness shall be, or become part of the System, and (C)
the Issuer shall provide for the funding of the Reserve Fund, upon such accession, in an
amount equal to the increase in the amount of the Reserve Fund Requirement occasioned by
such accession in accordance with Section 4.5(D) hereof. If the aforementioned conditions are
satisfied, the Subordinated Indebtedness shall be deemed to have been issued pursuant to this
Resolution the same as the Outstanding Bonds, and such Subordinated Indebtedness shall be
considered Bonds for all purposes provided in this Resolution.
ARTICLE 7
DEFAULTS AND REMEDIES
Section 7.1. Events of Default. The following events shall each constitute an
"Event of Default" hereunder:
(A) Default shall be made in the payment of the principal of,
Amortization Installment, redemption premium or interest on any Bond when due.
(B) There shall occur the dissolution or liquidation of the Issuer, or the
filing by the Issuer of a voluntary petition in bankruptcy, or the commission by the Issuer of
any act of bankruptcy, or adjudication of the Issuer as a bankrupt, or assignment by the Issuer
for the benefit of its creditors, or appointment of a receiver for the Issuer, or the entry by the
Issuer into an agreement of composition with its creditors, or the approval by a court of
competent jurisdiction of a petition applicable to the Issuer in any proceeding for its
reorganization instituted under the provisions of the Federal Bankruptcy Act, as amended, or
under any similar act in any jurisdiction which may now be in effect or hereafter enacted.
(C) 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 a
period of thirty (30) days after written notice of such default shall have been received from
any Insurer or the Holders of not less than twenty-five percent (25%) of the aggregate
principal amount of Bonds Outstanding or any Credit Bank. Notwithstanding the foregoing,
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 curative action and diligently
pursues such action until the default has been corrected.
004.219416.8 5g
Section 7.2. Remedies. Any Holder of Bonds issued under the provisions of
this Resolution or any trustee or receiver acting for such Bondholders may either at law or in
equity, by suit, action, mandamus or other proceedings in any court of competent jurisdiction,
protect and enforce any and all rights under the laws of the State, or granted and contained in
this Resolution, and may enforce and compel the performance of all duties required by this
Resolution or by any applicable statutes to be performed by the Issuer or by any officer
thereof.
The Holder or Holders of Bonds in an aggregate principal amount of not less
than twenty-five percent (25%) of the Bonds then Outstanding may by a duly executed
certificate in writing appoint a trustee for Holders of Bonds issued pursuant to this Resolution
with authority to represent such Bondholders in any legal proceedings for the enforcement and
protection of the rights of such Bondholders and such certificate shall be executed by such
Bondholders or their duly authorized attorneys or representatives, and shall be filed in the
office of the Clerk. Notice of such appointment, together with evidence of the requisite
signatures of the Holders of not less than twenty-five percent (25 %) in aggregate principal
amount of Bonds Outstanding and the trust instrument under which the trustee shall have
agreed to serve shall be filed with the Issuer and the trustee and notice of appointment shall be
given to all Holders of Bonds in the same manner as notices of redemption are given
hereunder. After the appointment of the first trustee hereunder, no further trustees may be
appointed; however, the Holders of a majority in aggregate principal amount of all the Bonds
then Outstanding may remove the trustee initially appointed and appoint a successor and
subsequent successors at any time.
Section 7.3. Directions to Trustee as to Remedial Proceedings. The Holders
of a majority in principal amount of the Bonds then Outstanding (or any Insurer insuring, or
any Credit Bank providing a Credit Facility for, any then Outstanding Bonds) have the right,
by an instrument or concurrent instruments in writing executed and delivered to the trustee, to
direct the method and place of conducting all remedial proceedings to be taken by the trustee
hereunder, provided that such direction shall not be otherwise than in accordance with law or
the provisions hereof, and that the trustee shall have the right to decline to follow any such
direction which in the opinion of the trustee would be unjustly prejudicial to Holders of Bonds
not parties to such direction.
004.219416.8 59
Section 7.4. Remedies Cumulative. No remedy herein conferred upon or
reserved to the Bondholders is intended to be exclusive of any other remedy or remedies, and
each and every such remedy shall be cumulative, and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by statute.
Section 7.5. Waiver of Default. No delay or omission of any Bondholder to
exercise any right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver of any such default, or an acquiescence therein; and every
power and remedy given by Section 7.2 of this Resolution to the Bondholders may be
exercised from time to time, and as often as may be deemed expedient.
Section 7.6. Application of Moneys After Default. If an Event of Default
shall happen and shall not have been remedied, the Issuer or a trustee or receiver appointed for
the purpose shall apply all Pledged Funds as follows and in the following order:
(A) To the payment of the reasonable and proper charges, expenses and
liabilities of the trustee or receiver, Registrar and Paying Agent hereunder; and
(B) To the payment of the interest and principal or Redemption Price,
if applicable, then due on the Bonds, as follows:
(1) Unless the principal of all the Bonds shall have become due
and payable, all such moneys shall be applied:
FIRST: to the payment to the Persons entitled thereto of all
installments of interest then due, in the order of the maturity of such installments, and,
if the amount available shall not be sufficient to pay in full any particular installment,
then to the payment ratably, according to the amounts due on such installment, to the
Persons entitled thereto, without any discrimination or preference;
SECOND: to the payment to the Persons entitled thereto of the
unpaid principal of any of the Bonds which shall have become due at maturity or upon
mandatory redemption prior to maturity (other than Bonds called for redemption for the
payment of which moneys are held pursuant to the provisions of Section 9.1 of this
Resolution), in the order of their due dates, with interest upon such Bonds from the
respective dates upon which they became due, and, if the amount available shall not be
sufficient to pay in full Bonds due on any particular date, together with such interest,
then to the payment first of such interest, ratably according to the amount of such
interest due on such date, and then to the payment of such principal, ratably according
to the amount of such principal due on such date, to the Persons entitled thereto
without any discrimination or preference; and
THIRD: to the payment of the Redemption Price of any Bonds
called for optional redemption pursuant to the provisions of this Resolution.
(2) If the principal of all the Bonds shall have become due and
payable, all such moneys shall be applied to the payment of the principal and interest
004.219416.8 60
then due and unpaid upon the Bonds, with interest thereon as aforesaid, without
preference or priority of principal over interest or of interest over principal, or of any
installment of interest over any other installment of interest, or of any Bond over any
other Bond, ratably, according to the amounts due respectively for principal and
interest, to the Persons entitled thereto without any discrimination or preference.
Section 7.7. Control by Insurer or Credit Bank. Upon the occurrence and
continuance of an Event of Default, each Insurer or Credit Bank, if such Insurer or Credit
Bank shall have honored all of its commitments under its Bond Insurance Policy or its Credit
Facility, as the case may be, shall be entitled to direct and control the enforcement of all rights
and remedies with respect to the Bonds it shall insure or for which such Credit Facility is
provided.
ARTICLE 8
SUPPLEMENTAL RESOLUTIONS
Section 8.1. Supplemental Resolution Without Bondholders' Consent. The
Issuer, from time to time and at any time, may adopt such Supplemental Resolutions without
the consent of the Bondholders (which Supplemental Resolution shall thereafter form a part
hereof) for any of the following purposes:
(A) To cure any ambiguity or formal defect or omission or to correct
any inconsistent provisions in this Resolution or to clarify any matters or questions arising
hereunder.
(B) To grant to or confer upon the Bondholders any additional rights,
remedies, powers, authority or security that may lawfully be granted to or conferred upon the
Bondholders.
(C) To add to the conditions, limitations and restrictions on the issuance
of Bonds under the provisions of this Resolution other conditions, limitations and restrictions
thereafter to be observed.
(D) To add to the covenants and agreements of the Issuer in this
Resolution other covenants and agreements thereafter to be observed by the Issuer or to
surrender any right or power herein reserved to or conferred upon the Issuer.
(E) To specify and determine at any time prior to the first delivery of
any Series of Bonds the matters and things referred to in Section 2.1 or Section 2.2 hereof,
and also any other matters and things relative to such Bonds which are not contrary to or
inconsistent with this Resolution as theretofore in effect, or to amend, modify or rescind any
such authorization, specification or determination.
(F) To authorize an Additional Project or to change or modify the
description of the Initial Project or any Additional Project.
004.219416.8 61
(G) To specify and determine matters necessary or desirable for the
issuance of Capital Appreciation Bonds or Variable Rate Bonds.
(H) To authorize Additional Bonds or Subordinated Indebtedness.
(I} To make any other change that, in the opinion of Bond Counsel,
would not materially adversely affect the security for the Bonds, provided that the Issuer has
obtained the consent of the Insurer prior to making such change. In making such
determination, Bond Counsel shall not take into consideration any Bond Insurance Policy.
Except Supplemental Resolutions described in subsections (E), (F) and (H) of
this Section 8.1, no Supplemental Resolution adopted pursuant to this Article 8 shall become
effective unless approved by every Insurer; and the Issuer covenants and agrees to furnish to
each Insurer an executed original transcript of the Issuer's proceedings with respect to the
adoption of each Supplemental Resolution.
Section 8.2. Supplemental Resolution With Bondholders', Insurer's and Credit
Bank's Consent. Subject to the terms and provisions contained in this Section 8.2 and Section
$.1 hereof, the Holder or Holders of not less than a majority in aggregate principal amount of
the Bonds then Outstanding shall have the right, from time to time, anything contained in this
Resolution to the contrary notwithstanding, to consent to and approve the adoption of such
Supplemental Resolution or Resolutions hereto as shall be deemed necessary or desirable by
the Issuer for the purpose of supplementing, modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in this Resolution;
provided, however, that if such modification or amendment will, by its terms, not take effect
so long as any Bonds of any specified Series or maturity remain Outstanding, the consent of
the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be
Outstanding for the purpose of any calculation of Outstanding Bonds under this Section 8.2.
Any Supplemental Resolution which is adopted in accordance with the provisions of this
Section 8.2 shall also require the written consent of the Insurer of, or any Credit Bank
providing a Credit Facility for, any Bonds which are Outstanding at the time such
Supplemental Resolution shall take effect. No Supplemental Resolution may be approved or
adopted which shall permit or require (A) an extension of the maturity of the principal of or
the payment of the interest on any Bond issued hereunder, (B} reduction in the principal
amount of any Bond or the Redemption Price or the rate of interest thereon, (C) the creation
of a lien upon or a pledge of the Pledged Funds other than the lien and pledge created by this
Resolution which adversely affects any Bondholders, (D) a preference or priority of any Bond
or Bonds over any other Bond or Bonds, or (E) a reduction in the aggregate principal amount
of the Bonds required for consent to such Supplemental Resolution. Nothing herein contained,
however, shall be construed as making necessary the approval by Bondholders, the Insurer or
the Credit Bank of the adoption of any Supplemental Resolution as authorized in Section 8.1
hereof.
If at any time the Issuer shall determine that it is necessary or desirable to adopt
any Supplemental Resolution pursuant to this Section 8.2, the Clerk shall cause the Registrar
to give notice of the proposed adoption of such Supplemental Resolution and the form of
004.219416.8 62
consent to such adoption to be mailed, postage prepaid, to all Bondholders at their addresses as
they appear on the registration books and to all Insurers of, and Credit Banks providing a
Credit Facility for, Bonds Outstanding. Such notice shall briefly set forth the nature of the
proposed Supplemental Resolution and shall state that copies thereof are on file at the offices
of the Clerk and the Registrar for inspection by all Bondholders. The Issuer shall not,
however, be subject to any liability to any Bondholder by reason of its failure to cause the
notice required by this Section 8.2 to be mailed and any such failure shall not affect the
validity of such Supplemental Resolution when consented to and approved as provided in this
Section 8.2.
Whenever the Issuer shall deliver to the Clerk an instrument or instruments in
writing purporting to be executed by the Holders of not less than a majority in aggregate
principal amount of the Bonds then Outstanding, which instrument or instruments shall refer to
the proposed Supplemental Resolution described in such notice and shall specifically consent to
and approve the adoption thereof in substantially the form of the copy thereof referred to in
such notice, thereupon, but not otherwise, the Issuer may adopt such Supplemental Resolution
in substantially such form, without liability or responsibility to any Holder of any Bond,
whether or not such Holder shall have consented thereto.
If the Holders of not less than a majority in aggregate principal amount of the
Bonds Outstanding at the time of the adoption of such Supplemental Resolution shall have
consented to and approved the adoption thereof as herein provided, no Holder of any Bond
shall have any right to object to the adoption of such Supplemental Resolution, or to object to
any of the terms and provisions contained therein or the operation thereof, or in any manner to
question the propriety of the adoption thereof, or to enjoin or restrain the Issuer from adopting
the same or from taking any action pursuant to the provisions thereof.
Upon the adoption of any Supplemental Resolution pursuant to the provisions of
this Section 8.2, this Resolution shall be deemed to be modified and amended in accordance
therewith, and the respective rights, duties and obligations under this Resolution of the Issuer
and all Holders of Bonds then Outstanding shall thereafter be determined, exercised and
enforced in all respects under the provisions of this Resolution as so modified and amended.
Section 8.3. Amendment with Consent of Insurer and/or Credit Bank Only. If
all of the Bonds Outstanding hereunder are insured or secured as to payment of principal and
interest by an Insurer or Insurers and/or by a Credit Facility provided by a Credit Bank or
Credit Banks, and the Insurer or Insurers and/or the Credit Bank or Credit Banks, as
applicable, are not in default, and the Bonds, at the time of the hereinafter described
amendment, shall be rated by the rating agencies which shall have rated the Bonds at the time
such Bonds were insured or such Credit Facility was provided no lower than the ratings
assigned thereto by such rating agencies on the date such Bonds were insured or such Credit
Facility was provided, the Issuer may enact one or more Supplemental Resolutions amending
all or any part of Article 1, Article 4, Article 5, Article 6 and Article 7 hereof with the written
consent of said Insurer or Insurers and/or said Credit Bank or Credit Banks, as applicable, and
the acknowledgment by said Insurer or Insurers and/or said Credit Bank or Credit Banks that
its Bond Insurance Policy or its Credit Facility, as the case may be, will remain in full force
ooa.z~ say s.s 63
and effect. The consent of the Holders of any Bonds shall not be necessary. The foregoing
right of amendment, however, does not apply to any amendment to Section 5.17 hereof with
respect to the exclusion, if applicable, of interest on said Bonds from the gross income of the
Holders thereof for federal income tax purposes nor may any such amendment deprive the
Holders of any Bond of right to payment of the Bonds from, and their lien on, the Pledged
Funds and any additional security pledged hereunder. Upon filing with the Clerk of evidence
of such consent of the Insurer or Insurers and/or the Credit Bank or Credit Banks as aforesaid,
the Issuer may adopt such Supplemental Resolution. After the adoption by the Issuer of such
Supplemental Resolution, notice thereof shall be mailed in the same manner as notice of an
amendment under Section 8.2 hereof.
ARTICLE 9
MISCELLANEOUS
Section 9.1. Defeasance. If the Issuer shall pay or cause to be paid or there
shall otherwise be paid to the Holders of all Bonds the principal or Redemption Price, if
applicable, and interest due or to become due thereon, at the times and in the manner
stipulated therein and in this Resolution, then the pledge of the Pledged Funds and any
additional security pledged hereunder, and all covenants, agreements and other obligations of
the Issuer to the Bondholders, shall thereupon cease, terminate and become void and be
discharged and satisfied. In such event, the Paying Agents shall pay over or deliver to the
Issuer all money or securities held by them pursuant to this Resolution which are not required
for the payment or redemption of Bonds not theretofore surrendered for such payment or
redemption.
Any Bonds or interest installments appertaining thereto, whether at or prior to
the maturity or redemption date of such Bonds, shall be deemed to have been paid within the
meaning of this Section 9.1 if (A) in case any such Bonds are to be redeemed prior to the
maturity thereof, there shall have been taken all action necessary to call such Bonds for
redemption and notice of such redemption shall have been duly given or provision shall have
been made for the giving of such notice, and (B) there shall have been deposited in irrevocable
trust with a banking institution or trust company by or on behalf of the Issuer either moneys in
an amount which shall be sufficient, or Securities the principal of and the interest on which
when due will provide moneys which, together with the moneys, if any, deposited with such
bank or trust company at the same time shall be sufficient, to pay the principal of or
Redemption Price, if applicable, and interest due and to become due on said Bonds on and
prior to the redemption date or maturity date thereof, as the case may be. Neither the
Securities nor any moneys so deposited with such bank or trust company nor any moneys
received by such bank or trust company on account of principal of or Redemption Price, if
applicable, or interest on said Securities shall be withdrawn or used for any purpose other
than, and all such moneys shall be held in trust for and be applied to, the payment, when due,
of the principal of or Redemption Price, if applicable, of the Bonds for the payment or
redemption of which they were deposited and the interest accruing thereon to the date of
maturity or redemption thereof; provided, however, the Issuer may substitute new Securities
and moneys for the deposited Securities and moneys if the new Securities and moneys are
004.219416.8 64
sufficient to pay the principal of or Redemption Price, if applicable, and interest on such
Bonds.
For purposes of determining whether Variable Rate Bonds shall be deemed to
have been paid prior to the maturity or the redemption date thereof, as the case may be, by the
deposit of moneys, or specified Securities and moneys, if any, in accordance with this Section
9.1, the interest to come due on such Variable Rate Bonds on or prior to the maturity or
redemption date thereof, as the case may be, shall be calculated at the Maximum Interest Rate;
provided, however, that if on any date, as a result of such Variable Rate Bonds having borne
interest at less than the Maximum Interest Rate for any period, the total amount of moneys and
specified Securities on deposit for the payment of interest on such Variable Rate Bonds is in
excess of the total amount which would have been required to be deposited on such date in
respect of such Variable Rate Bonds in order to satisfy this Section 9.1, such excess shall be
paid to the Issuer free and clear of any trust, lien, pledge or assignment securing the Bonds or
otherwise existing under this Resolution.
In the event the Bonds for which moneys are to be deposited for the payment
thereof in accordance with this Section 9.1 are not by their terms subject to redemption within
the next succeeding sixty (60) days, the Issuer shall cause the Registrar to mail a notice to the
Holders of such Bonds that the deposit required by this Section 9.1 of moneys or Securities
has been made and said Bonds are deemed to be paid in accordance with the provisions of this
Section 9.1 and stating such maturity or redemption date upon which moneys are to be
available for the payment of the principal of or Redemption Price, if applicable, and interest
on said Bonds.
Nothing herein shall be deemed to require the Issuer to call any of the
Outstanding Bonds for redemption prior to maturity pursuant to any applicable optional
redemption provisions, or to impair the discretion of the Issuer in determining whether to
exercise any such option for early redemption.
In the event that the principal of or Redemption Price, if applicable, and interest
due on the Bonds or any portion thereof shall be paid by an Insurer or Insurers or a Credit
Bank or Credit Banks, such Bonds or any portion thereof shall remain Outstanding, shall not
be defeased and shall not be considered paid by the Issuer, and the pledge of the Pledged
Funds and any additional security pledged hereunder, and all covenants, agreements and other
obligations of the Issuer to the Bondholders shall continue to exist and such Insurer or Insurers
or such Credit Bank or Credit Banks shall be subrogated to the rights of such Bondholders.
Section 9.2. Capital Appreciation Bonds. For the purposes ' of (A) receiving
payment of the Redemption Price if a Capital Appreciation Bond is redeemed prior to
maturity, or (B) receiving payment of a Capital Appreciation Bond if the principal of all Bonds
becomes due and payable under the provisions of this Resolution, or (C) computing the
amount of Bonds held by the Holder of a Capital Appreciation Bond in giving to the Issuer or
any trustee or receiver appointed to represent the Bondholders any notice, consent, request or
demand pursuant to this Resolution for any purpose whatsoever, the principal amount of a
Capital Appreciation Bond shall be deemed to be its Accreted Value. For the purpose of
004.219416.8 65
determining the aggregate principal amount of Capital Appreciation Bonds which may be
issued hereunder, only the aggregate principal amount of such Bonds at their initial offering
shall be counted, without regard to the aggregated Accreted Value or face amount of such
Bonds which shall be payable at their respective maturities.
Section 9.3. Sale of Series 2000 Bonds; Authorization of Execution and
Deliver~of Purchase Contract. A negotiated sale of the 2000 Bonds is hereby authorized. The
Mayor and the Issuer's Finance Director are hereby authorized and directed to award the sale
of the Series 2000 Bonds to the Underwriter in an aggregate principal amount which shall not
exceed $18,200,000, at an aggregate purchase price (net of original issue discount) of not less
than 99.0% of the original principal amount of such Series 2000 Bonds, as approved by the
Mayor or the Issuer's Finance Director (the "Minimum Purchase Price"), and with final
terms, as approved by the Mayor or the Issuer's Finance Director within the following
parameters (the "Parameters"): the final maturity of the Series 2000 Bonds shall not be later
than December 31, 2030; the true interest cost of the Series 2000 Bonds shall not exceed
6.75% and the Series 2000 Bonds shall be subject to optional redemption no later than 10.5
years from the date of issuance of the Series 2000 Bonds, at a redemption price of no more
than 101 % of the principal amount thereof to be redeemed plus accrued interest.
The proposed form of the Purchase Contract presented by the Underwriter is
hereby approved, with such omissions, insertions and variations as may be necessary and/or
desirable and approved by the Mayor or the Issuer's Finance Director prior to the execution
and delivery thereof, such necessity and/or desirability and approval to be presumed by the
execution thereof by the Mayor; the Mayor or the Issuer's Finance Director is hereby
authorized to accept the offer of the Underwriter to purchase the Series 2000 Bonds in an
aggregate principal amount not to exceed $18,200,000, at a purchase price of not less than the
Minimum Purchase Price plus accrued interest thereon to the date of delivery and with final
terms within the Parameters, upon the terms and conditions set forth in the Purchase Contract;
and the Mayor is hereby authorized to execute and approve the Purchase Contract for and on
behalf of the Issuer pursuant to the terms hereof. Receipt by the Mayor or the Issuer's
Finance Director of a report of the Issuer's financial advisor stating that the aggregate
purchase price set forth in the Purchase Contract is not less than the Minimum Purchase Price
and that the final terms are within the Parameters shall constitute conclusive proof that all of
the terms and conditions set forth in this Section 9.3 have been fully satisfied.
The Series 2000 Bonds shall be in denominations of $5,000 or integral multiples
thereof, shall be in Book Entry Form, shall be dated such dates, shall bear interest at such
rates, shall be payable on such dates, shall mature on such dates, shall be redeemable prior to
maturity upon such terms and conditions and shall have such other terms as are set forth in the
Purchase Contract and approved by the Mayor or the Issuer's Finance Director, and the
authority to approve such matters is hereby expressly delegated to the Mayor and the Issuer's
Finance Director, with such approval to be conclusively evidenced by the Mayor's execution
of any documents including such terms.
Prior to the execution and delivery of the Purchase Contract, the Underwriter
shall file with the Mayor the disclosure statement required by Section 218.385(6), Florida
004.219416.8 66
Statutes, as amended. The Mayor, the City Clerk, the Issuer's Finance Director, and the other
officers, agents and employees of the Issuer are hereby authorized and directed to conclude the
issuance and delivery of the Series 2000 Bonds in accordance with the provisions of this
Resolution and the Purchase Contract.
The authority for the issuance of such aggregate principal amount of the Series
2000 Bonds herein authorized which shall not be delivered to the Underwriter pursuant to the
provisions of the Purchase Contract is hereby canceled and rescinded.
Section 9.4. Approval of Preliminary Official Statement and Authorization of
Official Statement. The form of the Preliminary Official Statement, with such omissions,
insertions and variations as may be necessary and/or desirable and approved by the Mayor or
the Issuer's Finance Director prior to the release thereof, is hereby approved, and the
Preliminary Official Statement is hereby authorized to be delivered by the Issuer to the
Underwriter at or prior to the execution and delivery of the Purchase Contract; and the
Issuer's Finance Director is hereby authorized to deem the Preliminary Official Statement final
as of its date on behalf of the Issuer for purposes of Rule 15c2-12 of the Securities and
Exchange Commission (except for such omissions permitted by such Rule 15c2-12), and to
execute a certificate to that effect to be delivered to the Underwriter. A final official statement
in substantially the form of the "deemed final" Preliminary Official Statement, with such
omissions, insertions and variations as may be necessary and/or desirable and approved by the
Mayor or the Issuer's Finance Director prior to the release thereof, is hereby authorized to be
delivered by the Issuer to the Underwriter at or prior to the issuance and delivery of the Series
2000 Bonds. The Mayor is hereby authorized to evidence the Issuer's approval of the final
official statement by his endorsement thereof upon one or more copies, and approval of all
such omissions, insertions and variations may be presumed from such endorsement upon any
copy of such final official statement. Bond Counsel is hereby directed to furnish to the
Division of Bond Finance of the Department of General Services of the State of Florida a copy
of the final official statement, a notice of the impending sale of the Series 2000 Bonds and the
other information required by Section 218.38, Florida Statutes, as amended, within the
appropriate time periods specified by such section.
Section 9.5. Registrar and Paying Agent. First Union National Bank,
Jacksonville, Florida, is hereby appointed Registrar and Paying Agent for the Series 2000
Bonds.
Section 9.6. Authorization of Execution and Delivery of Registrar and Paving
A~enc~greement. The Registrar and Paying Agency Agreement, with such omissions,
insertions and variations as may be approved on behalf of the Issuer by the Mayor or the
Issuer's Finance Director, such approval to be evidenced conclusively by the Mayor's
execution thereof, is hereby approved and authorized. The Issuer hereby authorizes and
directs the Mayor to execute the Registrar and Paying Agency Agreement and to deliver the
same to the Registrar and Paying Agent for the Series 2000 Bonds. All of the provisions of
the Registrar and Paying Agency Agreement, when executed, dated and delivered by or on
behalf of the Issuer as authorized herein and by or on behalf of the Registrar and Paying
004.219416.8 67
Agent, shall be deemed to be a part of this Resolution as fully and to the same extent as if
incorporated verbatim herein.
Section 9.7. Authorization of Execution and Delivery of Continuing
Disclosure Certificate. The Continuing Disclosure Certificate, with such omissions, insertions
and variations as may be approved on behalf of the Issuer by the Mayor or the Issuer's
Finance Director, such approval to be evidenced conclusively by the Mayor's execution
thereof, is hereby approved and authorized. The Issuer hereby authorizes and directs the
Mayor to execute and deliver the Continuing Disclosure Certificate. All of the provisions of
the Continuing Disclosure Certificate, when executed, dated and delivered by or on behalf of
the Issuer as authorized herein, shall be deemed to be a part of this Resolution as fully and to
the same extent as if incorporated verbatim herein.
Section 9.8. Escrow Holder. First Union National Bank, Jacksonville,
Florida, is hereby appointed Escrow Holder for the Series 2000 Bonds under the Escrow
Deposit Agreement.
Section 9.9. Authorization of Execution and Delivery of Escrow Deposit
Agreement. The Escrow Deposit Agreement, with such omissions, insertions and variations as
may be approved on behalf of the Issuer by the Mayor or the Issuer's Finance Director, such
approval to be evidenced conclusively by the Mayor's execution thereof, is hereby approved
and authorized. The Issuer hereby authorizes and directs the Mayor to execute and deliver the
Escrow Deposit Agreement. All of the provisions of the Escrow Deposit Agreement, when
executed, dated and delivered by or on behalf of the Issuer as authorized herein and by or on
behalf of the Escrow Holder, shall be deemed to be a part of this Resolution as fully and to the
same extent as if incorporated verbatim herein.
Section 9.10. Provisions Relating to Insurers Generally. Notwithstanding any
other provisions of this Resolution to the contrary, the following provisions shall apply with
respect to the Series 2000 Bonds or any Additional Bonds hereafter issued the timely payment
of the principal of and interest on which is insured by a Bond Insurance Policy.
(A) Except as otherwise provided in paragraph (D) below, and
notwithstanding the terms of Section 8.2 hereof, an Insurer shall be deemed to be the sole
Holder of each Bond insured by it for purposes of consent to the execution and delivery of any
supplemental resolution or ordinance or any amendment, supplement or change to or
modification of this Resolution and direction, approval or the taking of any other action that
the Bondholders whose Bonds are insured by such Insurer are entitled to take pursuant hereto.
(B) Except as otherwise provided in paragraph (D) below, upon the
occurrence and continuance of an event of default, an Insurer shall be deemed to be the sole
Holder of each Bond insured by it for purposes of directing the enforcement and exercising of
rights and remedies granted to the Bondholders under this Resolution, no acceleration of such
Bonds shall occur without the prior written consent of such Insurer, and such Insurer shall also
be entitled to approve all waivers of events of default with respect to Bonds insured by the
Insurer. Notwithstanding the foregoing, however, any notices of events of default hereunder
004.219416.8 6g
required to be sent to Bondholders shall be sent to Bondholders as well as each Insurer. In the
event that the maturity of Bonds is accelerated, an Insurer of such Bonds may pay the
accelerated principal and accrued or accreted interest, as applicable, on such principal to the
date of acceleration and the Insurer's obligations under its Bond Insurance Policy with respect
to such Bonds shall be fully discharged.
(C) In the event that the principal and/or interest due on Bonds insured
by an Insurer shall be paid by such Insurer pursuant to its Bond Insurance Policy, such Bonds
shall remain outstanding for all purposes, not be defeased or otherwise satisfied and not be
considered paid by the Issuer, and the assignment and pledge of the Pledged Funds and all
covenants, agreements and other obligations of the Issuer to the Holders thereof shall continue
to exist and shall run to the benefit of such Insurer and the Insurer shall be subrogated to the
rights of such Holders in accordance with the Bond Insurance Policy.
(D) Notwithstanding any other provision contained in this Section 9.10
or elsewhere in this Resolution to the contrary:
(1) If an Insurer shall be in default in the due and punctual
performance of its payment obligations under its Bond Insurance Policy or if such
policy for whatever reason is not then enforceable and in full force and effect; or
(2) If an Insurer shall apply for or consent to the appointment of
a receiver, custodian, trustee or liquidator of such Insurer or of all or a substantial part
of its assets, or shall admit in writing its inability, or be generally unable, to pay its
debts as such debts become due, or shall make a general assignment for the benefit of
its creditors, or commence a voluntary case under the Federal Bankruptcy Code (as
now or hereafter in effect) or shall file a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, or shall fail to consent in a timely and appropriate manner, or
acquiesce in writing to, any other petition filed against such Insurer in any involuntary
case under said Federal Bankruptcy Code, or shall take any other action for the
purpose of effecting the foregoing; or
(3) If a proceeding or case shall be commenced without the
application or consent of an Insurer, in any court of competent jurisdiction seeking the
liquidation, reorganization, dissolution, winding up or composition or readjustment of
debts of such Insurer or the appointment of a trustee, receiver, custodian, or liquidator
or the like of the Insurer or of all or a substantial part of its assets, or similar relief
with respect to the Insurer under any law relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, and such proceeding
or case shall continue undismissed and an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed in effect for a
period of sixty (60) days from the commencement of such proceedings or case, or any
order for relief against the Insurer shall be entered in an involuntary case under said
Federal Bankruptcy Code;
004.219416.8 69
then and in any such event such Insurer shall not be entitled to any rights specifically granted
to it herein to consent to, approve or participate in any actions proposed to be taken by the
Issuer, a Bondholder or any of them pursuant to this Resolution or to receive any notices or
other documents or instruments.
(E) The Issuer hereby acknowledges that the issuer of the Bond
Insurance Policy shall be deemed athird-party beneficiary of this Resolution for the purpose of
enforcing the terms, conditions and obligations of this Resolution which benefit the issuer of
such Bond Insurance Policy.
Section 9.11. Authorization of Execution and Deliverv of Commitments for a
Bond Insurance Policy and Reserve Fund Insurance Policv for the Series 2000 Bonds. In order
to provide for the payment of the Series 2000 Bonds and to meet the Reserve Requirement for
the Series 2000 Bonds, the Issuer hereby selects FSA as the Insurer for the Series 2000 Bonds
and approves FSA's commitments for a Bond Insurance Policy and Reserve Fund Insurance
Policy for the Series 2000 Bonds, in the forms set forth as Exhibit F to this Resolution. The
Issuer hereby authorizes and directs the Mayor to execute and deliver such commitments,
including the Insurance Agreement substantially in the form attached as Exhibit B to the
commitment for the FSA Reserve Fund Insurance Policy.
Section 9.12. Provisions Relating to the Bond Insurance Policv for the Series
2000 Bonds. So long as FSA is providing a Bond Insurance Policy for the Series 2000 Bonds,
the following provisions shall apply with respect to the Series 2000 Bonds and the Bond
Insurance Policy, notwithstanding anything to the contrary contained in this Resolution:
(A) The Series 2000 Bonds shall bear a Statement of Insurance in the
following form:
"Financial Security Assurance, Inc. ("Financial Security"), New
York, New York, has delivered its municipal bond insurance policy with respect to the
scheduled payments due of principal of and interest on this Bond to First Union
National Bank, Jacksonville, Florida, or its successor, as paying agent for the Bonds
(the "Paying Agent"). Said Policy is on file and available for inspection at the
principal office of the Paying Agent and a copy thereof may be obtained from Financial
Security or the Paying Agent."
(B) No modification, amendment or supplement to this Resolution or
any other transaction document associated with the Series 2000 Bonds (each a "Related
Document") may become effective except upon obtaining the prior written consent of FSA.
(C) Copies of any modification or amendment to this Resolution or any
other Related Document shall be sent to Standard & Poor's and Moody's Investors Service at
least 10 days prior to the effective date thereof.
(D) The rights granted to FSA under this Resolution or any other
Related Document to request, consent to or direct any action are rights granted to FSA in
consideration of its issuance of the Bond Insurance Policy for the Series 2000 Bonds. Any
004.219416.8 ~~
exercise by FSA of such rights is merely an exercise of FBA's contractual rights and shall not
be construed or deemed to be taken for the benefit or on behalf of the Bondholders nor does
such action evidence any position of FSA, positive or negative, as to whether Bondholder
consent is required in addition to consent of FSA.
(E) If, on the third business day prior to the related scheduled interest
payment date or principal payment date or the date to which a Series 2000 Bond maturity has
been accelerated ("Payment Date") there is not on deposit in the Sinking Fund, after making
all transfers required under this Resolution, moneys sufficient to pay the principal of and
interest on the Series 2000 Bonds due on such Payment Date, the Issuer shall give notice to
FSA and to its designated agent (if any) ("FBA's Fiscal Agent") by telephone or telecopy of
the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If,
on the second Business Day prior to the related Payment Date, there continues to be a
deficiency in the amount available to pay the principal of and interest on the Series 2000
Bonds due on such Payment Date, the Issuer or the Paying Agent shall make a claim under the
Bond Insurance Policy and give notice to FSA and FBA's Fiscal Agent (if any) by telephone of
the amount of such deficiency, and the allocation of such deficiency between the amount
required to pay interest on the Series 2000 Bonds and the amount required to pay principal of
the Series 2000 Bonds, confirmed in writing to FSA and FBA's Fiscal Agent by 12:00 noon,
New York City time, on such second Business Day by filling in the form of Notice of Claim
and Certificate delivered with the Bond Insurance Policy.
In the event the claim to be made is for a mandatory sinking fund
redemption installment, upon receipt of the moneys due, the Registrar shall authenticate and
deliver to affected Bondholders who surrender their Series 2000 Bonds a new Series 2000
Bond or Series 2000 Bonds in an aggregate principal amount equal to the unredeemed portion
of the Series 2000 Bond surrendered. The Registrar and Paying Agent shall designate any
portion of payment of principal on Series 2000 Bonds paid by FBA, whether by virtue of
mandatory sinking fund redemption, maturity or other advancement of maturity, on its books
as a reduction in the principal amount of Series 2000 Bonds registered to the then current
Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Series
2000 Bond to FBA, registered in the name of Financial Security Assurance Inc., in a principal
amount equal to the amount of principal so paid (without regard to authorized denominations);
provided that the Registrar and Paying Agent's failure to so designate any payment or issue
any replacement Series 2000 Bond shall have no effect on the amount of principal or interest
payable by the Issuer on any Series 2000 Bond or the subrogation rights of FSA under Section
9.10(C).
The Paying Agent shall keep a complete and accurate record of all funds
deposited by FSA into the Policy Payments Account (defined below) and the allocation of such
funds to payment of interest on and principal paid in respect of any Series 2000 Bond. FSA
shall have the right to inspect such records at reasonable times upon reasonable notice to the
Paying Agent.
Upon payment of a claim under the Bond Insurance Policy, the Paying
Agent shall establish a separate special purpose trust account for the benefit of Bondholders
004.219416.8 71
referred to herein as the "Policy Payments Account" and over which the Paying Agent shall
have exclusive control and sole right of withdrawal. The Paying Agent shall receive any
amount paid under the Bond Insurance Policy in trust on behalf of Bondholders and shall
deposit any such amount in the Policy Payments Account and distribute such amount only for
purposes of making the payments for which a claim was made. Such amounts shall be
disbursed by the Paying Agent to the Bondholders in the same manner as principal and interest
payments are to be made with respect to the Series 2000 Bonds under the sections hereof
regarding payment of Series 2000 Bonds. It shall not be necessary for such payments to be
made by checks or wire transfers separate from the check or wire transfer used to pay debt
service with other funds available to make such payments.
Funds held in the Policy Payments Account shall not be invested by the
Paying Agent and may not be applied to satisfy any cost, expenses or liabilities of the Paying
Agent.
Any funds remaining in the Policy Payments Account following a
Payment Date shall promptly be remitted to FSA.
