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HomeMy WebLinkAboutOrd.1838.12-04-1995DA ORDINANCE NO.. OF THE CITY OF CAPE GIRARDEAU, MISSOURI PASSED DECEMBER 0 4, 1995 AUTHORIZING 0 9 095 000 WATERWORKS SYSTEM REFUNDING REVENUE BONDS SERIES 1995 ORDINANCE NO. INDEX PAGE Title.................... I I ................... Recitals........................................ ARTICLE I DEFINITIONS Section 101. Definitions of Words and Terms ................................ 2 ARTICLE 11 AUTHORIZATION OF BONDS Section 201. Authorization of Bonds ...................................... 7 Section 202. Description of Bonds ....................................... 7 Section 203. Designation of Paying Agent .................................. 8 Section 204. Method and Place of Payment of Bonds ........................... 8 Section 205. Registration, Transfer and Exchange of Bonds ...................... 9 Section 206. Execution, Authentication and Delivery of Bonds .................... 10 Section 207. Mutilated, Destroyed, Lost and Stolen Bonds ....................... 10 Section 208. Cancellation and Destruction of Bonds Upon Payment ................. 11 Section 209. Preliminary and Final Official Statement .......................... I I Section 210. Sale of Bonds ............................................ 12 Section 211. Authorization of Escrow Agreement ............................. 12 Section 212. Continuing Disclosure ...................................... 12 Section 213, Securities Depository ....................................... 12 ARTICLE III REDEMPTION OF BONDS Section 301. Redemption of Bonds ..................................... 14 Section 302. Selection of Bonds to Be Redeemed ..................... 15 Section 303. Notice and Effect of Call for Redemption .......................... 15 (i) ARTICLE IV SECURITY FOR BONDS Section 401. Security for Bonds ......................................... 17 ARTICLE V CREATION AND RATIFICATION OF FUNDS AND ACCOUNTS; DEPOSIT AND APPLICATION OF BOND PROCEEDS AND OTHER MONEYS Section 501. Establishment of Funds and Accounts ............................ 18 Section 502. Deposit of Bond Proceeds and Other Moneys ....................... 18 Section 503. Application of Moneys in the Escrow Fund ........................ 19 Section 504. Verification of Certified Public Accountant; 23 Section 605. Discharge of Refunded Bonds ............................ 19 Section 505. Redemption of Refunded Bonds ................................ 19 ARTICLE VI APPLICATION OF REVENUES Section 601. Revenue Fund ......................................... 20 Section 602. Application of Moneys in Funds and Accounts ...................... 20 Section 603. Transfer of Funds to Paying Agent .............................. 23 Section 604. Payments Due on Saturdays, Sundays and Holidays .................. 23 Section 605. Nonpresentment of Bonds .................................... 23 Section 606. Application of Moneys in the Rebate Fund ......................... 23 Section 607. Payments Under the Bond Insurance Policy ........................ 24 Section 608. Bond Insurer Deemed Owner ................................. 25 ARTICLE VII DEPOSIT AND INVESTMENT OF MONEYS Section 701. Deposit and Investment of Moneys .............................. 25 ARTICLE VIII GENERAL COVENANTS AND PROVISIONS Section 801. Efficient and Economical Operation ............................. 26 Section 802. Rate Covenant ........................................... 26 Section 803, Reasonable Charges for all Services ............................. 26 Section 804. Restrictions on Mortgage or Sale of System ........................ 26 BILLNO. 95-308 ORDINANCE NO.1 Z).3`' AN ORDINANCE AUTHORIZING THE ISSUANCE OF $9,095,000 PRINCIPAL AMOUNT OF WATERWORKS SYSTEM REFUNDING REVENUE BONDS, SERIES 1995, OF THE CITY OF CAPE GIRARDEAU, MISSOURI; PRESCRIBING THE FORM AND DETAILS OF SAID BONDS AND THE COVENANTS AND AGREEMENTS TO PROVIDE FOR THE PAYMENT AND SECURITY THEREOF; AND AUTHORIZING CERTAIN ACTIONS AND DOCUMENTS AND PRESCRIBING OTHER MATTERS RELATING THERETO. WHEREAS, the City of Cape Girardeau, Missouri (the "City"), is a home rule charter city and political subdivision duly organized and existing under the laws of the State of Missouri, and pursuant to Section 91.010 of the Revised Statutes of Missouri, as amended (the "Act"), now owns and operates a revenue producing waterworks system serving the City and its inhabitants and others within its service area (the "System," as hereinafter more fully defined); and WHEREAS, the City has heretofore issued and has outstanding the following series of revenue bonds payable out of the revenues derived from the operation of the System: Series of Bonds Date of Bonds Amount Issued Amount Outstandine Waterworks System Revenue Bonds, 04/15/92 $11,840,000 $11,700,000 Series 1992 WHEREAS, the City desires to advance refund $8,090,000 principal amount of the Series 1992 Bonds maturing in the year 2006 and thereafter, and is authorized under the provisions of Section 108.140(2) of the Revised Statutes of Missouri, as amended (the "Refunding Law"), to issue and sell refunding revenue bonds for the purpose of refunding, in whole or in part, its valid outstanding revenue bonds, which refunding revenue bonds may be payable from the same sources as were pledged to the payment of the bonds refunded; and WHEREAS, the City does not have outstanding any bonds or other obligations payable from the revenues derived from the operation of the System; and WHEREAS, it is hereby found and determined that it is necessary and advisable and in the best interest of the City and of its inhabitants at this time to authorize the issuance and delivery of revenue bonds pursuant to the Refunding Law and the Act as herein provided to provide funds for such purpose; NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF CAPE GIRARDEAU, MISSOURI, AS FOLLOWS: ARTICLE I DEFINITIONS Section 101. Definitions of Words and Terms. In addition to words and terms defined elsewhere herein, the following capitalized words and terms as used in this Ordinance shall have the following meanings: "Act" means Section 91.010 of the Revised Statutes of Missouri, as amended. "Arbitrage Instructions" means the Arbitrage Instructions attached as Exhibit A to the City's Arbitrage Certificate, as the same may be amended or supplemented in accordance with the provisions thereof. "Bond Counsel" means Gilmore & Bell, P.C., St. Louis, Missouri, or