Loading...
94-21170 Reso~' RESOLUTION N0. 94-21170 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE ISSUANCE OF NOT MORE THAN $65,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF CITY OF MIAMI BEACH, FLORIDA TAXABLE SPECIAL OBLIGATION BONDS (PENSION FUNDING PROJECT) TO DISCHARGE ALL OR PORTIONS OF THE CITY'S UNFUNDED ACTUARIAL ACCRUED LIABILITIES WITH RESPECT TO THREE PENSION PLANS MAINTAINED BY THE CITY; PROVIDING FOR THE RIGHTS AND SECURITY OF ALL HOLDERS OF BONDS ISSUED PURSUANT TO THIS RESOLUTION; PROVIDING CERTAIN DETAILS OF THE BONDS; PROVIDING FOR THE DETERMINATION OF ALL OTHER DETAILS OF THE BONDS BY SERIES RESOLUTION; APPOINTING A TRUSTEE AND PROVIDING FOR THE APPOINTMENT OF OTHER FIDUCIARIES BY SERIES RESOLUTION; PROVIDING FOR THE NEGOTIATED SALE OF THE BONDS; AUTHORIZING VALIDATION OF THE BONDS; AUTHORIZING OFFICIALS OF THE CITY TO TAKE ALL NECESSARY ACTIONS IN CONNECTION WITH THE ISSUANCE OF THE BONDS; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, pursuant to Chapter 23414, Laws of Florida, Special Acts of 1945, as amended, and Chapters 175 and 185, Florida Statutes, as amended (collectively, the "Base Firemen and Policemen Plan Legislation"), there is created and maintained in the City of Miami Beach, Florida (the "City") a system of pensions for disability and retirement from service for members of the City's fire and police dep~.rtments known as the "City Pension Fund for Firemen and Policemen" (the "Base Firemen and Policemen Plan"); and WHEREAS, pursuant to Chapters 175 and 185, Florida Statutes, as amended, and Ordinance No. 89-2640, adopted by the City on April 19, 1989, as amended (collectively, the "Supplemental Firemen and Policemen Plan Legislation"), there is created and maintained in the City a supplemental system of pensions for disability and retirement from service for members of the City's fire and police departments known as the "City Supplemental Pension Fund for Firefighters and Police Officers" (the "Supplemental Firemen and Policemen Plan"); and WHEREAS, pursuant to Chapter 18691, Laws of Florida, Acts of 1937, and Ordinance No. 88-2603, adopted by the City on March 2, 1988, as amended (collectively, the "Unclassified Employees and Elected Officials Plan Legislation"; the Base Firemen and Policemen Plan Legislation, the Supplemental Firemen and Policemen Plan Legislation and the Unclassified Employees and Elected Officials Plan Legislation are hereinafter sometimes referred to individually as the "Pension Plan Legislation" and collectively as the "Pension Plans Legislation"), there is created and maintained in the City a system of pensions for disability and retirement from service for eligible unclassified employees and elected officials of the City known as the "Retirement System for Unclassified Employees and Elected Officials of the City of Miami Beach" (the "Unclassified Employees and Elected Officials Plan"; the Base Firemen and Policemen Plan, the Supplemental Firemen and Policemen Plan and the Unclassified Employees and Elected Officials Plan are hereinafter sometimes referred to individually as the "Pension Plan" and collectively as the "Pension Plans"); and WSFsREAS, pursuant to the Pension Plans Legislation and Chapter 112, Part VII, Florida Statutes, as amended ("Chapter 112"), the City is obligated to make total contributions each year into the Pension Plans in such amounts, actuarially determined by independent actuaries (collectively, the "Actuaries"), as shall be sufficient, after taking into account member contributions, to meet the normal cost of each Pension Plan and to fully amortize, over a period of thirty years with interest at such rates as shall be determined by the independent Board of Trustees for each Pension ,, - 1 - oo9,~aw. nocs.r"w~aoosl Reno-~. 1 6 ( y Plan established under the applicable Pension Plan Legislation (each a "Board of Trustees"), the liability that has accrued under each Pension Plan and which has not been paid through normal contributions (individually with respect to each Pension Plan, the "Unfunded Actuarial Accrued Liability" and collectively, the "Unfunded Actuarial Accrued Liabilities"); and WHEREAS, pursuant to the Pension Plans Legislation and Chapter 112, the contributions described above, including the Unfunded Actuarial Accrued Liabilities and interest thereon, are a liability and obligation of the City which must be funded and paid by the City in accordance with such requirements and as such constitute a financial burden imposed upon the City and its taxpayers; and WHEREAS, the Actuaries, as applicable, have determined that the Unfunded Actuarial Accrued Liability with respect to the Base Firemen and Policemen Plan was $21,080,723 as of October 1, 1993, the Unfunded Actuarial Accrued Liability with respect to the Supplemental Firemen and Policemen Plan was $29,439,767 as of October 1, 1993, and the Unfunded Actuarial Accrued Liability with respect to the Unclassified Employees and Elected Officials Plan was $5,560,936 as of October 1, 1993; and WHEREAS, the City Commission of the City (the "Commission" ) has determined that it can obtain substantial savings in its required contributions to the Pension Plans by issuing its Taxable Special Obligation Bonds (Pension Funding Project) (the "Bonds") to be secured as described herein and applying the proceeds thereof to the discharge of all or portions of the Unfunded Actuarial Accrued Liabilities, all under the authority of the Constitution of the State of Florida, Chapter 166, Florida Statutes, as amended, and Chapter 159, Part VII, Florida Statutes, as amended, and the City of Miami Beach Charter (collectively, the "Act"), and that such issuance of the Bonds and application of the proceeds thereof serves a valid public and municipal purpose in accordance with the Act; and WHEREAS, the specific terms of the Bonds, the award of the Bonds, the approval of a Bond Purchase Agreement, an Official Statement and any other related documents, including but not limited to all documents to be entered into in connection with any Hedge Agreement (as hereinafter defined) to be entered into by the City, shall be as provided in a resolution supplemental hereto to be adopted by the City prior to the issuance of the Bonds (the "Series Resolution"); and WHEREAS, for reasons more fully set forth herein, the Commission finds and determines it to be in the best interests of the City to authorize the sale of the Bonds on the basis of a negotiated sale rather than a public sale by competitive bid; NOW THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA. ARTICLE I DEFINITIONS, AUTHORITY AND FINDINGS; RESOLUTION CONSTITUTES A CONTRACT SECTION 101. DEFINITIONS. In addition to the terms defined elsewhere in this Resolution, including the recitals hereto, as used in this Resolution, the following terms shall have the following meanings: "Act" shall mean the Constitution of the State, Chapter 166, Florida Statutes, as amended, Chapter 159, Part VII, Florida Statutes, as amended, and the City of Miami Beach Charter. "Amortization Requirements" shall mean such moneys required to be deposited in the Bond Redemption Account for the purpose of the mandatory redemption or payment at maturity of any - 2 - '~ r ~ nov: LM.SIB.DOC3.MIA/80031 eavo-3. .~ ~ e Term Bonds, the specific amounts and times of such deposits to be determined by the Commission pursuant to a Series Resolution. "Annual Debt Service Requirement" for any Fiscal Year, as applied to the Bonds, shall mean the respective amounts which are needed to provide: (a) for paying the interest on all Bonds then Outstanding which is payable on each Interest Payment Date in such Fiscal Year, (b) for paying the principal of all Serial Bonds then Outstanding which is payable upon the maturity of such Serial Bonds in such Fiscal Year, and (c) the Amortization Requirements, if any, for the Term Bonds of such Series for such Fiscal Year. For purposes of computing (a), (b) and (c) above, any principal, interest or Amortization Requirements due on October 1 in a Fiscal Year shall be deemed due in the preceding Fiscal Year. The following rules shall apply in determining the amount of the Annual Debt Service Requirement for any Fiscal Year: (a) The interest rate on Variable Rate Bonds shall be assumed to be the rate or rates as set forth in a Series Resolution; (b) In the case of Put Bonds, (i) the "put" date or dates shall be ignored if the source for payment of said "put" is a Credit Facility or a Liquidity Facility and the stated dates for Amortization Requirements and principal payments shall be used, and (ii) the terms of the reimbursement obligation to the issuers of a Credit Facility or a Liquidity Facility securing payment of the Bonds shall be ignored and the stated dates for Amortization Requirements and principal and interest payments shall be used; provided, however, that during any period of time after the issuer of a Credit Facility or a Liquidity Facility has advanced funds thereunder, the reimbursement obligation of which is payable from and secured on a parity with the Bonds and before such amount is repaid, Annual Debt Service Requirements shall include the principal amount so advanced and interest thereon, in accordance with the principal repayment schedule and interest rate or rates specified in the Credit Facility or Liquidity Facility; (c) If the City enters into a Hedge Agreement in connection with Bonds, the amounts required to be taken into account in determining interest payable on the Bonds shall be as set forth in a Series Resolution; and (d) If all or a portion of the principal of or interest on Bonds is payable from funds irrevocably set aside or deposited for such purpose, together with projected earnings thereon to the extent such earnings are projected to be from Permitted Investments, such principal or interest shall not be included in determining Annual Debt Service Requirements if such funds and/or Permitted Investments will provide moneys which shall be sufficient to pay when due such principal and interest. "Bonds" shall mean the City's Taxable Special Obligation Bonds (Pension Funding Project), authorized to be issued pursuant to this Resolution. "Bondholder", "Holder", "Holder of Bonds" or "Owner" Or any similar term, shall mean any person, who shall be the registered owner of any Outstanding Bond or Bonds. - 3 - D09: [04S48.DOCS.MIAI8003)R&9D-3. i ~ "City" shall mean the City of Miami Beach, Florida. "City Attorney" shall mean the City Attorney of the City or his designee or the officer succeeding to his principal functions. "City Clerk" shall mean the Clerk of the City or his designee or the officer succeeding to his principal functions. "City Manager" shall mean the City Manager of the City or his designee or the officer succeeding to his principal functions. "Commission" shall mean the City Commission of the City. "Couaterparty" shall mean a financial institution, investment bank or insurance company, or any subsidiary of any of the foregoing, which enters into a Hedge Agreement with the City. "Credit Facility" shall mean an irrevocable letter of credit, policy of municipal bond insurance, guaranty, purchase agreement, credit agreement or similar facility in which the entity providing such facility irrevocably agrees to provide funds to make payment of the principal of, premium, if any, and interest on Bonds. "Defeasance Obligations" shall mean to the extent permitted by law: (i) Direct general obligations of, or obligations the payment of the principal of which and the interest on which is unconditionally guaranteed by, the United States of America; and (ii) Evidences of indebtedness issued by the Bank for Cooperatives, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation (including participation certificates), Federal Land Banks, Federal Financing Banks, or any other agency or instrumentality of the United States of America created by an act of Congress which is substantially similar to the foregoing in its legal relationship to the United States of America; provided that the obligations of such agency or instrumentality are unconditionally guaranteed by the United States of America or any other agency or instrumentality of the United States of America; and (iii) Evidences of ownership of proportionate interests in future interest and principal payments on specified obligations described in (i) above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor on the underlying obligations described in (i) above, and which underlying obligations are not available to satisfy any claim of the custodian or any person claiming through the custodian or to whom the custodian may be obligated; and (iv) Obligations described in Section 103 (a) of the Internal Revenue Code of 1986, as amended, which do not permit redemption prior to maturity at the option of the obligor and provision for the payment of the principal of, premium, if any, and interest on which shall have been made by the irrevocable deposit with a bank or trust company acting as a trustee or escrow agent for holders of such obligations of securities described in clauses (i) or (ii) above, the maturing principal of and interest on which, when due and payable, will provide sufficient moneys to pay when due the principal of, premium if any, and interest on such obligations, and which securities described in clauses (i) or (ii) above are not available to satisfy any other claim, including any claim of the - 4 - no9:~awe.nocs.nwueoosl~so-s. T , trustee or escrow agent or of any person claiming through the trustee or escrow agent or to whom the trustee or escrow agent may be obligated, including in the event of the insolvency of the trustee or escrow agent or proceedings arising out of such insolvency. "Fiduciaries" shall mean the Trustee, the Paying Agent, the Registrar and any other fiduciaries appointed by the City in connection with the issuance of the Bonds pursuant to a Series Resolution. "Finance Director" shall mean the Finance Director of the City or his designee or the officer succeeding to his principal functions. "Fiscal Year" shall mean that period commencing on October 1, and continuing to and including the next succeeding September 30, or such other annual period as may be prescribed by law or by the City in accordance with law. "Fixed Rate Bonds" shall mean Bonds, which may be either Serial or Term Bonds, issued with a rate of interest which is fixed in percentage for the entire term thereof at the date of issue. "Hedge Agreement" shall mean and include an interest rate exchange agreement, interest swap agreement, interest cap agreement or other financial product which is used by the City as a hedging device with respect to its obligation to pay interest on any of the Bonds, entered into between the City and a Counterparty. "Interest Payment Date" shall mean such dates of each Fiscal Year on which interest on the Bonds is payable on any Bonds that are Outstanding, as set forth in a Series Resolution. "Liquidity Facility" shall mean a letter of credit, line of credit, policy of municipal bond insurance, guaranty, purchase agreement or similar facility in which the entity providing such facility agrees to provide funds to pay the purchase price of Put Bonds upon their tender by the Holders of Put Bonds. "Mayor" shall mean the Mayor of the City or in the absence or disability of the Mayor of the City, the Vice Mayor of the City, or the officers succeeding to their principal functions. "Maximum Annual Debt Service" shall mean, at any time and with respect to all of the Bonds, the greatest Annual Debt Service Requirement in the then current or any succeeding Fiscal Year. "Non-Ad Valorem Funds" shall mean all revenues of the City derived from any source other than ad valorem taxation on real or personal property, which are legally available to make the payments required herein, but only after provision has been made by the City for the payment of all essential or legally mandated services. "Outstanding" when used with reference to the Bonds, shall mean, as of any date of determination, all Bonds theretofore authenticated and delivered except: (i) Bonds theretofore canceled by the Registrar or delivered to the Registrar for cancellation; (ii) Bonds which are deemed paid and no longer Outstanding as provided herein; (iii) Bonds in lieu of which other Bonds have been issued pursuant to the provisions hereof relating to Bonds destroyed, stolen or lost, unless evidence satisfactory to the Registrar has been received that any such Bond is held by a bona fide purchaser; and - 5 - D09:~01W 8.ma.MIA18009,RB9O-3. 