HomeMy WebLinkAboutMASTER BOND RESOLUTION RELATING TO AUGUSTA GA WATER AND SEWERAGE REVENUE REFUNDING AND IMPROVEMENT BONDS (SECOND RESIKUTION 2012 � �
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MASTER BOND RESOLUTION
ADOPTED OCTOBER 16, 2012
BY THE AUGUSTA-RICHMOND COUNTY COMMISSION
RELATING TO
AUGUSTA� GEORGIA
WATER AND SEWERAGE REVENUE REFUNDING
AND IMPROVEMENT BONDS �SECOND RESOLUTION�
SERIES 2�12
This document was prepared by:
MURRAY BARNES FINISTER LLP
3350 Peachtree Road, Suite 1140
Atlanta, Georgia 30326
Telephone: (678) 999-0354
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS ............................................................................................................ 5
Section Definitions . ..................................................................................................5
Section 1.2. Construction of Certain Terms . .................................................................21
Section 1.3. Table of Contents; Titles and Headings ....................................................21
Section 1.4. Contents of Certificates or Opinions . ........................................................22
ARTICLE II THE BONDS ...........................................................................................................23
Section 2.1. Authorization; Designation of Bonds . .......................................................23
Section 2.2. Details of Bonds . .......................................................................................23
Section 2.3. Execution; Form of Series 2012 Bonds .....................................................25
Section 2.4. Required Authentication; Proof of Ownership ..........................................25
Section 2.5. Bond Registrar; Transfer and Exchange ....................................................26
Section 2.6. Lost, Destroyed, Mutilated Bonds . ............................................................26
Section Blank Bonds . .............................................................................................27
Section 2.8. Cancellation and Destruction of Bonds . ....................................................27
Section 2.9. Global Form; Securities Depository; Ownership of Series 2012
Bonds ........................................................................................................ 27
ARTICLE III REDEMPTION OF BONDS ..................................................................................30
Section 3.1. Optional Redemption .................................................................................30
Section 3.2. Mandatory Sinking Fund Redemption . .....................................................30
Section 3.3. Notice of Redemption ................................................................................30
Section 3.4. Effect of Notice of Redemption ................................................................. 31
Section 3.5. Redemption Among Series ........................................................................32
Section 3.6. Selection of Bonds to be Redeemed . .........................................................32
Section 3.7. Purchase in Open Market . ......................................................................... 32
ARTICLE IV CONSTRUCTION FUND; CUSTODY AND APPLICATION OF
PRO C EED S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3
Section 4.1. Construction Fund . ....................................................................................33
Section 4.2. Investment of Construction Fund Moneys . ...............................................34
Section 4.3. Funds Remaining on Completion of Projects ............................................35
Section 4.4. Application of Funds . ................................................................................35
Section 4.5. Redemption of Refunded Bonds ................................................................36
Section 4.6. Direction to Paying Agent for the Refunded Bonds ..................................36
Section 4.7. Creation of 2002 Defeasance Account . .....................................................36
ARTICLE V PLEDGED REVENUES AND FLOW OF FUNDS ...............................................37
Section 5.1. Pledge of Revenues; Limited Obligations . ................................................37
Section 5.2. Funds and Accounts ...................................................................................37
Section 5.3. Revenue Fund ............................................................................................39
Section 5.4. Sinking Fund ..............................................................................................41
Section 5.5. Utility General Fund ..................................................................................44
Section 5.6. Deposits and Security of Funds and Accounts . .........................................46
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Section 5.7. Investment of Funds and Accounts . ..........................................................46
Section 5.8. Valuation of Investments ...........................................................................48
Section 5.9. Application of Excess in Sinking Fund . ....................................................48
Section 5.10. Disposition of Moneys After Payment of Bonds .......................................48
ARTICLE VI ADDITIONAL BONDS AND SUBORDINATE BONDS ...................................49
Section 6.1. No Prior Lien Bonds nor Additional Bonds Except as Permitted in
the Bond Resolution . .................................................................................49
Section 6.2. Refunding Bonds . ......................................................................................49
Section 6.3. Additional Bonds Generally . .....................................................................49
Section 6.4. Subordinate Bonds .....................................................................................51
Section 6.5. Accession of Subordinate Bonds and related Subordinate Hedge
Agreements to Parity Status . .....................................................................53
Section 6.6. Adoption of Proceedings and Validation ................................................... 53
Section 6.7. Proceedings Authorizing Additional Bonds . ............................................. 54
Section 6.8. Applicability to Additional Bonds ............................................................. 54
Section 6.9. Financial Facilities and Hedge Agreements . .............................................54
Section 6.10. Other Obligations . .....................................................................................55
Section 6.11. Abrogation of Right to Issue Bonds under the Prior Lien
Resolution ................................................................................................. 5 5
ARTICLE VII DEPOSITORIES OF MONEYS AND SECURITIES FOR DEPOSITS ............. 56
Section 7.1. Depository; Security for Deposits . ............................................................56
Section 7.2. Successor Custodians and Depositories . ...................................................56
ARTICLE VIII GENERAL PROVISIONS ..................................................................................57
Section 8.1. Rate Covenant ............................................................................................57
Section 8.2. Maintenance of the System in Good Condition ......................................... 58
Section Insurance ....................................................................................................58
Section 8.4. No Sale, Lease, or Encumbrance; Exceptions . ..........................................59
Section 8.5. Books, Records, and Accounts . .................................................................60
Section 8.6. Rights of Inspection ...................................................................................61
Section 8.7. No Impairment of Rights . .......................................................................... 61
Section 8.8. Satisfaction of Liens . .................................................................................61
Section 8.9. Compulsory Sewer Connections . ..............................................................61
Section 8.10. Enforcement of Charges and Connections . ...............................................61
Section l. Payments ....................................................................................................62
Section 8.12. No Loss of Lien on Revenues ....................................................................62
Section 8.13. Annual Budget ...........................................................................................62
Section 8.14. Ta�c Provisions . ..........................................................................................62
Section 8.15. Payments to Consolidated Government Must be in Money . .....................64
Section 8.16. Continuing Disclosure for Series 2012 Bonds . .........................................64
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES .........................................................65
Section 9.1. Definition of Events of Default . ................................................................65
Section Remedies . ..................................................................................................66
Section 9.3. Remedies Cumulative ................................................................................68
Section 9.4. Waiver of Default . .....................................................................................68
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Section 9.5. Application of Moneys After Default ........................................................68
Section 9.6. Rights of Credit Facility Issuer ..................................................................70
ARTICLE X BOND OWNERSHIP ..............................................................................................71
Section 10.1. Manner of Evidencing Ownership of Bonds . ............................................71
Section 10.2. Call of Meetings of Bondholders ...............................................................71
Section 10.3. Proxies and Proof of Ownership of Bonds . ...............................................72
Section 10.4. Appointment of Officers at Meeting of Bondholders ................................72
Section 10.5. Quorum at Meetings of Bondholders . .......................................................72
Section Meetings . ...................................................................................................72
ARTICLE XI DEFEASANCE ...................................................................................................... 73
Section 11.1. Provision for Payment . ..............................................................................73
ARTICLE XII SUPPLEMENTAL RESOLUTIONS ...................................................................74
Section 12.1. Supplemental Resolutions Not Requiring Consent of Bondholders. ........74
Section 12.2. Supplemental Resolutions Requiring Consent of Bondholders . ...............75
Section 12.3. Notice of Supplemental Resolutions . ........................................................76
ARTICLE XIII MISCELLANEOUS PROVISIONS ....................................................................78
Section 13.1. Severability ................................................................................................78
Section 13.2. Requests of Consolidated Government . ....................................................78
Section 13.3. Validation of Series 2012 Bonds . ..............................................................78
Section 13.4. Approval of Offering Documents; Winning Bidder ..................................78
Section 13.5. Approval of Series 2012 Paying Agent and Bond Registrar
Agreement. ................................................................................................ 79
Section 13.6. Approval of Series 2012 Custodian and Depository Agreement . .............79
Section 13.7. Payments Due on Saturdays, Sundays, etc ................................................79
Section 13.8. Waiver of Bond Audit . ..............................................................................80
Section 13.9. Effective Date ............................................................................................80
Section 13.10. Applicable Provisions of Law . .................................................................. 80
Section 13.11. Repeal of Conflicting Resolutions ............................................................. 80
Section 13.12. No Individual Responsibility of Commissioners and Officers of
Consolidated Government . ........................................................................ 80
Section 13.13. General Authorization . ..............................................................................80
Section 13.14. Bond Resolution Constitutes a Contract ....................................................81
Exhibit A Form of Series 2012 Bond
Exhibit B Taa� Policy
Exhibit C Form of Redemption Notice
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A MASTER BOND RESOLUTION PROVIDING FOR THE ISSUANCE
OF WATER AND SEWERAGE REVENUE REFUNDING AND
IMPROVEMENT BONDS (SECOND RESOLUTION), SERIES 2012; TO
PROVIDE FUNDS TO PAY OR TO BE APPLIED TOWARD THE COST
OF ACQUIRING BY REDEMPTION, PAYMENT OR OTHERWISE ALL
OF THE OUTSTANDING AUGUSTA, GEORGIA WATER AND
SEWERAGE REVENUE BONDS, SERIES 2002; TO PROVIDE FOR THE
ISSUANCE UNDER CERTAIN TERMS AND CONDITIONS OF
ADDITIONAL PARITY BONDS; TO PROVIDE FOR THE CREATION
AND MAINTENANCE OF CERTAIN FUNDS; TO RATIFY AND
AUTHORIZE THE PREPARATION, USE AND DISTRIBUTION OF A
PRELIMINARY OFFICIAL STATEMENT AND A FINAL OFFICIAL
STATEMENT IN CONNECTION WITH THE OFFER AND SALE OF
THE SERIES 2012 BONDS; TO AUTHORIZE THE SALE OF THE
SERIES 2012 BONDS TO THE WINNING BIDDER; TO PROVIDE FOR
THE ANNUAL SUBMISSION OF CERTAIN FINANCIAL
INFORMATION AND OPERATING DATA PURSUANT TO RULE
15c2-12 OF THE SECURITIES AND EXCHANGE COMMISSION AND
FOR OTHER PURPOSES:
WHEREAS, under the provisions of Article IX, Section III, Paragraph II(a) of the
Constitution of the State of Georgia and an act of the General Assembly of the State of Georgia
(Georgia Laws 1995, p. 3648 et seq., as amended—the "Act"), and pursuant to referenda, as
authorized and required by the Act, which were held within the City of Augusta (the "City") and
Richmond County (the "County"), the City and the County (excluding the area within the City
of Hephzibah and the Town of Blythe, Georgia) were consolidated into a consolidated
government now known as "Augusta, Georgia" (the "Consolidated Government"); and
WHEREAS, the Act was amended by subsequent acts, including Georgia Laws 1997,
p. 4024 et seq., which provides:
Said county-wide government shall be a new political entity, a body
politic and corporate, and a political subdivision of the state to be known as
"Augusta, Georgia," at times in this Act called the "consolidated government" or
"Augusta.-Richmond County," having all the governmental and corporate powers,
duties, and functions heretofore held by and vested in the Consolidated
Government of Augusta and Richmond County, and also the powers, duties, and
functions provided in this charter; and
WHEREAS, pursuant to the Act, the Consolidated Government now constitutes a county
and a municipality under the laws and the Constitution of the State of Georgia, and is a political
subdivision of the State of Georgia in the exercise of the respective powers of a municipality and
a county; and
WHEREAS, pursuant to the Act, the water and sewerage systems of the City and the
County are owned and operated by the Consolidated Government and pursuant to the 1996
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Resolution (hereinafter defined) have been combined into one revenue producing undertaking;
and
VVHEREAS, the Consolidated Government acting by and through its governing body,
the Augusta-Richmond County Commission (the "Commission"), by virtue of the authority of
the Constitution of the State of Georgia, the Act and Title 36, Chapter 82, Article 3 of the
Official Code of Georgia Annotated, as amended (the "Revenue Bond Law"), is authorized to
issue revenue bonds to acquire by redemption, payment or otherwise all or any part of the
Consolidated Government's outstanding water and sewerage revenue obligations, to fund in part
a reasonably required debt service reserve and to acquire additional water and sewerage facilities
by the addition thereto of improvements to the Consolidated Government's water and sewerage
system, as now existent and as hereafter added to, extended, improved and equipped (the
"System"), and to construct such additions, and to operate and maintain the System for its own
use, and for the use of the public and to prescribe and revise rates, and to collect fees and charges
for the services, facilities and commodities furnished by the System; and
WHEREAS, pursuant to a resolution adopted on October 21, 1996 (the "1996
Resolution"), as supplemented and amended (as hereafter more specifically defined in this
Master Bond Resolution, the "Prior Lien Resolution"), the Consolidated Government has
heretofore authorized, issued and delivered its (i) $62,880,000 original aggregate principal
amount of Richmond County Water and Sewerage Revenue Refunding and Improvement Bonds,
Series 1996A (the "Series 1996A Bonds") which have been paid in full; (ii) $5,910,000 original
aggregate principal amount of Richmond County Water and Sewerage Revenue Refunding
Bonds, Series 1997 (the "Series 1997 Bonds"), which have been paid in full; (iii) $97,080,000
original aggregate principal amount of Augusta, Georgia Water and Sewerage Revenue Bonds,
Series 2000 (the "Series 2000 Bonds") which have been paid in full; (iv) $149,400,000 original
aggregate principal amount of Augusta, Georgia Water and Sewerage Revenue Bonds, Series
2002 (the "Series 2002 Bonds"), which are currently outstanding in the aggregate principal
amount of $95,740,000; (v) $160,000,000 original aggregate principal amount of Augusta,
Georgia Water and Sewerage Revenue Bonds, Series 2004 (the "Series 2004 Bonds"), currently
outstanding in the aggregate principal amount of $160,000,000; and (vi) $177,010,000 original
aggregate principal amount of Augusta, Georgia Water and Sewerage Revenue Refunding
Bonds, Series 2007 (the "Series 2007 Bonds"), which are currently outstanding in the aggregate
principal amount of $167,520,000 (the Series 2004 Bonds and the Series 2007 Bonds that will be
outstanding upon the issuance and delivery of the Series 2012 Bonds (hereafter described) are
herein referred to as the "Prior Lien Bonds"); and
WHEREAS, the Prior Lien Bonds are payable from and secured by a first lien and
pledge of "pledged revenues" (as defined in the Prior Lien Resolution) of the System; and
WHEREAS, the Consolidated Government has determined that it will not issue any
additional bonds or obligations of any kind payable from a lien on pledged revenues of the
System ranking as to such lien on the pledged revenues of the System created by the Prior Lien
Resolution on a parity with the Prior Lien Bonds; and
WHEREAS, the Consolidated Government has determined that there is a need for the
acquisition and construction of improvements, betterments, and extensions of the System, all as
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generally described in the Engineer's Report dated October 2012, as amended, prepared by ZEL
Engineers, Augusta, Georgia, which has been presented at this meeting at which this Master
Bond Resolution is being adopted and is on file in the Minute Book of the Consolidated
Government and which is incorporated herein by reference and in accordance or substantially in
accordance with plans and specifications on file from time to time with the Consolidated
Government (the "Series 2012 Project"), and the Consolidated Government presently
anticipates that the cost of the Series 2012 Project will be approximately $40,000,000; and
WHEREAS, after a thorough and detailed review and upon the recommendation from
Public Financial Management, Inc. (the "Financial Advisor"), the Consolidated Government
has determined that due to present market conditions and in order to achieve debt service savings
on certain of the Consolidated Government's now outstanding bonded indebtedness, the
Consolidated Government at this time should refund the Series 2002 Bonds maturing October l,
2018, October 1, 2027 and October 1, 2032 and currently outstanding in the aggregate principal
amount of $95,740,000 (the "Refunded Bonds"); and
WHEREAS, the Financial Advisor has further recommended, and the Consolidated
Government has concurred, that such refunding of the Refunded Bonds should be accomplished
by making due and legal provision for the redemption on November 16, 2012 of the Refunded
Bonds by paying the principal amount thereof and the interest to accrue thereon until such date
of redemption and the payment of all expenses necessary to accomplish the foregoing; and
WHEREAS, a portion of the proceeds derived from the sale of the Series 2012 Bonds
will be deposited in trust, simultaneously with the issuance and delivery of the Series 2012
Bonds (hereinafter defined), into a special segregated account designated as the "2002
Defeasance Account" with U.S. Bank National Association, Atlanta, Georgia, as successor bond
registrar and paying agent for the Series 2002 Bonds (the "2002 Paying Agent"), in an amount
sufficient without investment to pay the principal of and interest on the Refunded Bonds to the
November 16, 2012 redemption date, all as hereinafter provided; and
WHEREAS, upon the refunding of the Refunded Bonds, the Series 2004 Bonds
outstanding in the entire aggregate principal amount of $160,000,000 and the Series 2007 Bonds
outstanding in the aggregate principal amount of $167,520,000 will be the only revenue
obligations of the Consolidated Government outstanding having as security for the payment
thereof and interest thereon a first or prior lien on the "pledged revenues" of the System and the
Consolidated Government has been and is now complying and will continue to comply in all
respects with the applicable terms, covenants and provisions of the Prior Lien Resolution; and
WHEREAS, the Consolidated Government has determined that it is in the best interests
of the citizens of the area served by the System for the Consolidated Government to make the
additions, extensions, and improvements to the System described above as the Series 2012
Project, and the Consolidated Government has determined that the most feasible means of
(i) financing the Series 2012 Project, (ii) refunding the Refunded Bonds, (iii) funding a debt
service reserve account for the Series 2012 Bonds and (iv) paying the costs of issuance of the
Series 2012 Bonds is through the issuance of its water and sewerage revenue bonds on the terms
described in this Master Bond Resolution to be designated as "Augusta, Georgia Water and
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Sewerage Revenue Refunding and Improvement Bonds (Second Resolution), Series 2012" (the
"Series 2012 Bonds") in an aggregate principal amount of $138,830,000; and
WHEREAS, the Series 2012 Bonds will be secured by a second lien on the Pledged
Revenues (hereinafter defined) of the System; and
WHEREAS, the Consolidated Government proposes to provide for the issuance (from
time to time, under certain circumstances as described herein) of Additional Bonds (hereinafter
defined) ranking as to lien on the Pledged Revenues on a parity with the lien thereon securing the
Series 2012 Bonds and Subordinate Bonds (hereafter defined); and
VVHEREAS, the Consolidated Government has offered the Series 2012 Bonds for
competitive sale pursuant to an Official Notice of Sale and a Preliminary Official Statement (the
"Preliminary Official Statement"); and
WHEREAS, bids have been received pursuant to the Official Notice of Sale for all of the
Series 2012 Bonds and the Consolidated Government wishes to approve Barclays Capital Inc.
(the "Purchaser"), as the winning bidder for the Series 2012 Bonds; and
WHEREAS, it is proposed that the Consolidated Government should ratify the
preparation, use and distribution of the Preliminary Official Statement and authorize the
execution, use and distribution of an Official Statement relating to the Series 2012 Bonds; and
WHEREAS, it is further proposed that the Consolidated Government should authorize
the execution, delivery and performance of a Continuing Disclosure Certificate, dated the date of
the issuance and delivery of the Series 2012 Bonds; and
WHEREAS, it is further proposed that the Consolidated Government should appoint a
paying agent and registrar and various fund depositories for the Series 2012 Bonds; and
WHEREAS, the Consolidated Government proposes to adopt certain policies and
procedures with respect to tax-exempt debt (the "Tax Policy"), a form of which is attached
hereto as Exhibit B;
NOW, THEREFORE, BE IT RESOLVED by the Augusta-Richmond County
Commission, as follows:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
In addition to the terms hereinabove defined, whenever the following terms are used in
this Master Bond Resolution, the same, unless the context shall clearly indicate another or
different meaning or intent, shall be construed or used and are intended to have the following
meaning:
"Accreted Value" means, with respect to each Compound Interest Bond, the principal
amount of such Compound Interest Bond, plus, on the date of calculation, the interest accrued
thereon to such date compounded at the interest rate thereof on each compounding date
contained in such Compound Interest Bond, and, with respect to any calculation on a date other
than a compounding date, the Accreted Value means the Accreted Value as of the preceding
compounding date plus interest on such amount from such compounding date to the date of
calculation at a rate equal to the interest rate on such Compound Interest Bond.
"Additional Bonds" means any revenue bonds of the Consolidated Government ranking
on parity with the Series 2012 Bonds which may hereafter be issued pursuant to Sections 6.2 and
6.3 of this Master Bond Resolution.
"Additional Interest" means, for any period during which any Pledged Bonds are
owned by a Liquidity Facility Issuer pursuant to a Liquidity Facility or Liquidity Facility
Agreement, the amount of interest accrued on such Pledged Bonds at the Pledged Bond Rate less
the amount of interest that would have accrued during such period on an equal principal amount
of Bonds at the Bond Rate.
"Annual Budget" means the annual budget of the Consolidated Government relating to
the System (which shall include all costs, obligations, and expenses properly allocable to the
System), as amended or supplemented in accordance with established procedures of the
Consolidated Government, adopted or in effect for a particular Fiscal Year.
"Authorized Denominations" means (a) with respect to the Series 2012 Bonds, $5,000
and any integral multiple thereof and (b) with respect to future series of Bonds, the authorized
denominations specified in the Series Resolution authorizing such Bonds.
"Balloon Bonds" means any series of Bonds 25% or more of the original principal
amount of which (i) is due in any 12-month period or (ii) may, at the option of the Bondholders,
be required to be redeemed, prepaid, purchased directly or indirectly by the Consolidated
Government, or otherwise paid in any 12-month period; provided that, in calculating the
principal amount of such Bonds due or required to be redeemed, prepaid, purchased, or
otherwise paid in any 12-month period, such principal amount shall be reduced to the extent that
all or any portion of such amount is required to be redeemed or amortized prior to such 12-month
period.
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"Balloon Date" means any Principal Maturity Date or Put Date on which more than 25%
of the original principal amount of related Balloon Bonds mature or are subject to mandatory
redemption or could, at the option of the Bondholders, be required to be redeemed, prepaid,
purchased directly or indirectly by the Consolidated Government, or otherwise paid.
"Beneficial Owner" means the owner of a beneficial interest in the Bonds registered in
Book-Entry Form.
"Bond Counsel" means any firm of nationally recognized bond counsel experienced in
matters relating to tax-exempt financing appointed by the Consolidated Government.
`�Bond Rate" means the rate of interest per annum payable on specified Bonds other than
Pledged Bonds.
"Bond Register" means the registration books maintained and to be maintained by the
Bond Registrar.
"Bond Registrar" means the commercial bank designated by the Consolidated
Government with respect to any series of Bonds. Such Bond Registrar shall perform the duties
required of Bond Registrar set forth in the Bond Resolution. U.S. Bank National Association is
hereby designated as Bond Registrar for the Series 2012 Bonds.
"Bond Resolution" means this Master Bond Resolution as it may from time to time be
modified, supplemented, or amended by Supplemental Resolutions.
"Bondholder" means the registered owner of one or more Bonds.
"Bonds" means any revenue bonds authorized by and authenticated and delivered by the
Consolidated Government pursuant to the Bond Resolution, including the Series 2012 Bonds,
any Additional Bonds and Subordinate Bonds.
"Book-Entry Form" or "Book-Entry System" means, with respect to the Bonds, a form
or system, as applicable, under which (a) the ownership of beneficial interests in Bonds and bond
service charges may be transferred only through book-entry and (b) physical Bonds in fully
registered form are registered only in the name of a Securities Depository or its nominee as
holder, with physical Bonds in the custody of a Securities Depository.
"Capitalized Interest Account" means the Capitalized Interest Account within the
Sinking Fund established in Article V.
"Code" means the Internal Revenue Code of 1986, as amended and any regulations
promulgated thereunder.
"Commitment," when used with respect to Balloon Bonds, means a binding written
commitment from a financial institution, surety, or insurance company to refinance such Bonds
on or prior to any Balloon Date thereof, including without limitation any Liquidity Facility for
such Bonds.
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"Compound Interest Bonds" means Bonds that bear interest which is calculated based
on periodic compounding, payable only at maturity or earlier redemption.
"Consolidated Government" means Augusta, Georgia, a political subdivision of the
State, existing as such pursuant to the Constitution, statutes and laws of the State.
"Construction Fund" means the Augusta, Georgia Water and Sewerage Construction
Fund created in Section 4.1.
"Construction Fund Depository" means the commercial bank appointed by the
Consolidated Government to maintain the Construction Fund.
"Costs," with respect to any Project, means the total cost, paid or incurred, to study, plan,
design, finance, acquire, construct, reconstruct, install, or otherwise develop the Project and shall
include, but shall not be limited to, the following costs and expenses relating to such Project and
the reimbursement to the Consolidated Government for any such items previously paid by the
Consolidated Government:
(i) the cost of all lands, real or personal properties, rights, easements, and
franchises acquired;
(ii) the cost of all machinery and equipment, financing charges, and interest
prior to and during construction and for six months after completion of construction;
(iii) the cost of the acquisition, construction, reconstruction, or installation of
any Project;
(iv) the cost of engineering, architectural, development, and supervisory
services, fiscal agents' and legal expenses, plans and specifications, and other expenses
necessary or incident to determining the feasibility or practicability of any Projects,
administrative expenses, and such other expenses as may be necessary or incident to any
financing by Bonds;
(v) the cost of placing any Project in operation;
(vi) the cost of condemnation of property necessary for such construction and
operation;
(vii) the costs of issuing any Bonds to finance any Project or to refund any
Bonds; and
(viii) any other costs that may be incident to any Project.
"Credit Facility" means any letter of credit, insurance policy, guaranty, surety bond, or
similar obligation, arrangement, or instrument issued by a bank, insurance company, or other
financial institution that is used by the Consolidated Government to enhance the Consolidated
Government's credit by assuring owners of any of the Bonds that principal of and interest on
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such Bonds will be paid promptly when due. The term Credit Facility shall not include a
Reserve Account Credit Facility.
"Credit Facility Agreement" means an agreement between the Consolidated
Government and a Credit Facility Issuer pursuant to which the Credit Facility Issuer issues a
Credit Facility and may include the promissory note or other instrument evidencing the
Consolidated Government's obligations to a Credit Facility Issuer pursuant to a Credit Facility
Agreement. The term Credit Facility Agreement shall not include a Reserve Account Credit
Facility.
"Credit Facility Issuer" means any issuer of a Credit Facility then in effect for all or
part of the Bonds. The term Credit Facility Issuer shall not include any Reserve Account Credit
Facility Provider. Whenever in the Bond Resolution the consent of the Credit Facility Issuer is
required, such consent shall only be required from the Credit Facility Issuer whose Credit
Facility is issued with respect to the Bonds for which the consent is required.
"Current Interest Bonds" means those Bonds that bear interest payable on a periodic
basis and that are not Compound Interest Bonds.
"Debt Service Account" means the Debt Service Account created within the Sinking
Fund.
"Debt Service Requirement" means the total principal and interest coming due, whether
at maturity or upon mandatory redemption, in any specified period. For purposes of calculating
the Debt Service Requirement, the following assumptions shall be used:
(a) If any Bonds Outstanding or proposed to be issued shall bear interest at a
Variable Rate, the interest coming due in any specified future period shall be determined
as if the Variable Rate in effect at all times during such future period equaled (1) the
average of the actual Variable Rates that were in effect (weighted according to the length
of the period during which each such Variable Rate was in effect) for the most recent
twelve-month period immediately preceding the date of calculation for which such
information is available (or shorter period if such information is not available for a
twelve-month period), or (2) if no such Bonds are then Outstanding, the thirty year
Revenue Bond Index most recently published in The Bond Buver or if the Revenue Bond
Index is no longer available, the current average annual long-term fixed rate of interest on
securities of similar quality and having a similar maturity date as certified by a Financial
Advisor.