(F) The Issuer shall pay or reimburse FSA any and all charges, fees,
costs and expenses which FSA may reasonably pay or incur in connection with (i) the
administration, enforcement, defense or preservation of any rights or security in any Related
Document, (ii) the pursuit of any remedies under this Resolution or any other Related
Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action
with respect to, or related to, this Resolution or any other Related Document whether or not
executed or completed, (iv) the violation by the Issuer of any law, rule or regulation, or any
judgment, order or decree applicable to it or (v) any litigation or other dispute in connection
with this Resolution or any other Related Document or the transactions contemplated thereby,
other than amounts resulting from the failure of FSA to honor its obligations under the Bond
Insurance Policy. FSA reserves the right to charge a reasonable fee as a condition to
executing any amendment, waiver or consent proposed in respect of this Resolution or any
other Related Document.
(G) FSA shall be entitled to pay principal (or, in the case of Capital
Appreciation Bonds, accreted value) or interest on the Series 2000 Bonds that shall become
Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer (as such terms
are defined in the Bond Insurance Policy) and any amounts due on the Series 2000 Bonds as a
result of acceleration of the maturity thereof in accordance with this Resolution, whether or
not FSA has received a Notice of Nonpayment (as such terms are defined in the Bond
Insurance Policy) or a claim upon the Bond Insurance Policy.
(H) The notice address of the Insurer is: Financial Security Assurance
Inc., 350 Park Avenue, New York, New York 10022-6022, Attention: Managing Director -
Surveillance; Re: Policy No. ,Telephone: (212) 826-0100; Telecopier: (212) 339-
3529. In each case in which notice or other communication refers to an Event of Default, then
a. copy of such notice or other communication shall also be sent to the attention of General
Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED."
004.219416.8 72'
(I) FSA shall be provided with the following information:
(1) Annual audited financial statements within 120 days after the
end of the Issuer's fiscal year and the Issuer's annual budget within 30 days after the
approval thereof;
(2) Notice of any draw upon the Reserve Fund within two
Business Days after knowledge thereof other than (i) withdrawals of amounts in excess
of the Reserve Requirement and (ii) withdrawals in connection with a refunding of
Bonds;
(3) Notice of any default known to the Issuer within five Business
Days after knowledge thereof;
(4) Prior notice of the advance refunding or redemption of any of
the Series 2000 Bonds, including the principal amount, maturities and CUSIP numbers
thereof;
(5) Notice of the resignation or removal of the Paying Agent and
Registrar and the appointment of, and acceptance of duties by, any successor thereto;
(6) Notice of the commencement of any proceeding by or against
the Issuer commenced under the United States Bankruptcy Code or any other applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency
Proceeding");
(7) Notice of the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment
of principal of, or interest on, the Series 2000 Bonds;
(8) A full original transcript of all proceedings relating to the
execution of any amendment or supplement to the Related Documents; and
(9) All reports, notices and correspondence to be delivered under
the terms of the Related Documents.
Section 9.13. Provisions Relating to the FSA Reserve Fund Insurance Policy.
So long as FSA is providing a Reserve Fund Insurance Policy to meet the portion of the
Reserve Fund Requirement attributable to the Series 2000 Bonds, the following provisions
shall apply, notwithstanding anything to the contrary contained in this Resolution:
(A) The Issuer shall repay any draws under the FSA Reserve Fund
Insurance Policy and pay all related reasonable expenses incurred by FSA. Interest shall
accrue and be payable on such draws and expenses from the date of payment by FSA at the
Late Payment Rate. "Late Payment Rate" means the lesser of (a) the greater of (i) the per
annum rate of interest, publicly announced from time to time by The Chase Manhattan Bank at
its principal office in the City of New York, as its prime or base lending rate ("Prime Rate")
004.219416.8 73
(any change in such Prime Rate to be effective on the date such change is announced by The
Chase Manhattan Bank) plus 3 %, and (ii) the then applicable highest rate of interest on the
Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting
interest rates. The Late Payment Rate shall be computed on the basis of the actual number of
days elapsed over a year of 365 days. In the event The Chase Manhattan Bank ceases to
announce its Prime Rate publicly, the Prime Rate shall be the publicly announced prime or
base lending rate of such national bank as FSA shall specify.
Repayment of draws and payment of expenses and accrued interest
thereon at the Late Payment Rate (collectively, "Policy Costs") shall commence in the first
month following each draw, and each such monthly payment shall be in an amount at least
equal to 1/I2 of the aggregate of Policy Costs related to such draw.
Amounts in respect of Policy Costs paid to FSA shall be credited first to
interest due, then to the expenses due and then to principal due. As and to the extent that
payments are made to FSA on account of principal due, the coverage under the FSA Reserve
Fund Insurance Policy will be increased by a like amount, subject to the terms of the FSA
Reserve Fund Insurance Policy.
All cash and investments in the Reserve Fund shall be transferred to the
Sinking Fund for payment of debt service on the Bonds before any drawing may be made on
any Reserve Fund Insurance Policy or Reserve Fund Letter of Credit. Payment of any Policy
Costs shall be made prior to replenishment of any such cash amounts. Draws on all Reserve
Fund Letters of Credit and Reserve Fund Insurance Policies (including the FSA Reserve Fund
Insurance Policy) on which there is available coverage shall be made on a pro-rata basis
(calculated by reference to the coverage then available thereunder) after applying all available
cash and investments in the Reserve Fund. Payment of Policy Costs and payment or
reimbursement of amounts with respect to other Reserve Fund Letters of Credit and Reserve
Fund Insurance Policies shall be made on a pro-rata basis prior to replenishment of any cash
drawn from the Reserve Fund.
(B) If the Issuer shall fail to pay any Policy Costs in accordance with
the requirements of paragraph (A) above, FSA shall be entitled to exercise any and all legal
and equitable remedies available to it, including those provided hereunder, other than (i)
acceleration of the maturity of the Series 2000 Bonds or (ii) remedies which would adversely
affect owners of the Series 2000 Bonds.
(C) This Resolution shall not be discharged until all Policy Costs owing
to FSA shall have been paid in full. The Issuer's obligation to pay such amounts shall
expressly survive payment in full of the Series 2000 Bonds.
(D) In order to secure the Issuer's payment obligations with respect to
the Policy Costs, there shall be granted and perfected in favor of FSA a security interest
(subordinate only to that of the owners of the Bonds, and on a parity with similar security
interests granted to other providers of Reserve Fund Insurance Policies or Reserve Fund
Letters of Credit) in all revenues and collateral pledged as security for the Bonds.
004.219416.8 74
(E) If there is necessity for a claim upon the FSA Reserve Fund
Insurance Policy, the Issuer shall provide notice to FSA and the Paying Agent in accordance
with the terms of the FSA Reserve Fund Insurance Policy, at least five business days prior to
each date upon which interest or principal is due on the Bonds.
Section 9.14. General Authority. The members of the Governing Body and the
Issuer's officers, attorneys and other agents and employees are hereby authorized to do all acts
and things required of them by this Resolution or desirable or consistent with the requirements
hereof for the full, punctual and complete performance of all of the terms, covenants and
agreements contained in the Bonds and this Resolution, and they are hereby authorized to
execute and deliver all documents which shall be required by Bond Counsel or the initial
purchasers of the Bonds to effectuate the sale of the Bonds to said initial purchasers.
Section 9.15. No Personal Liability. No representation, statement, covenant,
warranty, stipulation, obligation or agreement herein contained, or contained in the Bonds, or
in any certificate or other instrument to be executed on behalf of the Issuer in connection with
the issuance of the Bonds, shall be deemed to be a representation, statement, covenant,
warranty, stipulation, obligation or agreement of any member of the Governing Body, officer,
employee or agent of the Issuer in his or her individual capacity, and none of the foregoing
persons nor any officer of the Issuer executing the Bonds, or any certificate or other
instrument to be executed in connection with the issuance of the Bonds, shall be liable
personally thereon or be subject to any personal liability or accountability by reason of the
execution or delivery thereof.
Section 9.16. No Third Part~Beneficiaries. Except such other Persons as may
be expressly described herein or in the Bonds, nothing in this Resolution, or in the Bonds,
expressed or implied, is intended or shall be construed to confer upon any Person other than
the Issuer and the Holders any right, remedy or claim, legal or equitable, under and by reason
of this Resolution or any provision hereof, or of the Bonds, all provisions hereof and thereof
being intended to be and being for the sole and exclusive benefit of the Issuer and the Persons
who shall from time to time be the Holders.
Section 9.17. Severability of Invalid Provisions. If any one or more of the
covenants, agreements or provisions of this Resolution shall 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 separable from the
remaining covenants, agreements and provisions of this Resolution and shall in no way affect
the validity of any of the other covenants, agreements or provisions hereof or of the Bonds
issued hereunder.
Section 9.18. Repeal of Inconsistent Resolutions. All resolutions or parts
thereof in conflict herewith are hereby superseded and repealed to the extent of such conflict.
Section 9.19. Table of Contents and Headings not Part Hereof. The Table of
Contents preceding the body of this Resolution and the headings preceding the several articles
004.219416.8 75
and sections hereof shall be solely for convenience of reference and shall not constitute a part
of this Resolution or affect its meaning, construction or effect.
Section 9.20. Effective Date. This Resolution shall take effect immediately
upon its adoption.
PASSED, APPROVED AND ADOPTED this 24th day of October, 2000.
CITY COUNCIL OF THE CITY OF
CLERMONT, FLORIDA
(OFFICIAL SEAL)
ATTEST:
.--
Jo ph E. Van Zile ity Clerk
By : .~
arold S. Turville, Jr., Mayor
004.219416.8 76
CITY OF CLERMONT, FLORIDA
WATER AND SEWER REVENUE AND REFUNDING BONDS,
SERIES 2000
BOND PURCHASE AGREEMENT
November _, 2000
Honorable Members
of the City Council of
the City of Clermont, Florida
Clermont, Florida
Ladies and Gentlemen:
The undersigned, PaineWebber Incorporated (the "Underwriter"), offers to enter into this
Bond Purchase Agreement (this "Agreement") with the City of Clermont, Florida (the "City"),which,
upon the acceptance of this offer and the execution of this Agreement by the City, shall be in full force
and effect in accordance with its terms and shall be binding upon the City and the Underwriter. This
offer is made subject to your acceptance and execution of this Agreement on or before 11:59 p.m.,
Eastern Time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the
Underwriter upon oral or written notice delivered by the Underwriter to the City at any time prior to
the acceptance hereof by the City. Unless otherwise indicated, capitalized terms used herein without
definitions shall have the meanings ascribed thereto in the Resolution (hereinafter defined).
Purchase of Bonds: Security Deposit.
(a) Upon the terms and conditions and upon the basis of the representations,
warranties and agreements hereinafter set forth, the Underwriter hereby agrees to purchase From the
City, and the City hereby agrees to issue, sell and deliver to the Underwriter, all (but not less than all)
of the ~ aggregate principal amount of City of Clermont, Florida, Water and Sewer
Revenue and Refunding Bonds, Series 2000 (the "Series 2000 Bonds"), at a purchase price of
~ (representing % of the principal amount thereof, taking into account
a net original issue discount of ~ and an Underwriter's discount of ~ ~
(the "Purchase Price"), plus accrued interest from November 1, 2000 to the Closing Date (hereinafter
defined). The Underwriter agrees to make a bona fide public offering of substantially all of the Series
2000 Bonds to the public at initial public offering prices not greater than (or yields not less than) the
initial public offering prices (or yields) set forth in the Official Statement (hereinafter defined);
provided, however, that the Underwriter reserves the right to make concessions to certain dealers,
certain dealer banks and banks acting as agents and to change such initial public offering prices as the
Underwriter shall deem necessary in connection with the marketing of the Series 2000 Bonds.
(b) The Underwriter has delivered to the City herewith a corporate check equal to
$ ( Dollars) as a security deposit, payable to the City.
In the event you do not accept this offer, such check shall be immediately returned to the Underwriter
uncashed. If this offer is accepted, the check will be held uncashed as security for the performance by
the Underwriter of its obligations to purchase, to accept delivery of and to pay Eor the Series 2000
Bonds at the Closing. In the event of your failure to deliver the Series 2000 Bonds at the Closing, or
if you shall be unable to satisfy the conditions of the obligations of the Underwriter contained herein,
or if the obligations of the Underwriter shall be terminated for any reason permitted by this Agreement,
the check shall be immediately returned to the Underwriter uncashed, and such return shall constitute
a full release and discharge of all claims by the Underwriter arising out of the transactions contemplated
hereby. In the event that the Underwriter fails (other than for reasons permitted hereunder) to accept
delivery of and to pay for the Series 2000 Bonds at the Closing, the check shall be cashed and the
proceeds thereof retained by you as and for full liquidated damages for such failure and for any defaults
hereunder on the part of the Underwriter, and such retention shall constitute a full release and
discharge of all claims by the City against the Underwriter arising out of the transactions contemplated
hereby.
2. The Series 2000 Bonds. The Series 2000 Bonds shall be as described in, and shall be
issued and secured under and pursuant to, the Constitution of the State of Florida, Chapter 166, Florida
Statutes, and other applicable provisions of law (collectively, the "Act") and pursuant and subject to
the terms and conditions of Resolution No. 901 adopted by the City Council of the City on
February 26, 1996, as amended and restated in its entirety by Resolution No. adopted by the City
Council of the City on October 24, 2000, as amended and supplemented from time to time
(collectively, the "Resolution"). The Series 2000 Bonds shall mature on such dates, shall bear interest
at such rates, and shall be subject to redemption as set forth in Exhibit "A" attached hereto.
In connection with the public offering of the Series 2000 Bonds, the Underwriter has delivered
to the City a letter containing the information required by Section 218.385, Florida Statutes, which letter
is in the form attached hereto as Exhibit "B," and the Issuer and the Underwriter have delivered the
truth-in-bonding statement in Section 4 hereof as required by Sections 218.385(2) and (3), Florida
Statutes.
3. Purpose of the Series 2000 Bonds. The City is proposing to issue the Series 2000
Bonds, together with other legally available funds of the City, (i) to finance the acquisition,
construction, erection, renovation or reconstruction of additions, extensions and improvements to the
water and sewer system (the "System") owned and operated by the City of Clermont, Florida (the
"City"), (ii) to refund the City of Clermont Water and Sewer Revenue and Refunding Bond
Anticipation Notes, Series 1996, which are currently outstanding in the principal amount of
(the "Series 1996 Notes"), (iii) to purchase a surety bond (the "Surety Bond") for deposit
in the Reserve Fund (as defined herein), and (iv) to pay costs of issuance of the Series 2000 Bonds
including the municipal bond insurance policy (the "Bond Insurance Policy") to be purchased Erom the
Insurer.
It shall be a condition to the obligation of the City to sell and deliver the Series 2000 Bonds to
the Underwriter, and the obligations of the Underwriter to purchase and accept delivery of the Series
2000 Bonds, that the entire aggregate principal amount of the Series 2000 Bonds shall be sold and
delivered by the City and paid for by the Underwriter at the Closing.
4. Truth-In-Bonding Statement. The Series 2000 Bonds are being issued for the purposes
described in Section 3 hereof, and are expected to be repaid over a period of approximately
years. At a true interest cost rate of %, total interest paid over the life of the Series 2000 Bonds
will be ~ (exclusive of accrued interest). As more fully described in the Official
Statement, the source of repayment or security for the Series 2000 Bonds are the Pledged Funds.
Authorizing the Series 2000 Bonds will result in a maximum of ~ of such Pledged Funds
not being available to finance other services of the City each year over the approximate year
period.
5. Official Statement. As soon as practicable after the date hereof, and, in any event, no
later than seven (~ business days after the date hereof, the City shall, so as to enable the Underwriter
to comply with the provisions of the Securities and Exchange Commission ("SEC") Rule 15c2-12 (the
"Rule"), deliver to the Underwriter a sufficient number of printed copies of the final Official Statement
with respect to the Series 2000 Bonds, dated the date hereof (including the cover page, the summary
statement and the appendices contained therein, the "Official Statement").
6. Use of Preliminary Official Statement and Official Statement. The City hereby
authorizes and ratifies the use by the Underwriter of the Preliminary Official Statement, dated
November _, 2000 (which, together with the cover page, summary statement and all appendices
included therein is herein called the "Preliminary Official Statement"), prior to the date hereof, and
authorizes the use by the Underwriter of the Official Statement, as the same may be modified, amended
or supplemented upon mutual agreement of the City and the Underwriter in connection with the public
offering and sale of the Series 2000 Bonds.
7. Conditions Precedent to Execution of this Agreement by the Underwriter. On or
before the acceptance by the City of this Agreement, the City shall deliver to the Underwriter, together
with such reasonable number of copies thereof as the Underwriter may request, certified copies of the
Resolution.
8. Representations and Warranties of the Citv. The City represents and warrants to the
Underwriter as follows:
(a) As of their respective dates, at the time of acceptance hereof and at the time
of Closing, the statements and information contained in the Preliminary Official Statement (other than
as modified in the Official Statement), the Official Statement, and this Agreement supplied by the City
are and will be accurate in all material respects for the purposes Eor which their use is authorized, and
do not and will not contain any untrue statement of a material fact or omit to state any material Eact
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading. In addition, any amendments to the Official Statement prepared and furnished
by the City pursuant hereto will not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
3
(b) As of its date, the Preliminary Official Statement was deemed "final" by the City
for purposes of paragraph (b)(1) of the Rule and, as of the date hereof, the Official Statement is
deemed "final" by the City for purposes of the Rule.
(c) The City has duly authorized the execution, delivery and due performance of
this Agreement.
(d) When executed and delivered by the City in accordance with the provisions of
this Agreement, the Series 2000 Bonds will have been duly authorized by the City, in the manner
required under applicable law, executed, issued and delivered and will constitute valid and binding
special obligations of the City, enforceable against the City in accordance with their terms, in
conformance with the Act and the Resolution, such enforceability being subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws, relating to or affecting the enforcement of
creditors' rights generally and to the exercise of judicial discretion in accordance with general principles
of equity.
(e) The adoption by the City of the Resolution, the enactment of Code Ordinance
No. 293-C by the City Council on May 25, 1999, as amended, Miscellaneous Ordinance No. 277-M by
the City Council on April 11, 1995, as amended, and Miscellaneous Ordinance Nos. 310-M and 329-M
by the City Council on April 23, 1996 and October 14, 1997, respectively, as amended, which
collectively established the Rates and Impact Fees applicable to users of the System and any and all
other resolutions and ordinances which govern the imposition of Rates and Impact Fees applicable to
users of the System (collectively, the "Rate and Impact Fees Ordinance"), the execution and delivery
by the City of this Agreement, the Continuing Disclosure Certificate to be dated November 1, 2000
(or such other date as determined by the City), the Insurance Agreement to be dated such date as
determined by the City, the letter of representations to be or previously entered into between the City
and The Depository Trust Company, New York, New York ("DTC'~ relating to the Series 2000 Bonds
(the "DTC Agreement"), the Series 2000 Bonds, and any other documents executed and delivered by
the City in connection with the issuance of the Series 2000 Bonds (collectively, including the Resolution
and the Rate and Impact Fees Ordinance, the "Bond Documents") and the compliance by the City
with the provisions thereof will not in any material respect conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under, any agreement or other
instrument to which the City is a party or by which the City is bound, or any existing law, administrative
•regulation, court order or consent decree to which the City or its property is subject.
(E) The City will furnish such information, execute such instruments and take such
other action in cooperation with the Underwriter as the Underwriter may reasonably request, to (i)
qualify the Series 2000 Bonds for offer and sale under the Blue Sky or other securities laws or
regulations of such states and other jurisdictions of the United States of America as the Underwriter
may designate, if required by the Underwriter, and (ii) determine the eligibility of the Series 2000 Bonds
for investment under the laws of such states and other jurisdictions and will use its best efforts to
continue such qualifications in effect so long as required for the distribution of the Series 2000 Bonds.
This paragraph shall not, however, require the City to submit to the jurisdiction of a court of any state
other than Florida.
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(>7 Between the date of this Agreement and the time of Closing, the City will not
execute any bonds, notes or other obligations for borrowed money secured by the Pledged Funds,
other than the proposed issuance or the issuance of which is referred to explicitly in the Official
Statement, without giving prior written notice thereof to the Underwriter.
(h) The City is, and will be at the date of Closing, duly organized and validly existing
as a municipal corporation under the Constitution and laws of the State of Florida, with the power and
authority set Forth in the Act.
(i) The City (i} has full legal power and authority to adopt and execute the
Resolution; to enact and execute the Rate and Impact Fees Ordinance; to execute and deliver this
Agreement and the other Bond Documents; to issue, sell and deliver the Series 2000 Bonds; and to
carry out and consummate the transactions contemplated by this Agreement, the Official Statement
and the other Bond Documents; (ii) has in full force and effect all consents, approvals, permits or other
actions by or Filings with any governmental authority required for the execution and delivery by the City
of this Agreement and the other Bond Documents, for the adoption of the Resolution, for the
enactment of the Rate and Impact Fees Ordinance, and for the performance by the City of the
Financing transactions contemplated thereby; (iii) represents that Erom the time of acceptance by the
City hereof through the date of the Closing, except as contemplated by the Official Statement, the City
will not incur any material liabilities, direct or contingent, or enter into any transaction that could
adversely affect the transactions contemplated hereby or by the Bond Documents, and there shall not
have been any material adverse change in the condition, financial or physical, of the City or the System
that could adversely affect the transactions contemplated hereby other than changes in the ordinary
course of business or in the normal operation of the facilities operated by the City; and (iv) represents
that the execution and delivery by the City of this Agreement and the other Bond Documents, the
adoption of the Resolution, the enactment of the Rate and Impact Fees Ordinance, and the compliance
by the City with the provisions thereof, and the carrying out and consummation by the City of its
obligations under such documents and instruments will not conflict with or constitute a breach of or
a default under any law, administrative regulation, court decree, instrument or agreement to which the
City is subject or by which the City is or any of its properties are bound.
(j) If between the date of this Agreement and the date which is twenty-five (25)
days from the end of the underwriting period (as such term is defined in paragraph (e}(2) of the Rule)
any event shall occur which, in the opinion of the City, would cause the Official Statement, as then
supplemented or amended, to contain any untrue statement of a material fact or to omit to state a
material fact necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading, the City shall notify the Underwriter and, iE in the reasonable opinion
of the C,'nderwriter, such event requires the preparation and publication of a supplement or amendment
to the Official Statement, the City will at its expense supplement or amend the Official Statement in
a form and in a manner approved by the Underwriter and provide the Underwriter with sufficient
copies of such supplement or amendment so as to enable the Underwriter to comply with the
provisions of paragraph (b)(4) of the Rule.
(k) Except as disclosed in the Official Statement, to the best knowledge of the City,
as of the date hereof, there is no action, suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, government agency, public board or body, pending or threatened against the
City, affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Series 2000
Bonds or contesting the validity or enforceability of the Act in any respect relating to authorization for
the issuance of the Series 2000 Bonds, the adoption of the Resolution, the enactment of the Rate and
Impact Fees Ordinance, or contesting the pledge of the Pledged Funds to secure payment of the Series
2000 Bonds or contesting the collection and application of the Pledged Funds in accordance with the
provisions of the Resolution or contesting the exclusion Erom gross income for federal income tax
purposes of interest on the Series 2000 Bonds, or contesting the completeness or accuracy of the
Official Statement or any supplement or amendment thereto, or contesting the powers or the authority
of the City for the issuance of the Series 2000 Bonds, the adoption of the Resolution, the enactment
of the Rate and Impact Fees Ordinance, or the execution and delivery by the City of this Agreement
and the other Bond Documents.
(1) The City is lawfully empowered to pledge and grant a first lien upon the Pledged
Funds for payment of the principal of, redemption premium, if any, and interest on the Series 2000
Bonds.
(m) The City will not take or omit to take any action which action or omission will
in any way cause the proceeds from the sale of the Series 2000 Bonds to be applied in a manner
contrary to that provided for in the Resolution and as described in the Official Statement.
(n) The City has undertaken pursuant to the Resolution to comply with the
provisions of the Rule, as defined in Paragraph 5 above, by providing certain annual financial
information, audited financial statements and material event notices, as described in the Resolution.
A description of the City's undertaking is also set forth in the Preliminary Official Statement and will
also be set Forth in the Official Statement.
9. The Closing. At 12:00 p.m., New York time, on November _, 2000, or on such later
time or date as may be mutually agreed upon by the City and the Underwriter (such time and date being
herein referred to as the "Closing Date"), the City will, subject to the terms and conditions hereof,
deliver the Series 2000 Bonds to DTC in New York, New York or at such other location as agreed to
by DTC in such form as shall be acceptable to DTC (which shall include printed or typewritten Bonds
if and to the extent required by DTC, registered in the name of its nominee, duly executed), and deliver
to the Underwriter the other documents hereinafter mentioned; and, subject to the terms and
conditions hereof, the Underwriter will pay the Purchase Price of the Series 2000 Bonds as set forth
in Paragraph 1(a) hereof in federal funds or other immediately available moneys drawn to the order of
the City, and the check delivered to the City pursuant to Paragraph 1(b) hereof shall be returned to the
Underwriter (such delivery of and payment for the Series 2000 Bonds is herein called the "Closing").
The City shall cause CUSIP identification numbers provided by the Cnderwriter to be typed
on the Series 2000 Bonds, but neither the Failure to type such numbers on any Series 2000 Bonds nor
any error with respect thereto shall constitute cause for a failure or refusal by the Underwriter to accept
delivery of and pay for the Series 2000 Bonds in accordance with the terms of this Agreement. The
Closing (except for delivery of the Series 2000 Bonds to DTC in New York, New York or at such other
location as agreed to by DTC) shall occur at the offices of Foley & Lardner, Bond Counsel, 111 North
Orange Avenue, Suite 1800, Orlando, Florida 32801 or such other location as shall be agreed upon
between the parties hereto.
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10. Conditions of Closing. The Underwriter has entered into this Agreement in reliance
upon the representations and warranties of the City herein contained and the performance by the City
of its obligations hereunder, both as of the date hereof and as of the time of Closing. The obligations
of the [Jnderwriter hereunder are subject to the following conditions:
(a) At the time of the Closing, (i) the Bond Documents, and any other documents
deemed necessary in connection with the issuance of the Series 2000 Bonds shall be in full force and
effect and shall not have been amended, modified or supplemented in any material respect prior to the
Closing, except as may have been agreed to in writing by the City and the Underwriter, and the City
shall have duly adopted and/or executed, as the case may be, and there shall be in full force and effect
the Resolution, the Rate and Impact Fees Ordinance and such additional resolutions, or ordinances or
agreements as shall, in the opinion of Robert D. Guthrie, Esq., Counsel to the City, Foley & Lardner,
Bond Counsel, and Bryant, Miller and Olive, P.A., Counsel to the Underwriter, be necessary in
connection with the issuance of the Series 2000 Bonds, (ii) the representations and warranties of the
City herein shall be true and accurate in all material respects, and (iii) the City shall perform or have
performed all obligations required under or specified in this Agreement and the other Bond
Documents to be performed at or prior to the. Closing.
(b) At or prior to the Closing, the Underwriter shall have received the following
documents:
(i) The approving opinion of Bond Counsel, dated the Closing Date,
substantially in the form appended to the Official Statement as Appendix F and a letter of such Bond
Counsel, dated the date of Closing and addressed to the Underwriter and the Insurer (hereinafter
defined), to the effect that the foregoing opinion addressed to the City may be relied upon by the
Underwriter to the same extent as if such opinion were addressed to it.
(ii) The supplemental opinion of Bond Counsel, dated the date of the
Closing and addressed to the Underwriter, to the extent not covered in the approving opinion of Bond
Counsel, to the effect that:
(A) the Series 2000 Bonds are not subject to the registration
requirements of the Securities Act of 1933, as amended, and the Resolution is exempt from
qualification pursuant to the Trust Indenture Act of 1939, as amended;
(B) the information contained in the Official Statement as of its date
and as of the Closing Date under the captions "DESCRIPTION OF THE SERIES 2000 BONDS"
(other than the information thereunder relating to DTC and DTC's book-entry only system),
"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS,""TAX EXEMPTION" and
"APPENDIX D -- FORM OF THE RESOLUTION," to the extent such information purports to
summarize portions of the Resolution, the Series 2000 Bonds, or the law referred to therein, are fair
and accurate; provided, however, that no financial or statistical data need be covered by the opinion.
(iii) A certificate or certificates, dated the date of Closing, signed by the
Mayor, the City Manager, and/or the Finance Director, in form and substance satisfactory to Bond
7
Counsel, the Underwriter and Counsel to the Underwriter, in which such officials, to the best of their
knowledge, state:
(~1) that the representations and warranties of the City herein
contained are true and correct in all material respects as of the Closing, that the City has satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the Closing, and that the
information and statements contained in the Official Statement are true, correct and complete in all
material respects for the purposes for which such Official Statement is to be used, and, as to factual
matters relating to the City and the System, nothing has come to their attention that would lead them
to believe that such information in the Official Statement includes any untrue statement of a material
fact or omits to state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however, that such certification
shall not include the information concerning DTC and DTC's book-entry only system and the Insurer
and its Policy (as hereinafter defined) contained in the Official Statement;
(B) that no event affecting the City or the System has occurred since
the date of the Official Statement which should be disclosed in the Official Statement for the purposes
for which it is to be used or which is necessary to be disclosed therein in order to make the statements
and information therein not misleading in any material respect;
(C) that the financial statements and the other financial and statistical
data relating to the City and the System included in the Official Statement are true and correct as of
the date of such information included in the Official Statement;
(D) that since the date of the financial statements included in the
Official Statement, (i) no material adverse change has occurred in the financial condition of the City
and (ii) the City has not incurred any material liabilities other than in the ordinary course of business,
except as set forth in or contemplated by the Official Statement;
(E) that no obligations issued or guaranteed by the City are in default
as to payment of principal or interest or have been in default as to payment of principal or interest at
any time after December 31, 1975 (except with respect to conduit issues for which the City has no
repayment obligation as to which no representation is made); and
(F) that the City has not been notified of any listing or proposed
listing by the Internal Revenue Service to the effect that the City is a bond issuer whose arbitrage
certificates may not be relied upon.
(iv) An opinion, dated the date of Closing, of Counsel to the City, addressed
to the City and to the Underwriter, in form and substance satisfactory to the Underwriter and Counsel
to the Underwriter, to the effect that:
(A) the City is a duly existing municipal corporation of the State of
Florida (the "State's and had and has good right and lawful authority under the Constitution and laws
of the State to adopt the Resolution, to enact the Rate and Impact Fees Ordinance, and to authorize
and issue the Series 2000 Bonds; the execution, delivery and due performance of the Bond Documents
8
were duly authorized by the City; the Resolution has been duly adopted by the City, the Rate and
Impact Fees Ordinance have been duly enacted by the City, and each are in full force and effect and
constitute the valid, legal and binding obligations of the City enforceable in accordance with their
respective terms; and under the laws of the State, the holders of the Series 2000 Bonds are not
precluded pursuant to any sovereign immunity laws or similar laws Erom bringing proceedings to
enforce the obligations imposed by the Resolution;
(B) as of the Closing Date, the City has duly performed all
obligations to be performed by it as of such date pursuant to the Resolution;
(C) the Bond Documents have been duly authorized, executed and
delivered by the City and constitute legal, valid and binding agreements of the City enforceable in
accordance with their respective terms; provided, however, the enforceability thereof may be subject
to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights
generally and subject, as to enforceability, to general principles of equity;
(D) the adoption of the Resolution, the enactment of the Rate and
Impact Fees Ordinance, and the execution and delivery of the Bond Documents, and the Series 2000
Bonds and compliance with the provisions thereof, will not conflict with or constitute a breach of or
default under any existing law, administrative regulation, court decree, resolution or agreement to which
the City is subject and the City has the power and authority under the laws of the State to pledge on
a first lien basis the Pledged Funds pledged under the Resolution to pay the Series 2000 Bonds and
interest thereon in accordance with the terms thereof;
(E) except as disclosed in the Official Statement, to the best of its
knowledge after due inquiry with respect thereto, no litigation or other proceedings are pending or
threatened in any court or other tribunal of competent jurisdiction, state or federal, in any way (i)
restraining or enjoining the issuance, sale or delivery of any of the Series 2000 Bonds; or (ii) questioning
or affecting the validity of the Bond Documents, the Series 2000 Bonds, or any of the Pledged Funds;
or (iii) questioning or affecting the validity of any of the proceedings for the authorization, sale,
execution, registration, issuance or delivery of the Series 2000 Bonds and the security therefor; or (iv)
questioning or affecting the organization or existence of the City or the City Council or the title to
office of the officers thereof; or (v) which could materially adversely affect the operations of the City
or the System or the financial condition of the City or the System;
(F) except as disclosed in the Official Statement, all approvals,
consents, authorizations and orders of any governmental authority or agency having jurisdiction in any
matter which would constitute a condition precedent to the performance by the City of its obligations
hereunder and under the Resolution and the other Bond Documents have been obtained and are in
full force and effect;
(G) the Preliminary Official Statement was duly and lawfully deemed
Final, as of its date, within the meaning of the Rule, the use of the Preliminary Official Statement by the
Under`vriter in connection with the marketing and sale of the Series 2000 Bonds was duly authorized,
and the Official Statement has been duly authorized, executed and delivered Eor use in connection with
the sale of the Series 2000 Bonds;
9
(H) the Official Statement, as of the date of such document and at
all subsequent times up to and including the date of Closing, as to legal matters relating to the City, did
not and does not contain any untrue statement of a material fact or omit any material fact required to
be stated therein or necessary to make such information not misleading;
(v) An opinion of Counsel to the Underwriter dated the date of the Closing
and addressed to the Underwriter in Eorm and substance acceptable to the Underwriter.
(vi) An executed copy of the Combined Report of The Feasibility
Consultant and the Consulting Engineer (the "Report") in the form included as Appendix A to the
Official Statement.
(vii) A certificate of the City Engineer, as Consulting Engineer, dated the date
of Closing, to the effect that (a) the Consulting Engineer has been retained by the City to participate
in preparation of the Report, included in the Official Statement as Appendix A and concurrence is
given to the inclusion of such Report as an Appendix to the Official Statement; (b) such Report was
prepared in accordance with generally accepted engineering practices; (c) in connection with the
preparation of such Report, has participated in meetings with representatives of the City, its counsel,
and its Financing team in regard to the System, and nothing has come to the attention of the Consulting
Engineer in connection with the preparation of such Report which would cause it to believe that such
Report, as of its date, or any of the statements in the Official Statement specifically attributed to the
Consulting Engineer, as of the date of the Official Statement, were inaccurate in any material respect;
and (d) the Consulting Engineer reviewed the Official Statement and, in her opinion, the information
presented therein which was furnished by her or attributed to her or which comes from such Report
is accurately presented.
(viii) A certificate of Hartman & Associates, Inc., the Rate Consultant, dated
the date of Closing, to the effect that (a) the Rate Consultant has been retained by the City to
participate in preparation of the Report, included in the Official Statement as Appendix A and
concurrence is given to the inclusion of such Report as an Appendix to the Official Statement; (b) such
Report was prepared in accordance with generally accepted rate feasibility practices; (c) in connection
with the preparation of such Report, has participated in meetings with representatives of the City, its
counsel, and its financing team in regard to the System, and nothing has come to the attention of the
Rate Consultant in connection with the preparation of such Report which would cause it to believe that
such Report, as of its date, or any of the statements in the Official Statement specifically attributed to
the Rate Consultant, as of the date of the Official Statement, were inaccurate in any material respect;
and (d) the Rate Consultant reviewed the Official Statement and, in its opinion, the information
presented therein which was furnished by it or attributed to it or which comes from such Report is
accurately presented.
(ix) A letter from Moody's Investor Service ("Moody's ") and a letter Erom
Standard & Poor's Ratings Group, a division of The McGraw Hill Companies, Inc. ("S&P") confirming
that such rating agencies have issued ratings of "Aaa" and "AAA," respectively, for the Series 2000
Bonds, conditioned upon the delivery of the Bond Insurance Policy by Financial Security Assurance
Inc. (the "Insurer").
10
(x) An executed copy of the Official Statement and each of the Bond
Documents, including but not limited to certified copies of the Resolution and Rate and Impact Fees
Ordinance.
(xi) A certificate of an authorized representative of First CJnion National
Bank (the "Bank") as Registrar and Paying Agent to the effect that:
(.~) the Bank is a national banking association organized, validly
existing and in good standing under the laws of the United States and is duly authorized to exercise
trust powers;
(B) the Bank has all the requisite authority, power, licenses, permits
and franchises, and has full corporate power and legal authority to execute and perform its functions
under the Resolution and the registrar and paying agent agreement;
(C) the performance by the Bank of its functions under the
Resolution and the registrar and paying agent agreement will not result in any violation of the Articles
of Association or Bylaws of the Bank, any court order to which the Bank is subject or any agreement,
indenture or other obligation or instrument to which the Bank is a party or by which the Bank is
bound, and no approval or other action by any governmental authority or agency having supervisory
authority over the Bank is required in order for the Bank to perform its functions under the Resolution
and the registrar and paying agent agreement;
(D) the registrar and paying agent agreement constitutes a valid and
binding obligation of the Bank in accordance with their terms, subject to applicable bankruptcy,
insolvenry, reorganization, moratorium and other similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity; and
(E) to the best of such authorized representative's knowledge, there
is no action, suit, proceeding, or investigation at law or in equity before any court, public board or body
pending or, to his or her knowledge, threatened against or affecting the Bank wherein an unfavorable
decision, ruling or finding on an issue raised by any party thereto is likely to materially and adversely
affect the ability of the Bank to perform its obligations under the Resolution and the registrar and
paying agent agreement.
(xii) A duly executed copy of the Bond Insurance Policy and the Surety
Bond.