4 (iv) For purposes of any consent or other action to be taken hereunder by the Holders of a specified percentage of principal amount of Bonds, Bonds held by or for the account of the City. "Paying Agent" shall mean any bank or trust company or any successor bank or trust company appointed by the City to act as Paying Agent hereunder. "Permitted Investments" shall mean and include such obligations as shall be permitted to be legal investments of the City by the laws of the State. "Pledged Funds" shall mean, collectively, all moneys, securities and instruments held in the Funds and Accounts created and established by this Resolution. "Purchasers" shall mean Morgan Stanley & Co. Incorporated, AIBC Investment Services Corporation and Clayton Brown & Associates, Inc. "Put Bonds" shall mean the Bonds which by their terms may be tendered by and at the option of the owner thereof for payment by the City prior to the stated maturity thereof. "Registrar" shall mean the bank or trust company appointed by the City, located within or without the State of Florida, which shall maintain the registration books of the City and be responsible for the transfer and exchange of the Bonds, and which may also be the Trustee or Paying Agent for the Bonds. "Reserve Account Insurance Policy" shall mean the insurance policy, surety bond or other acceptable evidence of insurance, if any, deposited in the Debt Service Reserve Account in lieu of or in partial substitution for cash or securities on deposit therein. The issuer providing such insurance shall be a municipal bond insurer rated, at the time of deposit in the Debt Service Reserve Account, in any of the two highest rating categories of Moody's Investors Service, Inc. or any successors thereof and Standard & Poor's Corporation or any successors thereof . "Reserve Account Letter of Credit" shall mean the irrevocable, transferable letter of credit, if any, deposited in the Debt Service Reserve Account in lieu of or in partial substitution for cash or securities on deposit therein. The issuer providing such letter of credit shall be a banking association, bank or trust company or branch thereof rated, at the time of deposit into the Debt Service Reserve Account, in any of the two highest rating categories of Moody's Investors Service, Inc. or any successors thereof and Standard & Poor's Corporation or any successors thereof. "Reserve Account Requirement" shall mean the Maximum Annual Debt Service. "Resolution" shall mean this Resolution as amended and supplemented by a Series Resolution and as the same may from time to time be further amended and supplemented in accordance with the terms hereof. "Serial Bonds" shall mean the Bonds of any Series which shall be stated to mature in annual or semi-annual installments but not including Term Bonds. "Series" shall mean all of the Bonds authenticated and delivered on original issuance and pursuant to this Resolution and a Series Resolution authorizing such Bonds as a separate Series of Bonds, or any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to Article II hereof, regardless of variations in maturity, interest rate or other provisions. - 6 - no9:[owe.noCS.MIA180031~so3. "Series Resolution" shall mean a resolution adopted by the Commission providing the details and other matters in connection with the issuance of Bonds of a Series. "State" shall mean the State of Florida. "Term Bonds" shall mean the Bonds of any Series which shall be stated to mature on one date and for the amortization of which payments are required to be made into the Bond Redemption Account in the Sinking Fund. "Trustee" shall mean any bank or trust company appointed by the City to act as Trustee hereunder, and which may also be the Paying Agent and Registrar for the Bonds. "Variable Rate Bonds" shall mean Bonds, which may be either Serial Bonds or Term Bonds, issued with a variable, adjustable, convertible or other similar rate which is not fixed in percentage for the entire term thereof at the date of issue. Words importing singular number shall include the plural number in each case and vice versa. Words defined in Section 101 hereof that appear in this Resolution in lower case form shall have the meanings ascribed to them in the definitions in Section 101 unless the context shall otherwise indicate. The words "Bond", "Owner", "Holder" and "person" shall include the plural as well as the singular number unless the context shall otherwise indicate. The word "person" shall include corporations and associations, including public bodies, as well as natural persons, unless the context shall otherwise indicate. The word "Bond" or "Bonds" shall mean any Bond or Bonds or all of the Bonds, as the case may be, issued under the provisions of this Resolution. SECTION 102. AUTHORITY FOR THIS RESOLUTION. This resolution is adopted pursuant to the provisions of the Act. SECTION 103. FINDINGS. It is hereby ascertained, determined and declared: (a) The recitals to this Resolution are incorporated herein as findings. (b) The issuance of the Bonds and the discharge of all or portions of the Unfunded Actuarial Accrued Liabilities with the proceeds thereof will serve a valid public and municipal purpose in accordance with the Act by providing substantial savings in the City's required contributions to the Pension Plans and thus, relieving a portion of the financial burden imposed by such contributions upon the City and its taxpayers. (c) The principal of and interest on the Bonds and all required sinking fund, reserve and other payments shall be payable solely from the Pledged Funds and, solely to the extent provided in Section 304 (A) hereof, the Non Ad-Valorem Funds. None of the City, the State of Florida or any political subdivision thereof shall ever be required to levy ad valorem taxes to pay the principal of or interest on the Bonds or to make any of the sinking fund, reserve or other payments required by this Resolution or the Bonds, and the Bonds shall not constitute a lien upon any property owned by or situated within the corporate territory of the City, except as provided herein with respect to the Pledged Funds. (d) Due to the character of the Bonds, the innovative nature of the financing, the complexity of structuring such financing, prevailing market conditions, and the recommendation of the financial advisor to the City that the sale of the Bonds be by negotiation, the sale of the Bonds on the basis of negotiated sale rather - 7 - nog: toesos.nocsruai soo~~ Rxso-s. than a public sale by competitive bid is in the best interest of the City and is hereby authorized. SECTION 104. RESOLUTION CONSTITUTES CONTRACT. In consideration of the acceptance of the Bonds authorized to be issued hereunder by those who shall own the same from time to time, this Resolution shall be deemed to be and shall constitute a contract between the City and such Bondholders, and the covenants and agreements herein set forth to be performed by the City shall be for the equal benefit, protection and security of the owners of any and all of such Bonds, all of which shall be of equal rank and without preference, priority, or distinction of any of the Bonds over any other thereof except as expressly provided therein and herein. [END OF ARTICLE I] - 8 - D09: [O1f18.DOC3.MIA18009] REBU-3. a v ARTICLE II AUTHORIZATION, TERMS, EXECUTION AND REGISTRATION OF BONDS SECTION 201. AUTHORIZATION OF BONDS. Subject and pursuant to the provisions of this Resolution, bonds of the City to be known as "Taxable Special Obligation Bonds (Pension Funding Project)" (the "Bonds"), are hereby authorized to be issued in an aggregate principal amount not to exceed Sixty Five Million Dollars ($65,000,000), for the purpose of providing funds to discharge all or a portion of the Unfunded Actuarial Accrued Liabilities, fund the Debt Service Reserve Account and pay certain costs of issuance of the Bonds, which Bonds may be issued all at one time in one Series or from time to time in multiple Series, and if in multiple Series, may be dated, numbered, and designated differently as to each Series, all as shall be determined in one or more Series Resolutions. Subject to the limitations contained herein, the Bonds shall be issued in such aggregate amount, shall be dated, shall mature on such date or dates, but not later than September 30, 2021, and in such amounts, shall be in the form of Serial Bonds or Term Bonds or a combination thereof, shall have such Interest Payment Dates, shall bear interest at such rates not to exceed the maximum rate permitted by law, which may be fixed or variable, shall have such Amortization Requirements, shall be subject to redemption at such times, at such prices and pursuant to such other notice provisions, as shall be set forth in a Series Resolution. The Commission hereby appoints First Union National Bank of Florida, Miami, Florida, as Trustee for the Bonds. The Commission shall in a Series Resolution appoint a Registrar, one or more Paying Agents and such other Fiduciaries as shall be necessary in connection with the issuance of the Bonds. The Bonds may be secured by a Credit Facility and/or a Liquidity Facility and the City may also enter into a Hedge Agreement with respect to payments due on the Bonds, all as determined by the Commission in a Series Resolution. The City is hereby authorized to enter into such documents as may be necessary to secure such Credit Facility, Liquidity Facility and/or Hedge Agreement, all in the form to be approved by the Commission in a Series Resolution, and to include in such Series Resolution such covenants and representations as may be necessary to so secure such Credit Facility, Liquidity Facility and/or Hedge Agreement. The Bonds shall be awarded for purchase to the Purchasers upon compliance with the requirements of Florida Statutes Section 218.385(4), the details of such purchase, including the purchase price thereof, to be set forth and approved by the Commission in a Series Resolution. SECTION 202. DESCRIPTION OF BONDS. Unless otherwise specified by the City in a Series Resolution, any Bonds issued pursuant to this Resolution shall be issued in fully registered form and, if at the request of the City the Registrar issues notice of the availability of exchanging registered Bonds for coupon Bonds, in coupon form. Registered Bonds may then be exchanged for an equal aggregate principal amount of coupon Bonds of the same Series and maturity of any authorized denomination. Subject to the limitations contained in Section 201 hereof and unless otherwise specified by the City in Series Resolution, the Bonds of a Series shall be dated as determined in a Series Resolution; shall bear interest from their date at a rate or rates not exceeding the legal rate per annum, with interest paid to the registered Holder thereof on each Interest Payment Date by the Paying Agent at the address shown on the registration books of the City (held by the Registrar) at the close of business on the 15th day of the calendar month preceding an Interest Payment Date (in each case a "Regular Record Date"); shall be lettered and shall - 9 - D09: LOi548.DOC3.MIA180037RE9D-3. be numbered in such manner as determined in a Series Resolution; shall be in the denomination of $5,000 or any integral multiple thereof; and shall mature on such dates, in such years and in such amounts, as determined in a Series Resolution. Notwithstanding anything in this paragraph to the contrary, any interest not punctually paid on a Regular Record Date shall forthwith cease to be payable to the registered Holder on such Regular Record Date and may be paid at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Paying Agent, notice of which shall be given not less than 10 days prior to such special record date to such registered Holder. The principal of and redemption premium, if any, on the Bonds shall be payable upon presentation and surrender at the principal office of the Paying Agent. Unless otherwise specified by the City in a Series Resolution, interest on the Bonds shall be paid by check or draft drawn upon the Paying Agent and mailed to the registered owners of the Bonds on each Interest Payment Date; provided, however, that (i) if ownership of Bonds is maintained in a book-entry only system by a securities depository, such payment may be made by automatic funds transfer to the securities depository or its nominee or (ii) if such Bonds are not maintained in a book-entry only system by a securities depository, upon written request of the Holder of $1,000,000 or more in principal amount of Bonds, such payments may be made by wire transfer to the bank and bank account specified in writing by such Holder (such bank being a bank within the continental United States), if such Holder has advanced to the Paying Agent the amount necessary to pay