(b) If any Compound Interest Bonds are Outstanding or proposed to be issued,
the total principal and interest coming due in any specified period shall be determined,
with respect to such Compound Interest Bonds, by Series Resolution of the Consolidated
Government authorizing such Compound Interest Bonds.
(c) With respect to any Bonds secured by a Financial Facility, Debt Service
Requirement shall include (i) any commission or commitment fee obligations with
respect to such Financial Facility, (ii) the outstanding amount of any Reimbursement
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Obligation owed to the relevant Financial Facility Issuer and interest thereon, (iii) any
Additional Interest owed on Pledged Bonds to a Liquidity Facility Issuer, and (iv) any
remarketing agent fees.
(d) With respect to any Hedged Bonds, the interest on such Hedged Bonds
during any Hedge Period and for so long as the provider of the related Hedge Agreement
has not defaulted on its payment obligations thereunder shall be calculated by adding
(x) the amount of interest payable by the Consolidated Government on such Hedged
Bonds pursuant to their terms and (y) the amount of Hedge Payments payable by the
Consolidated Government under the related Hedge Agreement and subtracting (z) the
amount of Hedge Receipts payable by the provider of the related Hedge Agreement at the
rate specified in the related Hedge Agreement; provided, however, that to the extent that
the provider of any Hedge Agreement is in default thereunder, the amount of interest
payable by the Consolidated Government on the related Hedged Bonds shall be the
interest calculated as if such Hedge Agreement had not been executed. In determining
the amount of Hedge Payments or Hedge Receipts that are not fixed throughout the
Hedge Period (i.e., which are variable), payable or receivable for any future period, such
Hedge Payments or Hedge Receipts for any period of calculation (the "Determination
Period") shall be computed by assuming that the variables comprising the calculation
(e.g., indices) applicable to the Determination Period are equal to the average of the
actual variables that were in effect (weighted according to the length of the period during
which each such variable was in effect) for the most recent twelve-month period
immediately preceding the date of calculation for which such information is available (or
shorter period if such information is not available for a twelve-month period).
(e) For the purpose of calculating the Debt Service Requirement on Balloon
Bonds (1) which are subject to a Commitment or (2) which do not have a Balloon Date
within 12 months from the date of calculation, such Bonds shall be assumed to be
amortized in substantially equal annual amounts to be paid for principal and interest over
an assumed amortization period of 25 years at an assumed interest rate (which shall be
the thirty year Revenue Bond Index most recently published in The Bond Bu�er or if the
Revenue Bond Index is no longer available, the interest rate certified by a Financial
Advisor to be the interest rate at which the Consolidated Government could reasonably
expect to borrow the same amount by issuing Bonds with the same priority of lien as such
Balloon Bonds and with a 25-year term); provided, however, that if the maturity of such
Bonds (taking into account the term of any Commitment) is in excess of 25 years from
the date of issuance, then such Bonds shall be assumed to be amortized in substantially
equal annual amounts to be paid for principal and interest over an assumed amortization
period of years equal to the number of years from the date of issuance of such Bonds to
maturity (including the Commitment) and at the interest rate applicable to such Bonds.
( fl For the purpose of calculating the Debt Service Requirement on Balloon
Bonds (1) which are not subject to a Commitment and (2) which have a Balloon Date
within 12 months from the date of calculation, the principal payable on such Bonds on
the Balloon Date shall be calculated as if paid on the Balloon Date.
9
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(g) The principal of and interest on Bonds and Hedge Payments shall be
excluded from the determination of Debt Service Requirement to the extent that the same
were or are expected to be paid with amounts on deposit on the date of calculation (or
Bond proceeds to be deposited on the date of issuance of proposed Bonds) in the
Construction Fund, the Sinking Fund, or a similar fund for Subordinate Bonds.
(h) With respect to any Federal Credit Payment Bonds, the interest on such
Federal Credit Payment Bonds for so long as the Federal government continues to pay the
Federal Credit Payments to the Consolidated Government shall be calculated by
subtracting the amount of Federal Credit Payments paid or payable by the Federal
government with respect to such Federal Credit Payment Bonds from the amount of
interest payable by the Consolidated Government on such Federal Credit Payment Bonds
pursuant to their terms.
"Debt Service Reserve Account" means the Debt Service Reserve Account within the
Sinking Fund established in Article IV.
"Debt Service Reserve Requirement" means as of any date of calculation, an amount
equal to the least of (a) 10% of the original principal amount of Senior Bonds, (b) 50% of the
maximum annual Debt Service Requirement on Senior Bonds payable in any Fiscal Year or
(c) 125% of the average annual Debt Service Requirement on Senior Bonds payable in the then
current or any succeeding Fiscal Year.
"Depository" means the depository of each fund established under the Bond Resolution,
and any successor depository of such fund hereafter designated by the Consolidated Government
in a Supplemental Resolution.
"DTC" means The Depository Trust Company, New York, New York, or its nominee, or
its successors and assigns, or any other depository performing similar functions under the Bond
Resolution.
"Engineering Report" means any engineering report related to Projects to be acquired,
constructed, installed or equipped with the proceeds of any Bonds.
"Event of Default" means any of the events defined as such in Article IX.
"Expenses of Operation and Maintenance" means all expenses reasonably incurred in
connection with the operation and maintenance of the System, including salaries, wages, the cost
of materials and supplies, rentals of leased property, if any, management fees, payments to others
for the purchase of water, if any, and for the treatment and disposal of sewerage, the cost of
audits, Paying Agent's and Bond Registrar's fees, payment of premiums for insurance required
by the Bond Resolution and other insurance that the Consolidated Government deems prudent to
carry on the System and its operations and personnel, and, generally, all expenses, exclusive of
interest on the Bonds and the Prior Lien Bonds and depreciation or amortization, that under
accounting principles generally accepted for municipal utility purposes are properly allocable to
operation and maintenance; however, only such expenses as are reasonably and properly
necessary or desirable for the proper operation and maintenance of the System shall be included.
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"Expenses of Operation and Maintenance" also includes the Consolidated Government's
obligations under any contract with any other political subdivision or public agency or authority
of one or more political subdivisions pursuant to which the Consolidated Government undertakes
to make payments measured by the expenses of operating and maintaining any facility that
constitutes part of the System and that is owned or operated in part by the Consolidated
Government and in part by others.
"Federal Credit Payment Bonds" means any Bonds for which the Consolidated
Government shall be entitled to receive Federal Credit Payments.
"Federal Credit Payments" means any periodic direct federal credit payments required
to be paid by the Federal government to the Consolidated Government relating to any series of
Bonds in an amount equal to a percentage of the interest payments on such Bonds if the
Consolidated Government irrevocably elected in a Supplemental Resolution authorizing the
issuance of such Bonds to include such direct federal credit payments in the definition of
"Operating Revenues" herein.
"Financial Advisor" means an investment banking or financial advisory firm,
commercial bank, or any other Person who or which is appointed by the Consolidated
Government for the purpose of passing on questions relating to the availability and terms of
specified types of Bonds and is actively engaged in and, in the good faith opinion of the
Consolidated Government, has a favorable reputation for skill and experience in underwriting or
providing financial advisory services in respect of similar types of securities.
"Financial Facility" means a Credit Facility or a Liquidity Facility.
"Financial Facility Agreement" means a Credit Facility Agreement or a Liquidity
Facility Agreement.
"Financial Facility Issuer" means a Credit Facility Issuer or a Liquidity Facility Issuer.
"Fiscal Year" means the 12-month period used by the Consolidated Government for its
general accounting purposes, as it may be changed from time to time. The Fiscal Year at the
time this Master Bond Resolution was adopted began on January 1 and ended on December 31 of
the same year.
"Fitch" means Fitch, Inc., doing business as Fitch Ratings, or, if such limited partnership
is dissolved or liquidated or otherwise ceases to perform securities rating services, such other
nationally recognized securities rating agency as may be designated in writing by the
Consolidated Government. The notice address of Fitch shall be One State Street Plaza, New
York, New York 10004.
"Forecast Period" means a period of five consecutive Fiscal Years commencing with
the Fiscal Year after the later of (1) the Fiscal Year in which any proposed Additional Bonds are
to be issued or (2) the Fiscal Year in which any Project to be financed with the proceeds of any
proposed Additional Bonds is expected to be completed.
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"Government Loans" means loans to the Consolidated Government by the government
of the United States or the State, or by any department, authority, or agency of either, for the
purpose of acquiring, constructing, reconstructing, improving, bettering, or extending any part of
the System.
"Government Obligations" means (a) obligations of the United States and of its
agencies and instrumentalities, (b) obligations fully insured or guaranteed by the United States
government or United States government agency or (c) obligations of any corporation of the
United States government (including any obligations described in (a), (b) or (c) issued or held in
book-entry form on the books of the Department of the Treasury of the United States of
America).
"Hedge Agreement" means, without limitation, (i) any contract known as or referred to
or which performs the function of an interest rate swap agreement, currency swap agreement,
forward payment conversion agreement, or futures contract; (ii) any contract providing for
payments based on levels of, or changes or differences in, interest rates, currency exchange rates,
or stock or other indices; (iii) any contract to exchange cash flows or payments or series of
payments; (iv) any type of contract called, or designed to perform the function of, interest rate
floors, collars, or caps, options, puts, or calls, to hedge or minimize any type of financial risk,
including, without limitation, payment, currency, rate, or other financial risk; and (v) any other
type of contract or arrangement that the Consolidated Government determines is to be used, or is
intended to be used, to manage or reduce the cost of any Bonds, to convert any element of any
Bonds from one form to another, to ma�cimize or increase investment return, to minimize
investment return risk, or to protect against any type of financial risk or uncertainty.
"Hedge Payments" means amounts payable by the Consolidated Government pursuant
to any Hedge Agreement, other than termination payments, fees, expenses, and indemnity
payments.
"Hedge Payments Account" means the Hedge Payments Account within the Sinking
Fund established in Article V.
"Hedge Period" means the period during which a Hedge Agreement is in effect.
"Hedge Receipts" means amounts payable by any provider of a Hedge Agreement
pursuant to such Hedge Agreement, other than termination payments, fees, expenses, and
indemnity payments.
"Hedged Bonds" means any Bonds for which the Consolidated Government shall have
entered into a related Hedge Agreement.
"Independent Certified Public Accountant" means a certified public accountant, or a
firm of certified public accountants, who or which is "independent" as that term is defined in
Rule 101 and related interpretations of the Code of Professional Ethics of the American Institute
of Certified Public Accountants, of recognized standing, who or which does not devote his or its
full time to the Consolidated Government (but who or which may be regularly retained by the
Consolidated Government).
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"Independent Consulting Engineer" means a firm of engineers or utility consultants
experienced in the planning and management of water and sewer systems and having a nationally
recognized reputation for such work.
"Interest Payment Date" means (a) with respect to the Series 2012 Bonds, each April 1
and October 1, commencing April 1, 2013 and (b) with respect to other series of Bonds, the
interest payment date specified in the Supplemental Resolution authorizing such Bonds.
"Investment Earnings" means all interest received on and profits derived from
investments made with Pledged Revenues or any moneys in the funds and accounts established
under Article V.
"Liquidity Facility" means any letter of credit, standby bond purchase agreement, line
of credit, revolving credit agreement, or similar obligation, arrangement, or instrument issued by
a bank, insurance company, or other financial institution that is used by the Consolidated
Government to perform one or more of the following tasks: (i) providing liquidity for the
owners of Bonds through undertaking to cause Bonds to be bought from the owners thereof
when submitted pursuant to an arrangement prescribed by a Series Resolution; or
(ii) remarketing any Bonds so submitted to the Liquidity Facility Issuer (whether or not the same
Liquidity Facility Issuer is remarketing the Bonds).
"Liquidity Facility Agreement" means an agreement between the Consolidated
Government and a Liquidity Facility Issuer pursuant to which the Liquidity Facility Issuer issues
a Liquidity Facility and may include the promissory note or other instrument evidencing the
Consolidated Government's obligations to a Liquidity Facility Issuer pursuant to a Liquidity
Facility Agreement.
"Liquidity Facility Issuer" means any issuer of a Liquidity Facility then in effect for all
or part of the Bonds.
"Moody's" means Moody's Investors Service, Inc. or, if such corporation is dissolved or
liquidated or otherwise ceases to perform securities rating services, such other nationally
recognized securities rating agency as may be designated in writing by the Consolidated
Government. The notice address of Moody's shall be 7 World Trade Center, 250 Greenwich
Street, New York, New York 10007.
"Net Operating Revenues" means Operating Revenues after provision for payment of
all Expenses of Operation and Maintenance and excluding Federal Credit Payments and
including any PILOT payments and PILOF payments.
"Operating Revenues" means all income and revenue of any nature derived from the
operation of the System, including monthly water and sewerage billings, service charges, other
charges for water and sewerage service and the availability thereof (other than any special
assessment proceeds), connection or tap fees (whether accounted for as revenues or as
contributed capital), local, state, or federal grants or other moneys received for the payment of
Expenses of Operation and Maintenance and any Federal Credit Payments, but excluding local,
13
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state, or federal grants, loans, capital improvement contract payments, or other moneys received
for capital improvements to the System and excluding Investment Earnings.
"Other System Obligations" means obligations of any kind, including but not limited
to, Government Loans, revenue bonds, capital leases, installment purchase agreements, or notes
(but excluding Bonds and related obligations to Financial Facility Issuers, Reserve Account
Credit Facility Providers and Qualified Hedge Providers), incurred or issued by the Consolidated
Government to finance or refinance the cost of acquiring, constructing, reconstructing,
improving, bettering, or extending any part of the System or for any other purpose with respect
to the System.
"Outstanding" means, when used in reference to the Bonds, all Bonds that have been
duly authenticated and delivered under the Bond Resolution, with the exception of (a) Bonds in
lieu of which other Bonds have been issued under agreement to replace lost, mutilated, stolen, or
destroyed obligations, (b) Bonds surrendered by the owners in exchange for other Bonds under
Section 2.6 or Section 3.4, and (c) Bonds for the payment of which provision has been made in
accordance with Article IX. In determining the amount of Compound Interest Bonds
Outstanding under the Bond Resolution, the Accreted Value of such Compound Interest Bonds at
the time of determination shall be used.
"Participants" means those financial institutions for which the Securities Depository
effects book-entry transfers and pledges of securities deposited with the Securities Depository in
the Book-Entry System, as such listing exists at the time of such reference.
"Paying Agent" means initially U.S. Bank National Association, Atlanta, Georgia and
the commercial bank or banks appointed by the Consolidated Government to serve as paying
agent in accordance with the terms of the Bond Resolution for any series of Bonds.
"Permitted Investments" means and includes any of the following securities, if and to
the extent the same are at the time legal for investment of Consolidated Government funds:
(a) the local government investment pool created in Chapter 83 of Title 36 of
the Official Code of Georgia Annotated, as amended;
(b) bonds or obligations of the Consolidated Government, or bonds or
obligations of the State of Georgia, or of other counties, municipal corporations, and
political subdivisions of the State of Georgia;
(c) bonds or other obligations of the United States or of subsidiary
corporations of the United States government which are fully guaranteed by such
government;
(d) obligations of and obligations guaranteed by agencies or instrumentalities
of the United States government, including those issued by the Federal Land Bank,
Federal Home Loan Bank, Federal Intermediate Credit Bank, Bank for Cooperatives and
any other such agency or instrumentality now or hereafter in existence; provided,
however, that all such obligations shall have a current credit rating from a nationally
14
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recognized rating service of at least one of the three highest rating categories available
and have a nationally recognized market;
(e) bonds or other obligations issued by any public housing agency or
municipal corporation in the United States, which such bonds or obligations are fully
secured as to the payment of both principal and interest by a pledge of annual
contributions under an annual contributions contract or contracts with the United States
government, or project notes issued by any public housing agency, urban renewal agency,
or municipal corporation in the United States which are fully secured as to payment of
both principal and interest by a requisition, loan, or payment agreement with the United
States government;
(� certificates of deposit of national or state banks located within the State of
Georgia which have deposits insured by the Federal Deposit Insurance Corporation and
certificates of deposit of federal savings and loan associations and state building and loan
or savings and loan associations located within the State of Georgia which have deposits
insured by the Savings Association Insurance Fund of the Federal Deposit Insurance
Corporation or the Georgia Credit Union Deposit Insurance Corporation, including the
certificates of deposit of any bank, savings and loan association, or building and loan
association acting as depository, custodian, or trustee for any proceeds of any bonds. The
portion of such certificates of deposit in excess of the amount insured by the Federal
Deposit Insurance Corporation, the Savings Association Insurance Fund of the Federal
Deposit Insurance Corporation or the Georgia Credit Union Deposit Insurance
Corporation, if any, shall be secured by deposit, with the Federal Reserve Bank of
Atlanta, Georgia, or with any national or state bank or federal savings and loan
association or state building and loan or savings and loan association located within the
State of Georgia or with a trust office located within the State of Georgia, of one or more
of the following securities in an aggregate principal amount equal at least to the amount
of such excess: direct and general obligations of the State of Georgia or other states or of
any county or municipal corporation in the State of Georgia, obligations of the United
States or subsidiary corporations referred to in paragraph (c) above, obligations of the
agencies and instrumentalities of the United States government referred to in
paragraph (d) above, or bonds, obligations, or project notes of public housing agencies,
urban renewal agencies, or municipalities referred to in paragraph (e) above;
(g) securities of or other interests in any no-load, open-end management type
investment company or investment trust registered under the Investment Company Act of
1940, as from time to time amended, or any common trust fund maintained by any bank
or trust company which holds such proceeds as trustee or by an affiliate thereof so long
as:
(i) the portfolio of such investment company or investment trust or
common trust fund is limited to the obligations referred to in paragraph (c) and (d)
above and repurchase agreements fully collateralized by any such obligations;
15
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(ii) such investment company or investment trust or common trust
fund takes delivery of such collateral either directly or through an authorized
custodian;
(iii) such investment company or investment trust or common trust
fund is managed so as to maintain its shares at a constant net asset value; and
(iv) securities of or other interests in such investment company or
investment trust or common trust fund are purchased and redeemed only through
the use of national or state banks having corporate trust powers and located within
the State of Georgia; and
(h) interest-bearing time deposits, repurchase agreements, reverse repurchase
agreements, rate guarantee agreements, or other similar banking arrangements with a
bank or trust company having capital and surplus aggregating at least $50 million or with
any government bond dealer reporting to, trading with, and recognized as a primary
dealer by the Federal Reserve Bank of New York having capital aggregating at least $50
million or with any corporation which is subject to registration with the Board of
Governors of the Federal Reserve System pursuant to the requirements of the Bank
Holding Company Act of 1956, provided that each such interest-bearing time deposit,
repurchase agreement, reverse repurchase agreement, rate guarantee agreement or other
similar banking arrangement shall permit the moneys so placed to be available for use at
the time provided with respect to the investment or reinvestment of such moneys; and
(i) any other investments authorized by the laws of the State of Georgia from
time to time.
"Person" means any natural person, firm, association, corporation, limited liability
company, partnership, joint stock company, joint venture, trust, unincorporated organization or firm,
or a government or any agency or political subdivision thereof or other public body.
"PILOF" means payments in lieu of franchise fees paid from Operating Revenues to the
Consolidated Government intended to approximate franchise fees paid by other utility companies
providing services within the Consolidated Government and calculated as a percentage of inetered
revenue of the System.
"PILOT" means payments in lieu of t�es paid from Operating Revenues to the
Consolidated Government intended to approximate the ad valorem property taxes that would be
payable on the net depreciated value of above-ground System structures if such assets were
subj ect to ad valorem property tax.
"Pledged Bond" means any Bond purchased and held by a Liquidity Facility Issuer
pursuant to a Liquidity Facility Agreement. A Bond shall be deemed a Pledged Bond only for
the actual period during which such Bond is owned by a Liquidity Facility Issuer pursuant to a
Liquidity Facility Agreement.
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"Pledged Bond Rate" means the rate of interest payable on Pledged Bonds, as may be
provided in a Liquidity Facility or Liquidity Facility Agreement.
"Pledged Revenues" means Operating Revenues, after provision for payment of all
Expenses of Operations and Maintenance, and Investment Earnings; provided that on and after
the date the Prior Lien Bonds are no longer outstanding under the Prior Lien Resolution, Pledged
Revenues shall also include Hedge Receipts and exclude any amounts required in the Bond
Resolution to be set aside pending, or used for, rebate to the United States government pursuant
to Section 148(� of the Code, including, but not limited to, amounts in the Rebate Fund.
The term "principal" means the principal amount of any Bond and includes the Accreted
Value of any Compound Interest Bonds. All references to principal sha11 be construed as if they
were also references to Accreted Value with respect to Compound Interest Bonds.
"Principal Maturity Date" means each date on which principal is to become due on any
Bonds, by maturity or mandatory sinking fund redemption, as established in the Series
Resolution for such Bonds.
"Prior Lien Bonds" means the Outstanding Series 2004 Bonds and the Outstanding
Series 2007 Bonds issued pursuant to the Prior Lien Resolution.
"Prior Lien Resolution" means the bond resolution adopted by the Consolidated
Government on October 21, 1996, as modified, supplemented, and amended by supplemental
resolutions adopted by the Consolidated Government on December 3 and 16, 1996, August 22,
2000, September 15, 2000, May 30, 2002, June 21, 2002, May 4, 2004, June 1, 2004,
November 23, 2004, June 15, 2004 and September 26, 2007, authorizing the issuance and
delivery of the Prior Lien Bonds.
"Project" means the acquisition, construction, reconstruction, improvement, betterment,
extension, or equipping of the System, in whole or in part, with the proceeds of any Bonds.
"Projected Senior Interest Payment" means that sum, redetermined by the
Consolidated Government monthly, which would have to be accumulated in the Interest Account
by the next Interest Payment Date to pay interest on Senior Bonds that bear interest at a Variable
Rate if such Variable Rate should continue to equal the rate borne by such Senior Bonds on the
date of calculation.
"Put Date" means any date on which a Bondholder may elect to have Balloon Bonds
redeemed, prepaid, purchased directly or indirectly by the Consolidated Government, or
otherwise paid.
"Qualified Hedge Provider" means an entity whose senior unsecured long term
obligations, financial program rating, counterparty rating, or claims paying ability, or whose
payment obligations under the related Hedge Agreement are absolutely and unconditionally
guaranteed by an entity whose senior unsecured long term obligations, financial program rating,
counterparty rating, or claims paying ability, are rated either (i) at least as high as the middle
range of the third highest rating category of each Rating Agency, but in no event lower than any
Rating on the related Hedged Bonds at the time of execution of the Hedge Agreement, or (ii) in
17
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any such lower Rating that each Rating Agency indicates in writing to the Consolidated
Government will not, by itself, result in a reduction or withdrawal of its Rating on the related
Hedged Bonds that is in effect prior to entering into the Hedge Agreement. An entity's status as
a"Qualified Hedge Provider" is determined only at the time the Consolidated Government enters
into a Hedge Agreement with such entity and cannot be redetermined with respect to that Hedge
Agreement.
"Rating" means a rating in one of the categories by a Rating Agency, disregarding
pluses, minuses, and numerical gradations.
`�Rating Agencies" or ��Rating Agency" means Fitch, Moody's, or Standard & Poor's or
any successors thereto and any other nationally recognized credit rating agency then mainta.ining
a rating on any Bonds at the request of the Consolidated Government. If at any time a particular
Rating Agency does not have a rating outstanding with respect to the relevant Bonds, then a
reference to Rating Agency or Rating Agencies shall not include such Rating Agency.
"Rebate Fund" means the Augusta, Georgia Water and Sewerage System Rebate Fund
established in Section 5.2(b)(2).
"Record Date" means (a) with respect to the Series 2012 Bonds, the fifteenth day of the
calendar month preceding each Interest Payment Date and (b) with respect to any other series of
Bonds, the record date specified in the Supplemental Resolution authorizing such Bonds.
"Refunded Bonds" means the Series 2002 Bonds maturing October 1, 2018, October 1,
2027 and October 1, 2032.
"Reimbursement Obligation" means the obligation of the Consolidated Government to
directly reimburse any Financial Facility Issuer for amounts paid by such Financial Facility
Issuer under a Financial Facility, whether or not such obligation to so reimburse is evidenced by
a promissory note or other similar instrument.
"Reserve Account Credit Facility" means the letter of credit, insurance policy, line of
credit, or surety bond, together with any substitute or replacement therefor, if any, complying
with the provisions of the Bond Resolution, thereby fulfilling all or a portion of the Debt Service
Reserve Requirement.
"Reserve Account Credit Facility Provider" means any provider of a Reserve Account
Credit Facility.
"Revenue Bond Law" means the Revenue Bond Law (O.C.G.A. Section 36-82-60
et seq.), as amended from time to time.
"Revenue Fund" means the Augusta, Georgia Water and Sewerage System Revenue
Fund described in Section 5.2.
"Securities Depository" means any securities depository that is a"clearing corporation"
within the meaning of the New York Uniform Commercial Code and a"clearing agency"
18
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registered pursuant to provisions of Section 17A of the Securities Exchange Act of 1934,
operating and maintaining, with its Participants or otherwise, a Book-Entry System to record
ownership of beneficial interest in bonds and bond service charges, and to effect transfers of
bonds in Book-Entry Form, and means, initially, DTC.
"Securities Depository Nominee" means any nominee of a Securities Depository and
shall initially mean Cede and Co., New York, New York, as nominee of DTC.
"Senior Bonds" means the Series 2012 Bonds and any Additional Bonds.
"Senior Hedge Agreements" means Hedge Agreements relating to Hedged Bonds that
are Senior Bonds.
"Series Resolution" means a bond resolution or bond resolutions of the Consolidated
Government (which may be supplemented by one or more bond resolution(s)) to be adopted
prior to and authorizing the issuance and delivery of any series of Bonds. This Master Bond
Resolution shall constitute the Series Resolution for the Series 2012 Bonds, as well as the Master
Bond Resolution for Additional Bonds and Subordinate Bonds. Such a bond resolution as
supplemented shall establish the date or dates of the pertinent series of Bonds, the schedule of
maturities of such Bonds, whether any such Bonds will be Compound Interest Bonds, the name
of the purchaser(s) of such series of Bonds, the purchase price thereof, the rate or rates of interest
to be borne thereby, whether fixed or variable, the interest payment dates for such Bonds, the
terms and conditions, if any, under which such Bonds may be made subject to redemption
(mandatory or optional) prior to maturity, the form of such Bonds, and such other details as the
Consolidated Government may determine.
"Series 2012 Bonds" means the Augusta, Georgia Water and Sewerage Revenue
Refunding and Improvement Bonds (Second Resolution), Series 2012, authorized to be issued
pursuant to Article II.
"Series 2012 Construction Account" means the Augusta Georgia Water and Sewerage
System Construction Fund — Series 2012 Construction Account within the Construction Fund
established in Article IV.
"Series 2012 Custodian and Depository Agreement" means the Custodian and
Depository Agreement, to be dated the date of its execution and delivery, between the
Consolidated Agreement and U.S. Bank National Association, relating to the Series 2012 Bonds,
as amended, modified or replaced.
"Series 2012 Disclosure Certificate" means the continuing disclosure certificate
executed in connection with the issuance of the Series 2012 Bonds.
"Series 2012 Project" means the Project as (1) generally described in the report dated
October 2012, as amended, prepared by the Consolidated Government's consulting engineers,
ZEL Engineers, Augusta, Georgia, and (2) particularly described in plans and specifications on
file from time to time with the Consolidated Government.