(xiii) An opinion of general counsel to the Insurer relating to the validity and
enforceability of the Bond Insurance Policy and the Surety Bond, and a certificate of an officer of the
Insurer dated the date of the Closing and addressed to the Underwriter, concerning the Insurer, the
Bond Insurance Policy and the Surety Bond, and the information relating to the Insurer, the Bond
Insurance Policy and the Surety Bond, contained in the Official Statement, in form and substance
satisfactory to the Underwriter and Counsel for the Underwriter.
11
(xiv) A certificate executed by the City Manager and/or Finance Director,
dated the Closing Date, satisfactory to Bond Counsel setting Eorth the facts, estimates and
circumstances which establish that it is not expected that the proceeds of the Series 2000 Bonds will
be used in a manner that would cause the Series 2000 Bonds to be "arbitrage bonds" within the
meaning of the Internal Revenue Code of 1986, as amended, and to the best of the knowledge and
belief of such officer, such expectations are reasonable.
(xv) A defeasance opinion of Bond Counsel, dated the Closing Date, and
addressed to the Underwriter, to the effect that both the Series 1996 Notes and the loan from the City
of Arcadia Dedicated Pool Loan Government Revenue Bonds, Series 1993, are legally defeased and are
no longer outstanding for purposes of the instruments which authorized their issuance.
(xvi) Evidence that IRS Form 8038-G has been executed by the City and filed
with the Internal Revenue Service.
(xvii) Evidence that Form BF2003/2004 has been executed by the City and
filed with the Florida Division of Bond Finance.
(xviii) Such additional certificates, instruments or opinions as Counsel to the
City, Bond Counsel, Counsel for the Underwriter or the Underwriter may deem necessary or desirable.
11. Termination. The Underwriter may terminate this Agreement by notification from the
Underwriter to the City, if at the time or prior to the Closing (a) legislation shall be enacted by the
Congress of the United States or adopted by either the United States Senate or House of
Representatives or recommended by the President of the United States to the Congress for passage
or favorably reported for passage to either House of Congress by any committee of the House and
Senate or a decision by a Court of the United States, including the United States Tax Court shall be
rendered or a ruling, regulation or official statement by or on behalf of the Treasury Department of
the United States, the Internal Revenue Service, or other governmental agency shall be made, with
respect to federal taxation of interest upon the Series 2000 Bonds or other action of events shall have
occurred which have the purpose or effect, directly or indirectly, of materially adversely affecting the
federal income tax consequences of any of the transactions contemplated in connection herewith,
which in the reasonable opinion of the Underwriter, materially adversely affects the market Eor the
Series 2000 Bonds or the sale by the Underwriter of the Series 2000 Bonds; or (b) legislation shall be
enacted or any action shall be taken by the SEC which, in the reasonable opinion of the Underwriter,
has the effect of requiring the contemplated distribution of the Series 2000 Bonds to be registered
under the Securities Act of 1933, as amended, or the Resolution to be qualified under the Trust
Indenture Act of 1939, as amended, or there shall exist a stop order, ruling or regulation by the SEC
the effect of which is that the issuance, offering or sale of the Series 2000 Bonds, as contemplated
hereby or by the Official Statement, is in violation of any provision of the Securities Act of 1933, as
amended and as then in effect, or of the Securities Exchange Act of 1934, as amended and as then in
effect, or that the Resolution is not exempt from qualification pursuant to the Trust Indenture Act of
1939, as amended and as then in effect; or (c) there shall exist any event which in the reasonable
judgment of the Underwriter either (i) makes untrue or incorrect in any material respect any statement
of information contained in the Official Statement or (ii) is not reflected in the Official Statement but
should be reflected therein or in an attachment thereto in order to make any material statement and
12
the information contained therein not misleading in any material respect; or (d) there shall have
occurred any outbreak of hostilities or other national or international calamity or crisis, the effect of
such outbreak, calamity or crisis on the financial markets or the United States being such as to
materially adversely affect the marketability of the Series 2000 Bonds; or (e) there shall be in force a
general suspension of trading or other material restrictions not now in Eorce on the New York Stock
Exchange; or (~ a general banking moratorium shall have been declared by either federal, Florida or
New York authorities having jurisdiction and then in force the effect of which on the financial markets
of the United States is such as, in the reasonable judgment of the Underwriter, would materially
adversely affect the market for the Series 2000 Bonds or the sale by the Underwriter of the Series 2000
Bonds; or (g) except as disclosed in the Official Statement any litigation shall be instituted or be
pending at Closing to restrain or enjoin the issuance, sale or delivery of the Series 2000 Bonds or that
in any way contests or affects any authority Eor the validity of the Series 2000 Bonds or any of the Bond
Documents, the pledge or application of any moneys or securities provided for the payment of the
Series 2000 Bonds, or the existence or powers of the City; or (h) the City has, without prior written
consent of the Underwriter, offered or issued any bonds, notes or other obligations for borrowed
money, or incurred any material liability for borrowed money, or incurred any material liability direct
or indirect, in each case secured by the Pledged Funds, or there has been an adverse change of a
material nature in the financial position, results of operation or condition, financial or otherwise, of the
City in all cases other than in the ordinary course of its business, or other than as contemplated in the
Official Statement, which change could adversely affect the transactions contemplated hereby.
If the City shall be unable to satisfy the conditions to the obligation of the Underwriter to
purchase, to accept delivery of and to pay for the Series 2000 Bonds contained in this Agreement and
the Underwriter does not waive such inability in writing, or if the obligations of the Underwriter shall
be terminated for any reason permitted by this Agreement, this Agreement shall be terminated and
neither the Underwriter nor the City shall have any further obligations hereunder, except as provided
in Sections 2, 12, 13 and 14 hereof. However, the Underwriter may, in its discretion, waive, by written
notice, one or more of the conditions imposed by this Agreement and proceed with the closing.
12. Expenses.
(a) The Underwriter shall be under no obligation to pay, and the City shall pay, all
expenses incident to the performance of the City's obligations under this Agreement, including, without
limitation, (i) the cost of preparation and printing of the Preliminary Official Statement and the Official
Statement (including amendments or supplements thereto), (ii) the cost of the preparation, printing and
execution of the Series 2000 Bonds, (iii) the fees and disbursements of Bond Counsel and Counsel to
the City, (iv) the fees and disbursements of the bond registrar, the paying agent, the City's financial
advisor and independent certified public accountants and of any other experts, advisors or consultants
retained to assist the City, (v) fees Eor bond ratings and bond insurance, debt service reserve fund
policy, if applicable, including the reasonable costs of the Underwriter incurred in the process of
obtaining insurance and ratings, (vi) the cost of reproducing all necessary copies of any of the Bond
Documents including those incurred by the Underwriter on the City's behalf, (vii) all expenses of the
L'~nderwriter specified on Schedule I to Appendix B attached hereto, and (viii) all travel, if any, and
other out-oE-pocket expenses of the City's staff and officials as incurred in connection with the closing;
all such expenses to be paid by the City as issuance costs.
13
(b) The Underwriter shall pay (i) all underwriting and advertising expenses in
connection with the public offering and distribution of the Series 2000 Bonds, and (ii) the fees and
disbursements of Counsel to the Underwriter, and (iii) all travel and out-of-pocket expenses of the
Underwriter other than as set forth in paragraph 12(a)(v) and 12(a)(vii) above.
13. Survival of Contract. The respective agreements, representations and warranties and
other statements of the City, the Underwriter and their respective officials and officers and directors
set forth in, or made pursuant to, this Agreement will remain in full force and effect regardless of any
investigation, or statement as to the results thereof, made by or on behalf of the City, the Underwriter
or any of their respective officials, officers or directors or any controlling person, and will survive
delivery and payment of the Series 2000 Bonds.
14. B n Ei . This Agreement is made Eor the benefit of the parties hereto including the
successors or assigns of the Underwriter. No other person shall acquire or have any right hereunder
or by virtue thereof.
15. Execution in Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall be one and the same instrument, and any parties hereto
may execute this Agreement by signing any such counterpart. The execution of this Agreement has
been duly authorized by the City Council of the Ciry.
16. Notices. Any notices or other communications to be given to the City under this
Agreement may be given by mailing the same to the City Manager of the City of Clermont, Florida at
1 Westgate Plaza, Clermont, Florida 34712, and any such notice or other communication to be given
to the Underwriter may be mailed to PaineWebber Incorporated, 200 South Orange Avenue, Suite
2200, Orlando, Florida 32801, Attention: Phillip N. Brown, Vice President.
17. v ili .The invalidity or enforceability of any provision of this Agreement as to
any one or more jurisdictions shall not affect the validity or enforceability of the balance of this
Agreement as to such jurisdiction or jurisdictions, or affect in any way such validity or enforceability
as to any other jurisdictions.
18. Waiver or Modifications. No waiver or modification of any one or more of the terms
and conditions of this Agreement shall be valid unless in writing and signed by the party or parties
making such waiver or agreeing to such modification.
[Remainder of page intentionally left blank]
14
19. CToverning Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida.
Very truly yours,
PAINEWEBBER INCORPORATED
By:
~fit~4~et. ~ 2000
ACCEPTED on ~~-~r ,
(SEAL)
Attest:
ity Clerk
Vice President
CITY OF CLERMONT, FLORIDA
By: .~-~-~t~
Mayor
APPROVED AS TO FORM:
City Attorney
15
EXHIBIT A
MATURITIES, AMOUNTS, INTEREST RATES AND YIELDS
$ Serial Bonds
Maturity Interest Maturity Interest
(December 11 B~]9u11I Rate Price/Yield (December 11 Amount Rate Price/Yield
Term Bonds due December 1, 20_ -Price or Yield
Term Bonds due December 1, 20_ -Price or Yield
(Accrued interest from November 1, 2000 to be added)
REDEMPTION PROVISIONS
[TO COME]
Exhibit A-1
EXHIBIT B
Form of Disclosure Letter pursuant to
Section 218.385, Florida Statutes
November _, 2000
Members of the City Council of the
Ciry of Clermont, Florida
Clermont, Florida
Re: $ City of Clermont, Florida
Water and Sewer Revenue and Refunding Bonds, Series 2000
Ladies and Gentlemen:
In connection with the proposed issuance by the City of Clermont, Florida (the "City"), of
$ in aggregate principal amount of its Water and Sewer Revenue and Refunding Bonds,
Series 2000, referred to above (the "Series 2000 Bonds"), PaineWebber Incorporated (the
"Underwriter") is preparing to underwrite a public offering of the Series 2000 Bonds. Arrangements
for underwriting the Series 2000 Bonds will include a Bond Purchase Agreement (the "Agreement")
between the City and the Underwriter that will embody the negotiations in respect thereof.
The purpose of this letter is to furnish, pursuant to the provisions of Section 218.385, Florida
Statutes, as amended, certain information in respect of the arrangements contemplated for the
underwriting of the Series 2000 Bonds as follows:
(a) The nature and estimated amounts of expenses to be incurred by the
Underwriter in connection with the purchase and offering of the Series 2000
Bonds are set forth in Schedule I attached hereto.
(b) There are no "finders," as defined in Section 218.386, Florida Statutes, who have
been retained or who will be paid by the Underwriter in connection with the
issuance of the Series 2000 Bonds.
(c) The underwriting spread (i.e., the difference between the price at which the
Series 2000 Bonds will be initially offered to the public by the Underwriter and
the price to be paid to the Ciry for the Series 2000 Bonds exclusive of original
issue discount and accrued interest in both cases) will be $ per $1,000 par
value of the principal amount of the Series 2000 Bonds.
(d) Based on and as part of the estimated underwriting spread set forth in paragraph
(c) above, the Underwriter will charge a management Eee of $ per $1,000
par value of the principal amount of the Series 2000 Bonds.
Exhibit B-1
(e) There is no other fee, bonus or other compensation to be paid by the
Underwriter in connection with the issuance of the Series 2000 Bonds to any
person not regularly employed or retained by the Underwriter, except as
specifically enumerated as expenses referred to in paragraph (a) above to be
incurred by the Underwriter as set forth in Schedule I attached hereto.
(~ The name of the sole Underwriter is:
PaineWebber Incorporated
200 South Orange Avenue, Suite 2200
Orlando, Florida 32801
We understand that you do not require any further disclosure from the Underwriter pursuant
to Section 218.385, Florida Statutes.
Very truly yours,
By:
PAINEWEBBER INCORPORATED
Vice President
Exhibit B-2
SCHEDULE I
ESTIMATED EXPENSES
ITEM
PER $1.000 TOTAL
Underwriter's Counsel Fees and Expenses
CUSIP
DTC Fee
BMA Fee
Municipal Syndicate Services Fees Interest
on day loan
Communication, Fax, Federal Express, etc.
Computer and Structuring
Closing and Miscellaneous
TOTAL
J\Bonds\<325\BPA2.WPD
Occoba 9, 2000
I- 1
PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 24, 2000
In the opinion of Bond Counsel, under exzsting law, assuming compk~ance with certain covenants in the Resolution
described herein, interest on the Series 2000 Bonds is excluded from dross income for federal income tax purposes, and
the Series 2000 Bonds and the interest thereon are exempt, from taxation under the laws of the State of Florida, except
as to estate taxes and taxes an interest, income orprofits on debt obligations owned by corporations, as defined in Chapter
220, Florzda Statutes, as amended. See, however, "TAX EXEMPTION" herein for a description of certain federal
minimum and other special taxes that may affect the tax treatment of interest on the Series 2000 Bonds.
NEW ISSUE
BOOK-ENTRY ONLY
$17,500,000*
CITY OF CLERMONT, FLORIDA
Water and Sewer Revenue and Refunding Bonds,
Series 2000
Dated: November 1, 2000
Due: December 1, as shown below
The City of Clermont, Florida, Water and Sewer Revenue and Refunding Bonds, Series 2000
(the "Series 2000 Bonds") will be issued only as fully registered bonds, without coupons, which initially
will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC").
Individual purchases will be made in book entry form only in denominations of $5,000 and any integral
multiple thereof. Purchasers of the Series 2000 Bonds (the "Beneficial Owners") will not receive
physical delivery of the Series 2000 Bonds. Transfer of ownership in the Series 2000 Bonds will be
effected by DTC's book-entry system as described herein. As long as Cede & Co. is the registered
owner as nominee of DTC, principal and interest payments will be made directly to such registered
owner which will in turn remit such payments to the Participants (as defined herein) for subsequent
disbursement to the Beneficial Owners. The principal and the premium, if any, on the Series 2000
Bonds will be payable upon presentation and surrender thereof at maturity or redemption at the
principal corporate trust office of First Union National Bank, Charlotte, North Carolina, as Registrar
and Paying Agent, or its successors. Interest on the Series 2000 Bonds is payable semi-annually June 1
and December 1 of each year (first payment due June 1, 2001) by check or draft mailed by the Paying
Agent (or by wire transfer from the Paying Agent under certain circumstances) to the registered owner
thereof at the address as shown on the registration books kept by the Registrar at the close of business
on the fifteenth day (whether or not a business day) of the month preceding each interest payment
date.
Certain of the Series 2000 Bonds are subject to optional and mandatory redemption prior to
maturity as set forth in this Official Statement.
The Series 2000 Bonds are being issued to (i) finance the acquisition, construction, erection,
renovation or reconstruction of additions, extensions and improvements to the water and sever system
(the "System's owned and operated by the City of Clermont, Florida (the "City"), (ii) refund the City
of Clermont Water and Sewer Revenue and Refunding Bond Anticipation Notes, Series 1996, which
are currently outstanding in the principal amount of X7,990,000 (the "Series 1996 Notes"), (iii) purchase
a surety bond for deposit in the Reserve Fund (as defined herein), and (iv) pay costs of issuance of the
Series 2000 Bonds, including the municipal bond insurance premium and the surety premium.
The Series 2000 Bonds are being issued pursuant to the Constitution and laws of the State of
Florida, including Chapter 166, Part II, Florida Statutes, and other applicable provisions of law (the
"Act"), and pursuant and subject to the terms and conditions of Resolution No. 901 adopted by the
City Council of the City on February 26, 1996, as amended and restated in its entirety by Resolution
No. adopted by the City Council of the City on October 24, 2000, as amended and
supplemented from time to time (collectively, the "Resolution"). The Series 2000 Bonds are secured
by a pledge of and are payable solely from the Net Revenues and the Impact Fees Debt Service
Component (together, the "Pledged Revenues"), and, until applied in accordance with the provisions
of the Resolution, the proceeds of the Series 2000 Bonds and all moneys, including investments
thereof, in the funds and accounts established thereunder, except the Rebate Fund and the Impact Fees
Stabilization Account (as such terms are defined in the Resolution, collectively, the "Pledged Funds").
The principal of and interest on the Series 2000 Bonds and all other payments provided for in the
Resolution will be paid solely Erom the sources therein provided in accordance with the terms thereof;
and no ad valorem taxing power of the City will ever be exercised nor will any holder of any Series 2000
Bond have the right to compel the exercise of such ad valorem taxing power to pay the principal of
or interest on the Series 2000 Bonds or to make any other payments provided for in the Resolution,
and the Series 2000 Bonds shall not constitute a lien upon the System or upon any other property of
the City or situated within its corporate territorial limits, except the Pledged Funds.
Payment of the principal of and interest on the Series 2000 Bonds when due will be insured by
a municipal bond insurance policy to be issued by Financial Security Assurance Inc. simultaneously with
the delivery of the Series 2000 Bonds. For a discussion of the terms and provisions of such policy,
including the limitations thereof, see "MUNICIPAL BOND INSURANCE" herein.
[INSERT FSA LOGO]
MATURITIES, AMOUNTS, INTEREST RATES AND PRICES OR YIELDS
$ Serial Bonds
Maturity Interest Maturity Interest
December 1) Amount Rate Price/Yield December I) Amount R
~ % Term Bonds due December 1, 20_ -Price or Yield
~ % Term Bonds due December 1, 20_ -Price or Yield
(_~ccrued interest from November 1, 2000 to be added)
Price/Yield
This cover page contains certain information for quick reference only. It is not a summary of
the Series 2000 Bonds. Investors must read the entire Official Statement to obtain information
essential to the making of an informed investment decision.
The Series 2000 Bonds are offered when, as and if issued and received by the Underwriter, subject to the receipt
of an opinion as to the valida~ty of the Series 2000 Bonds and certain other matters by Foley dam' L~rrdner, Jacksonville,
Florida, Bond Counsel. Certain legal matters incident to the issuance and delivery of the Series 2000 Bonds will be
passed on for the City by its counsel, Robert D. Guthrie, Esq., Orlando, Florida, and for the Underwriter by its counsel,
Bryant, ~~Iiller and Okwe, P.A., Tampa, Florida. Public Financial Management, Inc., Fort Myers, Florida zs serving
as Financial Advisor to the City. It is expected that the Series 2000 Bonds will be available for delivery to the
Underwriter at the facilr~ties of DTC in New York, New York on or about November _, 2000.
PaineWebber Incorporated
Dated:
2000
*Preliminary, subject to change.
RED HERRING LANGUAGE:
This Preliminary Official Statement and the information contained herein are subject
to completion or amendment. Under no circumstances shall this Preliminary Official
Statement constitute an offer to sell or a solicitation of an offer to buy, nor shall there
be any sale of the Series 2000 Bonds in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration, qualification or exemption under the
securities laws of such jurisdiction. The City has deemed this Preliminary Official
Statement "final," except for certain permitted omissions, within the contemplation of
Rule 15c2-12 promulgated by the Securities and Exchange Commission.
CITY OF CLERiVIONT, FLORIDA
MEMBERS OF CITY COUNCIL
Harold S. Turville, Jr., Mayor
Jeff Biddle
Hope Lamb~'~
'Marilyn George MacLauchlin
Keith Mullins
CITY ATTORNEY
Robert D. Guthrie, Esq.
Orlando, Florida
CITY OFFICIALS
Wayne Saunders, City Manager
Joseph E. Van Zile, Finance Director and City Clerk
BOND COUNSEL
Foley & Lardner
Jacksonville, Florida
FINANCIAL ADVISOR
Public Financial Management, Inc.
Fort Myers, Florida
FEASIBILITY CONSULTANT
Hartman & Associates, Inc.
Orlando, Florida
CONSULTING ENGINEER
Tamara Richardson, City Engineer
City of Clermont, Florida
AUDITOR
Greenlee, Kurras, Rice & Brown, PA
Mount Dora, Florida
~'~ This City Council seat will change following the general election on November 2, 2000.
No dealer, broker, salesman or other person has been authorized by the City to give any
information or to make any representations in connection with the Series 2000 Bonds other than as
contained in this Official Statement, and, iE given or made, such information or representations must
not be relied upon as having been authorized by the City. This Official Statement does not constitute
an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2000 Bonds
by any person in any jurisdiction in which it is unlawful Eor such person to make such offer, solicitation
or sale. The information set forth herein has been obtained from the City, DTC, the Insurer, and other
sources which are believed to be reliable. The Underwriter has reviewed the information in this Official
Statement in accordance with and, as part of its responsibilities to investors under the federal securities
laws as applied to the facts and circumstances of this transaction, but the Underwriter does not
guaranty the accuracy or completeness of such information. The information and expressions of
opinion stated herein are subject to change, and neither the delivery of this Official Statement nor any
sale made hereunder shall create, under any circumstances, any implication that there has been no
change in the matters described herein since the date hereof.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY
OVERFILLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE
~LARKET PRICE OF THE SERIES 2000 BONDS AT LEVELS ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED,
?~1AY BE DISCONTINUED AT ANY TIME.
All summaries herein of documents and agreements are qualified in their entirety by reference
to such documents and agreements, and all summaries herein of the Series 2000 Bonds are qualified
in their entirety by reference to the Eorm thereof included in the aforesaid documents and agreements.
Other than with respect to information concerning Financial Security Assurance Inc. ("Financial
Security") contained under the captions "MUNICIPAL BOND INSURANCE" and "SURETY
BOND" herein, "EXHIBIT E -Specimen Bond Insurance Policy" and "EXHIBIT H -Specimen
Surety Bond" attached hereto, none of the information supplied in this Official Statement has been
supplied or verified by Financial Security and Financial Security makes no representation or warranty,
express or implied, as to (i) the accuracy or completeness of such information; (ii) the validity of the
Series 2000 Bonds; or (iii) the tax exempt status of the interest on the Series 2000 Bonds.
NO REGISTRATION STATEMENT RELATING TO THE SERIES 2000 BONDS HAS
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") OR WITH ANY STATE SECURITIES COMMISSION. IN MAKING ANY
INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATIONS
OF THE CITY AND THE TERMS OF THE OFFERING, INCLUDING THE i~1ERITS AND
RISKS INVOLVED. THE SERIES 2000 BONDS HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION OR
REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES HAVE NOT PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY
REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.
TABLE OF CONTENTS
INTRODUCTION ............................................................... 1
THE INITIAL PROJECT ......................................................... 2
DESCRIPTION OF THE SERIES 2000 BONDS .. .................................... 2
General .............................. .................................... 2
Book-Entry Only System ................ .................................... 3
Optional Redemption ................... .................................... ~
1~landatory Redemption ................. .................................... 6
Notice oERedemption .................. .................................... 6
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ....................... 6
General .............................. .................................... 6
Investments ........................... .................................... 9
Flow of Funds ......................... .................................... 9
Rate Covenant ......................... ................................... 13
Reserve Fund .......................... ................................... 14
Construction Fund ..................... ................................... 15
Additional Bonds ...................... ................................... 16
Subordinated Indebtedness ............... ................................... 18
Separate Accounts ...................... ................................... 18
MUNICIPAL BOND INSURANCE ............ ................................... 18
General .............................. ................................... 18
Bond Insurance Policy ................. .................................... 19
Financial Security Assurance Inc . ......... .................................... 19
THE SURETY BOND ........................................................... 20
ESTIMATED SOURCES AND USES OF FUNDS ................................... 20
DEBT SERVICE ............................................................... 21
THE CITY .................................................................... 22
THE SYSTEM ................................................................. 22
General ................................................................. 22
Utility:~4anagement ........................................................ 22
Existing System ........................................................... 23
5-Year Capital Improvement Program and Funding Sources ....................... 28
Historical Customer Data ................................................... 30
Historical Customers and Flows Water and Sewer ............................... 30
Historical System Operating Results ........................................... 31
-i-
Restricted and Unrestricted Reserves .......................................... 31
Rates and Charges ......................................................... 31
Ten Largest Water Customers ............................................... 33
Ten Largest Sewer Customers ............................................... 34
Projected Debt Service Coverage ............................................. 37
Conclusions of the Rate Consultant ........................................... 39
RISK FACTORS ................................................................ 41
INVEST TENT POLICY ........................................................ 41
LEGAL MATTERS ............................................................. 42
LITIGATION .................................................................. 43
DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS ................ 43
TAX EXEMPTION ............................................................. 43
Federal Tax Matters ....................................................... 43
Florida Tax Matters ........................................................ 45
Original Issue Discount .................................................... 45
Original Issue Premium ..................................................... 46
RATINTG S ..................................................................... 46
FINAi~1CIAL ADVISOR ......................................................... 47
INDEPENDENT ACCOUNTANTS ............................................... 47
UNDERWRITING ............................................................. 47
EXPERTS AND CONSULTAI~ITS ................................................ 48
CONTING EN'T FEES .......................................................... 48
ENFORCEABILITY OF REMEDIES .............................................. 48
CONTINUING DISCLOSURE .................................................. . 48
ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT .................. . 49
AUTHORIZATION OF OFFICIAL STATEMENT ................................. . 49
-u-
APPENDIX A: Report of Feasibility Consultant and Consulting Engineer
APPENDIX B: General Information Concerning the City
APPENDIX C: Audited Financial Statements of the City
APPENDIX D: Form of the Resolution
APPENDIX E: Specimen Bond Insurance Policy
APPENDIX F: Form of Bond Counsel Opinion
APPENDIX G: Form of Continuing Disclosure Certificate
APPENDIX H: Specimen Surety Bond
-ui-
OFFICIAL STATEMENT
relating to
$17,500,000*
CITY OF CLERMONT, FLORIDA
WATER AND SEWER REVENUE AND REFUNDING BONDS,
SERIES 2000
INTRODUCTION
The purpose of this Official Statement, including the cover page and all appendices, is to set
forth certain information in connection with the sale by the City of Clermont, Florida (the "City") of
its $17,500,000* aggregate principal amount of Water and Sewer Revenue and Refunding Bonds, Series
2000 (the "Series 2000 Bonds").
The Series 2000 Bonds are being issued pursuant to the Constitution and laws of the State of
Florida, including Chapter 166, Part II, Florida Statutes, and other applicable provisions of law (the
"Act"), and pursuant and subject to the terms and conditions of Resolution No. 901 adopted by the
City Council of the City on February 26, 1996, as amended and restated in its entirety by Resolution
No. adopted by the City Council of the City on October 24, 2000, as amended and
supplemented from time to time (collectively, the "Resolution").
The Series 2000 Bonds are being issued to (i) finance the acquisition, construction, erection,
renovation or reconstruction oEadditions, extensions and improvements to the water and sewer system
(the "System") owned and operated by the City of Clermont, Florida (the "City"), (ii) refund the City
of Clermont Water and Sewer Revenue and Refunding Bond Anticipation Notes, Series 1996, which
are currently outstanding in the principal amount of $7,990,000 (the "Series 1996 Notes"), (iii) purchase
a surety bond for deposit in the Reserve Fund (as defined in the Resolution), and (iv) pay costs of
issuance of the Series 2000 Bonds, including the municipal bond insurance premium and the surety
premium.
The Series 2000 Bonds are secured by a pledge of and are payable solely Erom the Net Revenues
and the Impact Fees Debt Service Component (together, the "Pledged Revenues"), and, until applied
in accordance with the provisions of the Resolution, the proceeds of the Series 2000 Bonds and all
moneys, including investments thereof, in the funds and accounts established thereunder, except the
Rebate Fund and the Impact Fees Stabilization Account (as such terms are defined in the Resolution,
collectively, the "Pledged Funds").
The Series 2000 Bonds are issuable only in the form of fully registered bonds, without coupons,
in the principal amount of X5,000 or any integral multiples thereof. The interest on the Series 2000
Bonds is payable on June 1, 2001 and on each December 1 and June 1 thereafter until maturity or
"Preliminary,•subject to change.
earlier redemption as more fully described herein. First Union National Bank, Charlotte, North
Carolina is serving as Registrar and Paying Agent Eor the Series 2000 Bonds.
Capitalized terms used but not defined herein have the same meanings as when used in the
Resolution unless the content clearly indicates otherwise. Complete descriptions of the terms and
conditions of the Series 2000 Bonds are set Forth in the Resolution, a Eorm of which is attached to this
Official Statement as APPENDIX D. The description of the Series 2000 Bonds, the documents
authorizing and securing the same, and the information from various reports and statements contained
herein are not comprehensive or definitive. All references herein to such documents, reports and
statements are qualified by the entire, actual content of such documents, reports and statements.
Copies of such documents, reports and statements referred to herein that are not included in their
entirety in this Official Statement may be obtained, after payment of applicable copying and mailing
costs, from the City of Clermont, 1 Westgate Plaza, Clermont, Florida 34711, Attention: Joseph E. Van
Zile, Finance Director and City Clerk.
THE INITIAL PROJECT
The "Initial Project" consists of the acquisition, construction, erection, renovation or
reconstruction of additions, extensions and improvements to the System. For more detailed
information, see "THE SYSTEM -Proposed Improvements, Permits and Regulatory Status" herein
and "APPENDIX A -Combined Report of Feasibility Consultant and Consulting Engineer" attached
hereto.
DESCRIPTION OF THE SERIES 2000 BONDS
General
Each Series 2000 Bond shall be issued in fully registered form in the denomination of X5,000
each, or integral multiples thereof, shall be dated, shall be numbered, shall bear interest computed on
the basis of a 360 day year of twelve 30 day months at the rates and shall mature on the dates and in
the amounts shown on the cover page hereof.
The principal of or Redemption Price, if applicable, on the Series 2000 Bonds is payable upon
presentation and surrender of the Series 2000 Bonds at the office of the Paying Agent. Interest payable
on any Series 2000 Bond on any Interest Date will be paid by check or draft of the Paying Agent to the
Holder in whose name such Bond shall be registered at the close of business on the date which shall
be the fifteenth day (whether or not a business day) of the calendar month next preceding such Interest
Date, or, at the option of the Paying Agent, and at the request and expense of such Holder, by bank
wire transfer for the account of such Holder. In the event the interest payable on any Series 2000
Bond is not punctually paid or duly provided for by the City on such Interest Date, such defaulted
interest will be paid to the Holder in whose name such Bond shall be registered at the close of business
on a special record date for the payment of such defaulted interest as established by notice to such
Holder, not less than ten (10) days preceding such special record date. All payments of principal of or
Redemption Price, if applicable, and interest on the Series 2000 Bonds shall be payable 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.
No Series 2000 Bond shall be secured under the Resolution or entitled to the benefit hereof
or shall be valid or obligatory Eor any purpose unless there shall be manually endorsed on such Bond
a certificate of authentication by the Registrar or such other entity as may be approved by the City for
such purpose. Such certificate on any Bond shall be conclusive evidence that such Bond has been duly
authenticated and delivered under the Resolution.
Each Series 2000 Bond shall be transferable only upon the books of the City, at the office of
the Registrar, under such reasonable regulations as the City may prescribe, by the Holder thereof in
person or by such Holder's attorney duly authorized in writing upon surrender thereof together with
a written instrument of transfer satisfactory to the Registrar duly executed and guaranteed by the
Holder or such Holder's duly authorized attorney. Upon the transfer of any such Bond, the City shall
issue, and cause to be authenticated, in the name of the transferee a new Bond or Bonds of the same
aggregate principal amount and maturity as the surrendered Bond. The City, the Registrar and any
Paying Agent or fiduciary of the Ciry may deem.and treat the Person in whose name any Outstanding
Series 2000 Bond shall be registered upon the books of the City as the absolute owner of such Bond,
whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account
of, the principal or Redemption Price, if applicable, and interest on such Bond and for all other
purposes, and all such payments so made to any such Holder or upon such Holder's order shall be valid
and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so
paid and neither the City nor the Registrar nor any Paying Agent or other fiduciary of the City shall be
affected by any notice to the contrary.
Book-Entry Only System
THE FOLLOWING INFORMATION CONCERNING THE DEPOSITORY TRUST
COMPA:~iY ("DTC") AND DTC'S BOOK-ENTRY ONLY SYSTEM HAS BEEN OBTAINED
FROM SOURCES THAT THE CITY BELIEVES TO BE RELIABLE, BUT THE CITY TAKES
NO RESPONSIBILITY FOR THE ACCURACY THEREOF.
DTC will act as securities depository for the Series 2000 Bonds. The Series 2000 Bonds will
be issued as fully-registered bonds registered in the name of Cede & Co. (DTC's partnership nominee)
or such other name as may be requested by an authorized representative of DTC. One fully-registered
bond certificate will be issued for each maturity of the Series 2000 Bonds in the aggregate principal
amount of such maturity, and will be deposited with DTC.
DTC is alimited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC.
DTC also Facilitates the settlement among Participants of securities transactions such as transfers and
pledges, and in deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of securities certificates.
"Direct Participants" means securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a number of its Direct Participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Securities and Exchange Commission.
Purchases of Series 2000 Bonds under the DTC system must be made by or through Direct
Participants which will receive a credit for the Series 2000 Bonds on DTC's records. The ownership
interest of each actual purchaser of each Series 2000 Bond ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written
confirmation Erom DTC of their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Series 2000 Bonds are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership interests in Series 2000 Bonds, except in the
event that use of the book-entry system Eor the Series 2000 Bonds is discontinued.
To facilitate subsequent transfers, all Series 2000 Bonds deposited by Participants with DTC
are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Series 2000
Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2000 Bonds; DTC's
records reflect only the identity of the Direct Participants to whose accounts such Series 2000 Bonds
are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Beneficial Owners of the Series 2000 Bonds may wish to take certain steps to augment the
transmission to them of notices of significant events with respect to the Series 2000 Bonds, such as
redemptions, defaults and proposed amendments to Series 2000 Bond documents. Beneficial Owners
of the Series 2000 Bonds may wish to ascertain that the nominee holding the Series 2000 Bonds for
their benefit has agreed to obtain and transmit notices to Beneficial Owners, or in the alternative,
Beneficial Owners may wish to provide their names and addresses to the Paying Agent and Registrar
and request that copies of notices be provided directly to them.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. IE less than all of the Series 2000 Bonds within
an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each
Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to Series 2000 Bonds. Under
its usual procedures, DTC mails an omnibus proxy to the City as soon as possible after the record date.
The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Series 2000 Bonds are credited on the record date (identified in a listing attached
to the omnibus proxy).
Principal and interest payments on the Series 2000 Bonds will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on payment dates in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment
on the payment date. Payments by Participants to Beneficial Chvners will be governed by standing
instructions and customary practices, as in the case with securities held for the accounts of customers
in bearer form or registered in "street name," and will be the responsibility of such Participant and not
of DTC, the City, or the Paying Agent, subject to any statutory or regulatory requirements as may be
in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City
or the Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility
of DTC, and disbursement of such payments to the Beneficial Chvners shall be the responsibility of
Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Series
2000 Bonds at any time by giving reasonable notice to the City and/or the Paying Agent. Under such
circumstances, in the event that a successor securities depository is not obtained, Series 2000 Bond
certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book-entry transfers through DTC
(or a successor securities depository). In that event, Series 2000 Bond certificates will be printed and
delivered.
Optional Redemption
The Series 2000 Bonds maturing on or prior to December 1, ,are not subject to
redemption prior to maturity. The Series 2000 Bonds maturing December 1, ,and thereafter
are subject to redemption prior to their respective maturities, on or after December 1, , at the
.option of the City, in whole or in part, in such manner as shall be determined by the City and by lot
within a maturity iE less than a full maturity, from any legally available monies at a redemption price
(expressed as a percentage of the principal amount to be redeemed) as set forth in the following table,
plus accrued interest to the redemption date.
Period During Which Redeemed
Both Dates Inclusive) Redemption Price
December 1, through November 30,
December 1, through November 30,
December 1, and thereafter
Mandatory Redemption
The Series 2000 Bonds which mature December 1, ,are subject to mandatory redemption
in part prior to maturity, by lot, at redemption prices equal to 100% of the principal amount thereof
plus interest accrued to the redemption date, beginning on December 1, ,and on each December
1 thereafter in the following principal amounts in the years specified:
Year Principal Amount
* ~
* Final Maturity
The Series 2000 Bonds which mature December 1, are subject to mandatory
redemption in part prior to maturity, by lot, at redemption prices equal to 100% of the principal
amount thereof plus interest accrued to the redemption date, beginning on December 1, ,and
on each December 1 thereafter in the following principal amounts in the years specified:
Year Principal Amount
* ~
* Final Maturity
Notice of Redemption
Unless waived by any Holder of Series 2000 Bonds to be redeemed, notice of any redemption
made pursuant to the Resolution shall be given by the Registrar on behalf of the City by mailing a copy
of an official redemption notice by first class mail, postage prepaid, at least thirty (30) days and not
more than sixty (60) days prior to the date fixed for redemption to each Holder of Series 2000 Bonds
to be redeemed at the address of such Holder shown on the registration books maintained by the
Registrar or at such other address as shall be furnished in writing by such Holder to the Registrar;
provided, however, that no defect in any notice given pursuant to the Resolution to any Holder of
Series 2000 Bonds to be redeemed nor failure to give such notice shall in any manner defeat the
effectiveness of a call for redemption as to all other Holders of Series 2000 Bonds to be redeemed.
Prior to any redemption date, the City shall deposit with the Paying Agent an amount of money
sufficient to pay the Redemption Price of and accrued interest on all the Series 2000 Bonds or portions
of Series 2000 Bonds which are to be redeemed on that date.