other attorney or firm of attorneys with a nationally recognized standing in the field of municipal bond financing selected by the City. "Bond Insurance Policy" means the municipal bond new issue insurance policy issued by the Bond Insurer that guarantees payment when due of the principal of and interest on the Bonds. "Bond Insurer" means Financial Guaranty Insurance Company, a New York stock insurance company, or any successor thereto. "Bond Payment Date" means any date on which principal of or interest on any Bond is payable at the Maturity thereof or on any Interest Payment Date. "Bond Register" means the books for the registration, transfer and exchange of Bonds kept at the office of the Paying Agent. "Bondowner" or "Registered Owner" when used with respect to any Bond means the Person in whose name such Bond is registered on the Bond Register. "Bonds" means the Waterworks System Refunding Revenue Bonds, Series 1995, of the City, in the aggregate principal amount of $9,095,000, authorized and issued pursuant to this Ordinance. "Business Day" means a day other than a Saturday, Sunday or holiday on which the Paying Agent is scheduled in the normal course of its operations to be open to the public for conduct of its banking operations. "City" means the City of Cape Girardeau, Missouri, and any successors or assigns. "Code" means the Internal Revenue Code of 1986, as amended, and the applicable regulations of the Treasury Department proposed or promulgated thereunder. "Consultant" means an independent engineer or engineering firm having a favorable reputation for skill and experience in the construction, financing and operation of public utilities and the preparation of management studies and financial feasibility studies in connection therewith, selected by the City for the purpose of carrying out the duties imposed on the Consultant by this Ordinance. -2- "Costs of Issuance Account" means the account by that name created by Section 501 hereof. "Debt Service Account" means the account by that name created by Section 501 hereof. "Debt Service Requirements" means the aggregate principal payments (whether at maturity or pursuant to scheduled mandatory sinking fund redemption requirements) and interest payments on all System Revenue Bonds for the period of time for which calculated; provided, however, that for purposes of calculating such amount, principal and interest shall be excluded from the determination of Debt Service Requirements to the extent that such principal or interest is payable from amounts deposited in trust, escrowed or otherwise set aside for the payment thereof with the Paying Agent or other commercial bank or trust company located in the State of Missouri and having full trust powers. "Debt Service Reserve Account" means the account by that name ratified and confirmed by Section 501 hereof. "Debt Service Reserve Requirement" means, with respect to the Bonds and the outstanding Series 1992 Bonds, the sum of $1,115,000, and (b) with respect to any additional Parity Bonds issued pursuant to Section 902 hereof, an amount equal to the least of (1) 10% of the stated principal amount of the bonds, (2) the maximum Debt Service Requirements for the bonds during any fiscal year or (3) 125 % of the average annual Debt Service Requirements for the bonds over the term of the bonds. If the aggregate initial offering price of the Bonds to the public is less than 98 % or more than 102 % of par, such offering price shall be used in clause (1) in lieu of the stated principal amount. "Defaulted Interest" means interest on any Bond which is payable but not paid on any Interest Payment Date. "Defeasance Obligations" means direct non -callable obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America, to which direct obligation or guarantee the full faith and credit of the United States of America has been pledged, Refcorp interest strips, CATS, TIGRS, STRPS, or defeased municipal bonds rated AAA by Standard & Poor's or Aaa by Moody's Investors Service (or any combination thereof) unless the Bond Insurer otherwise approves. "Depreciation and Replacement Account" means the account by that name ratified and confirmed by Section 501 hereof. "Escrow Agent" means Mercantile Bank of St. Louis National Association, in the City of St. Louis, Missouri, and any successors or assigns. "Escrow Agreement" means the Escrow Trust Agreement dated as of December 1, 1995, between the City and the Escrow Agent. "Escrow Fund" means the fund by that name referred to in Section 501 hereof. "Escrowed Securities" means the direct, noncallable obligations of the United States of America, as described in the Escrow Agreement. "Expenses" means all reasonable and necessary expenses of operation, maintenance and repair of the System and keeping the System in good repair and working order (other than interest paid on System 3- Revenue Bonds and depreciation and amortization charges during the period of determination), determined in accordance with generally accepted accounting principles, including without limiting the generality of the foregoing, current maintenance charges, expenses of reasonable upkeep and repairs, salaries, wages, costs of materials and supplies, Paying Agent fees and expenses, annual audits, periodic Consultant's reports, properly allocated share of charges for insurance, the cost of purchased water, gas and power, if any, obligations (other than for borrowed money or for rents payable under capital leases) incurred in the ordinary course of business, liabilities incurred by endorsement for collection or deposit of checks or drafts received in the ordinary course of business, short-term obligations incurred and payable within a particular fiscal year, other obligations or indebtedness incurred for the purpose of leasing (pursuant to a true or operating lease) equipment, fixtures, inventory or other personal property, and all other expenses incident to the operation of the System, but shall exclude all general administrative expenses of the City not related to the operation of the System. "Insurance Consultant" means an individual or firm selected by the City qualified to survey risks and to recommend insurance coverage for entities engaged in operations similar to those of the System and having a favorable reputation for skill and experience in making such surveys and recommendations. "Interest Payment Date" means the Stated Maturity of an installment of interest on any