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• �
"Series 2012 Paying Agent and Bond Registrar Agreement" means the Paying Agent
and Bond Registrar Agreement, to be dated the date of its execution and delivery, between the
Consolidated Government and U.S. Bank National Association, relating to the Series 2012
Bonds, as amended, modified, or replaced.
"Sinking Fund" means the Augusta, Georgia Water and Sewerage System Sinking Fund
No. 2 described in Section 5.2 in which are held the Debt Service Account and the Debt Service
Reserve Account.
"Sinking Fund No. 1" means the Augusta, Georgia Water and Sewerage System Sinking
Fund described in Section 5.2.
"Standard and Poor's" or "S&P" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or, if such corporation is dissolved or liquidated
or otherwise ceases to perform securities rating services, such other nationally recognized
securities rating agency as may be designated in writing by the Consolidated Government. The
notice address of Standard & Poor's shall be 55 Water Street, New York, New York 10041.
"State" means the State of Georgia.
"Subordinate Bonds" means Bonds issued with a right to payment from the Pledged
Revenues and secured by a lien on the Pledged Revenues expressly junior and subordinate to the
Senior Bonds.
"Subordinate Hedge Agreements" means Hedge Agreements relating to Hedged Bonds
that are Subordinate Bonds.
"Supplemental Resolution" means (a) any Series Resolution and (b) any modification,
amendment, or supplement to this Master Bond Resolution other than a Series Resolution.
"System" means the water and sewerage system of the Consolidated Government, as it
now exists and as it may be hereafter added to, extended, improved, and equipped, either from
the proceeds of the Bonds or from any other sources at any time hereafter, including, without
limitation, (a) all wells, pumping stations, purification and treatment plants, and other sources of
supply of water and all pipes, mains, and other parts of the facilities for the distribution of water
and disposal and treatment of sewerage and all equipment and property used in connection
therewith and (b) all other facilities or property of any nature or description, real or personal,
tangible ar intangible, now or hereafter owned or used by the Consolidated Government in the
supply, treatment, disposal and distribution of water and sewerage, including solid waste
facilities relating to sludge disposal, or held by the Consolidated Government to obtain future
sources of raw water. The Consolidated Government may own a partial interest in any water and
sewerage facility, the remaining interest in which may be owned by or on behalf of a political
subdivision of the State or any agency or authority thereo£ In case of such ownership, the rights
and interests possessed by the Consolidated Government in such facility shall be included as part
of the System.
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"Tax-Exempt Bonds" means any Bonds the interest on which has been determined, in
an unqualified opinion of Bond Counsel, to be excludable from the gross income of the owners
thereof for federal income tax purposes.
"Term Bonds" means Bonds that mature on one Principal Maturity Date yet a portion of
which are required to be redeemed, prior to maturity, under a schedule of mandatory redemptions
established by the Bond Resolution.
"2002 Defeasance Account" means the account created for the purpose of holding a
portion of the proceeds of the Series 2012 Bonds which are to be applied to the refunding of the
Refunded Bonds.
"Utility General Fund" means the Augusta, Georgia Water and Sewerage System
Utility General Fund described in Article V.
"Variable Rate" means as to any Bonds, any portion of such Bonds the interest rate on
which is not established at the time of original execution or issuance at a fixed or constant rate.
Section 1.2. Construction of Certain Terms.
For all purposes of the Bond Resolution, except as otherwise expressly provided or unless
the context otherwise requires, the following rules of construction shall apply:
(1) The use of the masculine, feminine, or neuter gender is for convenience
only and shall be deemed and construed to include correlative words of the masculine,
feminine, or neuter gender, as appropriate.
(2) All references in the Bond Resolution to designated "Articles,"
"Sections," and other subdivisions are to the designated Articles, Sections, and other
subdivisions of the Bond Resolution. The words "herein," "hereof," and "hereunder" and
other words of similar import refer to the Bond Resolution as a whole and not to any
particular Article, Section, or other subdivision.
(3) The terms defined in this Article shall have the meanings assigned to them
in this Article and include the plural as well as the singular.
(4) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
promulgated by the American Institute of Certified Public Accountants.
Section 1.3. Table of Contents; Titles and Headings
The table of contents, the titles of the articles, and the headings of the sections of the
Bond Resolution are solely for convenience of reference, are not a part of the Bond Resolution,
and shall not be deemed to affect the meaning, construction, or effect of any of its provisions.
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Section 1.4. Contents of Certificates or Opinions.
Every certificate or opinion with respect to the compliance with a condition or covenant
provided for in the Bond Resolution shall include: (i) a statement that the person or persons
making or giving such certificate or opinion have read such covenant or condition and the
definitions herein relating thereto, (ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in such certificate
or opinion are based, (iii) a statement that, in the opinion of the signers, they have made or
caused to be made such examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such covenant or condition has been complied with, and
(iv) a statement as to whether, in the opinion of the signers, such condition or covenant has been
complied with.
Any such certificate or opinion made or given by an official of the Consolidated
Government may be based, insofar as it relates to legal or accounting matters, upon a certificate
or an opinion of counsel or an accountant, which certificate or opinion has been given only after
due inquiry of the relevant facts and circumstances, unless such official knows that the certificate
or opinion with respect to the matters upon which his certificate or opinion may be based as
aforesaid is erroneous or in the exercise of reasonable caxe should have known that the same was
erroneous. Any such certificate or opinion made or given by counsel or an accountant may be
based (insofar as it relates to factual matters with respect to information that is in the possession
of an official of the Consolidated Government or any third party) upon the certificate or opinion
of or representations by an official of the Consolidated Government or any third party on whom
counsel or an accountant could reasonably rely unless such counsel or such accountant knows
that the certificate or opinion or representations with respect to the matters upon which his
certificate or opinion may be based as aforesaid are erroneous or in the exercise of reasonable
care should have known that the same were erroneous. The same official of the Consolidated
Government, or the same counsel or accountant, as the case may be, need not certify or opine to
all of the matters required to be certified or opined under any provision of the Bond Resolution,
but different officials, counsel, or accountants may certify or opine to different matters,
respectively.
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ARTICLE II
THE BONDS
Section 2.1. Authorization; Designation of Bonds.
The Bonds authorized under the Bond Resolution may be issued and sold from time to
time in one or more series, shall be designated "Augusta, Georgia Water and Sewerage Revenue
Bonds," and shall be in substantially the form set forth in the related Series Resolution, but such
variations, omissions, substitutions, and insertions may be made therein, and such particular
series designation, legends, or text may be endorsed thereon, as may be necessary or appropriate
to conform to and as required or permitted by this Master Bond Resolution and any Series
Resolution or as may be necessary or appropriate to comply with applicable requirements of the
Code. The Bonds also may bear such legend or contain such further provisions as may be
necessary to comply with or conform to the rules and requirements of any brokerage board,
securities exchange, or municipal securities rulemaking board. Additional Bonds may be issued
from time to time as provided in, and subject to the limitations set forth in, Article VI.
Subordinate Bonds may be issued from time to time as provided in, and subject to the limitations
set forth in, Section 6.4.
Under the authority of the Revenue Bond Law, the Consolidated Government hereby
authorizes the execution, issuance and delivery of a series of Bonds in a total aggregate principal
amount of $138,830,000 and designated "Augusta, Water and Sewerage Revenue Refunding and
Improvement Bonds (Second Resolution), Series 2012." The proceeds of the Series 2012 Bonds
will be used for the purpose of (a) refunding the Refunded Bonds, (b) acquiring, constructing,
installing and equipping the Series 2012 Project, (c) funding a debt service reserve account and
(d) paying the costs of issuing the Series 2012 Bonds. The issuance of the Series 2012 Bonds for
the foregoing purposes is hereby found and declared to be in the best interests of and in
advancement of the general welfare of the Consolidated Government's citizens.
Section 2.2. Details of Bonds.
The Bonds shall be issued in fully registered form in Authorized Denominations and shall
be dated as provided in the pertinent Series Resolution, except that any Compound Interest Bond
shall be issued in the denomination of $5,000 maturity amount or integral multiples thereof.
Each Bond authenticated prior to the first Interest Payment Date thereon shall bear
interest from its dated date. Each Bond authenticated on or after the first Interest Payment Date
thereon shall bear interest from the Interest Payment Date thereon next preceding the date of
authentication thereof, unless such date of authentication shall be an Interest Payment Date to
which interest on such Bond has been paid in full or duly provided for, in which case from such
date of authentication; provided that if, as shown by the records of the Paying Agent, interest on
such Bond shall be in default, such Bond shall bear interest from the date to which interest has
been paid in full on such Bond or, if no interest has been paid on such Bond, its dated date. Each
Bond shall bear interest on overdue principal and, to the extent permitted by law, on overdue
premium, if any, and interest at the rate borne by such Bond. No payment due on any Bond shall
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be overdue if on the due date of such payment sufficient collected funds to make such payment
are on deposit with the Paying Agent.
The principal of, premium, if any, and interest on the Bonds shall be payable in any coin
or currency of the United States of America that, at the respective dates of payment thereof, is
legal tender for the payment of public and private debts.
The Series 2012 Bonds shall be dated their date of original issuance and delivery, shall be
in the form of fully registered bonds without coupons, shall be in Authorized Denominations,
shall be transferable to subsequent owners as hereinafter provided, shall be numbered R-1
upward and shall bear interest as herein provided (based on a 360 day year comprised of twelve
30-day months) at the rates per annum set forth below. Interest on the Series 2012 Bonds shall
be payable April 1 and October 1 of each year, commencing April 1, 2013, and the principal
shall mature on the 1 st day of October in the years and amounts set forth below:
Year Principal Amount Interest Rate
2018 $4,155,000 5.000%
2023 5,365,000 5.000
2024 5,640,000 5.000
2025 5,920,000 5.000
2026 6,210,000 5.000
2027 6,525,000 5.000
2028 6,850,000 4.000
2029 7,125,000 4.000
2030 7,410,000 3.000
2031 19,320,000 4.000
2032 20,095,000 3.000
2042 44,215,000 3.500
Unless a Bond is held in Book-Entry Form, the principal of and redemption premium, if
any, on any Bond shall be payable to the Bondholder upon presentation and surrender thereof at
the principal corporate trust office of the Paying Agent. Unless a Bond is held in Book-Entry
Form, payments of interest on each Bond shall be made by the Paying Agent to the registered
owner as shown on the Bond Register kept by the Bond Registrar at the close of business on the
Record Date preceding the Interest Payment Date by check, mailed by first class mail to the
registered owner at the address shown on the Bond Register, or at such other address as is
furnished in writing by such registered owner to the Bond Registrar prior to such Record Date,
notwithstanding the cancellation of any such Bonds upon any exchange or transfer thereof
subsequent to the Record Date and prior to such Interest Payment Date. Notwithstanding the
foregoing, interest on the Bonds of any series shall be paid to any registered owner of more than
$1,000,000 in aggregate principal amount of the Bonds of such series by deposit of immediately
available funds to the account of such registered owner maintained with the Paying Agent or
transmitted by wire transfer to such registered owner to an account maintained at a commercial
bank located within the United States of America if written instructions are given to the Paying
Agent prior to the 15�' day preceding the Interest Payment Date. Interest shall continue to be so
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paid until such wire instructions are revoked in writing. While the Bonds of any series are held
in Book-Entry Form, the principal of and interest on such Bonds shall be payable as provided in
Section 2.9.
The Consolidated Government may, by Supplemental Resolution, provide for other
methods or places of payment, including wire transfer, as it may deem appropriate for any
Bonds.
Section 2.3. Execution; Form of Series 2012 Bonds.
The Bonds shall be executed on behalf of the Consolidated Government by the manual or
facsimile signature of the Mayor and attested by the manual or facsimile signature of the Clerk of
the Commission. The official seal of the Consolidated Government shall be impressed thereon.
The Bonds shall be authenticated by the manual signature of a duly authorized signatory of the
Bond Registrar. The validation certificate to be attached to the Bonds shall be executed by the
manual signature of the Clerk of the Superior Court of Richmond County, and the official seal of
such Court shall be impressed thereon. In case any official whose signature shall appear on the
Bonds shall cease to be such officer before delivery of the Bonds, such signature shall
nevertheless be valid and sufficient for all purposes the same as if such officer had remained in
office until such delivery. The Series 2012 Bonds, the certificate of authentication and
registration, form of assignment and the certificate of validation to be endorsed upon the Series
2012 Bonds, shall be in substantially the form set forth in Exhibit A hereto, with such variations,
omissions and insertions as are required or permitted by this Bond Resolution. Prior to the
preparation of definitive Bonds, the Consolidated Government may issue interim receipts,
interim certificates, or temporary Bonds, exchangeable'in any case for definitive Bonds upon the
issuance of definitive Bonds.
Section 2.4. Required Authentication; Proof of Ownership.
Only those Bonds which shall have endorsed thereon a certificate of authentication and
registration substantially in the form of Bond set forth in the Bond Resolution, duly executed by
the manual signature of an authorized officer of the Bond Registrar shall be entitled to any
benefit or security under this Bond Resolution. Every such certificate of the Bond Register upon
any of such Bonds when duly executed shall be conclusive evidence that such Bond has been
duly authenticated, registered and delivered under the Bond Resolution and that the owner is
entitled to the benefit of the Bond Resolution. It shall not be necessary that the same authorized
signatory of the Bond Registrar sign the certificate of authentication and registration on all of the
Bond or on all Bonds of any series. The person in whose name any Bond shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes and the payment of
the principal amount, interest and premium, if any, shall be made only to or upon the order of the
registered owner thereof or such registered owner's attorney duly authorized in writing. All such
payments shall be valid and effectual to satisfy and discharge the liability upon such Bond,
including redemption premium, if any, and the interest thereon to the extent of the sums so paid.
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Section 2.5. Bond Registrar; Transfer and Exchange.
The Bond Registrar shall keep the Bond Register of the Consolidated Government for the
registration of the Bonds and for the registration of transfers of the Bonds as herein provided.
The transfer of any Bond shall be registered upon the Bond Register upon the surrender and
presentation of the Bond to the Bond Registrar duly endorsed for transfer or accompanied by an
assignment duly executed by the registered owner or attorney duly authorized in writing in such
form as shall be satisfactory to the Bond Registrar. Upon any such registration of transfer, the
Bond Registrar shall authenticate and deliver in exchange for such Bond or Bonds so
surrendered, a new Bond or Bonds registered in the name of the transferee or transferees, of any
Authorized Denomination, and in an aggregate principal amount or maturity amount equal to the
aggregate principal amount or maturity amounts of the Bonds so surrendered and of the same
maturity, interest rate, series and tenor, and bearing numbers not then outstanding. Any Bond,
upon presentation and surrender thereof to the Bond Registrar, together with an assignment duly
executed by the registered owner or duly authorized attorney, in such form as may be satisfactory
to the Bond Registrar, may be exchanged for an aggregate principal amount of Bonds of the
same series, interest rate, maturity and equal to the principal amount of the Bond so surrendered,
of any Authorized Denomination, and bearing numbers not then outstanding. The Bond
Registrar may make a charge for every exchange or registration of transfer of the Bonds
sufficient to reimburse it for any t� or other governmental charge required to be paid with
respect to such exchange or registration of transfer, but no other charge shall be made to the
owner for the privilege of exchanging or registering the transfer of Bonds under the Bond
Resolution.
The Bond Registrar shall not be required to transfer or exchange any Bond after notice
calling such Bond for redemption has been given or during the period of 15 days (whether or not
a business day for the Bond Registrar, but excluding the date of giving such notice of redemption
and including such 15th day) immediately preceding the giving of such notice of redemption.
All Bonds surrendered for exchange or transfer of registration shall be canceled and
destroyed by the Bond Registrar in accordance with Section 2.7.
Notwithstanding the foregoing, registrations of transfers and exchanges shall be made in
accordance with the Book-Entry System as long as the Bonds are held in Book-Entry Form.
Section 2.6. Lost, Destroyed, Mutilated Bonds.
If any Bond is mutilated, lost, stolen, or destroyed, the Consolidated Government may
execute and deliver a new Bond of the same series, maturity, interest rate, aggregate principal
amount, and tenor in lieu of and in substitution for the Bond mutilated, lost, stolen, or destroyed.
In the case of any mutilated Bond, however, such mutilated Bond shall first be surrendered to the
Bond Registrar, and, in the case of any lost, stolen, or destroyed Bond, there shall first be
furnished to the Bond Registrar evidence satisfactory to it of the ownership of such Bond and of
such loss, theft, or destruction, together with indemnity to the Consolidated Government and the
Bond Registrar, satisfactory to each of them. If any such Bond shall have matured or a
redemption date pertaining to the Bond shall have passed, instead of issuing a new Bond the
Consolidated Government may pay or cause the Paying Agent to pay the Bond. The
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Consolidated Government, the Bond Registrar, and the Paying Agent may charge the owner of
such Bond with their reasonable fees and expenses for replacing mutilated, lost, stolen, or
destroyed Bonds.
In executing a new Bond and in furnishing the Bond Registrar with the written
authorization to deliver a new Bond as provided for in this Section, the Consolidated
Government may rely conclusively on a representation of the Bond Registrar that the Bond
Registrar is satisfied with the adequacy of the evidence presented concerning the mutilation, loss,
theft, or destruction of any Bond.
Section 2.7. Blank Bonds.
The Consolidated Government shall make all necessary and proper provisions for the
transfer and exchange of the Bonds by the Bond Registrar and the Consolidated Government
shall deliver or cause to be delivered to the Bond Registrar a sufficient quantity of blank Bonds
duly executed on behalf of the Consolidated Government, together with the certificate of
validation pertaining thereto duly executed by the Clerk of the Superior Court of Richmond
County, as herein provided in order that the Bond Registrar shall at all times be able to register
and authenticate the Bonds at the earliest practicable time in accordance with the provisions of
the Bond Resolution. All Bonds surrendered in any such exchange or registration of transfer
shall be forthwith canceled by the Bond Registrar and a record thereof duly entered in the
permanent records pertaining to the Bonds maintained by the Bond Registrar.
Section 2.8. Cancellation and Destruction of Bonds.
If a Bond is paid, purchased or redeemed in full, either at or before maturity, it shall be
delivered to the Bond Registrar when such payment, purchase or redemption is made, and the
Bond shall thereupon be cancelled and shall not be reissued. All Bonds cancelled on account of
payment, transfer or exchange shall be destroyed in accordance with the prevailing practice of
the Bond Registrar and a permanent record of such destruction shall be kept by the Bond
Registrar.
Section 2.9. Global Form; Securities Depository; Ownership of Series 2012 Bonds.
(a) Upon the initial issuance, the ownership of each Series 2012 Bond shall be
registered in the name of the Securities Depository or the Securities Depository Nominee, and
ownership thereof shall be maintained in Book-Entry Form by the Securities Depository for the
account of the Participants thereof. Initially, each maturity of the Series 2012 Bonds shall be
registered in the name of Cede & Co., as the nominee of The Depository Trust Company.
Beneficial Owners will not receive Series 2012 Bonds from the Paying Agent evidencing their
ownership interests. Except as provided in subsection (c) of this Section 2.9, the Series 2012
Bonds may be transferred, in whole but not in part, only to the Securities Depository or the
Securities Depository Nominee, or to a successor Securities Depository selected or approved by
the Consolidated Government or to a nominee of such successor Securities Depository.
(b) With respect to Series 2012 Bonds registered in the name of the Securities
Depository or the Securities Depository Nominee, the Consolidated Government, the Paying
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Agent and the Bond Registrar shall have no responsibility or obligation to any Participant or
Beneficial Owner. Without limiting the foregoing, the Consolidated Government, the Paying
Agent, the Bond Registrar and their respective affiliates shall not have any responsibility or
obligation with respect to:
(i) the accuracy of the records of the Securities Depository, the Securities
Depository Nominee or any Participant with respect to any beneficial ownership interest
in the Series 2012 Bonds;
(ii) the delivery to any Participant, any Beneficial Owner or any other person,
other than the Securities Depository or the Securities Depository Nominee, of any notice
with respect to the Series 2012 Bonds; or
(iii) the payment to any Participant, any Beneficial Owner or any other person,
other than the Securities Depository or the Securities Depository Nominee, of any
amount with respect to the principal, premium, if any, or interest on the Series 2012
Bonds.
So long as any Series 2012 Bonds are registered in Book-Entry Form, the Consolidated
Government and the Paying Agent may treat the Securities Depository as, and deem the
Securities Depository to be, the absolute owner of such Series 2012 Bonds for all purposes
whatsoever, including without limitation:
(i) the payment of principal, premium, if any, and interest on such series of
Series 2012 Bonds;
(ii) giving notices of redemption and other matters with respect to such Series
2012 Bonds;
(iii) registering transfers with respect to such Series 2012 Bonds;
(iv) the selection of Series 2012 Bonds for redemption; and
(v) voting and obtaining consents under the Bond Resolution.
So long as any Series 2012 Bonds are registered in Book-Entry Form, the Paying Agent
shall pay all principal, premium, if any, and interest on the Series 2012 Bonds only to the
Securities Depository or the Securities Depository Nominee as shown in the Bond Register, and
all such payments shall be valid and effective to fully discharge the Consolidated Government's
obligations with respect to payment of principal of, premium, if any, and interest on the Series
2012 Bonds to the extent so paid.
(c) If at any time (i) the Consolidated Government determines that the Securities
Depository is incapable of discharging its responsibilities described herein, (ii) the Securities
Depository notifies the Consolidated Government that it is unwilling or unable to continue as
Securities Depository with respect to the Series 2012 Bonds, or (iii) the Securities Depository
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shall no longer be registered or in good standing under the Securities Exchange Act of 1934 or
other applicable statute or regulation and a successor Securities Depository is not appointed by
the Consolidated Government within 90 days after the Consolidated Government receives notice
or becomes aware of such condition, as the case may be, then this Section 2.9 shall no longer be
applicable and the Consolidated Government shall execute and the Bond Registrar shall
authenticate and deliver bonds representing the Series 2012 Bonds to the owners of the Series
2012 Bonds. Series 2012 Bonds issued pursuant to this paragraph (c) shall be registered in such
names and Authorized Denominations as the Securities Depository, pursuant to instructions from
the Participant or otherwise, shall instruct the Bond Registrar. Upon exchange, the Bond
Registrar shall deliver such certificates representing the Series 2012 Bonds to the persons in
whose names such Series 2012 Bonds are so registered on the business day immediately
preceding the date of such exchange.
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ARTICLE III
REDEMPTION OF BONDS
Section 3.1. Optional Redemption.
The Series 2012 Bonds maturing on or after October 1, 2023, may be redeemed prior to
their respective maturities at the option of the Consolidated Government on or after October 1,
2022, in whole or in part at any time, at the redemption price equal to the principal amount of the
Series 2012 Bonds to be redeemed plus accrued interest to the redemption date.
Section 3.2. Mandatory Sinking Fund Redemption.
The Series 2012 Bonds maturing on October 1, 2042, are subject to mandatory sinking
fund redemption on October 1, 2040 and on each October 1 thereafter, in accordance with the
Bond Resolution, at a redemption price equal to the principal amount of each Series 2012 Bond
(or portion thereo fl to be redeemed plus accrued interest to the date fixed for redemption, in the
following principal amounts and on the dates set forth below (the October 1, 2042 amount to be
paid rather than redeemed):
October 1 of the Year Principal Amount
2040 $14,000,000
2041 14,500,000
2042 15,715,000
The Consolidated Government shall be entitled to receive a credit in respect of its
mandatory sinking fund redemption obligation for Series 2012 Bonds delivered, purchased, or
redeemed, as hereinafter described, if the Consolidated Government at its option purchases in the
open market and delivers to the Paying Agent for cancellation Series 2012 Bonds or redeems
Series 2012 Bonds (other than through mandatory sinking fund redemption) and such Series
2012 Bonds have not theretofore been applied as a credit against any mandatory redemption
obligation. Each such Series 2012 Bond so purchased or redeemed shall be credited by the
Paying Agent at 100% of the principal amount thereof on the obligation of the Consolidated
Government on such mandatory redemption payment date, and any excess shall be credited on
future mandatory sinking fund redemption obligations in chronological order, and the principal
amount of such Series 2012 Bonds to be redeemed by operation of mandatory redemption shall
be accordingly reduced.
Section 3.3. Notice of Redemption
Unless waived by any registered owner of Bonds to be redeemed, official notice of any
such redemption shall be given by the Bond Registrar on behalf of the Consolidated Government
by mailing a copy of an official redemption notice by first class mail, at least 30 days and not
more than 60 days prior to the date fixed for redemption to the registered owner of the Bond or
Bonds to be redeemed at the address shown on the Bond Register or at such other address as is
furnished in writing by such registered owner to the Bond Registrar.
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All official notices of redemption shall be dated, shall contain the complete official name
of the Bond issue, and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the interest rates and maturity dates of the Bonds being redeemed;
(4) the date on which notice of redemption will be published;
(5) if less than all the Outstanding Bonds are to be redeemed, the Bond
numbers, and, where part of the Bonds evidenced by one Bond certificate are being
redeemed, the respective principal amounts of such Bonds to be redeemed;
(6) that on the redemption date the redemption price will become due and
payable upon each such Bond or portion thereof called for redemption and that interest
thereon shall cease to accrue from and after such date;
(7) the place where such Bonds are to be surrendered for payment of the
redemption price (which place of payment shall be the principal corporate trust office of
the Paying Agent) and the name, address, and telephone number of a person or persons at
the Paying Agent who may be contacted with respect to the redemption; and
(8) any conditions to such redemption.
Upon the payment of the redemption price of Bonds being redeemed, each check or other
transfer of funds issued for such purpose shall beax the CUSIP number identifying, by issue and
maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
Not less than 60 days after the redemption date, the Bond Registrar shall send a second
copy of the official notice of redemption to the registered owner of any Bond or Bonds to be
redeemed if, by such date, such registered owner has not surrendered its Bond or Bonds for
redemption. Such notice shall be sent by registered or certified mail, with a return receipt
requested.
Any defect in any notice of redemption shall not affect the validity of proceedings for
redemption of the Bonds.
The Paying Agent shall hold amounts payable on redemption for Bonds that have not
been surrendered for redemption for a period of not less than one year after the final maturity
date of the Bonds or any earlier date when all of the Bonds have been refunded or redeemed.
Section 3.4. Effect of Notice of Redemption.
Official notice of redemption having been given in the manner and under the conditions
provided in this Article, and moneys for payment of the redemption price being held by the
Paying Agent as provided in the Bond Resolution, the Bonds or portions of Bonds called for
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redemption shall, on the redemption date designated in such notice, become and be due and
payable at the redemption price provided for redemption of such Bonds or portions of Bonds on
such date, and from and after such date interest on the Bonds or portions of Bonds called for
redemption shall cease to accrue, such Bonds or portions of Bonds shall cease to be entitled to
any lien, benefit, or security under the Bond Resolution, and the owners of such Bonds or
portions of Bonds shall have no rights in respect thereof except to receive payment of the
redemption price thereo£ Upon surrender for partial redemption of any Bond, there sha11 be
prepared for and delivered to the registered owner a new Bond or Bonds of the same series,
maturity, and interest rate in the amount of the unpaid principal.
Section 3.5. Redemption Among Series.
Subject to the redemption provisions of any Series Resolution authorizing Bonds, the
Consolidated Government in its discretion may redeem the Bonds of any series, or a portion of
the Bonds of any such series, before it redeems the Bonds of any other series. Within any
particular series, any redemption of Bonds shall be effected in the manner provided in this
Master Bond Resolution and in any Series Resolution.
Section 3.6. Selection of Bonds to be Redeemed.
