1989-12 Water & Sewer BondsRESOLUTION NO. 89-12
A RESOLUTION AMENDING VARIOUS PROVISIONS OF
RESOLUTION 0 NO. 87-19 AS AMENDED, OF THE CITY OF
OKEECHOBEE, FLORIDA, AUTHORIZING ISSUANCE OF
• $5,000,000 WATER AND SEWER REFUNDING AND
IMPROVEMENT REVENUE BONDS, SERIES 1987; AMENDING
VARIOUS PROVISIONS OF RESOLUTION NO. 89-3 OF THE CITY
AUTHORIZINd THE ISSUANCE OF NOT EXCEEDING $5,000,000
WATER ANDOEWER IMPROVEMENT REVENUE BONDS, SERIES
1989; "PRONG NG THE DEPOSIT OF A SURETY BOND INTO THE
RESERVE ACCOUNT SECURING THE 1987 BONDS AND THE
1989 BONDS; -)AUTHORIZING THE EXECUTION AND DELIVERY
OF A FINANCIAL GUARANTY AGREEMENT TO THE SURETY
BOND INSURER; AWARDING SALE OF THE 1989 BONDS;
AUTHORIZING EXECUTION AND DELIVERY OF A PURCHASE
CONTRACT FOR THE 1989 BONDS; FIXING THE DATE,
MATURITIES, INTEREST RATES, INTEREST PAYMENT DATES,
AND REDEMPTION PROVISIONS WITH RESPECT TO SUCH 1989
BONDS; AUTHORIZING USE OF OFFICIAL STATEMENTS IN
CONNECTION WITH MARKETING THE 1989 BONDS;
AUTHORIZING OTHER ACTION IN CONNECTION WITH THE
DELIVERY OF SUCH 1989 BONDS; DESIGNATING THE 1989
BONDS AS A QUALIFIED TAX-EXEMPT OBLIGATION;
DESIGNATING THE PAYING AGENT AND REGISTRAR FOR THE
1989 BONDS; AND PROVIDING AN EFFECTIVE DATE.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OKEECHOBEE,
FLORIDA, AS FOLLOWS:
SECTION 1. AUTHORITY FOR THIS RESOLUTION. This Resolution
is adopted pursuant to Chapter 166, Part II, Florida Statutes, and other applicable
provisions of law, and pursuant to Section 16R of Resolution No. 87-1 duly adopted by the
City Council of the Issuer on January 209 1987, as amended and supplemented, particularly
as amended and supplemented by Resolution No. 87-7 duly adopted by the City Council of
the Issuer on July 8, 1987 and Resolution No. 87-8 duly adopted by the City Council of the
Issuer on July 21, 1987 (collectively, the "Original Resolution') and Resolution No. 89-3
duly adopted by the City Council of the Issuer on August 1, 1989 (the "1989 Resolution").
SECTION 2. DEFINITIONS. All terms defined in the 1989 Resolution
shall have the satae meaning herein, unless the text otherwise expressly requires. The
following terms shall have the following meanings herein, unless the text otherwise
expressly requires. Words importing singular number shall include the plural number in
each case and vice versa, and words importing persons shall include firms and
corporations.
111987 Bonds" shall mean the Issuer's Water and Sewer Refunding and
Improvement Revenue Bonds, Series 1987, authorized to be issued under the Original
Resolution.
LKL-12/06/89-329AA-2914
Rev.12/07/89
-1-
4i
4
"1989 Bonds" shall mean the Issuer's Water and Sewer Improvement Revenue
Bonds, Series 1989, authorized to be issued under the 1989 Resolution.
"Act" shall mean Chapter 166, Part II, Florida Statutes, and other applicable
provisions of law, and the Original Resolution and the 1989 Resolution.
"AMBAC" shall mean AMBAC Indemnity Corporation, a Wisconsin - domiciled
stock insurance company.
"Financial Guaranty Agreement" shall mean that certain Financial Guaranty
Agreement, dated as of the date of closing for the 1989 Bonds, between the Issuer and
MBIA, in substantially the form attached hereto as Exhibit "A".
"MBIA" shall mean Municipal Bond Investors Assurance Corporation, a stock
insurance company incorporated under the laws of the State of New York.
"Surety Bond" shall have the meaning assigned thereto in the Financial
Guaranty Agreement.
SECTION 3. FINDINGS. It is hereby ascertained, determined and
declared that:
A. The Issuer has received from MBIA a commitment to insure the payment
of principal and Interest on the 1989 Bonds and a commitment to provide the Surety Bond
for deposit into the Reserve Account securing the 1987 Bonds and the 1989 Bonds.
B. As a condition set forth in the commitments from MBIA, certain
amendments are required to the Original Resolution and the 1989 Resolution.