Bond. "Maturity" when used with respect to any Bond means the date on which the principal of such Bond becomes due and payable as therein and herein provided, whether at the Stated Maturity thereof or call for optional or mandatory redemption or otherwise. "Net Revenues Available for Debt Service" means, for the period of determination, all Revenues less all Expenses as determined in accordance with generally accepted accounting principles. "Operation and Maintenance Account" means the account by that name ratified and confirmed by Section 501 hereof. "Ordinance" means this Ordinance as from time to time amended in accordance with the terms hereof. "Outstanding" means, when used with reference to Bonds, as of any particular date, all Bonds theretofore issued and delivered hereunder, except the following Bonds: (a) Bonds theretofore cancelled by the Paying Agent or delivered to the Paying Agent for cancellation; (b) Bonds deemed to be paid in accordance with the provisions of Section 1101 hereof; and (c) Bonds in exchange for or in lieu of which other Bonds have been registered and delivered hereunder. "Parity Bonds" means the City's outstanding Series 1992 Bonds and any additional parity bonds or other obligations hereafter issued or incurred pursuant to Section 902 hereof and standing on a parity and equality with the Bonds with respect to the payment of principal and interest out of the net income and Revenues of the System. M "Parity Ordinances" means the Series 1992 Ordinance under which the outstanding Parity Bonds have been issued, and the ordinances under which any additional Parity Bonds are hereafter issued pursuant to Section 902 hereof. "Paying Agent" means Mercantile Bank of St. Louis National Association, St. Louis, Missouri, and any successors and assigns. "Permitted Investments" means any of the following securities and obligations, if and to the extent the same are at the time legal for investment of the City's moneys held in the funds and accounts referred to in Section 501 hereof: (a) United States Government Obligations; (b) bonds, notes or other obligations of the State of Missouri, or any political subdivision of the State of Missouri, that at the time of their purchase are rated in either of the two highest rating categories by a nationally recognized rating service; (c) repurchase agreements with any bank, bank holding company, savings and loan association, trust company, or other financial institution organized under the laws of the United States or any state, that are continuously and fully secured by any one or more of the securities described in clause (a) or (b) above and have a market value, exclusive of accrued interest, at all times at least equal to the principal amount of such repurchase agreement and are held in a custodial or trust account for the benefit of the City; (d) obligations of the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Financing Bank, the Federal Intermediate Credit Corporation, Federal Banks for Cooperatives, Federal Land Banks, Federal Home Loan Banks, Farmers Home Administration and Federal Home Loan Mortgage Corporation; (e) certificates of deposit or time deposits, whether negotiable or nonnegotiable, issued by any bank or trust company organized under the laws of the United States or any state, provided that such certificates of deposit or time deposits shall be either (1) continuously and fully insured by the Federal Deposit Insurance Corporation, or (2) continuously and fully secured by such securities as are described above in clauses (a) through (c) above, inclusive, which shall have a market value, exclusive of accrued interest, at all times at least equal to the principal amount of such certificates of deposit or time deposits; and (f) any other securities or investments that are lawful for the investment of moneys held in such funds or accounts under the laws of the State of Missouri. "Person" means any natural person, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof or other public body. "Purchaser" means A.G. Edwards & Sons, Inc., St. Louis, Missouri, and Piper Jaffray Inc., Kansas City, Missouri, the original purchasers of the Bonds. "Rebate Fund" means the fund by that name referred to in Section 501 hereof. -5- "Record Date" for the interest payable on any Interest Payment Date means the 15th day (whether or not a Business Day) of the calendar month next preceding such Interest Payment Date. "Redemption Date" when used with respect to any Bond to be redeemed means the date fixed for such redemption pursuant to the terms of this Ordinance. "Redemption Price" when used with respect to any Bond to be redeemed means the price at which such Bond is to be redeemed pursuant to the terns of this Ordinance, including the applicable redemption premium, if any, but excluding installments of interest whose Stated Maturity is on or before the Redemption Date. "Refunded Bonds" means the $8,090,000 principal amount of Series 1992 Bonds maturing in the year 2006 and thereafter. "Refunding Law" means Section 108.140(2) of the Revised Statutes of Missouri, as amended. "Revenue Fund" means the fund by that name ratified and confirmed by Section 501 hereof. "Revenues" means all income and revenues derived from the operation of the System, including investment income and any amounts deposited in escrow in connection with the acquisition, construction, remodeling, renovation and equipping of facilities to be applied during the period of determination to pay interest on System Revenue Bonds, but excluding any profits or losses on the early extinguishment of debt or on the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets. "Series 1992 Bonds" means the Waterworks System Revenue Bonds, Series 1992, of the City, issued in the original principal amount of $11,840,000. "Series 1992 Ordinance" means Ordinance No. 1148 of the City adopted on April 6, 1992, authorizing the issuance of the Series 1992 Bonds. "Special Record Date" means the date fixed by the Paying Agent pursuant to Section 204 hereof for the payment of Defaulted Interest. "Stated Maturity" when used with respect to any Bond or any installment of interest thereon means the date specified in such Bond and this Ordinance as the fixed date on which the principal of such Bond or such installment of interest is due and payable. "Surplus Account" means the account by that name ratified and confirmed by Section 501 hereof. "System" means the entire waterworks plant and system