If less than all of the Bonds of like maturity of any series shall be called for redemption,
the particular Bonds, or portions of Bonds, to be redeemed shall be selected by lot in such other
manner as the Consolidated Government in its discretion may deem proper. The portion of any
Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of
$5,000 or an integral multiple thereof, and, in selecting portions of such Bonds for redemption,
the Consolidated Government shall treat each such Bond as representing that number of Bonds
which is obtained by dividing the principal amount of such Bond to be redeemed in part by
$5,000.
Section 3.7. Purchase in Open Market.
Nothing herein contained shall be construed to limit the right of the Consolidated
Government to purchase with any excess moneys in the Interest Account or the Principal
Account (i.e., moneys not needed in the then current Fiscal Year to pay principal of and interest
on any Senior Bonds) and for Sinking Fund purposes, any Senior Bonds in the open market.
Any such Senior Bonds so purchased shall not be reissued and shall be canceled.
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ARTICLE IV
CONSTRUCTION FUND; CUSTODY AND APPLICATION OF PROCEEDS
Section 4.1. Construction Fund.
(a) A special trust fund is hereby created and designated as the "Augusta, Georgia
Water and Sewerage Construction Fund." All moneys deposited into the Construction Fund
shall be held in trust by the Construction Fund Depository separate from other deposits of the
Consolidated Government. A special account is initially created in the Construction Fund; the
"Series 2012 Capital Improvement Account."
As to any future issue of Bonds providing Construction Fund moneys, the Construction
Fund Depository shall establish a separate special account for the Construction Fund, each of
which shall be designated as "Series Capital Improvement Account" (hereinafter referred
to as a"Capital Improvement Account"). Subject to Section 4.3, the moneys credited to a
Capital Improvement Account shall be used and applied for the purpose of paying the Costs of
the Project or for the repayment of advances made for that purpose in accordance with and
subject to the provisions and restrictions set forth in this Article.
(b) All payments from the Construction Fund shall be made by wire transfer or upon
checks signed by the Construction Fund Depository or officers of the Consolidated Government
properly authorized to sign on its behalf (an "Authorized Consolidated Government
Representative"). Before any such transfers are made or any checks are signed, there shall be
filed with the Construction Fund Depository:
(1) A requisition for such payment stating each amount to be paid, and the
name of the person to whom payment is due; and
(2) A certificate signed by such Authorized Consolidated Government
Representative, attached to the requisition and certifying that:
(i) An obligation in the stated amount has been incurred by the
Consolidated Government, specifying the purpose and circumstances of such
obligation in reasonable detail and to whom such obligation is owed, that the
same is a proper charge against the Construction Fund and has not been paid or
the subject of a previous requisition, and that the bill or statement of account for
such obligation is on file with the Consolidated Government;
(ii) The Authorized Consolidated Government Representative has no
notice of any vendors, mechanic's or other liens or rights to liens, chattel
mortgages, conditional sales contracts or any security interest, that should be
satisfied or discharged before such payment is made;
(iii) Such requisition contains no item representing payment on account
or any retained percentages which the Consolidated Government is, at the date of
such certificate, entitled to retain; and
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(iv) Insofar as such obligation was incurred for work, materials,
supplies or equipment in connection with the undertaking, such work was actually
performed, or such materials, supplies or equipment were actually installed in or
about the construction or delivered at the site of the work for that purpose.
(c) No requisition for payment shall be made until the Consolidated Government has
been furnished with a proper certificate of the supervising Independent Consulting Engineer that
insofar as such obligation was incurred for work, material, supplies, or equipment in connection
with the undertaking, such work was actually performed, or such material, supplies, or
equipment was actually installed in or about the construction or delivered at the site of the work
for that purpose.
(d) In the event the United States government or government of the State, or any
department, authority, or agency of either, agrees to allocate moneys to be used to defray any
part of the Cost of any Project upon the condition that the Consolidated Government appropriate
a designated amount of moneys for such purpose, and it is required of the Consolidated
Government that its share of such cost be deposited in a special account, the Consolidated
Government shall have the right to withdraw any sum so required from the Construction Fund by
appropriate transfer and deposit the same in a special account for that particulax Project;
provided, however, that all payments thereafter made from such special account shall be made
only in accordance with the requirements set forth in this Section.
Withdrawals for investment purposes only may be made by the Construction Fund
Depository to comply with written directions from the Consolidated Government without any
requisition other than such direction.
(e) The Consolidated Government will do all things, and take all reasonable and
prudent measures, necessary to continue construction with due diligence and to expend the
moneys credited to each Capital Improvement Account in the Construction Fund as
expeditiously as possible in order to assure the completion of the Project for which such accounts
were created, on the earliest practicable date, and will indemnify itself against the usual hazards
incident to the construction of such Project.
(� All requisitions and certificates required by this Section shall be retained either by
the Construction Fund Depository or by the Consolidated Government, subject at all times to
inspection by any officer of the Consolidated Government and any Bondholder.
Section 4.2. Investment of Construction Fund Moneys.
The Consolidated Government covenants that it will not cause or permit to be paid from
the Construction Fund any sums except in accordance with such provisions and restrictions;
provided, however, that any moneys in the Construction Fund not presently needed for the
payment of current obligations during the course of construction may be invested in Permitted
Investments maturing not later than (i) the date upon which such moneys will be needed
according to a schedule of anticipated payments from the Construction Fund filed with the
Consolidated Government by the Independent Consulting Engineer in charge of the Project or
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(ii) in the absence of such schedule, 36 months from the date of purchase, in either case upon
written direction of the Consolidated Government. Any such investments shall be held by the
Construction Fund Depository, in trust, for the account of the Construction Fund until maturity
or until sold, and at maturity or upon such sale the proceeds received therefrom including
accrued interest and premium, if any, shall be immediately deposited by the Construction Fund
Depository in the Construction Fund and shall be disposed of in the manner and for the purposes
provided in the Bond Resolution.
Section 4.3. Funds Remaining on Completion of Projects.
The Consolidated Government shall, when a Project has been completed, and may, when
a Project has been substantially completed, file with the Construction Fund Depository a
certificate signed by the Authorized Consolidated Government Representative estimating what
portion of the funds remaining in the separate account relating to such Project will be required by
the Consolidated Government for the payment or reimbursement of the Costs of such Project.
The Authorized Consolidated Government Representative shall attach to such certificate a
certificate of the supervising engineer certifying that such Project has been completed or
substantially completed, as the case may be, in accordance with the plans and specifications
therefor and approving the estimates of the Authorized Consolidated Government Representative
with respect to the portion of funds in the Capital Improvement Account required for Costs of the
Project. Such funds that will not be used shall be (1) transferred to the Principal Account and
used to redeem Bonds of the related series on the next redemption date or to pay principal of
such Bonds on the next Principal Maturity Date, or (2) transferred to the Interest Account and
used to pay interest on Bonds of the related series, provided that the Consolidated Government
shall first obtain an opinion of Bond Counsel to the effect that, under existing law, the
application of such moneys to pay interest on such Bonds (a) is allowed under State law, and
(b) if such Bonds are Tax-Exempt Bonds, will not, by itself and without more, adversely affect
the exclusion from gross income for federal income t� purposes of interest payable on such
Bonds. When all moneys have been withdrawn or transferred from any Capital Improvement
Account within the Construction Fund in accordance with the provisions of this Article IV, such
separate account shall terminate and cease to exist.
Section 4.4. Application of Funds.
The Consolidated Government shall apply the net proceeds (i. e., the sale proceeds less
the Purchaser's discount of $536,061.90 and the bond insurance premium of $492,668.40 paid
by the Purchaser to insure certain maturities of the Series 2012 Bonds) from the sale of the Series
2012 Bonds as follows:
(a) $96,335,762.50 shall be transferred to the 2002 Paying Agent for deposit
in the 2002 Defeasance Account and applied to refund the Refunded Bonds;
(b) $10,195,526.65 shall be deposited into the Debt Service Reserve Account;
and
(c) the balance shall be deposited into the Series 2012 Capital Improvement
Account to pay Costs of the Project and the costs of issuance for the Series 2012 Bonds.
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Notwithstanding the foregoing, if the Mayor shall determine that a different application of funds
is required to carry out the intent of this Bond Resolution, the Mayor may provide for such
different application of funds in the authentication order to be delivered at the time of issuance of
the Series 2012 Bonds.
Section 4.5. Redemption of Refunded Bonds.
The Refunded Bonds be and the same are hereby irrevocably called for redemption on
November 16, 2012 and the owners of the Refunded Bonds should present the same for payment
on November 16, 2012 and receive the principal amount thereof and all interest due thereon to
November 16, 2012.
Section 4.6. Direction to Paying Agent for the Refunded Bonds.
The Consolidated Government hereby authorizes and directs the 2002 Paying Agent to
mail the notice of redemption of the Refunded Bonds not later than October 17, 2012 to the
registered owners of the Refunded Bonds to be redeemed at the addresses which appear on the
bond registration book kept by the bond registrar for the Refunded Bonds, which notice shall be
in substantially the form attached hereto as Exhibit C.
Section 4.7. Creation of 2002 Defeasance Account.
Simultaneously with the issuance and delivery of the Series 2012 Bonds herein
authorized to be issued, a sufficient sum derived from the sale of the Series 2012 Bonds and
lawfully available funds shall be deposited in trust with the 2002 Paying Agent in an amount
sufficient without investment to pay the principal of and interest on the Refunded Bonds to the
November 16, 2012 redemption date. The Paying Agent, in its role as the 2002 Paying Agent,
shall establish a special segregated trust account designated the "2002 Defeasance Account."
The moneys so deposited in the 2002 Defeasance Account and all income therefrom shall be
subject to a lien and charge in favor of the owners of, and are hereby pledged to the payment of,
the Refunded Bonds, shall not be commingled with other moneys on deposit with the 2002
Paying Agent and shall be held in trust for the security of such owners until used and applied as
hereinafter provided.
The moneys so deposited in trust in the 2002 Defeasance Account have been calculated
as being sufficient and shall be used to redeem all of the Refunded Bonds by making the
following payment on November 16, 2012:
Date Principal Interest Total
11/16/2012 $95,740,000 $595,762.50 $96,335,762.50
Any moneys remaining in the 2002 Defeasance Account following the redemption of the
Refunded Bonds on November 16, 2012, shall be deposited to the Debt Service Account.
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ARTICLE V
PLEDGED REVENUES AND FLOW OF FUNDS
Section 5.1. Pledge of Revenues; Limited Obligations.
(a) All Pledged Revenues shall be and are hereby pledged to the prompt payment of
the principal of, premium, if any, and interest on the Bonds. Such moneys and securities shall
immediately be subject to the lien of this pledge for the benefit of the Bondholders without any
physical delivery thereof or further act, and the lien of this pledge shall be valid and binding
against the Consolidated Government and against all other persons having claims against the
Consolidated Government, whether such claims shall have arisen in tort, contract, or otherwise,
and regardless of whether such persons have notice of the lien of this pledge. This pledge shall
rank superior to all other pledges that may hereafter be made of any of the Pledged Revenues,
except for pledges of the Pledged Revenues hereafter made by the Consolidated Government in
the Hedge Agreements to secure Hedge Payments, which may rank on a parity with this pledge
as to the related Hedged Bonds on and after the date that no Prior Lien Bonds remain outstanding
under the Prior Lien Resolution. The lien of the pledge made in this Section 5.1 does not secure
any obligation of the Consolidated Government other than the Bonds; provided that so long as
any Prior Lien Bonds are outstanding pursuant to the Prior Lien Resolution, the pledge of and
lien on Pledged Revenues to the payment of principal of, premium, if any, and interest on the
Bonds shall be subject and subordinate to the pledge of and lien on "pledged revenues" (as
defined in the Prior Lien Resolution) to the payment of principal of, premium, if any, and interest
on the Prior Lien Bonds.
(b) The Bonds shall be limited obligations of the Consolidated Government as
provided herein payable solely from the Pledged Revenues. The Bonds and the interest thereon
shall not constitute a general or moral obligation of, nor a debt, indebtedness, or obligation of, or
a pledge of the faith and credit of, the Consolidated Government or the State of Georgia, or any
political subdivision thereof, within the meaning of any constitutional or statutory provision
whatsoever. Neither the faith and credit nor the taxing power of the State of Georgia, the
Consolidated Government or any political subdivision thereof is pledged to the payment of the
principal of, premium, if any, or interest on the Bonds or other costs incident thereto. Neither the
members of the Commission nor any person executing the Bonds shall be liable personally on
the Bonds by reason of the issuance thereof.
Section 5.2. Funds and Accounts.
(a) Pursuant to the Prior Lien Resolution, the Consolidated Government has
heretofore created and is currently maintaining the following funds and accounts separate and
apart from its other funds, and the moneys deposited in such funds and accounts shall be held in
trust for the purposes set forth in the Prior Lien Resolution and the Bond Resolution:
(i) Augusta, Georgia Water and Sewerage System Revenue Fund, currently
held and to be held by Georgia Bank & Trust, Augusta, Georgia, as Depository for the
account of the Consolidated Government.
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(ii) Augusta, Georgia Water and Sewerage System Sinking Fund (the
"Sinking Fund No. 1"), containing a debt service account and a debt service reserve
account currently held and to be held by U.S. Bank National Association, Atlanta.,
Georgia, as Depository for the account of the Consolidated Government.
(iii) Augusta, Georgia Water and Sewerage System Hedge Payments Fund (the
"�Iedge Payments Fund") currently held and to be held by U.S. Bank National
Association, Augusta, Georgia, as Depository for the account of the Consolidated
Government.
(iv) Augusta, Georgia Water and Sewerage System Utility General Fund,
currently held and to be held by Georgia Bank & Trust, Augusta, Georgia, as Depository
for the account of the Consolidated Government.
The Consolidated Government covenants that, so long as any Bonds issued pursuant to the Bond
Resolution remain outstanding, it will continue to maintain the above-described Revenue Fund
and Utility General Fund separate and apart from all other funds of the Consolidated
Government.
(b) The Consolidated Government hereby establishes the following funds and
accounts, and the moneys deposited in such funds and accounts shall be held in trust for the
purposes set forth in the Bond Resolution:
(i) Augusta, Georgia Water and Sewerage System Sinking Fund No. 2(the
"Sinking Fund"), to be held by U.S. Bank National Association, Atlanta, Georgia, as
Depository for the account of the Consolidated Government, containing the following
accounts:
(a) Interest Account.
(b) Hedge Payments Account.
(c) Principal Account.
(d) Capitalized Interest Account.
(e) Debt Service Reserve Account.
(ii) Augusta, Georgia Water and Sewerage System Rebate Fund, to be held by
Bank of America, N.A., Augusta, Georgia, as Depository for the account of the
Consolidated Government.
(iii) Augusta, Georgia Water and Sewerage System Construction Fund, to be
held by Bank of America, N.A., Augusta, Georgia, as Depository for the account of the
Consolidated Government and the Series 2012 Capital Improvement Account held
therein.
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Each account listed above shall be held within the fund under which it is created. All
funds and accounts listed above are further described in this Article, except for (i) the Rebate
Fund and (ii) the Construction Fund and the Series 2012 Capital Improvement Account, which
are further described in Article VIII and Article IV, respectively.
Section 5.3. Revenue Fund.
The Consolidated Government shall deposit and continue to deposit all Operating
Revenues in the Revenue Fund from time to time as and when received. Moneys in the Revenue
Fund shall be applied by the Consolidated Government from time to time to the following
purposes and in the following order of priority:
(a) First: The Consolidated Government shall make withdrawals as needed
from the Revenue Fund in amounts necessary to pay the Expenses of Operation and
Maintenance. PILOT and PILOF payments shall not be payable from the Revenue Fund,
but shall be payable solely from the Utility General Fund as hereinafter provided.
(b) Second: So long as any Prior Lien Bonds are outstanding pursuant to the
Prior Lien Resolution, there shall next be deposited monthly into Sinking Fund No. 1
created by the Prior Lien Resolution the amounts required by the Prior Lien Resolution
for the purpose of paying the principal of and interest on the Prior Lien Bonds, including
the maintenance of the required reserves for that purpose as required by the Prior Lien
Resolution.
(c) Third: So long as any Prior Lien Bonds are outstanding pursuant to the
Prior Lien Resolution, there shall next be deposited monthly into the Hedge Payments
Fund amounts due Hedge Providers under the Hedge Agreements (other than termination
payments, which are funded from the Utility General Fund).
(d) Fourth: There shall next be deposited monthly into the Interest Account
the amount required by Section 5.4(a).
(e) Fifth: On and after the date that no Prior Lien Bonds remain outstanding
pursuant to the Prior Lien Resolution, there shall next be deposited monthly into the
Hedge Payments Account the amount required by Section 5.4(b).
( fl Sixth: There shall next be deposited monthly into the Principal Account
the amount required by Section 5.4(c).
(g) Seventh: On and after the date that no Prior Lien Bonds remain
outstanding pursuant to the Prior Lien Resolution, there shall next be deposited monthly
any amounts required to be deposited into the Rebate Fund, as estimated by the
Consolidated Government, or as estimated for the Consolidated Government and
approved by the Consolidated Government, for purposes of complying with the
requirement for rebate to the United States government under Section 148(� of the Code.
Deposits may be made in monthly installments and may be adjusted as the Consolidated
Government deems necessary to provide the amount that it estimates to be necessary, as
revised from time to time, within any Fiscal Year.
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(h) E�h: On and after the date that no Prior Lien Bonds remain outstanding
pursuant to the Prior Lien Resolution, there shall next be paid monthly to any Financial
Facility Issuer securing Senior Bonds all amounts required to be paid to such Financial
Facility Issuer as compensation for the Financial Facility securing Senior Bonds and as
satisfaction of any other amounts due under the Financial Facility Agreement that are not
considered to be subrogated payments of principal and interest on Senior Bonds under
Section 9.6, including Additional Interest on Senior Bonds.
(i) Ninth: There shall next be deposited monthly into the Debt Service
Reserve Account and paid monthly to any Reserve Account Credit Facility Provider, on a
pro rata basis based upon the Debt Service Reserve Requirement for the Debt Service
Reserve Account, the amount required by Section 5.4(�.
(j) Tenth: There shall next be paid monthly repayments of any draw-down on
any Reserve Account Credit Facility (other than repayments that reinstate the Reserve
Account Credit Facility) and any interest or fees due the Reserve Account Credit Facility
Provider under such Reserve Account Credit Facility.
(k) Eleventh: There shall next be deposited monthly the amounts required to
be deposited into the funds and accounts created by any Series Resolution authorizing the
issuance of Subordinate Bonds, for the purpose of (i) paying principal of (whether at
maturity or upon mandatory redemption) and interest on Subordinate Bonds, (ii) making
Hedge Payments under Subordinate Hedge Agreements on and after the date that no Prior
Lien Bonds are outstanding under the Prior Lien Resolution and (iii) accumulating
reserves for such payments. Any money withdrawn from such funds and accounts for
use in making such payments shall be released from the lien of the Bond Resolution. If at
any time the amounts in any account of the Sinking Fund are less than the amounts
required by the Bond Resolution, and there are not on deposit in the Utility General Fund
available moneys sufficient to cure any such deficiency, then the Consolidated
Government shall withdraw from the funds and accounts relating to Subordinate Bonds
and deposit in such account of the Sinking Fund, as the case may be, the amount
necessary (or all the moneys in such funds and accounts, if less than the amount required)
to make up such deficiency.
(1) Twelfth: On and after the date that no Prior Lien Bonds remain
outstanding pursuant to the Prior Lien Resolution, there shall next be paid monthly any
amounts required to be paid with respect to any Other System Obligations.
(m) Thirteenth: There shall next be deposited monthly into the Utility General
Fund all remaining moneys and securities held in the Revenue Fund after all of the other
transfers set forth in this Section 5.3 have been made; provided that on and after the date
that no Prior Lien Bonds remain outstanding under the Prior Lien Resolution, the
Consolidated Government shall maintain a working capital reserve in the Revenue Fund
to pay the costs of operating, maintaining and repairing the System in such amount as the
Administrator of the Consolidated Government and the Director of the Utilities
Department of the Consolidated Government deem reasonable and prudent; provided
further that the amount of such working capital reserve shall be a minimum of the lesser
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of $2,500,000 or 5% of the Operating Revenues of the System for the immediately
preceding Fiscal Year.
Section 5.4. Sinking Fund.
Sufficient moneys shall be paid in monthly installments from the Revenue Fund into
(1) the Interest Account and the Principal Account for the purpose of paying the principal of and
interest (excluding Additional Interest) on the Senior Bonds as they become due and payable and
(2) on or after the date that no Prior Lien Bonds remain outstanding under the Prior Lien
Resolution, the Hedge Payments Account for the purpose of making Hedge Payments under
Senior Hedge Agreements. Amounts held in the Interest Account shall not be used to pay
Additional Interest.
(a) Interest Account. There shall be paid into the Interest Account monthly, on or
before the 25th day of the month, an installment equal to 1/6th of the amount of interest
(excluding Additional Interest) falling due and payable on all Outstanding Senior Bonds on the
next Interest Payment Date, adjusted to give credit for any other available moneys then in the
Interest Account or the Capitalized Interest Account, and further adjusted if necessary to assure
the timely accumulation of the required amount in approximately equal installments. To the
extent that any of the Senior Bonds bear interest at a Variable Rate, this requirement shall be
deemed satisfied with respect to such Senior Bonds if the instaliment paid into the Interest
Account in each month shall be sufficient to accumulate for such Senior Bonds an amount equal
to 1/6th of the Projected Senior Interest Payment multiplied by the number of months and
fractions of months expired since delivery of such Senior Bonds or the most recent Interest
Payment Date. Notwithstanding the foregoing, any Series Resolution that authorizes the
issuance of Additional Bonds which pay interest other than semiannually may establish a
different method of accumulating money in the Interest Account to pay interest on such
Additional Bonds, so long as such method provides for the accumulation, in equal installments of
no greater frequency than monthly, of sufficient funds to pay interest due on such Additional
Bonds on each Interest Payment Date established for such Additional Bonds. On and after the
date that no Prior Lien Bonds remain outstanding under the Prior Lien Resolution, the
Consolidated Government shall also deposit and continue to deposit all Hedge Receipts under
Senior Hedge Agreements in the Interest Account from time to time as and when received.
Moneys in the Interest Account shall be used solely to pay interest (excluding Additional
Interest) on the Senior Bonds when due.
(b) Hedge Payments Account. On or before each payment date for Hedge Payments
under Senior Hedge Agreements, the Consolidated Government shall deposit in the Hedge
Payments Account from moneys in the Revenue Fund, on and after the date that no Prior Lien
Bonds remain outstanding pursuant to the Prior Lien Resolution, an amount which, together with
any other moneys already on deposit therein and available to make such payment, is not less than
such Hedge Payments coming due on such payment date. In addition, on or before the 25th day
of each month, the Consolidated Government shall deposit in the Hedge Payments Account from
moneys in the Revenue Fund, on and after the date that no Prior Lien Bonds remain outstanding
under the Prior Lien Resolution, an amount which, together with an equal amount to be
deposited in each such month, if any, occurring prior to the next succeeding payment date for
Hedge Payments under Senior Hedge Agreements, will not be less than the amount of such
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Hedge Payments to become due on such next succeeding payment date for such Hedge
Payments. No deposit pursuant to this subsection need be made to the extent that there is a
sufficient amount already on deposit in the Hedge Payments Account to pay such Hedge
Payments on each such payment date. Moneys in the Hedge Payments Account shall be used
solely to pay Hedge Payments under Senior Hedge Agreements when due.
(c) Principal Account. There shall be paid into the Principal Account monthly, on or
before the 25th day of the month, an installment equal to 1/12th of the principal amount falling
due and payable on all Outstanding Senior Bonds on the next Principal Maturity Date plus
whatever additional amounts may be necessary in equal monthly installments to accumulate in
the Principal Account the full principal amount falling due in such Fiscal Year. For purposes of
this requirement, the amount of principal falling due in any Fiscal Year shall include all amounts
of principal maturing during the Fiscal Year and all amounts of principal that are subject to
mandatory redemption during the Fiscal Year. Notwithstanding the foregoing, any Series
Resolution that authorizes the issuance of Additional Bonds which pay principal other than
annually may establish a different method of accumulating money in the Principal Account to
pay principal on such Additional Bonds, so long as such method provides for the accumulation,
in equal installments of no greater frequency than monthly, of sufficient funds to pay principal
on such Additional Bonds when due. Moneys in the Principal Account shall be used solely for
the payment of principal of the Senior Bonds as the same shall become due and payable at
maturity or upon redemption.
(d) Interest Account and Principal Account Generally. No further payments need be
made into the Interest Account or the Principal Account whenever the amount available in the
Interest Account and the Principal Account, if added to the amount then in the Debt Service
Reserve Account (without taking into account any amount available to be drawn on any Reserve
Account Credit Facility), is sufficient to retire all Senior Bonds then Outstanding and to pay all
unpaid interest accrued and to accrue prior to such retirement. No moneys in the Interest
Account or the Principal Account shall be used or applied to the optional purchase or redemption
of Senior Bonds prior to maturity unless: (i) provision shall have been made for the payment of
all of the Senior Bonds; or (ii) such moneys are applied to the purchase and cancellation of
Senior Bonds that are subject to mandatory redemption on the next mandatory redemption date,
which falls due within 12 months, such Senior Bonds are purchased at a price not more than
would be required for mandatory redemption, and such Senior Bonds are canceled upon
purchase; or (iii) such moneys are applied to the purchase and cancellation of Senior Bonds at a
price less than the amount of principal that would be payable on such Senior Bonds, together
with interest accrued through the date of purchase, and such Senior Bonds are canceled upon
purchase; or (iv) such moneys are in excess of the then required balance of the Interest Account
or the Principal Account and are applied to redeem a part of the Senior Bonds Outstanding on the
next succeeding redemption date for which the required notice of redemption may be given.
(e) Capitalized Interest Account. There shall be deposited into the Capitalized
Interest Account the amounts specified in Series Resolutions with respect to Additional Bonds.
Amounts deposited in the Capitalized Interest Account shall be applied to the payment of interest
on the Senior Bonds and shall be transferred to the Interest Account to pay interest on the Senior
Bonds or to reimburse any Credit Facility Issuer for amounts drawn on a Credit Facility for such
purposes. Such transferred amounts shall be limited to amounts necessary to enable the
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Consolidated Government to make all required deposits into the Interest Account, thereby
leaving sufficient Net Operating Revenues to enable the Consolidated Government to make all
required deposits to the other funds and accounts established under the Bond Resolution. Upon
filing with the Depository the certificate required by Section 4.5, all amounts then on deposit in
the Capitalized Interest Account shall be transferred to the Interest Account.
(� Debt Service Reserve Account. Upon the issuance of the Series 2012 Bonds,
there shall be deposited into the Debt Service Reserve Account the amount specified in
Section 4.4. The balance of the Debt Service Reserve Account shall be maintained at an amount
equal to the Debt Service Reserve Requirement (or such lesser amount that is required to be
accumulated in the Debt Service Reserve Account in connection with the periodic accumulation
to the Debt Service Reserve Requirement upon the failure of the Consolidated Government to
provide a substitute Reserve Account Credit Facility in certain events). There shall be
transferred from the Revenue Fund on a pro rata basis (1) to the Debt Service Reserve Account
the amount necessary to restore the amount of cash and securities in the Debt Service Reserve
Account to an amount equal to the difference between (a) the Debt Service Reserve Requirement
(or such lesser monthly amount that is required to be deposited into the Debt Service Reserve
Account upon the failure of the Consolidated Government to provide a substitute Reserve
Account Credit Facility in certain events) and (b) the portion of the required balance of the Debt
Service Reserve Account satisfied by means of a Reserve Account Credit Facility, and (2) to any
Reserve Account Credit Facility Provider the amount necessary to reinstate any Reserve Account
Credit Facility that has been drawn down. Whenever for any reason the amount in the Interest
Account or the Principal Account is insufficient to pay all interest or principal falling due on the
Senior Bonds within the next seven days, the Consolidated Government shall make up any
deficiency by transfers from the Utility General Fund. Whenever, on the date that such interest
or principal is due, there are insufficient moneys in the Interest Account or the Principal Account
available to make such payment, the Consolidated Government shall, without further
instructions, apply so much as may be needed of the moneys in the Debt Service Reserve
Account to prevent default in the payment of such interest or principal, with priority to interest
payments for the Senior Bonds. Whenever by reason of any such application or otherwise the
amount remaining to the credit of the Debt Service Reserve Account is less than the amount then
required to be in the Debt Service Reserve Account, such deficiency shall be remedied by
monthly deposits from the Revenue Fund in accordance with the priority set forth in Section 5.3,
to the extent funds are available in the Revenue Fund for such purpose.