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
General
The Series 2000 Bonds are secured by a pledge of and are payable solely from the Net Revenues
and the Impact Fees Debt Service Component (together the "Pledged Revenues"), and, until applied
in accordance with the provisions of the Resolution, the proceeds of the Series 2000 Bonds and all
moneys, including investments thereof, in the Funds and accounts established thereunder, except the
Rebate Fund and the Impact Fees Stabilization Account (collectively, the "Pledged Funds").
THE PRINCIPAL OF AND INTEREST ON THE SERIES 2000 BONDS AND ALL
OTHER PAYMENTS PROVIDED FOR IN THE RESOLUTION WILL BE PAID SOLELY
FROM THE SOURCES THEREIN PROVIDED IN ACCORDANCE WITH THE TERMS
THEREOF; AND NO AD VALOREM TAXING POWER OF THE CITY WILL EVER BE
EYERCISED NOR WILL ARTY HOLDER OF ANY BOND HAVE THE RIGHT TO COMPEL
THE EXERCISE OF SUCH AD VALOREM T.~IXING POWER TO PAY THE PRINCIPAL OF
OR INTEREST ON THE SERIES 2000 BONDS OR TO MAKE ANY OTHER PAYS-1ENTS
PROVIDED FOR IN THE RESOLUTION, AND THE SERIES 2000 BONDS SHALL NOT
CONSTITUTE A LIEN UPON THE SYSTEM OR UPON ANY OTHER PROPERTY OF THE
CITY OR SITUATED WITHIN ITS CORPORATE TERRITORIAL LIMITS, EXCEPT THE
PLEDGED FUNDS.
"Net Revenues" means Gross Revenues less Operating Expenses. "Gross Revenues" means
all income and moneys, excluding Assessments and Impact Fees, received by the City from the Rates,
or otherwise received by the City or accruing to the City in the management and operation of the
System, calculated in accordance with generally accepted accounting principles employed in the
operation of public utility systems similar to the System, including, without limiting the generality of
the foregoing, all earnings and income derived from the investment of moneys under the provisions
of the Resolution which are transferred to the Revenue Fund or the Interest Account as provided in
the Resolution. "Rates" means the rates, fees, rentals and other charges which shall be made and
collected by the City for the use of the product, services and Facilities to be provided by the System.
"Operating Expenses" means the City's expenses for operation, maintenance and repairs with
respect to the System and shall include, without limiting the generality of the foregoing, administration
expenses, insurance and surety bond premiums, the fees to the provider of a Reserve Fund Insurance
Polity or Reserve Fund Letter of Credit (but excluding any expenses or reimbursement obligations for
draws made thereunder), the fees of any rebate compliance service or of Bond Counsel relating to
compliance with the provisions of Section 148 of the Code, legal and engineering expenses, ordinary
and current rentals of equipment or other property, refunds of moneys lawfully due to others,
payments to others for disposal of sewage or other wastes, payments to pension, retirement, health and
hospitalization funds, and any other expenses required to be paid for or with respect to proper
operation or maintenance of the System, all to the extent properly attributable to the System in
accordance with generally accepted accounting principles employed in the operation of public utility
systems similar to the System, and disbursements Eor the expenses, liabilities and compensation of any
Paying Agent or Registrar under the Resolution, but does not include any costs or expenses in respect
of original construction or improvement other than expenditures necessary to prevent an interruption
or continuance of an interruption of the Gross Revenues, or any provision for interest, depreciation,
amortization or similar charges.
"Impact Fees Debt Service Component" for any Bond Year means the amount of Available
Impact Fees equal to the total of the products determined for all Series of Bonds issued wholly or in
part to finance Expansion Facilities by multiplying the Bond Service Requirement Eor each such Series
by the Expansion Percentage for such Series. "Available Impact Fees" means the Impact Fees to the
extent that such fees or charges have been lawfully levied and collected by the City and may under
applicable law be used for the acquisition or construction of the Expansion Facilities or for Impact Fees
Debt Service Components. "Impact Fees" means all non-refundable (except at the option of the City)
system development fees, capital expansion Eees, utility improvement fees or other similar fees and
charges separately imposed by the City upon new customers of the System as a nonuser capacity charge
for a proportionate share of the cost of the acquisition or construction of Expansion Facilities, which
are imposed by the City for the purpose of allocating to such customers a portion of the cost of the
additional System capacity made necessary by the extension or expected extension of System services
to such new customers.
The use of Impact Fees is limited under Florida law to (1) payment Eor Expansion Facilities or
(2) paying debt service on obligations issued to acquire or construct or refinance Expansion Facilities
to the extent the debt service is attributable to Expansion Facilities. Under Florida law, investment
earnings with respect to Impact Fees are subject to the same restrictions on use as the Impact Fees
themselves. Impact Fees revenues fluctuate with the amount of new construction or development
which occurs within the City. Therefore, there can be no assurances that such revenue will not
decrease or be eliminated altogether in the event that new construction, for whatever reason, might
decrease or cease altogether within the City.
"Expansion Facilities" means all those improvements, extensions and additions to the System,
including all lands and interests therein, franchises, plants, buildings, machinery, fixtures, equipment,
pipes, mains, and all other property, real and personal, tangible and intangible, which shall be
constructed or acquired in order to meet the increased demand upon the System, whether actual or
anticipated, created by new users connecting to the System.
"Expansion Percentage," as applied to each Series of Bonds issued wholly or in part to finance
or refinance Expansion Facilities, means a Fraction having a numerator equal to the principal amount
of the Bonds of such Series which are attributable to Expansion Facilities, as shall be determined by
the Qualified Independent Consultant and set forth in the Project Certificate relating to such Series,
and a denominator equal to the original aggregate principal amount of all Bonds of such Series.
Provided, however, that if amounts on deposit in the Impact Fees Stabilization Account are, pursuant
to the Resolution, withdrawn therefrom and applied to the purchase or redemption of Bonds prior to
maturity, then the numerator of the foregoing Fraction shall be reduced by the amounts so withdrawn
and the denominator shall be reduced by the total principal amount of the Bonds so purchased or
redeemed. For purposes of the preceding sentence, Term Bonds redeemed from amounts on deposit
in the Bond Amortization Account shall not be considered to have been redeemed prior to their
maturity date.
The Resolution establishes the Revenue Fund, the Sinking Fund (which includes the Principal
Account, the Interest Account, and the Bond Amortization Account), the Reserve Fund, the Impact
Fees Fund (which includes the Current Account and the Impact Fees Stabilization Account), the Rate
Stabilization Fund, the Renewal and Replacement Fund, the Construction Fund (which includes a
separate account for each Series of Bonds) and the Rebate Fund. All such funds and accounts will be
held by one or more Authorized Depositories.
Investments
Each fund and account established by the Resolution shall be continuously secured in the
manner by which the deposit of public funds are authorized to be secured by the laws of the State.
Moneys on deposit in each fund and account, other than the Reserve Fund, may be invested and
reinvested in Authorized Investments maturing not later than the date on which the moneys therein
will be needed. See "APPENDIX D -Form of the Resolution" attached hereto for the definition
of "Authorized Investments." Moneys on deposit in the Reserve Fund may be invested or reinvested
in securities provided in clauses (1) through (12) of the definition of Authorized Investments which
shall mature no later than five (5) years from the date of acquisition thereof.
Any and all income received by the City from the investment of moneys in the Revenue Fund,
the Construction Fund, the Rate Stabilization Fund and the Rebate Fund, in the Interest Account, the
Principal Account and the Bond Amortization Account in the Sinking Fund, in the Current Account
and the Impact Fees Stabilization Account in the Impact Fees Fund, in the Renewal and Replacement
Fund (to the extent such income and the other amounts in the Renewal and Replacement Fund do not
exceed the Renewal and Replacement Fund Requirement), and in the Reserve Fund (to the extent such
income and the other amounts in the Reserve Fund do not exceed the Reserve Fund Requirement)
shall be retained in such respective fund or account.
Any and all income received from the investment of moneys in the Renewal and Replacement
Fund (only to the extent such income and other amounts therein exceed the Renewal and Replacement
Fund Requirement) shall be deposited upon receipt thereof in the Revenue Fund. Any and all income
received from the investment of moneys in the Reserve Fund (only to the extent such income and
other amounts therein exceed the Reserve Fund Requirement) shall be deposited upon receipt thereof
in the Interest Account.
All investments shall be valued at cost.
Flow of Funds
(A) Impact Fees. The City shall deposit into the Current Account all Available Impact Fees,
promptly upon receipt thereof, until there shall have been deposited therein an amount equal to the
Impact Fees Debt Service Component for the then current Bond Year, together with the amount of
any continuing deficiency in the deposits for the Impact Fees Debt Service Component for any prior
Bond Year, and thereafter the City shall deposit into the Impact Fees Stabilization Account all
additional Available Impact Fees received in such Bond Year.
On or before the last day of each month, the City shall withdraw from the moneys on deposit
to the credit of the Current Account and deposit in the Sinking Fund a sum equal to one-twelfth (1 / 12)
of the Impact Fees Debt Service Component for the then current Bond Year, together with the
amount of any continuing deficiency in prior monthly transfers from the Current Account to the
Sinking Fund.
The moneys in the Impact Fees Stabilization Account may, to the extent such moneys may be
lawfully used for such purpose, be applied at the discretion of the City (I) for deposit to the Current
9
Account whenever the moneys on deposit therein are insufficient for the purposes set forth in the
Resolution, (2) for the acquisition and construction of Expansion Facilities or to the payment of debt
service on indebtedness incurred to Finance the acquisition and construction of Expansion Facilities,
and (3) for the purchase or redemption of Bonds; provided, however, that the aggregate amount of
Available Impact Fees applied by the City pursuant to clauses (1) and (3) and pursuant to the second
paragraph of this subsection (A) to Bond Service Requirements shall never exceed the aggregate Impact
Fees Debt Service Components determined Eor all Bonds.
(B) Revenues. The City shall deposit all Gross Revenues into the Revenue Fund promptly
upon the receipt thereof. On or before the last day of each month, commencing with the month in
which delivery of the Series 2000 Bonds shall be made to the purchasers thereof, the moneys in the
Revenue Fund shall be deposited or credited in the following manner and in the following order of
priority:
(1) Qg~ration and Maintenance. Amounts in the Revenue Fund shall be used first
to pay reasonable and necessary Operating Expenses for the next ensuing month; provided,
however, that no such payment shall be made unless the provisions of the Resolution hereof
in regard to the current Annual Budget are complied with.
(2) Sinking Fund. Next, the City shall deposit into or credit to the Sinking Fund
such sums as are described in subsection (C) below.
(3) Reserve Fund. I~'ext, the City shall deposit into or credit to the Reserve Fund
such sums as are described in subsection (D) below.
(4) Renewal and Replacement Fund. Next, the City shall deposit into or credit to
the Renewal and Replacement Fund such sums as shall be sufficient to pay one-twelfth (1/12)
of an amount equal to five percent (5%) of the Gross Revenues received by the City in the
immediately preceding Fiscal Year, until the balance on deposit in the Renewal and
Replacement Fund equals the Renewal and Replacement Fund Requirement. "Renewal and
Replacement Fund Requirement" means, on the date of calculation, an amount equal to the
lesser of (1) X250,000 or (ii) such other amount as may be recommended to the City by the
Qualified Independent Consultant and approved by the Governing Body as an amount
appropriate for the purposes of the Resolution. As of the date of delivery of the Series 2000
Bonds, X250,000 will be on deposit in the Renewal and Replacement Fund. If the balance on
deposit in the Renewal and Replacement Fund exceeds the Renewal and Replacement Fund
Requirement such excess amount shall be transferred by the City from the Renewal and
Replacement Fund and deposited into the Revenue Fund. The moneys in the Renewal and
Replacement Fund shall be applied by the City for the purpose of paying the cost of
extensions, improvements or additions to, or the replacement or renewal of capital assets of,
the System, or extraordinary repairs of the System; provided, however, that on or prior to each
principal and interest payment date for the Bonds (in no event earlier than the fifteenth day of
the month next preceding such payment date), moneys in the Renewal and Replacement Fund
shall be deposited into the Interest Account, the Principal Account and the Bond Amortization
Account when the moneys therein are insufficient to pay the principal of and interest on the
Bonds coming due, but only to the extent moneys available in the Reserve Fund and the Rate
10
Stabilization Fund for such purpose pursuant to subsection (D) below shall be inadequate to
fully provide for such insufficiency.
(5) Rate Stabilization Fund. The balance of any moneys remaining in the Revenue
Fund after the payments and deposits required by part (1) through (4) of this subsection (B)
shall be deposited or credited to the Rate Stabilization Fund. The moneys on deposit in the
Rate Stabilization Fund may be transferred, at the discretion of the City, to any other
appropriate Eund or account of the City and be used by the City for any lawful purpose,
including, but not limited to, the payment of the principal of, premium, if any, and interest on
the Bonds or any Subordinated Indebtedness hereafter issued by the City; provided, however,
that on or prior to each principal and interest payment date for the Bonds (in no event earlier
than the fifteenth day of the month next preceding such payment date), moneys in the Rate
Stabilization Fund shall be deposited into the Interest Account, the Principal Account and the
Bond Amortization Account when the moneys therein are insufficient to pay the principal of
and interest on the Bonds coming due.
(C) Sinking Fund. The City shall deposit into or credit to the Sinking Fund from moneys
in the Current Account the sums required by subsection (A) above. To the extent that moneys in the
Current Account are insufficient or unavailable to make all of the deposits into the Sinking Fund
required by this subsection (C), such deposits shall be made by the City from moneys in the Revenue
Fund. The moneys on deposit in the Sinking Fund shall be applied in the manner provided in the
Resolution solely for the payment of the principal of or Redemption Price, if applicable, and interest
on the Bonds and shall not be available for any other purpose. The moneys transferred to the Sinking
Fund shall be deposited or credited in the following manner and in the following order of priority:
(1) Interest Account. The City shall deposit into or credit to the Interest Account
the sum which, together with the balance in said account, shall equal the interest on all
Outstanding Bonds accrued and unpaid and to accrue to the end of the then current calendar
month (assuming that a year consists of twelve (12) equal calendar months of thirty (30) days
each). Moneys in the Interest Account shall be applied by the City to pay interest on the
Bonds as and when the same shall become due, whether by redemption or otherwise, and Eor
no other purpose. The City shall adjust the amount of the deposit into the Interest Account
not later than the month immediately preceding any Interest Date so as to provide sufficient
moneys in the Interest Account to pay the interest coming due on the Bonds on such Interest
Date.
(2) Principal Account. Next, the City shall deposit into or credit to the Principal
Account the sum which, together with the balance in said account, shall equal (a) the principal
amount of all Outstanding Bonds other than Term Bonds due and unpaid, (b) that portion of
the principal amount of the Bonds other than Term Bonds next due which would have accrued
on such Bonds next due during the then current calendar month iE such principal amount
thereof were deemed to accrue monthly (assuming that a year consists of twelve (12) equal
calendar months of thirty (30) days each) in equal installments from a date one year preceding
the due date of such Bonds next due and (c) the portion of the principal amount of the Bonds
other than Term Bonds next due which shall have accrued on such basis in prior months.
Serial Capital Appreciation Bonds (including their respective interest components) shall be
11
payable entirely from moneys in the Principal Account on their respective maturity dates, and
monthly deposits or credits to the Principal Account to provide funds for such purpose shall
commence in the month which is one year prior to each such maturity date. Not later than the
month immediately preceding any principal payment date, the City shall adjust the amount of
the deposit into the Principal Account so as to provide sufficient moneys in the Principal
Account to pay the principal on the Bonds other than Term Bonds becoming due on such
principal payment date. Moneys in the Principal Account shall be applied by the City to pay
the principal of the Bonds other than Term Bonds as and when the same shall become due,
whether at maturity or otherwise, and for no other purpose.
(3) Bond Amortization Account. Payments to the Bond Amortization Account
shall be on a parity with payments to the Principal Account. Commencing in the month which
is one year prior to the due date of each Amortization Installment, the City shall deposit into
or credit to the Bond Amortization Account the sum which, together with the balance in said
account held for the credit of such Amortization Installment and all Outstanding Term Bonds
due and unpaid, shall equal (a) the principal amount of all such Outstanding Term Bonds due
and unpaid, (b) that portion of such Amortization Installment which would have accrued
during the then current calendar month if such Amortization Installment were deemed to
accrue monthly (assuming that a year consists of twelve (12) equal calendar months of thirty
(30) days each) in equal amounts from a date one year preceding such due date and (c) the
portion of such Amortization Installment which shall have accrued on such basis in prior
months. Term Capital Appreciation Bonds (including their respective interest components)
shall be payable entirely from moneys in the Bond Amortization Account on the respective due
dates of the Amortization Installments applicable thereto, and monthly deposits or credits to
the Bond Amortization Account to provide funds for such purpose shall commence in the
month which is one year prior to each such Amortization Installment due date. The City shall
adjust the amount of the deposit into the Bond Amortization Account not later than the
month immediately preceding any date Eor payment of an Amortization Installment so as to
provide sufficient moneys in the Bond Amortization Account to pay such Amortization
Installment on such date. Moneys in the Bond Amortization Account shall be applied by the
City to purchase or redeem Term Bonds in the manner provided in the Resolution, and for no
other purpose.
(D) Reserve Fund. The City shall deposit into or credit to the Reserve Fund such sum, if
any, as will be necessary to immediately restore the funds on deposit therein to an amount equal to the
Reserve Fund Requirement including the reinstatement of any Reserve Fund Insurance Policy or
Reserve Fund Letter oECredit on deposit therein or the cash replacement thereof. On or prior to each
principal and interest payment date for the Bonds, moneys in the Reserve Fund shall be applied by the
City to the payment of the principal of or Redemption Price, if applicable, and interest on the Bonds
to the extent moneys in the Interest Account, the Principal Account and the Bond Amortization
Account shall be insufficient for such purpose, but only to the extent moneys available in the Rate
Stabilization Fund for such purpose pursuant to subsection (B)(5) above shall be inadequate to fully
pro~~ide for such insufficiency. Whenever there shall be surplus moneys in the Reserve Fund by reason
of a decrease in the Reserve Fund Requirement or as a result of a deposit therein of a Reserve Fund
Insurance Policy and/or a Reserve Fund Letter of Credit, such surplus moneys shall be deposited by
the City into the Principal Account, or such other appropriate fund or account of the City, provided
12
such deposit to such other fund or account shall not adversely affect the exclusion from gross income
of interest on the Bonds for federal income tax purposes.
Upon the issuance of any Series of Bonds, under the terms, limitations and conditions as
provided in the Resolution, the City shall provide for the funding of the Reserve Fund in an amount
equal to the Reserve Fund Requirement. Such required amount may be paid in Eull or in part from the
proceeds of such Series oEBonds or may be accumulated in equal monthly payments from the Revenue
Fund, on a parity with the payments required by the first sentence of this subsection (D), to the
Reserve Fund over a period of months from the date of issuance of such Series of Bonds, which shall
not exceed the greater of (a) sixty (60) months, or (b) the number of months for which interest on such
Series of Bonds has ':peen capitalized.
Whenever moneys on deposit in the Reserve Fund, together with the other available amounts
in the Sinking Fund, are sufficient to fully pay all Outstanding Bonds (including principal and interest
thereon) in accordance with their terms, the funds on deposit in the Reserve Fund shall be applied to
the payment of Bonds.
I~Totwithstanding the Foregoing provisions, in lieu of the required deposits into the Reserve
Fund, the City may, at its sole option and discretion, cause to be deposited a Reserve Fund Insurance
Polity and/or Reserve Fund Letter of Credit in an amount equal to the difference between the Reserve
Fund Requirement applicable thereto and the sums, if any, remaining on deposit in the Reserve Fund
after the deposit of such Reserve Fund Insurance Policy and/or Reserve Fund Letter of Credit.
See "APPENDIX D -- Form of the Resolution" attached hereto for more information relating
to Reserve Fund Insurance Policies and Reserve Fund Letters of Credit. Prior to deposit in the Reserve
Fund, any Reserve Fund Letter of Credit or Reserve Fund Insurance Polity shall be approved in writing
by each Insurer and Credit Bank and shall conform to such additional or different restrictions as such
Insurer or Credit Bank shall reasonably require.
(E) Purchase or Redemption of Bonds. The City, in its discretion, may use moneys in the
Principal Account and the Interest Account to purchase or redeem Bonds coming due on the next
principal payment date, provided such purchase or redemption does not adversely affect the City's
ability to pay the principal or interest coming due on such principal payment date on the Bonds not
• so purchased or redeemed.
(F) Deposit of Moneys wi Paying Agents. At least one (1) business day prior to the date
established for payment of any principal of or Redemption Price, iE applicable, or interest on the
Bonds, the City shall withdraw from the Sinking Fund sufficient moneys to pay such principal or
Redemption Price, iE applicable, or interest and deposit such moneys with the Paying Agent for the
Bonds to be paid.
Rate Covenant
Pursuant to the Resolution, the City has covenanted to Fix, establish, maintain and collect such
Rates and revise the same Erom time to time, whenever necessary, as will always provide in each Fiscal
Year:
13
(A) Net Revenues, together with moneys on deposit in the Rate Stabilization Fund,
adequate at all times to pay in each Fiscal Year:
(i) at least one hundred ten percent (110%) of the current annual Debt Service
Requirement becoming due in such Fiscal Year on each Series of Outstanding Bonds, provided
that Net Revenues shall equal at least one hundred percent (100%) of the current annual Debt
Service Requirement becoming due in such Fiscal Year on each Series of Outstanding Bonds,
plus
(ii) at least one hundred percent (100%) of any amounts required by the terms of
the Resolution to be deposited in the Reserve Fund or in the Renewal and Replacement Fund
or with any issuer of a Reserve Fund Letter of Credit or Reserve Fund Insurance Policy in such
Fiscal Year,
(B) Net Revenues, together with amounts deposited in the Current Account in the Impact
Fees Fund and moneys on deposit in the Rate Stabilization Fund, adequate at all times to pay in each
Fiscal Year:
(i) at least one hundred twenty percent (120%) of the current annual Debt Service
Requirement becoming due in such Fiscal Year on each Series of Outstanding Bonds, provided
that Net Revenues shall equal at least one hundred percent (100%) of the current annual Debt
Service Requirement becoming due in such Fiscal Year on each Series of Outstanding Bonds,
plus
(ii) at least one hundred percent (100%) of any amounts required by the terms of
the Resolution to be deposited in the Reserve Fund or in the Renewal and Replacement Fund
or with any issuer of a Reserve Fund Letter of Credit or Reserve Fund Insurance Policy in such
Fiscal Year.
Such Rates shall not be so reduced so as to be insufficient to provide Net Revenues fully adequate for
the purposes provided therefor by the Resolution.
If, in any Fiscal Year, the City shall fail to comply with the requirements contained in subsection
(A) above, it shall cause the Consulting Engineers to review its Rates, Gross Revenues, Operating
Expenses and methods of operation and to make written recommendations as to the methods by
which the City may promptly seek to comply with the requirements set forth in subsection (A) above.
The City shall forthwith commence to implement such recommendations to the extent required so as
to cause it to thereafter comply with said requirements.
Reserve Fund
The Resolution provides for the establishment and maintenance of a Reserve Fund. lpon
delivery of the Series 2000 Bonds, the City shall deposit into the Reserve Fund a surety bond issued by
the Insurer in an amount equal to the Reserve Fund Requirement (~ ). See
14
"MUNICIPAL BOND INSURANCE -- Financial Security Assurance Inc." and "THE SURETY
BOND" herein. Pursuant to the Resolution, the "Reserve Fund Requirement" means, as of any date
of calculation, an amount equal to the lesser of (i) the Maximum Debt Service Requirement, (ii) 125%
of the average annual Debt Service Requirement, or (iii) 10% of the proceeds of each Series of
Outstanding Bonds.
Moneys on deposit in the Reserve Fund shall be applied in accordance with the provisions of
the Resolution solely for the purpose of the payment of maturing principal of, amortization, and
interest on the Bonds Outstanding including any Additional Bonds hereafter issued.
Construction Fund
The Resolution provides for the establishment and maintenance of a Construction Fund to be
used solely for the purpose of paying Costs of the Project. '.Moneys in the Construction Fund, until
applied in payment of any item of the Cost of a Project in the manner hereinafter provided, shall be
held in trust by the City and shall be subject to a lien and charge in favor of the Bondholders and for
the further security of such Holders.
There shall be paid into the Construction Fund the amounts required to be so paid by the
provisions of the Resolution, and there may be paid into the Construction Fund, at the option of the
City, any moneys received for or in connection with a Project by the City from any other source.
The proceeds of insurance maintained pursuant to the Resolution against physical loss of or
damage to a Project, or of contractors' performance bonds with respect thereto pertaining to the
period of construction thereof, shall be deposited into the appropriate account of the Construction
Fund.
The City covenants that the acquisition and construction of each Project will be completed
without delay and in accordance with sound engineering practices. The City shall make disbursements
or payments from the Construction Fund to pay the Cost of a Project upon the filing with the Clerk
of documents and/or certificates signed by an Authorized Issuer Officer stating with respect to each
disbursement or payment to be made: (1) the item number of the payment, (2) the name and address
of the Person to whom payment is due, (3) the amount to be paid, (4) the Construction Fund account
from which payment is to be made, (5) the purpose, by general classification, for which payment is to
be made, and (6) that (A) each obligation, item of cost or expense mentioned therein has been properly
incurred, is in payment of a part of the Cost of a Project and is a proper charge against the account of
the Construction Fund from which payment is to be made and has not been the basis of any previous
disbursement or payment, or (B) each obligation, item of cost or expense mentioned therein has been
paid by the City, is a reimbursement of a part of the Cost of a Project, is a proper charge against the
account of the Construction Fund from which payment is to be made, has not been theretofore
reimbursed to the City or otherwise been the basis of any previous disbursement or payment and the
City is entitled to reimbursement thereof. The Clerk shall retain all such documents and/or certificates
pE the Authorized Issuer Officers for seven (~ years from the dates of such documents and/or
certificates. The Clerk shall make available the documents and/or certificates at all reasonable times
for inspection by any Bondholder or the agent or representative of any Bondholder.
15
Notwithstanding any of the other provisions of the Resolution, to the extent that other moneys
are not available therefor, amounts in the Construction Fund shall be applied to the payment of
principal of or Redemption Price, if applicable, and interest on Bonds when due.
The date of completion of a Project shall be determined by the Authorized Issuer Officer who
shall certify such fact in writing to the Governing Body. Promptly after the date of the completion of
a Project, and after paying or making provisions for the payment of all unpaid items of the Cost of such
Project, the City shall deposit in the following order of priority any balance of moneys remaining in the
Construction Fund in (1) another account of the Construction Fund for which the Authorized Issuer
Officer has stated that there are insufficient moneys present to pay the Cost of the related Project, (2)
the Reserve Fund, to the extent of a deficiency therein, and (3) such other fund or account of the City,
including those established under the Resolution, as shall be determined by the Governing Body,
provided the City has received an opinion of Bond Counsel to the effect that such transfer shall not
adversely affect the exclusion, if any, of interest on the Bonds from gross income for federal income
tax purposes.
Additional Bonds
The City may issue one or more Series of Additional Bonds on parity and equal status with the
Series 2000 Bonds as to lien and source of security for any one or more of the Following purposes:
financing the Cost of any Project, or the completion thereof or of the Initial Project, or refunding any
or all Outstanding Bonds or of any Subordinated Indebtedness of the City. No such Additional Bonds
shall be issued by the City unless the following conditions are complied with:
(A) The City shall certify that it has complied with the covenants and agreements of the
Resolution.
(B) There shall have been obtained and filed with the City a certificate of a Qualified
Independent Consultant: (1) stating that such consultant has examined the books and records of the
City relating to the collection and receipt oEGross Revenues and Impact Fees and relating to Operating
Expenses; (2) setting forth the amount of Net Revenues and Impact Fees deposited into the Current
Account during the most recent preceding Fiscal Year for which audited financial statements are
available or any twelve (12) consecutive months selected by the City of the twenty-four (24) months
immediately preceding the issuance of such Additional Bonds; (3) stating that:
(a) such Net Revenues, adjusted as provided in the Resolution equal at least:
(i) 1.10 times the maximum annual Debt Service Requirement for the next
succeeding four Fiscal Years Eor all Outstanding Bonds and such Additional Bonds then
proposed to be issued, plus
(ii) 1.00 times any amounts required by the terms hereof to be deposited
in the Reserve Fund or in the Renewal and Replacement Fund or with any issuer of a
Reserve Fund Letter of Credit or Reserve Fund Insurance Policy during such period,
plus
16
(iii) 1.00 times the maximum annual subordinated debt service for all
Subordinated Indebtedness then outstanding;
(b) such Net Revenues, adjusted as provided in the Resolution and Impact Fees
deposited into the Current Account, adjusted as provided in the Resolution, equal at least:
(i) 1.20 times the maximum annual Debt Service Requirement for the next
succeeding four Fiscal Years for all Outstanding Bonds and such Additional Bonds then
proposed to be issued, and that such Net Revenues, adjusted as provided in the
Resolution, equal at least 1.00 times the maximum annual Debt Service Requirement
for the next succeeding four Fiscal Years for all Outstanding Bonds and such
Additional Bonds then proposed to be issued, plus
(ii) 1.00 times any amounts required by the terms of the Resolution to be
deposited in the Reserve Fund or in the Renewal and Replacement Fund or with any
issuer of a Reserve Fund Letter of Credit or Reserve Fund Insurance Policy during such
period, plus
(iii) 1.00 times the maximum annual subordinated debt service for all
Subordinated Indebtedness then outstanding;
and (4) stating that no Event of Default was disclosed in the report of the most recent Annual Audit,
or if such Event of Default was so disclosed, that it shall have been cured.
In the event any Additional Bonds are issued for the purpose of refunding any Bonds then
Outstanding, the conditions described above shall not apply, provided that the issuance of such
Additional Bonds shall not result in an increase in the aggregate amount of principal and interest on
the Outstanding Bonds becoming due in the current Fiscal Year and all subsequent Fiscal Years. The
conditions described above shall apply to Additional Bonds issued to refund Subordinated
Indebtedness and to Additional Bonds issued for refunding purposes which cannot meet the conditions
of this paragraph.
IE at any time the City shall enter into an agreement or contract for an ownership interest in
any public or privately owned water or sewer system or Eor the reservation of capacity therein whereby
the City has agreed as part of the cost thereof to pay part of the debt service on the obligations of such
public or privately owned water or sewer system issued in connection therewith, such payments to be
made by the City shall be junior, inferior and subordinate in all respects to the Bonds issued under the
Resolution, unless such obligations (when treated as Additional Bonds) shall meet the conditions
described above, in which case such obligations shall rank on parity as to lien on the Pledged Funds
with the Bonds.
17
Subordinated Indebtedness
The City will not issue any other obligations, except under the conditions and in the manner
provided in the Resolution, payable from the Pledged Funds or voluntarily create or cause to be created
any debt, lien, pledge, assignment, encumbrance or other charge having priority to or being on a parity
with the lien thereon in favor of the Bonds and the interest thereon. The City may at any time or from
time to time issue evidences of indebtedness that are not Additional Bonds and that are payable in
whole or in part out of the Pledged Funds and which may be secured by a pledge of the Pledged Funds;
provided, however, that such pledge shall be, and shall be expressed to be, subordinated in all respects
to the pledge of the Pledged Funds created by the Resolution.
The City may provide for the accession of Subordinated Indebtedness to the status of complete
parity with the Bonds, if (A) the City shall meet all the requirements imposed upon the issuance of
Additional Bonds described above, assuming, for purposes of said requirements, that such
Subordinated Indebtedness shall be Additional Bonds, (B) the Facilities financed by such Subordinated
Indebtedness shall be, or become part of the System, and (C) the City shall provide Eor the funding of
the Reserve Fund, upon such accession, in an amount equal to the increase in the amount of the
Reserve Fund Requirement occasioned by such accession in accordance with the Resolution.
Separate Accounts
The moneys required to be accounted for in each of the funds and accounts established in the
Resolution may be deposited in a single bank account, and funds allocated to the various funds and
accounts established in the Resolution may be invested in a common investment pool, provided that
adequate accounting records are maintained to reflect and control the restricted allocation of the
moneys on deposit therein and such investments for the various purposes of such funds and accounts
as provided in the Resolution.
The designation and establishment of the various funds and accounts in and by the Resolution
shall not be construed to require the establishment of any completely independent, self-balancing funds
as such term is commonly defined and used in governmental accounting, but rather is intended solely
to constitute an earmarking of certain revenues For certain purposes and to establish certain priorities
for application of such revenues as herein provided.
MUNICIPAL BOND INSURANCE
General
The following information under this heading has been furnished by Financial Security
Assurance Inc. ("Financial Security" or the "Insurer") for use in this Official Statement.
THE INFOR'~tATION RELATING TO THE INSURER CONTAINED BELOW HAS
BEEN FURi~1ISHED BY FINAI~;CIAL SECURITY ASSURANCE INC. NO REPRESENTATION
IS BLADE BY THE CITY OR THE UNDERWRITER AS TO THE ACCURACY OR ADEQUACY
OF SUCH INFOR'~tATION OR THAT THERE HAS NOT BEEN ANY MATERIAL ADVERSE
18
CHANGE IN SUCH INFORMATION SUBSEQUENT TO THE DATE OF SUCH
INFORMATION. NEITHER THE CITY NOR THE UNDERWRITER HAVE 'V1ADE ANY
INVESTIGATION INTO THE FINANCIAL CONDITION OF THE INSURER, AND NO
REPRESENTATION IS MADE AS TO THE ABILITY OF THE INSURER TO MEET ITS
OBLIGATIONS UNDER THE BOND INSURANCE POLICY OR THE SURETY BOND.
Bond Insurance Policy
Concurrently with the issuance of the Series 2000 Bonds, Financial Security will issue its
Municipal Bond Insurance Policy for the Series 2000 Bonds (the "Bond Insurance Policy"). The Bond
Insurance Policy guarantees the scheduled payment of principal of and interest on the Series 2000
Bonds when due as set forth in the Eorm of the Bond Insurance Policy attached hereto as "EXHIBIT
F -Specimen Municipal Bond Insurance Policy."
The Bond Insurance Policy is not covered by any insurance security or guaranty fund
established under New York, California, Connecticut or Florida Insurance Law.
Financial Security Assurance Inc.
Financial Security is a New York domiciled insurance company and a wholly owned subsidiary
of Financial Security Assurance Holdings Ltd. ("Holdings"). Holdings is an indirect subsidiary of
Dexia, S.A., a publicly held Belgian corporation. Dexia S.A., through its bank subsidiaries, is primarily
engaged in the business of public finance in France, Belgium and other European countries. No
shareholder of Holdings or Financial Security is liable for the obligations of Financial Security.
At June 30, 2000, Financial Security's total policyholders' surplus and contingency reserves were
approximately $1,367,714,000 and its total unearned premium reserve was approximately X696,918,000
in accordance with statutory accounting principles. At June 30, 2000, Financial Security's total
shareholder's equity was approximately $1,354,526,000 and its total net unearned premium reserve was
approximately $574,825,000 in accordance with generally accepted accounting principles.
The Financial statements included as exhibits to the annual and quarterly reports filed by
Holdings with the Securities and Exchange Commission are hereby incorporated herein by reference.
Also incorporated herein by reference are any such financial statements so filed from the date of this
Official Statement until the termination of the offering of the Series 2000 Bonds. Copies of materials
incorporated by reference will be provided upon request to Financial Security Assurance Inc., 350 Park
Avenue, New York, New York 10022, Attention: Communications Department (telephone (212) 826-
0100).
The Bond Insurance Policy does not protect investors against changes in market value of the
Series 2000 Bonds, which market value may be impaired as a result of changes in prevailing interest
rates, changes in applicable ratings or other causes. Financial Security makes no representation
regarding the Series 2000 Bonds or the advisability of investing in the Series 2000 Bonds. Financial
Security makes no representation regarding this Official Statement, nor has it participated in the
preparation thereof, except that Financial Security has provided to the County the information
presented under this caption for inclusion in this Official Statement.
19
THE SURETY BOND
Concurrently with the issuance of the Series 2000 Bonds, the Insurer will issue its Municipal
Bond Debt Service Reserve Policy (the "Surety Bond") in an amount equal to ~ A general
description of the Insurer's financial condition is contained under the heading "MUNICIPAL BOND
INSURANCE -Financial Security Assurance Inc." herein. The Surety Bond unconditionally
guarantees the payment of the principal of and the interest on the Series 2000 Bonds which has become
due for payment, but shall be unpaid by reason of nonpayment of the City, provided that the aggregate
amount paid under the Surety Bond may not exceed the maximum amount set forth in the Surety
Bond. A Form of the Surety Bond is attached hereto as "APPENDIX G -Specimen Surety Bond."
ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth the estimated sources and uses of the proceeds to be received
from the sale of the Series 2000 Bonds (including accrued interest on the Series 2000 Bonds to the date
of delivery):
Sources of Funds
Principal Amount of Series 2000 Bonds
Accrued Interest
Less Original Issue Discount
Total Sources of Funds
Uses of Funds
Deposit to Construction Fund
Deposit to Escrow Account
Deposit to Interest Account (1)
Deposit to Costs of Issuance Account (2)
Total Uses
(1) Includes accrued interest.
(2) Includes legal and advisory fees, bank Eees, printing, bond insurance and surety premiums and
Underwriter's discount.