owned and operated by the City for the production, storage, treatment and distribution of water, to serve the needs of the City and its inhabitants and others, including all appurtenances and facilities connected therewith or relating thereto, together with all extensions, improvements, additions and enlargements thereto hereafter made or acquired by the City. "System Revenue Bonds" means collectively the Bonds, the Parity Bonds and all other revenue bonds which are payable out of, or secured by an interest in, the income and Revenues derived from the operation of the System. in "Valuation Date" means the first business day of each fiscal year of the System. "United States Government Obligations" means bonds, notes, certificates of indebtedness, treasury bills or other securities constituting direct obligations of, or obligations the principal of and interest on which are fully and unconditionally guaranteed as to fall and timely payment by, the United States of America, including evidences of a direct ownership interest in future interest or principal payments on obligations issued or guaranteed by the United States of America (including the interest component of obligations of the Resolution Funding Corporation), or securities which represent an undivided interest in such obligations, which obligations are rated in the highest rating category by a nationally recognized rating service, and such obligations are held in a custodial or trust account for the benefit of the City. ARTICLE II AUTHORIZATION OF BONDS Section 201. Authorization of Bonds. There is hereby authorized and directed to be issued a series of bonds of the City, designated "Waterworks System Refunding Revenue Bonds, Series 1995", in the principal amount of $9,095,000 (the "Bonds") for the purpose of providing funds to refund the Refunded Bonds and to pay costs of issuance of the Bonds. Section 202. Description of Bonds. The Bonds shall consist of fully registered bonds without coupons, numbered from 1 upward, in denominations of $5,000 or any integral multiple thereof. The Bonds, as originally issued or issued upon transfer, exchange or substitution, shall be substantially in the form set forth in Exhibit A attached hereto, and shall be subject to registration, transfer and exchange as provided in Section 205 hereof. The Bonds shall be dated as of December 1, 1995, shall become due in the amounts on the Stated Maturities (subject to optional and mandatory redemption prior to their Stated Maturities as provided in Article III hereof), and shall bear interest at the rates per annum, as follows: SERIAL BONDS Stated Maturity Principal Annual Rate March 1 Amount of Interest 1996 $ 160,000 3.700% 1997 70,000 3.900 1998 75,000 4.100 1999 80,000 4.200 2000 80,000 4.300 2001 85,000 4.400 2002 90,000 4.500 2003 90,000 4.500 2004 95,000 4.600 2005 100,000 4.750 2006 810,000 4.875 2007 890,000 5.000 2008 980,000 5.000 2009 1,010,000 5.200 7- I f- RS 1 Stated Maturity Principal Annual Rate March 1 Amount of Interest 2012 $4,480,000 5.00% The Bonds shall bear interest at the above-specified rates (computed on the basis of a 360 -day year of twelve 30 -day months) from the date thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable semiannually on March 1 and September 1 in each year, beginning on March 1, 1996. Section 203. Designation of Paying Agent. Mercantile Bank of St. Louis National Association, in the City of St. Louis, Missouri, is hereby designated as the City's paying agent for the payment of principal of and interest on the Bonds and bond registrar with respect to the registration, transfer and exchange of Bonds (herein called the "Paying Agent"). The City will at all times maintain a Paying Agent meeting the qualifications herein described for the performance of the duties hereunder. The City reserves the right to appoint a successor Paying Agent by (1) filing with the bank or trust company then performing such function a certified copy of the proceedings giving notice of the termination of such bank or trust company and appointing a successor, and (2) causing notice to be given by first class mail to each Bondowner. No resignation or removal of the Paying Agent shall become effective until a successor has been appointed and has accepted the duties of the Paying Agent. Every Paying Agent appointed hereunder shall at all times be a commercial banking association or corporation or trust company located in the State of Missouri organized and in good standing and doing business under the laws of the United States of America or of the State of Missouri, authorized under such laws to exercise trust powers and subject to supervision or examination by federal or state regulatory authority. The Paying Agent shall be paid the usual fees and expenses for its services in connection therewith, which fees and expenses shall be paid as other Expenses are paid. Section 204. Method and Place of Payment of Bonds. The principal or Redemption Price of and interest on the Bonds shall be payable in any coin or currency of the United States of America that, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of each Bond shall be paid at Maturity by check or draft to the Person in whose name such Bond is registered on the Bond Register at the Maturity thereof, upon presentation and surrender of such Bond at the payment office of the Paying Agent. The interest payable on each Bond on any Interest Payment Date shall be paid to the Registered Owner of such Bond as shown on the Bond Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Paying Agent to such Registered Owner at the address shown on the Bond Register or (b) in the case of an interest payment to any Registered Owner of $250,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Registered Owner upon written notice given to the Paying Agent by such Registered Owner not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank (which shall be in the ME continental United States), ABA routing number and account number to which such Registered Owner wishes to have such transfer directed. Notwithstanding the foregoing provisions of this Section, any Defaulted Interest with respect to any Bond shall cease to be payable to the Registered Owner of such Bond on the relevant Record Date and shall be payable to the Registered Owner in whose name such Bond is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed as hereinafter specified in this paragraph. The City shall notify the Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment (which date shall be at least 30 days after receipt of such notice by the Paying Agent) and shall deposit with the Paying Agent at the time of such notice an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Paying Agent for such deposit prior to the date of the proposed payment. Following receipt of such funds, the Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Paying Agent shall promptly notify the City of such Special Record Date and, in the name and at the expense of the City, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed by first class mail, postage prepaid, to each Registered Owner of a Bond entitled to such notice at the address of such Registered Owner as it appears on the Bond Register not less than 10 days prior to such Special Record Date. The Paying Agent shall keep a record of payment of principal and Redemption Price of and interest on all Bonds and shall at least annually forward a copy or summary of such records to the City. Section 205. Registration, Transfer and Exchange of Bonds. The City covenants that, as long as any of the Bonds remain Outstanding, it will cause the Bond Register to be kept at the office of the Paying Agent for the registration, transfer and exchange of Bonds as herein provided. Each Bond when issued shall be registered in the name of the Owner thereof on the Bond Register. Bonds may be transferred and exchanged only on the Bond Register as provided in this Section. Upon surrender of any Bond at the payment office of the Paying Agent, the Paying Agent shall transfer or exchange such Bond for a new Bond or Bonds in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Bond that was presented for transfer or exchange. Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Paying Agent, duly executed by the Registered Owner thereof or by the Registered Owner's duly authorized agent. In all cases in which the privilege of transferring or exchanging Bonds is exercised, the Paying Agent shall authenticate and deliver Bonds in accordance with the provisions of this Ordinance. The City shall pay the fees and expenses of the Paying Agent for the registration, transfer and exchange of Bonds provided for by this Ordinance and the cost of printing a reasonable supply of registered bond blanks. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Paying Agent, are the responsibility of the Registered Owners of the Bonds. In the event any Registered Owner fails to provide a correct taxpayer identification number to the Paying Agent, the Paying Agent may make a charge against such Registered Owner sufficient to pay any governmental charge required to be paid as a result of such failure. In compliance with Section 3406 of the Code, such amount may be deducted by the Paying Agent from amounts otherwise payable to such Registered Owner hereunder or under the Bonds. KIM The City and the Paying Agent shall not be required (a) to register the transfer or exchange of any Bond after notice calling such Bond or portion thereof for redemption has been given or during the period of 15 days next preceding the first mailing of such notice of redemption, or (b) to register the transfer or exchange of any Bond during a period beginning at the opening of business on the day after receiving written notice from the City of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest pursuant to Section 204 hereof. The City and the Paying Agent may deem and treat the Person in whose name any Bond is registered on the Bond Register as the absolute owner of such Bond, whether such Bond is overdue or not, for the purpose of receiving payment of, or on account of, the principal or Redemption Price of and interest on said Bond and for all other purposes. All payments so made to any such Registered Owner or upon the Registered Owner's order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the City nor the Paying Agent shall be affected by any notice to the contrary. At reasonable times and under reasonable regulations established by the Paying Agent, the Bond Register may be inspected and copied by the Registered Owners (or a designated representative thereof) of 10 % or more in principal amount of the Bonds then Outstanding or any designated representative of such Registered Owners to be evidenced to the satisfaction of the Paying Agent. Section 206. Execution, Authentication and Delivery of Bonds. Each of the Bonds, including any Bonds issued in exchange or as substitution for the Bonds initially delivered, shall be signed by the manual or facsimile signature of the Mayor, attested by the manual or facsimile signature of the Deputy City Clerk, and shall have the official seal of the City affixed thereto or imprinted thereon. If any officer whose signature appears on any Bonds ceases to be such officer before the delivery of such Bonds, such signature shall nevertheless be valid and sufficient for all purposes, as if such person had remained in office until delivery. Any Bond may be signed by such persons who at the actual time of the execution of such Bond are the proper officers to sign such Bond although at the date of such Bond such persons may not have been such officers. The Mayor and Deputy City Clerk are hereby authorized and directed to prepare and execute the Bonds as herein specified, and when duly executed, to deliver the Bonds to the Paying Agent for authentication. The Bonds shall have endorsed thereon a certificate of authentication substantially in the form set forth in Exhibit A attached hereto, which shall be manually executed by an authorized officer or employee of the Paying Agent, but it shall not be necessary that the same officer or employee sign the certificate of authentication on all of the Bonds that may be issued hereunder at any one time. No Bond shall be entitled to any security or benefit under this Ordinance or be valid or obligatory for any purpose unless and until such certificate of authentication has been duly executed by the Paying Agent. Such executed certificate of authentication upon any Bond shall be conclusive evidence that such Bond has been duly authenticated and delivered under this Ordinance. Upon authentication, the Paying Agent shall deliver the Bonds to the Purchaser, upon payment of the purchase price of the Bonds plus accrued interest thereon to the date of their delivery. Section 207. Mutilated, Destroyed, Lost and Stolen Bonds. If (a) any mutilated Bond is surrendered