C. The Issuer has determined that the amendments to the Original
Resolution do not contain a "material modification or amendment" within the meaning of
Section 20 of the Original Resolution in that such amendments provide for application of
Pledged Revenues subordinate to the holders of the 1987 Bonds, provide increased rate
covenant coverages, and otherwise preserve the rights of the holders of the 1987 Bonds
and of AMBAC.
D. Deposit of the Surety Bond into the Reserve Account requires the
written consent of AMBAC under the Original Resolution and such written consent will be
obtained prior to such deposit of the Surety Bond.
E. The Original Resolution requires that moneys in the Reserve Account
(taking into account the Surety Bond) in excess of the Maximum Bond Service
Requirement on all Bonds then outstanding, shall be deposited into the Sinking Fund.
F. As a condition of MBIA providing the Surety Bond, the Issuer must enter
into the financial guaranty agreement.
G. The Original Resolution, in Section 16R thereof, provides for the
issuance of Additional Bonds on a parity with the 1987 Bonds under the terms, limitations
and conditions provided therein, and the Issuer expects all of such conditions to be met
LKL-12/06/89-329AA-2914 -2-
with respect to the 1989 Bonds and shall not issue the 1989 Bonds until such conditions are
met.
• H. The Issuer hereby finds that the timing, size and complexity of the
financing and the present volatility of the municipal bond market require that its terms be
negotiated at private sale rather than offered by competitive bid at public sale in order to
assure the most favorable terms in the bond market and, therefore, has determined to sell
the 1989 Bonds at private, negotiated sale.
I. The Issuer has received a Purchase Contract attached hereto as Exhibit
"B" (the "Purchase Contract") from First Union Securities, Inc. (the "Underwriter"), the
acceptance of which the Issuer determines to be in its best interest and hereby approves.
J. The Issuer desires to approve and ratify the use of Official Statements,
in substantially the form attached hereto as Exhibit "C" (the "Official Statement"), to
designate the Paying Agent and Registrar for the 1989 Bonds, to designate the 1989 Bonds
as a "qualified tax-exempt obligation" under Section 265(b) of the Code, and to authorize
the taking of all necessary action in connection with the delivery of the 1989 Bonds.
SECTION 4. AMENDMENTS TO THE ORIGINAL RESOLUTION. The
Original Resolution is hereby amended, pursuant to the terms thereof and pursuant to
Section 3C of this Resolution, as follows:
A. Section 16B of the Original Resolution is hereby amended, in part, by
redesignating Subsections (6) and (7) thereof as Subsections (7) and (8), respectively, and
by adding a new Subsection (6) to read as follows:
11(6) The Issuer shall next apply and deposit the moneys in the Revenue Fund
for payment to Municipal Bond Investors Assurance Corporation, or its successor, interest
on amounts advanced under the Reserve Account surety bond as required by the financial
guaranty agreement, or other applicable reimbursement agreement under the Reserve
Account surety bond."
B. Subsection 16F of the Original Resolution is hereby amended, in part, to
add the following sentence at the end thereof:
"For purposes of this subsection all amounts owed to Municipal Bond Investors
Assurance Corporation, or its successors, under the financial guaranty agreement or other
applicable reimbursement agreement under the Reserve Account suzety bond, shall be
deemed to be within the meaning of 'all reserve and other payments required to be made
pursuant to this Resolution.' "
C. Subsection 16N of the Original Resolution is hereby amended, in part, to
add the following sentence at the end thereof:
"The Paying Agent for the Bonds shall, at the direction of the surety bond
insurer, with the consent of the applicable insurer of the debt service on the Bonds,
enforce by mandamus, suit or other proceeding at law or in equity the covenants and
agreements of the Issuer under this Resolution." ,
LKL-12/07/89-329AA-2914 -3-
D. Section 20 of the Original Resolution is hereby amended, in part, to add
the following sentence to the end thereof:
"Insurer under this Section shall be deemed to include the insurer under the
Reserve Account surety bond. A copy of all amendments to this Resolution which are
consented to by the insurer shall be mailed to Standard & Poor's Corporation."