[Remainder of page intentionally left blank]
20
DEBT SERVICE SCHEDULE
Bond Year
Ending Total
T~ecember 1 PrincTl In r Debt Service
2001 $ ~ ~
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
$ $ $
[Remainder of page intentionally left blank]
21
THE CITY
The City of Clermont is located in the center of south Lake County about 22 miles west
of Orlando. Clermont is located in the central highlands of Florida about equidistant from the Atlantic
and Gulf Coasts. The area around the City has many miles of lakes and rivers. The chain of lakes
around Clermont provides access to the Atlantic Ocean.
The City has aCouncil/Manager Eorm of government. The 'Mayor and four City Council
members are elected at-large to serve overlapping two-year terms. The City employs afull-time City
Manager to administer the day-to-day operations of the City.
THE SYSTEM
Reference is made to "APPENDIX A--Combined Report of the Feasibility Consultant and
Consulting Engineer" attached hereto for a detailed description of the System. Set forth below is
certain general information relating to the System based in a large part on information furnished by the
Feasibility Consultant, Hartman & Associates, Inc., and the Consulting Engineer, Tamara Richardson,
City Engineer.
General
The City provides potable water and sewer services to customers located both inside and
outside the City limits. As a result of growth in the community, the City identifies potable water
customers pursuant to two separate service areas, "East" and "West." The West service area consists
of areas primarily west of U.S. Highway 27, and is generally referred to as the original or older service
area. The East service area is primarily east of U.S. Highway 27 and accommodates principally newer
connections to the System.
The water system, as of September 30, 1999, has approximately 5,865 customers. The West
water system serves primarily those customers within the immediate City limits consisting of 3,587
(61.2%) of the total water customers. The East water system resulted from an effort to efficiently
expand the water service area and accommodate anticipated growth east of the City. This area has seen
tremendous growth in the past 5 years. The East water system currently provides service to 2,278
(38.8%) of the total water customers.
The System currently provides sewer service to 4,026 connections. Unlike the water system,
there is only one sewer service area, which provides service to all customers, both within and outside
the City limits.
Utility Management
Personnel involved in management, Financing, and operations of the System includes an
elected City Council consisting of five members. The City Manager is appointed by the City Council
and is responsible for the day to day management and administration of the City. The Director of
Finance, Public Services Director, and Consulting Engineer are selected by the City Manager.
22
lYlayne Saunders, City Manager. IVIr. Saunders has been City Manager since May 1985. Prior
to this appointment in the City of Clermont, he served as Finance Director of the City of Clermont
for five years. Mr. Saunders has a Masters in Business Administration from the Western Carolina
University.
Joseph Ilan Zile, Finance Director. Mr. Van Zile has been Finance Director since July 1985.
He received a Bachelor of Science in Accounting from the University of Central Florida. Mr. Van Zile
is a Certified Public Accountant in the State of Florida and a Certified Government Finance Officer.
His prior experience includes employment as an auditor with the Office of the Auditor General, State
of Florida. Before this appointment, he was Finance Manager for the Volusia County School District.
The Director of Finance is responsible for all accounting, budgeting, investing daily cash collections,
deposits and any and all other duties related to the City's finances.
Preston Davis, Director of Publz'c Services. I~1r. Davis has twenty-nine years of water and
wastewater utilities experience in treatment, operations, maintenance, design, and construction. He has
served as the Public Services Director for the City of Clermont since 1990 and as the Utility
Department Director since 1974. Mr. Davis is a Florida Class "A" Wastewater Treatment Plant
Operator and a Florida Class "B" Drinking Water Treatment Plant Operator. Reporting directly to Mr.
Davis are Mr. Gene Lainhart, Supervisor of Distribution and Collection, and Mr. James Kinzler,
Supervisor of Water and Wastewater Treatment.
Tamara Kichardson, City Engineer. Ms. Richardson has served as the Consulting Engineer as
an employee for the City of Clermont since May 1998. Prior to that, she was employed with an
environmental consulting firm where she designed potable water supply and transmission facilities and
wastewater treatment and collection facilities. Ms. Richardson graduated Summa Cum Laude with a
Bachelor of Science in Environmental Engineer from the University of Central Florida in 1992.
Existing System
B k n
Withdrawal of groundwater in the City and surrounding County is regulated by the St.
John's River Water Management District (SJRWMD) through the issuance of Consumptive Use
Permits (CUPS). The East Water System is permitted under CUP No. 50052 (formerly 2-069-
0963AI~1GM2R) and the West Water System is permitted under CUP No. 2478 (formerly 2-069-0175).
Currently, both permits are in the process of being renewed. The timing of the renewal is
advantageous to the planned construction of new wells in each system since the new wells can be easily
incorporated into the permit renewal application.
Water System
lY/est lYlater System
The West Water System primarily serves the original sections of the City with approximately
3,700 connections as of June 2000. The system includes three raw water wells, two elevated storage
tanks and an extensive distribution system. The West water service area is largely built-out with
minimal growth. The groundwater source is the Floridan Aquifer. The water quality of the
23
groundwater is such that no treatment is required. The City provides only disinfection prior to
distribution. The water produced by the West Water System meets all federal and state regulatory
drinking water standards.
The West ~~'ater System includes two elevated storage tanks. The Disston Avenue tank has
a capacity of 100,000 gallons and the Bloxam Avenue tank has a capacity of 500,000 gallons. The wells
are controlled by the level of the Bloxam Avenue tank. As the level in the tanks drops, the wells are
energized in rotation.
The Vest Water System consists of three remote wells, known as the Fourth Street Well,
the Seminole Avenue Well and the Grand Highway Well, that discharge directly into the distribution
system, Following disinfection with a gaseous chlorine injection system. The total depth of the wells
range from 790 feet to 918 Eeet and casing diameters range from 10 to 12 inches. Each well is equipped
with a vertical turbine well pump, flow-measurement device and discharge piping and valves. The
Fourth Street Well is equipped with a propane powered right-angle drive engine and the Grand
Highway Well is equipped with a diesel powered right-angle drive engine to serve as a back-up power
source in the event of a power failure. Redundancy will be provided with the addition of a new well
in the West ~Y~ater System. With the best well off line, the system will be able to maintain service.
The total permitted capacity of the West Water System is 2.13 million gallons per day while
the total design capacity is 3.44 million gallons per day. The following table provides a summary of the
West Water System well characteristics:
West Water System
Summ ary of Ground Water Sources
Casing Casing Total Pump Date
Well Name Dim in Depth(ftl Depth ~ft~ Capaci~.y (_ Vim) Drill
Fourth Street 12 605 790 1,650 1981
Seminole Avenue 10 517 840 1,625 1975
Grand Highway 12 600 918 1,500 1965
Due to the age of the wells and the minimal growth on the west side of the City, the City
will be constructing a new potable well in the West Water System to provide additional capacity as well
as water supply redundancy in the event one of the existing wells must be taken out of service for any
length of time. Other system improvements include replacing the existing gaseous chlorine feed system
with a sodium hypochlorite feed system. In light of the tightening regulations on the use of chlorine
gas as well as the growing concern by the public regarding its safety, the City has taken the proactive
stance of eliminating chlorine gas completely in all utilities. The improvements discussed in this
paragraph are included below under the heading "THE SYSTEM - 5-Year Capital Improvement
Program and Funding Sources."
lY/est lY/ater System Transmission Faczlr'ties
The City's water transmission and distribution system for the West Water System consists
of approximately 237,600 linear feet of ductile iron, asbestos cement and polyvinyl chloride (PVC) pipe
ranging from 1 '/~ to 12 inches in diameter. The majority, approximately 60 percent, of the
24
transmission/distribution system on the West side was constructed during the 1970s and 1980s, so it
is a relatively new system and in good repair. In the event that a pipeline does deteriorate, the City has
an ongoing renewal and replacement program in which sections of pipeline are abandoned in place or
removed and replaced with new material, usually PVC. In addition, Eire hydrants have been installed
as the facilities were constructed in order to provide fire protection to the majority of the areas served.
East IYlater System
The East ~Y/ater System was developed to serve the expanding water service area due to the
high rate of growth in the area. As of June 2000, the East Water System services approximately 2,940
connections located within the City limits as well as in unincorporated Lake County. The system
includes three raw water wells, one elevated storage tank, and an expanding distribution system. The
groundwater source is the Floridan Aquifer. The water quality of the groundwater is such that no
treatment is required. The City provides only disinfection prior to distribution. The water produced
by the East Water System meets all the federal and state regulatory drinking water standards.
The East Water System includes one elevated storage tank located on Highway 50, which
has a capacity of 400,000 gallons. The wells are controlled by the level of the elevated tank. As the
level in the tanks drops, the wells are energized in rotation.
The East Water System consists of three remote wells that discharge directly into the
distribution system, following disinfection with a gaseous chlorine injection system. The total depth
of the wells range Erom 790 feet to 918 feet and casing diameters range from 10 to 12 inches. Each well
is equipped with a vertical turbine well pump, flow-measurement device and discharge piping and
valves. In addition, each well is equipped with an emergency standby generator sufficient to operate
the well during a power failure. The total permitted capacity of the East Water System is 3.384 million
gallons per day while the total design capacity is 3.74 million gallons per day. The following table
provides a summary of the East Water System well characteristics:
East Water System
Summary of Ground Water Sources
Casing Casing Total Pump Date
Well Name Di in Depth(ftl Depth (ft~ Cag~.citv__~_ (~ml Drill
Greater Hills North 16 200 750 1,650 1981
Greater Hills South 18 1,150 1,200 1,625 1990
Hancock 16 360 885 1,500 1995
Due to the high rate of growth on the east side, the City will be constructing three new
potable wells in the East Water System to provide additional capacity as well as water supply
redundancy in the event one of the existing wells must be taken out of service for any length of time.
Other system improvements include replacing the existing gaseous chlorine feed system with a sodium
hypochlorite teed system. In light of the tightening regulations on the use of chlorine gas as well as the
growing concern by the public regarding its safety, the City has taken the proactive stance of eliminating
chlorine gas completely in all utilities. Other improvements to the East Water System include a
telemetry system, which will allow remote monitoring and control of the potable wells. The system
will also be used to monitor the level in the elevated storage tanks. The system will provide increased
25
reliability for water production and supply to the City's expanding population. The improvements
discussed in this paragraph are included below under the heading "THE SYSTEM - 5-Year Capital
Improvement Program and Funding Sources."
East lY>ater System Transmission Facilities
The City's water transmission and distribution system for the East Water System consists
of approximately 210,000 linear Eeet of ductile iron and PVC pipe ranging from 2 to 20 inches in
diameter. The transmission/distribution system on the east side is relatively new, with construction
beginning in the 1980s, so the system is in good repair and a renewal and replacement program is not
yet required. Fire hydrants have been installed along all pipelines as the facilities were constructed in
order to provide fire protection to the majority of the areas served.
Exi ing Sewer Sy em
The wastewater collection system includes gravity collection, force main transmission, lift
stations, two wastewater treatment facilities anal effluent and sludge disposal systems.
[Ylastewater Collection and Transmission
The existing wastewater collection and treatment system on the west side of the City was
constructed in the 1970s. Prior to the collection system, individual septic tanks were used for homes
and businesses. The collection system on the east side of town, the area of concentrated growth, is
relatively new having been constructed solely for the new development and not as a retrofit. There are
approximately 90 miles of gravity sewers and Force mains serving the east and west sides of the City.
Due to the varying topography with elevation changes from 85 feet to 307 feet above mean sea level,
approximately 45 lift stations are needed to convey wastewater over the hills to its Enal destination.
Of the 45 existing lift stations, four are master lift stations receiving flow from several smaller stations.
These lift stations include LS-6, LS-9, LS-13 and LS-15 on the west side and E-6 and E-14 on the east
side. Since initial installation, modifications and upgrades have been made to the wastewater collection
and transmission system (almost exclusively on the west side) including lift station and manhole
renovations, sewer line replacements and installation of odor control facilities.
For reliability, the lift stations are equipped with auto-dialers that notify City personnel in
the event of a lift station failure. Also included at each lift station are audible and visual alarms that
activate in the event of a lift station failure. From proceeds of the Series 2000 Bonds, the City will
install a telemetry system to provide additional Feedback Erom each station and the ability for remote
control of each station. This project will increase system reliability and will reduce the potential for
spills resulting from lift station failures. The majority of new lift stations constructed in the past five
years are equipped with emergency standby generators as do the master lift stations. As part of the
City's regular renewal and replacement program for the wastewater system, lift stations located in
environmentally sensitive areas will be retrofitted to include emergency generators. All lift stations that
currently do not have a dedicated emergenry generator are equipped with a power receptacle to accept
the City's portable generator and each station has an emergency pump connection for the City's
portable pumps. Redundancy is provided in each lift station by including at least two pumps, each with
ample capacity, to handle the lift station flows. In the event of a single pump failure, the alternate
pump will maintain lift station service.
2G
i~astervater Treatment Facilz~ties
The City owns and operates two wastewater treatment Facilities. One generally serves the
west side of the Ciry and one generally serves the east side of the City.
Throughout the years, improvements and expansions have been made to the wastewater
treatment facility, known as the Clermont Pollution Control Facility, on the west side of the City. The
facility was initially constructed in 1972. Additional facilities, including a flow equalization basin, were
added in 1985 to expand the capacity to 0.95 million gallons per day and to redirect effluent disposal
from on site ponds to an oEf site sprayfield. In 1990, the sludge treatment facilities were expanded.
The design capacity of the Clermont Pollution Control Facility is 0.95 million gallons per day, but the
permitted capacity is only 0.75 million gallons per day, limited by the loading requirements of the
sprayfield. The current flows to the facility are 0.64 million gallons per day.
The wastewater facility on the east side, known as the East Side Wastewater Treatment
Facility, was constructed in phases beginning in 1995. Initially a package plant with a capacity of 0.099
million gallons per day was constructed to serve the Kings Ridge development located east of Highway
27 and south of Highway 50. In 1996, the plant was expanded to a contact stabilization facility with
a design capacity of 0.75 million gallons per day. Effluent disposal is accomplished using rapid
infiltration basins and liquid sludge is hauled off site for further processing and disposal by an
independent facility. Current tows to this plant are approximately 0.26 million gallons per day.
To meet the anticipated capacity demands created by the rapid growth on the east side of
the Ciry, design of the expansion of the East Side Wastewater Treatment Facility is currently underway.
The expansion will increase capacity to 2.0 million gallons per day and will include facilities to produce
effluent suitable for use as reclaimed water. The expanded plant will include anoxic zones and extended
aeration Followed by clarification, filtration and disinfection. Effluent disposal will occur through a
network of reclaimed water piping to irrigate golf courses and residential neighborhoods. The existing
rapid infiltration basins will serve as a disposal site for substandard effluent. Sludge processing facilities
will include aerobic digestions and belt filter presses. Processed sludge will be hauled off site for land
application. The improvements discussed in this paragraph are included below under the heading
"THE SYSTEM - 5-Year Capital Improvement Program and Funding Sources."
Components that will comply with such requirements will be included in the design of the
expansion. The newly expanded wastewater treatment Facility will produce effluent suitable for use as
reclaimed water. The City has multiple customers equipped to accept and use the reclaimed water for
irrigation water. Some of the customers with existing piping, connections, lined ponds and booster
pump stations (if necessary) include the Kings Ridge GoIE Course, the Kings Ridge Executive Golf
Course, the Legends Golf Course and the Diamond Players Club Golf Course. Other customers
include, but are not limited to, the Kings Ridge residential community, the Summit.Green residential
community, South Lake Hospital, Lake Sumter Community College and Hancock Recreational Facility.
Condition of Existing Facilities
The ongoing renewal and replacement programs for the distribution and collection systems
Eor the water and ~vastewater systems keep the systems in good repair. The raw water supply wells are
taken out of service and repaired or renovated on a regular basis. See "APPENDIX A -- Combined
27
Report of the Feasibility Consultant and Engineer" attached hereto for information about the general
condition of the various components of the System.
Existing and Projected System apa i ie
The majority of the growth is concentrated on the east side of the City and therefore
creates additional demands on the East Water System and the East Side Wastewater Treatment Facility.
The projected capacity demands on the water and wastewater system are presented in the table which
follows:
Projected Increase in Capacity Demands
Due to System Growth
East Water System West Water System Wastewater Treatment
Capacity Demand Capacity Demand Capacity Demand
Year (M D~'~ (MGD~ ['~ (MGD) [~
2000 2.52 2.70 0.82
2001 4.31 2.85 1.10
2002 6.51 3.00 1.44
2003 8.38 3.14 1.72
2004 10.10 3.28 1.97
2005 11.30 3.43 2.18
2006 12.40 3.57 2.38
Note: [1]
[2]
Based on 750 gpd/connection through 2002. Based on 500 gpd/connection from 2003 through life of
the Series 2000 Bonds.
Based on 2.4 citizens per connection, 300 gpd/connection for single family connections, and 150
gpd/connection for age restricted communities.
5-Year Capital Improvement Program and Funding Sources
To accommodate the rapidly growing population, the City is proposing several capital
improvement projects to increase capacity of the water supply systems and wastewater collection and
treatment systems. The regulatory agencies governing each project have been contacted and projects
have been evaluated for the ability to obtain a permit and timing. None of the projects included below
are the result of a consent order requiring corrective action by any regulatory authority relating to any
component of the System. The estimated improvement costs are summarized below in the tables
which follows and the regulatory status is discussed in each project description in "APPENDIX A--
Combined Report of the Feasibility Consultant and Consulting Engineer" attached hereto.
[Remainder of page intentionally left blank]
28
Water System
Impact Series 2000
Descrip ion ~S Fees Bond Proceeds Other
Engineering -Water Wells $176,930 $176,930 $ 0 $ 0
Engineering -Telemetry System 29,400 0 29,400 0
Engineering -Arrowhead Line 14,400 7,200 0 7,200
Water Master Plan 40,000 40,000 0 0
Hancock North `Y'ell Air Problem 210,000 0 210,000 0
Chlorine Systems -Water Well 300,000 0 300,000 0
Arrowhead Water Line Extension 144,000 72,000 0 72,000
East Water Well #2 (Windy Hill) 600,000 0 600,000 0
East Water Well #3 (Elevated Tank) 600,000 0 600,000 0
East Water Well #4 (Lost Lake) 600,000 0 600,000 0
West Water Well #4 (Lakeview) 700,000 700,000 0 0
Water ~Y~ells Telemetry System 150,000 _~ 15 -~
Water System Improvements Total $3,564,730 $996,130 $2,489,400 $79,200
Sewer System
Impact Series 2000
Descry ion ~t Fees Bond Proceeds Other
Engineering -Telemetry System $26,500 $ 0 $26,500 $ 0
Engineering -Treatment System 497,500 497,500 0 0
Sewer Master Plan 40,000 40,000 0 0
Chlorine Systems - West Plant 70,000 0 70,000 0
Rebuild Lift Station #9 175,000 0 175,000 0
Rebuild Life Station #18 191,000 0 191,000 0
Lift Station Telemetry System 150,000 0 150,000 0
East Treatment Plant Expansion 7.300T000 836.000 6,464.000 ~
Sewer System Improvements Total $8,450,000 $1,373,500 $7,076,500 $ 0
GRr~ND TOTAL 12 1 2.369.630 79 20
For a more detailed description of improvements and estimates of probable cost and
permitting, see "APPENDIX A -Combined Report of the Feasibility Consultant and Consulting
Engineer" attached hereto.
Regulatory Status
The City is in full compliance with all applicable federal and state regulatory requirements
relating to the provision of water and sewer services and there are currently no outstanding consent
orders requiring corrective actions that have been issued by any regulatory authority relating to any
component of the System. The City is operating all of its water production facilities and wastewater
treatment plants pursuant to unexpired permits issued by the requisite regulatory agencies. The Ciry
is current on all permit renewals. The water produced by the System meets all federal and state
regulatory drinking water standards.
29
Historical Customer Data
The City's water and sewer rate ordinance provides for two major customer classes: 1)
Residential, comprised of single-family and multi-family dwellings, and 2) Commercial, comprised of
all others that do not qualify as Residential. Single Family customers are representative of single dwelling
units connected to the System through individual meters, while multi-family customers are connected
through a common master meter (e.g., apartments, condominiums, etc.). The table below provides
summary customer data for the last five fiscal years. This data suggests that both water and sewer
customers have been increasing at double digits averages. Data relative to metered water indicates usage
has increased well above the customer rate of growth. It is believed that this increased difference is
primarily due to the reduced rainfall experienced in Central Florida the last several years and that, over
time, the annual metered water increases should approximate customer growth.
Historical Customers and Flows Water and Sewer
Fiscal Y ar
~XJater Accounts 1994/95 1995/96 1996/97 1997/98 ~
Residential 3,136 3,483 3,987 4,549 5,400
Commercial _~ 391 439 447 465
Total 3,528 3,874 4,426 4,996 5,865
Incremental Growth N/A 346 552 570 869
Percent Growth N/A 9.8% 14.2% 12.9% 17.3%
Metered Flow (1,000 gallons) 482,962 630,763 833,834 1,087,078 1,296,265
Percent Increase N/A 30.6% 32.2% 30.4% 19.2%
Fiscal Y ar
Sewer Accounts 1 94 9 1995/96 1 9 1 97 199 9
Residential 1,978 2,334 2,770 3,099 3,615
Commercial 350 358 ~$.~ ~$ 411
Total 2,328 2,692 3,156 3,487 4,026
Incremental Growth N/A 364 464 331 539
Percent Growth N/A 15.6% 17.2% 10.5% 158%
[Remainder of page intentionally left blank]
30
Historical System Operating Results
Fiscal Year
199 1 9 9 1996/97 1997/98 1 9
Operating Revenues
Operating Expenses~`~
Personal Services
U tilitie s
Administrative Expenses
Repair and Maintenance
Professional Services
Insurance
Operating Supplies
Office Expense
Bad Debt
Total Operating Expenses
Net Revenues
Non-Operating Revenues
(Expenses)
Operating Transfer Out
Net Balance
Impact Fees
$1,429,275 $1,725,935 $2,022,483 $2,457,227 $2,803,192
$363,285 $410,850 $514,784 $624,041 $727,704
176,539 188,368 250,936 270,090 343,481
106,050 114,571 123,942 127,037 181,332
121,360 104,356 115,808 260,852 238,700
70,635 112,237 84,286 89,457 90,688
29,513 24,772 49,036 35,831 25,000
68,426 55,973 71,072 77,586 85,491
12,426 24,725 28,082 26,386 38,131
- 2.957 2.761 3.000 G.G89
$948,234 $1,038,809 $1,240,707 $1,514,280 $1,737,216
$481,041 $687,126 $781,776 $942,947 $1,065,976
242,334 (303,247) (289,892) (337,549) (442,238)
(61.0181
$662,357 j80.4391
$303,440 j93.8351
$398,049 j,117.7431
$487,655 u.54..~-41
$473,024
$297,934 $432,215 $946,148 $879,425 $1,697,806
Notes: (1) Excludes depreciation.
Restricted and Unrestricted Reserves
The System anticipates having cash available from both unrestricted previous earnings and
restricted Impact Fees in the approximate amounts of $1,300,000 and $5,369,000, respectively as of
September 30, 2000. Of the $1,300,000 in unrestricted previous earnings, $250,000 will be used to fund
the Renewal and Replacement Fund (which is established pursuant to the Resolution), approximately
$400,000 will be applied towards retiring existing debt, and $250,000 for working capital needs.
Approximately $5,213,000 of the restricted Impact Fees will be used for capital projects and towards
retiring the loan by the City Arcadia Dedicated Pool Loan Government Revenue Bonds, Series 1993.
The City has indicated that the remaining $400,000+ in unrestricted previous earnings and $156,000+/-
in restricted Impact Fees will be available to: 1) assist in the payment of the fiscal requirements not
required to be funded by annual operating revenues, 2) reduce the amount of the Series 2000 Bonds
project needs, 3) fund renewal and replacement, and/or 4) fund the Rate Stabilization Fund and Impact
Fees Stabilization Fund (which were established pursuant to the Resolution); provided, however, that the
$156,000+/- in restricted assets will only be used to fund expansion-related projects.
Rates and Charges
n r 1
The System's revenue generation provisions for operations consist of a series of user rates, fees,
and charges applied uniformly to all customers. These rates, fees, and charges are established by
31
ordinance enacted by City Council, which also provides for adequate collection and enforcement
provisions. In addition, City Council has also established uniform and equitable water and wastewater
Impact Fees, by ordinance, which provide Eor the recovery of expansion related costs. The System is
considered an enterprise operation by the City and provisions have been established to provide for all
facility and operating costs.
The City's annual budget process, together with periodic reviews by independent consultants, is
used to identify the adequacy of operating revenues to provide for the fiscal requirements of operations.
The current sewer rate ordinance contains a provision whereby the sewer rates are adjusted annually for
inflation by the Deflator Index as established by the Florida Public Service Commission (FPSC). This
is an automatic adjustment unless otherwise modified or deleted through City Council action.
The rate structure Eor the user rates, fees, and charges for both water and sewer services consist
of a series of Minimum Monthly Charges and Additional Use/Variable (Volumetric) Rates. The sewer
rate structure provides for graduated Minimum Monthly Charges pursuant to the size of the customer's
connection and a provision limiting the usage amount subject to volumetric rate for residential customers.
Water
The existing water rates were established by Miscellaneous Ordinance No. 277-M and provide
separate user rates, fees and charges for both the East and West service areas. In summary, water rates
for customers in the West service area consist of a Minimum Charge of $4.85 per month (which includes
3,000 gallons of metered usage) plus an Additional Use Rate of $1.10 per 1,000 gallons for consumption
over 3,000 gallons per month. Water rates for customers in the East service area consist of a $9.11
Minimum Rate per month plus an Additional Use Rate of $1.13 per 1,000 gallons for all metered usage
per month.
Sewer
The existing sewer rates provide for Minimum Rate of $11.26 per Equivalent Meter Connection
(EPIC) and a Variable Rate of $1.47 per 1,000 gallons of metered water use. One EMC is equal to a 5/8"
x 3/4" water meter. Multi-Family master metered connections utilize the number of dwelling units with
a factor of 0.80, which equates to a Minimum Monthly Charge of $9.02 per dwelling unit. EMCs for
Single Family and Commercial connections are based on the American Water Works Association
(AWWA) equivalency factors associated with meter sizes. The Variable Rate for Single Family customers
is capped at 16,000 gallons per month of metered water use and for Multi-Family customers at 13,000
gallons per month of metered water use. There is no cap on usage for Commercial customers.
Miscellaneous Ordinance No. 329-M provides Eor an automatic annual increase to all sewer rates and
charges based upon the FPSC Deflator Index. The FPSC Deflator Index is 1.21 percent and 1.36 percent
for fiscal years 1999/2000 and 2000/2001 respectively. The most recent 10-year average of the FPSC
Deflator Index is approximately 2.50 percent. Feasibility assumptions for the purposes of the Report
assume that the FPSC Deflator factor will be 1.50 percent for fiscal year 2001/2002 and thereafter. It
is also assumed that such annual rate deflator adjustments will occur automatically on October 1 of each
fiscal year.
32
Water and Wastewater Impact Fees
Impact fees are charged to all new connections to the System. These fees are for the purpose
of capital recovery and are charged based on the demand characteristics of the connection applying for
service. Demand characteristics are identified pursuant to Equivalent Residential Units (ERUs) whereby
one ERU is equal to 375 gallons per day (gpd) for water and 250 gpd for wastewater. On May 25, 1999,
City Council enacted Ordinance ~'o. 293-C which established the following water and wastewater impact
fees shown below. Such Ordinance also has provisions for automatic inflation adjustments based on the
Engineering News Record Construction Cost Index, unless otherwise adjusted by the City Council.
Current Impact Fees
East West
Water per ERU $921 $421
Sewer ~r ER ' 2 625 2 625
Total 3,546 3,042
Under Florida law, impact fees may only be expended to cover the costs of expansion of the
system necessary to service new customers. See "SECURITY AND SOURCES OF PAYMENTS FOR
THE BONDS -- General" herein.
Ten Largest Water Customers
Percentage of
Customer ~8g.~ 1(m lonsl Total ul
Lake County School District 66,676,000 6.13%
South Lake Hospital 54,230,000 4.99%
CBS Builders Supply, Inc. 15,001,000 1.38%
Grandview Apartments 13,677,000 1.26%
Emerald Lakes Mobile Homes Park 5,648,000 0.52%
Holiday Inn 4,684,000 0.43%
Quincy's Restaurant 4,426,000 0.41%
Bank of America 4,405,000 0.41%
~X/estminster :~1ursing Home 4,386,000 0.40%
Denny's Restaurant 4_.339.000 0.40%
Total 177,472,000 16.33%
:dote: ~'~ Percentage of total metered water flow of approximately 1,087,000,000 gallons for the 12-month period
ending August 1, 2000.
[Remainder of page left intentionally blank]
33
Ten Largest Sewer Customers
Percentage of
. ,c omen ~a llonsl Total ill
Lake County School District 20,875,000 2.76%
Grandview Apartments 13,677,000 1.81
Emerald Lakes Mobile Home Park 5,648,000 0.75
Bank of America 4,405,000 0.58
Westminister Nursing Home 3,970,000 0.52
Burger King Restaurant 3,888,000 0.51
South Lake Hospital 3,671,000 0.49
Quincy's Restaurant 3,670,000 0.49
Oakridge Apartments 3,316,000 0.44
SunTrust Bank ~ ~ 4:32
Total 66,093,000 8.74%
Note: [il Percentage of total metered water flow for wastewater billing purposes of approximately 756,534,000 gallons Eor
the 12-month period ending August 1, 2000.
[Remainder of page intentionally left blank]
34
Comparison of Monthly Residential Water and Sewer Bills
RP~idential Servic e fora 5/8" Meter
3,000 7,000 8,000 10,000
lGa Ions 1Sz~-12n,~ 1S~~n~ 1~_1~n~
City of Clermont:
West $20.52 $30.08 $33.37 $38.51
East 28.17 38.57 41.17 46.37
Other Florida Utilities:
Apopka $30.90 $34.34 $35.20 $36.92
Eustis 27.90 39.26 42.10 47.78
Leesburg 25.69 29.01 29.84 31.40
Mt. Dora 21.79 29.11 30.94 34.60
Ocoee 27.39 35.31 37.29 41.25
Orange County 31.61 49.05 53.41 63.13
Orlando 22.43 34.14 37.07 42.92
Tavares 26.27 36.65 37.07 43.71
Umatilla 33.00 36.00 37.00 39.00
Winter Garden 21.80 35.80 39.30 46.30
Winter Haven 25.31 41.31 45.31 53.31
Other Florida Utilities'
Average $26.74 $36.27 $38.59 $43.57
Note: Unless otherwise noted, amounts shown reflect standard residential rates in effect as of October 1999 and are
exclusive of taxes or franchise fees, i f any, and reflect rates charged for service inside the city. All ra tes are as reported by
the respective utility. This comparison is intended to sho w comparable charges for similar service for comparison purposes
only and is not intended to be a com plete listing of all rates and charges offere d by each listed utility .
[Remainder of page intentionally left blank]
35
Comparison of System Impact Fees for One ERU or 5/8" Meter
Water ~w~ T~t~
City of Clermont
East System $921 $2,625 $3,546
West System 417 2,625 3,042
Other Florida Utilities:
Apopka $1,502 $2,458 $3,960
Eusris 2,243 1,547 3,790
Mt. Dora 980 2,010 2,990
Ocoee 9GG 2,865 3,831
Orange County 1,095 2,487 3,582
Orlando - 2,883 2,883
Tavares 1,700 2,100 3,800
Winter Garden (inside City) 1,220 1,600 2,820
Winter Garden (outside City) 1,525 2,000 3,525
Winter Haven (inside City) 500 1,000 1,500
Winter Haven (outside City) 625 1,250 1,875
Other Florida Utilities' Average $1,123 $2,018 $3,141
[Remainder of page intentionally left blank]
3G
Projected Debt Service Coverage
CITY OF CLERMONT, FLORIDA
PROJECTED SYSTEM OPERATING RESULTS AND DEBT SERVICE COVERAGE
Projections for Fiscal_ Year .ndingygptem ber 30
~QQ 2001 2002 24Q~ 2 4 _2Q4~
Operating Revenues
User Rate Revenue
Water -West $810,800 $818,900 $851,900 $860,400 $869,000 $873,400
~Clater -East 715,100 786,600 891,200 980,300 1,078,300 1,164,600
Sewer 1,276,100 1,404,400 1,593,200 1,755,500 1,934,500 2,091,800
Imgation Reuse 42 300 42.300 42.300 42.300 42.300 42.300
Total User Rate Revenue $2,844,300 $3,052,200 $3,378,600 $3,638,500 $3,924,100 $4,172,100
Other Operating Revenues
Meter Sales -West $28,000 $29,200 $29,500 $29,800 $30,100 $15,200
Meter Sales -East 115,000 140,000 154,000 169,500 186,400 164,000
Interest Income 180,000 148,500 166,400 232,600 316,000 403,100
Miscellaneous 75.000 78.800 ~2.Z44 -~G.$44 ! ~5 Z44
Total Other Operating Revenues $398,000 $396,500 $432,600 $518,700 $623,600 $678,000
Total Operating Revenues $3,242,300 $3,448,700 $3,811,200 $4,157,200 $4,547,700 $4,850,100
Operating Expenses
Water $1,026,122 $1,200,800 $1,306,400 $1,415,700 $1,492,500 $1,546,700
Sewer 1.072.386 1.116 400 1.523.700 1 607.100 1.697 300 1.759.400
Total Operating Expenses $2,098,508 $2,317,200 $2,830,100 $3,022,800 $3,189,800 $3,306,100
Net Revenues $1,143,792 $1,131,500 $981,100 $1,134,400 $1,357,900 $1,544,000
Rate Stabilization Fund S --- $410,088 $749,045 $988,353 $1,350,961 $1,898,564
Current Account ~- 574 77 .~ $~$1-f~l~ ~ZZ41~Z ~Z
Balance Available for Debt Service $1,143,792 $2,116,265 $2,419,758 $2,812,366 $3,433,018 $4,211,201
Debt Service
Series 1996 Notes $724,400 $121,017 $ --- $ --- $ --- $ ---
Series 2000 Bonds (Estimated) --- 11 973.205 973 205 1.021 955 1.084.727
Total Debt Service $724,400 $932,020 $973,205 $973,205 $1,021,955 $1,084,727
Balance Available After Debt Ser~7ce $419,392 $1,184,245 $1,446,553 $1,839,161 $2,411,064 $3,126,474
Other (Revenues) Expenses
Capital Outlay $118,298 $122,400 $126,800 $131,300 $135,900 $140,600
Computer 8,706 9,000 9,300 9,600 9,900 10,200
Renewals and Replacements 138,300 151,200 161,500 173,000 182,700 191,600
Transfer to the General Fund 144.000 152.6QQ 160.60Q 174304 -1$4.444 ~4
Total Other (Revenues) Expenses $409,304 $435,200 $458,200 $ 488,200 $ 512,500 $ 537,100
Available for Rate Stabilization Fund $ 10,088 $749,045 $988,353 $1,350,961 $1,898,564 $2,589,374
37
CITY OF CLERMONT, FLORIDA
PROJECTED SYSTEM OPERATING RESULTS AND DEBT SERVICE COVERAGE
(continued)
Proj~tions Eor Fiscal Year Ending~ptember 30
2001 2002 2003 2004 2005
Net Revenues
Rate Stabilization Fund
Current Account
Impact Fees Stabilization Fund
Debt Service -Series 2000 Bonds (Est.)
Debt Service Coverage
PART A
Requirement (i)
Net Revenues
Rate Stabilization Fund
Total
Debt Service -Series 2000 Bonds (Est.)
Projected
Required
AND
Net Revenues
Debt Service -Series 2000 Bonds (Est.)
Projected
Required
OR
PART B
Requirement (i)
Net Revenues
Rate Stabilization Fund
Current Account
Total
Debt Service -Series 2000 Bonds (Est.)
Projected
Required
AND
Net Revenues
Debt Service -Series 2000 Bonds (Est.)
Projected
Required
Source.• Hartman ~' A.r.roaater, Inc.
$1,131,500 $981,100 $1,134,400 $1,357,900 $1,544,000
410,088 749,045 988,353 1,350,961 1,898,564
574,677 689,613 689,613 724,157 768,637
1,073,720 2,038,707 3,184,294 4,497,537 5,462,800
932,020 973,205 973,205 1,021,955 1,084,727
$1,131,500
88 $981,100
045
749 $1,134,400
988353 $1,357,900
961
1
350 $1,544,000
1
898
564
410.0
$1,541,588 .
$1,730,145 $2,122,753 .
.
$2,708,861 .
.
$3,442,564
$932,020 $973,205 $973,205 $1,021,955 $1,084,727
1.65 1.78 2.18 2.65 3.17
1.10 1.10 1.10 1.10 1.10
$1,131,500 $981,100 $1,134,400 $1,357,900 $1,544,000
$932,020 $973,205 $973,205 $1,021,955 $1,084,727
1.21 1.01 1.17 1.33 1.42
1.00 1.00 1.00 1.00 1.00
$1,131,500 $981,100 $1,134,400 $1,357,900 $1,544,000
410,088 749,045 988,353 1,350,961 1,898,564
574.677 689.613 689 613 724.157 768,637
$2,116,265 $2,419,758 $2,812,366 $3,433,018 $4,211,201
$932,020 $973,205 $973,205 $1,021,955 $1,084,727
2.27 2.49 2.89 3.36 3.88
1.20 1.20 1.20 1.20 1.20
$1,131,500 $981,100 $1,134,400 $1,357,900 $1,544,000
$932,020 $973,205 $973,205 $1,021,955 $1,084,727
1.21 1.01 1.17 1.33 1.42
t .00 1.00 1.00 1.00 1.00
38
In the preparation of the projections summarized above, certain assumptions were made with
respect to conditions, which may occur in the future. Although the assumptions are believed by the
Feasibility Consultant to be reasonable for the purpose of the projections, they are dependent upon
future events and actual conditions may differ from those assumed. In addition to the projections and
estimates, certain information and assumptions provided or prepared by others have been used and
relied upon. While believed to be reasonable Eor the purposes of the projections, no further assurances
with respect thereto are offered by the Feasibility Consultant other than for the purpose of the
projections. To the extent that actual conditions differ from those assumed or from information and
assumptions provided or prepared by others, the actual results will vary from those estimated and
projected herein. Such projections are, therefore, subject to adjustment and there are no assurances
that the projections will be realized. The principal considerations and assumptions used on projecting
the operating results include projected increases in user rates and Impact Fees, customer growth and
inflation. For more information relating to such assumptions, see "APPENDIX A--Combined Report
of the Feasibility Consultant and Consulting Engineer" attached hereto.