The Consolidated Government may elect to satisfy in whole or in part the Debt Service
Reserve Requirement by means of a Reserve Account Credit Facility, subject to the following
requirements: (A) the Reserve Account Credit Facility Provider must have a credit rating issued
by a Rating Agency not less than its second highest Rating; (B) the Consolidated Government
shall not secure any obligation to the Reserve Account Credit Facility Provider by a lien equal to
or superior to the lien granted to the related series of Senior Bonds; (C) each Reserve Account
Credit Facility shall have a term of at least one (1) year (or, if less, the remaining term of all
related series of Senior Bonds) and shall entitle the Consolidated Government to draw upon or
demand payment and receive the amount so requested in immediately available funds on the date
of such draw or demand; (D) the Reserve Account Credit Facility shall permit a drawing by the
Consolidated Government for the full stated amount in the event (i) the Reserve Account Credit
Facility expires or terminates for any reason prior to the final maturity of the related series of
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Senior Bonds, and (ii) the Consolidated Government fails to satisfy the Debt Service Reserve
Requirement by the deposit to the Debt Service Reserve Account of cash, securities, a substitute
Reserve Account Credit Facility, or any combination thereof, on or before the date of such
expiration or termination; (E) if the Rating issued by the Rating Agency to the Reserve Account
Credit Facility Provider is withdrawn or reduced below its second highest Rating, the
Consolidated Government shall provide a substitute Reserve Account Credit Facility within sixty
(60) days after such rating change, and, if no substitute Reserve Account Credit Facility is
obtained by such date, shall fund the Debt Service Reserve Requirement in not more than
twenty-four (24) equal monthly deposits commencing not later than the first day of the month
immediately succeeding the date representing the end of such sixty (60) day period; and (F) if the
Reserve Account Credit Facility Provider commences any insolvency proceedings or is
determined to be insolvent or fails to make payments when due on its obligations, the
Consolidated Government shall provide a substitute Reserve Account Credit Facility within sixty
(60) days thereafter, and, if no substitute Reserve Account Credit Facility is obtained by such
date, shall fund the Debt Service Reserve Requirement in not more than twenty-four (24) equal
monthly deposits commencing not later than the first day of the month immediately succeeding
the date representing the end of such sixty (60) day period. If the events described in either
clauses (E) or (F) above occur, the Consolidated Government shall not relinquish the Reserve
Account Credit Facility at issue until after the Debt Service Reserve Requirement is fully
satisfied by the provision of cash, securities, or a substitute Reserve Account Credit Facility or
any combination thereof. Any amount received from the Reserve Account Credit Facility shall
be deposited directly into the Interest Account and the Principal Account, and such deposit shall
constitute the application of amounts in the Debt Service Reserve Account. Repayment of any
draw-down on the Reserve Account Credit Facility (other than repayments that reinsta.te the
Reserve Account Credit Facility) and any interest or fees due the Reserve Account Credit
Facility Provider under such Reserve Account Credit Facility shall be secured by a lien on the
Pledged Revenues subordinate to payments into the Sinking Fund and the Rebate Fund and
payments to any Financial Facility Issuer securing Senior Bonds.
Any such Reserve Account Credit Facility shall be pledged to the benefit of the owners
of each series of Senior Bonds to which such Reserve Account Credit Facility relates. The
Consolidated Government reserves the right, if it deems it necessary in order to acquire such a
Reserve Account Credit Facility, to amend the Bond Resolution without the consent of any of the
owners of the Bonds in order to grant to the Reserve Account Credit Facility Provider such
additional rights as it may demand, provided that such amendment shall not, in the written
opinion of Bond Counsel filed with the Consolidated Government, impair or reduce the security
granted to the owners of Senior Bonds or any of them.
Section 5.5. Utility General Fund.
In addition to the deposits to be made to the Utility General Fund pursuant to Section 5.3,
the Consolidated Government shall deposit in the Utility General Fund all termination payments
received under any Hedge Agreements. So long as the Prior Lien Bonds are outstanding under
the Prior Lien Resolution, the Consolidated Government shall maintain at all times a minimum
balance in the Utility General Fund equal to the lesser of $2,500,000 or 5% of the Operating
Revenues of the System for the immediately preceding Fiscal Year. All sums accumulated and
retained in the Utility General Fund shall be used first to prevent default in the payment of
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interest on or principal of the Prior Lien Bonds and the Senior Bonds when due and then shall be
applied by the Consolidated Government from time to time, as and when the Consolidated
Government shall determine, to the following purposes:
(a) To the payment of Expenses of Operation and Maintenance, to the extent
moneys are not available for such purpose in the Revenue Fund, including, without
limitation, PILOT and PILOF payments;
(b) So long as any Prior Lien Bonds are outstanding, to the restoration of the
Sinking Fund No. 1 to the amount required at that time to be held therein;
(c) To the restoration of the Interest Account, the Principal Account, and on
and after the date the Prior Lien Bonds are no longer outstanding under the Prior Lien
Resolution, the Hedge Payments Account to the respective amounts required at that time
to be held therein;
(d) To the restoration of the Rebate Fund to the amount required at that time
to be held therein;
(e) To the payment of any and all amounts that may then be due and owing to
any Financial Facility Issuer securing Senior Bonds;
(� To the restoration of the Debt Service Reserve Account (including the
reinstatement of any Reserve Account Credit Facility) to the amount required at that time
to be held therein;
(g) To the payment of any and all amounts that may then be due and owing to
any Reserve Account Credit Facility Provider;
(h) To prevent default in the payment of interest on or principal of the
Subordinate Bonds when due;
(i) To the restoration of the funds and accounts relating to Subordinate Bonds
to the respective amounts required at that time to be held therein;
(j) To the payment of all amounts required to be paid to any Financial
Facility Issuer securing Subordinate Bonds as compensation for the Financial Facility
securing Subordinate Bonds and as satisfaction of any other amounts due under the
Financial Facility Agreement.
(k) To the payment of any and all amounts that may then be due and owing
under any Hedge Agreement (including termination payments, fees, expenses, and
indemnity payments);
(1) To the payment of any and all governmental charges and assessments
against the System or any part thereof that may then be due and owing;
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(m) On and after the date the Prior Lien Bonds are no longer outstanding under
the Prior Lien Resolution, to the payment of any and all amounts that may then be due
and owing under any Other System Obligation;
(n) To make acquisitions, betterments, extensions, repairs, or replacements or
other capital improvements (including the purchase of equipment) to the System deemed
necessary by the Consolidated Government (including payments under contracts with
vendors, suppliers, and contractors for the foregoing purposes);
(o) On or after the date the Prior Lien Bonds are no longer outstanding under
the Prior Lien Resolution, at the option of the Consolidated Government, to the
acquisition of Senior Bonds by redemption or by purchase in the open market as provided
and in accordance with the terms and conditions of the Bond Resolution, which Senior
Bonds may be any of the Senior Bonds, prior to their respective maturities, and when so
used for such purposes the moneys shall be withdrawn from the Utility General Fund and
deposited into the Interest Account and the Principal Account for the Senior Bonds to be
so redeemed or purchased.
Section 5.6. Deposits and Security of Funds and Accounts.
All moneys in the funds and accounts established under the Bond Resolution shall be
held by the Consolidated Government in one or more Depositories qualified for use by the
Consolidated Government. Uninvested moneys shall, at least to the extent not guaranteed by the
Federal Deposit Insurance Corporation, be secured to the fullest extent required by the laws of
the State for the security of public funds.
Section 5.7. Investment of Funds and Accounts.
So long as any Prior Lien Bonds are outstanding, moneys in the Revenue Fund, the
Hedge Payments Fund and the Utility General Fund shall be invested as provided in the Prior
Lien Resolution. Subject to the immediately preceding sentence, moneys in the funds and
accounts established under the Bond Resolution shall be invested and reinvested in Permitted
Investments bearing interest at the highest rates reasonably available (except to the extent that a
restricted yield is required or advisable under Section 148 of the Code). Subject to the first
sentence of this Section 5.7, moneys in the Revenue Fund may be invested by the Consolidated
Government in Permitted Investments maturing not later than the date or dates on which such
moneys shall be required for the purposes intended. Moneys in the Interest Account and the
Capitalized Interest Account may be invested by the Consolidated Government in Permitted
Investments maturing or redeemable at the option of the holder prior to the next Interest Payment
Date, but whenever prior to any Interest Payment Date the aggregate of the available moneys in
such accounts exceeds the amount necessary to pay interest falling due on such Interest Payment
Date, such excess may be invested in Permitted Investments maturing or redeemable at the
option of the holder prior to the next following Interest Payment Date. Moneys in the Principal
Account may be invested by the Consolidated Government in Permitted Investments maturing or
redeemable at the option of the holder prior to the next Principal Maturity Date, but whenever
prior to any Principal Maturity Date the aggregate of the available moneys in such account
exceeds the amount necessary to pay principal falling due on such Principal Maturity Date, such
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excess may be invested in Permitted Investments maturing or redeemable at the option of the
holder prior to the next following Principal Maturity Date. Moneys in the Hedge Payments
Account may be invested by the Consolidated Government in Permitted Investments maturing or
redeemable at the option of the holder prior to the next due date of related Hedge Payments, but
whenever prior to any due date of related Hedge Payments the aggregate of the available moneys
in such account exceeds the amount necessary to pay related Hedge Payments falling due on
such date, such excess may be invested in Permitted Investments maturing or redeemable at the
option of the holder prior to the next following due date of related Hedge Payments. Moneys in
the Debt Service Reserve Account shall be invested by the Consolidated Government in
Permitted Investments that mature or are redeemable at the option of the holder within five years
from date of purchase. Subject to the first sentence of this Section 5.7, moneys in the Utility
General Fund may be invested by the Consolidated Government in Permitted Investments.
Whenever any moneys in the Debt Service Reserve Account or the Utility General Fund invested
as above provided are needed for the payment of currently maturing principal of or interest on
the Senior Bonds, the Consolidated Government shall cause such investments to be liquidated at
current market prices, to produce the amount required, without further instructions, and shall
cause the proceeds of such liquidation to be applied to the payment of such principal and interest.
Investment Earnings in each fund and account (except for those established pursuant to
Article XI) shall be allocated as follows:
(a) Investment Earnings from the investment of moneys of each account held
in the Sinking Fund (except for the Debt Service Reserve Account) shall be retained in
the account of the Sinking Fund to which such investments relate;
(b) Investment Earnings from the investment of moneys of each account held
in the Construction Fund shall be retained in the account of the Construction Fund to
which such investments relate;
(c) Investment Earnings from the investment of moneys in the Debt Service
Reserve Account shall be retained in the Debt Service Reserve Account at all times the
balance is less than the Debt Service Reserve Requirement; thereafter and at all times the
balance of the Debt Service Reserve Account is equal to or greater than the Debt Service
Reserve Requirement, such Investment Earnings shall be deposited in the Interest
Account;
(d) Investment Earnings from the investment of moneys in the Rebate Fund
shall be retained in the Rebate Fund;
(e) Investment Earnings from the investment of moneys in the Utility General
Fund shall be retained in the Utility General Fund; and
(� Investment Earnings from the investment of moneys in the Revenue Fund
shall be retained in the Revenue Fund.
The Series Resolution authorizing the issuance of any Subordinate Bonds shall specify
any maturity limitations and allocations of Investment Earnings on investments of moneys in the
funds and accounts relating to such Subordinate Bonds.
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Moneys in each of such funds shall be accounted for as a separate and special fund apart
from all other Consolidated Government funds, provided that investments of moneys therein
may be made in a pool of investments together with other moneys of the Consolidated
Government so long as sufficient Permitted Investments in such pool, not allocated to other
investments of contractually or legally limited duration, are available to meet the requirements of
the foregoing provisions.
Section 5.8. Valuation of Investments.
All investments made under the Bond Resolution shall, for purposes of the Bond
Resolution, be valued at fair market value on each Interest Payment Date.
Section 5.9. Application of Excess in Sinking Fund.
Whenever at the end of each Fiscal Year the amount of moneys in any account of the
Sinking Fund exceeds the amount then currently required to be held therein, the excess shall be
transferred to the Revenue Fund.
Section 5.10. Disposition of Moneys After Payment of Bonds.
Any amounts remaining in any fund or account established under the Bond Resolution
after payment in full of the principal of, redemption premium, if any, and interest on the Bonds
(or after provision for payment thereof has been made), the fees, charges, and expenses of the
Paying Agent and Bond Registrar, all amounts owing to any Financial Facility Issuer, any
Reserve Account Credit Facility Provider, and any Qualified Hedge Provider, and all other
amounts required to be paid under the Bond Resolution (including amounts required to be paid
into the Rebate Fund), shall be promptly paid to the Consolidated Government.
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ARTICLE VI
ADDITIONAL BONDS AND SUBORDINATE BONDS
Section 6.1. No Prior Lien Bonds nor Additional Bonds Except as Permitted in the
Bond Resolution.
All Senior Bonds shall have complete parity of lien on the Pledged Revenues despite the
fact that any of the Senior Bonds may be delivered at an earlier date than any other of the Senior
Bonds. The Consolidated Government may issue Additional Bonds in accordance with the Bond
Resolution, and the Consolidated Government shall issue no other obligations of any kind or
nature payable from or enjoying a lien on the Pledged Revenues or any part thereof having
priority over or (except as permitted in the Bond Resolution) on a parity with the Series 2012
Bonds.
Section 6.2. Refunding Bonds.
Any or all of the Prior Lien Bonds and the Senior Bonds may be refunded in accordance
with their terms, or with the consent of the owners of such Prior Lien Bonds or such Senior
Bonds, and the refunding Bonds so issued shall constitute Additional Bonds, if:
(a) The Consolidated Government shall have executed a certificate: (i) setting
forth the aggregate amount of interest and principal of all Prior Lien Bonds and Senior
Bonds falling due during the then current Fiscal Year and for each subsequent Fiscal
Year to and including the Fiscal Year of the last maturity of any Prior Lien Bonds and
Senior Bonds then Outstanding (A) with respect to all Prior Lien Bonds and Senior
Bonds Outstanding immediately prior to the date of authentication and delivery of such
refunding Bonds and (B) with respect to all Prior Lien Bonds and Senior Bonds to be
Outstanding immediately thereafter; and (ii) demonstrating that the amount set forth for
each Fiscal Year pursuant to (i)(B) above is no greater than the amount set forth for such
Fiscal Year pursuant to (i)(A) above.
(b) As an alternative to, and in lieu of, satisfying the requirements of Section
6.2(a), all Outstanding Senior Bonds are being refunded under arrangements that
immediately result in making provision for the payment of the refunded Senior Bonds.
(c) The requirements of Section 6.3(d) and 6.3(fl are met with respect to such
refunding Bonds.
Section 6.3. Additional Bonds Generally.
Bonds (including refunding Bonds that do not meet the requirements of Section 6.2) may
also be issued on a parity with the Series 2012 Bonds pursuant to a Series Resolution, and the
Bonds so issued shall constitute Additional Bonds, if all of the following conditions are satisfied:
(a) Except in the case of Additional Bonds issued for refunding purposes
pursuant to Section 6.2, there shall have been procured and filed with the Consolidated
Government either:
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(i) a report by an Independent Certified Public Accountant to the
effect that the historical Net Operating Revenues and Investment Earnings
(excluding Investment Earnings, if any, on the Construction Fund) for a period of
12 consecutive months of the most recent 24 consecutive months prior to the
issuance of the proposed Additional Bonds were equal to at least 125% of the
maximum annual Debt Service Requirement on all Prior Lien Bonds and Senior
Bonds that will be Outstanding immediately after the issuance of the proposed
Additional Bonds, in the then current or any succeeding Fiscal Year, or
(ii) (1) a report by an Independent Certified Public Accountant to the
effect that the historical Net Operating Revenues and Investment Earnings
(excluding Investment Earnings, if any, on the Construction Fund) for a period of
12 consecutive months of the most recent 24 consecutive months prior to the
issuance of the proposed Additional Bonds were equal to at least 125% of the
historical Debt Service Requirement on all Prior Lien Bonds and Senior Bonds
that were Outstanding during such 12 month period, and
(2) a report by an Independent Consulting Engineer to the effect that
(A) the forecasted Net Operating Revenues and Investment Earnings (excluding
Investment Earnings, if any, on the Construction Fund) for the period beginning
on the expected date of issuance of the proposed Additional Bonds and ending on
the date of commencement of the Forecast Period are expected to equal at least
100% of the Debt Service Requirement during such period on all Prior Lien
Bonds and Senior Bonds that will be Outstanding immediately after the issuance
of the proposed Additional Bonds, after taking into account amounts deposited
into the Capitalized Interest Account, and (B) the forecasted Net Operating
Revenues and Investment Earnings (excluding Investment Earnings, if any, on the
Construction Fund) for each Fiscal Year in the Forecast Period are expected to
equal at least 125% of the maximum annual Debt Service Requirement on all
Prior Lien Bonds and Senior Bonds that will be Outstanding immediately after the
issuance of the proposed Additional Bonds, in the then current or any succeeding
Fiscal Year.
The reports by the Independent Certified Public Accountant that are
required by this Section 6.3(a) may contain pro forma adjustments to historical
Net Operating Revenues equal to 100% of the increased annual amount
attributable to any revision in the schedule of rates, fees, and charges for the
services, facilities, and commodities furnished by the System, imposed prior to
the date of delivery of the proposed Additional Bonds and not fully reflected in
the historical Net Operating Revenues actually received during such 12-month
period. Such pro forma adjustments shall be based upon a report of an
Independent Consulting Engineer as to the amount of Operating Revenues that
would have been received during such 12-month period had the new rate schedule
been in effect throughout such 12-month period.
The report by the Independent Consulting Engineer that is required by
Section 6.3(a)(ii)(2) may not take into consideration any rate schedule to be
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imposed in the future, unless such rate schedule has been adopted by resolution of
the Commission. Such rate schedule adopted by resolution may conta.in,
however, future effective dates.
(b) The Consolidated Government shall have received, at or before issuance
of the Additional Bonds, a report from an Independent Certified Public Accountant to the
effect that the payments required to be made into each account of the Sinking Fund have
been made and the balance in each account of the Sinking Fund is not less than the
balance required by the Bond Resolution as of the date of issuance of the proposed
Additional Bonds.
(c) The Series Resolution authorizing the proposed Additional Bonds must
require the proceeds of such proposed Additional Bonds to be used to make capital
improvements to the System, to fund interest on the proposed Additional Bonds, to
acquire existing or proposed water or sewer utilities, to refund other obligations issued
for such purposes (whether or not such refunding Bonds satisfy the requirements of
Section 6.2), and to pay expenses incidental thereto and to the issuance of the proposed
Additional Bonds.
(d) If any Additional Bonds would bear interest at a Variable Rate, the Series
Resolution under which such Additional Bonds are issued shall provide a ma�cimum rate
of interest per annum that such Additional Bonds may bear.
(e) The Administrator of the Consolidated Government and the Director of
the Utilities Department of the Consolidated Government shall have certified, by written
certificate dated as of the date of issuance of the Additional Bonds, that the Consolidated
Government is in compliance with all requirements of the Bond Resolution.
(� The Consolidated Government shall have received an opinion of Bond
Counsel, dated as of the date of issuance of the Additional Bonds, to the effect that the
Series Resolution and any related Supplemental Resolution authorizing the issuance of
Additional Bonds have been duly adopted by the Consolidated Government.
Section 6.4. Subordinate Bonds.
(a) Bonds may also be issued on a subordinate basis with respect to the Senior Bonds
pursuant to a Series Resolution, payable from moneys that would otherwise be deposited in the
Utility General Fund, and the Bonds so issued shall constitute Subordinate Bonds, if all of the
following conditions are satisfied:
(1) The Series Resolution authorizing the Subordinate Bonds shall provide
that such Subordinate Bonds shall be junior and subordinate in lien and right of payment
to all Senior Bonds Outstanding at any time.
(2) The Series Resolution authorizing the Subordinate Bonds shall establish
funds and accounts for the moneys that would otherwise be deposited in the Utility
General Fund, to be used to pay debt service on the Subordinate Bonds, to pay Hedge
Payments under Subordinate Hedge Agreements or and after the date that the Prior Lien
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Bonds are no longer outstanding under the Prior Lien Resolution, and to provide reserves
therefor.
(3) The requirements of Section 6.3(c), 6.3(d), and 6.3(� are met with respect
to such Subordinate Bonds (as if such Bonds constituted Additional Bonds).
(b) In the event of any insolvency or bankruptcy proceedings, and any receivership,
liquidation, reorganization, or other similar proceedings in connection therewith, relative to the
Consolidated Government or to its creditors, as such, or to its property, and in the event of any
proceedings for voluntary liquidation, dissolution, or other winding up of the Consolidated
Government, whether or not involving insolvency or bankruptcy, the owners of all Senior Bonds
then Outstanding and related Qualified Hedge Providers shall be entitled to receive payment in
full of all principal and interest due on all such Senior Bonds in accordance with the provisions
of the Bond Resolution and related Hedge Payments in accordance with the provisions of the
Senior Hedge Agreements before the owners of the Subordinate Bonds or related Qualified
Hedge Providers are entitled to receive any payment from the Pledged Revenues or the amounts
held in the funds and accounts created under the Bond Resolution on account of principal of,
premium, if any, or interest on the Subordinate Bonds or Hedge Payments under Subordinate
Hedge Agreements.
(c) In the event that any of the Subordinate Bonds are declared due and payable
before their expressed maturities because of the occurrence of an event of default (under
circumstances when the provisions of paragraph (b) shall not be applicable), the owners of all
Senior Bonds Outstanding and related Qualified Hedge Providers at the time such Subordinate
Bonds so become due and payable because of the occurrence of such an event of default shall be
entitled to receive payment in full of all principal and interest on all such Senior Bonds and all
Hedge Payments under related Senior Hedge Agreements before the owners of the Subordinate
Bonds or related Qualified Hedge Providers are entitled to receive any accelerated payment from
the Pledged Revenues or the amounts held in the funds and accounts created under the Bond
Resolution of principal of, premium, if any, or interest on the Subordinate Bonds or Hedge
Payments under Subordinate Hedge Agreements.
(d) If any Event of Default shall have occurred and be continuing (under
circumstances when the provisions of paragraph (b) shall not be applicable), the owners of all
Senior Bonds then Outstanding and related Qualified Hedge Providers shall be entitled to receive
payment in full of all principal and interest then due on all such Senior Bonds and all Hedge
Payments under related Senior Hedge Agreements before the owners of the Subordinate Bonds
or related Qualified Hedge Providers are entitled to receive any payment from the Pledged
Revenues or the amounts held in the funds and accounts created under the Bond Resolution of
principal of, premium, if any, or interest on the Subordinate Bonds or Hedge Payments under
Subordinate Hedge Agreements.
(e) No owner of Senior Bonds or any related Qualified Hedge Provider shall be
prejudiced in its right to enforce subordination of the Subordinate Bonds and Subordinate Hedge
Agreements by any act or failure to act on the part of the Consolidated Government.
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(� The obligations of the Consolidated Government to pay to the owners of the
Subordinate Bonds the principal of, premium, if any, and interest thereon in accordance with
their terms and to pay to related Qualified Hedge Providers Hedge Payments in accordance with
the terms of the Subordinate Hedge Agreements shall be unconditional and absolute. Nothing in
the Bond Resolution shall prevent the owners of the Subordinate Bonds or related Qualified
Hedge Providers from exercising all remedies otherwise permitted by applicable law or under the
Bond Resolution or the Subordinate Hedge Agreements upon default thereunder, subject to the
rights contained in the Bond Resolution of the owners of Senior Bonds and related Qualified
Hedge Providers to receive cash, property, or securities otherwise payable or deliverable to the
owners of the Subordinate Bonds and related Qualified Hedge Providers, and any Series
Resolution authorizing Subordinate Bonds may provide that, insofar as a trustee or paying agent
for the Subordinate Bonds is concerned, the foregoing provisions shall not prevent the
application by such trustee or paying agent of any moneys deposited with such trustee or paying
agent for the purpose of the payment of or on account of the principal of, premium, if any, and
interest on such Subordinate Bonds and Hedge Payments under Subordinate Hedge Agreements
if such trustee or paying agent did not have knowledge at the time of such application that such
payment was prohibited by the foregoing provisions.
(g) Any series of Subordinate Bonds and related Subordinate Hedge Agreements may
have such rank or priority with respect to any other series of Subordinate Bonds and related
Subordinate Hedge Agreements as may be provided in the Series Resolution authorizing such
series of Subordinate Bonds and may contain such other provisions as are not in conflict with the
provisions of the Bond Resolution.
Section 6.5. Accession of Subordinate Bonds and related Subordinate Hedge
Agreements to Parity Status.
By proceedings authorizing Subordinate Bonds, the Consolidated Government may
provide for the accession of such Subordinate Bonds and related Subordinate Hedge Agreements
to the status of complete parity with the Senior Bonds and related Senior Hedge Agreements if,
as of the date of accession, the conditions of Section 6.3(a)(i) and 6.3(� are satisfied, on a basis
that includes all Outstanding Senior Bonds and such Subordinate Bonds, and if on the date of
accession:
(a) the Debt Service Reserve Account contains an amount equal to the Debt
Service Reserve Requirement; and
(b) the Interest Account, the Principal Account, and the Hedge Payments
Account contain the amounts that would have been required to be accumulated therein on
the date of accession if the Subordinate Bonds had originally been issued as Additional
Bonds.
Section 6.6. Adoption of Proceedings and Validation.
The Consolidated Government shall adopt a Series Resolution authorizing the issuance of
any additional Bonds and reciting that the requirements of this Article have been satisfied, and
shall set forth in such proceedings, among other things, the date or dates such additional Bonds
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shall bear and the rate or rates of interest, interest payment date or dates, maturity date or dates,
and redemption provisions with respect to such additional Bonds and any other matters
applicable to such additional Bonds as the Consolidated Government may deem advisable.
Any such Series Resolution shall restate and reaffirm, by reference, all of the applicable
terms, conditions, and provisions of the Bond Resolution not modified by the Series Resolution.
All additional Bonds, any Series Resolution providing for additional Bonds, and all
proceedings relative thereto and the security therefor shall be validated as then prescribed by
law.
Section 6.7. Proceedings Authorizing Additional Bonds.
No Series Resolution authorizing the issuance of additional Bonds as permitted under this
Article shall conflict with the terms and conditions of the Bond Resolution, except to the extent
that the Series Resolution is adopted for one of the purposes set forth in Section 12.1 and
complies with the provisions of Section 12.1 for the adoption of Supplemental Resolutions
without the consent of Bondholders.
Section 6.8. Applicability to Additional Bonds.
The provisions of the Bond Resolution shall be construed as including and being
applicable to any future series of Bonds, and any such Bonds shall be treated, unless otherwise
specifically stated, just as if they had been issued together with the Series 2012 Bonds and
pursuant to the terms of this Master Bond Resolution.