E. The Original Resolution is hereby amended, in part, by redesignating
Sections 25 and 26 thereof as Sections 26 and 27, respectively, and by adding a new
Section 25 to read as follows:
"Section 25. Reserve Account Surety Bond. The Issuer shall deliver a
"demand for payment," in the form provided by the Reserve Account surety bond insurer,
at least three (3) business days prior to the date on which funds are required. The Issuer
shall maintain adequate records, verified by the surety bond insurer, as to the amount
available to be drawn at any given time under the Reserve Account surety bond and as to
the amounts paid and owing to the surety bond insurer under the terms of the financial
guaranty agreement or other applicable reimbursement agreement under the Reserve
Account surety bond. The Issuer hereby covenants to pay or cause to be paid, but only
from the Pledged Revenues, all amounts owed to the surety bond insurer under the terms
of the financial guaranty agreement or other applicable reimbursement agreement under
the Reserve Account surety bond in the order of priority established in Section 16B of this
Resolution. All such amounts shall be paid in full before, or concurrent with, defeasance
of any Bonds, optional redemption of any Bonds, refunding of any Bonds or distribution of
funds (other than as permitted by Section 16B of this Resolution) to the Issuer or any
underlying obligor on any Bonds. In the event that both cash and a Reserve Account
surety bond are on deposit in the Reserve Account, draws on the Reserve Account shall be
completely from cash (until there is no longer any cash in the Reserve Account) before
any demand is made on the Reserve Account surety bond, and replenishment of the
Reserve Account from Pledged Revenues shall be applied first, to reinstate the Reserve
Account surety bond at the surety bond limit and second, to replenish cash in the Reserve
Account. The surety bond insurer shall be deemed a third -party beneficiary under the
Resolution and all terms, conditions and obligations of the Issuer in this Resolution shall
be subject to specific performance by the surety bond insurer. MBIA shall receive all
notices with respect to this Resolution as follows: Municipal Bond Investors Assurance
Corporation; 113 King Street, Armonk, New York 10504; Attention: Surveillance
Department."
SECTION 5. AMENDMENTS TO 1989 RESOLUTION. The 1989
Resolution is hereby amended, as follows:
A. Section 20 of the 1989 Resolution is hereby amended, in part, to add the
following sentences to the end thereof:
"Insurer under this Section shall be deemed to include the insurer under the
Reserve Account surety bond. A copy of all amendments to this Resolution which are
consented to by the insurer shall be mailed to Standard & Poor's Corporation."
SECTION 6. AUTHORIZATION OF EXECUTION AND DELIVERY OF
FINANCIAL GUARANTY AGREEMENT. The Financial Guaranty Agreement, in
LKL-12/07/89-329AA-2914 -4-
substantially the form attached hereto as Exhibit "A," with such changes, alterations and
corrections as may be approved by the Mayor or Vice -Mayor of the Issuer, such approval
to be presumed by his execution thereof, is hereby approved by the Issuer, and the Issuer
hereby authorizes and directs said Mayor or Vice -Mayor to execute, and the Clerk or
Deputy Clerk of the Issuer to attest under the seal of the Issuer, the Financial Guaranty
• Agreement and to deliver to MBIA the Financial Guaranty Agreement, all of the
provisions of which, when executed and delivered by the Issuer as authorized herein and by
MBIA duly authorized, shall be deemed to be a part of this instrument as fully and to the
same extent as if incorporated verbatim herein.
0
0
SECTION 7. AWARD OF BONDS. The Issuer hereby finds, determines
and declares that the recent volatility in the municipal bond market is presently so great
that a competitive public sale on a date which must be fixed well in advance for the
receipt of bids would prove extremely costly should such date occur during an upswing in
the market. Therefore, the flexibility to choose to award or not to award the 1989 Bonds
on a day to day basis is needed to assure the best interest rate obtainable for the 1989
Bonds which can only be accomplished by sale on a negotiated basis. The negotiated sale
of the principal amount of the 1989 Bonds, specified in the Purchase Contract, to the
Underwriter is hereby authorized and the Issuer has received the disclosure required by
Section 218.385, Florida Statutes. A copy of the disclosure is attached to the Purchase
Contract. The offer in the form of the Purchase Contract, attached hereto as Exhibit "B"
and made a part hereof, relating to the purchase of the 1989 Bonds is hereby accepted and
the 1989 Bonds are hereby awarded and sold to the Underwriter at the purchase price and
upon the terms and conditions set forth in the Purchase Contract. The principal amount
of 1989 Bonds authorized in the 1989 Resolution which are in excess of the principal
amount awarded pursuant to the Purchase Contract are hereby cancelled.
SECTION 8. DESCRIPTION OF 1989 BONDS. The 1989 Bonds shall be
Issued in fully registered form, shall be numbered consecutively from R-1 upward in the
order of their maturities; shall be in $5,000 denominations; shall be dated November 1,
1989; shall bear interest from such date, at such rates, payable on such dates, shall
mature on the dates and in the amounts, and shall be redeemable prior to maturity upon
the terms and provisions and in the manner, all as specified in the Purchase Contract
attached hereto as Exhibit "B". The maturities of Bonds described in the Purchase
Contract as Term Bonds shall be Term Bonds hereunder and shall be redeemable by
operation of the Bond Amortization Account.