Conclusions of the Rate Consultant
Based upon the principal considerations and assumptions and the results of their studies and
analyses as described in "APPENDIX A--Combined Report of the Feasibility Consultant and
Consulting Engineer" attached hereto, the Feasibility Consultant is of the opinion that:
Financial and customer service activities for the System are well managed and adequate
Eor the projection period illustrated in the Report.
2. Historical operating results reflect favorably on the System.
The existing and projected System customers are sufficient to generate the revenues
required to meet the projected fiscal requirements, including debt service coverage,
utilizing existing and project System reserves as noted in the Report.
4. The projected growth in customers and usage of the System represent reasonable
projections for the purposes of the Report.
The water and sewer rates are reasonable and comparable to those of neighboring
utilities.
The Impact Fees are reasonable and comparable to the fees charged by neighboring
utilities.
The projected revenues for the fiscal years ending September 30, 2001 through 2005
under the City's water and sewer rates, including the application of annual rate
adjustments as shown in the Report, will be sufficient to: (i) pay all projected operating
and maintenance expenses; (ii) make the estimated debt service payments on the Series
2000 Bonds; (iii) allow for projected deposits to the Renewal and Replacement Fund,
the Rate Stabilization Fund and the Impact Fees Stabilization Fund; (iv) meet the rate
covenant in the Resolution; and (v) cover projected capital requirements.
39
The projected revenues and operating and maintenance expenses are reasonable based
on the System historical data, City's rates, input from City staff and the Feasibility
Consultants' experience with similar utilities.
The projected debt service coverage of the System is in compliance with the covenant
contained in the Resolution.
10. It is projected that all necessary capital improvements to the System through the five-
year projection period ending September 30, 2005 will be satisfied without any further
borrowing by the City. Such capital improvement plan is sufficient to meet the
anticipated water and sewer service demands of the System customers through the end
of fiscal year 2005.
11. Nothing has come to the attention of the Feasibility Consultant that would adversely
affect the continued operating and financial condition of the System.
Based upon the principal considerations and assumptions and the results of their studies and
analyses as described in "APPENDIX A--Combined Report of the Feasibility Consultant and
Consulting Engineer" attached hereto, the Consulting Engineer is of the opinion that:
The System is well managed and maintains adequate management and staff to meet
operating and service requirements.
2. The projected ERA growth is reasonable based on historical trends and observation of
current activities.
3. Based upon field observation, intended use, age and existing information available, the
water and sewer supply, treatment, storage, transmission, distribution, collection and
disposal facilities are in average to good condition.
4. It is anticipated that the major facilities constructed from the proceeds of the Series
2000 Bonds are expected, with scheduled maintenance and renewal and replacement,
to have a useful life consistent with the term of Series 2000 Bonds.
5. The existing facilities, together with capital improvements constructed from the
proceeds of the Series 2000 Bonds, will provide adequate reserve capacity for projected
customer growth.
6. The City has, or is expected to, obtain all necessary permits to construct and operate
facilities to be constructed from the proceeds of the Series 2000 Bonds.
7. The cost estimates associated ~vith the improvements anticipated to be constructed
from the proceeds of the Series 2000 Bonds are reasonable.
40
The City is operating all of its water production and wastewater treatment facilities
pursuant to unexpired permits issued by the requisite regulatory agencies. The City is
current in all permit renewals.
Nothing has come to the attention of the Consulting Engineer that would adversely
affect the continued operating and financial condition of the System, including but not
limited to compliance with regulatory agencies.
10. The capital improvements included in the Report will provide the City with adequate
reserve capacity for growth in customer connections.
RISK FACTORS
The future financial condition of the System could be affected adversely by, among other
things, legislation, environmental and other regulatory actions as set forth above, changes in demand
for services, economic conditions, demographic changes, and litigation. In addition to those items
listed above, some of the possible changes in the future may include, but not be limited to, the
following:
The City's water and sewer Facilities are subject to regulation and control by numerous
federal, state and local governmental agencies. Neither the City nor its consultants can
predict future policies such agencies may adopt. Future changes could result in the City
having to discontinue operations at certain facilities or to make signiEcant capital
expenditures and could generate substantial litigation.
2. Estimates of revenues and expenses contained in this Official Statement and the
realization of such estimates, are subject to, among other things, future economic and
other conditions which are unpredictable and which may adversely affect such revenues
and expenses, and in turn, the payment of the Series 2000 Bonds.
INVESTMENT POLICY
The City's investment and reporting policy which was approved and adopted by City Council
on September 24, 1996, applies to all financial assets ("City Funds") of the City, with the exception of
Pension Funds, Trust Funds, and Funds related to the issuance of debt where there are other existing
policies or indentures in effect for such funds. See "SECURITY AND SOURCES OF PAYMENTS
FOR THE BONDS -- Investments" herein for a description of permitted investments of Funds and
Accounts created by the Resolution. Funds held by state agencies (e.g. State of Florida) are not subject
to the provisions of such policy.
In accordance with the municipal charter of the City, the responsibility for providing oversight
and direction in regard to the management of the investment program resides with the City Manager.
Management responsibility for all City Funds in the investment program and investment transactions
are delegated to the Finance Director.
41
Authorized City staff only purchase securities Erom financial institutions which are qualified as
public depositories by the Treasurer of the State of Florida or from primary securities dealers as
designated by the Federal Reserve Bank of New York.
Repurchase agreements can only be entered into with primary securities dealers as designated
by the Federal Reserve Bank of New York and financial institutions which are state qualified public
depositories.
Permitted investment of City Funds include the following:
A. The Florida Local Government Surplus Funds Trust Fund (SBA)
B. United States Government Securities
C. United States Government (full faith and credit of the United States Government)
D. Federal Instrumentalities (United States Government sponsored agencies which are
non-full faith and credit)
1. Federal Farm Credit Bank (FFCB)
2. Federal Home Loan Bank or its district banks (FHLB)
3. Federal National Mortgage Association (FNMA)
4. Federal Home Loan Mortgage Corporation (Freddie-Macs) including Federal
Home Loan Mortgage Corporation participation certificates
5. Student Loan Marketing Association (Sallie-Mae)
E. Non-Negotiable Interest Bearing Time Certificates of Deposit
F. Repurchase Agreements. The maximum length to maturity of any repurchase
agreement is 60 days from the date of purchase.
G. Commercial Paper
H. State and/or Local Government Taxable and/or Tax-Exempt Debt which is rated at
least "Aa" by Moody's and "AA" by Standard & Poor's for long-term debt, or rated at
least MIG-2 by Moody's and SP-2 by Standard & Poor's for short-term debt
I. Fixed Income Money Market Mutual Funds
To the extent possible, an attempt shall be made to match investment maturities with known
cash needs and anticipated cash flow requirements.
The City may revise the aforementioned investment policy from time to time.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Series 2000 Bonds are subject to
an approving legal opinion of Foley & Lardner, Jacksonville, Florida, Bond Counsel, whose approving
opinion (a Eorm of which is attached hereto as APPENDIX F) will be available at the time of delivery
of the Series 2000 Bonds. The actual legal opinion to be delivered may vary from that text if necessary
to reflect facts and law on the date of delivery. The opinion will speak only as of its date, and
subsequent distribution of it by recirculation of the Official Statement or otherwise shall create no
implication that subsequent to the date of the opinion Bond Counsel has reviewed or expresses any
opinion concerning any of the matters referenced in the opinion. Certain legal matters will be passed
42
on for the City by Robert D. Guthrie, Esq., City Attorney, Clermont, Florida. Certain legal matters
will be passed on for the Underwriter by Bryant, Miller and Olive, P.A., Tampa, Florida.
LITIGATION
There is no pending or, to the knowledge of the City, any threatened litigation against the City
of any nature whatsoever which in any way questions or affects the validity of the Series 2000 Bonds,
or any proceedings or transactions relating to their issuance, sale, execution, or delivery, or the adoption
of the Resolution, or the pledge of the Pledged Funds. Neither the creation, organization or existence,
nor the title of the present members of the City Council, or other officers of the City is being
contested.
The City experiences claims, litigation, and various legal proceedings which individually are not
expected to have a material adverse effect on the operations or financial condition of the System or
the City, but may, in the aggregate, have a material impact thereon. In the opinion of the City
Attorney, however, the City will either successfully defend such actions or otherwise resolve such
matters without any material adverse consequences on the financial condition of the System or the City.
DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS
Pursuant to Section 517.051, Florida Statutes, as amended by Chapter 87-316, Laws of Florida,
no person may directly or indirectly offer or sell securities of the City except by an offering circular
containing full and fair disclosure of all defaults as to principal or interest on its obligations since
December 31, 1975, as provided by rule of the Florida Department of Banking and Finance (the
"Department"). Pursuant to Rule 3E-400.003, Florida Administrative Code, the Department has
required the disclosure of the amounts and types of defaults, any legal proceedings resulting from such
defaults, whether a trustee or receiver has been appointed over the assets of the City, and certain
additional financial information, unless the City believes in good faith that such information would not
be considered material by a reasonable investor. The City is not and has not been in default on any
bond issued since December 31, 1975 which would be considered material by a reasonable investor.
TAX EXEMPTION
Federal Tax Matters
The Internal Revenue Code of 1986, as amended (the "Code"), contains a number of
requirements and restrictions which may apply to the Series 2000 Bonds, including investment
restrictions, a requirement of periodic payments of arbitrage profits to the United States, requirements
regarding the use of bond proceeds and the facilities financed therewith, and certain other matters. The
City has covenanted to comply with all requirements of the Code that must be satisfied in order for
the interest on the Series 2000 Bonds to be excluded from gross income for federal income tax
purposes. Failure to comply with certain of such requirements could cause interest on the Series 2000
Bonds to be included in gross income retroactive to the date of issuance of the Series 2000 Bonds.
43
Subject to the condition that the City comply with the pertinent requirements of the Code,
under existing law, in the opinion of Bond Counsel, interest on the Series 2000 Bonds will be excluded
from the gross income of the owners thereof for federal income tax purposes and will not be treated
as an item of tax preference in computing the alternative minimum tax for individuals and corporations.
Reference is made to a proposed form of the Bond Counsel opinion attached hereto as APPENDIX F
for the complete text thereof.
In rendering the opinion, Bond Counsel will rely upon certificates of the City with respect to
certain material facts relating to the property financed with the proceeds of the Series 2000 Bonds and
the application of the proceeds of the Series 2000 Bonds.
The Code contains numerous provisions which could affect the economic value of the Series
2000 Bonds to certain owners of the Series 2000 Bonds. The following is a brief summary of some of
the significant provisions that may be applicable to particular owners of the Series 2000 Bonds.
Prospective owners of the Series 2000 Bonds, however, should consult their own tax advisors with
respect to the impact of such provisions on their own tax situations.
The Series 2000 Bonds will not be "qualified tax-exempt obligations" within the meaning of
Section 265(6) of the Code. Interest on indebtedness incurred or continued to purchase or carry the
Series 2000 Bonds or, in the case of banks and certain other financial institutions, interest expense
allocable to interest on the Series 2000 Bonds, will not be deductible for federal income tax purposes.
Insurance companies (other than life insurance companies) are required to reduce the amount
of their deductible underwriting losses by 15% of the amount of tax-exempt interest received or
accrued on certain obligations, including the Series 2000 Bonds, acquired after August 7, 1986. If the
amount of this reduction exceeds the amount otherwise deductible as losses incurred, such excess may
be includable in income. Life insurance companies are subject to similar provisions under which
taxable income is increased by reason of receipt or accrual of tax-exempt interest, such as interest on
the Series 2000 Bonds.
Interest on the Series 2000 Bonds must be included in the "adjusted earnings" of corporations
(other than S corporations, regulated investment companies, teal estate investment trusts and
REMICs), and the alternative minimum taxable income of such corporations must be increased by 75%
of the excess of adjusted current earnings over alternative minimum taxable income (determined
without regard to this adjustment and prior to reduction for certain net operating losses).
Certain recipients of social security benefits and railroad retirement benefits are required to
include a portion of such benefits in gross income by reason of the receipt or accrual of interest on tax-
exempt obligations, such as the Series 2000 Bonds.
For foreign corporations that operate branches in the United States, Section 884 of the Code
imposes a branch level tax on certain earnings and profits in tax years beginning after 1986. Interest
on tax-exempt obligations, such as the Series 2000 Bonds, may be included in the determination of such
domestic branches' taxable base on which this tax is imposed.
44
Passive investment income, including interest on the Series 2000 Bonds, may be subject to
federal income taxation under Section 1375 of the Code Eor S corporations that have subchapter C
earnings and profits at the close of the taxable year if greater than 25% of the gross receipts of the
S corporation consists of passive investment income.
From time to time, legislative proposals are pending in Congress that if enacted would alter or
amend one or more of the federal tax matters referred to above in certain respects or would adversely
affect the market value of the Series 2000 Bonds. It cannot be predicted whether or in what form any
such proposals, either pending or that could be introduced, may be enacted and there can be no
assurance that such proposals will not apply to the Series 2000 Bonds.
Florida Tax Matters
It is also the opinion of Bond Counsel that, under existing law, the Series 2000 Bonds and the
interest thereon are exempt from taxation under the laws of the State of Florida, except as to estate
taxes and taxes on interest, income or profits on debt obligations owned by corporations, as defined
in Chapter 220, Florida Statutes, as amended.
Original Issue Discount
In the opinion of Bond Counsel, under existing law, the original issue discount in the selling
price of each Series 2000 Bond maturing in ,and (the
"Discount Bonds"), to the extent properly allocable to each owner of a Discount Bond, is excluded
from gross income for federal income tax purposes to the same extent that any interest payable on
such Discount Bond is or would be excluded from gross income for federal income tax purposes. The
original issue discount is the excess of stated redemption price at maturity of such Discount Bond over
the initial offering price to the public, excluding underwriters or other intermediaries, at which price
a substantial amount of such Discount Bonds were sold (the "issue price").
Under Section 1288 of the Code, original issue discount on tax-exempt bonds accrues on a
compound basis. The amount of original issue discount that accrues to an owner of a Discount Bond
during any accrual period generally equals (i) the issue price of such Discount Bond plus the amount
of original issue discount accrued in all prior accrual periods multiplied by (ii) the yield to maturity of
such Discount Bond (determined on the basis of compounding at the close of each accrual period and
properly adjusted for the length of each accrual period), less (iii) any interest payable on such Discount
Bond during such accrual period.
The amount of original issue discount so accrued in a particular accrual period will be
considered to be received ratably on each day of the accrual period, and will increase the owner's tax
basis in such Discount Bond. The adjusted tax basis in a Discount Bond will be used to determine
taxable gain or loss upon a disposition (e.g., upon a sale, exchange, redemption, or payment at maturity)
of such Discount Bond.
If a Discount Bond is purchased For a cost that exceeds the sum of the issue price plus accrued
interest and accrued original issue discount, the amount of original issue discount that is redeemed to
45
accrue thereafter to the purchaser is reduced by an amount that reflects amortization of such excess
over the remaining term of such Discount Bond.
As described above regarding tax-exempt interest, a portion of the original issue discount that
accrues in each year to an owner of a Discount Bond may result in certain collateral federal income tax
consequences. In the case of a corporation, such portion of the original issue discount will be included
in the calculation of the corporation's alternative minimum tax liability and the branch profits tax
liability. Corporate owners of any Discount Bonds should be aware that the accrual of original issue
discount in each year may result in an alternative minimum tax liability or a branch profits tax liability
although the owners of such Discount Bonds will not receive a corresponding cash payment until a
later year.
Owners of Discount Bonds who did not purchase such Discount Bonds in the initial offering
at the issue price should consult their own tax advisors with respect to the tax consequences of owning
such Discount Bonds.
Owners of Discount Bonds should consult their own tax advisors with respect to the state and
local tax consequences of the Discount Bonds. It is possible that under the applicable provisions
governing the determination of state and local income taxes, accrued original issue discount on the
Discount Bonds may be deemed to be received in the year of accrual, even though there will not be
a corresponding cash payment until a later year.
Original Issue Premium
Each of the Series 2000 Bonds maturing in ,and (the
"Premium Bonds") has an issue price that is greater than the amount payable at maturity of such
Bonds. Any Premium Bond purchased in the initial offering at the issue price will have "amortizable
bond premium" within the meaning of Section 171 of the Code. A holder of a Premium Bond that
has amortizable bond premium is not allowed any deduction for the amortizable bond premium.
During each taxable year, such a holder must reduce his or her tax basis in such Premium Bond by the
amount of the amortizable bond premium that is allocable to the portion of such taxable year during
which the holder held such Premium Bond. The adjusted tax basis in a Premium Bond will be used
to determine taxable gain or loss upon a disposition (e.g., upon a sale, exchange, redemption, or
payment at maturity) of such Premium Bond.
Holders of Premium Bonds who did not purchase such Premium Bonds in the initial offering
at the issue price should consult their own tax advisors with respect to the tax consequences of owning
such Premium Bonds. Holders of Premium Bonds should consult their own tax advisors with respect
to the state and local tax consequences of the Premium Bonds.
RATINGS
Moody's Investor Service ("Moody's'~ and Standard & Poor's Ratings Group, a division of The
McGraw Hill Companies, Inc. ("S&P'~ have assigned their municipal bond ratings of "Aaa" and "Aaa,"
respectively, to the Series 2000 Bonds with the understanding that upon delivery of the Series 2000
46
Bonds, the Bond Insurance Policy insuring the timely payment of the principal and interest on the
Series 2000 Bonds will be issued by the Insurer. The ratings reflect only the views of said rating
agencies and an explanation of the ratings may be obtained only from said rating agencies. There is no
assurance that such ratings will continue for any given period of time or that they will not be lowered
or withdrawn entirely by the rating agencies, or any of them, if in their judgment, circumstances so
warrant. A downward change in or withdrawal of any of such ratings, may have an adverse effect on
the market price of the Series 2000 Bonds. An explanation of the significance of the ratings can be
received from the rating agencies, at the following addresses: Moody's Investor Service, 99 Church
Street, New York, New York, 10007 and Standard & Poor's Ratings Services, 25 Broadway, New York,
New York 10004.
FINANCIAL ADVISOR
The Ciry has retained Public Financial Management, Inc., Fort Myers, Florida, as Financial
Advisor (the "Financial Advisor") in connection with preparation of the City's plan of financing and
with respect to the authorization and issuance of the Series 2000 Bonds. The Financial Advisor is not
obligated to undertake and has not undertaken to make, an independent verification or to assume
responsibility for the accuracy, completeness or fairness of the information contained in the Official
Statement. Public Financial Management, Inc. is a financial advisory and consulting organization and
is not engaged in the business of underwriting, marketing or trading of municipal securities or any other
negotiable instruments.
INDEPENDENT ACCOUNTANTS
The Audited Financial Statements of the City as of September 30, 1999, and for the year then
ended, have been audited by Greenlee, Kurras, Rice & Brown, PA, Mount Dora, Florida (the
"Independent Certified Public Accountants") as stated in their report included in APPENDIX C
attached hereto. The Independent Certified Public Accountants have consented to the use of such
report herein.
UNDERWRITING
The Series 2000 Bonds are being purchased by PaineWebber Incorporated (the "Underwriter")
at an aggregate purchase price of $ (which includes net original issue discount of
$ and Underwriter's discount of $ ), plus accrued interest. The Underwriter's
obligations are subject to certain conditions precedent, and it will be obligated to purchase all of the
Series 2000 Bonds if any Series 2000 Bonds are purchased. The Series 2000 Bonds may be offered and
sold to certain dealers (including dealers depositing such Series 2000 Bonds into investment trusts) at
prices lower than such public offering prices, and such public offering prices may be changed, from
time to time, by the Underwriter.
The Underwriter has reviewed the information in this Official Statement in accordance with
and, as part of its responsibilities to investors under the federal securities laws as applied to the facts
47
and circumstances of this transaction, but the Underwriter does not guaranty the accuracy or
completeness of such information.
EXPERTS AND CONSULTANTS
The references herein to Hartman & Associates, Inc., Orlando, Florida, as the Feasibility
Consultant and Tamara Richardson, City Engineer, City of Clermont, as the Consulting Engineer, have
been approved by each. The combined Report of such entities has been included as APPENDIX A
to this Official Statement in reliance upon such Report and upon such entities as experts in rate analysis
and engineering, respectively. References to and excerpts herein from such Report does not purport
to be adequate summaries of such Report or complete in all respects. Such Report is an integral part
of this OfEcial Statement and should be read in their entirety for complete information with respect
to the subjects discussed therein.
CONTINGENT FEES
The City has retained Bond Counsel and the Financial Advisor, with respect to the
authorization, sale, execution and delivery of the Series 2000 Bonds. Payment of the fees of such
professionals and a discount to the Underwriter (which includes the fees of Underwriter's Counsel) are
each contingent upon the issuance of the Series 2000 Bonds.
ENFORCEABILITY OF REMEDIES
The remedies available to the owners of the Series 2000 Bonds upon an event of default under
the Resolution and the Bond Insurance Policy are in many respects dependent upon judicial actions
which are often subject to discretion and delay. Under existing constitutional and statutory law and
judicial decisions, including specifically the Federal Bankruptcy Code, the remedies specified by the
Resolution, the Series 2000 Bonds and the Bond Insurance Policy may not be readily available or may
be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2000
Bonds (including Bond Counsel's approving opinion) will be qualified, as to the enforceability of the
'remedies provided in the various legal instruments, by limitations imposed by bankruptcy,
reorganization, insolvency or other similar laws affecting the rights of creditors enacted before of after
such delivery. See "APPENDIX D -- Form of the Resolution" attached hereto for a description of
events of default and remedies.
CONTINUING DISCLOSURE
The City has covenanted for the benefit of the Series 2000 Bondholders to provide certain
financial information and operating data relating to the City and the Series 2000 Bonds in each year,
and to provide notices of the occurrence of certain enumerated material events. The City has agreed
to file annual financial information and operating data and the audited financial statements with each
nationally recognized municipal securities information repository then approved by the Securities and
-I8
Exchange Commission (the "NRMSIRs"), as well as any state information depository that is established
in the State (the "SID"). Currently, there are no such SIDs. The City has agreed to file notices of
certain enumerated material events, when and if they occur, with the NRMSIRs or the Municipal
Securities Rulemaking Board, and with the SIDs, if any.
The specific nature of the financial information, operating data, and of the type of events which
trigger a disclosure obligation, and other details of the undertaking are described in "APPENDIX G
--Form of Continuing Disclosure Certificate" attached hereto. The Continuing Disclosure Certificate
shall be executed by the City prior to the issuance of the Series 2000 Bonds. These covenants have
been made in order to assist the C;nderwriter in complying with the continuing disclosure requirements
of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the "Rule").
With respect to the Series 2000 Bonds, no parry other than the City is obligated to provide, nor
is expected to provide, any continuing disclosure information with respect to the Rule. The City has
never failed to comply with any prior agreements to provide continuing disclosure information
pursuant to the Rule.
ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT
The references, excerpts, and summaries of all documents, statutes, and information concerning
the City and certain reports and statistical data referred to herein do not purport to be complete,
comprehensive and definitive and each such summary and reference is qualified in its entirety by
reference to each such document for full and complete statements of all matters of fact relating to the
Series 2000 Bonds, the security for the payment of the Series 2000 Bonds and the rights and obligations
of the owners thereof and to each such statute, report or instrument.
Any statements made in this Official Statement involving matters of opinion or of estimates,
whether or not so expressly stated are set forth as such and not as representations of fact, and no
representation is made that any of the estimates will be realized. Neither this Official Statement nor
any statement that may have been made verbally or in writing is to be construed as a contract with the
owners of the Series 2000 Bonds.
The appendices attached hereto are integral parts of this Official Statement and must be read
in their entirety together with all foregoing statements.
AUTHORIZATION OF OFFICIAL STATEMENT
The execution and delivery of this Official Statement has been duly authorized and approved
by the City. At the time of delivery of the Series 2000 Bonds, the City will furnish a certificate to the
effect that nothing has come to their attention which would lead them to believe that the Official
Statement (other than information herein related to the Insurer, the Bond Insurance Policy, DTC, the
book-entry only system of registration and the information contained under the caption "TAX
E_XE~iPTION" as to which no opinion shall be expressed), as of its date and as of the date of delivery
of the Series 2000 Bonds, contains an untrue statement of a material Eact or omits to state a material
49
fact which should be included therein for the purposes Eor which the Official Statement is intended to
be used, or which is necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
sy:
CITY OF CLERMONT, FLORIDA
Mayor
City Manager
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APPENDIX B
GENERAL INFORMATION CONCERNING THE CITY OF CLERMONT, FLORIDA
The Area
The City of Clermont occupies about 11.26 square miles and is located in south Lake County,
Florida (the "County"), about 22 miles west of Orlando on Highway 50 in the central highlands region
of Florida and is about equidistant from the Atlantic Ocean and the Gulf Coast. The average elevation
is 80 feet above sea level with the maximum elevation of up to 307 feet. The area around the City has
many miles of lakes and rivers. Lake Griffin provides direct access to the Atlantic Ocean Via the St.
Johns River.
Climate
The mean daily high temperature is 82 degrees and the mean low temperature is 63 degrees.
Year round temperatures in the area average in the 70's. Average annual yearly rainfall is 51.2 inches.
The average relative humidity is 60%.
Recreation and Tourism
There are many golf courses in and within close proximity to the County. In addition, with
many lakes nearby, fishing, boating and water sports are popular recreational activities. The City is the
largest financial supporter of a private library that serves City residents and residents of the surrounding
area.
Lake County
The County is a noncharter county established in 1887 and located in Central Florida between
Orlando and Ocala. The County benefits from a spillover effect being a part of the Orlando
Metropolitan Statistical Area (MSA) which is just southeast of the County. The County encompasses
1,163 square miles of land and more than 1,400 recorded lakes, rivers and canals, covering 202 square
miles. Interstate 75 connects with State Road 40 to 50, U.S. 441 and 27, and the Florida State Turnpike
passes through the County. Within the County's borders are fourteen municipalities.
Population
The County's population has increased from 152,104 in 1990 to 203,845 in 1999, an increase
of 34% according to recent statistics from the Florida Statistical Abstract & Bureau of Economic
Business Research Gainesville. The City's population has increased from 6,910 in 1990 to 8,861 in
1999, an increase of 28.2% according to recent statistics Erom the Florida Statistical Abstract & Bureau
of Economic Business Research Gainesville. This compares to a 32.7% increase Eor Florida and a 9.8%
increase for the nation.
Appendix B-1
POPULATION TRENDS
Annual Annual
Average Average
Lake Percentage State of Percentage
Year un Increase Florida Increase
1994 171,168 - 13,878,905 -
1995 176,931 3.37% 14,149,317 1.95%
1996 182,218 2.99% 14,411,563 1.85%
1997 188,331 3.35% 14,712,922 2.09%
1998 195,978 4.06% 15,000,475 1.95%
1999 203,863 4.43% 15,322,040 2.14%
2000* 206,500 1.29% 15,524,500 1.32%
2005* 232,000 12.35%** 16,773,400 8.05%**
* Projections
** Five-year percentage increase
Source: Bureau of Economic and Business Research, University of Florida, and Lake County Planning
Department
City of Clermont, Florida
Demographic Statistics
Last Ten Fiscal Years
(2)
(1) School
Year Population Enrollment
1990 6,910 1,897
1991 6,910 1,975
1992 6,930 2,169
1993 7,013 1,482
1994 7,174 1,629
1995 7,233 1,787
1996 7,291 2,381
1997 7,582 2,180
1998 8,202 2,412
1999 8,861 3,683
Data Sources:
(1) College of Business Administration, University of Florida -Bureau of Economic and
Business Research.
(2) Figures represent Grades K-19 in Public Schools.
Source -Lake County School Board
Appendix B-2
PERCENTAGE OF POPULATION BY AGE GROUP
Lake State of
Aug Coun Percent Florida Percent
0-14 30,732 16.3% 2,822,554 19.2%
15-44 58,866 31.2% 5,982,790 40.7%
45-64 44,007 23.4% 3,196,356 21.7%
65+ 54,726 29.1% 2,711,222 18.4%
Source: Bureau of Economic and Business Research, 1998 Florida Statistical Abstract (Est. -April 1,
1997)
Local and State Taxes
Florida has no individual state income tax although a corporate income tax is imposed.
Inheritance tax is confined to the amount allowed as a credit to the State from the tax levied by the
United States government. The 6% State sales tax applies to all items except groceries and medicines.
Under the Florida Homestead Exemption law, no municipal or county taxes are levied against
the first X25,000 of valuation of a home occupied by its owners except for special assessments. It is
a state law that all tax appraisals must be at 100% of value.
The Board of Commissioners of Lake County, the School Board of Lake County and the City
Council are each limited by the Constitution of Florida to an ad valorem tax levy of 10.0 mills per
X1,000 of assessed value for operating expenditures.
(Remainder of page intentionally left blank]
Appendix B-3
Property Tax Rates -Direct and Overlapping Governments
(Per $1,000 of Assessed Value)
Last Ten Fiscal Years
City of
Clermont Lake County School District
Fiscal Year(11 Millage Rate Millagee Ratel2) Millage Rate
1994-1995 2.979 5.135 8.515
1995-1996 2.979 4.927 9.678
1996-1997 2.979 4.909 9.228
1997-1998 2.979 4.733 9.100
1998-1999 2.979 4.733 9.190
(1) Fiscal year is equivalent to preceding tax year. For example, fiscal year 1998-1999 corresponds
to tax assessment year 1999.
(2) Millage Rate that is applied county-wide; additional millage is imposed by the County in various
parts of the County.
Source: Lake County, Florida Comprehensive Annual Financial Report, Fiscal Year ended
September 30, 1999; City of Clermont, Florida Comprehensive Annual Report, Fiscal
Year ended September 30, 1999
The following tables set forth the taxable assessed property valuations and the property tax
levies and collections for the County Eor the last ten fiscal years.
TAXABLE ASSESSED PROPERTY VALUATIONS
Real Property Personal Centrally Assessed Total Taxable
Fiscal Assessed Property Property Assessed Property
Year Valuations Assessed Valuations Valuation Valuation
1989-90 $2,842,381,900 $488,517,532 $3,013,793 $3,333,913,225
1990-91 3,080,744,507 538,458,517 3,245,484 3,622,448,508
1991-92 3,480,863,456 635,628,359 2,826,098 4,119,317,913
1992-93 3,621,147,219 649,780,932 2,443,773 4,273,371,924
1993-94 3,825,896,856 692,045,241 2,126,516 4,519,268,613
1994-95 4,097,974,722 768,041,176 2,475,038 4,868,490,936
1995-96 4,423,650,486 818,915,796 2,821,616 5,245,387,898
1996-97 4,627,450,425 844,873,368 3,074,530 5,475,398,323
1997-98 4,966,480,786 917,800,067 3,438,006 5,887,718,859
1998-99 5,394,788,622 947,508,431 4,030,565 6,346,327,618
Source: Office of the Property Appraiser, Lake County, Florida
Appendix B-4
PROPERTY TAX LEVIES AND COLLECTIONS
Percent
Total Current Percent Delinquent Total Of Total
Fiscal Tax Tax Of Levy Tax Tax Collections
Year Lew Collections Collected Collections Collections To Lew
1989-90 $18,730,150 $17,858,865 95.3% $14,272 $17,873,137 95.4`'~l~
1990-91 20,095,004 19,137,963 95.2 206,787 19,344,750 96.3~'~
1991-92 21,116,329 20,114,968 95.3 65,437 20,180,405 95.6~2~
1992-93 21,593,510 20,685,120 95.8 215,640 20,900,760 96.8`2
1993-94 24,068,491 23,117,883 96.1 147,352 23,265,235 96.7~2~
1994-95 25,946,463 24,843,858 95.8 316,774 25,160,602 97.0~'~
1995-96 26,761,060 25,546,544 95.5 167,078 25,713,622 96.1"
1996-97 27,556,669 26,313,178 95.5 180,945 26,494,123 96.1~4~
1997-98 28,584,267 27,289,014 95.5 97,291 27,386,305 95.8~4~
1998-99 31,323,970 29,953,579 95.6 535,191 30,488,770 97.3~4~
~'~ These figures include property tax levies of the General County, Northeast Hospital District,
Northeast Ambulance District, Northwest Ambulance District and the Greater Hills Municipal
Service Taxing Unit.
~2> These figures include property tax levies of the General County, Northeast Ambulance District,
Iv'orthwest Ambulance District, and the Greater Hills Municipal Service Taxing Unit.
~'> These figures include property tax levies of the General County, Lake County Ambulance
District, and the Greater Hills Municipal Service Taxing Unit.
(4) These figures include property tax levies of the General County and Lake County Ambulance
District.
NOTE: Property Taxes become due and payable on November 1st of each year. A four (4)
percent discount is allowed if the taxes are paid in November, with the discount declining by one (1)
percent each month thereafter. Accordingly, taxes collected will never be 100 percent of the tax levy.
Taxes become delinquent on April 1st of each year and tax certificates for the full amount of any unpaid
Real Property taxes and assessments must be sold not later than June 1st of each year.
Source: Office of the Property Appraiser, Lake County, Florida
[Remainder of page intentionally left blank]
Appendix B-5
Lake County Schools
Within a sixty mile radius the County has six major institutions of higher learning: University
of Central Florida, University of Florida, Rollins College, St. Leo College and Stetson University. Lake
Sumter Community College, located east of Leesburg, offers two-year associate degrees in the arts,
sciences, business and technical subjects. The Lake County School District operates Eorty-four schools:
twenty-two elementary, nine middle, six high, one exceptional education, one charter, four special, and
one vocational/technical school. For the 1999 school year a total of 28,230 were enrolled.
Medical Facilities
The County has five hospitals with a total short-term patient capacity of more than 680 beds,
one Hospice, 121icensed home health care agencies, four resident treatment facilities with approximately
76 beds and 11 nursing homes with an approximate total of 1,316 beds.
Employment
Unemployment Rates
Lake County, Florida and the United States
1990-1999
Fiscal Year Cow S National
1990 8.0 5.9 5.8
1991 8.3 7.3 6.7
1992 8.7 8.2 7.4
1993 6.9 7.0 6.8
1994 6.6 6.6 6.1
1995 5.0 5.3 5.6
1996 5.2 5.1 5.4
1997 3.1 4.8 4.9
1998 2.2 4.3 4.5
1999(1) 2.7 3.9 4.2
(1) As of April 1999.
Sources: Florida Department of Labor and Employment Security, Office of Labor Market
Information, Florida Department of Labor, Bureau of Labor Market Info.
Economy
Although recent freezes have severely damaged the local citrus industry, agriculture is still
important to the economy.
Appendix B-6
The services sector of the County's economy is the largest employer in the County. In 1998
over half of the total non-farm employment (67.1%) was in two industry divisions, services (36.4%) and
wholesale and retail trade (30.7%).
Employment by Major Industry Group
State of Florida and Lake County
1997-1998
S ate of Florida Lake Count
°/a
Chan ~
Services 2,093,337 2,210,111 5.6% 17,413 17,871 2.6%
Retail Trade 1,294,388 1,324,769 2.3 13,024 13,319 2.3
Manufacturing 489,549 493,015 0.7 4,488 4,632 3.2
Agriculture,
forestry and
fisheries 153,443 155,668 1.5 3,207 2,895 (10.8)
Construction 331,900 348,345 5.0 4,090 4,756 16.3
Finance, Insurance
and Real Estate 396,896 423,391 6.7 3,416 4,100 20.0
Transportation,
Commerce and
Public Utilities 314,597 328,892 4.5 2,065 2,076 0.5
Wholesale Trade 347,097 357,208 2.9 1,611 1,759 9.2
dining 6,528 6,729 3.1 339 374 10.3
Other 25,473 29,961 17.6 106 224 111.3
Total Industries 5,453,208 5,678,089 4.1 49,759 52,006 4.5
Source: Florida Statistical Abstract, 1999
[Remainder of page intentionally left blank]
Appendix B-7
Manufacturing accounts for a small share of the County's economy (10.1%). Listed below are
the ten largest industrial employers in the County as of September 30, 1999:
Ten Largest Industrial Employers
Lake County, Florida
Number of
Em.~yees
Dura Stress, Inc. 1,000
1~(etro Building Supply, Inc. 1,000
Golden Gem Growers 629
Florida Crushed Stone 600
Cutrale Citrus Juices USA 250
White Aluminum Products 180
Florida Medical Industries 150
Silver Springs Citrus Co-op(1) 144
Aluminum Building Systems, Inc. 139
Mercer Products 122
(1) Includes seasonal employees.
Source: Mid-Florida Economic Development Commission.
Personal Income
The following financial indexes are presented to compare personal income in the County with
the State of Florida and the United States.