the cost of such wire transfer or authorized the Paying Agent to deduct the cost of such wire transfer from the payment due to such Holder. The Bonds issued hereunder may be Serial Bonds or Term Bonds and may be Fixed Rate Bonds, Variable Rate Bonds and/or Put Bonds, all as determined in a Series Resolution. SECTION 203. REDEMPTION PROVISIONS. The Bonds of each Series may be subject to redemption prior to maturity at such times, at such redemption prices and upon such terms in addition to the terms contained in this Resolution as may be determined by Series Resolution. Notice of redemption for Bonds being redeemed shall be given by deposit in the U.S. mails of a copy of a redemption notice, postage prepaid, at least thirty (30) and not more than sixty (60) days before the redemption date with respect to Fixed Rate Bonds and as provided in a Series Resolution with respect to Variable Rate Bonds, to all registered owners of the Bonds or portions of the Bonds to be redeemed at their addresses as they appear on the registration books to be maintained in accordance with the provisions hereof. Failure to mail any such notice to a registered owner of a Bond, or any defect therein, shall not affect the validity of the proceedings for redemption of any Bond or portion thereof with respect to which no failure or defect occurred. Such notice shall set forth the date fixed for redemption, the rate of interest borne by each Bond being redeemed, the date of publication, if any, of a notice of redemption, the name and address of the Registrar and Paying Agent, the redemption price to be paid and, if less than all of the Bonds then outstanding shall be called for redemption, the distinctive numbers and letters, including CUSIP numbers, if any, of such Bonds to be redeemed and, in the case of Bonds to be redeemed in part only, the portion of the principal amount thereof to be redeemed. If any Bond is to be redeemed in part only, the notice of redemption which relates to such Bond shall also state that on or after the redemption date, upon surrender of such Bond, a new Bond or Bonds in a principal amount equal to the unredeemed portion of such Bond will be issued. Any notice mailed as provided in this section shall be conclusively presumed to have been duly given, whether or not the owner of such Bond receives such notice. - 10 - D09:I~4318.1bCS.MIA180037R&9D-3. Unless otherwise provided in a Series Resolution, in addition to any required redemption notice to Bondholders, the City shall give notice of redemption for Bonds being redeemed to registered securities depositories and to national information services that disseminate redemption notices at least 2 business days in advance of the notice mailed to holders of Bonds by sending notice to depositories such as The Depository Trust Company of New York, New York, Midwest Securities Trust Company of Chicago, Illinois, Pacific Securities Depository Trust Company of San Francisco, California, and Philadelphia Depository Trust Company of Philadelphia, Pennsylvania and to national information services such as Financial Information Inc.'s Daily Called Bond Service, Interactive Data Corporation's Bond Service, Kenny Information Service's Called Bond Serve, Moody's Municipal and Government News Reports and Standard and Poor's Called Bond Record. In addition, the Paying Agent shall publish notice of redemption one time in The Bond Buyer of New York, New York or if the Paying Agent believes that such publication is impractical or unlikely to reach a substantial number of owners of the Bonds to be redeemed, in some other financial newspaper or journal which regularly carries notices of redemption of other obligations similar to the Bonds, such publication to be made at least 30 days prior to the date fixed for redemption. Notwithstanding the additional notice provisions contained in the two preceding paragraphs, failure to mail or publish such additional notices or any defect therein shall not affect the validity of any redemption proceedings as to which notice of such redemption has been properly given to such Bondholder as contained in the third preceding paragraph. SECTION 204. EXECUTION OF BONDS. The Bonds shall be executed in the name of the City by the Mayor, and the seal of the City or a facsimile thereof shall be affixed thereto or imprinted or reproduced thereon and attested by the City Clerk, either manually or with their facsimile signatures. In case any one or more of the officers who shall have signed or sealed any of the Bonds shall cease to be such officer before the Bonds so signed and sealed shall have been actually sold and delivered, such Bonds may nevertheless be sold and delivered as herein provided and may be issued as if the person who signed and sealed such Bonds had not ceased to hold such office. Any Bond may be signed and sealed on behalf of the City by such person as at the actual time of the execution of such Bond shall hold the proper office, although at the date of such Bonds such person may not have held such office or may not have been so authorized. The Bonds of each Series shall bear thereon a certificate of authentication, in the form set forth in Exhibit A hereto, executed manually by the Registrar. Only such Bonds as shall bear thereon such certificate of authentication shall be entitled to any right or benefit under this Resolution and no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Registrar. Such certificate of the Registrar upon any Bond executed on behalf of the City shall be conclusive evidence that the Bond so authenticated has been duly authenticated and delivered under this Resolution and that the Holder thereof is entitled to the benefits of this Resolution. If the Bonds have been validated, the validation certificate on each of the Bonds shall be signed with the manual or facsimile signatures of the present or any future Mayor and City Clerk, and the City may adopt and use for that purpose the manual or facsimile signatures of any persons who shall have been such Mayor and City Clerk at any time on or after the date of the Bonds, notwithstanding that they may have ceased to be such Mayor and City Clerk at the time when said Bonds shall be actually delivered. - 11 - D09: [04748.DOCS.I.Qp/80071 RE9D-7. SECTION 205. NEGOTIABILITY, REGISTRATION AND CANCEL- LATION. At the option of the registered Holder thereof and upon surrender thereof at the principal corporate trust office of the Registrar with a written instrument of transfer satisfactory to the Registrar duly executed by the registered Holder or his duly authorized attorney and upon payment by such Holder of any charges which the Registrar or the City may make as provided in this Section, the Bonds may be exchanged for Bonds of the same aggregate principal amount of the same Series and maturity of any other authorized denominations. The Registrar shall keep books for the registration of Bonds and for the registration of transfers of Bonds. The Bonds shall be transferable by the Holder thereof in person or by his attorney duly authorized in writing only upon the books of the City kept by the Registrar and only upon surrender thereof together with a written instrument of transfer satisfactory to the Registrar duly executed by the Holder or his duly authorized attorney. Upon the transfer of any such Bond, the City shall cause to be issued in the name of the transferee a new Bond or Bonds. The City, the Trustee, the Paying Agent, the Registrar and any other Fiduciaries may deem and treat the person in whose name any Bond shall be registered upon the books kept by the Registrar as the absolute Holder of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of, premium, if any, and interest on such Bond as the same becomes due and for all other purposes. All such payments so made to any such Holder or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the City, the Trustee, the Paying Agent, the Registrar nor any other Fiduciary shall be affected by any notice to the contrary. In all cases in which the privilege of exchanging Bonds or transferring Bonds is exercised, the City shall execute and the Registrar shall authenticate and deliver Bonds in accordance with the provisions of this Resolution. All Bonds surrendered in any such exchanges or transfers shall forthwith be delivered to the Registrar and canceled by the Registrar in the manner provided in this Section. There shall be no charge for any such exchange or transfer of Bonds, but the City or the Registrar may require the payment of a sum sufficient to pay any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer. Neither the City nor the Registrar shall be required (a) to transfer or exchange Bonds of any Series for a period of 15 days next preceding any selection of Bonds of such Series to be redeemed or thereafter until after the mailing of any notice of redemption; or (b) to transfer or exchange any Bonds of any Series called for redemption. Except as may otherwise be provided with respect to Put Bonds in a Series Resolution, all Bonds paid or redeemed, either at or before maturity shall be delivered to the Trustee when such payment or redemption is made, and such Bonds, together with all Bonds purchased by the City, shall thereupon be promptly canceled. Bonds so canceled may at any time be destroyed by the Trustee, who shall execute a certification of destruction in duplicate by the signature of one of its authorized officers describing the Bonds so destroyed, and one executed certificate shall be filed with the City and the other executed certificate shall be retained by the Trustee. SECTION 206. BONDS MUTILATED, DESTROYED, STOLEN OR LOST. In case any Bond shall become mutilated, destroyed, stolen or lost, the City may execute and the Registrar shall authenticate and deliver a new Bond of like Series, date, maturity, denomination and interest rate as the Bond so mutilated, destroyed, stolen or lost; provided that, in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the City and, in the case of any lost, stolen or destroyed Bond, there shall first be furnished to - 12 - the City and the Registrar evidence of such loss, theft, or destruction satisfactory to the City and the Registrar, together with indemnity satisfactory to them. In the event any such Bond shall be about to mature or has matured or has been called for redemption, instead of issuing a duplicate Bond, the City may direct the Paying Agent to pay the same without surrender thereof. The City and Registrar may charge the Holder of such Bonds their reasonable fees and expenses in connection with this transaction. Any Bond surrendered for replacement shall be canceled in the same manner as provided in Section 205 hereof. Any such duplicate Bonds issued pursuant to this Section shall constitute additional contractual obligations on the part of the City, whether or not the lost, stolen or destroyed Bonds be at any time found by anyone, and such duplicate Bonds shall be entitled to equal and proportionate benefits and rights as to lien on and source and security for payment from the Pledged Funds, with all other Bonds issued hereunder. SECTION 207. PREPARATION OF DEFINITIVE BONDS; TEMPORARY BONDS. The definitive Bonds of each Series shall be lithographed, printed or typewritten. Until the definitive Bonds are prepared, the Mayor and City Clerk may execute and the Registrar may authenticate, in the same manner as is provided in Section 204, and deliver, in lieu of definitive Bonds, but subject to the same provisions, limitations and conditions as the definitive Bonds, one or more printed, lithographed or typewritten temporary fully registered Bonds, substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued, in authorized denominations, and with such omissions, insertions and variations as may be appropriate to such temporary Bonds. The City at its own expense shall prepare and execute and, upon the surrender at the corporate trust office of the Registrar of such temporary Bonds for which no payment or only partial payment has been provided, the Registrar shall authenticate and, without charge to the Holder thereof, deliver in exchange therefor, at the principal corporate trust office of the Registrar, definitive Bonds of the same aggregate principal amount, Series and maturity as the 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. SECTION 208. FORM OF BONDS. The text of the Bonds shall be of the tenor set forth in Exhibit A to this Resolution, with such omissions, insertions and variations as may be necessary and desirable and authorized or permitted by this Resolution or a Series Resolution. SECTION 209. BOOK-ENTRY ONLY SYSTEM FOR THE BONDS; QUALIFICATION FOR THE DEPOSITORY TRUST COMPANY. The Bonds may be issued as uncertificated securities through the book-entry only system maintained by The Depository Trust Company of New York ("DTC") or such other securities depository as may be selected by the City. The City, the Trustee, the Registrar, the Paying Agent, the Purchasers and any other Fiduciaries are hereby authorized to take such actions as may be necessary to qualify the Bonds for deposit with DTC, including but not limited to those actions as may be set forth in a letter agreement (the "DTC Agreement") to be entered into by and among the City, the applicable Fiduciaries and DTC, the execution and delivery of which by the Mayor or City Manager is hereby authorized, wire transfers of interest and principal payments with respect to the Bonds, utilization of electronic book entry data received from DTC in place of actual delivery of Bonds and provisions of notices with respect to Bonds registered by DTC (or any of its designees identified to the City, the Trustee, the Registrar or the Paying Agent) by overnight delivery, courier service, telegram, telecopy or other similar means of communication. [END OF ARTICLE II] - 13 - no9:[ossas.nas.huwisomlt~c.9o-s. ARTICLE III COVENANTS, FUNDS AND APPLICATION THEREOF SECTION 301. BONDS NOT TO BE INDEBTEDNESS OF THE CITY. The Bonds shall not be and shall not constitute an indebtedness of the City, within the meaning of any constitutional, statutory or charter provisions or limitations; but shall be payable solely, as provided in this Resolution, from the Pledged Funds and, solely to the extent provided in Section 304 (A) hereof, the Non-Ad Valorem Funds. No holder or holders of any Bonds issued hereunder shall ever have the right to compel the exercise of the ad valorem taxing power of the City, the State or any political subdivision thereof, or taxation in any form of any real or personal property therein, or the application of any funds of the City, except the Pledged Funds and, solely to the extent provided