SECTION 9. APPROVAL OF OFFICIAL STATEMENT FOR BONDS. The
use of the preliminary Official Statement relating to the Bonds, in the form attached
hereto as Exhibit "C", and made a part hereof, with such revisions as shall hereafter be
approved by the Mayor of the Issuer, such approval to be evidenced by his execution
thereof, is hereby authorized and approved in connection with marketing of the 1989
Bonds, and the proper officers of the Issuer are further authorized to execute the final
Official Statement, revised to reflect the provisions of the Purchase Contract and the
provisions of this Resolution and to deliver same to the Underwriter.
SECTION 10. AUTHORIZING EXECUTION OF PURCHASE CONTRACT
AND AUTHORIZATION OF ALL OTHER NECESSARY ACTION. The proper officers of
the Issuer are hereby authorized and directed to execute and deliver the Purchase
Contract and to execute the Bonds when prepared and deliver the same, to__,the .
LKL-12/07/89-329AA-2914 -5-
Underwriter upon payment of the purchase price pursuant to the conditions stated in the
Purchase Contract. The Mayor, Vice -Mayor, the City Clerk, the attorney for the Issuer
and the bond counsel for the Issuer are each designated agents of the Issuer in connection
with the issuance and delivery of the 1989 Bonds, and are authorized and empowered,
collectively or individually, to take all action and steps to execute and deliver any and all
instruments, documents or contracts on behalf of the Issuer which are necessary or
desirable in connection with the execution and delivery of the 1989 Bonds and which are
not inconsistent with the terms and provisions of this Resolution and other actions
relating to the 1989 Bonds heretofore taken by the Issuer.
SECTION 11. QUALIFIED TAX EXEMPT OBLIGATIONS. The Issuer
hereby represents and finds that it reasonably anticipates not more than $10,000,000 of
tax exempt obligations (other than certain private activity bonds) will be issued by the
Issuer and its subordinate governmental entities in calendar year 1989. The Issuer hereby
directs its Mayor to recertify these representations upon issuance of the 1989 Bonds, and
the 1989 Bonds are hereby designated as a "qualified tax exempt obligation" under Section
265(bx3) of the Code.
SECTION 12. PAYING AGENT AND REGISTRAR. Citizens and Southern
Trust Company (Florida), National Assoclation, Ft. Lauderdale, Florida, is hereby
appointed Paying Agent and Registrar in connection with the 1989 Bonds.
SECTION 13. RESOLUTIONS TO REMAIN IN EFFECT. All other Sections
and provisions of the Original Resolution and of the 1989 Resolution, not express
amended herein, shall remain in full force and effect.
SECTION 14. SEVERABILITY OF INVALID PROVISIONS. If any one or
more of the covenants, agreements or provisions herein contained shall be held contrary
to any express provisions 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 or provisions and shall in no
way affect the validity of any of the other provisions hereof or of the Bonds issued
hereunder.
SECTION 15. REPEALING CLAUSE. All ordinances or resolutions or parts
thereof of the Issuer in conflict with the provisions herein contained are, to the extent of
such conflict, hereby superseded and repealed.
SECTION 16. EFFECTIVE DATE. This resolution shall take effect immed-
iately upon its adoption.
LHL-12/07/89-329AA-2914 -6-
•
r
•
Adopted this day of December, 1989.
CITY OF OKEECHOBEE, FLORIDA
(SEAL)
Attest:
City Clerk `
Approved as to form:
�",c14""1'
LKL-12/07/89-329AA-2914 -7-
Mayor
STATE OF FLORIDA
COUNTY OF OKEECHOBEE
I, Bonnie S. Thomas, the undersigned City Clerk of the City of Okeechobee,
Florida, do hereby certify that the above and foregoing is a true and correct copy of a
resolution as the same was duly adopted and passed at a meeting of the City Council on
the day of December, 1989, and as the same appears on record in my office.
IN WITNESS WHEREOF, I hereunto set my hand and official seal this
day of December, 1989.
CITY OF OKEECHOBE% FLORIDA
1. rfyC
i.... 'WIN
LKL-12/07/89-329AA-2914 -8-
A
.t
•
EXHIBIT A
FINANCIAL GUARANTY AGREEKENT
(BETWEEN ISSUER AND INSURER)
FINANCIAL GUARANTY AGREEMENT made as of (Date of
Obligations) by and between ('the Issuer') and
M:'NICIPAL BOND INVESTORS ASSURANCE CORPORA':ION (the 'Insurer'), organized
under the laws of the state of New York.
