RESOLUTION NO 90-05
APPROVING AN INTEREST RATE MANAGEMENT PLAN; AUTHORIZING THE FORM OF INTEREST RATE MANAGEMENT AGREEMENTS RELATING TO ITS SEWER REVENUE BONDS, SERIES OF 1998, AUTHORIZING THE PROPER OFFICERS OF THE AUTHORITY TO EXECUTE AND DELIVER THE INTEREST RATE MANAGEMENT AGREEMENTS; COVENANTING TO PAY THE PERIODIC SCHEDULED PAYMENTS DUE FROM THE AUTHORITY UNDER THE INTEREST RATE MANAGEMENT AGREEMENT; RETAINING AN INDEPENDENT FINANCIAL ADVISOR; AND AUTHORIZING THE EXECUTION AND DELIVERY OF OTHER NECESSARY DOCUMENTS AND THE TAKING OF OTHER NECESSARY ACTIONS IN CONNECTION WITH THE FOREGOING.
WHEREAS, the Authority desires to confirm the appointment of Municipal Government Investors Corporation (“mGIC”) as its independent financial advisor (the “Financial Advisor”); said Financial Advisor has prepared an Interest Rate Management Plan (the “Plan”) in order to better manage the Authority’s interest costs relating to the $30,210,000 notional principal amount of its Sewer Revenue Bonds, Series of 1998, (the “Bonds”); and
WHEREAS, the Plan sets forth an analysis of the risks associated with entering into a Swap Agreement, as hereinafter described, as well as criteria for the selection of a Counterparty and the Authority has been advised that it is in its best financial interest to enter into the Swap Agreement that meets the parameters set forth in the Plan; and
WHEREAS, the Plan proposes that the Authority enter into a confirmation relating to an Interest Rate Swap Agreement (collectively, the “Swap Agreement” or sometimes “Swap Agreements”) with Wachovia Bank, N.A., as a Counterparty which meets the criteria of the Plan (the “Counterparty”) relating to the Bonds, which Swap Agreement constitutes a Qualified Interest Rate Management Agreement.
WHEREAS, the Authority intends to enter into the Swap Agreement with the Counterparty, pursuant to an ISDA Master Agreement, as supplemented by the Schedule and the Basis Swap Terms and Conditions, a Credit Support Annex and Confirmation thereto; and
WHEREAS, the Authority desires to approve the Plan, authorize the execution and delivery of the Swap Agreement and such other documents as shall be necessary or appropriate in connection therewith.
THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE
1. Appointment of Financial Advisor; Adoption of the Interest Rate Management Plan. The Authority hereby appoints mGIC as its Financial Advisor and hereby adopts and approves the Interest Rate Management Plan prepared and recommended by the Financial Advisor, which is attached hereto as Appendix I, subject to such modifications from time to time as the Chairman of the Board of Directors, the Financial Advisor and Solicitor to the Authority shall approve. The Financial Advisor is hereby determined to be independent of the other parties to any transaction that may occur pursuant to the Interest Rate Management Plan. The Authority further appoints HT Capital Markets A Division of Northeast Securities, Inc. as its Swap Structuring Agent
2. Selection of the Counterparty. The Authority hereby determines that its process for the selection of a Counterparty, in order to serve its best financial interest, and to obtain financial terms and conditions which, in the opinion of the Financial Advisor, are fair and reasonable, is to award the Swap Agreement to the Counterparty by a private sale by negotiation. The Financial Advisor is authorized and directed to negotiate with the Counterparty, in order to obtain the Swap Agreement having the form, and containing all the terms and provisions set forth in Appendix II hereof.
3. Authorization of the Swap Agreement and Basis Swap Terms and Conditions. In order to manage interest rate risks or costs to the Authority relative to the Bonds, the proper officers of the Authority, as set forth in paragraph 4 below, are hereby authorized to execute and deliver the Swap Agreement, in substantially the form attached hereto as Appendix II, which is hereby incorporated by reference. The substantial form of the Swap Agreements is hereby approved; provided that: (i) the notional amount subject to the Swap Agreement shall not exceed the outstanding principal amount of the Bonds to which it relates, (ii) the term of the Swap Agreement shall end no later than the latest maturity date for the Bonds, (iii) the Swap Agreement shall obligate the Counterparty to pay an amount equal to the notional amount of the Bonds multiplied by 64% of the one-month London Interbank Offered Rates ("LIBOR") plus 30 basis points (.003) times the respective notional amount, as set forth in the Plan and in the form of the Swap Agreement attached hereto, at the times and in the manner set forth in the Swap Agreement, (iv) the Swap Agreement shall obligate the Authority to pay an amount equal to the average monthly BMA (Bond Market Association) Municipal Swap Index multiplied by the respective notional amount of the Bonds at the times and in the manner set forth in the Swap Agreement, and (v) both parties may be required to make certain additional payments to the extent required under the Swap Agreement, however, periodic scheduled payments payable by the Authority pursuant to the Swap Agreement shall be senior in right and priority of payment to termination payments which may become due under the Swap Agreement.