in Section 304 (A) hereof, the Non-Ad Valorem Funds to pay the Bonds or the interest thereon or the making of any sinking fund, reserve or other payments provided for herein. SECTION 302. BONDS SECURED BY PLEDGE OF PLEDGED FUNDS. The payment of the principal of, interest and premium, if any, on all of the Bonds issued hereunder shall be secured forthwith equally and ratably by a first lien on and pledge of the Pledged Funds. The Pledged Funds are hereby irrevocably pledged to the payment of the principal of and interest on the Bonds authorized herein, and other payments provided for herein, as the same become due and payable. The Bonds and the obligation evidenced thereby shall not constitute a lien upon any property of or in the City, but shall constitute a lien only on the Pledged Funds all in the manner provided in this Resolution. The Bonds shall be payable from the Non-Ad Valorem Funds solely in accordance with the provisions of Section 304 (A) hereto. SECTION 303. APPLICATION OF BOND PROCEEDS. All moneys received by the City from the sale of the Bonds shall be disbursed as follows: (1) Proceeds derived from the sale of the Bonds equal to the accrued interest on the Bonds, if any, shall be deposited in the Interest Account, hereinafter created and established, and used for the purpose of paying interest on the Bonds as the same becomes due and payable. (2) Proceeds derived from the sale of the Bonds in an amount equal to the Reserve Account Requirement shall be deposited in the Debt Service Reserve Account, hereinafter created and established. (3) Proceeds derived from the sale of the Bonds in an amount determined pursuant to a certificate of the Finance Director at or prior to the delivery of the Bonds shall (i) be deposited in a Cost of Issuance Fund which is hereby created and established and used for the purpose of paying such costs of issuance of the Bonds as the City shall determine are appropriate and/or (ii) applied directly to the payment of any premiums or fees due the issuers of any Credit Facility, Liquidity Facility or Hedge Agreement. (4) The balance of the proceeds derived from the sale of the Bonds shall be paid to the respective Board of Trustees in discharge of all or portions of the Unfunded Actuarial Accrued Liability of the related Pension Plan, the actual amount of such payments to be determined by the Commission in a Series Resolution. - 14 - noe:[oaws.uocs.naal8oos7eavo3. SECTION 304. COVENANTS OF THE CITY. The City hereby covenants and agrees with the holders of any and all of the Bonds issued pursuant to this Resolution as follows: A. COVENANT TO BUDGET AND APPROPRIATE. The City covenants and agrees to appropriate in its annual budget, by amendment, if necessary, from Non-Ad Valorem Funds lawfully available in each Fiscal Year, amounts sufficient to satisfy (i) the Annual Debt Service Requirement for such Fiscal Year, (ii) any deposits required to be made into the Debt Service Reserve Account during such Fiscal Year and (iii) any fees and costs due any Fiduciaries and issuers of any Credit Facilities, Liquidity Facilities, Reserve Account Insurance Policies, Reserve Account Letters of Credit and/or Hedge Agreement relating to the Bonds during such Fiscal Year. Such covenant and agreement on the part of the City to budget and appropriate such amounts of Non-Ad Valorem Funds shall be cumulative to the extent not paid, and shall continue until such Non-Ad Valorem Funds or other legally available funds in amounts sufficient to make all such required payments shall have been budgeted, appropriated and actually paid. Notwithstanding the foregoing covenant of the City, the City does not covenant to maintain any services or programs, now provided or maintained by the City, which generate Non-Ad Valorem Funds. Such covenant to budget and appropriate does not create any lien upon or pledge of such Non-Ad Valorem Funds, nor does it preclude the City from pledging in the future its Non-Ad Valorem Funds, nor does it require the City to levy and collect any particular Non-Ad Valorem Funds, nor does it give the Bondholders a prior claim on the Non-Ad Valorem Funds as opposed to claims of general creditors of the City. Such covenant to appropriate Non-Ad Valorem Funds is subject in all respects to the payment of obligations secured by a pledge of such Non-Ad Valorem Funds heretofore or hereinafter entered into (including the payment of debt service on bonds and other debt instruments). However, the covenant to budget and appropriate in its general annual budget for the purposes and in the manner stated herein shall have the effect of making available in the manner described herein Non-Ad Valorem Funds and placing on the City a positive duty to appropriate and budget, by amendment, if necessary, amounts sufficient to meet its obligations hereunder; subject, however, in all respects to the restrictions of Section 166.241(3), Florida Statutes, which provides, in part, that the governing body. of each municipality make appropriations for each fiscal year which, in any one year, shall not exceed the amount to be received from taxation or other revenue sources; and subject further, to the payment of services and programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated by applicable law. B. DISPOSITION OF NON-AD VALOREM FUNDS. There is hereby created and established the "Taxable Special Obligation Bonds (Pension Funding Project) Sinking Fund" (hereinafter referred to as the "Sinking Fund"). There are also hereby created four (4) separate accounts in the Sinking Fund to be known as the "Interest Account," the "Principal Account," the "Bond Redemption Account" and the "Debt Service Reserve Account." The Sinking Fund and the accounts therein shall be held by the Trustee. Non Ad-Valorem Funds appropriated in each Fiscal Year for the purposes hereunder under the provisions of Section 304 (A) above shall be disposed of by the City in the following manner: (1) To the Trustee, to the full extent necessary, for deposit into the Interest Account in the Sinking Fund, on the fifth (5th) day preceding each Interest Payment Date, such sums as shall be sufficient to pay the interest becoming due on the Bonds on each such Interest Payment Date; provided, however, that such deposits for interest shall not be required to be made into the Interest Account to the extent that money on deposit therein is sufficient for such purpose and, provided - 15 - further, that in the event the City has issued Variable Rate Bonds or entered into a Hedge Agreement pursuant to the provisions of this Resolution, sums shall be deposited at such other times and/or in such other amounts or transferred to such other parties as necessary to pay the interest becoming due on the Variable Rate Bonds or the payments due under the Hedge Agreement on the next Interest Payment Date, all in the manner provided in a Series Resolution. The Trustee shall, on each Interest Payment Date, transfer to the Paying Agent moneys in an amount equal to the interest due on such Interest Payment Date or shall advise the Paying Agent of the amount of any deficiency in the amount so transferred so that the Paying Agent may give appropriate notice required to provide for the payment of such deficiency from any Reserve Account Insurance Policy or Reserve Account Letter of Credit on deposit in the Debt Service Reserve Account. (2) (a) To the Trustee, to the full extent necessary, for deposit in the Principal Account in the Sinking Fund, on the fifth (5th) day preceding each principal maturity date, the principal amount of Serial Bonds which will mature and become due on such maturity dates; provided, however, that such deposits for principal shall not be required to be made into the Principal Account to the extent that money on deposit therein is sufficient for such purpose. The Trustee shall, on each principal payment date, transfer to the Paying Agent moneys in an amount equal to the principal due on such principal payment date or shall advise the Paying Agent of the amount of any deficiency in the amount so transferred so that the Paying Agent may give appropriate notice required to provide for the payment of such deficiency from any Reserve Account Insurance Policy or Reserve Account Letter of Credit on deposit in the Debt Service Reserve Account. (b) To the Trustee, to the full extent necessary, for deposit into the Bond Redemption Account in the Sinking Fund on the fifth (5th) day preceding each redemption or maturity date, the Amortization Requirements as may be necessary for the payment of the Term Bonds payable from the Bond Redemption Account on such redemption or maturity dates. The moneys in the Bond Redemption Account shall be used solely for the purchase or redemption of the Term Bonds payable therefrom. The City may at any time purchase any of said Term Bonds at prices not greater than the then redemption price of said Term Bonds. If the Term Bonds are not then redeemable, the City may purchase said Term Bonds at prices not greater than the redemption price of such Term Bonds on the next ensuing redemption date. The City shall be mandatorily obligated to use any moneys in the Bond Redemption Account for the redemption prior to maturity of such Term Bonds in such manner and at such times as the same are subject to mandatory redemption. If, by the application of moneys in the Bond Redemption Account, the City shall purchase or call for redemption in any year Term Bonds in excess of the Amortization Requirements for such year, such excess of Term Bonds so purchased or redeemed shall be credited in such manner and at such times as the Finance Director shall determine over the remaining payment dates. (3) To the Trustee, to the full extent necessary, for deposit into the Debt Service Reserve Account in the Sinking Fund on the fifteenth (15th) day of each month in - 16 - 17119eIa348.1111C8.MIAIBOOSIRE9C/-3. each year, beginning with the fifteenth (15th) day of the first full calendar month following the date on which the City receives written notice from the Trustee that there is a deficiency in the amount required to be on deposit in the Debt Service Reserve Account, such sums as shall be at least sufficient to pay an amount equal to one- twelfth (1/12) of the difference between the amount on deposit in the Debt Service Reserve Account (including any Reserve Account Insurance Policy or Reserve Account Letter of Credit) and the Reserve Account Requirement; provided, however, that no payments shall be required to be made into the Debt Service Reserve Account whenever and as long as the amount on deposit therein (including any Reserve Account Insurance Policy or Reserve Account Letter of Credit) shall be equal to the Reserve Account Requirement. Moneys in Debt Service Reserve Account shall be used only for the purpose of making payments of principal of and interest on the Bonds when the moneys in any other fund or account held pursuant to this Resolution and available for such purpose are insufficient therefor. Any moneys in the Debt Service Reserve Account in excess of the Reserve Account Requirement for the Bonds Outstanding may, in the discretion of the City, be transferred to and deposited in the Interest Account, the Principal Account or the Bond Redemption Account as the City at its option may determine. Notwithstanding the foregoing provisions, in lieu of or in substitute for the required deposits (including existing deposits therein) into the Debt Service Reserve Account, the City may cause to be deposited into the Debt Service Reserve Account a Reserve Account Insurance Policy or a Reserve Account Letter of Credit for the benefit of the holders of the Bonds Outstanding, which Reserve Account Insurance Policy or Reserve Account Letter of Credit shall be payable or available to be drawn upon, as the case may be, (upon the giving of notice as required thereunder) on any Interest Payment Date or redemption or principal payment date on which a deficiency exists which cannot be cured by moneys in any other fund or account held pursuant to this Resolution and available for such purpose. If a disbursement is made under the Reserve Account Insurance Policy or the Reserve Account Letter of Credit, the City shall be obligated to either (i) reinstate the maximum limits of such Reserve Account Insurance Policy or Reserve Account Letter of Credit within twelve months by increasing the amount payable or available to be drawn thereunder in equal monthly amounts over such twelve month period, or (ii) deposit, on a monthly basis in accordance with the first paragraph of this Section 304(B)(3), into the Debt Service Reserve Account from the Non-Ad Valorem Funds appropriated in accordance with Section 304 (A) hereof, funds in the amount of the disbursements made under such Reserve Account Insurance Policy or Reserve Account Letter of Credit, or a combination of such alternatives as shall equal the Reserve Account Requirement for the Bonds Outstanding. In the event that upon the occurrence of any deficiency in the Interest Account, the Principal Account or the Bond Redemption Account, the Debt Service Reserve Account is then funded with one or more Reserve Account Insurance Policies and/or Reserve Account Letters of Credit, the City or the Paying Agent, as applicable, shall, on an interest or principal payment date or mandatory redemption date to which such deficiency relates, draw upon or cause to be paid under such facilities, on a pro-rata basis thereunder, an amount - 17 - 1109:IOaJaa.DOCS.MLAL8007] RE9D-7. sufficient to remedy such deficiency, in accordance with the terms and provisions of such facilities and any corresponding reimbursement or other agreement governing such facilities; provided however, that if at the time of such deficiency the Debt Service Reserve Account is only partially funded with one or more Reserve Account Insurance Policies and/or Reserve Account Letters of Credit, prior to drawing on such facilities or causing payments to be made thereunder, the Trustee shall first apply any cash and securities on deposit in the Debt Service Reserve Account to remedy the deficiency and, if after such application a deficiency still exists, the City or the Paying Agent, as applicable, shall make up the balance of the deficiency by drawing on such facilities or causing payments to be made thereunder, as provided in this paragraph. Amounts drawn or paid under a Reserve Account Insurance Policy or Reserve Account Letter of Credit shall be applied as set forth in the second paragraph of this Section 304(B)(3). Any amounts drawn or paid under a Reserve Account Insurance Policy or Reserve Account Letter of Credit shall be reimbursed to the issuer thereof