W I T N E S S E T F:
WHEREAS, the Issuer has or will issue the Obligations; and
WP.EREAS, pursjant to the terms of the Document the Issuer agrees to
make certain payments on the Obligations; and
WREREAS, the Insurer will issue its Surety Bond, substantially in the
form set forth in Annex A to this Agreement, guaranteeing certain payments by
the Issuer sutject to the terms and limitations of the Surety Bona; and
WHEREAS, to induce the Insurer to issue the Surety Bond, the Issuer has
agreed to pay the premium, for the Surety Bond and to reimburse the Insurer for
all payments made by the Insurer under the Surety Bond, all as more fully set
forth in this Agreement; and
WREREAS, the Issuer understands that the Insurer expressly requires the
delivery of this Agreement as part of the consideration for the execution by
the Insurer of the Surety Bond; and
NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained and of the execution of the Surety Bond, the Issuer and the
Insurer agree as follows:
f
E'
ARTICLE I
DEFINITIONSi SURETY BOND
Section 1.01. Definitions. The terms which are capitalized herein
71
shall have the meanings specified in Annex B hereto.
Section 1.02. Surety Bond.
(a) The Insurer will issue the Surety Bond in accordance with and
subject to the terms and conditions of the Commitment.
(b) The maximum. liability of the Insurer under the Surety Bond and
the coverage and term thereof shall be subject to and limited by the
term= and conditions of the Surety Bond.
Section 1.03. Premium. In consideration of the Insurer agreeing to
issue the Surety Bond hereunder, the Issuer hereby agrees to pay or cause to
be paid the Premium set forth in Annex B hereto. The Premium on the Surety
Bond is not refundable for any reason.
Section 1.04. Certain Other Expenses. The Iss.ier will pay all
reasonable fees and disbu:sements of the Insurer's special counsel related to
any modification of this Agreement or the Surety Bond.
ARTICLE II
P.EIMBUR.SEMENT AND INDEMNIFICATION
OBLICA:IONS OF ISSUER AND SECURITY THEREFOR
Section 2.01. Reimbursement for Payments Under the Surety Bond and
Expenses; Indemnification.
(a) The Issuer will reimburse the Insurer, within the Reimbursement
Period, without demand or notice by the Insurer to the Issuer or any
other person, to the extent of each Surety ,Bond,YaymFnt with.interest on
°each Surety' Bond Fra'yment ficfm •and including the date made to the date of
the reimbursement at the lesser of the Reimbursement Rate or the maximum
rate of interest permitted by then applicable law.
(b) The Issuer also agrees to reimburse the Insurer immediately and
unconditionally upon demand, to the extent permitted by state law, for
all reasonable expenses incurred by the Insurer in connection with the
Surety Bond and the enforcement by the Insurgr of the Issuer's
obligations under this Agreement, the Document and any other document
executed in'connection with the issuance of the Obligations, together
with interest on all such expenses from and including the date incurred
to the date of payment at the ra%e set forth in subsection (a) of this
Se -tion 2.01.
-2-
a.
r
3
R,-
-2-
r
•
(c) The Issuer agrees to indemnify the Insurer, to the extent
permitted by state law, against any and all liability, claims, loss,
costs, damages, fees of attorneys and other expenses which the Insurer
may sustain or incur by reason of or in consequence of (i) the failure of
the Issuer to perform or comply with the covenants or conditions of this
Agreement or (ii) reliance by the Insurer upon any representations made
by the Issuer or (iii) a default by the Issuer under the terms of the
Document or any other documents executed in connection with the issuance
of the Obligations.
(d) The Obligor and the Issuer agree that all amounts owing to the
Insurer pursuant to Section 1.03 hereof and this Section 2.01 must be
paid in full rrior to any optional redemption or refunding of the
Obligations.
(e) All payments made to the Insurer under this Agreement shall be
paid in lawful currency of the United States in immediately available
funds at the Insurer's office at 445 Hamilton Avenue, White Plains, New
York 10602, Attention: Accounting and Surveillance Departments, or at
suc"; other place as shall be designated by the Insurer.
Section 2.02. Allocation of Payments. The Insurer and the Issuer
hereby agree that each payment received by the Insurer from or on behalf of
the Issuer as a reimbursement to the Insurer as required by Section 2.01
hereof shall be applied by�the Insurer first, toward payment of any unpaid
premium; second, toward repayment of the aggregate Surety Bond.Payments made
by the Insurer and not yet repaid, payment of which will reinstate all or a
portion of the Surety Bond Coverage to the extent of such repayment (but not
to exceed the Surety Bond Limit); and third, upon full reinstatement of the
Surety Bond Coverage to the Surety Bond Limit, toward other amounts,
including, without limitation, any interest payable with respect to any Surety
Bond Payments then due to the Insurer.
Section 2.03. Security for Payments; Instruments of Further Assurance.