to the Paying Agent, or the City and the Paying Agent receive evidence to its satisfaction of the destruction, loss or theft of any Bond, and (b) there is delivered to the Paying Agent such security or indemnity as may be required by the Paying Agent, then, in the absence of notice to the Paying Agent that -10- such Bond has been acquired by a bona fide purchaser, the City shall execute and, upon the City's request, the Paying Agent shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Bond, a new Bond of the same Stated Maturity and of like tenor and principal amount. If any such mutilated, destroyed, lost or stolen Bond has become or is about to become due and payable, the City in its discretion may pay such Bond instead of issuing a new Bond. Upon the issuance of any new Bond under this Section, the City may require the payment by the Registered Owner of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Paying Agent) connected therewith. Every new Bond issued pursuant to this Section shall constitute a replacement of the prior obligation of the City, and shall be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Bonds. Section 208. Cancellation and Destruction of Bonds Upon Payment. All Bonds that have been paid or redeemed or that otherwise have been surrendered to the Paying Agent, either at or before Maturity, shall be cancelled by the Paying Agent immediately upon the payment, redemption and surrender thereof to the Paying Agent and subsequently destroyed in accordance with the customary practices of the Paying Agent. The Paying Agent shall execute a certificate in duplicate describing the Bonds so cancelled and destroyed and shall file an executed counterpart of such certificate with the City. Section 209. Preliminary and Final Official Statement. The Preliminary Official Statement, in the form attached hereto as Exhibit B, is hereby ratified and approved, and the final Official Statement is hereby authorized and approved by supplementing, amending and completing the Preliminary Official Statement, with such changes and additions thereto as are necessary to conform to and describe the transaction. The Mayor is hereby authorized to execute the final Official Statement as so supplemented, amended and completed, and the use and public distribution of the Official Statement by the Purchaser in connection with the reoffering of the Bonds is hereby authorized. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds. For the purpose of enabling the Purchaser to comply with the requirements of Rule 15c2 -12(b)(1) of the Securities and Exchange Commission, the City hereby deems the information regarding the City contained in the Preliminary Official Statement to be "final" as of its date, except for the omission of such information as is permitted by Rule 15c2 -12(b)(1), and the appropriate officers of the City are hereby authorized, if requested, to provide the Purchaser a letter or certification to such effect and to take such other actions or execute such other documents as such officers in their reasonable judgment deem necessary to enable the Purchaser to comply with the requirement of such Rule. The City agrees to provide to the Purchaser within seven business days of the date of the sale of Bonds sufficient copies of the final Official Statement to enable the Purchaser to comply with the requirements of Rule 15c2 -12(b)(4) of the Securities and Exchange Commission and with the requirements of Rule G-32 of the Municipal Securities Rulemaking Board. -11- Section 210. Sale of Bonds. The Bond Purchase Agreement between the City and the Purchaser, attached hereto as Exhibit C, under which the City agrees to sell the Bonds to the Purchaser at a purchase price of 99.06 % of the principal amount thereof, plus accrued interest to the date of delivery, is hereby ratified and confirmed. Delivery of the Bonds shall be made to the Purchaser as soon as practicable after the adoption of this Ordinance, upon payment therefor in accordance with the terms of sale. Section 211. Authorization of Escrow Agreement. The City is hereby authorized to enter into the Escrow Agreement, dated as of December 1, 1995, between the City and the Escrow Agent, in substantially the form attached to this Ordinance as Exhibit D. The Mayor and Deputy City Clerk are hereby authorized and directed to execute the Escrow Agreement with such changes therein as such officials may deem appropriate, for and on behalf of and as the act and deed of the City. The Escrow Agent is hereby authorized to carry out, on behalf of the City, the duties, terms and provisions of the Escrow Agreement, and the Escrow Agent, the Purchaser and Bond Counsel are authorized to take all necessary actions for the subscription and purchase of the Escrowed Securities described therein, including the subscription for United States Treasury Securities - State and Local Government Series. Section 212. Continuing Disclosure. The Mayor, acting on behalf of the City, is hereby authorized to execute the Continuing Disclosure Certificate, dated the date of issuance of the Bonds, in substantially the form attached hereto as Exhibit E, with such changes therein as such official deems appropriate. The City covenants and agrees that it will comply with the carry out all of the provisions of the Continuing Disclosure Certificate, as originally executed and amended from time to time in accordance with the terms thereof. Upon failure of the City to comply with the Continuing Disclosure Certificate, any Bondowner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under the Continuing Disclosure Certificate. Section 213. Securities Depository. (a) For purposes of this Section 213, the following terms shall have the following meanings: "Beneficial Owner" shall mean, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant, or such person's subrogee. "Cede & Co." shall mean Cede & Co., the nominee of the Securities Depository, and any successor nominee of the Securities Depository with respect to the Bonds. "Participant" shall mean any broker-dealer, bank or other financial institution for which the Securities Depository holds Bonds as securities depository. "Representation Letter" shall mean the Representation Letter from the City and the Paying Agent to the Securities Depository with respect to the Bonds. Securities Depository" shall mean The Depository Trust Company, New York, New York. (b) The Bonds shall be initially issued as one single authenticated