Per Capita Amounts on Place-of-Residence Basis
United States, Florida and Lake County
1993-1997
(Rounded to dollars)
1~~ 1~ 1` 1` 2
United States $20,809 $22,045 $23,196 $24,164 $25,288
Florida 23,583 23,930 24,713 25,659 26,707
Lake County 19,382 19,632 20,095 20,631 21,142
Source: Florida Statistical Abstract, 1999.
appendix B-8
Personal Income by Industry Classification
Lake County
1996-1997
(in thousands)
In
Manufacturing
Construction
Transportation, Communications
and Utilities
Retail Trade
Wholesale Trade
Finance, Insurance and Real Estate
Services
Mining
Other private industry(1)
Total
1_9~z 1997 °o h n
142,563 136,687 (4.1%)
140,643 157,719 12.1
92,653 92,103 (0.6)
210,659 232,332 10.3
55,214 58,349 5.7
101,620 112,052 10.3
490,038 519,879 6.1
9,873 11,063 12.1
31,667 30,090 (5.0)
1,274,930 1,350,274 5.9
(1) Includes agricultural services, Forestry, fisheries and other.
Source: Florida Statistical Abstract, 1999.
[Remainder of page intentionally left blank]
Appendix B-9
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City of Clermont, Florida
Largest Employers
Employer
Lake County School District
South Lake Hospital
Westminister Care of Clermont
City of Clermont
CBS Industries
Public
Kmart
Exceletech, Inc.
Rolling Hills Ford
Winn Dixie
Number of
In Em}2loyees
Education 221
Health Care 216
Retirement and Nursing 120
Municipality 113
Construction Supplies 104
Grocery 83
Retail 83
Steel Fabrication/Erection 65
Automobile Dealer 65
Grocery 50
Source: City of Clermont, Florida Comprehensive Annual Financial Report, year ending September 30,
1999.
(Remainder of page intentionally left blank]
Appendix B-11
REGISTRAR AND PAYING AGENCY AGREEMENT
THIS REGISTRAR AND PAYING AGENCY AGREEMENT is made and
entered into as of the first day of November, 2000, by and between the CITY OF
CLERMONT, FLORIDA (the "Issuer"), and FIRST UNION NATIONAL BANK,
Jacksonville, Florida (the "Bank").
WHEREAS, the Issuer, by the Resolution (as hereinafter defined), designated
the Bank as Registrar and Paying Agent (as defined in the Resolution) for its $
Water and Sewer Revenue and Refunding Bonds, Series 2000 (the "Bonds"); and
WHEREAS, the Issuer and the Bank desire to set forth the Bank's duties as
Registrar and Paying Agent and the compensation to be paid the Bank for its services;
NOW, THEREFORE, it is agreed by the parties hereto as follows:
1. The Bank agrees to serve as Registrar and Paying Agent for the Bonds
and to perform the duties of Registrar and Paying Agent under Resolution No. 1162 adopted
by the City Council of the Issuer on October 24, 2000, relating to, among other matters, the
issuance of the Bonds (the "Resolution").
2. The Issuer shall deposit with the Bank sufficient funds from the accounts
and funds established for the payment of the Bonds under the Resolution to pay when due and
payable the principal of, premium, if any, and interest on the Bonds.
3. The Bank shall use the funds received from the Issuer pursuant to
paragraph 2 hereof to pay the principal of, premium, if any, and interest on the Bonds in
accordance with the Resolution. The Bank shall cremate cancelled Bonds and transmit to the
Issuer a certificate of destruction therefor. The Bank shall adhere, with respect to transfer of
the Bonds, to the standards for efficiency and transfer agent performance established in
Securities and Exchange Commission Rules 17Ad-2 through 7 under the Securities Exchange
Act, most particularly Rule 17Ad-2, which requires that registered transfer agents process at
-least ninety percent (90%) of routine items (such as certificates presented for transfer) received
during any month within three (3) business days of their receipt.
4. The Bank on behalf of the Issuer shall give notice of any redemption of
the Bonds, including mandatory sinking fund redemptions, made pursuant to the Resolution by
mailing a copy of an official redemption notice at least 30 days and not more than 60 days
prior to the date fixed for redemption to each holder of Bonds to be redeemed in the manner
provided in the Resolution.
5. The Bank shall be obligated to act only in accordance with the
Resolution and any written instructions received in accordance therewith, and is authorized
hereby to comply with any orders, judgments, or decrees of any court with or without
jurisdiction and shall not be liable as a result of its compliance with the same.
004.229065.1
6. The Bank may rely absolutely upon the genuineness and authorization of
the signature and purported signature of any party upon any instruction, notice, release,
request, affidavit, or other document delivered to it pursuant to the Resolution.
7. To the extent allowed by Florida law, the Issuer hereby agrees to
indemnify the Bank and hold it harmless from any and all claims, liabilities, losses, actions,
suits, or proceedings at law or in equity, or any other expenses, fees, or charges of any
character or nature, which it may incur or with which it may be threatened by reason of its
acting as Registrar or Paying Agent under the Resolution, unless caused by the Bank's willful
misconduct or negligence; and in connection therewith, to indemnify the Bank against any and
all expenses, including attorneys' fees and the costs of defending any action, suit, or
proceeding, or resisting any claim.
8. The Bank may consult with counsel of its own choice and shall have sole
and complete authorization and protection for any action taken or suffered by it under the
Resolution in good faith and in accordance with the opinion of such counsel. The Bank shall
otherwise not be liable for any mistakes of fact or errors of judgment, or for any acts or
omissions of any kind unless caused by the Bank's willful misconduct or negligence.
9. In consideration of the services rendered by the Bank as Registrar and
Paying Agent, the Issuer agrees to and shall pay to the Bank the fee specified on Exhibit A
attached hereto during the term of this Agreement, and all expenses, charges, attorneys' fees,
and other disbursements incurred by it or its attorneys, agents, and employees in and about the
acceptance and performance of its powers and duties as Registrar and Paying Agent.
10. The Bank shall, at all times, when requested to do so by the Issuer,
furnish full and complete information pertaining to its functions as the Registrar and Paying
Agent with regard to the Bonds, and shall without further authorization, execute all necessary
and proper deposit slips, checks, certificates and other documents with reference thereto.
11. Subject to the provisions of the Resolution, either of the parties hereto,
at its option, may cancel this Agreement after giving thirty (30) days written notice to the
other party of its intention to cancel, and this Agreement may be cancelled at any time by
mutual consent of the parties hereto. This Agreement shall terminate without further action
upon final payment of the Bonds and the interest appertaining thereto.
12. In the event of a cancellation of this Agreement, the Issuer shall deliver
any proper and necessary releases to the Bank upon demand and the Bank shall upon demand
pay over the funds on deposit in connection with the Bonds and surrender all registration
books and related records, and the Issuer may appoint and name a successor to act as Registrar
and Paying Agent for the Bonds. The Issuer shall, in such event, notify all holders of the
Bonds of the appointment and name of the successor, by providing notice in the manner
required by the Resolution for the redemption of the Bonds.
13. This Agreement shall not be assigned by either party without written
consent of the other party.
004.229065.1
2
14. No modification of this Agreement shall be valid unless made by a
written agreement, executed and approved by the parties hereto.
15. Should any section or part of any section of this Agreement be declared
void, invalid, or unenforceable by any court of law for any reason, such determination shall
not render void, invalid, or unenforceable any other section or other part of any section of this
Agreement.
16. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers and their official seals to be hereunto affixed and
attested as of the date first above written.
Attested:
A
oseph E. Van e City C1 rk
(SEAL)
Attested:
By:
Vice President
(SEAL)
CITY OF CLERMONT, FLORIDA
~--__
Harold S. Turville, Jr., Mayor
FIRST UNION NATIONAL BANK
By
Vice President
004.229065.1
3
C'(~NTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered
by City of Clermont, Florida (the "Issuer") in connection with the issuance of its ~ Water
and Sewer Revenue and Refunding Bonds, Series 2000 (the "Series 2000 Bonds"). The Series 2000
Bonds are being issued pursuant and subject to the terms and conditions of Resolution No. 901
adopted by the Ciry Council of the City on February 26, 1996, as amended and restated in its entirety
by Resolution No. adopted by the City Council of the City on October 24, 2000, as amended
and supplemented from time to time (collectively, the "Resolution"). The City covenants and agrees
as follows:
SECTION 1. PURPOSE OF THE DISCLOSURE CERTIFICATE. This Disclosure
Certificate is being executed and delivered by the Issuer for the benefit of the Holders and Beneficial
Owners of the Series 2000 Bonds and in order to assist the Participating Underwriter in complying with
the continuing disclosure requirements of Securities and Exchange Commission Rule 15c2-12.
SECTION 2. DEFINITIONS. In addition to the definitions set forth in the Resolution which
apply to any capitalized term used in this Disclosure Certificate, unless otherwise defined in this Section,
the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Certificate.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to
vote or consent with respect to, or to dispose of ownership of, any Series 2000 Bonds (including
persons holding Series 2000 Bonds through nominees, depositories or other intermediaries), or (b) is
treated as the owner of any Series 2000 Bonds for federal income tax purposes.
"Dissemination Agent" shall mean the Issuer, or any successor Dissemination Agent, designated
in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.
"National Repository" shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule. The National Repositories currently approved by the Securities
and Exchange Commission are set forth in Exhi i B.
"Participating Underwriter" shall mean the original underwriter of the Series 2000 Bonds
required to comply with the Rule in connection with offering of the Series 2000 Bonds.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean the continuing disclosure requirements of Rule 15c2-12 adopted by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be
amended from time to time.
"State" shall mean the State of Florida.
"State Repository" shall mean any public or private repository or entity designated by the State
as a state information depository for the purpose of the Rule and recognized as such by the Securities
and Exchange Commission. As of the date of this Disclosure Certificate, there is no State Repository.
SECTION 3. PROVISION OF ANNUAL REPORTS.
(a) The Issuer shall, or shall cause the Dissemination Agent to, not later than each
April 30th, commencing April 30, 2001 with the report for the 1999-2000 fiscal year, provide to each
Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure
Certificate. The Annual Report may be submitted as a single document or as separate documents
comprising a package, and may cross-reference other information as provided in Section 4 of this
Disclosure Certificate; provided that the audited Financial statements of the Issuer may be submitted
separately Erom the balance of the Annual Report and later than the date required above for the Filing
of the Annual Report if they are not available by that date. If the Issuer's fiscal year changes, it shall
give notice of such change in the same manner as for a Listed Event under Section 5(c).
(b) Not later than fifteen (15) Business Days prior to the date set forth in (a) above, the
Issuer shall provide the Annual Report to the Dissemination Agent (if other than the Issuer). If the
Issuer is unable to provide to the Repositories an Annual Report by the date required in subsection (a),
the Issuer shall send a notice to (i) each National Repository or the Municipal Securities Rulemaking
Board, and (ii) the State Repository in substantially the form attached as Exhi i R.
(c) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the
name and address of each National Repository and the State Repository, iE any; and
(ii) if the Dissemination Agent is other than the Issuer, file a report with the Issuer
certifying that the Annual Report has been provided pursuant to this Disclosure
Certificate, stating the date it was provided and listing all the Repositories to which it
was provided.
SECTION 4. CONTENT OF ANNUAL REPORTS. The Issuer's Annual Report shall
contain or include by reference the following:
(a) the audited Financial statements of the Issuer for the prior fiscal year, prepared in
accordance with generally accepted accounting principles as promulgated to apply to governmental
entities from time to time by the Governmental Accounting Standards Board. If the Issuer's audited
Financial statements are not available by the time the Annual Report is required to be filed pursuant to
Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the
financial statements contained in the final Official Statement dated .2000 (the "Official
Statement"), and the audited financial statements shall be Filed in the same manner as the Annual
Report when they become available.
2
(b) updates to the Following historical financial information and operating data presented in
the Official Statement:
Historical Customers and Flows Water and Sewer.
2. Beginning with the fiscal year ended September 30, 2001, Historical System
Operating results and Debt Service Coverage. The format should look like the table entitled
"CITY OF CLERNIONT, FLORIDA PROJECTED SYSTEM OPERATING RESULTS
_~ND DEBT SERVICE COVERAGE" in the Official Statement. Include the most recent five
fiscal years; provided, however, the table need not go back beyond the fiscal year ended
September 30, 2001.
Ten Largest Water Customers.
4. Ten Largest Sewer Customers.
The information provided under Section 4(b) may be included by specific reference to other
documents, including official statements of debt issues of the Issuer or related public entities, which
have been submitted to each of the Repositories or the Securities and Exchange Commission. If the
document included by reference is a final official statement, it must be available from the Municipal
Securities Rulemaking Board. The Issuer shall clearly identify each such other document so included
by reference.
SECTION 5. REPORTING OF SIGNIFICANT EVENTS.
(a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause to
be given, notice of the occurrence of any of the following events with respect to the Series 2000 Bonds,
if material:
1. principal and interest payment delinquencies;
2. non-payment related defaults;
3. unscheduled draws on the debt service reserves reflecting financial difficulties;
4. unscheduled draws on credit enhancements reflecting financial difficulties;
5. substitution of credit or liquidity providers, or their failure to perform;
6. adverse tax opinions or events affecting the tax-exempt status of the Series
2000 Bonds;
7. modifications to rights of the holders of the Series 2000 Bonds;
8. Bond calls (other than scheduled mandatory redemption);
9. defeasances;
10. release, substitution, or sale of property securing repayment of the Series 2000
Bonds; and
11. ratings changes.
(b) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event,
the Issuer shall promptly determine if such event would be material under applicable federal securities
laws; provided, however, that any event under clauses 4, 5, 6, 10 and 11 above shall always be deemed
to be material.
(c) If the Issuer determines that knowledge of the occurrence of a Listed Event
would be material under applicable federal securities laws, the Issuer shall promptly file a notice of such
occurrence with (i) each National Repository or the Municipal Securities Rulemaking Board, and (ii)
the State Repository.
SECTION 6. TERMINATION OF REPORTING OBLIGATION. The Issuer's obligations
under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or
payment in full of all of the Series 2000 Bonds. If such termination occurs prior to the final maturity
of the Series 2000 Bonds, the Issuer shall give notice of such termination in the same manner as Eor
a Listed Event under Section 5(c).
SECTION 7. DISSEMINATION AGENT. The Issuer may, from time to time, appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate,
and may discharge any such Dissemination Agent, with or without appointing a successor
Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the
content of any notice or report prepared by the Issuer pursuant to this Disclosure Certificate. The
initial Dissemination Agent shall be the Issuer.
SECTION 8. AMENDMENT; WAIVER. Notwithstanding any other provision of this
Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this
Disclosure Certificate may be waived, provided that the Following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 5(a),
it may only be made in connection with a change in circumstances that arises from a change
in legal requirements, change in law, or change in the identity, nature or status of the Issuer, or
the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of the
Rule at the time of the original issuance of the Series 2000 Bonds, after taking into account any
amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) The amendment or waiver either (i) is approved by the holders or Beneficial
Owners of the Series 2000 Bonds in the same manner as provided in the Resolution for
amendments to the Resolution with the consent of holders or Beneficial Owners, or (ii) does
not, in the opinion of nationally recognized bond counsel, materially impair the interests of the
holders or Beneficial Owners of the Series 2000 Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Issuer shall
describe such amendment in the next Annual Report, and shall include, as applicable, a narrative
explanation of the reason for the amendment or waiver and its impact on the type (or in the case of
a change of accounting principles, on the presentation) of financial information or operating data being
presented by the Issuer. In addition, if the amendment relates to the accounting principles to be
4
followed in preparing financial statements, (i) notice of such change shall be given in the same manner
as for a Listed Event under Section 5(c), and (ii) the Annual Report for the year in which the change
is made should present a comparison (in narrative form and also, if feasible, in quantitative form)
between the financial statements as prepared on the basis of the new accounting principles and those
prepared on the basis of the former accounting principles.
SECTION 9. :ADDITIONAL INFORMATION. Nothing in this Disclosure Certificate shall
be deemed to prevent the Issuer Erom disseminating any other information, using the means of
dissemination set forth in this Disclosure Certificate or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event, in
addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any
information in any Annual Report or notice of occurrence of a Listed Event in addition to that which
is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this
Certificate to update such information or include it in any future Annual Report or notice of
occurrence of a Listed Event.
SECTION 10. DEFAULT. In the event of a failure of the Issuer to comply with any
provision of this Disclosure Certificate, any holder or Beneficial Owner of the Series 2000 Bonds may
take such actions as may be necessary and appropriate, including seeking mandamus or specific
performance by court order, to cause the Issuer to comply with its obligations under this Disclosure
Certificate; provided, however, the sole remedy under this Disclosure Certificate in the event of any
failure of the Issuer to comply with the provisions of this Disclosure Certificate shall be an action to
compel performance. A default under this Disclosure Certificate shall not be deemed an event of
default under the Resolution.
SECTION 11. DUTIES, IMMUNITIES AND LIABILITIES OF DISSEMINATION
AGENT. The Dissemination Agent shall have only such duties as are specifically set forth in this
Disclosure Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent, its
officers, directors, employees and agents, harmless against loss, expense and liabilities which it may
incur arising out of or in the exercise or performance of its powers and duties hereunder, including the
costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding
liabilities due to the Dissemination Agent's negligence or wilful misconduct. The obligations of the
Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment
of the Series 2000 Bonds.
[Remainder of intentionally left blank]
5
SECTION 12. BENEFICIARIES. This Disclosure Certificate shall inure solely to the benefit
of the Issuer, the Dissemination Agent, the Participating Underwriters and holders and Beneficial
Owners from time to time of the Series 2000 Bonds, and shall create no rights in any other person or
entity.
Dated as of , 2000.
[SEAL] CITY OF CLERMONT, FLORIDA
Mayor
Attest:
Ciry Clerk
APPROVED AS TO FOR_Nt:
City Attorney
EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Clermont. Florida
'Name of Bond Issue: Water and Sewer Revenue and Refunding Bonds,
Series 2000 (the "Series 2000 Bonds")
Date of Issuance: , 2000
NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to
the above-named Bonds as required by Section 3 of the Continuing Disclosure Certificate dated as of
2000. The Issuer anticipates that the Annual Report will be filed by
Dated:
CITY OF CLERMONT, FLORIDA
By: t.~~~_.-
Its:
EXHIBIT B
Nationally Recognized Municipal Securities Information Repositories approved by the Securities and
Exchange Commission:
Bloomberg Municipal Repositories
P.O. Box 840
Princeton, NJ 08542-0840
(609) 279-3225
FAX (609) 279-5962
Email: munis@bloomberg.com
Standard & Poor's J. J. Kenny Repository
55 Water Street, 45~' Floor
New York, NY 10041
(212) 438-4595
Fr1X (212) 438-3975
Email: nrmsir_repository@sandp.com
Interactive Data
Attn: Repository
100 Williams Street
New York, NY 10038
(212) 771-6899
FAX (212) 771-7390
Email: NRMSIR@interactivedata.com
Website: http//www.InteractiveData.com
DPC Data Inc.
One Executive Drive
Fort Lee, NJ 07024
(201) 346-0701
FAX (201) 947-0107
Email: NRMSIR@dpcdata.com
A list of names and addresses of all designated Nationally Recognized Municipal Securities Information
Repositories as of any point in time is available by visiting the SEC's website at
wwty. secgov/consumer/ nrmsir. htm.
1?Bonds?432SCdc2. wpd
Octotm 9, 2000
ESCROW DEPOSIT AGREEMENT
In consideration of the facts hereinafter recited and of the mutual covenants and
agreements herein contained, the City of Clermont, a municipality created and existing under
the laws of the State of Florida (the "Issuer"), and First Union National Bank, a national
banking association, as Escrow Holder (the "Escrow Holder"), do hereby agree as follows as of
November , 2000:
Section 1. Definitions.
Terms used herein shall have the respective meanings assigned in and by the
Resolution hereinafter defined, and the following terms which are not defined in the Resolution
shall have the following meanings, unless the text clearly otherwise requires:
"Aggregate Debt Service" shall mean all of the interest on the Refunded
Obligations becoming due upon maturity on December 1, 2000, and the amount required to pay
the principal of the Refunded Obligations upon maturity on December 1, 2000. Aggregate
Debt Service as of the date of the delivery of this Agreement is set forth in Exhibit A attached
hereto.
"Agreement" shall mean this Escrow Deposit Agreement.
"Escrow Account" shall mean the Escrow Account created pursuant to the
provisions of Section 3 of this Agreement.
"Escrow Requirement" shall mean, as of any particular date, the sum of an
amount in cash in the Escrow Account and the principal amount of the Federal Securities held
by the Escrow Holder pursuant to Section 4 hereof which, together with the interest which shall
thereafter become payable on the Federal Securities, will be sufficient to pay the Aggregate
Debt Service.
"Federal Securities" shall mean direct obligations of the United States of
America, none of which permit redemption prior to maturity at the option of the obligor, which
obligations are set forth in Exhibit B attached hereto, and such other obligations as may be
purchased in accordance with Section 8 hereof.
"Refunded Obligations" shall mean the Issuer's outstanding Water and Sewer
Revenue and Refunding Bond Anticipation Notes, Series 1996.
"Resolution" shall mean Resolution Number 1162 adopted by the Issuer on
October 24, 2000, as amended and supplemented from time to time, authorizing issuance of the
Series 2000 Bonds, and the execution and delivery of this Agreement.
"Series 2000 Bonds" shall mean the City of Clermont, Florida, Water and Sewer
Revenue and Refunding Bonds, Series 2000, authorized pursuant to the Resolution.
004.226860.3
Section 2. Recitals.
(a) The Issuer adopted the Resolution for the purpose of authorizing the
issuance of the Series 2000 Bonds for the purpose of, among other things, financing the cost of
refunding the Refunded Obligations.
(b) The Resolution authorized the Issuer to enter into this Agreement for the
purposes expressed therein and herein, and all acts and things have been done and performed to
make this Agreement valid and binding for the security of the Refunded Obligations.
(c) The Escrow Holder has the powers and authority of a trust company
under the laws of the United States of America and, accordingly, the power to execute the trust
hereby created.
Section 3. Deposit of Funds.
There is hereby created and established with the Escrow Holder a special
account to be known as the "Escrow Account." Simultaneously with the execution and delivery
of this Agreement, the Issuer has deposited with the Escrow Holder, for deposit by the Escrow
Holder to the Escrow Account, a portion of the proceeds of the Series 2000 Bonds in the
amount of $ ,and $ heretofore held by the Issuer for the
payment of the principal of and interest on the Refunded Obligations, totaling
$ After such funds are invested to the extent required to purchase the Federal
Securities, the uninvested portion of such funds and the principal amount of such Federal
Securities and the interest to become due thereon will equal or exceed the Escrow Requirement
as of the date of the delivery of this Agreement. Such Federal Securities shall mature and such
interest shall be payable on or before the funds represented thereby shall be required for timely
payment of the principal of and interest on the Refunded Obligations as the same shall become
due and payable in accordance with their terms on December 1, 2000, the maturity date
thereof, as specified in Exhibit A attached hereto.
The Escrow Holder shall hold the Escrow Account as a separate trust account
wholly segregated from all other funds held by the Escrow Holder in any capacity and shall
make disbursements from the Escrow Account only in accordance with the provisions of this
Agreement. The Federal Securities described in Exhibit B shall not be sold or otherwise
disposed of or reinvested except as provided in Sections 4 and 7 hereof.
Section 4. Use and Investment of Funds.
The Escrow Holder acknowledges receipt of the cash described in Section 3 of
this Agreement and agrees:
(a) to hold the same in irrevocable escrow for application in the manner
provided herein;
004.226860.3
2
(b) to apply such cash and the proceeds of such Federal Securities in the
manner provided in this Agreement, and only in such manner;
(c) to invest immediately $
Federal Securities described in Exhibit B attached hereto;
(d) to retain $
application described in Section 5 below; and
thereof by purchasing the
thereof in cash in the Escrow Account for
(e) to deposit in the Escrow Account, as received, the principal of all of such
Federal Securities described in Exhibit B attached hereto and any other Federal Securities
acquired hereunder which shall mature during the term of this Agreement, all interest which
shall be derived during the term of this Agreement from such Federal Securities and any other
Federal Securities acquired hereunder, and the proceeds of any sale, transfer, redemption or
other disposition of such Federal Securities and any other Federal Securities acquired
hereunder.
All moneys held by the Escrow Holder pursuant to any provision of this
Agreement, on deposit in the Escrow Account or otherwise, shall at all times be continually
secured in the manner provided by Florida law for the securing of municipal funds.
Section 5. Payment of the Refunded Obligations and Expenses
The owners of the Refunded Obligations shall have a first and prior lien on the
principal of and interest on the Federal Securities and all moneys held by the Escrow Holder in
the Escrow Account, until all such moneys shall be used and applied by the Escrow Holder as
provided in paragraph (a) below.
(a) Refunded Obli atg. ions. On December 1, 2000, the maturity date
established for the Refunded Obligations, the Escrow Holder shall pay to the paying agent for
the Refunded Obligations, from the moneys on deposit in the Escrow Account, a sum sufficient
to pay the Aggregate Debt Service due on such date, as shown in Exhibit A attached hereto.
After making such payments from the Escrow Account, the Escrow Holder shall pay to the
Issuer any moneys remaining in said account in excess of the Escrow Requirement, for the
Issuer to use for capital projects relating to the System.
004.226860.3
3
(b) Fees and Expenses.
(i) In consideration of the services rendered by the Escrow Holder under
this Agreement, the Issuer upon the execution hereof has paid to the Escrow
Holder a fee for all services and ordinary expenses to be incurred as Escrow
Holder in connection with such services. The term "ordinary expenses" means
expenses of holding, investing and disbursing the Escrow Account as provided
herein.
(ii) The Issuer shall also reimburse the Escrow Holder for any extraordinary
expenses incurred by it in connection herewith. The term "extraordinary
expenses" includes (a) expenses arising out of the assertion of any third party to
any interest in the Escrow Account or any challenge to the validity hereof,
including reasonable attorneys' fees, (b) expenses relating to any substitution
under Section 7 hereof, and (c) expenses (other than ordinary expenses) not
occasioned by the Escrow Holder's misconduct or negligence.
(iii) The fees, expenses and moneys payable by the Issuer under Sections 8
and 9 hereof and this section shall not be paid from the Escrow Account, but
shall be paid by the Issuer as an Operating Expense of the System. The Escrow
Holder shall have no lien for the payment of its fees or expenses or otherwise for
its benefit on the Escrow Account and hereby waives any rights of set off against
the Escrow Account which it may lawfully have or acquire.
Section 6. No Redemption or Acceleration of Maturity.
The Issuer will not accelerate the maturity of any Refunded Obligations or
exercise any option to redeem any Refunded Obligations before December I, 2000.
Section 7. Reinvestment.
Except as provided in Section 4 of this Agreement and in this Section, the
Escrow Holder shall have no power or duty to invest any funds held under this Agreement or to
sell, transfer or otherwise dispose of or make substitutions for any Federal Securities held
hereunder.
At the written request of the Issuer and upon compliance with the conditions
stated in this Section, the Escrow Holder shall sell, transfer, or otherwise dispose of or request
the redemption of any of the Federal Securities acquired hereunder and shall purchase either
Refunded Obligations or other Federal Securities to be substituted for such Federal Securities
disposed of or redeemed.
The Issuer will not request the Escrow Holder to exercise any of the powers
described in the preceding sentence in any manner which will cause the Series 2000 Bonds or
the Refunded Obligations to be "arbitrage bonds" within the meaning of Section 148 of the
004.226860.3
4
Internal Revenue Code of 1986, as amended, and the applicable regulations proposed or
promulgated thereunder.
The Escrow Holder may, at the written direction of the Issuer, substitute other
noncallable Federal Securities ("Substitute Federal Securities") in lieu of the Federal Securities
then on deposit in the Escrow Account provided that, prior to any such substitution, the Escrow
Holder and the Issuer shall have received:
(a) New debt service and cash flow schedules showing (i) the dates and
amounts of all principal and interest payments thereafter to become due on the Refunded
Obligations, (ii) the cash and Federal Securities to be on deposit in the Escrow Account upon
making such substitution, (iii) the dates and amounts of maturing principal and interest to be
received by the Escrow Holder from such Federal Securities, and (iv) that the cash on hand in
the Escrow Account plus cash to be derived from the maturing principal and interest of such
Federal Securities shall be sufficient to pay when due all remaining debt service payments on
the Refunded Obligations (the most recent debt service and cash flow schedules shall be
considered to be the applicable "Debt Service and Cash Flow Schedules"); and
(b) An opinion of nationally recognized bond counsel to the effect that such
substitution is permissible hereunder and that (based on said new Debt Service and Cash Flow
Schedules) such substitution will not adversely affect the defeasance of the Refunded
Obligations or the exclusion from gross income for federal income tax purposes of the interest
payable on the Series 2000 Bonds or the Refunded Obligations.
Section 8. Indemnity.
Whether or not any action or transaction authorized or contemplated hereby shall
be undertaken or consummated, the Issuer hereby agrees to the extent allowed by Florida law to
indemnify, protect, save and keep harmless the Escrow Holder and its respective successors,
agents and servants, from and against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal
fees and attorneys' disbursements and expenses) of whatsoever kind and nature which may be
imposed on, incurred by or asserted against the Escrow Holder at any time, whether or not the
same may be indemnified against by the Issuer or any other Person under any other agreement
or instrument, by reason of or arising out of the execution and delivery of this Agreement, the
establishment of the Escrow Account, the acceptance by the Escrow Holder of the funds herein
described, the purchase, retention or disposition of the Federal Securities or the proceeds
thereof, or any payment, transfer or other application of funds or securities by the Escrow
Holder in accordance with the provisions of this Agreement; provided, however, that the Issuer
shall not be required to indemnify the Escrow Holder for any expense, loss, costs,
disbursements, damages or liability resulting from its own negligence or misconduct. The
indemnities contained in this Section shall survive the termination of this Agreement.
Nothing in this Section contained shall give rise to any liability on the part of the
Issuer in favor of any Person other than the Escrow Holder.
004.226860.3
5
Section 9. Responsibilities of Escrow Holder.
The Escrow Holder and its respective successors, agents and servants shall not
be held to any personal liability whatsoever, in tort, contract or otherwise, by reason of the
execution and delivery of this Agreement, the establishment of the Escrow Account, the
acceptance and disposition of the various moneys and funds described herein, the purchase,
retention or disposition of the Federal Securities or the proceeds thereof, any payment, transfer
or other application of funds or securities by the Escrow Holder in accordance with the
provisions of this Agreement or any non-negligent act, omission or error of the Escrow Holder
made in good faith in the conduct of its duties. The Escrow Holder shall, however, be liable to
the Issuer and to holders of the Refunded Obligations to the extent of their respective damages
for negligent or willful acts, omissions or errors of the Escrow Holder which violate or fail to
comply with the terms of this Agreement. The duties and obligations of the Escrow Holder
shall be determined by the express provisions of this Agreement. The Escrow Holder may
consult with counsel, who may or may not be counsel to the Issuer, and be entitled to receive
from the Issuer reimbursement of the reasonable fees and expenses of such counsel, and in
reliance upon the opinion of such counsel have full and complete authorization and protection
in respect of any action taken, suffered or omitted by it in good faith in accordance therewith.
Whenever the Escrow Holder shall deem it necessary or desirable that a matter be proved or
established prior to taking, suffering or omitting any action under this Agreement, such matter
may be deemed to be conclusively established by a certificate signed by an authorized officer of
the Issuer.
Section 10. Resignation of Escrow Holder.
The Escrow Holder may resign and thereby become discharged from the duties
and obligations hereby created, by notice in writing given to the Issuer and published once in a
newspaper of general circulation published in the territorial limits of the Issuer, and in a daily
newspaper of general circulation or a financial journal published in the Borough Of Manhattan,
City and State of New York, not less than sixty (60) days before such resignation shall take
effect. Such resignation shall take effect immediately upon the appointment of a new Escrow
Holder hereunder, if such new Escrow Holder shall be appointed before the time limited by
such notice and shall then accept the duties and obligations of the Escrow Holder hereunder.
004.226860.3
6
Section 11. Removal of Escrow Holder.
(a) The Escrow Holder may be removed at any time by an instrument or
concurrent instruments in writing, executed by the owners of not less than fifty-one per centum
(51 %) in aggregate principal amount of the Refunded Obligations then outstanding, such
instrument or instruments to be filed with the Issuer, and notice published once in a newspaper
of general circulation published in the territorial limits of the Issuer, and in a daily financial
journal published in the Borough of Manhattan, City and State of New York, not less than sixty
(60) days before such removal is to take effect as stated in said instrument or instruments. A
photographic copy of any instrument filed with the Issuer under the provisions of this paragraph
shall be delivered by the Issuer to the Escrow Holder.
(b) The Escrow Holder may also be removed at any time by any court of
competent jurisdiction upon the application of the Issuer or the owners of not less than five per
centum (5 %) in aggregate principal amount of the Refunded Obligations then outstanding for
any breach of trust or for acting or proceeding in violation of, or for failing to act or proceed in
accordance with, any provision of this Agreement with respect to the duties or obligations of
the Escrow Holder.
Section 12. Successor Escrow Holder.
(a) If at any time hereafter the Escrow Holder shall resign, be removed, be
dissolved or otherwise become incapable of acting, or shall be taken over by any governmental
official, agency, department or board, the position of Escrow Holder shall thereupon become
vacant. If the position of Escrow Holder shall become vacant for any of the foregoing reasons
or for any other reason, the Issuer shall appoint a successor Escrow Holder to fill such vacancy.
The Issuer shall publish notice of any such appointment once in each week for four (4)
successive weeks in a newspaper of general circulation published in the territorial limits of the
Issuer and in a daily financial journal published in the Borough of Manhattan, City and State of
New York.
(b) At any time after such vacancy shall have occurred, the owners of not less
than fifty-one per centum (51 %) in aggregate principal amount of Refunded Obligations then
outstanding, by an instrument or concurrent instruments in writing, executed by such owners
and filed with the Governing Body of the Issuer, may appoint a successor Escrow Holder,
which shall supersede any successor Escrow Holder theretofore appointed by the Issuer.
Photographic copies of each such instrument shall be promptly delivered by the Issuer to the
predecessor Escrow Holder and to the Escrow Holder so appointed by such owners.
(c) If no appointment of a successor Escrow Holder shall be made pursuant
to the foregoing provisions of this Section, the owner of any Refunded Obligations then
outstanding, or the retiring Escrow Holder may apply to any court of competent jurisdiction to
appoint a successor Escrow Holder. Such court may thereupon, after such notice, if any, as
such court may deem proper and prescribe, appoint a successor Escrow Holder.
004.226860.3
7
(d) Every successor Escrow Holder appointed hereunder shall execute,
acknowledge and deliver to its predecessor and also to the Issuer an instrument in writing
accepting such appointment hereunder, and thereupon such successor Escrow Holder, without
any further act, shall become full vested with all of the duties and obligations of its predecessor
under this Agreement.
Section 13. Predecessor Escrow Holder.
Every predecessor Escrow Holder shall deliver to its successor and also to the
Issuer an accounting of all moneys and securities held by it under this Agreement, and shall
deliver to its successor all such moneys and securities held by it as Escrow Holder hereunder.
Section 14. Amendments.
This Agreement is made for the benefit of the Issuer and the holders from time
to time of the Refunded Obligations and it shall not be repealed, revoked, altered or amended
without the written consent of all such holders, the Escrow Agent and the Issuer; provided,
however, that the Issuer and the Escrow Agent may, without the consent of, or notice to, such
holders, enter into such agreements supplemental to this Agreement as shall not adversely affect
the rights of such holders or the provider of any Bond Insurance Policy or Reserve Fund
Insurance Policy and as shall not be inconsistent with the terms and provisions of this
Agreement, for any one or more of the following purposes:
(a) to cure any ambiguity or formal defect or omission in this Agreement;
(b) to grant, or confer upon, the Escrow Agent for the benefit of the holders
of the Refunded Obligations, any additional rights, remedies, powers or authority that may
lawfully be granted to, or conferred upon, such holders or the Escrow Agent; and
(c) to subject to this Agreement additional funds, securities or properties.
The Escrow Agent shall be entitled to rely exclusively upon an unqualified
opinion of nationally recognized bond counsel with respect to compliance with this Section 14,
including the extent, if any, to which any change, modification or addition affects the rights of
the holders of the Refunded Obligations, or that any instrument executed hereunder complies
with the conditions and provisions of this Section 14.
Section 15. Notices.
All notices, approvals, consents, requests and other communications hereunder
shall be in writing and shall be deemed to have been given when mailed or delivered by
registered or certified mail, return receipt requested, postage prepaid, and addressed as follows:
004.226860.3
g
If to the Issuer: City of Clermont
1 Westgate Plaza
Clermont, FL 34712
Attention: City Clerk
If to the Escrow Holder: First Union National Bank
Attention: Corporate Trust Department
The Issuer and the Escrow Holder may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, approvals, consents, requests or other
communications shall be sent or persons to whose attention the same may be directed.
Section 16. Term.
This Agreement shall commence upon its execution and delivery and shall
terminate when the Refunded Obligations and the interest thereon shall have been paid and
discharged in accordance with the proceedings authorizing the Refunded Obligations and all
excess moneys have been paid to the Issuer.
Section 17. Severability.
If any of the covenants, agreements or provisions of this Agreement on the part
of the Issuer or the Escrow Holder to be performed should be determined by a court of
competent jurisdiction to be contrary to law, such covenant, agreement or provision shall be
null and void, shall be deemed separable from the remaining covenants, agreements and
provisions of this Agreement and shall in no way affect the validity of the remaining covenants,
agreements or provisions of this Agreement.
Section 18. Counterparts.
This Agreement may be executed in several counterparts, all or any of which
shall be regarded for all purposes as the original and shall constitute and be but one and the
same instrument.