To the extent, but only to the extent, that the Document, or any related
indenture, trust agreement, ordinance, resolution, mortgage, security
agreement or similar •instrument, if any, pledges to the Owners or any trustee
therefor, or grants a security interest or lien in or on any collateral,
property, revenue or other payments ('Collateral and Revenues') in order tc
g provide a source of payment for the Obligations, secure the Obligations or ions, the
Issuer hereby grants to the Insurer a security interest in or lien on, as the
case may be, and pledges to the Insurer all such Collateral and Revenues as
security for payment of all amounts due hereunder and under the Document or
any other document executed in connection with the issuance of the
Obligations, which security interest, lien and/or pledge created or granted
under this Section 2.03 shall be subordinate only to the interests of the
Owners and any trustee therefor in such Collateral and Revenues, except as
otherwise provided. The Issuer agrees that it will, from time to time,
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, any and all financing statements, if applicable, and all other
furthtr instruments as may be required by law or as shall reasonably be
requested by the Insurer for the perfection of the security interest, if any,
granted under this Section 2.03 and for the preservation and protection of all
-� rights of the Insurer under this Section 2.03.
-3-
section 2.04. Unconditional Obligation. The Obligations hereunder are
absolute and unconditional and will be paid or performed strictly in
accordance with this Agreement, subject to the limitations of the Document,
irrespective of:
(a) any lack of validity or enforceability of, or any amendment or
other modification of, or waiver with respect to the Obligations, the
Document or any other document executed in connection with the issuance
of the Obligations; or -
(b) any exchange, release or nonperfection of any security interest
in property securing the Obligations or this Agreement or any obligations
hereunder; or
(c, any circumstances that might otherwise constitute a defense
available to, or discharge of, the Issuer with respect to the
Obligations, the Document or any other document executed in connection
with the issuance of the Obligations; or
(d) whether or not such Obligations are contingent or matured,
disputed or undisputed, liquidated or unliquidated.
Section 2.05. Subrogation Rights. To the extent of payments made and
expenses incurred by the Insurer in connection with the Obligations and this
Agreement, the Insurer shall be fully subrogated to the rights of the Paying
Agent and the Owners against the Issuer, which rights shall be subordinate to
the rights of the Owners to receive regularly scheduled principal and interest
on the Obligations.
ARTICLE III
AMENDMENTS TO DOCUM,EN:
So long as this Agreement is in effect, the Issuer agrees that it will
not agree
issuancedofthe
theDocument
Obligations,�ywithoutdocument
priorexecuted
writteniconsentconnection
of
the the
with the
Insurer.
ARTICLE IV
EVENTS Of DEFAULT; REMEDIES
Section 4.01. Events of Default. The following events shall constitute
Events of Default hereunder:
(a) The Issuer shall fail to pay to the Insurer when due any amount
payable under Section 1.03; or
(b) The Issuer shall fail , to pay to the Insurer any amount payable
under Sections 1.04 and 2.01 hereof and such failure shall have continued
for a period in excess of the Reimbursement Period; or
-4-
- '8
't
z:
't
•
(c) Any material representation or warranty made by the Issuer
under the Document or hereunder or any statement in the application for
the Surety Bond or any report, certificate, financial statement, document
or other instrument provided in connection with the Commitment, the
Surety Bond, the Obligations, or herewith shall have been materially
false at the time when made; or
(d) Except as otherwise provided in this Section 4.01, the Issuer
shall fail to perform any of its other obligations under the Document,
any other document executed in connection with the issuance of the
Obligations, or hereunder, provided that such failure continues for more
than 30 days after receipt by the Issuer of written notice of such
failure to perform; or
(e) The Issuer shall (i) voluntarily commence any proceeding or
file any petition seeking relief under the United States Bankruptcy Code
or any other Federal, state or foreign bankruptcy, insolvency or similar
law, (ii) consent to the institution of, or fail to controvert in a
timely and appropriate manner, any such proceeding or the filing of any
Sic') p4ti:ion, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar official for such
party or for a substantial part of its property, (iv) file an answer
admitting the material allegations of a petition filers against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take action for
the purpose of effecting any of the foregoing; or
(f) An involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of the Issuer, or of a substantial part of its property,
under the United States Bankruptcy Code or any other Federal, state or
foreign bankruptcy, insolvency or similar law or (ii) the appointment of
a receiver, trustee, custodian, sequestrator or similar official for the
Issuer or for a substantial part of its property; and such proceeding or
petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall continue unstaged and in
effect for 30 days.
