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a rate and amount of ad valorem tax that will be sufficient to raise and produce the money required <br />to pay the interest on the Certificates as such interest comes due, and to provide and maintain a <br />sinking fund adequate to pay the principal of the Certificates as such principal matures (but never <br />less than 2% of the original amount of the Certificates as a sinking fund each year); and said tax <br />shall be based on the latest approved tax rolls of the Issuer, with full allowances being made for tax <br />delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby <br />levied, and is hereby ordered to be levied, against all taxable property in the Issuer, for each year <br />while any of the Certificates are outstanding and unpaid, and said tax shall be assessed and collected <br />each such year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad <br />valorem taxes sufficient to provide for the payment of the interest on and principal of the <br />Certificates, as such interest comes due and such principal matures, are hereby pledged for such <br />payment, within the limit prescribed by law. <br />Section 6. SURPLUS REVENUES. The Certificates are additionally secured by and <br />payable from a pledge of the revenues of the Issuer's combined Waterworks and Sewer Systems <br />remaining after payment of all operation and maintenance expenses thereof (the "Net Revenues"), <br />and all debt service, reserve and other requirements in connection with all of the Issuer's revenue <br />obligations (now or hereafter outstanding) that are payable from all or part of the Net Revenues of <br />the Issuer's Waterworks and Sewer Systems, constituting "Surplus Revenues." The Issuer shall <br />deposit such Surplus Revenues to the credit of the Interest and Sinking Fund created pursuant to <br />Section 5, to the extent necessary to pay the principal and interest on the Certificates. <br />Notwithstanding the requirements of Section 5, if Surplus Revenues are actually on deposit in the <br />Interest and Sinking Fund in advance of the time when ad valorem taxes are scheduled to be levied <br />for any year, then the amount of taxes that otherwise would have been required to be levied pursuant <br />to Section 5 may be reduced to the extent and by the amount of the Surplus Revenues then on <br />deposit in the Interest and Sinking Fund. The Issuer reserves the right, without condition or <br />limitation, to issue other obligations secured in whole or in part by a parity lien on and pledge of the <br />Surplus Revenues, for any purpose permitted by law. <br />Section 7. DEFEASANCE OF CERTIFICATES. (a) Any Certificate and the interest <br />thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Certificate") <br />within the meaning of this Ordinance, except to the extent provided in subsection (d) of this Section <br />7, when payment of the principal of such Certificate, plus interest thereon to the due date (whether <br />such due date be by reason of maturity or otherwise) either (i) shall have been made or caused to be <br />made in accordance with the terms thereof, or (ii) shall have been provided for on or before such due <br />date by irrevocably depositing with or making available to the Paying Agent/Registrar in accordance <br />with an escrow agreement or other instrument (the "Future Escrow Agreement") for such payment <br />(1) lawful money of the United States of America sufficient to make such payment or (2) Defeasance <br />Securities that mature as to principal and interest in such amounts and at such times as will insure <br />the availability, without reinvestment, of sufficient money to provide for such payment, and when <br />proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment <br />of its services until all Defeased Certificates shall have become due and payable. At such time as <br />a Certificate shall be deemed to be a Defeased Certificate hereunder, as aforesaid, such Certificate <br />and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, <br />14 <br />