in accordance with the terms and provisions of the reimbursement or other agreement governing such facility. The Debt Service Reserve Account shall be valued on the last day of each Fiscal Year and the value of securities on deposit therein shall be the lower of par, or if purchased at other than par, amortized value. Amortized value, when used. with respect to securities purchased at a premium above or a discount below par, shall mean the value at any given date obtained by dividing the total premium or discount at which such securities were purchased by the number of interest payment dates remaining to maturity on such securities after such purchase and by multiplying the amount so calculated by the number of interest payment dates having passed since the date of purchase; and (i) in the case of securities purchased at a premium, by deducting the product thus obtained from the purchase price, and (ii) in the case of securities purchased at a discount, by adding the product thus obtained to the purchase price. (4) To the various Fiduciaries and issuers of Credit Facilities, Liquidity Facilities, Reserve Account Insurance Policies, Reserve Account Letters of Credit and/or Hedge Agreement, in payment of fees and costs payable to such parties during such Fiscal Year. Notwithstanding the foregoing or any other provision herein to the contrary, if any amount applied to the payment of principal of and premium, if any, and interest on the Bonds that would have been paid from an account in the Sinking Fund, is paid instead under a Credit Facility, Liquidity Facility or Hedge Agreement, amounts deposited in such relevant account may be paid, to the extent required, to the issuer of the Credit Facility, Liquidity Facility or Hedge Agreement having theretofore made said corresponding payment. C. INVESTMENT OF FUNDS. The Sinking Fund, including the Interest Account, Principal Account, Bond Redemption Account and Debt Service Reserve Account, and the Cost of Issuance Fund and all other special funds created and established by this Resolution shall constitute trust funds in favor of the Bondholders and shall be invested at the direction of the City as provided in this Section 304(C). Moneys on deposit in the Interest Account, Principal Account, Bond Redemption Account and Cost of Issuance Fund may be invested in Permitted Investments maturing not later than the dates on which such moneys will be needed for the purposes of such fund or account. - 18 - D09:LMS48.DOCS.MIA180031 RE9D3. Moneys on deposit in the Debt Service Reserve Account may be invested in Permitted Investments maturing not later than the final maturity of any of the Bonds. All income and earnings received from the investment and reinvestment of moneys in the Interest Account, the Principal Account and the Bond Redemption Account in the Sinking Fund shall be retained in the respective accounts and applied as a credit against the obligation of the City to transfer moneys to such accounts pursuant to Section 304 (B) (1) and Section 304 (B) (2) (a) and Section 304(B)(2)(b) of this Resolution, respectively. All income and earnings received from the investment and reinvestment of moneys in the Debt Service Reserve Account in the Sinking Fund shall be retained in the Debt Service Reserve Account and applied as a credit against the obligation of the City to transfer moneys to such account, unless the amount in such account shall exceed the Reserve Account Requirement, in which event such excess may be applied in the manner set forth for excess amounts in the Debt Service Reserve Account, as described in Section 304 (B) (3) . All income and earnings received from the investment and reinvestment of moneys in the Cost of Issuance Fund shall be transferred to the Interest Account. For the purpose of investing or reinvesting, the City and the Trustee may commingle moneys in the funds and accounts created and established hereunder in order to achieve greater investment income; provided that the City and the Trustee shall separately account for the amounts so commingled. The amounts required to be accounted for in each of the funds and accounts designated herein may be deposited in a single bank account provided that adequate accounting procedures are maintained to reflect and control the restricted allocations of the amounts on deposit therein for the various purposes of such funds and accounts as herein provided. The designation and establishment of funds and accounts in and by this Resolution shall not be construed to require the establishment of any completely independent funds and accounts but rather is intended solely to constitute an allocation of certain revenues and assets for certain purposes and to establish such certain priorities for application of certain revenues and assets as herein provided. D. BOORS AND RECORDS. The City will keep separately identifiable accounting records for the Pledged Funds by the use of a fund established in accordance with generally accepted accounting principles, and any holder of a Bond or Bonds issued pursuant to this Resolution, shall have the right at all reasonable times to inspect all records, accounts and data of the City relating thereto. Such records and accounts shall contain the statements required by generally accepted accounting principles applicable to governmental entities. E. NO IMPAIRMENT OF CONTRACT. The City has full power and authority to irrevocably pledge the Pledged Funds to the payment of the principal of and interest on the Bonds. The pledge of such Pledged Funds, in the manner provided herein, shall not be subject to repeal, modification or impairment by any subsequent resolution, ordinance or other proceedings of the City so long as any Bonds are Outstanding hereunder. The City shall take all actions necessary and pursue such legal remedies which may be available to it either in law or in equity to prevent or cure any impairment by any entity other than the City within the meaning of this subsection. F. REMEDIES. Any holder of Bonds issued under the provisions of this Resolution or the Trustee, acting for the 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 - 19 - mv: [01508.DOC3.MIA180037 RE90-3. enforce and compel the performance of all duties required by this Resolution or by any applicable statutes to be performed by the City or by any officer thereof. Nothing herein, however, shall be construed to grant any Holder of such Bonds any lien on any property of or within the corporate boundaries of the City, except as provided herein. No Holder of Bonds, however, shall have any right in any manner whatever to affect adversely, or prejudice the security of this Resolution or to express any right hereunder except in the manner herein provided, and all proceedings at law or in equity shall be instituted and maintained for the benefit of all Holders of Bonds. Notwithstanding anything in this Resolution to the contrary, so long as the issuer of a Credit Facility or a Liquidity Facility shall not be in default in its payment obligations under such Credit Facility or Liquidity Facility, said issuer shall be deemed to be the Holder of all Bonds so secured for all purposes of this Section 304(F). G. DISCHARGE AND SATISFACTION OF BONDS. The covenants, liens and pledges entered into, created or imposed pursuant to this Resolution may be fully discharged and satisfied with respect to all or a portion of the Bonds in any one or more of the following ways: (1) by paying the principal of and interest on such Bonds when the same shall become due and payable; or (2) by depositing in the Interest Account, the Principal Account and the Bond Redemption Account and/or in such other accounts which are irrevocably pledged to the payment of Bonds as the City may hereafter create and establish by resolution, certain moneys which together with other moneys lawfully available therefor, if any, shall be sufficient at the time of such deposit to pay when due the principal, redemption premium, if any, and interest due and to become due on said Bonds on or prior to the redemption date or maturity date thereof; or (3) by depositing in the Interest Account, the Principal Account and the Bond Redemption Account and/or such other accounts which are irrevocably pledged to the payment of Bonds as the City may hereafter create and establish by resolution, moneys which together with other moneys lawfully available therefor, when invested in Defeasance Obligations which shall not be subject to redemption prior to their maturity other than at the option of the holder thereof, will provide moneys which shall be sufficient to pay when due the principal, redemption premium, if any, and interest due and to become due on said Bonds on or prior to the redemption date or maturity date thereof and delivering to the Trustee a verification report of a nationally recognized certified public accountant as to the adequacy of such deposit, together with investment earnings thereon, to pay when due the principal, redemption premium, if any, and interest due or to become due on or prior to the redemption date or maturity date of the Bonds. Upon such payment or deposit in the amount and manner provided in this Section 304(G), Bonds shall be deemed to be paid and shall no longer be deemed to be Outstanding for the purposes of this Resolution and all liability of the City with respect to said Bonds shall cease, terminate and be completely discharged and extinguished, and the Holders thereof shall be entitled to payment solely out of the moneys or securities so deposited; provided that in the event said Bonds do not mature and are not to be redeemed within the next succeeding sixty (60) days, the City shall have given the Registrar irrevocable instructions to give, as soon as practicable, a notice to the Holders of said Bonds by - 20 - D09: [U1S48.DOCS.MIA18om7RE.9o-3. first-class mail, postage prepaid, stating that the deposit of said moneys or Defeasance Obligations has been made with an appropriate fiduciary institution acting as escrow agent solely for the Holders of said Bonds and other Bonds being defeased, and that said Bonds are deemed to have been paid in accordance with this Section and stating such maturity or redemption date upon which moneys are to be available for the payment of the principal of and premium, if any, and interest on said Bonds. (4) As to Variable Rate Bonds, whether discharged and satisfied under the provisions of subsection (1) , (2) or (3) above, the amount required for the interest thereon shall be calculated at the maximum rate permitted by the terms of the provisions which authorized the issuance of such Variable Rate Bonds; provided however, that if on any date, as a result of such Variable Rate Bonds having borne interest at less than such maximum rate for any period, the total amount of moneys and Defeasance Obligations 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 fully discharge and satisfy such Bonds pursuant to the provisions of this Section, the City may use the amount of such excess free and clear of any trust, lien, security interest, pledge or assignment securing said Variable Rate Bonds or otherwise existing under this Resolution. (5) Notwithstanding any of the provisions of this Resolution to the contrary, Put Bonds may only be fully discharged and satisfied either pursuant to subsection (1) above or by depositing in the Interest Account, the Principal Account and the Bond Redemption Account, or in such other accounts which are irrevocably pledged to the payment of the Put Bonds as the City may hereafter create and establish by resolution, moneys which together with moneys lawfully available therefor, if any, shall be sufficient at the time of such deposit to pay when due the maximum amount of principal of and redemption premium, if any, and interest on such Put Bonds which could become payable to the Holders of such Bonds upon the exercise of any options provided to the Holders of such Bonds; provided however, that if, at the time a deposit is made pursuant to this subsection (5), the options originally exercisable by the Holder of a Put Bond are no longer exercisable, such Bond shall not be considered a Put Bond for purposes of this subsection (5) . (6) Notwithstanding the foregoing, all references to the discharge and satisfaction of Bonds shall include the discharge and satisfaction of any issue of Bonds, any portion of an issue of Bonds, any maturity or maturities of an issue of Bonds, any portion of a maturity of an issue of Bonds or any combination thereof, provided that the provisions of this subsection (6) shall not affect the requirements regarding Put Bonds set forth in subsection (5). In the event that the principal and redemption price, if applicable, and interest due on the Bonds shall be paid by the issuer of a Credit Facility or Liquidity Facility pursuant to the terms thereof, the assignment and pledge created hereunder and all covenants, agreements and other obligations of the City to the Bondholders shall continue to exist and the issuer of such Credit Facility or Liquidity Facility shall be subrogated to the rights of such Bondholders. - 21 - D09:I00.598.DOCS.MIA180037RE903. (7) If any portion of the moneys deposited for the payment of the principal of and redemption premium, if any, and interest on any portion of Bonds is not required for such purpose, the City may use the amount of such excess free and clear of any trust, lien, security interest, pledge or assignment securing said Bonds or otherwise existing under this Resolution. H. CONCERNING THE RESERVE ACCOUNT INSURANCE POLICY, THE RESERVE ACCOUNT LETTER OF CREDIT, CREDIT FACILITY AND/OR LIQUIDITY FACILITY. As long as the City shall have a Reserve Account Insurance Policy and/or a Reserve Account Letter of Credit on deposit in the Debt Service Reserve Account, the City covenants that it will comply with the provisions of the Reserve Account Insurance Policy and/or Reserve Account Letter of Credit and/or any reimbursement or similar agreement with respect to the Reserve Account Insurance Policy and/or Reserve Account Letter of Credit. As long as any Bonds of the City are secured by a Credit Facility or Liquidity Facility, (i) the City covenants to comply with the requirements and conditions imposed on the City by the issuer of the Credit Facility or Liquidity Facility and (ii) all rights hereunder granted to the Holders of the Bonds so secured shall be exercisable by the issuer of such Credit Facility or Liquidity Facility in lieu of the Holders of the Bonds. Notwithstanding anything in this Resolution to the contrary, the right of any issuer of a Credit Facility or Liquidity Facility created under this Resolution shall