Section 6.9. Financial Facilities and Hedge Agreements.
(a) In connection with the issuance of any Bonds under the Bond Resolution, the
Consolidated Government may obtain or cause to be obtained one or more Financial Facilities
providing for payment of all or a portion of the principal of, premium, if any, or interest due or to
become due on such Bonds, providing for the purchase of such Bonds by the Financial Facility
Issuer, or providing funds for the purchase of such Bonds by the Consolidated Government. In
connection therewith the Consolidated Government shall enter into Financial Facility
Agreements with such Financial Facility Issuers providing for, among other things, (i) the
payment of fees and expenses to such Financial Facility Issuers for the issuance of such
Financial Facilities; (ii) the terms and conditions of such Financial Facilities and the Bonds
affected thereby; and (iii) the security, if any, to be provided for the issuance of such Financial
Facilities. The Consolidated Government may secure any Financial Facility by an agreement
providing for the purchase of the Bonds secured thereby with such adjustments to the rate of
interest, method of determining interest, maturity, or redemption provisions as are specified by
the Consolidated Government in the applicable Series Resolution. The Consolidated
Government may in a Financial Facility Agreement agree to directly reimburse such Financial
Facility Issuer for amounts paid under the terms of such Financial Facility, together with interest
thereon; provided, however, that no Reimbursement Obligation shall be created for purposes of
the Bond Resolution until amounts are paid under such Financial Facility. Any such
Reimbursement Obligation shall be deemed to be a part of the Bonds to which the Financial
Facility relates that gave rise to such Reimbursement Obligation, and references to principal and
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• i
interest payments with respect to such Bonds shall include principal and interest (except for
Additional Interest and principal amortization requirements with respect to the Reimbursement
Obligation that are more accelerated than the amortization requirements for the related Bonds,
without acceleration) due on the Reimbursement Obligation incurred as a result of payment of
such Bonds with the Financial Facility. All other amounts payable under the Financial Facility
Agreement (including any Additional Interest and principal amortization requirements with
respect to the Reimbursement Obligation that are more accelerated than the amortization
requirements for the related Bonds, without acceleration) shall be fully subordinate to the
payment of debt service on the related class of Bonds. Any such Financial Facility shall be for
the benefit of and secure such Bonds or portion thereof as specified in the applicable Series
Resolution.
(b) In connection with the issuance of any Bonds or at any time thereafter so long as
such Bonds remain Outstanding, the Consolidated Government may enter into Hedge
Agreements with Qualified Hedge Providers, and no other providers, with respect to any Bonds.
The Consolidated Government shall authorize the execution, delivery, and performance of each
Hedge Agreement in a Supplemental Resolution, in which it shall designate the related Hedged
Bonds. On and after the date that no Prior Lien Bonds are outstanding under the Prior Lien
Resolution, the Consolidated Government's obligation to pay Hedge Payments may be secured
by a pledge of, and lien on, the Pledged Revenues on a parity with the lien created by Section 5.1
to secure the related Hedged Bonds, or may be subordinated in lien and right of payment to the
payment of the Bonds, as determined by the Consolidated Government.
Section 6.10. Other Obligations.
The Consolidated Government expressly reserves the right, at any time, to adopt one or
more other bond resolutions and reserves the right, at any time, to issue any Other System
Obligations not secured by the amounts pledged under the Bond Resolution.
Section 6.11. Abrogation of Right to Issue Bonds under the Prior Lien Resolution.
Notwithstanding anything in the Prior Lien Resolution to the contrary, the Consolidated
Government agrees that it will not issue any additional bonds or obligations of any kind under
the Prior Lien Resolution. Accordingly, no obligations of the Consolidated Government shall be
secured by the Prior Lien Resolution, except for the Prior Lien Bonds.
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ARTICLE VII
DEPOSITORIES OF MONEYS AND SECURITIES FOR DEPOSITS
Section 7.1. Depository; Security for Deposits.
(a) All moneys received by the Consolidated Government under the terms hereof
shall, subject to the giving of security as hereinafter provided, be deposited with the proper
Depository in the name of the Consolidated Government. All moneys deposited under the
provisions hereof shall be deposited in banks insured by the Federal Deposit Insurance
Corporation, or any successor thereto, and such moneys shall be applied in accordance with the
terms and for the purposes set forth in this Bond Resolution and shall not be subject to lien or
attachment or any type of security interest by any creditor of the Consolidated Government.
(b) No moneys belonging to any of the Funds shall be deposited or remain on deposit
and uninvested with any Depository in an amount in excess of the amount guaranteed by the
Federal Deposit Insurance Corporation, or any successor thereto, unless such institution shall
have pledged for the benefit of the Consolidated Government and the owners of the Bonds as
collateral security for the moneys deposited direct obligations of or obligations the principal and
interest of which are unconditionally guaranteed by the United States of America, or other
marketable securities eligible as security for the deposit of trust funds under regulations of the
Board of Governors of the Federal Reserve System and having a market value (exclusive of
accrued interest) at least equal to the amount of such deposits.
(c) In the event the Depository of the Sinking Fund and the Paying Agent for all
Bonds then outstanding is the same bank acting in both capacities, then said Depository of the
Sinking Fund shall, without any further direction on the part of or any further authorization from
the Consolidated Government, use and disburse the moneys in the Sinking Fund as provided in
this Bond Resolution; except that, if, as provided under Article III, it redeems or buys any Bonds
with moneys in the Sinking Fund, then proper authorization and direction from the Consolidated
Government shall be furnished for such use and disbursement.
Section 7.2. Successor Custodians and Depositories.
The Consolidated Government may, from time to time, designate a successor Depository
provided said custodians and depositories comply with all of the provisions of this Article and
the applicable provisions of the Bond Resolution.
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ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. Rate Covenant.
The Consolidated Government shall continuously own, control, operate, and maintain the
System in an efficient and economical manner and on a revenue producing basis and shall
prescribe, fix, maintain, and collect rates, fees, and other charges for the services, facilities, and
commodities furnished by the System fully sufficient to:
(a) provide for 100% of the Expenses of Operation and Maintenance and for
the accumulation in the Revenue Fund of a reasonable reserve therefor to the extent
required by the Bond Resolution; and
(b) produce Net Operating Revenues in each Fiscal Year that (together with
Investment Earnings, other than Investment Earnings on the Construction Fund):
(i) will equal at least 110% of the Debt Service Requirement on all
Prior Lien Bonds and Senior Bonds then Outstanding for the year of computation
and 100% of the Debt Service Requirement on all Subordinate Bonds then
Outstanding for the year of computation;
(ii) will enable the Consolidated Government to make all required
payments, if any, into the debt service reserve account created under the Prior
Lien Resolution, the Debt Service Reserve Account and the Rebate Fund and to
any Financial Facility Issuer, any Reserve Account Credit Facility Provider, and
any Qualified Hedge Provider;
(iii) will enable the Consolidated Government to accumulate an amount
to be held in the Utility General Fund as required by the Bond Resolution, and
such greater amount which in the judgment of the Consolidated Government is
adequate to meet the costs of major renewals, replacements, repairs, additions,
betterments, and improvements to the System, necessary to keep the same in good
operating condition or as is required by any governmental agency having
jurisdiction over the System; and
(iv) will remedy all deficiencies in required payments into any of the
funds and accounts mentioned in the Bond Resolution from prior Fiscal Years.
If the Consolidated Government fails to prescribe, fix, maintain, and collect rates, fees,
and other charges, or to revise such rates, fees, and other charges, in accordance with the
provisions of this Section, the owners of not less than 25% in aggregate principal amount of the
Senior Bonds then Outstanding, without regard to whether any Event of Default shall have
occurred, may institute and prosecute in any court of competent jurisdiction an appropriate action
to compel the Consolidated Government to prescribe, fix, maintain, or collect such rates, fees,
and other charges, or to revise such rates, fees, and other charges, in accordance with the
requirements of this Section.
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The rates, fees, and other charges shall be classified in a reasonable manner to cover
users of the services and facilities furnished by the System so that, as nearly as practicable, such
rates, fees, and other charges shall be uniform in application to all users falling within any
reasonable class. No free services shall at any time be furnished from the System. All service
shall be on a metered basis except public parks, fire hydrants, and fire sprinklers. All services
shall be furnished in accordance with rates now or hereafter established.
Section 8.2. Maintenance of the System in Good Condition.
The Consolidated Government covenants that it has and will continue to enforce
reasonable rules and regulations governing the System and the operation thereof, that all
compensation, salaries, fees, and wages paid by it in connection with the operation, maintenance,
and repair of the System will be reasonable, and that no more persons will be employed by it
than are necessary, that it will operate the System in an efficient and economical manner and will
at all times maintain the System in good repair and in sound operating condition, that it will
make all necessary repairs, renewals, and replacements to the System, and that it will comply
with all valid acts, rules, regulations, orders, and directions of any legislative, executive,
administrative, or judicial body applicable to the System and the Consolidated Government's
operation thereof.
Section 8.3. Insurance.
So long as any Prior Lien Bonds are outstanding, the Consolidated Government will
maintain insurance coverage with respect to the System and proceeds of such insurance shall be
applied as provided in the Prior Lien Resolution. With respect to the System, the Consolidated
Government will carry adequate public liability, fidelity, and property insurance, such as is
maintained by similar utilities as the System, including but not limited to the following:
(a) comprehensive general liability insurance on an occurrence or claims
made basis; and
(b) the following properties will at all times be insured to the full insurable
value thereof with a responsible insurance company or companies, authorized and
qualified under the laws of the State to assume the risks thereof against loss or damage
from the following causes: (i) all buildings and all machinery and equipment therein
against loss or damage by fire, lightning, tornado, winds, and explosions; and (ii) all other
property against loss or damage by fire or lightning if the same is not fireproof, and
against loss or damage from other causes customarily insured against by similar utilities
of like size; and
(c) fidelity bonds or policies covering all agents, employees, and officials of
the Consolidated Government whose duties involve the receipt, custody, investment, or
disbursement of Operating Revenues, Investment Earnings, Hedge Receipts, or other
Pledged Revenues, including proceeds from the sale of Bonds, in an amount not less than
the greatest amount reasonably anticipated to be within the custody or control of such
officer, agent, or employee at one time.
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The Consolidated Government shall indemnify itself against the usual hazards incident to
the construction of any Project, and without in any way limiting the generality of the above,
shall: (a) require each construction contractor and each subcontractor to furnish a bond, or
bonds, of such type and in amounts adequate to assure the faithful performance of their contracts
and the payment of all bills and claims for labor and material arising by virtue of such contracts;
and (b) require each construction contractor or the subcontractor to maintain at all times until the
completion and acceptance of the Project adequate compensation insurance for all of their
employees and adequate public liability and property damage insurance for the full and complete
protection of the Consolidated Government from any and all claims of every kind and character
that may arise by virtue of the operations under their contracts, whether such operations be by
themselves or by anyone directly or indirectly for them, or under their control.
All such policies shall be for the benefit of and made payable to the Consolidated
Government and shall be on deposit with the Consolidated Government; provided, however, the
Consolidated Government may elect to be a self-insurer with respect to any risks for which
insurance is required under this Section 8.3. The cost of such insurance may be paid as an
Expense of Operation and Maintenance.
All moneys received for losses under any such insurance policies, except public liability
policies, are hereby pledged by the Consolidated Government as security for the Bonds until and
unless such proceeds are paid out in making good the loss or damage in respect of which such
proceeds are received, either by repairing the property damaged or replacing the property
destroyed or by depositing the same in the Utility General Fund. Adequate provision for making
good such loss and damage shall be made within 120 days from the date of the loss. Insurance
proceeds not used in making such provision shall be deposited in the Utility General Fund on the
expiration of such 120-day period. Such insurance proceeds shall be payable to the Consolidated
Government by appropriate clause to be attached to or inserted in the policies.
Section 8.4. No Sale, Lease, or Encumbrance; Exceptions.
Except as expressly permitted in the Prior Lien Resolution (so long as any Prior Lien
Bonds are outstanding) and the Bond Resolution, the Consolidated Government irrevocably
covenants, binds, and obligates itself not to sell, lease, encumber, or in any manner dispose of the
System as a whole or in part until all of the Bonds and all interest thereon shall have been paid in
full or provision for payment has been made in accordance with Article XI.
Subject to the restrictions relating to the sale of the System contained in Article VII,
Section 7 of the Prior Lien Resolution (so long as any Prior Lien Bonds are outstanding), the
Consolidated Government shall have and hereby reserves the right to sell, lease, or otherwise
dispose of any of the property comprising a part of the System in the following manner, if any
one of the following conditions exists: (i) such property is not necessary for the operation of the
System; (ii) such property is not useful in the operation of the System; (iii) such property is not
profitable in the operation of the System; or (iv) the disposition of such property will be
advantageous to the System and will not adversely affect the security for the Bondholders. All
proceeds of any such sale shall be deposited in the Utility General Fund.
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In addition, subject to the restrictions relating to the sale of the System contained in
Article VII, Section 7 of the Prior Lien Resolution (so long as any Prior Lien Bonds are
outstanding), the Consolidated Government reserves the right to sell or transfer any portion of
the System to any political subdivision or authority or agency of one or more political
subdivisions of the State, provided that there shall be first filed with the Consolidated
Government: (i) an opinion of Bond Counsel to the effect that such sale will not adversely affect
the extent to which interest on any Taa�-Exempt Bonds is excluded from gross income for federal
income tax purposes; and (ii) an opinion of an Independent Consulting Engineer expressing the
view that such sale will not result in any diminution of Pledged Revenues to the extent that in
any future Fiscal Year the Pledged Revenues will be less than 125% of the m�imum annual
Debt Service Requirement on all Prior Lien Bonds and all Senior Bonds to be Outstanding after
such sale, in the then current or any succeeding Fiscal Year. In reaching this conclusion, the
Independent Consulting Engineer shall take into consideration such factors as the Independent
Consulting Engineer may deem significant, including (i) anticipated diminution of Operating
Revenues, (ii) anticipated increase or decrease in Expenses of Operation and Maintenance
attributable to the sale, and (iii) reduction in the annual Debt Service Requirement attributable to
the application of the sale proceeds to the provision for payment of Bonds theretofore
Outstanding. Such sale may include a partial interest in a water or sewer facility owned or to be
owned in whole or in part by the Consolidated Government. All proceeds of any such sale shall
be deposited in the Utility General Fund.
Subject to the restrictions related to the sale of the System contained in Article VII,
Section 7 of the Prior Lien Resolution (so long as any Prior Lien Bonds are outstanding), the
Consolidated Government reserves the right to transfer the System as a whole to any political
subdivision or authority or agency of one or more political subdivisions of the State to which
may be delegated the legal authority to own and operate the System, or any portion thereof, on
behalf of the public, and which undertakes in writing, filed with the Consolidated Government,
the Consolidated Government's obligations under the Bond Resolution, provided that there shall
be first filed with the Consolidated Government: (i) an opinion of Bond Counsel to the effect
that such sale will not adversely affect the extent to which interest on any Tax Exempt Bonds is
excludable from gross income for federal income tax purposes; and (ii) an opinion of an
Independent Consulting Engineer expressing the view that such transfer will not result in any
diminution of Pledged Revenues to the extent that in any future Fiscal Year the Pledged
Revenues will be less than 125% of the maximum annual Debt Service Requirement on all Prior
Lien Bonds and Senior Bonds to be Outstanding after such sale, in the then current or any
succeeding Fiscal Year. In reaching this conclusion, the Independent Consulting Engineer shall
take into consideration such factors as the Independent Consulting Engineer may deem
significant, including any rate schedule to be imposed by the transferee political subdivision,
authority, or agency.
Section 8.5. Books, Records, and Accounts.
The Consolidated Government shall, after the close of each Fiscal Year, cause the books,
records, and accounts of the System to be properly audited by an Independent Certified Public
Accountant and shall require such Independent Certified Public Accountant to complete its
report within 180 days after the close of the Fiscal Year. The audit report shall cover, but shall
not be limited to, a balance sheet, an income statement, a cash flow statement, and any other
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statement required by law or accounting convention, and a report by such Independent Certified
Public Accountant disclosing any material financial default on the part of the Consolidated
Government in the performance of any covenant in the Bond Resolution. A copy of such annual
audit report shall be made available to any Bondholder, Financial Facility Issuer, Qualified
Hedge Provider, or Reserve Account Credit Facility Provider on request.
Section 8.6. Rights of Inspection.
The owner or owners of $1,000,000 or more in aggregate principal amount of Bonds, any
Financial Facility Issuer, any Qualified Hedge Provider, or any Reserve Account Credit Facility
Provider shall have the right at all reasonable times to inspect the System and all records,
accounts, and data of the Consolidated Government relating thereto. Upon request the
Consolidated Government will furnish to such persons such financial statements and other
available information relating to the Consolidated Government and the System as such persons
may from time to time reasonably require.
Section 8.7. No Impairment of Rights.
The Consolidated Government shall not enter into any contract or contracts, nor take any
action, the results of which might materially impair the rights of the Bondholders.
Section 8.8. Satisfaction of Liens.
The Consolidated Government will from time to time duly pay and discharge or cause to
be paid and discharged all t�es, assessments, and other governmental charges, if any, lawfully
imposed upon the System or any part thereof or upon the Pledged Revenues, as well as any
lawful claims for labor, materials, or supplies that if unpaid might by law become a lien or
charge upon the System or the Pledged Revenues or any part thereof or that might impair the
security of the Bonds, except when the Consolidated Government in good faith contests its
liability to pay the same.
Section 8.9. Compulsory Sewer Connections.
In consideration of the purchase of the Bonds and in order better to secure the prompt
payment of principal and interest thereon, as well as for the purpose of protecting the health and
welfare of the inhabitants of the Consolidated Government, and acting under authority of the
general laws of the State, the Consolidated Government will, to the extent permitted by law, and
to the extent not prevented by physical impediments or inadequate capacity of the System,
require every owner of each lot and parcel of land in the jurisdiction which is served by the
Consolidated Government and which abuts upon any street or public way containing a sewage
line forming a part of the System and upon which lot a building shall subsequently be
constructed for residential, commercial, or industrial use, to connect such building to such
sewage line and to refrain from using any other method for the disposal of sewage.
Section 8.10. Enforcement of Charges and Connections.
The Consolidated Government shall compel the prompt payment of rates, fees, and
charges imposed for service rendered on every lot or parcel connected with the System, and to
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that end will vigorously enforce all of the provisions of any resolution or ordinance of the
Consolidated Government having to do with water and sewer connections and with water and
sewer charges, and all of the rights and remedies permitted the Consolidated Government under
law. The Consolidated Government by this Section expressly covenants and agrees that such
charges will be enforced and promptly collected to the full extent permitted by law, including the
requirement for the making of reasonable deposits by customers of the System to the extent
required by the Consolidated Government and the securing of injunctions against the disposition
of sewage or industrial waste into the System by any premises delinquent in the payment of such
charges.
Section 8.11. Payments.
All payments falling due on the Bonds for principal and interest shall be made by the
Consolidated Government from the Pledged Revenues or, at the Consolidated Government's
option, other legally available revenues to the owners thereof when due in full, and all reasonable
and authorized charges made by the Bond Registrar and any Paying Agent shall be paid by the
Consolidated Government when due.
Section 8.12. No Loss of Lien on Revenues.
The Consolidated Government shall not do, or omit to do, or permit to be done or to be
omitted any matter or thing whatsoever whereby the lien of the Bond Resolution on the Pledged
Revenues or any part thereof might or could be lost or impaired.
Section 8.13. Annual Budget.
The Consolidated Government agrees to adopt an Annual Budget for the System for each
Fiscal Year in compliance with the rate covenants as stated in Section 8.1.
Section 8.14. Tax Provisions.
The Consolidated Government recognizes that the purchasers and owners of Tax-Exempt
Bonds will have accepted the Tax-Exempt Bonds on, and paid for the Tax-Exempt Bonds a price
that reflects, the understanding that interest on such T�-Exempt Bonds is not included in the
gross income of the owners for federal income tax purposes under laws in force at the time the
Tax-Exempt Bonds shall have been delivered.
The Consolidated Government shall take any and all action that may be required from
time to time in order to assure that interest on the Taa�-Exempt Bonds shall remain excludable
from the gross income of the owners of the Tax-Exempt Bonds for federal income tax purposes
and shall refrain from taking any action that would adversely affect such status.
Prior to or contemporaneously with delivery of each series of Taa�-Exempt Bonds, the
Mayor and the Clerk of the Commission shall execute a certificate as to arbitrage matters on
behalf of the Consolidated Government respecting the investment of the proceeds of such series
of Tax-Exempt Bonds. Such certificate shall be a representation and certification of the
Consolidated Government, and an executed copy thereof shall be delivered to the Bond
Registrar. The Consolidated Government shall not knowingly invest or participate in the
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investment of any moneys held under the Bond Resolution if such investment would cause
interest on any Tax-Exempt Bonds to become included in gross income for federal income tax
purposes.
The Mayor or the Clerk of the Commission may also execute and deliver, on behalf of
the Consolidated Government: (i) such agreements, filings, and other writings as may be
necessary or desirable to cause or bind the Consolidated Government to comply with any
requirements for rebate under Section 148(� of the Code, or (ii) such certificate or other writing
as may be necessary or desirable to qualify for exemption from such rebate requirements.
The Consolidated Government shall calculate, from time to time, as required in order to
comply with the provisions of Section 148(� of the Code, the amounts required to be rebated
(including penalties) to the United States and shall deposit or cause to be deposited into the
Rebate Fund any and all of such amounts promptly following a determination of any such
amount.
The Consolidated Government shall direct the Depository of the Rebate Fund to keep all
moneys held therein invested in Permitted Investments. To the extent and at the times required
in order to comply with Section 148(� of the Code, the Consolidated Government may withdraw
funds from the Rebate Fund for the purpose of making rebate payments (including penalties) to
the United States as required by Section 148(� of the Code. Except as otherwise specifically
provided in this Section, moneys in the Rebate Fund may not be withdrawn from the Rebate
Fund for any other purpose.
All earnings on investments held in any account of the Rebate Fund shall be retained in
such account of the Rebate Fund and shall become part of such account of the Rebate Fund.
Moneys held in the Rebate Fund, including the investment earnings thereon, if any, shall not be
subject to a pledge in favor of the owners of the Bonds under the Bond Resolution and may not
be used to pay amounts due on the Bonds or under any Financial Facility Agreements or Hedge
Agreements or amounts required for the operation, maintenance, enlargement, or extension of
the System.
The Consolidated Government shall have the right to create special accounts, from time
to time, in the Rebate Fund as it may deem desirable.
If the Consolidated Government shall deliver to the Depository of the Rebate Fund a
certificate, signed by an officer of the Consolidated Government, certifying that the Consolidated
Government has filed all reports required to be filed with the United States pursuant to Section
148(� of the Code and has made all payments required to be made to the United States pursuant
to Section 148(� of the Code, then the Depository of the Rebate Fund shall transfer to, or upon
the order of, the Consolidated Government all moneys or investments remaining in the Rebate
Fund, and such moneys and investments may be used by the Consolidated Government for any
lawful purpose permitted by the Bond Resolution.
The Consolidated Government may employ any rebate analyst or other expert to perform
any of the Consolidated Government's duties with respect to the Rebate Fund, other than
payment of moneys into the Rebate Fund.
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'The Consolidated Government hereby covenants and agrees that it will not use or permit
any use of the proceeds of the sale of any Tax-Exempt Bonds, or any other moneys arising out of
the ownership or operation of the System or otherwise, or use or permit the use of any of the
facilities being financed or refinanced thereby or any other portion of the System, which would
cause any Tax-Exempt Bonds or any portion thereof to be "private activity bonds" within the
meaning of Section 141 of the Code.
The covenants, certifications, representations, and warranties contained in this Section
shall survive payment in full or provision for payment in full of the T�-Exempt Bonds.
The Consolidated Government hereby agrees to adopt and comply with the Tax Policy,
attached hereto as Exhibit B.
Section 8.15. Payments to Consolidated Government Must be in Money.
The Consolidated Government shall require all payments to be made to the Consolidated
Government as water and sewerage service charges to be made in lawful moneys of the United
States of America.
Section 8.16. Continuing Disclosure for Series 2012 Bonds.
The Consolidated Government hereby covenants and agrees that it shall comply with and
carry out all of the provisions of the Series 2012 Continuing Disclosure Certificate.
Notwithstanding any other provision of the Bond Resolution, failure of the Consolidated
Government to comply with the Series 2012 Disclosure Certificate shall not be considered a
default or an Event of Default under the Bond Resolution. It is expressly provided, however,
that any beneficial owner of the Series 2012 Bonds may take such action, to the extent and in
such manner as may be allowed by applicable law, as may be necessary and appropriate,
including seeking mandamus or specific performance by court order, to cause the Consolidated
Government to comply with its obligations under this Section 8.17.
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ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Definition of Events of Default.
An "Event of Default" shall mean the occurrence of any one or more of the following:
(a) failure to pay the principal or redemption price of any Senior Bond when
the same shall become due and payable, either at maturity or by proceedings far
redemption or otherwise; or
(b) failure to pay any installment of interest on any Senior Bond when and as
such installment of interest shall become due and payable; or
(c) default shall be made by the Consolidated Government in the performance
of any obligation in respect to the Debt Service Reserve Account for Senior Bonds and
such default shall continue for 30 days thereafter; or
(d) the Consolidated Government shall (1) admit in writing its inability to pay
its debts generally as they become due, (2) file a petition in bankruptcy or take advantage
of any insolvency act, (3) make an assignment for the benefit of its creditors, (4) consent
to the appointment of a receiver of itself or of the whole or any substantial part of its
property, or (5) be adjudicated a bankrupt; or
(e) a court of competent jurisdiction shall enter an order, judgment, or decree
appointing a receiver of the System or any of the funds or accounts established in
Article IV or Article V, or of the whole or any substantial part of the Consolidated
Government's property, or approving a petition seeking reorganization of the
Consolidated Government under the federal bankruptcy laws or any other applicable law
or statute of the United States of America or the State, and such order, judgment, or
decree shall not be vacated or set aside or stayed within 60 days from the date of the entry
thereof; or
(� under the provisions of any other law for the relief or aid of debtors, any
court of competent jurisdiction shall assume custody or control of any of the funds or
accounts established in Article IV or Article V, or of the Consolidated Government or of
the whole or any substantial part of the Consolidated Government's property, and such
custody or control shall not be terminated or stayed within 60 days from the date of
assumption of such custody or control; or
(g) the Consolidated Government shall fail to perform any of the other
covenants, conditions, agreements, and provisions contained in the Senior Bonds or in the
Bond Resolution (other than in Section 8.17) on the part of the Consolidated Government
to be performed, and such failure shall continue for 90 days after written notice
specifying such failure and requiring it to be remedied shall have been given to the
Consolidated Government by the owners of not less than, or a Credit Facility Issuer
securing not less than, 25% in aggregate principal amount of the Senior Bonds; provided,
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however, if the failure stated in such notice can be corrected, but not within such 90 day
period, the Consolidated Government shall have 180 days after such written notice to
cure such default if corrective action is instituted by the Consolidated Government within
such 90 day period and diligently pursued until the failure is corrected; or
(h) an Event of Default under any Series Resolution relating to Senior Bonds
shall occur; or
(i) failure by any Liquidity Facility Issuer to pay the purchase price of Senior
Bonds under any Liquidity Facility then in effect; or
(j) delivery to the Consolidated Government by a Credit Facility Issuer of
written notice stating that an "Event of Default" has occurred under any Credit Facility
Agreement relating to Senior Bonds; or
(k) delivery to the Consolidated Government by a Qualified Hedge Provider
of written notice stating that an"Event of Default" has occurred under any Senior Hedge
Agreement.