Section 4.02. Remedies. If an Event of Default shall occur and be
continuing, then the Insurer may take whatever action at law or in equity may
appear necessary or desirable to collect the amounts then due and thereafter
to become due under this Agreement or to enforce performance of any obligation
of the Issuer to the Insurer under the Document or any related instrument, and
any obligation, agreement or covenant of the Issuer under this Agreement;
provided, however, that the Insurer may not take any action to direct or
require acceleration or other early redemption of the Obligations or adversely
affect the rights of the Owners. In addition, if an Event of Default shall
occur due to the failure to pay to the Insurer the amounts due under Section
1.03 hereof, the Insurer shall have the right to cancel the Surety Bond in
accordance with its terms. All rights and remedies of the Insurer under this
Section 4.02 are cum"lative and the ekercise of any one remedy doef not
preclude the exercise of one or more of the other available remedies.
-5-
4
W
j
4.
r"
ARTICLE V
SETTLEMENT
The Insurer shall have the exclusive right to decide and determine
whether any contest, suit or judgment made or brought against the Insurer, the
Issuer or any other party on the Surety Bond shall or shall not be paid,
compromised, resisted, defended, tried or appealed, and the Insurer's decision
thereon, if made in good faith, shall be final and binding upon the Insurer,
the Issuer and any other party on the Surety Bond. An itemized statement of
payments made by the Insurer, certified by an officer of the Insurer, or the
voucher or vouchers for such payments, shall be prima facie evidence of the
liability of the Issuer, and if the Issuer fails to reimburse immediately the
Insurer upon the receipt of such statement of payments, interest shall be
computed on such amount from. the date of any payment made by the Insure: at
the rate set forth in subsection (a) of Section 2.01 hereof.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Interest Computations. All computations of interest due
hereunder shall be made on the basis of the actual number of days elapsed over
a year of 360 days.
Section 6.02. Exercise of Rights. No failure or delay on the part of
the Insurer to exercise any right, power or privilege under this Agreement and
no course of dealing between the Insurer and the Issuer or any other party
shall operate as a waiver of any such right, power or privilege, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies that the Insurer would otherwise
have pursuant to law or equity. No notice to or demand on any party in any
case shall entitle such party to any other or further notice or demand in
similar or other circumstances, or constitute a waiver of the right of the
other party to any other or further action in any circumstances without notice
or demand.
Section 6.03. Amendment and Waiver. Any provision of this Agreement
may be amended, waived, supplemented, discharged or terminated only with the
prior written consent of the Issuer and the Insurer. The Issuer hereby agrees
that upon the written request of the Paying Agent, the Insurer may make or
consent to issue any substitute for the Surety Bond to cure any ambiguity or
formal defect or omission in the Surety Bond that does not materially change
the terms of the Surety Bond nor adversely affect the rights of the Owners,
and this Agreement shall apply to such substituted surety bond. The Insurer
agrees to deliver'to the Issuer and to the company or companies, if any,
rating the Obligations, a copy of such substituted surety bond.
Section 6.04. Successors and Assigns; Descriptive Headings.
(a) This Agreement shall bind, and the benefits thereof shall inure
to, the Issuer and the Insurer and their respective successors and
-6-
7
6-
a .-
•
assigns; provided, that the Issuer may not transfer or assign any or all
of its rights and obligations hereunder without the prior written consent
of the Insurer.
(b) The descriptive headings of the various provisions of this
Agreement are inserted for convenience of reference only and shall not be
deemed to affect the meaning or construction of any of the provisions
hereof.
Section 6.05. Other Sureties. If the Insurer shall procure any other
surety to reinsure the Surety Bond, this Agreement shall inure to the benefit
of such other surety, its successors and assigns, so as to give to it a direct
right of action against the Issuer to enforce this Agreement, and 'the
Insurer,' wherever used herein, shall be deemed to include such reinsuring
surety, as its respective interests may appear.
Section 6.06. Signature on Bond. The Issuer's liability shall not be
affected by its failure to sign the Surety Bond nor by any claim that other
indemnity or security was to have been obtained nor by the release of any
indemnity, nor the return or exchange of any collateral that may have been
obtaine�.
Section 6.07. Waiver. The Issuer waives any defense that this
Agreement was executed subsequent to the date of the Surety Bond, admitting
and covenanting that such Surety Bond was executed pursuant to the Issuer's
request and in reliance on the Issuer's promise to execute 61hi-s Agreement.
Section 6.08. Notices, Requests, Demands. Except as otherwise
expressly provided herein, all written notices, requests, demands or other
communications to or upon the respective parties hereto shall be deemed to
have been given or made when actually received, or in the case of telex or
telecopier notice sent over a telex or a telecopier machine owned or operated
by a party hereto, when sent, addressed as specified below or at such other
address as any of the parties may hereafter specify in writing to the others:
If to the Issuer:
If to the Paying Agent:
Attention:
Attention:
If to the Insurer: !Municipal Bond Investors
Assurance Corporation
445 Samilton Avenue
White Plains, New York 10602
Attention: Surveillance
Department
..t ' �'
A
section 6.09. Survival of Representations and Warranties. All
representations, warranties and obligations contained herein shall survive the
execution and delivery of this Agreement and the Surety Bond.