remain in full force and effect only so long as the applicable Credit Facility or Liquidity Facility shall remain in effect and the issuer of such Credit Facility or Liquidity Facility shall not be in default in its payment obligations to the Holders of Bonds secured by such facility. [END OF ARTICLE III] - 22 - no9:touae.nocs.nanisoo3~xsso-s. ARTICLE IV THE FIDUCIARIES SECTION 401. APPOINTMENT AND ACCEPTANCE OF DUTIES; ADDITIONAL PAYING AGENTS. Each Fiduciary shall, except for the Trustee appointed hereunder, be appointed by a Series Resolution and shall signify its acceptance of the duties and obligations imposed upon it by this Resolution, as supplemented, by executing and delivering to the City a written acceptance thereof. The City may at any time or from time to time appoint additional Paying Agents having the qualifications set forth in Section 408 of this Resolution for a successor Paying Agent; provided that nothing herein shall prevent the City from appointing itself as the Paying Agent hereunder. Unless otherwise provided, the principal corporate trust offices of the Paying Agents are designated as the respective offices or agencies of the City for the payment of the interest on and principal or redemption price of the Bonds. SECTION 402. RESPONSIBILITIES OF FIDUCIARIES. The recitals of facts contained herein and in the Bonds shall be taken as the statements of the City and no Fiduciary assumes any responsibility for the correctness of the same. No Fiduciary makes any representation as to the validity or sufficiency of this Resolution or of any Bonds issued thereunder or as to the security afforded by this Resolution, and no Fiduciary shall incur any liability in respect thereof. The Registrar shall, however, be responsible for its representation contained in its certificate of authentication of the Bonds. No Fiduciary shall be under any responsibility or duty with respect to the application of any moneys paid by such Fiduciary in accordance with the provisions of this Resolution to or upon the order of the City or any other Fiduciary. No Fiduciary shall be under any obligation or duty to perform any act which would involve it in expense or liability or to institute or defend any suit in respect thereof, or to advance any of its own moneys, unless properly indemnified. No Fiduciary shall be liable in connection with the performance of its duties hereunder except for its own negligence, misconduct or default. SECTION 403. EVIDENCE ON WHICH FIDUCIARIES MAY ACT. (a) Each Fiduciary, upon receipt of any notice, resolution, request, consent, order, certificate, report, opinion, bond, or other paper or document furnished to it pursuant to any provision of this Resolution, shall examine such instrument to determine whether it conforms to the requirements of this Resolution and shall be protected in acting upon any such instrument believed by it to be genuine and to have been signed or presented by the proper party or parties. Each Fiduciary may reasonably consult with counsel, who may or may not be counsel to the City, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it under this Resolution in good faith and in accordance therewith. (b) Whenever any Fiduciary shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under this Resolution, such matter (unless other evidence in respect thereof be therein specifically prescribed) may be deemed to be conclusively proved and established by a certificate of the Mayor, City Manager or his designee, and such certificate shall be full warrant for any action taken or suffered in good faith under the provisions of this Resolution upon the faith thereof; but in its discretion the Fiduciary may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evidence as it may deem reasonable. (c) Except as otherwise expressly provided in this Resolution, any request, order, notice or other direction required or permitted to be furnished pursuant to any provision hereof by the City to any Fiduciary shall be sufficiently executed in the - 23 - ~:~~.~.MI,,~B~~~-s. name of the City by the Mayor, City Manager or designee of either of them. SECTION 404. COMPENSATION. The City may agree with any Fiduciary to pay to such Fiduciary from time to time reasonable compensation for all services rendered under this Resolution, and also all reasonable expenses, charges, counsel fees and other disbursements, including those of its attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Resolution. The City may also agree with any Fiduciary to indemnify any Fiduciary for any and all of its reasonable fees, costs and expenses resulting from any claim, liability or the like incurred in and about the performance of its powers and duties under this Resolution. SECTION 405. CERTAIN PERMITTED ACTS. Any Fiduciary, individually or otherwise, may become the owner of any Bonds, with the same rights it would have if it were not a Fiduciary. To the extent permitted by law, any Fiduciary may act as depositary for, and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bondholders or to effect or aid in any reorganization growing out of the enforcement of the Bonds or this Resolution, whether or not any such committee shall represent the Holders of a majority in principal amount of the Bonds then Outstanding. SECTION 406. MERGER OR CONSOLIDATION. Any entity into which any Fiduciary may be merged or converted or with which it may be consolidated or any entity resulting from any merger, conversion or consolidation to which it shall be a party or any entity to which any Fiduciary may sell or transfer all or substantially all of its business, provided such entity shall be authorized by law to perform all duties imposed upon it by this Resolution, shall be the successor to such Fiduciary without the execution or filing of any paper or the performance of any further act. SECTION 407. ADOPTION OF AUTHENTICATION. In case any of the Bonds contemplated to be issued under this Resolution shall have been authenticated but not delivered, any successor Registrar may adopt the certificate of authentication of any predecessor Registrar so authenticating such Bonds and deliver such Bonds so authenticated; and in case any of the said Bonds shall not have been authenticated, any successor Registrar may authenticate such Bonds in the name of the predecessor Registrar, or in the name of the successor Registrar, and in all such cases such certificate shall be fully effective. SECTION 408. RESIGNATION OR REMOVAL OF FIDUCIARIES AND APPOINTMENT OF SUCCESSOR. Any Fiduciary may at any time resign and be discharged of the duties and obligations created by this Reso- lution by giving at least 60 days' written notice to the issuer of a Credit Facility or Liquidity Facility, the City, and the other Fiduciaries. Any Fiduciary may be removed by the City at any time by an instrument filed with such Fiduciary, the issuer of each Credit Facility or Liquidity Facility and the other Fiduciaries signed by the Mayor or the City Manager. Any successor Fiduciary shall be appointed by the City and shall be fully qualified to act in such capacity under the laws of the State, be willing and able to accept the office on reasonable and customary terms and be authorized by law to perform all the duties imposed upon it by this Resolution. The City shall notify the issuer of each Credit Facility or Liquidity Facility and the other Fiduciaries of the appointment of any successor Fiduciary. In the event of the resignation or removal of any Fiduciary, such Fiduciary shall pay over, assign and deliver any moneys held by it as Fiduciary to its successor. The City may, by a Series Resolution, provide additional or different conditions with respect to the resignation, removal and appointment of Fiduciaries. SECTION 409. VACANCY. If at any time hereafter any Fiduciary shall resign, be removed, be dissolved, or otherwise - 24 - D09:[0 W S.DOCS.MiA180091RE9O3. become incapable of acting, by bankruptcy or otherwise, or if the bank, trust company or securities firm acting as a Fiduciary shall be taken over by any governmental official, agency, department or board, the position of such Fiduciary shall thereupon become vacant. If the position of such Fiduciary shall become vacant for any of the foregoing reasons or for any other reasons, the City shall appoint a successor Fiduciary and shall publish notice of any such appointment by it made once in each week for two (2) successive weeks in a daily newspaper of general circulation or a financial journal published in the Borough of Manhattan, City and State of New York. If no appointment of a successor Fiduciary shall be made pursuant to the foregoing provisions of this Section, the Holder of any Bond Outstanding hereunder or any retiring Fiduciary may apply to any court of competent jurisdiction to appoint a successor Fiduciary. Such court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Fiduciary. Any Trustee, Registrar or Paying Agent hereafter appointed shall be a bank or trust company authorized by law to exercise corporate trust powers and subject to examination by federal or state authority, of good standing and having at the time of its appointment a combined capital and surplus aggregating not less than Fifty Million Dollars ($50,000,000). [END OF ARTICLE IV] - 25 - D09:LOGSIB.DOCS.MIA180031R&90-3. ARTICLE V EXECIITION OF INSTRUMENTS BY BONDHOLDERS AND PROOF OF OWNERSHIP OF BONDS OWNERSHIP. SECTION 501. PROOF OF EXECUTION OF DOCUMENTS AND (a) Any request, direction, consent or other instrument in writing required by this Resolution to be signed or executed by Bondholders may be in any number of concurrent instruments of similar tenor and may be signed or executed by such Bondholders in person or by their attorneys or legal representatives appointed by an instrument in writing. Proof of the execution of any such instrument and of the ownership of Bonds shall be sufficient for any purpose of this Resolution and shall be conclusive in favor of the Fiduciaries with regard to any action taken by it under such instrument if made in the following manner: (1) The fact and date of the execution by any person of any such instrument may be proved by the verification of any officer in any jurisdiction who, by the laws thereof, has power to take affidavits within such jurisdiction, to the effect that such instrument was subscribed and sworn to before him, or by an affidavit of a witness to such execution. Where such execution is on behalf of a person other than an individual, such verification shall also constitute sufficient approval of the authority of the signor thereof. (2) The ownership of Bonds shall be proved by the registration books required to be maintained pursuant to the provisions of this Resolution. Nothing contained in this Article shall be construed as limiting the Fiduciaries to such proof, it being intended that the Fiduciaries may accept any other evidence of the matters herein stated which it may deem sufficient. (b) If the City shall solicit from the Holders any request, direction, consent or other instrument in writing required or permitted by this Resolution to be signed or executed by the Holders, the City may, at its option, fix in advance a record date for determination of Holders entitled to give each request, direction, consent or other instrument, but the Authority shall have no obligation to do so. If such a record date is fixed, such request, direction, consent or other instrument may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Bonds have authorized or agreed or consented to such request, direction, consent or other instrument, and for that purpose the Bonds shall be computed as of such record date. (c) Any request or consent of the Holder of any Bond shall bind every future Holder of the same Bond in respect of anything done in pursuance of such request or consent. [END OF ARTICLE V] - 26 - ARTICLE VI MISCELLANEOUS PROVISIONS SECTION 601. MODIFICATION OR AMENDMENT. Except as otherwise provided in the third paragraph hereof, no adverse material modification or amendment of this Resolution, or of any resolution amendatory hereof or supplemental hereto, may be made after the issuance of any Bonds without the consent in writing of the Holders of more than fifty (500) per centum in aggregate principal amount of the Bonds then Outstanding; provided, however, that no modification or amendment shall permit a change in the maturity of such Bonds or a reduction in the rate of interest thereon, or affect the promise of the City to pay the principal of and interest on the Bonds, as the same mature or become due, from the Pledged Funds or the Non-Ad Valorem Funds as provided in Section 304 (A) hereof, or reduce the percentage of Holders of Bonds required above for such modification or amendment, without the consent of the Holders of all the Bonds. For the purposes of this Section 601, to the extent the Bonds are secured by a Credit Facility or Liquidity Facility, then the consent of the issuer of the Credit Facility or Liquidity Facility shall constitute the consent of such Holders. This Resolution may be amended, changed, modified and altered without the consent of the Holders of Bonds or the issuer of any Credit Facility or Liquidity Facility: (a) to cure any ambiguity or formal defect or omission in this Resolution or in any Series Resolutions or supplemental resolutions or to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions contained herein; or (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; or (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; or (d) to add to the covenants and agreements of the City in this Resolution other covenants and agreements thereafter to be observed by the City or to surrender any right or power herein reserved to or conferred upon the City; or (e) to qualify the Bonds or any of the Bonds for registration under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended; or (f) to qualify this Resolution as an "indenture" under the Trust Indenture Act of 1939, as amended; or (g) to make such changes as may be necessary to adjust the terms hereof so as to facilitate the issuance of Variable Rate Bonds or Put Bonds; or (h) to permit Bonds to be issued in book entry form with or without physical bonds; or (i) to make such changes as may be necessary for a Credit Facility or a Liquidity Facility that secures any Series of Bonds, a Reserve Account Insurance Policy or a Reserve Account Letter of Credit deposited in the Debt - 27 - uo9:[o~wa.uocs.