Section 9.2. Remedies.
(a) Upon the happening and continuance of any Event of Default specified in Section
9.1(a) or 9.1(b), then and in every such case, the principal of all Senior Bonds then Outstanding
shall become due and payable immediately, together with the interest accrued thereon to the date
of such acceleration, at the place of payment provided therein, and interest on the Senior Bonds
shall cease to accrue after the date of such acceleration, anything in the Bond Resolution or in the
Senior Bonds to the contrary notwithstanding. Upon the happening and continuance of any
Event of Default specified in Section 9.1 (except in Section 9.1(a), 9.1(b), 9.1(i), 9.1(j), and
9.1(k)), then and in every such case, upon the written declaration of the owners of more than
50% in aggregate principal amount of all Senior Bonds then Outstanding or upon the written
demand of a Credit Facility Issuer securing more than 50% in aggregate principal amount of the
Senior Bonds then Outstanding, the principal of all Senior Bonds then Outstanding shall become
due and payable immediately, together with the interest accrued thereon to the date of such
acceleration, at the place of payment provided therein, and interest on the Senior Bonds shall
cease to accrue after the date of such acceleration, anything in the Bond Resolution or in the
Senior Bonds to the contrary notwithstanding. Notwithstanding anything in the Bond Resolution
to the contrary, so long as any Prior Lien Bonds are outstanding pursuant to the Prior Lien
Resolution, the payment of the principal of any Senior Bonds shall not be accelerated unless and
until the payment of the principal of all of the Prior Lien Bonds has been accelerated pursuant to
Article VIII, Section 2 of the Prior Lien Resolution.
Upon any declaration of acceleration under the Bond Resolution, the Consolidated
Government shall immediately draw under the applicable Credit Facility to the extent permitted
by the terms thereof that amount which, together with other amounts on deposit under the Bond
Resolution, shall be sufficient to pay the principal of and accrued interest on the related Senior
Bonds so accelerated.
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The above provisions, however, are subject to the condition that if, after the principal of
the Senior Bonds shall have been so accelerated, all arrears of interest upon such Bonds, and
interest on overdue installments of interest at the rate on such Bonds, shall have been paid by the
Consolidated Government, the principal of such Bonds that has matured (except the principal of
any Bonds not then due by their terms except as provided above) has been paid, and the
Consolidated Government shall also have performed all other things in respect to which it may
have been in default under the Bond Resolution, and the Credit Facility Issuer shall have
reinstated the Credit Facility in the full amount available to be drawn thereunder by written
notice to the Consolidated Government, then, in every such case, the owners of more than 50%
in aggregate principal amount of all Senior Bonds then Outstanding by written notice to the
Consolidated Government, may waive such default and its consequences and such waiver shall
be binding upon the Consolidated Government and upon all owners of the Bonds; but no such
waiver shall extend to or affect any subsequent default or impair any right or remedy consequent
thereon. Notwithstanding the foregoing, as long as the applicable Credit Facility Issuer shall not
then continue to dishonor draws under the Credit Facility, no Event of Default with respect to the
related Senior Bonds may be waived without the express written consent of such Credit Facility
Issuer.
(b) Upon the happening and continuance of any Event of Default, any owner of
Senior Bonds then Outstanding affected by the Event of Default or a duly authorized agent for
such owner may proceed to protect and enforce its rights and the rights of the owners of Senior
Bonds by such of the following remedies as it shall deem most effectual to protect and enforce
such rights:
(i) by mandamus or other suit, action, or proceeding at law or in equity,
enforce all rights of the owners of Senior Bonds, including the right to require the
appointment of a receiver for the System or to exercise any other right or remedy
provided by the Revenue Bond Law and to require the Consolidated Government to
perform any other covenant or agreement contained in the Bond Resolution and to
perform its duties under the Revenue Bond Law;
(ii) by bringing suit upon the Senior Bonds;
(iii) by action or suit in equity, require the Consolidated Government to
account as if it were the trustee of an express trust for the owners of the Senior Bonds;
(iv) by action or suit in equity, enjoin any acts or things that may be unlawful
or in violation of the rights of the owners of the Senior Bonds; or
(v) by pursuing any other available remedy at law or in equity or by statute.
In the enforcement of any remedy under the Bond Resolution, owners of Senior Bonds
shall be entitled to sue for, enforce payment on, and receive any and all amounts then or during
any default becoming, and at any time remaining, due from the Consolidated Government for
principal, redemption premium, interest, or otherwise, under any provision of the Bond
Resolution or of the Senior Bonds, and unpaid, with interest on overdue payments at the rate or
rates of interest specified in such Senior Bonds, together with any and all costs and expenses of
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collection and of all proceedings under the Bond Resolution and under such Senior Bonds,
without prejudice to any other right or remedy of the owners of Senior Bonds, and to recover and
enforce a judgment or decree against the Consolidated Government for any portion of such
amounts remaining unpaid, with interest, costs, and expenses, and to collect from any moneys
available for such purpose, in any manner provided by law, the moneys adjudged or decreed to
be payable.
Section 9.3. Remedies Cumulative.
No remedy conferred upon or reserved to the Bondholders is intended to be exclusive of
any other remedy or remedies, and each and every such remedy shall be cumulative and sha11 be
in addition to every other remedy given under the Bond Resolution or now or hereafter existing
at law or in equity or by statute.
Section 9.4. Waiver of Default.
No delay or omission of any Bondholder to exercise any right or power accruing upon
any Event of Default shall impair any such right or power or shall be construed to be a waiver of
any such Event of Default, or an acquiescence therein, and every power and remedy given by the
Bond Resolution to the Bondholders may be exercised from time to time and as often as may be
deemed expedient.
Section 9.5. Application of Moneys After Default.
On and after the date that the Prior Lien Bonds are no longer outstanding under the Prior
Lien Resolution, if an Event of Default occurs and shall not have been remedied, the
Consolidated Government or a receiver appointed for the purpose shall apply all Pledged
Revenues as follows and in the following order of priority:
(a) Expenses of Receiver and Paying Agent and Bond Registrar — to the
payment of the reasonable and proper charges, expenses, and liabilities of the receiver
and the Paying Agent and Bond Registrar under the Bond Resolution;
(b) Expenses of Operation and Maintenance and Renewals and Replacements
— to the payment of all reasonable and necessary Expenses of Operation and Maintenance
and major renewals and replacements to the System;
(c) Principal or Redemption Price, Interest, and Hedge Payments — to the
payment of the interest and principal or redemption price then due on the Senior Bonds
and Hedge Payments then due under Senior Hedge Agreements, as follows:
(i) Unless the principal of all the Senior Bonds shall have become due
and payable, all such moneys shall be applied as follows:
First: to the payment to the persons entitled thereto of all
installments of interest then due on the Senior Bonds, in the order of the
maturity of such installments (with interest on defaulted installments of
interest at the rate or rates borne by the Senior Bonds with respect to
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which such interest is due, but only to the extent permitted by law), and, if
the amount available shall not be sufficient to pay in full any particular
installment, then to the payment ratably, according to the amounts due on
such installment, to the persons entitled thereto, without any
discrimination or preference. As to any Compound Interest Bond that is a
Senior Bond, such interest shall accrue on the Accreted Value of such
Bond and be set aside on a daily basis until the next compounding date for
such Bonds, whereupon it shall be paid to the owner of such Bond as
interest on a defaulted obligation and only the unpaid portion of such
interest (if any) shall be treated as principal of such Bond.
Second: to the payment of the Hedge Payments due under any
Senior Hedge Agreements pursuant to their terms.
Third: to the payment to the persons entitled thereto of the unpaid
principal of any of the Senior Bonds that shall have become due at
maturity or upon mandatory redemption prior to maturity (other than
Senior Bonds called for redemption for the payment of which moneys are
held pursuant to the provisions of Article XI), in the order of their due
dates, with interest upon such Senior Bonds from the respective dates
upon which they became due, and, if the amount available shall not be
sufficient to pay in full Senior Bonds due on any particular date, together
with such interest, then to the payment first of such interest, ratably
according to the amount of such interest due on such date, and then to the
payment of such principal, ratably according to the amount of such
principal due on such date, to the persons entitled thereto without any
discrimination or preference. The Accreted Value of a Compound Interest
Bond that is a Senior Bond (except for interest that shall have been paid
under paragraph first) shall be treated as principal for purposes of this
paragraph third.
Fourth: to the payment of the redemption premium on and the
principal of any Senior Bonds called for optional redemption pursuant to
their terms.
(ii) If the principal of all the Senior Bonds shall have become due and
payable, all such moneys shall be applied to the payment of the principal and
interest then due and unpaid upon the Senior Bonds, with interest thereon as
aforesaid, and due and unpaid Hedge Payments under Senior Hedge Agreements,
without preference or priority of principal over interest or Hedge Payments or of
interest over principal or Hedge Payments, or of Hedge Payments over principal
or interest, or of any installment of interest over any other installment of interest,
or of any Senior Bond over any other Senior Bonds, or of any such Hedge
Payment over any other such Hedge Payment, ratably, according to the amounts
due respectively for principal, interest, and Hedge Payments, to the persons
entitled thereto without any discrimination or preference.
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Section 9.6. Rights of Credit Facility Issuer.
Notwithstanding any other provision of the Bond Resolution, in the event that the
Consolidated Government shall draw under a Credit Facility any amount for the payment of
principal of or interest on any Bonds, then upon such payment the related Credit Facility Issuer
shall succeed to and become subrogated to the rights of the recipients of such payments and such
principal or interest shall be deemed to continue to be unpaid and Outstanding for all purposes
and shall continue to be fully secured by the Bond Resolution until the Credit Facility Issuer, as
successor and subrogee, has been paid all amounts owing in respect of such subrogated payments
of principal and interest. Such rights shall be limited and evidenced by having the Consolidated
Government note the Credit Facility Issuer's rights as successor and subrogee on its records, and
the Consolidated Government shall, upon request, deliver to the Credit Facility Issuer (i) in the
case of interest on the Bonds, an acknowledgment of the Credit Facility Issuer's ownership of
interest to be paid on the Bonds specifying the amount of interest owed, the period represented
by such interest, and the numbers of the Bonds on which such interest is owed and (ii) in the case
of principal of the Bonds, either the Bonds themselves duly assigned to the Credit Facility Issuer
or new Bonds registered in the name of the Credit Facility Issuer or in such other name as the
Credit Facility Issuer shall specify. Whenever moneys become available for the payment of any
interest then overdue, the Credit Facility Issuer shall be treated as to interest owed to it as
successor and subrogee as if it had been the Bondholder of the Bonds on which such interest is
payable on any special record date therefor.
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ARTICLE X
BOND OWNERSHIP
Section 10.1. Manner of Evidencing Ownership of Bonds.
Any request, direction, or other instrument required by the Bond Resolution to be signed
or executed by Bondholders may be in any number of counterparts or writings of similar tenor
and may be signed or executed by such Bondholders in person or by agent appointed in writing.
Proof of the execution of any such request, direction, or other instrument, or of the writing
appointing such agent and of the ownership of Bonds, if made in the following manner, shall be
sufficient for any purpose of the Bond Resolution.
The fact and date of the execution by any person of any such writing may be proved by
the certificate of any officer in any jurisdiction, who, by the laws thereof, has power to take
acknowledgments within such jurisdiction, to the effect that the person signing such writing
acknowledged before him the execution thereof, or by an affidavit of a witness to such
execution; provided that the execution of the form of assignment on the back of each Bond may
be guaranteed only by an eligible guarantor institution (such as banks, stockbrokers, savings and
loan associations, and credit unions) with membership in an approved Signature Guarantee
Medallion Program pursuant to S.E.C. Rule 17Ad-15. The fact of ownership of the Bonds by
any Bondholder, the amount and issue numbers of such Bonds, and the date of ownership shall
be proved by the Bond Register.
Section 10.2. Call of Meetings of Bondholders.
The Consolidated Government or the owners of not less than 25% in aggregate principal
amount of the Bonds of either the senior class or the subordinate class may at any time call a
meeting of the Bondholders for any one or more of the following purposes:
(a) to consent to, approve, request, or direct any action required to be
consented to or approved by the Bondholders of the affected class under the Bond
Resolution or which they may request or direct under the Bond Resolution to be taken;
(b) to give any notices to the Consolidated Government;
(c) to take any other action that the Bondholders of the affected class may
take under the Bond Resolution; and
(d) for any other purpose concerning the payment, security, or enforcement of
the Bonds of the affected class.
Any such meeting shall be held at such place in Augusta, Georgia, or in the City of New
York, New York, as may be specified in the notice calling such meeting. Written notice of such
meeting, stating the place and time of the meeting and in general terms the business to be
submitted, shall be mailed by the Consolidated Government or the Bondholders calling such
meeting to the Bondholders of the affected class at their addresses then appearing upon the Bond
Register not less than 30 days nor more than 60 days before such meeting. The mailing of such
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notice shall not, however, be a condition precedent to the validity of any action taken at any such
meeting. Any meeting of Bondholders shall be valid without notice if the Bondholders of the
affected class are present in person or by proxy or if notice is waived in writing before or within
30 days after the meeting by the Bondholders of the affected class not so present.
Section 10.3. Proxies and Proof of Ownership of Bonds.
Attendance and voting by Bondholders at such meetings may be in person or by proxy.
The Bondholders may, by an instrument in writing, appoint any person or persons, with full
power of substitution, as their proxy to vote at any meeting for them. The right of a proxy for a
Bondholder to attend a meeting and act and vote may be proved (subject to the right of the
Consolidated Government to require additional proo� by a written instrument executed by such
Bondholder.
Any registered owner of Bonds of the affected class shall be entitled in person or by
proxy to attend and vote at such meeting without producing the Bonds registered in such
Bondholder's name; provided, however, that such persons and their proxies shall, if required,
produce such proof of personal identity as shall be satisfactory to the secretary of the meeting.
All other persons seeking to attend or vote at such meeting must produce the Bonds claimed to
be owned or represented at such meeting.
The vote of any Bondholder shall be binding upon such Bondholder and upon every
subsequent owner of such Bond (whether or not such subsequent Bondholder has notice of that
vote).
Section 10.4. Appointment of Officers at Meeting of Bondholders.
A chairman and a secretary of any meeting of the Bondholders shall be elected by the
Bondholders of the affected class, by a majority in principal amount of the Bonds of the affected
class represented at such meeting in person or by proxy. The chairman shall appoint two (2)
inspectors of votes who shall count all votes cast at such meeting, except votes on the election of
chairman and secretary, and who shall make and file with the secretary and with the
Consolidated Government their verified report of all such votes cast at the meeting.
Section 10.5. Quorum at Meetings of Bondholders.
The owners of not less than the principal amount of the Bonds of the affected class
required for any action to be taken at such meeting must be present at such meeting in person or
by proxy in order to constitute a quorum for the transaction of business.
Section 10.6. Meetings.
Meetings shall be conducted in accordance with rules, regulations, orders, and procedures
established by the chairman of the meeting.
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ARTICLE XI
DEFEASANCE
Section 11.1. Provision for Payment.
Bonds for the payment or redemption of which sufficient moneys or sufficient
Government Obligations shall have been deposited with the Paying Agent or the Depository of
the Sinking Fund (whether upon or prior to the maturity or the redemption date of such Bonds)
shall be deemed to be paid and no longer Outstanding under the Bond Resolution; provided,
however, that if such Bonds are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been duly given as provided in Article III or firm and irrevocable
arrangements shall have been made for the giving of such notice. Government Obligations shall
be considered sufficient for purposes of this Article XI only: (i) if such Government Obligations
are not callable by the issuer of the Government Obligations prior to their stated maturity, and
(ii) if such Government Obligations fall due and bear interest in such amounts and at such times
as will assure sufficient cash (whether or not such Government Obligations are redeemed by the
Consolidated Government pursuant to any right of redemption) to pay currently maturing interest
and to pay principal and redemption premiums, if any, when due on the Bonds without rendering
the interest on any Tax-Exempt Bonds includable in gross income of any owner thereof for
federal income tax purposes.
The Consolidated Government may at any time surrender to the Bond Registrar for
cancellation by it any Bonds previously authenticated and delivered under the Bond Resolution,
which the Consolidated Government may have acquired in any manner whatsoever. All such
Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired.
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ARTICLE XII
SUPPLEMENTAL RESOLUTIONS
Section 12.1. Supplemental Resolutions Not Requiring Consent of Bondholders.
The Consolidated Government, from time to time and at any time, subject to the
conditions and restrictions in the Bond Resolution, may adopt one or more Supplemental
Resolutions, which thereafter shall form a part of the Bond Resolution, for any one or more or all
of the following purposes:
(a) To add to the covenants and agreements of the Consolidated Government
in the Bond Resolution other covenants and agreements thereafter to be observed or to
surrender, restrict, or limit any right or power reserved in the Bond Resolution to or
conferred upon the Consolidated Government (including but not limited to the right to
issue Additional Bonds);
(b) To make such provisions for the purpose of curing any ambiguity, or of
curing, correcting, or supplementing any defective provision contained in the Bond
Resolution, or in regard to matters or questions arising under the Bond Resolution, as the
Consolidated Government may deem necessary or desirable and not inconsistent with the
Bond Resolution;
(c) To grant to or confer any additional rights, remedies, powers, or
authorities that may be lawfully granted to or conferred upon the owners of the Bonds;
(d) To subject to the lien and pledge of the Bond Resolution additional
revenues, receipts, properties, or other collateral;
(e) To evidence the appointment of successors to any Depositories, Paying
Agent(s), or Bond Registrar(s);
(� To modify, amend, or supplement the Bond Resolution in such manner as
to permit the qualification of the Bond Resolution under the Trust Indenture Act of 1939
or any federal statute hereinafter in effect, and similarly to add to the Bond Resolution
such other terms, conditions, and provisions as may be permitted or required by such
Trust Indenture Act of 1939 or any similar federal statute;
(g) To make any modification or amendment of the Bond Resolution required
in order to make any Bonds eligible for acceptance by a Securities Depository or to
permit the issuance of any Bonds or interests therein in Book-Entry Form;
(h) To modify any of the provisions of the Bond Resolution in any respect if
such modification shall not become effective until after the Bonds Outstanding
immediately prior to the effective date of such Supplemental Resolution shall cease to be
Outstanding and if any Bonds issued contemporaneously with or after the effective date
of such Supplemental Resolution shall contain a specific reference to the modifications
contained in such subsequent proceedings;
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(i) Subject to the provisions of Article IV, to modify the provisions of the
Bond Resolution with respect to the disposition of any moneys remaining in the
Construction Fund upon the completion of any Project;
(j) To modify the Bond Resolution to permit the qualification of any Bonds
for offer or sale under the securities laws of any state in the United States of America;
(k) To modify the Bond Resolution to provide for the issuance of Additional
Bonds or Subordinate Bonds, and such modification may deal with any subjects and
make any provisions that the Consolidated Government deems necessary or desirable for
that purpose;
(1) To make such modifications in the provisions of the Bond Resolution as
may be deemed necessary by the Consolidated Government to accommodate the issuance
of Bonds that (i) are Compound Interest Bonds (including, but not limited to, provisions
for determining the Debt Service Requirement for such Compound Interest Bonds and for
treatment of Accreted Value in making such determination) or (ii) bear interest at a
Variable Rate; and
(m) To modify any of the provisions of the Bond Resolution in any respect
(other than a modification of the type described in Section 12.2 requiring the unanimous
written consent of the Bondholders); provided that for (i) any Outstanding Bonds which
are assigned a Rating and which are not secured by a Credit Facility providing for the
payment of the full amount of principal and interest to be paid thereon, each Rating
Agency shall have given written notification to the Consolidated Government that such
modification will not cause the then applicable Rating on any Bonds to be reduced or
withdrawn, and (ii) any Outstanding Bonds which are secured by Credit Facilities
providing for the payment of the full amount of the principal and interest to be paid
thereon, each Credit Facility Issuer shall have consented in writing to such modification.
Any Supplemental Resolution authorized by the provisions of this Section may be
adopted by the Consolidated Government without the consent of or notice to the owners of any
of the Bonds at the time Outstanding, notwithstanding any of the provisions of Section 12.2.
Any Supplemental Resolution of the Consolidated Government may modify the
provisions of the Bond Resolution in such a manner, and to such extent and containing such
provisions, as the Consolidated Government may deem necessary or desirable to effect any of
the purposes stated above.
As used in this Section, the term "modify" shall mean "modify, amend, or supplement"
and the term "modification" shall mean "modification, amendment, or supplement."
Section 12.2. Supplemental Resolutions Requiring Consent of Bondholders.
With the consent (evidenced as provided in Article X) of the owners of not less than a
majority in aggregate principal amount of the Outstanding Bonds of each class (senior and
subordinate), voting separately by class, the Consolidated Government may from time to time
and at any time adopt a Supplemental Resolution for the purpose of adding any provisions to or
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changing in any manner or eliminating any of the provisions of the Bond Resolution or of any
Supplemental Resolution; provided, however, that no such Supplemental Resolution shall:
(1) extend the maturity date or due date of any mandatory sinking fund redemption with respect
to any Bond Outstanding under the Bond Resolution; (2) reduce or extend the time for payment
of principal of, redemption premium, or interest on any Bond Outstanding under the Bond
Resolution; (3) reduce any premium payable upon the redemption of any Bond under the Bond
Resolution or advance the date upon which any Bond may first be called for redemption prior to
its stated maturity date; (4) give to any Senior Bond or Senior Bonds (or related Senior Hedge
Agreements) a preference over any other Senior Bond or Senior Bonds (or related Senior Hedge
Agreements); (5) permit the creation of any lien or any other encumbrance on the Pledged
Revenues having a lien equal to or prior to the lien created under the Bond Resolution for the
Senior Bonds; (6) reduce the percentage of owners of either class of Bonds required to approve
any such Supplemental Resolution; or (7) deprive the owners of the Bonds of the right to
payment of the Bonds or from the Pledged Revenues, without, in each case, the consent of the
owners of all the Bonds then Outstanding. No amendment may be made under this Section that
affects the rights or duties of any Financial Facility Issuer securing any of the Bonds or any
Qualified Hedge Provider under any Hedge Agreement without its written consent.
If the Consolidated Government intends to enter into or adopt any Supplemental
Resolution as described in this Section, the Consolidated Government shall mail, by registered or
certified mail, to the registered owners of the Bonds at their addresses as shown on the Bond
Register, a notice of such intention along with a description of such Supplemental Resolution not
less than 30 days prior to the proposed effective date of such Supplemental Resolution. The
consents of the registered owners of the Bonds need not approve the particular form of wording
of the proposed Supplemental Resolution, but it shall be sufficient if such consents approve the
substance thereof. Failure of the owner of any Bond to receive the notice required in the Bond
Resolution shall not affect the validity of any Supplemental Resolution if the required number of
owners of the Bonds of each class shall provide their written consent to such Supplemental
Resolution.
Notwithstanding any provision of the Bond Resolution to the contrary, upon the issuance
of a Credit Facility to secure any Bonds and for the period in which such Credit Facility is
outstanding, the Credit Facility Issuer may have the consent rights of the owners of the Bonds
that are secured by such Credit Facility pertaining to some or all of the amendments or
modifications of the Bond Resolution, to the extent provided in the applicable Series Resolution.
Notwithstanding the foregoing, if a Credit Facility Issuer is granted the consent rights of the
owners of any Bonds in a Series Resolution and refuses to exercise such consent rights, either
affirmatively or negatively, then the registered owners of the Bonds secured by the related Credit
Facility may exercise such consent rights.
Section 12.3. Notice of Supplemental Resolutions.
The Consolidated Government shall cause the Bond Registrar to mail a notice by
registered or certified mail to the registered owners of all Bonds Outstanding, at their addresses
shown on the Bond Register or at such other address as has been furnished in writing by such
registered owner to the Bond Registrax, setting forth in general terms the substance of any
Supplemental Resolution that has been: (i) adopted by the Consolidated Government pursuant to
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Section 12.1 or (ii) approved by Bondholders or any Credit Facility Issuer and adopted by the
Consolidated Government pursuant to Section 12.2.
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1. Severability.
In case any one or more of the provisions of the Bond Resolution or of the Bonds shall
for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any
other provision of the Bond Resolution or of the Bonds, but the Bond Resolution and the Bonds
shall be construed and enforced as if such illegal or invalid provision had not been contained
therein. In case any covenant, stipulation, obligation, or agreement contained in the Bonds or in
the Bond Resolution shall for any reason be held to be unenforceable or in violation of law, then
such covenant, stipulation, obligation, or agreement shall be deemed to be the covenant,
stipulation, obligation, or agreement of the Consolidated Government to the full extent that the
power to incur such obligation or to make such covenant, stipulation, or agreement shall have
been conferred on the Consolidated Government by law.
Section 13.2. Requests of Consolidated Government.
Whenever any action is to be taken by the Bond Registrar or the Paying Agent at the
request of the Consolidated Government under the Bond Resolution, if no other means of
authenticating such request is required, such request shall be evidenced by a written instrument
signed by the Mayor and Clerk of the Commission or by such other Consolidated Government
official or employee (one or more) as may from time to time be designated in writing by the
Mayor and Clerk of the Commission. A duly certified copy of such designation must be filed
with the Bond Registrar and the Paying Agent.
Section 13.3. Validation of Series 2012 Bonds.
The Consolidated Government shall deliver a certified copy of this Master Bond
Resolution with an appropriate notice signed by the Clerk of the Commission to the District
Attorney for the Augusta Judicial Circuit accompanied by the request that the District Attorney
proceed with the validation of the Series 2012 Bonds.
Section 13.4. Approval of Offering Documents; Winning Bidder.
The preparation, use and distribution of the Official Notice of Sale and the Preliminary
Official Statement with respect to the Series 2012 Bonds and presented at this meeting are
hereby ratified and approved. The use and distribution of the Official Statement and the
execution of the Official Statement by the Mayor are hereby authorized and approved, provided
that the Official Statement is in substantially the same form as the Preliminary Official
Statement. The execution and delivery by the Mayor of the Consolidated Government of a
"deemed final certificate" required by Rule 15c2-12 of the Securities Exchange Act of 1934, as
amended, are hereby ratified.
Barclays Capital Inc. is hereby approved as the winning bidder for the Series 2012 Bonds
upon the terms set forth in its bid. The purchase price for the Series 2012 Bonds is equal to the
par amount of $138,830,000 plus net original issue premium of $9,395,210.95 less Purchaser's
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discount of $536,061.90. In addition, the Purchaser acquired insurance with respect to certain
maturities of the Series 2012 Bonds for $492,668.40.
Section 13.5. Approval of Series 2012 Paying Agent and Bond Registrar
Agreement.
The form, terms, and conditions and the execution, delivery, and performance of the
Series 2012 Paying Agent and Bond Registrar Agreement, which has been filed with the
Consolidated Government, are hereby approved and authorized. The Series 2012 Paying Agent
and Bond Registrar Agreement shall be in substantially the form submitted to the Mayor with
such changes, corrections, deletions, insertions, variations, additions, or omissions as may be
approved by the Mayor, whose approval thereof shall be conclusively evidenced by the
execution of such contract. The Mayor is hereby authorized and directed to execute on behalf of
the Consolidated Government, the Series 2012 Paying Agent and Bond Registrar Agreement,
and the Clerk of the Commission is hereby authorized and directed to affix thereto and attest the
seals of the Consolidated Government upon proper execution and delivery of the other party
thereto, provided, that in no event shall any such attestation or affixation of the seals of the
Consolidated Government be required as a prerequisite to the effectiveness thereof, and the
Mayor and the Clerk of the Commission are authorized and directed to deliver such contract on
behalf of the Consolidated Government.