Section 6.10. Governing Law. This Agreement and the rights and
obligations of the parties under this Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State.
Section 6.11. Counterparts. This Agreement may be executed in any
number of copies and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument.
Complete counterparts of this Agreement shall be provided to the Issuer and
the Insurer.
Section 6.12. Severability. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 6.13. Survival of Obligations. Notwithstanding anything to the
contrary contained in this Agreement, the obligation of the Issuer to pay all -
amounts due hereunder and the rights of the Insurer to pursue all remedies
shall survive the expiration, ternination or substitution of the Surety Bond
and this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
Issuer
By
Title
!MUNICIPAL BOND INVESTORS ASS MNCE CORPORATION
$14
Au f e
si
Authorized Officer
-8-
•
•
ANNEX A
SURETY BOND
(To be provided.)
a�.
_
f
ANNEX A
SURETY BOND
(To be provided.)
a�.
ry
I -t'
ANNEX B
DEFINITIONS
For all purposes of this Agreement and the Surety Bond, except as
otherwise expressly provided herein or unless the context otherwise requires,
all capitalized terms shall have the meanings as set out below, which shall be
equally applicable to both the singular and plural forms of such terms.
'Agreement' means this Financial Guaranty Agreement.
'Closing Date' means ► 19
'Commitment' means the commitment to issue Municipal Bond Guaranty
Insurance in the form attached hereto as Annex C.
'Debt Service Payments' means those payments required to be made by or
on behalf of the Issuer which will be applied to payment of principal of and
interest on the Obligations.
'Demand for Payment' means the certificate submitted to the Insurer for
payment under the Surety Bond substantially in the form attached to the Surety
Bond as Attachment 1.
'Document' means
(indenture, trust agreement, ordinance, resolution or similar instrument
providing for payment of the Obligations).
'Event of Default' shall mean those events of default set forth in
Section 1.01 of the Agreement.
'Insurer' has the same meaning as set forth in the first paragraph of
this Agreement.
•Issuer' means (Description
of issuer of the Obligations).
•Obligations' means
(Description of bonds, notes, certificates or similar municipal obligations)
(together with any bonds issued on a parity therewith, excluding bonds issued
for the purpose of refunding the. Obligations).
*owners' means the registered owners of any Obligation as indicated in
the books maintained by the Paying Agent, the Issuer or any designee of the
Issuer for such purpose.
-N
'f.
•
...t
ANNEX B (continued)
•Paying Agent' means (Description of trustee,
paying agent or other entity appointed to act in a similar capacity).
•Premium' means (insert for Upfront Premium Option: ; 01
Payable to the Insurer on or prior to the Closing Date.) (Insert for Annual
Premium Option:.an amount per year equal to basis points times the
Surety Bond Limit, which amount shall be payable annually in advance on the
Closing Date and on each anniversary thereafter.)
'Reimbursement Period' means, with respect to a particular Surety Bond
Payment,'the period commencing on the date of such Surety Bond Payment and
ending on the earlier of the date of cancellation of the Surety Bond due to
nonpayment of Premium when due or on the expiration of ( ) months following
such Surety Bond Payment.
'Reimbursement Rate' means Citibank's prime rate plus three (3) percent
per annum, as of the date of such Surety Bond Payment, said 'prime rate' being
the rate of interest announced from time to time by Citibank, N.A., New York,
New York, as its prime rate. The rate of interest shall be calculated on the
basis of the actual number of days elapsed over a 360 -day year.
'State' means. New York.
'Surety Bond' means that surety bond, attached hereto as Annex A and
issued by the Insure: guaranteeing, subject to the terms and limitations
thereof, Debt Service Payments required to be made by the Issuer under the
Document.
'Surety Bond Coverage' means the amount available at any particular
time to be paid under the terms of the Surety Bond, which amount shall never
exceed the Surety Bond Limit.
•Surety Bond Limit' means (Insert for fixed annual coverage:
S .) (Insert for variable annual coverage: the annual amount set
forth for the applicable bond year on Exhibit A to the Surety Bond.)
'Surety Bond Payment' means an amount equal to the Debt Service Payment
required to be made by the Issuer pursuant to the Document less (i) that
portion of the Debt Service Payment paid by or on behalf of the Issuer, and
(ii) other funds legally available for payment to the Owners, all as certified
in a Demand for Payment.
.A
ANNEX C
COMMITMENT
[To be provided.]
1B37o