004.226860.3
9
Section 19. Governing_Law.
This Agreement shall be construed under the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized signatories as of the day of November, 2000.
CITY OF CLERMONT, Florida
(SEAL)
ATTEST:
eph E. Van Zile, Ci lerk
By ~~ -r.~ ...__..
Harold S. Turville, Jr. , Mayor
Approved as to Form and Legality:
By
Robert D. Guthrie, City Attorney
FIRST UNION NATIONAL BANK, as
Escrow Holder
By
Title:
004.226860.3
10
EXHIBIT A
AGGREGATE DEBT SERVICE
PrinciQal Premium Interest Total
004.226860.3
EXHIBIT B
FEDERAL SECURITIES
Security
SLG
SLG
TOTALS
Cash in Escrow
Total Available to
Pay Aggregate Debt
Service
Maturity Par Purchase Receipts at
Date Amount Coupon Price Maturity
$ $ $
004.226860.3
Exhibit F
Commitments for Bond Insurance Policy and
Reserve Fund Insurance Policy
004.219416.8
"'" Y MUNICIPAL BOND INSURANCE COMMITMENT
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security" or "FSA") hereby commits to issue its Municipal Bond
Insurance Policy (the "Policy") relating to whole maturities of the debt obligations described in Exhibit A attached hereto (the
"Bonds"), subject to the terms and conditions set forth in this Commitment, of which Commitment Exhibit A is an integrated
part. or added hereto (the "Commitment"). To keep this Commitment in effect after the Expiration Date set forth in Exhibit A
attached hereto. a request for renewal must be submitted to Financial Security prior to such Expiration Date. Financial
Security reserves the right to refuse wholly or in part to grant a renewal.
THE MUNICIPAL BOND INSURANCE POLICY SHALL BE ISSUED IF THE FOLLOWING CONDITIONS ARE SATISFIED
1. The documents to be executed and delivered in connection with the issuance and sale of the Bonds shall not
contain any untrue or misleading statement of a material fact and shall not fail to state a material fact necessary in order to
make the information contained therein not misleading.
2. No event shall occur which would permit any underwriter or purchaser of the Bonds, otherwise required, not to be
required to underwrite or purchase the Bonds on the date scheduled for the issuance and delivery thereof ("Closing Date").
3. There shall be no material change in or affecting the Bonds (including, without limitation, the security for the
Bonds) or the financing documents or the Official Statement (or any similar disclosure documents) to be executed and
delivered in connection with the issuance and sale of the Bonds from the descriptions or forms thereof approved by
Financial Security.
4. The Bonds shall contain no reference to Financial Security, the Policy or the insurance evidenced thereby except
as may be approved by Financial Security. BOND PROOFS SHALL HAVE BEEN APPROVED BY FINANCIAL SECURITY
PRIOR TO PRINTING. The Bonds shall bear a Statement of Insurance in the form provided by Financial Security.
5. Financial Security shall be provided with:
(a) Executed copies of all financing documents, any disclosure document (the "Official Statement") and the
various legal opinions delivered in connection with the issuance and sale of the Bonds (which shall be dated the Closing
Date and which, except for the opinions of counsel relating to the adequacy of disclosure, shall be addressed to Financial
Security or accompanied by a letter of such counsel permitting Financial Security to rely on such opinion as if such opinion
were addressed to Financial Security), including, without limitation, the approving opinion of bond counsel. Each of the
foregoing shall be in form and substance acceptable to Financial Security. Copies of all drafts of such documents prepared
subsequent to the date of the Commitment (blacklined to reflect all revisions from previously reviewed drafts) shall be
furnished to Financial Security for review and approval. Final drafts of such documents shall be provided to Financial
Security at least three (3) business days prior to the issuance of the Policy, unless Financial Security shall agree to some
shorter period.
(b) Evidence of wire transfer in federal funds of an amount equal to the insurance premium, unless alternative
arrangements for the payment of such amount acceptable to Financial Security have been made prior to the delivery date of
the Bonds.
(c) Standard & Poor's Ratings Services, Moody's Investors Service Inc. and Fitch IBCA, Inc. will separately
present bills for their respective fees relating to the Bonds. Payment of such bills should be made directly to such rating
agency. Payment of the rating fee is not a condition to release of the Policy by Financial Security.
6. Promptly after the closing of the Bonds, Financial Security shall receive three completed sets of executed
documents (one original and either (i) two photocopies (each unbound) or (ii) three compact discs).
7. The Official Statement shall contain the language provided by Financial Security and only such other references to
Financial Security or otherwise as Financial Security shall supply or approve. FINANCIAL SECURITY SHALL BE
PROVIDED WITH SIX PRINTED COPIES OF THE OFFICIAL STATEMENT.
EXHIBIT A
MUNICIPAL BOND INSURANCE COMMITMENT
TERM SHEET
Issuer: City of Clermont, Florida
Principal Amount of Bonds Insured: Not to Exceed $17,500.000
Name of Bonds Insured: Water and Sewer Revenue and Refunding Bonds, Series 2000
Date of Commitment: October 10, 2000 Expiration Date: Friday, December 15. 2000'
Premium: .32% of total debt service on the Bonds Insured
Additional Conditions:
1. The amortization schedule tor, and final maturity date of, the Bonds shall be acceptable to
Financial Security.
2. See attached Exhibits B, C and D.
Terms used in this Commitment and not othervvise defined shall have the meanings ascribed to them in the
document authorizing the issuance of and setting forth the terms for the Bonds described above (the "Resolution").
FINANCIAL SECURITY ASSURANCE INC.
i~ ~~
Authorized Officer
'To keep the Commitment in effect to the Expiration Date set forth above, Financial Security must receive a
duplicate of this Exhibit A executed by an appropriate officer by the earlier of the date on which the Official
Statement containing disclosure language about Financial Security is circulated and ten days from the date of this
Commitment.
The undersigned agrees that if the Bonds are insured by a policy of municipal bond insurance, such insurance shall
be provided by Financial Security in accordance with the terms of the Commitment.
CITY OF CLERMONT, FLORIDA
Authorized Officer
L:ILEGALVNUN ISISTATES~FL~38688_N. doc
EXHIBIT B
Page 1 of t
STANDARD OPINION REQUIREMENTS
Each of the Resolution, the Escrow Deposit Agreement and any other transaction documents (collectively, the
"Related Documents") is a legal. valid and binding obligation of the parties thereto, has been duly authorized.
executed and delivered and is enforceable in accordance with its terms.
2. There does not exist any action, suit, proceeding or investigation pending, or to the best of such counsel's
knowledge, threatened which if adversely determined, could (i) materially adversely affect (a) the financial
position of the Issuer, (b) the ability of the Issuer to perform its obligations under the Related Documents, (c)
the security for the Bonds, or (d) the transactions contemplated by the Related Documents or (ii) impair the
ability of the Issuer to maintain and operate the water and sewer system.
Nothing has come to the attention of disclosure counsel which would cause them to believe that the final
Official Statement (excluding information provided by Financial Security), as of its date and the date of
issuance of the Policy, contains any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
L:1L EGALVNU N I S~,STATE S~Fl.L3868B _ N. doc
EXHIBIT C
Page t of 3
RESOLUTION REQUIREMENTS
The Resolution shall incorporate the following requirements either in one section or article entitled "Provisions
Relating to Bond Insurance" (or the like), the provisions of which section or article shall be stated in the
Resolution to govern notwithstanding anything to the contrary set forth in the Resolution, or individually in
the appropriate sections:
(a) "Insurance Policy" shall be defined as follows: "the Insurance policy issued by the Bond Insurer
guaranteeing the scheduled payment of principal of and interest on the Bonds when due". "Insurer" shall
be defined as follows: "Financial Security Assurance Inc., a New York stock insurance company, or any
successor thereto or assignee thereof".
(b) The Insurer shall be deemed to be the sole holder of the Bonds insured by it for the purpose of exercising
any voting right or privilege or giving any consent or direction or taking any other action that the holders of
the Bonds insured by it are entitled to take pursuant to the Resolution. The Trustee shall take no action
except with the consent, or at the direction, of Financial Security. The maturity of Bonds insured by the
Insurer shall not be accelerated without the consent of the Insurer.
(c) The Insurer shall be included as a third party beneficiary to the Resolution.
(d) No modification, amendment or supplement to the Resolution or any other transaction document (each a
"Related Document") may become effective except upon obtaining the prior written consent of the Insurer.
(e) Copies of any modification or amendment to the Resolution or any other Related Document shall be sent to
Standard 8 Poor's Ratings Services and Moody's Investors Service, Inc. at least 10 days prior to the
effective date thereof.
(f) The rights granted to the Insurer under the Resolution or any other Related Document to request, consent
to or direct any action are rights granted to the Insurer in consideration of its issuance of the Insurance
Policy. Any exercise by the Insurer of such rights is merely an exercise of the Insurer's contractual rights
and shall not be construed or deemed to be taken for the benefit or on behalf of the Bondholders nor does
such action evidence any position of the Insurer, positive or negative, as to whether Bondholder consent is
required in addition to consent of the Insurer.
(g) Amounts paid by the Insurer under the Insurance Policy shall not be deemed paid for purposes of the
Resolution and shall remain Outstanding and continue to be due and owing until paid by the Issuer in
accordance with the Resolution.
(h) Claims Upon the Insurance Policy and Payments by and to the Insurer.
If, on the third business day prior to the related scheduled interest payment date or principal payment date
or the date to which Bond maturity has been accelerated ("Payment Date") there is not on deposit with the
Trustee, after making all transfers and deposits required under the Resolution, moneys sufficient to pay the
principal of and interest on the Bonds due on such Payment Date, the Trustee shall give notice to the Bond
Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy of the
amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second
Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available
to pay the principal of and interest on the Bonds due on such Payment Date, the Trustee shall make a claim
under the Insurance Policy and give notice to the Insurer and the Insurer's Fiscal Agent (if any) by
telephone of the amount of such deficiency, and the allocation of such deficiency between the amount
required to pay interest on the Bonds and the amount required to pay principal of the Bonds, confirmed in
writing to the Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second
Business Day by filling in the form of Notice of Claim and Certificate delivered with the Insurance Policy.
L:~LEGALUAUN IS~.STATESIFL\38688_N. doc
EXH181T C
Page 2 of 3
In the event the claim to be made is for a mandatory sinking fund redemption installment. upon receipt of
the moneys due, the Trustee shall authenticate and deliver to affected Bondholders who surrender their
Bonds a new Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond
surrendered. The Trustee shall designate any portion of payment of principal on Bonds paid by the Insurer.
whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its
books as a reduction in the principal amount of Bonds registered to the then current Bondholder, whether
DTC or its nominee or otherwise, and shall issue a replacement Bond to the Insurer, registered in the name
of Financial Security Assurance Inc., in a principal amount equal to the amount of principal so paid (without
regard to authorized denominations); provided that the Trustee's failure to so designate any payment or
issue any replacement Bond shall have no effect on the amount of principal or interest payable by the
Issuer on any Bond or the subrogation rights of the Insurer.
The Trustee shall keep a complete and accurate record of all funds deposited by the Insurer into the Policy
Payments Account and the allocation of such funds to payment of interest on and principal paid in respect
of any Bond. The Insurer shall have the right to inspect such records at reasonable times upon reasonable
notice to the Trustee.
Upon payment of a claim under the Insurance Policy the Trustee shall establish a separate special purpose
trust account for the benefit of Bondholders referred to herein as the "Policy Payments Account" and over
which the Trustee shall have exclusive control and sole right of withdrawal. The Trustee shall receive any
amount paid under the Insurance Policy in trust on behalf of Bondholders and shall deposit any such
amount in the Policy Payments Account and distribute such amount only for purposes of making the
payments for which a claim was made. Such amounts shall be disbursed by the Trustee to Bondholders in
the same manner as principal and interest payments are to be made with respect to the Bonds under the
sections hereof regarding payment of Bonds. It shall not be necessary for such payments to be made by
checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds
available to make such payments.
Funds held in the Policy Payments Account shall not be invested by the Trustee and may not be applied to
satisfy any costs, expenses or liabilities of the Trustee.
Any funds remaining in the Policy Payments Account following a Bond payment date shall promptly be
remitted to the Insurer.
(i) The Insurer shall, to the extent it makes any payment of principal of (or, in the case of Capital Appreciation
Bonds, accreted value) or interest on the Bonds, become subrogated to the rights of the recipients of such
payments in accordance with the terms of the Insurance Policy.
(j) The Issuer shall pay or reimburse the Insurer any and all charges, fees, costs and expenses which the
Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or
preservation of any rights or security in any Related Document; (ii) the pursuit of any remedies under the
Resolution or any other Related Document or otherwise afforded by law or equity, (iii) any amendment,
waiver or other action with respect to, or related to, the Resolution or any other Related Document whether
or not executed or completed, (iv) the violation by the Issuer or the Obligor of any law, rule or regulation, or
any judgment, order or decree applicable to it or (v) any litigation or other dispute in connection with the
Resolution or any other Related Document or the transactions contemplated thereby, other than amounts
resulting from the failure of the Insurer to honor its obligations under the Insurance Policy. The Insurer
reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or
consent proposed in respect of the Resolution or any other Related Document.
(k) The Insurer shall be entitled to pay principal (or, in the case of Capital Appreciation Bonds, accreted value)
or interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment
by the Issuer (as such terms are defined in the Insurance Policy) and any amounts due on the Bonds as a
result of acceleration of the maturity thereof in accordance with the Resolution, whether or not the Insurer
has received a Notice of Nonpayment (as such terms are defined in the Insurance Policy) or a claim upon
the Insurance Policy.
~:~LEGAL~AAU NIS~STATESU=Ll~8688 _N. doc
EXHIBIT C
Page 3 of 3
(I) The notice address of the Insurer is: Fnnancial Security Assurance Inc.. 350 Park Avenue, New York. New
York 10022-6022, Attention: Managing Director -- Surveillance: Re: Policy No. Telephone: (212)
826-0100; Telecopier: (212) 339-3529. In each case in which notice or other communication refers to an
Event of Default, then a copy of such notice or other communication shall also be sent to the attention of
General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED."
(m) The Insurer shall be provided with the following information:
Annual audited financial statements within 120 days after the end of the Issuer's
fiscal year and the Issuer's annual budget within 30 days after the approval thereof;
(ii) Notice of any draw upon the Debt Service Reserve Fund within two Business Days
after knowledge thereof other than (i) withdrawals of amounts in excess of the Debt
Service Reserve Requirement and (ii) withdrawals in connection with a refunding of
Bonds;
(iii) Notice of any default known to the Trustee within five Business Days after knowledge
thereof;
(iv) Prior notice of the advance refunding or redemption of any of the Bonds, including
the principal amount, maturities and CUSIP numbers thereof;
(v) Notice of the resignation or removal of the Trustee, Paying Agent and Bond Registrar
and the appointment of, and acceptance of duties by, any successor thereto;
(vi) Notice of the commencement of any proceeding by or against the Issuer or the
Obligor commenced under the United States Bankruptcy Code or any other
applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an
"Insolvency Proceeding");
(vii) Notice of the making of any claim in connection with any Insolvency Proceeding
seeking the avoidance as a preferential transfer of any payment of principal of, or
interest on, the Bonds;
(viii) A full original transcript of all proceedings relating to the execution of any amendment
or supplement to the Related Documents; and
(ix) All reports, notices and correspondence to be delivered under the terms of the
Related Documents.
L:ILEGALVNUNIS\STATES\FL\38688 N.doc
EXHIBIT D
Page 1 of 1
REFUNDING REQUIREMENTS
1. The defeasance of the Refunded Bonds shall be accomplished by the deposit solely of cash or direct non-
callable obligations of the United States of America ("Direct Obligations") unless otherwise approved by
Financial Security. The document providing for the establishment and maintenance of the escrow to provide
such defeasance (the "Escrow Deposit Agreement") shall be in form and substance acceptable to Financial
Security. Modification of the Escrow Deposit Agreement shall not be p
2. ermitted unless Financial Security shall consent to such modification.
2. In the event a forward purchase agreement ("FPC") will be employed in the refunding, such agreement shall
be subject to the approval of Financial Security and shall be accompanied by opinions of counsel as required
by Financial Security. Financial Security shall provide its requirements for FPCs upon request.
3. At least three business days prior to the proposed date for delivery of the Policy, Financial Security shall
receive for its review and approval (i) the verification letter, of which Financial Security shall be an addressee,
by an independent firm of certified public accountants which is either nationally recognized or otherwise
acceptable to Financial Security, of the adequacy of the escrow established to provide for the payment of the
Refunded Bonds in accordance with the terms and provisions of the Escrow Deposit Agreement (the "Original
Verification")', (ii) copies of the subscription forms for the purchase and issue of U.S. Treasury Securities -
State and Local Government Series which have been stamped as received by the Bureau of Public Debt, (iii)
the form of an opinion of Bond Counsel addressed to Financial Security (or a reliance letter relating thereto) to
the effect that, upon the making of the required deposit to the escrow, the legal defeasance of the Refunded
Bonds shall have occurred and (iv) the form of an opinion of Bond Counsel addressed to Financial Security
(or a reliance letter relating thereto) to the effect that the Escrow Deposit Agreement is a valid and binding
obligation of the parties thereto enforceable in accordance with its terms. An executed copy of each of such
opinion and reliance letter, if applicable, shall be forwarded to Financial Security together with the opinion
requested by Condition 5 hereof.
In the event an FPC is employed the Original Verification should also verify the adequacy of the FPC securities to
pay the portion of debt service on the Refunded Bonds to which the FPC relates.
L:1L E GA L WI U N I S~.S TA TE S~FL~98688 _ N . doc
.:~,
_~r ~:. ,
MUNICIPAL BOND DEBT SERVICE RESERVE
INSURANCE COMMITMENT
Issuer: City of Clermont, Florida Date of Commitment: October 10, 2000
Bonds Insured: Water and Sewer Revenue and Refunding Bonds, Series 2000
Premium: 2.25% of Policy Limit Expiration Date: Friday, December 15. 2000
Policy Limit: A dollar amount equal to the Debt Service Reserve Requirement, as specified under the Resolution
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), a stock insurance company, hereby commits to
issue its Municipal Bond Debt Service Reserve Insurance Policy (the "Reserve Policy"), in the form attached hereto
as Exhibit A, relating to the above-described debt obligations (the "Bonds"), subject to the terms and conditions
contained herein or added hereto. All terms used herein and not otherwise defined shall have the meanings
ascribed to them in the document setting forth the security for and authorizing the issuance of the Bonds (the
"Resolution").
To keep this Commitment in effect after the Expiration Date set forth above, a request for renewal must be submitted
to Financial Security prior to such expiration date. Financial Security reserves the right to refuse wholly or in part to
grant a renewal. To keep the Commitment in effect to the Expiration Date set forth above, Financial Security must
receive a duplicate of this Commitment executed by an appropriate officer of the Issuer by the date which is ten days
from the date of this Commitment.
THE RESERVE POLICY SHALL BE ISSUED UPON SATISFACTION OF THE FOLLOWING CONDITIONS:
1. The documents to be executed and delivered in connection with the issuance and sale of the Bonds shall not
contain any untrue or misleading statement of a material fact and shall not fail to state a material fact
necessary in order to make the information contained therein not misleading.
2. No event shall occur which would permit any purchaser of the Bonds, otherwise required, not to be required to
purchase the Bonds on the date scheduled for the issuance and delivery thereof.
3. There shall be no material change in or affecting the Bonds (including, without limitation, the security for the
Bonds) or the financing documents or the Official Statement (or any similar disclosure documents) to be
executed and delivered in connection with the issuance and sale of the Bonds from the descriptions or forms
thereof approved by Financial Security.
4. Financial Security shall be provided with:
(a) A letter from Foley 8~ Lardner ("Bond Counsel") addressed to Financial Security to the effect that
Financial Security may rely on the approving opinion(s) of Bond Counsel as if such opinion(s) were addressed
to Financial Security.
(b) An opinion(s) of Bond Counsel, addressed to and in form and substance satisfactory to Financial
Security, as to the (i) due authorization, validity and enforceability of the authorizing document, the Insurance
Agreement and the document which incorporates the requirements set forth in Paragraph 5 hereof and (ii) the
perfection of the security interests created thereunder.
Page 1 of 3
(c) Evidence of wire transfer in federal funds in an amount equal to the insurance premwm, unless
alternative arrangements for the payment of such amount acceptable to Financial Security have been made
prior to the delivery date of the Reserve Poficy.
5. The Resolution shall include the following terms and conditions and shall be in form and substance
acceptable to Financial Secunry:
(a) The Issuer shall repay any draws under the Reserve Policy and pay all related reasonable expenses
incurred by Financial Security. Interest shall accrue and be payable on such draws and expenses from the
date of payment by Financial Security at the Late Payment Rate. "Late Payment Rate" means the lesser of
(a) the greater of (i) the per annum rate of interest, publicly announced from time to time by The Chase
Manhattan Bank at its principal office in the City of New York, as its prime or base lending rate ("Prime Rate")
(any change in such Prime Rate to be effective on the date such change is announced by The Chase
Manhattan Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Bonds and (b) the
maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment
Rate shall be computed on the basis of the actual number of days elapsed over a year of 365 days. In the
event The Chase Manhattan Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the
publicly announced prime or base lending rate of such national bank as Financial Security shall specify.
Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate
(collectively, "Policy Costs") shall commence in the first month following each draw, and each such monthly
payment shall be in an amount at least equal to 1/12 of the aggregate of Policy Costs related to such draw.
Amounts in respect of Policy Costs paid to Financial Security shall be credited first to interest due, then
to the expenses due and then to principal due. As and to the extent that payments are made to Financial
Security on account of principal due, the coverage under the Reserve Policy will be increased by a like
amount, subject to the terms of the Reserve Policy.
All cash and investments in the debt service reserve fund established for the Bonds (the "Reserve
Fund") shall be transferred to the debt service fund for payment of debt service on Bonds before any drawing
may be made on the Reserve Policy or any other credit facility credited to the Reserve Fund in lieu of cash
("Credit Facility"). Payment of any Policy Costs shall be made prior to replenishment of any such cash
amounts. Draws on all Credit Facilities (including the Reserve Policy) on which there is available coverage
shall be made on a pro-rata basis (calculated by reference to the coverage then available thereunder) after
applying all available cash and investments in the Reserve Fund. Payment of Policy Costs and
reimbursement of amounts with respect to other Credit Facilities shall be made on a pro-rata basis prior to
replenishment of any cash drawn from the Reserve Fund.
(b) If the Issuer shalt fail to pay any Policy Costs in accordance with the requirements of Paragraph 5(a)
hereof, Financial Security shall be entitled to exercise any and all legal and equitable remedies available to it,
including those provided under the Resolution other than (i) acceleration of the maturity of the Bonds or (ii)
remedies which would adversely affect owners of the Bonds.
(c) The Resolution shall not be discharged until all Policy Costs owing to Financial Security shall have
been paid in full. The Issuer's obligation to pay such amounts shall expressly survive payment in full of the
Bonds.
(d) In order to secure the Issuer's payment obligations with respect to the Policy Costs there shall be
granted and perfected in favor of Financial Security a security interest (subordinate only to that of the owners
of the Bonds) in all revenues and collateral pledged as security for the Bonds.
(e) The additional bonds test and the rate covenant in the Resolution shall expressly provide for at least
one times coverage of the Policy Costs then due and owing.
Page 2 of 3
L:\LEGALUAUNIS\STATES\FL\38832 D.doc
(f) The Resolution shall require the Trustee to ascertain the necessity for a claim upon the Reserve Policy
and to provide notice to Financial Security in accordance with the terms of the Reserve Policy at least five
business days prior to each date upon which interest or principal is due on the Bonds. Where deposits are
required to be made by the Issuer with the Trustee to the debt service fund for the Bonds more often than
semi-annually, the Trustee shall be instructed to give notice to Financial Security of any failure of the Issuer to
make timely payment in full of such deposits within two business days of the date due.
6. The Reserve Policy shall expire on the earlier of the date the Bonds are no longer outstanding and the final
maturity date of the Bonds.
7. The Issuer shall deliver to Financial Security an executed Insurance Agreement in substantially the form of
Exhibit B hereto.
8. Any official statement or similar disclosure document relating to the Bonds shall contain only such references
to the Reserve Policy and Financial Security as we shall supply or approve.
9. Financial Security shall insure the Bonds pursuant to its Commitment Letter dated October 10, 2000.
10. Promptly after the issuance of the Reserve Policy, Financial Security shall receive a complete set of executed
documents implementing the requirements of this Commitment.
FINANCIAL SECURITY ASSURANCE INC.
`~,- ~.
Authorized Officer
To keep this commitment in effect to the Expiration Date set forth on the first page, Financial Security must receive
by the date which is ten days from the date of this Commitment a duplicate of this Commitment executed by an
appropriate officer of the Issuer.
The undersigned agrees that if the debt service reserve fund requirement for the Bonds is met in whole or in part by
credit instrument, such credit instrument shall be a Reserve Policy provided by Financial Security in accordance with
the terms of this Commitment. The undersigned further acknowledges and agrees that execution of the Resolution
constitutes an express instruction by the undersigned to legal counsel to deliver to Financial Security the opinions
required by paragraph 4 hereof (such instruction and opinion delivery requirements being a condition precedent to
issuance of the Reserve Policy hereunder).
Accepted as of , 2000 by City of Clermont, Florida.
BY:
Title:
Date:
Page 3 of 3
L:~LEGALUAUNIS\STATE S\FL\38832_D.doc
~, .
:~~ FINANCjAL MUNICIPAL BOND D T SERVICE
_~ SECURITY RESERVE INSURAN POLICY
ASSURANCE®
ISSUER: _ oiicv No.: -R
BONDS: /~~ ~ ive Date:
Date:
FINANCIAL SECURITY ASSURANCE INC. ("Financial Secu for sideration rved, hereby
UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the t (the ' stee") pa ing agent (the
"Paying Agent") as set forth in the documentation (t "Bond Doc a pro g fo th issuance of and
securing the Bonds, for the benefit of the Owners, subj ly to the thi y ich includes each
endorsement hereto), that portion of the pnncipal d int r s n the ds sh a me Due for Payment
but shall be unpaid by reason of Nonpayment by th I uer.
Financial Security will make payment as pr t ' ol~ t th or P g Agent on the later of the
Business Day on which such pnncipal a in o Du r P or the Business Day next following
the Business Day on which Financial sha I hav r eiv once f onpayment, in a form reasonably
satisfactory to it. A Notice of Nonpaym n will be deemed ive a give usiness Day rf d is received pnor
to 1:00 p.m. (New York time) on such iness Day; othe it 't deemed received on the next Business
Day. If any Notice of Nonpayme rec ' d by Financial Sec is ' omplete, it shall be deemed not to have
been received by Financial Sec for u ses of the precedi ent a and Financial Security shall promptly
so advise the Trustee, Pay g gent Issuer, as appr ria ,who may submit an amended Notice of
Nonpayment Payment by na I Secu ~ to the Trusfee ayi Agent for the benefit of the Owners shall, to
the extent thereof, discha a obligation f financial Secu under this Policy. Upon such payment, Financial
Security shall become entiU reimb e t of the a u t so paid (together with interest and expenses)
pursuant to the
The amount avail le 's lacy r payment II n xceed the Policy Limit. The amount available at any
particular time to paid to T or Paying Agent under the terms of this Policy shall automatically be
reduced by any pa nt u r is Howe er, after such payment, the amount available under this Polity
shall be re ed i A or i rt, b h up o e Polity Limit, to the extent of the reimbursement of such
payment x o nd e s o nancial Security by or on behaH of the Issuer. Within three
Business y5 such rsement, Security shall provide the Trustee, the Paying Agent and the
Issuer lice of the rsement and i atement.
Payment un Polity 1 not be available with respect to (a) any Nonpayment that occurs prior to the
Effective Date her Te anon Date of this Policy or (b) Bonds that are not outstanding under the Bond
Document. If the amo ab nder this Policy is also payable under another insurance policy or surety bond
insuring the Bonds, pa t ust !1 be made under this Policy to the extent of the amount available under this
Policy up to the Policy Li In event shall Financial Security incur duplicate liability for the same amounts
owing with respect to the Bo that are covered under this Policy and any other insurance policy or surety bond
that Financial Security ~ u
Except to the extent expre~"5fy modified by an endorsement hereto, the following terms shall have the meanings
specified for all purposes of this Policy. 'Business Day" means any day other than (a) a Saturday or Sunday or (b)
a day on which banking institutions in the State of New York are, or the Insurefs Fiscal Agent is, authorized or
required by taw or executive order to remain closed. "Due for Payment" means (a) when retemng to the pnncipal
of a Bond, payable on the stated maturity date thereo( or the date on which the same shall have been duly called
for marxiatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason
of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of
maturity unless Finarxyal Security shall elect, in its sole discretion, to pay such principal due upon such
acceleration together with any accn~ed interest to the date of acceleration and (b) when retemng to interest on a
Bond, payable on the stated date for payment of interest "Insurance Agreement" means the Insurance
r
Page 2 of 2
Policy No. -R
Agreement dated as of the effective date hereof in respect of this Policy, as the s may be amended or
supplemented from time to time. "Nonpayment" means, in respect of a Bond, the fail of the Issuer to have
provided sufficient funds to the Paying Agent for payment in full of all principal and interest is Due for Payment
on such Bond. "Nonpayment' shall also include, in respect of a Bond, any payment of pri I or interest that is
Due for Payment made to an Owner by or on behaH of the Issuer that has en recovere om such Owner
pursuant to the United States Bankruptcy Code by a trustee in bankru accord with a final,
nonappealable order of a court having competent jurisdiction. "Notice" ele is or t opted notice,
subsequently confirmed in a signed writing, or written notice by register ce i ai , m Issuer, the
Trustee or the Paying Agent to Financial Security which notice shall (a) the rso a aking the
claim, (b) the Policy Number, (c) the claimed amount and (d) the d to uch clai ant Due for
Payment. "Owner' means, in respect of a Bond, the person or entity at the ti a onpaymen , ntitled
under the terms of such Bond to payment of pnncipal or interest t ereun exce t t " er' shall not i lade
the Issuer or any person or entity whose direct or indirect oblig n co un g security for the
Bonds. 'Policy Limit" shall be the dollar amount of the debt servic r erve r aired to intained for the
Bonds by the Bond Document from time to time (the "Debt Service a rve a uirement"), b no event shall
the Policy Limit exceed $(21 ]. The Policy Limit shall automatically an ~_ oca reduced fro ime to time by
the amount of each reduction in the Debt Service Reserve Requireme '~~ rout in the ~ Document.
Financial Security may appoint a fiscal agent (the "Insu fiscal A t°) u ~ o his Policy by giving
~
written notice to the Trustee and the Paying Agen ecifyt ad of the Insurers Fiscal
name n
Agent. From and after the date of receipt of such e b ayi Agent, (a) copies of all
notices required to be delivered to Financial Seca rsua o shall imuttaneousy delivered to
the Insurers Fiscal Agent and to Financial ecu an II recei d until received by both and
(b) ail payments required to be made b Fi Sec un is I may be made directly by Financial
Security or by the Insurers Fiscal Agent haH of Fina S Th urers Fiscal Agent is the agent of
Financial Security only and the Insurer rscal Agent shall ' e t be li a to any Owner for any act of the
Insurers Fiscal Agent or any failure of i ancial Security to it cause to be deposited sufficient funds to
make payments due under this P '
To the fullest extent permitt y lira law, Financial S Tees not to assert, and hereby waives, only
for the benefR of each r, I rights ( Cher by counte im, toff or otherwise) and defenses (including,
without limitation, the defe f fraud), wh r acquired by brogation, assignment or otherwise, to the extent
that such rights and defenses y be a Financial
' uriry to avoid payment of its obligations under this
Policy in accordance e o ' ' o is Pol
This Policy sets f ful u rt rig of Fina city, and shall not be modrfied, altered or affected by
any other agree or ins n lading any rnodrfication or amendment thereto. Except to the extent
expressly an en me reto, (a) ny premium paid in respect of this Policy is nonrefundable for
any re tsoe a incl pa t, or ion being made for payment, of the Bonds prior to maturity
and (b) be ca or revoked. THIS POLICY IS NOT COVERED BY THE
PROPE /C UAL RANCE S R FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK
fNSURA LAW.
In witness INAN SECURITY ASSURANCE INC. has caused this Policy to be executed on its
behalf by its A r.
(Countersignature] FINANCIAL SECURITY ASSURANCE INC.
By By
Authorized Officer
A subsidiary of Financial Security Assurance Holdings Ltd. (212) 826-0100
350 Park Avenue, New York, N.Y. 10022-6022
Form 501 NY (6/90)
7. If the Issuer shalt fait to pay any Policy Costs in accordance with the requirements of the
Resolution and this Agreement, the Insurer shall be entitled to exercise any and all legal and
equitable remedies available to it, including those provided under the Resolution, other than (i)
acceleration of the maturity of the Bonds or (ii) remedies which would adversely affect owners of
the Bonds.
8. The Resolution shall not be discharged until all Policy Costs owing to the Insurer shall have been
paid in full. The Issuer's obligation to pay such amounts shall expressly survive payment in full of
the Bonds.
9. In order to secure the Issuer's payment obligations with respect to the Policy Costs, there is
hereby granted and perfected in favor of the Insurer a security interest (subordinate only to that of
the owners of the Bonds) in all revenues and collateral pledged as security for the Bonds.
10. Policy Costs due and owing shall be included in debt service requirements for purposes of
calculation of the additional bonds test and the rate covenant in the Resolution.
1 i. The Trustee shall ascertain the necessity for a claim upon the Reserve Policy and provide notice
to the Insurer in accordance with the terms of the Reserve Policy at least five business days prior
to each date upon which interest or principal is due on the Bonds. Where deposits are required to
be made by the Issuer with the Trustee to the debt service fund for the Bonds more often than
semi-annually, the Trustee shall give notice to the Insurer of any failure of the issuer to make
timely payment in full of such deposits within two business days of the date due.
12. Notices to the Insurer shall be sent to the following address (or such other address as the Insurer
may designate in writing): Financial Security Assurance Inc., 350 Park Avenue, New York, New
York 10022-6022 Attention: Managing Director -Surveillance.
13. This Agreement may be executed in counterparts, each of which alone and all of which together
shall be deemed one original Agreement.
14. If any one or more of the agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such agreements, provisions or terms shall be deemed
severable from the remaining agreements, provisions or terms of this Agreement and shall in no
way affect the validity or enforceability of the other provisions of this Agreement.
15. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Resolution.
16. This Agreement and the rights and obligations of the parties of the Agreement shall be governed
by and construed and interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date written above.
CITY OF CLERMONT, FLORIDA FINANCIAL SECURITY ASSURANCE INC.
By: _
Tifle:
By:
Title: Managing Director
Page 2 of 2
EXHIBIT B
INSURANCE AGREEMENT
INSURANCE AGREEMENT, dated as November _: 2000 by and between City of Clermont. Florida (the
"Issuer") and Financial Security Assurance Inc. (the "Insurer') (the "Agreement").
In consideration of the issuance by the Insurer of its Municipal Bond Debt Service Reserve Insurance Policy
(the "Reserve Policy") with respect to the Issuer's Water and Sewer Revenue and Refunding Bonds, Series 2000
(the "Bonds") issued under Resolution No. ,adopted by the City Council of the Issuer on ,
2000 (the "Resolution") and the Issuer's payment to the Insurer of the insurance premium for the Reserve Policy, the
Insurer and the Issuer hereby covenant and agree as follows:
Upon any payment by the Insurer under the Reserve Policy, the Insurer shall furnish to the Issuer
written instructions as to the manner in which payment of amounts owed to the Insurer as a result
of such payment under the Reserve Policy shall be made.
The Issuer shall pay the Insurer the principal amount of any draws under the Reserve Policy and
pay all related reasonable expenses incurred by the Insurer and shall pay interest thereon from the
date of payment by Financial Security at the Late Payment Rate. "Late Payment Rate" means the
lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time
by The Chase Manhattan Bank at its principal office in the City of New York, as its prime or base
lending rate ("Prime Rate") (any change in such Prime Rate to be effective on the date such
change is announced by The Chase Manhattan Bank) plus 3%, and (ii) the then applicable highest
rate of interest on the Bonds and (b) the maximum rate permissible under applicable usury or
similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the
actual number of days elapsed over a year of 360 days. In the event The Chase Manhattan Bank
ceases to announce its Prime Rate, the Prime Rate shall be the prime or base lending rate of such
national bank as the Insurer shall designate.
3. Repayment of draws and payment of expenses and the interest accrued thereon at the Late
Payment Rate (collectively, "Policy Costs") shall commence in the first month following each draw,
and each such monthly payment shall be in an amount at least equal to 1/12th of the aggregate of
Policy Costs related to such draw.
4. Amounts in respect of Policy Costs paid to the Insurer shall be credited first to interest due, then to
the expenses due and then to principal due.
5. As and to the extent that payments are made to the Insurer on account of principal due, the
coverage under the Reserve Policy will be increased by a like amount, subject to the terms of the
Reserve Policy.
6. Alf cash and investments in the Reserve Fund shall be transferred to the debt service fund for
payment of debt service on the Bonds before any drawing may be made on the Reserve Policy or
on any alternative credit instrument. Payment of any Policy Costs shall be made prior to
replenishment of any such cash amounts. Draws on all alternative credit instruments (including
the Reserve Policy) on which there is available coverage shall be made on a pro rata basis
(calculated by reference to coverage then available under each such alternative credit instrument)
after applying available cash and investments in the Reserve Fund. Payment of Policy Costs and
reimbursement of amounts with respect to alternative credit instruments shall be made on a pro-
rata basis prior to replenishment of any cash drawn from the Reserve Fund.
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