~un~soos~t~avo-s. Service Reserve Account or any Hedge Agreement entered into in connection with the issuance of the Bonds. If at any time the City shall so request the Trustee, the Trustee shall cause a notice of a proposed supplemental resolution requiring the consent of Bondholders to be mailed, postage prepaid, to all Holders of Bonds then Outstanding at their addresses as they appear on the registration books. Such notice shall briefly set forth the nature of the proposed supplemental resolution and shall state that a copy thereof is on file at the principal corporate trust office of the Trustee for inspection by all Bondholders. The Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail the notice required by this Section, and any such failure shall not affect the validity of such supplemental resolution when consented to or approved as provided in this Section. Whenever, at any time after the date of the mailing of such notice, the City shall deliver to the Trustee an instrument or instruments purporting to be executed by the Holders of at least a majority in aggregate principal amount of the Bonds then Outstanding, which instrument or instruments shall refer to the proposed supplemental resolutions described in such notice and shall specifically consent to and approve the adoption thereof, and the City shall deliver to the Trustee a certificate signed by the Mayor that the Holders of such required percentage of Bonds have filed such consents, the City may adopt such supplemental resolutions in substantially such form without liability or responsibility to any Holder of any Bond, whether or not such Holder shall have consented thereto. It shall not be necessary for the consent of the Holders to approve the particular form of any proposed supplemental resolution, but it shall be sufficient if such consent shall approve the substance thereof. If the Holders of more than fifty per centum (50~) in aggregate principal amount of the Bonds Outstanding at the time of the execution of such supplemental resolution shall have consented to and approved the adoption thereof as herein provided, no Holder shall have any right to object to the adoption of such supplemental resolution, or to object to any of the terms and provisions therein contained, or the operation thereof, or in any manner to question the propriety of the adoption thereof, or to enjoin or restrain the City from adopting the same or from taking any action pursuant to the provisions thereof. SECTION 602. SEVERABILITY OF INVALID PROVISIONS. If any one or more of the covenants, agreements or provisions of this Resolution should be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separate from the remaining covenants, agreements or provisions, and shall in no way affect the validity of any of the other provisions of this Resolution or of the Bonds issued hereunder. SECTION 603. SALE OF BONDS. Except as otherwise provided in Section 201 with respect to the Bonds, the Bonds shall be issued and sold at one time or from time to time and at such price or prices consistent with the provisions of the Act and the requirements of this Resolution as the City shall hereafter determine by a Series Resolution. SECTION 604. UNCLAIMED MONEY. Notwithstanding any provisions of this Resolution, any money held by a Fiduciary for the payment of the principal or redemption price of, or interest on, any Bonds and remaining unclaimed for five (5) years after the principal of all of the Bonds has become due and payable (whether at maturity or upon call for redemption) , if such money were so held at such date, or five (5) years after the date of deposit of such money if deposited after such date when all of the Bonds became due and payable, shall be repaid to the City free from the - 28 - provisions of this Resolution, and all liability of the Fiduciary with respect to such money shall thereupon cease; provided, however, that before the repayment of such money to the City as aforesaid, the City shall first publish at least once in a financial newspaper or journal published and of general circulation in New York, New York, a notice, in such form as may be deemed appropriate by the City with respect to the Bonds so payable and not presented, and with respect to the provisions relating to the repayment to the City of the money held for the payment thereof. SECTION 605. PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. In any case where the date of maturity of interest on or principal of the Bonds or the date fixed for redemption of any Bonds or the "put" date with respect to any Put Bonds shall be a Saturday, Sunday or a day on which any Paying Agent is required, or authorized or not prohibited, by law (including executive orders) to close and is closed, then payment of such interest, principal, redemption price or purchase price, as applicable, need not be paid by the Paying Agent on such date but may be paid on the next succeeding business day on which the Paying Agent is open for business with the same force and effect as if paid on the date of maturity or the date fixed for redemption or the "put" date, and no interest shall accrue for the period after such date of maturity. SECTION 606. CONTROLLING LAW; MEMBERS OF COD~IISSION NOT LIABLE. The provisions of this Resolution shall be governed by, and interpreted in accordance with, the laws of the State. All covenants, stipulations, obligations and agreements of the City contained in this Resolution shall be deemed to be covenants, stipulations, obligations and agreements of the City to the full extent authorized by the Act and provided by the Constitution and laws of the State. No covenant, stipulation, obligation or agreement contained herein shall be deemed to be a covenant, stipulation, obligation or agreement of any present or future member, agent or employee of the Commission or the City in his individual capacity, and neither the members of the Commission nor any official executing the Bonds shall be liable personally on the Bonds or this Resolution or shall be subject to any personal liability or accountability by reason of the issuance or the execution of such Bonds. SECTION 607. FURTHER AUTHORIZATIONS. The Mayor, the City Manager, the Finance Director, the City Attorney and such other officers, employees and staff of the City as may be designated by the Mayor and the City Manager or either of them are each designated as agents of the City in connection with the issuance and delivery of the Bonds and are authorized and empowered, collectively or individually, to take all action and steps and to execute all instruments, documents and contracts on behalf of the City, that are necessary or desirable in connection with the execution and delivery of the Bonds, and which are not inconsistent with the terms and provisions of this Resolution. SECTION 608. VALIDATION AUTHORIZED. The City hereby authorizes the City Attorney and bond counsel to the City to take all actions necessary to provide for the validation of the Bonds under the provisions of Chapter 75, Florida Statutes, as amended, to the extent such validation, including any appeals, is deemed necessary or desirable by the City Attorney, after consultation with bond counsel to the City. SECTION 609. HEADINGS FOR CONVENIENCE ONLY. Any headings preceding the texts of the several articles and sections hereof shall be solely for convenience of reference and shall not constitute a part of this Resolution, nor shall they affect its meaning, construction or effect. - 29 - D09:[O1S48.DOC3.MIA180D37RE.903. SECTION 610. TIME OF TARING EFFECT. This Resolution shall take effect immediately upon its adoption. PASSED and ADOPTED this 18th day of MAY 1994. (SEAL ) Vice-Mayor Attest: City Clerk - 30 - ~dRM APPROVE© EEG~,L DEPT. 6,, ~ "-~ Date S -13- C~ D09: LP1.Sde.DOCB.MIA18063]A&9D-3. EXHIBIT A [Form of Bond] (Face of Bond) No. R- UNITED STATES OF AMERICA STATE OF FLORIDA CITY OF MIAMI BEACH, FLORIDA TAXABLE SPECIAL OBLIGATION BOND (PENSION FUNDING PROJECT), SERIES Date of Interest Maturity Original Rate Date Issuance CUSIP REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS KNOW ALL MEN BY THESE PRESENTS that the City of Miami Beach, Florida (the "City"), for value received, hereby promises to pay to the registered owner specified above, or registered assigns, on the date specified above, but solely from the sources herein- after mentioned, upon presentation and surrender hereof at the principal corporate trust office of as paying agent (said and any successor paying agent being herein called the "Paying Agent"), the principal amount specified above with interest thereon at the interest rate per annum specified above, payable on the first day of and of each year, commencing on Principal of this Bond is payable at the office of the Paying Agent in lawful money of the United States of America. Interest on this Bond is payable by check or draft of the Paying Agent made payable to the registered owner as its name and address shall appear on the registry books of as Registrar (said and any successor registrar being herein called the "Registrar") at the close of business on the fifteenth day of the calendar month preceding each interest payment date (the "Regular Record Date"); provided, however, that (i) if ownership of the Bonds is maintained in a book-entry only system by a securities depository, such payment may be made by automatic funds transfer (wire) to such securities depository or its nominee or (ii) if such Bonds are not maintained in a book-entry only system by a securities depository, upon written request of the Holder of $1,000,000 or more in principal amount of Bonds, such payments may be made by wire transfer to the bank and bank account specified in writing by such Holder (such bank being a bank within the continental United States), if such Holder has advanced to the Paying Agent the amount necessary to pay the cost of such wire transfer or authorized the Paying Agent to deduct the cost of such wire transfer from the payment due such Holder. Any interest not punctually paid on a Regular Record Date shall forthwith cease to be payable to the registered owner on such Regular Record Date and may be paid at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Paying Agent, notice whereof shall be given not less than 10 days prior to such special record date to such registered owner. Such interest shall be payable from the most recent interest payment date next preceding the date of authentication to which interest has been paid, unless the date of authentication is a 1 or 1 to which interest has been paid, in which case from the date of authentication, or unless A-1 D09:~00.W B.mCS.MIA,8003~RP9()3. the date of authentication is prior to 19 in which case from 19 or unless the date of authentication is between a Regular Record Date and the next succeeding interest payment date, in which case from such interest payment date. This Bond is one of an authorized issue of Bonds of the City designated as its "Taxable Special Obligation Bonds (Pension Funding Project), Series (herein called the "Bonds"), in the aggregate principal amount of Dollars ($ ) of like date, tenor, and effect, except as to number, date of maturity and interest rate, issued for the purpose of discharging [all] [portions] of the City's Unfunded Actuarial Accrued Liabilities under the Pensions Plans (as such terms are defined in the Resolution described below), funding a debt service reserve account (the "Debt Service Reserve Account") and paying costs of issuance of the Bonds, all under the authority of and in full compliance with the Constitution of the State of Florida, Chapter 166, Florida Statutes, as amended, Chapter 159, Part VII, Florida Statutes, as amended, and the City of Miami Beach Charter (collectively, the "Act") and resolutions duly adopted by the City Commission of the City on 19 and 19 (hereinafter collectively referred to as the "Resolution") and is subject to all the terms and conditions of the Resolution. 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 ON THE FRONT SIDE HEREOF. It is hereby certified and recited that all acts, conditions and things required to exist, to happen, and to be performed, precedent to and in the issuance of this Bond exist, have happened and have been performed in regular and due form and time as required by the Act, and that the issuance of this Bond, and of the issue of Bonds of which this Bond is one, is in full compliance with all constitutional, statutory or charter limitations or provisions. IN WITNESS WHEREOF, the City of Miami Beach, Florida has caused this Bond to be signed by the Mayor, either manually or with his facsimile signature, and the seal of the City of Miami Beach, Florida or a facsimile thereof to be affixed hereto or imprinted or reproduced hereon, and attested by the City Clerk, either manually or with his facsimile signature. CITY OF MIAMI BEACH, FLORIDA (SEAL) VICE- MAYOR Attest: CITY CLERK A-2 FORM APPROVED LEGAL [SEPT. By Date ~~ ~ 3 4 FORM OF CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds delivered pursuant to the within mentioned Resolution. Date of Authentication: as Registrar By: Authorized Officer A-3 D09:~0~548.DOCS.MiA~8009~,1E9U3. [Back of Bond] This Bond is secured by a lien on and pledge of the moneys held in certain funds and accounts established under the Resolution (collectively, the "Pledged Funds") and is payable solely from such Pledged Funds and, solely to the extent provided in the second and third succeeding paragraphs, the Non-Ad Valorem Funds (defined below), all in the manner provided in the Resolution. The City is not obligated to pay this Bond or the interest hereon except as provided above, and the full faith and credit of the City are not pledged for the payment of this Bond and this Bond does not constitute an indebtedness of the City within the meaning of any constitutional, statutory or charter provision or limitation; and it is expressly agreed by the Holder of this Bond that such Holder shall never have the right to require or compel the exercise of the ad valorem taxing power of the City, the State of Florida or any political subdivision thereof or taxation in any form of any real or personal property therein, for the payment of the principal of and interest on this Bond or the making of any other payments provided for in the Resolution. It is further agreed between the City and the Holder of this Bond that this Bond and the obligation evidenced thereby shall not constitute a lien upon property of or in the City, but shall constitute a lien only on the Pledged Funds, all in the manner provided in the Resolution. "Non-Ad Valorem Funds" is defined in the Resolution as all revenues of the City derived from any source other than ad valorem taxation on real or personal property, which are legally available to make the payments required under the Resolution, but only after provision