Section 13.6. Approval of Series 2012 Custodian and Depository Agreement.
The form, terms, and conditions and the execution, delivery, and performance of the
Series 2012 Custodian and Depository Agreement, which has been filed with the Consolidated
Government, are hereby approved and authorized. The Series 2012 Custodian and Depository
Agreement shall be in substantially the form submitted to the Mayor with such changes,
corrections, deletions, insertions, variations, additions, or omissions as may be approved by the
Mayor, whose approval thereof shall be conclusively evidenced by the execution of such
contract. The Mayor is hereby authorized and directed to execute on behalf of the Consolidated
Government, the Series 2012 Custodian and Depository Agreement, and the Clerk of the
Commission is hereby authorized and directed to affix thereto and attest the seals of the
Consolidated Government upon proper execution and delivery of the other party thereto,
provided, that in no event shall any such attestation or affixation of the seals of the Consolidated
Government be required as a prerequisite to the effectiveness thereof, and the Mayor and the
Clerk of the Commission are authorized and directed to deliver such contract on behalf of the
Consolidated Government.
Section 13.7. Payments Due on Saturdays, Sundays, etc.
Whenever a date upon which a payment is to be made under the Bond Resolution falls on
a Saturday, a Sunday, a legal holiday, or any other day on which ba.nking institutions are
authorized to be closed in the state in which the payment is to be made, such payment may be
made on the next succeeding business day without interest for the intervening period.
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Section 13.8. Waiver of Bond Audit.
The Consolidated Government hereby approves the publication of the requisite legal
notice waiving the performance audit and performance review requirements of Section
36-82-100 of the Official Code of Georgia Annotated.
Section 13.9. Effective Date.
This Master Bond Resolution shall take effect immediately upon its adoption.
Section 13.10. Applicable Provisions of Law.
The Bond Resolution shall be governed by and construed and enforced in accordance
with the laws of the State.
Section 13.11. Repeal of Conflicting Resolutions.
Except for the Prior Lien Resolution, any and all resolutions, or parts of resolutions, if
any, in conflict with the Bond Resolution are hereby repealed.
Section 13.12. No Individual Responsibility of Commissioners and Officers of
Consolidated Government.
No stipulations, obligations, or agreements of any commissioner or of any officer of the
Consolidated Government shall be deemed to be stipulations, obligations, or agreements of any
such member or officer in his or her individual capacity.
Section 13.13. General Authorization.
From and after the date of adoption of this Master Bond Resolution, the officials,
employees, and agents of the Consolidated Government are hereby authorized to do all such acts
and things and to execute and deliver any and all other documents, agreements, certificates
(including, without limitation, the Series 2012 Disclosure Certificate), and instruments as may be
necessary or desirable in connection with the execution, delivery, and sale of the Series 2012
Bonds, the investment of the proceeds of the Series 2012 Bonds, and the transactions
contemplated on the part of the Consolidated Government by the Bond Resolution. The Mayor
and Clerk of the Commission are hereby authorized and directed to prepare and furnish to the
purchasers of the Series 2012 Bonds, when the Series 2012 Bonds are issued, certified copies of
all proceedings and records of the Consolidated Government relating to the Series 2012 Bonds or
to this Master Bond Resolution, and such other affidavits and certificates as may be required to
show the facts relating to the legality and marketability of the Series 2012 Bonds as such facts
appear from the books and records in the officers' custody and control or as otherwise known to
them. All such certified copies, certificates, and affidavits, including any heretofore furnished,
shall constitute representations of the Consolidated Government as to the truth of all statements
contained therein.
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Section 13.14. Bond Resolution Constitutes a Contract.
The Bond Resolution constitutes a contract with the Bondholders binding the
Consolidated Government, and therefore it is proper and appropriate for the Mayor to execute
the same on behalf of the Consolidated Government and for the Clerk of the Commission to
attest the same.
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Adopted and approved this 16th day of October, 2012.
AUGUSTA-RICHMOND COUNTY
COMMISSION
(SEAL)
-'_�`�`��\� � r
� �. By:
� � ��.......,���• C�� � �z� Mayor
/ ,�� f � e �o
� V �. � G �
��; �- � �
� ��
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, Es
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Clerk ��ot rav�`�`C°°`�";:
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EXHIBIT A
Form of Series 2012 Bond
Unless this Bond is presented by an authorized representative of The Depository Trust
Company ("DTC"), a New York corporation, to Augusta, Georgia or its agent for
registration of transfer, exchange, or payment, and any Bond issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other entity as
is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VAL UE OR OTHER WISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
UNITED STATES OF AMERICA
STATE OF GEORGIA
AUGUSTA, GEORGIA
WATER AND SEWERAGE REVENUE REFUNDING AND IMPROVEMENT BOND
(SECOND RESOLUTION),
SERIES 2012
Number R- $
Maturity Interest
Date Rate Dated CUSIP
, 2012
Registered Owner: Cede & Co.
Principal Amount:
KNOW ALL MEN BY THESE PRESENTS that AUGUSTA, GEORGIA (the
"Consolidated Government"), a political subdivision of the State of Georgia, existing as such
under and by virtue of the Constitution, statutes and laws of the State of Georgia, for value
received, hereby promises to pay (but only out of the sources provided) to the registered owner
identified above, or registered assigns, on the Maturity Date stated above, unless this Bond shall
have been called for redemption prior to maturity and payment of the redemption price shall
have been duly made or provided for, the principal amount identified above and to pay (but only
out of the sources provided) interest on the balance of such principal sum from time to time
remaining unpaid from and including the date hereof or from and including the most recent
Interest Payment Date (as hereinafter defined) with respect to which interest has been paid or
duly provided for, until payment of such principal sum has been made, at the interest rate per
annum shown above (computed on the basis of a 360-day year consisting of twelve 30-day
months) on April 1 and October 1 of each year (each an"Interest Payment Date") commencing
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April 1, 2013, until the payment of the principal amount of this Bond in full, and promises to pay
interest on overdue principal and, to the extent permitted by law, on overdue premium, if any,
and interest, at such rate.
Principal of and redemption premium, if any, on this Bond are payable when due in
lawful money of the United States of America upon presentation and surrender of this Bond at
the principal corporate trust office of U.S. Bank National Association, Atlanta, Georgia, as
registrar and paying agent (the "Bond Registrar" or the "Paying Agent"). Payment of interest on
this Bond shall be made to the registered owner and shall be paid in lawful money of the United
States of America by check or draft mailed on the applicable Interest Payment Date to such
registered owner as of the close of business on the 15th day of the calendar month (the "Record
Date") immediately preceding such Interest Payment Date at its address as it appears on the
registration books (the "Bond Register") of the Consolidated Government maintained by the
Bond Registrar, or at such other address as is furnished in writing by such registered owner to the
Bond Registrar.
Notwithstanding the foregoing, however, interest on this Bond shall be payable to any
registered owner of more than $1,000,000 in aggregate principal amount of the Bonds of the
same series as this Bond (including this Bond) by deposit of immediately available funds to the
account of such registered owner maintained with the Paying Agent or transmitted by wire
transfer to such registered owner at an account maintained at a commercial bank located within
the United States of America, if the Paying Agent receives from such registered owner written
deposit or wire transfer instructions prior to the Record Date preceding the Interest Payment Date
for which the deposit or wire transfer is requested.
This Bond is one of a series of $138,830,000 in original aggregate principal amount of
revenue bonds designated "Augusta, Georgia Water and Sewerage Revenue Refunding and
Improvement Bonds (Second Resolution), Series 2012" (the "Series 2012 Bonds"), issued by the
Consolidated Government pursuant to and in full compliance with the provisions of the
Constitution and laws of the State of Georgia, including specifically, but without limitation,
Article 3 of Chapter 82 of Title 36 of the Official Code of Georgia Annotated, known as the
"Revenue Bond Law," as amended. The Series 2012 Bonds have been authorized by a Master
Bond Resolution duly adopted by the Augusta-Richmond County Commission on October 16,
2012 (the "Bond Resolution"), for the purpose of financing the costs of (a) refunding the
Augusta, Georgia Water and Sewerage Revenue Bonds, Series 2002 (b) acquiring, constructing,
installing and equipping improvements to the water and sewerage system of the Consolidated
Government, (c) funding a debt service reserve account and (d) paying the costs of issuing the
Series 2012 Bonds.
The Series 2012 Bonds maturing on or before October 1, 2022, may not be called for
optional redemption prior to maturity. The Series 2012 Bonds maturing on or after October 1,
2023, are subject to redemption prior to maturity at the option of the Consolidated Government
on or after October 1, 2022, in whole or in part at any time, at the redemption price equal to the
principal amount of the Series 2012 Bonds to be redeemed plus accrued interest on such
redemption date.
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The Series 2012 Bonds maturing on October 1, 2042, are subject to mandatory sinking
fund redemption on October 1, 2040 and on each October 1 thereafter, in accordance with the
Bond Resolution, at a redemption price equal to the principal amount of each Series 2012 Bond
(or portion thereo� to be redeemed plus accrued interest to the date fixed for redemption, in the
following principal amounts and on the dates set forth below (the October 1, 2042 amount to be
paid rather than redeemed):
October 1 of the Year Principal Amount
2040 $14,000,000
2041 14,500,000
2042 15,715,000
Notice of redemption, unless waived, is to be given by first class mail at least 30 days and
not more than 60 days prior to the date fixed for redemption to the registered owner of each
Series 2012 Bond to be redeemed at the address shown on the Bond Register or at such other
address as is furnished in writing by such registered owner to the Bond Registrar. All such
Series 2012 Bonds called for redemption and for the retirement of which funds are duly provided
shall, on the redemption date designated in such notice, become and be due and payable at the
redemption price provided for redemption of such Series 2012 Bonds on such date, and interest
on the Series 2012 Bonds or portions of Series 2012 Bonds so called for redemption shall cease
to accrue, such Series 2012 Bonds or portions of Series 2012 Bonds shall cease to be entitled to
any lien, benefit, or security under the Bond Resolution, and the owners of such Series 2012
Bonds or portions of Series 2012 Bonds shall have no rights in respect thereof except to receive
payment of the redemption price. Any defect in any notice of redemption shall not affect the
validity of proceedings for the redemption of any Series 2012 Bonds.
The Consolidated Government has established a book-entry system of registration for the
Series 2012 Bonds. Except as specifically provided otherwise in the Bond Resolution, an agent
will hold this Bond on behalf of the beneficial owner hereof. By acceptance of a confirmation of
purchase, delivery, or transfer, the beneficial owner of this Bond shall be deemed to have agreed
to such arrangement. While the Series 2012 Bonds are in the book-entry system of registration,
the Bond Resolution provides special provisions relating to the Series 2012 Bonds, which
override certain other provisions of the Bond Resolution. This Bond is transferable by the
registered owner at the principal corporate trust office of the Bond Registrar but only in the
manner, subject to the limitations, and upon payment of the charges provided in the Bond
Resolution and upon surrender of this Bond. Upon such transfer, a new registered Bond or
Bonds of the same series, maturity, interest rate, aggregate principal amount, and tenor, of any
authorized denomination or denominations, and bearing numbers not then outstanding, will be
issued to the transferee in exchange for this Bond. The Series 2012 Bonds are issuable as fully
registered Bonds in the denomination of $5,000 or any integral multiple thereof. The Bond
Registrar is not required to transfer or exchange any Series 2012 Bond after notice calling such
Series 2012 Bond for redemption has been given or during the period of 15 days (whether or not
a business day for the Bond Registrar, but excluding the redemption date and including such 15th
day) immediately preceding the giving of such notice of redemption.
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The Series 2012 Bonds and such revenue bonds of the Consolidated Government as may
in the future be issued on a parity therewith, are equally and ratably secured by pledge of the
"Pledged Revenues" of the water and sewerage system (the "System") of the Consolidated
Government, which are defined in the Bond Resolution to include gross operating revenues of
the System after provision for payment of all reasonable expenses of operation and maintenance
and earnings on investments made with moneys and securities from time to time on deposit in
the funds and accounts established in the Bond Resolution, and on and after the date that the
Prior Lien Bonds (hereafter defined) are no longer outstanding under the Prior Lien Resolution
(hereafter defined), "Pledged Revenues" will include Hedge Receipts and exclude any amounts
required in the Bond Resolution to be set aside pending, or used for, rebate to the United States
government pursuant to Section 148(� of the Internal Revenue Code of 1986, as amended,
including, but not limited to, amounts in the Rebate Fund.
Pursuant to a resolution adopted by the Consolidated Government on October 21, 1996,
as supplemented and amended (as more specifically defined in the Bond Resolution, the "Prior
Lien Resolution"), the Consolidated Government has heretofore authorized, issued and delivered
its (i) $62,880,000 original aggregate principal amount of Richmond County Water and
Sewerage Revenue Refunding and Improvement Bonds, Series 1996A (the "Series 1996A
Bonds") which have been paid in full; (ii) $5,910,000 original aggregate principal amount of
Richmond County Water and Sewerage Revenue Refunding Bonds, Series 1997 (the "Series
1997 Bonds"), which have been paid in full; (iii) $97,080,000 original aggregate principal
amount of Augusta, Georgia Water and Sewerage Revenue Bonds, Series 2000 (the "Series 2000
Bonds") which have been paid in full; (iv) $149,400,000 original aggregate principal amount of
Augusta, Georgia Water and Sewerage Revenue Bonds, Series 2002 (the "Series 2002 Bonds"),
which are currently outstanding in the aggregate principal amount of $95,740,000;
(v) $160,000,000 original aggregate principal amount of Augusta, Georgia Water and Sewerage
Revenue Bonds, Series 2004 (the "Series 2004 Bonds"), currently outstanding in the aggregate
principal amount of $160,000,000; and (vi) $177,010,000 original aggregate principal amount of
Augusta, Georgia Water and Sewerage Revenue Refunding Bonds, Series 2007 (the "Series 2007
Bonds"), which are currently outstanding in the aggregate principal amount of $167,520,000 (the
Series 2004 Bonds and the Series 2007 Bonds that will be outstanding upon the issuance and
delivery of the Series 2012 Bonds are herein referred to as the "Prior Lien Bonds"). The Prior
Lien Bonds are payable solely from, and secured by, a first lien on and pledge of "pledged
revenues" (as defined in the Prior Lien Resolution) of the System. The Consolidated
Government has agreed that it will not issue any additional bonds or obligations of any kind
payable from a lien on net revenues of the System ranking as to such lien on net revenues of the
System created by the Prior Lien Resolution on a parity with the Prior Lien Bonds. So long as
the Prior Lien Bonds remain outstanding, the Series 2012 Bonds and such revenue bonds of the
Consolidated Government as may in the future be issued on a parity therewith will be payable
solely from, and secured by, a second lien on and pledge of "pledged revenues" (as defined in
the Prior Lien Resolution) of the System.
THIS BOND SHALL NEVER CONSTITUTE AN INDEBTEDNESS OR GENERAL
OBLIGATION OF THE STATE OF GEORGIA, THE CONSOLIDATED GOVERNMENT,
OR ANY OTHER POLITICAL SUBDIVISION OF THE STATE OF GEORGIA, WITHIN
THE MEANING OF ANY CONSTITUTIONAL PROVISION OR STATUTORY
LIMITATION WHATSOEVER, NOR A PLEDGE OF THE FAITH AND CREDIT OR
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TAXING POWER OF ANY OF THE FOREGOING, NOR SHALL ANY OF THE
FOREGOING BE SUBJECT TO ANY PECUNIARY LIABILITY HEREON. THIS BOND
SHALL NOT BE PAYABLE FROM NOR A CHARGE UPON ANY FUNDS OTHER THAN
THE REVENUES PLEDGED TO THE PAYMENT HEREOF AND SHALL BE A LIMITED
OR SPECIAL OBLIGATION OF THE CONSOLIDATED GOVERNMENT PAYABLE
SOLELY FROM THE FUNDS PROVIDED THEREFOR IN THE BOND RESOLUTION. NO
OWNER OF THIS BOND SHALL EVER HAVE THE RIGHT TO COMPEL THE EXERCISE
OF THE TAXING POWER OF THE STATE OF GEORGIA, THE CONSOLIDATED
GOVERNMENT, OR ANY OTHER POLITICAL SUBDIVISION OF THE STATE OF
GEORGIA TO PAY THE PRINCIPAL OF THIS BOND OR THE INTEREST OR ANY
PREMIUM HEREON, OR TO ENFORCE PAYMENT HEREOF AGAINST ANY PROPERTY
OF THE FOREGOING, NOR SHALL THIS BOND CONSTITUTE A CHARGE, LIEN, OR
ENCUMBRANCE, LEGAL OR EQUITABLE, UPON ANY PROPERTY OF THE
FOREGOING. NEITHER THE MEMBERS OF THE GOVERNING BODY OF THE
CONSOLIDATED GOVERNMENT NOR ANY PERSON EXECUTING THIS BOND SHALL
BE LIABLE PERSONALLY ON THIS BOND BY REASON OF THE ISSUANCE HEREOF.
The Consolidated Government has covenanted and hereby covenants and agrees while
any Series 2012 Bonds are outstanding and unpaid to prescribe, fix, maintain, and collect rates,
fees, and other charges for the services, facilities, and commodities furnished by the System fully
sufficient at all times to: (i) provide for 100% of the expenses of operation and maintenance of
the System and for the accumulation in the Revenue Fund (as defined in the Bond Resolution) of
a reasonable reserve therefor, and (ii) produce net operating revenues in each Fiscal Year (as
defined in the Bond Resolution) that, together with certain investment earnings, will: (a) equal at
least 110% of the debt service requirement on all Prior Lien Bonds and Senior Bonds (as defined
in the Bond Resolution) then outstanding and 100% of the debt service requirement on all
Subordinate Bonds (as defined in the Bond Resolution) then outstanding, (b) enable the
Consolidated Government to make all required payments into the debt service reserve account
under the Prior Lien Resolution, the Debt Service Reserve Account and the Rebate Fund and to
any Financial Facility Issuer, any Reserve Account Credit Facility Provider, and any Qualified
Hedge Provider (as each is defined in the Bond Resolution), (c) enable the Consolidated
Government to accumulate an amount to be held in the Utility General Fund (as defined in the
Bond Resolution), which in the judgment of the Consolidated Government is adequate to meet
the costs of major renewals, replacements, repairs, additions, betterments, and improvements to
the System, necessary to keep the same in good operating condition or as is required by any
governmental agency having jurisdiction over the System, and (d) remedy all deficiencies in
required payments into any of the funds and accounts mentioned in the Bond Resolution from
prior Fiscal Years.
The Bond Resolution contains a more particular statement of the covenants and
provisions securing the Series 2012 Bonds, the conditions under which the owner of this Bond
may enforce covenants (other than the covenant to pay principal of and interest on this Bond
when due from the sources provided, the right to enforce which is unconditional), the conditions
upon which additional revenue bonds may be issued on a parity or achieve parity status with this
Bond under the Bond Resolution, and the conditions upon which the Bond Resolution may be
amended with the consent of the owners of a majority in aggregate principal amount of the
Bonds (as defined in the Bond Resolution) of each class (senior and subordinate) outstanding or
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the issuer of any Credit Facility (as defined in the Bond Resolution), if any, of such Bonds.
Upon the occurrence of an Event of Default under the Bond Resolution, the owner of this Bond
shall be entitled to the remedies provided by the Bond Resolution and the Revenue Bond Law.
It is hereby certified, recited, and declared that all acts, conditions, and things required to
exist, happen, and be performed precedent to and in the issuance of this Bond do exist, have
happened, and have been performed in due time, form, and manner as required by law.
This Bond shall not be entitled to any security or benefit under the Bond Resolution or
become valid or obligatory for any purpose until the certificate of authentication hereon shall
have been duly executed by the Bond Registrar.
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IN WITNESS WHEREOF, the Consolidated Government has caused this Bond to be
executed by the manual signature of its Mayor and has caused the official seal of the
Consolidated Government to be impressed on this Bond and attested by the manual signature of
its Clerk.
AUGUSTA, GEORGIA
(SEAL) By:
Mayor
Attest:
Clerk
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BOND REGISTRAR'S CERTIFICATE OF AUTHENTICATION
This Bond is one of the bonds of the series described in the within mentioned Bond
Resolution.
U.S. BANK NATIONAL ASSOCIATION,
as Bond Registrar
By:
Authorized Signatory
Date of Registration
and Authentication:
,
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VALIDATION CERTIFICATE
STATE OF GEORGIA )
)
RICHMOND COUNTY )
The undersigned Clerk of the Superior Court of Richmond County, State of Georgia,
DOES HEREBY CERTIFY that this Bond and the security therefor was validated and
confirmed by judgment of the Superior Court of Richmond County, on the day of
November, 2012, that no intervention or objection was filed opposing the validation of this Bond
and the security therefor, and that no appeal of such judgment of validation has been taken.
IN WITNESS WHEREOF, I have hereunto set my hand and have impressed hereon the
official seal of the Superior Court of Richmond County, Georgia.
(SEAL)
Clerk, Superior Court of Richmond County,
Georgia
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The following abbreviations, when used in the inscription on this Bond or in the
assignment below, shall be construed as though they were written out in full according to
applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common and not as community property
UNIF TRANS
MIN ACT - Custodian
(Custodian) (Minor)
under Uniform Transfers to Minors Act
(State)
Additional abbreviations may be used although not in the above list.
[FORM OF ASSIGNMENT]
ASSIGNMENT AND TRANSFER
FOR VALUE RECEIVED, the undersigned sells, assigns, and transfers unto
(Name and Address of Assignee)
(Insert Social Security or Taxpayer
Identification Number of Assignee)
the within revenue bond of the Augusta, Georgia and does hereby irrevocably constitute and
appoint attorney to transfer the Bond on the books kept for
registration thereof with full power of substitution in the premises.
Dated:
(Signature Guaranteed) Registered Owner
Notice: Signature(s) must be guaranteed by Notice: The signature(s) on this assignment
an eligible guarantor institution (such as must correspond with the name as it appears on
banks, stockbrokers, savings and loan the face of the within bond in every particular
associations, and credit unions) with without alteration or enlaxgement or any
membership in an approved Signature change whatsoever.
Guarantee Medallion Program pursuant to
S.E.C. Rule 17Ad-15.
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EXHIBIT B
POLICY WITH RESPECT TO TAX-EXEMPT DEBT
ISSUED BY OR FOR THE BENEFIT OF AUGUSTA, GEORGIA
OBJECTIVE
To comply with all applicable federal and state laws, rules and regulations related to the issuance
of tax-exempt debt (the "Debt").
SCOPE
This policy (the "Policy") applies to all Debt issued by or for the benefit of Augusta, Georgia
(the "Consolidated Government") and its related entities.
POLICY
The Consolidated Government shall comply with all federal and state laws, rules and regulations
related to the issuance of Debt.
RESPONSIBILITY
The Consolidated Government shall be administratively responsible for the Policy. The
Assistant Director of Finance shall be responsible for reviewing the requirements and
responsibilities of the Consolidated Government under the Policy with bond counsel on or before
the closing date of any Debt issued by the Consolidated Government.
DISSEMINATION AND TRAINING
The Policy shall be disseminated to all personnel in the finance department and to the auditor.
The Assistant Director of Finance shall provide appropriate training to all personnel directly
involved in the administration of tax-exempt debt to ensure they comply with the provisions of
the Policy. The Assistant Director of Finance shall consult as appropriate with qualified
attorneys with respect to the content of such training.
REVIEW
The Policy shall be reviewed and revised annually by the Assistant Director of Finance and
redistributed to all personnel in the finance department and to the auditor.
The Assistant Director of Finance shall annually conduct a due diligence review of all Debt
currently outstanding to ensure proper compliance with each of the provisions of the Policy. If
the Assistant Director of Finance discovers non-compliance with any provisions of the Policy,
steps necessary to correct the noncompliance will be taken within ten (10) business days of the
conclusion of the annual due diligence review. Records of all corrective action taken shall be
retained in accordance with the Policy.
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PROVISIONS
Record Keeping
All records relating to the Debt needed to comply with Section 6001 of the Internal Revenue
Code of 1986, as amended (the "Code") shall be maintained. These records shall be kept in
paper or electronic form and shall include, among other things, (i) basic records relating to the
transaction (including the bond documents, the opinion of bond counsel, etc.), (ii) documents
evidencing the expenditure of the proceeds of the Debt, (iii) documentation evidencing the use of
Debt-financed property by public and private entities (e.g., copies of management contracts,
leases and research agreements) and (iv) documentation pertaining to any investment of Debt
proceeds (including the purchase and sale of securities, SLG subscriptions, yield calculations for
each class of investments, actual investment income received from the investment of the
proceeds of the Debt, guaranteed investment contracts and rebate calculations. Such records
must be maintained as long as the Debt is outstanding, plus three years after the final payment or
redemption date of the respective Debt.
Use of Proceeds
A list of all property financed with the proceeds of the Debt shall be created and maintained.
The use of such property shall be monitored to ensure that such use does not constitute "private
business use" within the meaning of the Code. Without limiting the foregoing, each contract,
including but not limited to management contracts and leases, relating to such property shall be
reviewed by legal counsel prior to the execution of such contract. The list of property shall be
reviewed at least annually to ensure that none of the property has been sold.
Remedial Action
In the event that property financed with the proceeds of the Debt is used in a manner that
constitutes "private business use" or the property is sold, the remediation provisions of Treasury
Regulation § 1.141-12 shall be carried out in consultation with bond counsel.
Yield Restriction
If bond counsel advises that a fund or account needs to be yield restricted (i.e., not invested at a
yield in excess of the Debt), the moneys on deposit in such fund or account shall be invested in
United States Treasury Obligations — State and Local Government Series, appropriate "yield
reduction payments" shall be made if permitted by the Code or the Assistant Director of Finance
shall establish other procedures to ensure that such fund or account is yield restricted.
Rebate
At the time the Debt is issued, the Assistant Director of Finance shall determine if he or she
reasonably expects that one of the arbitrage rebate exceptions will be satisfied. If the arbitrage
rebate exception relates to the time period over which the proceeds of the Debt are spent, the
Assistant Director of Finance shall verify that the appropriate expenditures have been made at
each milestone. If one of the milestones is not satisfied or the Assistant Director of Finance does
not reasonably expect that one of the arbitrage rebate exceptions will be satisfied, an outside
arbitrage rebate consultant shall be retained unless the Assistant Director of Finance has
determined that positive arbitrage will not be earned.
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EXHIBIT C
NOTICE OF CALL FOR REDEMPTION
AUGUSTA, GEORGIA
WATER AND SEWERAGE REVENUE BONDS
SERIES 2002
NOTICE is hereby given to the owners of the following described Augusta, Georgia
revenue bonds, that said bonds have been called for redemption on November 16, 2012, said bonds
being in the aggregate principal amount of $95,740,000 known as "Augusta, Georgia Water and
Sewerage Revenue Bonds, Series 2002," dated June 1, 2002, bearing interest at the rate per annum
set forth below opposite the principal maturity, all interest payable on April 1 and October 1 in each
year, and the principal maturing on October 1 in the years and the amounts set forth below:
Year Amount Rate CUSIP
2018 $ 4,180,000 4.50%
2027 29,695,000 5.00
2032 61,865,000 5.00
Funds for the redemption and payment of said bonds and the interest then due thereon to
November 16, 2012 will be available at U.S. Bank National Association, on November 16, 2012,
and said above-described bonds should be presented to said bank for redemption and payment on
said date. Interest on the above-described bonds designated for redemption shall cease to accrue
after the redemption date.
This notice is given under and pursuant to a Master Bond Resolution of the Augusta-
Richmond County Commission adopted on October 16, 2012.
U.S. BANK NATIONAL ASSOCIATION,
as Paying Agent and Bond Registrar
By:
Authorized OfFicer