fully registered bond for each Stated Maturity. Upon initial issuance, the ownership of such Bonds shall be registered in the Bond Register of the City kept by the Paying Agent in the name of Cede & Co., as nominee of the Securities Depository. The Paying Agent and the City may treat the Securities Depository (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal of -12- or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Registered Owners of Bonds under this Ordinance, registering the transfer of Bonds, and for all other purposes whatsoever; and neither the Paying Agent nor the City shall be affected by any notice to the contrary. Neither the Paying Agent nor the City shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through the Securities Depository or any Participant, or any other person which is not shown on the Bond Register kept by the Paying Agent as being a Registered Owner of any Bonds, with respect to the accuracy of any records maintained by the Securities Depository or any Participant, with respect to the payment by the Securities Depository or any Participant of any amount with respect to the principal of or interest on the Bonds, with respect to any notice which is permitted or required to be given to Owners of Bonds under this Ordinance, with respect to the selection by the Securities Depository or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with respect to any consent given or other action taken by the Securities Depository as Registered Owner of the Bonds. The Paying Agent shall pay all principal of and interest on the Bonds only to Cede & Co. in accordance with the Representation Letter, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than the Securities Depository shall receive an authenticated Bond for each separate stated maturity evidencing the obligation of the City to make payments of principal and interest. Upon delivery by the Securities Depository to the Paying Agent of written notice to the effect that the Securities Depository has determined to substitute a new nominee in place of Cede & Co., the Bonds will be transferable to such new nominee in accordance with paragraph (f) hereof. (c) In the event the City determines that it is in the best interest of the Beneficial Owners that they be able to obtain bonds, the City may notify the Securities Depository and the Paying Agent, whereupon the Securities Depository shall notify the Participants of the availability through the Securities Depository of bonds. In such event, the Bonds will be transferable in accordance with paragraph (f) hereof. The Securities Depository may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and the Paying Agent and discharging its responsibilities with respect thereto under applicable law. In such event the Bonds will be transferable in accordance with paragraph (f) hereof. (d) Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of the Securities Depository, all payments with respect to the principal of and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, to the Securities Depository as provided in the Representation Letter. (e) The execution and delivery of the Representation Letter to the Securities Depository by the Mayor in the form presented to the City Council with such changes, omissions, insertions and revisions as the Mayor shall deem advisable, is hereby authorized, and execution of the Representation Letter by the Mayor shall be conclusive evidence of such approval. The Representation Letter shall set forth certain matters with respect to, among other things, notices, consents and approvals by Registered Owners of the Bonds and Beneficial Owners and payments on the Bonds. The Paying Agent shall have the same rights with respect to its actions thereunder as it has with respect to its actions under this Ordinance. (f) In the event that any transfer or exchange of Bonds is permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Paying Agent from the Registered Owners thereof of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this Ordinance. In the event bonds are issued to holders other than Cede & Co., its successor as nominee for the Securities Depository as -13- holder of all the Bonds, or other securities depository as holder of all the Bonds, the provisions of this Ordinance shall also apply to all matters relating thereto, including, without limitation, the printing of such bonds and the method of payment of principal of and interest on such bonds. ARTICLE III REDEMPTION OF BONDS Section 301. Redemption of Bonds. (a) Optional Redemption By City. At the option of the City, Bonds or portions thereof maturing in the year 2007 and thereafter may be called for redemption and payment prior to the Stated Maturity thereof on March 1, 2006, and thereafter in whole at any time or in part on any Interest Payment Date at a Redemption Price equal to 100 % of the principal amount thereof, plus accrued interest thereon to the Redemption Date. (b) Mandatory Redemption. The Bonds maturing in the year 2012 (the "Term Bonds") shall be subject to mandatory redemption and payment prior to Stated Maturity pursuant to the mandatory redemption requirements of this Section at a Redemption Price equal to 100% of the principal amount thereof plus accrued interest to the Redemption Date. The payments specified in Section 602(b) hereof which are to be deposited into the Debt Service Account shall be sufficient to redeem, and the City shall redeem on March 1 in each year, the following principal amounts of Bonds: Year Principal 2010 $1,065,000 2011 1,120,000 2012* 2,295,000 *Final Maturity At its option, to be exercised on or before the 45th day next preceding any mandatory Redemption Date, the City may: (1) deliver to the Paying Agent for cancellation Term Bonds, in any aggregate principal amount desired; or (2) furnish the Paying Agent funds, together with appropriate instructions, for the purpose of purchasing any Term Bonds from any Registered Owner thereof, whereupon the Paying Agent shall expend such funds for such purpose to such extent as may be practical; or (3) receive a credit with respect to the mandatory redemption obligation of the City under this Section for any Term Bonds which prior to such date have been redeemed (other than through the operation of the requirements of this Section) and cancelled by the Paying Agent and not theretofore applied as a credit against any redemption obligation under this Section. Each Term Bond so delivered or