The Authority hereby determines that the Swap Agreement is in the Authority's best financial interest and that it contains financial terms and conditions which the Authority has been advised by the Financial Advisor are fair and reasonable.
In order to manage interest rate risks or costs to the Authority relative to the Bonds and to provide for the provisions that are required to be in the Swap Agreement, the Authority hereby approves the Basis Swap Terms and Conditions in substantially the form attached hereto as Appendix III, which is hereby incorporated by reference.
4. Execution and Delivery of Documents. Subject to receipt of an upfront payment (“Premium”) of at least $700,000 (net of projected costs from the Counterparty upon execution of the Swap Agreements, the Chairman or Vice Chairman of the Authority is hereby authorized to execute and deliver, in the name of the Authority and on its behalf, the following documents and to approve the final form and substance thereof, and any amendments or supplements thereto, and to approve the exact notional amount, term and interest rates under the Swap Agreements (subject to paragraph 3 above), such approvals to be conclusively evidenced by the execution thereof (including such amendments as may be required to assure compliance with the law), and the Secretary is hereby authorized to affix to all of the following documents the seal of the Authority and to attest to the same, as necessary:
(a) The Swap Agreement;
(b) Such other documents, agreements, instruments and certifications, as the executing officers determine to be reasonable and appropriate to provide for the Swap Agreement as authorized by this Resolution.
Copies of the foregoing documents, together with the other documents relating to the transactions authorized hereby, in final form as executed and delivered by the parties thereof, shall be filed in the official records of the Authority.
The General Manager of the Authority is hereby authorized to accept the final pricing of the Swap Agreements subject to the condition that the total Premium for both Swap Agreements is at least $700,000 and the General Manager is further authorized to execute any documents evidencing such acceptance.
5. Payments Under the Swap Agreements
Payment obligations (except any termination payments) of the Authority under the Swap Agreement will be general obligations of the Authority. The Auuthority hereby covenants that it shall include the amount of scheduled payments (except any termination payments) due thereunder for each fiscal year in which such sums are payable in its budget for that year; shall appropriate such amounts from its general revenues to the payment of such scheduled payments; and shall duly and punctually pay or cause to be paid the scheduled payments (except any termination payments) on the dates and places and in the manner stated in the Swap Agreement according to the true intent and meaning thereof, and for such proper budgeting, appropriation and payment, the general unsecured, unenhanced obligation of the Authority is hereby irrevocably pledged.
The Authority hereby covenants that it shall include any termination payment due under the Swap Agreement, for which revenues are not otherwise available in the fiscal year in which such termination payment is due, in its budget to be adopted for the fiscal year immediately following the fiscal year in which such termination payment is due, and that it shall appropriate and pay such termination payment from its general revenues promptly, when first available. Nonetheless, to the extent revenues are available for the payment, in whole or part, of a termination payment in the fiscal year in which such termination payment is due, the Authority shall pay such termination payment promptly from its general revenues.
The Authority covenants with the Counterparty, and proper officers of the Authority are hereby authorized and directed, to withdraw from the General Fund (or from the Sinking Fund hereinafter authorized) and pay to the Counterparty on or before the appropriate payment dates set forth in the Swap Agreement (or as and when otherwise due by its terms and in order to provide same-day, available funds for timely payment), amounts required to pay the periodic scheduled payments and any other amounts due and owing under the Swap Agreement.
In the event the Authority determines the same to be necessary or beneficial, and with the consent of the Counterparty, the Authority hereby authorizes to be established, a Sinking Fund for the payment of the periodic scheduled payments and any other amounts due and owing under the Swap Agreements, with a paying agent, to be named, and further covenants to maintain such Sinking Fund until such obligations are paid in full. Proper officers of the Authority are hereby authorized and directed to contract with any such paying agent for its services in such capacity.
6. Dating of Swap Agreement. The Swap Agreement and other documents are presently expected to be dated as of their date of execution within the next sixty (60) days. The Chairman, Vice Chairman and Secretary (for attestation purposes) of the Board of Directors are hereby authorized to approve at a later date for the Swap Agreement and all such other documents if the award of the Swap Agreement is delayed, due to market conditions or other proper cause, such approval to be conclusively evidenced by the execution of the Swap Agreement and such other documents by the Chairman or Vice Chairman and Secretary (for attestation purposes) of the Board of Directors.