has been made by the City for the payment of all essential or legally mandated services. The City covenants and agrees in the Resolution to appropriate in its annual budget, by amendment, if necessary, from Non-Ad Valorem Funds lawfully available in each Fiscal Year, amounts sufficient to satisfy (i) the Annual Debt Service Requirement (as defined in the Resolution) for such Fiscal Year, (ii) any deposits required to be made into the Debt Service Reserve Account during such Fiscal Year and (iii) any fees and costs due any Fiduciaries and issuers of any Credit Facilities, Liquidity Facilities, Reserve Account Insurance Policies, Reserve Account Letters of Credit and/or Hedge Agreement (as such terms are defined in the Resolution) relating to the Bonds. Such covenant and agreement on the part of the City to budget and appropriate such amounts of Non-Ad Valorem Funds shall be cumulative to the extent not paid, and shall continue until such Non-Ad Valorem Funds or other legally available funds in amounts sufficient to make all such required payments shall have been budgeted, appropriated and actually paid. Notwithstanding the foregoing covenant of the City, the City does not covenant to maintain any services or programs, now provided or maintained by the City, which generate Non-Ad Valorem Funds. Such covenant to budget and appropriate does not create any lien upon or pledge of such Non-Ad Valorem Funds, nor does it preclude the City from pledging in the future its Non-Ad Valorem Funds, nor does it require the City to levy and collect any particular Non-Ad valorem Funds, nor does it give the Bondholders a prior claim on the Non-Ad Valorem Funds as opposed to claims of general creditors of the City. Such covenant to appropriate Non-Ad Valorem Funds is subject in all respects to the payment of obligations secured by a pledge of such Non-Ad Valorem Funds heretofore or hereinafter entered into (including the payment of debt service on bonds and other debt instruments). However, the covenant to budget and appropriate in its general annual budget for the purposes and in the manner stated in the Resolution shall have the effect of making available in the manner described herein Non- Ad Valorem Funds and placing on the City a positive duty to appropriate and budget by amendment, if necessary, amounts sufficient to meet its obligations under the Resolution subject, however, in all respects to the restrictions of Section 166.241 (3) , Florida Statutes, which provides, in part, that the governing body A-4 of each municipality make appropriations for each fiscal year which, in any one year, shall not exceed the amount to be received from taxation or other revenue sources; and subject, further, to the payment of services and programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated by applicable law. [Redemption Provisions] The original registered owner, and each successive registered owner of this Bond shall be conclusively deemed to have agreed and consented to the following terms and conditions: 1. The Registrar shall keep books for the registration of Bonds and for the registration of transfers of Bonds as provided in the Resolution. The Bonds shall be transferable by the registered owner thereof in person or by his attorney duly authorized in writing only upon the books of the City kept by the Registrar and only upon surrender thereof together with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or his duly authorized attorney. Upon the transfer of any such Bond, the City shall issue in the name of the transferee a new Bond or Bonds. 2. The City, the Trustee, the Paying Agent, the Registrar and any other Fiduciaries may deem and treat the person in whose name any Bond shall be registered upon the books kept by the Registrar as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Bond as the same becomes due, and for all other purposes. All such payments so made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the City, the Trustee, the Paying Agent, the Registrar nor any other Fiduciary shall be affected by any notice to the contrary. 3. At the option of the registered owner thereof and upon surrender thereof at the principal corporate trust office of the Registrar with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or his duly authorized attorney and upon payment by such registered owner of any charges which the Registrar or the City may make as provided in the Resolution, the Bonds may be exchanged for Bonds of the same series and maturity of any other authorized denominations. 4. In all cases in which the privilege of exchanging Bonds or transferring Bonds is exercised, the City shall execute and the Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Resolution. There shall be no charge for any such exchange or transfer of Bonds, but the City or the Registrar may require payment of a sum sufficient to pay any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer. Neither the City nor the Registrar shall be required (a) to transferor exchange Bonds for a period of 15 days next preceding an interest payment date on such Bonds or next preceding any selection of Bonds to be redeemed or thereafter until after the mailing of any notice of redemption; or (b) to transfer or exchange any Bonds called for redemption. A-5 D09:I00.548.1)o(S•bIIA18003]RE,903. [FORM OF ABBREVIATIONS FOR BONDS] 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 the right of survivorship and not as tenants in common UNIFORM GIFT MIN ACT - Custodian (Gust) (Minor) under Uniform Gifts to Minors Act (State) Additional abbreviations may also be used though not in the above list. [FORM OF ASSIGNMENT FOR BONDS] For value received, the undersigned hereby sells, assigns and transfers unto the within Bond, and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the said Bond on the bond register, with full power of substitution in the premises. Dated: Please insert Social Security or other identifying number of transferee: Signature guaranteed: NOTICE: The transferor's signature to this Assignment must correspond with the name as it appears on the face of the within Bond in every particular without alteration or any change whatever. D09: L04348.DOCS.MIAI80037RH80-3. A-6 CITY Oi= MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139 OFFICE OF THE CITY MANAGER COMMISSION MEMORANDUM NO. To: Mayor Seymour Gelber and Members of the City Commission From: Roger M. Carl City Manager May 18, 1994 Subject: Resolution Authorizing the Issuance of not more than $65 Million in Bonds to Fund the Actuarial Unfunded Liability in the Retirement System for Firemen and Policemen and the Unclassified Employees and Elected Officials Retirement System Administrative Recommendation The Administration recommends that the City Commission adopt this resolution authorizing the issuance of not more than $65 million in bonds to fund the unfunded actuarial liability in two of the City's retirement systems subject to negotiating certain performance standards with the two Pension Boards which will utilize the funds generated to eliminate the unfunded liability to insure that pension fund management practices do not create a new unfunded liability. Discussion Over the past several years, defined benefit pension plans have been required by plan sponsors, both public and private, to reduce costs. Plan Trustees administrating the assets of the plan have, for the most part, accepted their fiduciary duty to control costs and have done so as much as they were able. A rapidly evolving method to reduce this pressure on costs is newly available to public plans. This is the issuance of a bond issue to fund the unfunded liability which results in the removal of the unfunded liability thereby reducing annual contributions from the City of Miami Beach. This concept consists of the substitution of payments on one liability stream with payments on another liability stream with a reduced interest cost. This funding mechanism has the added benefit of giving the City the ability to borrow long term at a fixed income rate and effectively invest the borrowed proceeds in the equity market through its pension plans. From the standpoint of the City of Miami Beach, this concept has great potential. As interest is accrued on the unfunded liability at the 8.5~ rate of return assumed by the actuary, the issuance of taxable debt at a lower interest rate than the assumed rate of return provides a spread which produces significant savings to the City. For the City of Miami Beach, the Fire and Police Pension System has a $51 million unfunded liability and the Unclassified Employee's Pension System has a $5.5 million unfunded liability. It 4!4 1 AGENDA _ ITEM r DATE TELEPHONE: (305) 673-7010 FAX: (305) 673-7782 ~R~-A ~I should be noted that the General Employees Retirement System is currently overfunded by approximately $13 million. If the City can issue debt at a cost of 1.5~ less than the assumed rate of return, the City will have to fund only the current bond issue amortization expense rather than the amount necessary to fund the unfunded liability at a higher interest rate. The savings is estimated to be $825,000 a year less at current rates than the amount necessary to eliminate the unfunded liability over the next twenty-seven years. Even on a discounted basis, this stream of savings is worth $11 million to the City over the next twenty-seven years and the actual .dollar savings over that same period is over $22 million. The City Commission should be aware that the interest rates are moving in the wrong direction at this time and that we need to be prepared to enter the market as soon as possible. Risk Analysis An argument can be made that the savings are not guaranteed because the actuarial assumed rate of return may change. If the Trustees are adequately maintaining their stewardship function, the rate of return assumption will be based on their asset allocation compared to market returns over a long time period. If the rate of return is based on such method, the current decline in the anticipated rate of return from the various asset classes will have no effect on the assumed rate. Additionally, unless the plan was entirely invested in fixed income instruments, the rate of return assumed will always be in excess of the fixed income rate due to the equity position taken by the plan. Another argument that can be made is that the pension fund will have trouble deploying the additional assets it receives currently into assets which will produce returns sufficient to meet the actuarial assumption. This argument requires the same response as the first. If the pension system invests its funds with a long time horizon, the appropriate rate of return assumption will be set on market returns over an extended period and the investment and reinvestment of funds need not be concerned with short term fluctuations in interest rates and returns. Additionally, this risk is the same risk that is taken with every dollar coming into the plan and every dollar of return generated by the plan. If the City of Miami Beach will undertake additional risk for additional savings, there are a number of methods to accomplish this goal. The first of these is to take advantage of the "slope of the yield curve". That is that shorter term interest rates are normally lower than long term rates. Bonds can be issued on a floating rate based on thirty day commercial paper utilizing a credit facility and a remarketing agent and the City of Miami Beach can achieve the thirty day interest rate for a thirty year period. The risk in such a strategy is that the economy will experience a dramatic increase in the inflation rate and also in inflationary expectations and the yield curve becomes inverted. That is the only case, three times in the last fifty years, in which the short rates will be in excess of the long term rates. If the City of Miami Beach does not wish to assume that level of risk, there are any number of derivative products available in the marketplace to reduce the exposure. The Finance Committee will discuss these alternatives should the City Commission forward this concept for review. Undertaking such a refinancing of the unfunded pension liability by the City can and will produce significant savings and reduce the annual funding cost of a defined benefit plan. As local governments downsize the operations and increase productivity, all operations of the local government must be reviewed to insure they are properly managed. This management includes the proper management of the assets of the City and, as in this case, the proper management of the City~s pension liabilities. ~~ 5 Background The resolution to be adopted is not sufficient in its current form to accomplish the issuance of bonds to fund the unfunded liability of the two pension systems. Another resolution, known as a series resolution, which will set the terms of the bonds must be adopted prior to any such bond issuance. The purpose of this resolution is to provide a document which expresses the intent to issue such bonds that can be used to file a validation complaint in circuit court. The validation hearing will establish whether or not the purpose for which the bonds will be issued is a valid public purpose under Florida Law. If, as we anticipate, the validation is successful, the City can move forward with the issuance of the debt to substitute for the debt of the unfunded liability. Therefore the final decision to issue the bonds need not yet be made. Pension Board Responsibilities The Administration also will approach the pension boards to accomplish additional guarantees and policies in this process. From both of the pension systems we will ask that a guarantee of the performance of the investment managers be instituted by mandating that the Board of the pension systems must remove any investment manager whose performance falls below an acceptable level of performance for a prescribed period. Additionally, as a condition precedent to implementing the bond issue for the unfunded liability, we will ask the two boards to establish a policy of amortizing gains and losses over a lesser period than the fifteen or thirty year periods currently in effect. For the Police and Fire System we will ask that the management of funds be diversified so that no single manager controls over forty percent (40$) of the assets of the plan. This system currently has $190 million in assets all with one investment manager. Conclusion As this item has been discussed with the Budget Advisory Committee and the Finance Committee and received their endorsement, the Administration requests that the City Commission review this concept and adopt this resolution. RMC/RJN/me ~6 3