7. Binding Effect to Covenants and Agreements. All covenants, obligations and agreements of the Authority set forth in this Resolution and in the documents authorized hereby shall be deemed to be the covenants, obligations and agreements of the Authority to the fullest extent authorized or permitted by law, and all such covenants, obligations and agreements shall be binding upon the Authority and its successors from time to time and upon any board or body to which any powers or duties affecting the same shall be transferred by or in accordance with law. Except as otherwise provided in this Resolution, all rights, powers and privileges conferred and duties and liabilities imposed upon the Authority or the members thereof by the provisions of this Resolution or the documents authorized hereby shall be exercised or performed by such members, officers or other representatives of the Authority as may be required or permitted by law to exercise or perform the same. No covenant, obligation or agreement herein contained in any documents authorized hereby shall be deemed to be a covenant, obligation or agreement of any member, officer, agent or employee of the Authority in his or her individual capacity and neither the members of the Authority nor any officer executing the Swap Agreements or any other document authorized by this Resolution shall be liable personally thereunder or be subject to any personal liability or accountability by reason of the execution and delivery thereof.
8. Settlement; Settlement Fund. If necessary or beneficial, the proper officers of the Authority are hereby authorized and directed to establish a one-day demand deposit account, with an authorized depository, to facilitate the settlement of the Swap Agreements, designated the “Settlement Fund”. The Premium shall be deposited into the Settlement Fund immediately upon receipt and the proper officers of the Authority are hereby authorized and directed to transfer and invest funds, to pay all necessary, usual and proper costs of settlement of the Swap Agreements, to execute and deliver such documents and to do all such other acts, upon advice of the Financial Advisor, Bond Counsel or Solicitor, as are reasonable and necessary to ensure a satisfactory settlement of the Swap Agreements and a proper application of the Premium.
9. Counsel. Wayne D. Gerhold, Esq. is hereby appointed Bond Counsel with respect to the matters set forth in this Resolution and is hereby directed to represent the Authority’s interests in these matters.
10. Further Action. Any member of the Authority is hereby authorized and directed to execute such further documents and do such further things as may be necessary or proper to carry out the intent and purpose of this Resolution or any document herein authorized.
11. Repeal of Inconsistent Resolutions. All prior resolutions or parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency.
12. Resolution A Contract. This Resolution shall constitute a contract with the Counterparty.
13. Statutory References. All references to specific provisions of statutory law herein contained may be read and interpreted by reference to amended, successor or replacement laws, but only to the extent consistent with the intent and clear meaning of this Resolution. All inconsistencies shall be resolved with recognition of, and in favor of, the rights of the Counterparty whose rights shall not be impaired.
14. Benefited Parties. Nothing in this Resolution, expressed or implied, is intended or shall be construed to confer upon, or to give to, any person or corporation, other than the Authority, the Paying Agent, if any, and the Counterparty, any right, remedy or claim under or by reason of this Resolution or any covenant, condition or stipulation hereof; and all of the covenants, stipulations, promises and agreements in this Resolution contained by and on behalf of the Authority shall be for the sole and exclusive benefit of such persons.
15. Severability. If any one or more of the covenants or agreements provided in this Resolution on the part of the Authority to be performed shall for any reason be held to be illegal or invalid or otherwise contrary to law, then such covenant or covenants or agreement or agreements shall be null and void and shall be deemed separable from the remaining covenants and agreements, but shall in no way otherwise affect the validity of this Resolution.
16. Counterparts. This Resolution may be executed in multiple counterparts, each of which shall be regarded for all purposes as an original; but such counterparts shall constitute but one and the same instrument.
17. Effective Date. This Resolution shall take effect immediately.
Adopted: April 25, 2005
ATTEST: Leah Mangino, Secretary
INTEREST RATE MANAGEMENT PLAN
FORM OF INTEREST RATE SWAP AGREEMENT
BASIC SWAP TERMS AND CONDITIONS
C E R T I F I C A T E
I, the undersigned, a Secretary of the West Mifflin Sanitary Sewer Municipal Authority, hereby certify that the foregoing and attached is a true copy of a Resolution which was duly adopted by the affirmative vote of a majority of all the members of the Board of Directors thereof at a meeting held on the date of the execution thereof; that due notice of such meeting was given and the meeting was at all times open to the public; that such Resolution was duly recorded; that this Resolution is still in full force and effect as of the date hereof; that the vote upon said Resolution was called and duly recorded upon the minutes of the Board of Directors; and that the members of the Board of Directors voted in the manner following:
Yes No Abstain Absent
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WITNESS my hand and seal of the West Mifflin Sanitary Sewer Municipal Authority this 25th day of April, 2005.