previously purchased or redeemed shall be credited at 100% of the principal amount thereof on the obligation of the City to redeem Term Bonds of the same Stated Maturity on such Redemption Date, and any excess of such amount shall be credited on future mandatory redemption obligations for Term Bonds of the same Stated Maturity in chronological order, and the principal amount of Term Bonds of the same Stated Maturity to be redeemed by operation of the requirements of this Section shall be accordingly reduced. If the City intends to exercise any option granted by the provisions of clauses (1), (2) or (3) above, the City will, on or before the 45th day next preceding each mandatory Redemption Date, furnish the Paying Agent a written certificate indicating to -14- what extent the provisions of said clauses (1), (2) and (3) are to be complied with respect to such mandatory redemption payment. Section 302. Selection of Bonds to Be Redeemed. (a) The Paying Agent shall call Bonds for redemption and payment and shall give notice of such redemption as herein provided upon receipt by the Paying Agent at least 45 days prior to the Redemption Date of written instructions of the City specifying the principal amount, Stated Maturities, Redemption Date and Redemption Prices of the Bonds to be called for redemption. If the Bonds are refunded more than 90 days in advance of such Redemption Date, any escrow agreement entered into by the City in connection with such refunding shall provide that such written instructions to the Paying Agent shall be given by the escrow agent on behalf of the City not more than 90 days prior to the Redemption Date. The Paying Agent may in its discretion waive such notice period so long as the notice requirements set forth in Section 303 hereof are met. The foregoing provisions of this paragraph shall not apply in the case of any mandatory redemption of Bonds hereunder, and Bonds shall be called by the Paying Agent for redemption pursuant to such mandatory redemption requirements without the necessity of any action by the City and whether or not the Paying Agent holds moneys available and sufficient to effect the required redemption. (b) Bonds shall be redeemed only in the principal amount of $5,000 or any integral multiple thereof. When less than all of the Outstanding Bonds are to be redeemed, such Bonds shall be redeemed from the Stated Maturities selected by the City, and Bonds of less than a full Stated Maturity shall be selected by the Paying Agent in $5,000 units of principal amount in such equitable manner as the Paying Agent may determine. (c) In the case of a partial redemption of Bonds when Bonds of denominations greater than $5,000 are then Outstanding, then for all purposes in connection with such redemption each $5,000 of face value shall be treated as though it were a separate Bond of the denomination of $5,000. If it is determined that one or more, but not all, of the $5,000 units of face value represented by any Bond are selected for redemption, then upon notice of intention to redeem such $5,000 unit or units, the Registered Owner of such Bond or the Registered Owner's duly authorized agent shall present and surrender such Bond to the Paying Agent (1) for payment of the Redemption Price and interest to the Redemption Date of such $5,000 unit or units of face value called for redemption, and (2) for exchange, without charge to the Registered Owner thereof, for a new Bond or Bonds of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the Registered Owner of any such Bond fails to present such Bond to the Paying Agent for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the Redemption Date to the extent of the $5,000 unit or units of face value called for redemption (and to that extent only). Section 303. Notice and Effect of Call for Redemption. Unless waived by any Registered Owner of Bonds to be redeemed, official notice of any redemption shall be given by the Paying Agent on behalf of the City by mailing a copy of an official redemption notice by first class mail at least 30 days prior to the Redemption Date, to the Purchaser of the Bonds and each Registered Owner of the Bonds to be redeemed at the address shown on the Bond Register. -15- All official notices of redemption shall be dated and shall contain the following information: (a) the Redemption Date; (b) the Redemption Price; (c) if less than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption of any Bonds, the respective principal amounts) of the Bonds to be redeemed; (d) a statement that on the Redemption Date the Redemption Price will become due and payable upon each Bond or portion thereof called for redemption and that interest thereon shall cease to accrue from and after the Redemption Date; and (e) the place where such Bonds are to be surrendered for payment of the Redemption Price, which shall be the payment office of the Paying Agent. The failure of any Registered Owner to receive notice given as heretofore provided or an immaterial defect therein shall not invalidate any redemption. Prior to any Redemption Date, the City shall deposit with the Paying Agent an amount of money sufficient to pay the Redemption Price of all the Bonds or portions of Bonds that are to be redeemed on that date. The redemption notice shall either (i) explicitly state that the proposed redemption is conditioned on there being on deposit in the applicable fund or account on the Redemption Date sufficient money to pay the full Redemption Price of the Bonds to be redeemed or (ii) be sent only if sufficient money to pay the full Redemption Price of the Bonds to be redeemed is on deposit in the applicable fund or account. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall become due and payable on the Redemption Date, at the Redemption Price therein specified, and from and after the Redemption Date (unless the City defaults in the payment of the Redemption Price) such Bonds or portion of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with such notice, the Redemption Price of such Bonds shall be paid by the Paying Agent. Installments of interest due on or prior to the Redemption Date shall be payable as herein provided for payment of interest. Upon surrender for any partial redemption of any Bond, there shall be prepared for the Registered Owner a new Bond or Bonds of the same Stated Maturity in the amount of the unpaid principal as provided herein. All Bonds that have been redeemed shall be cancelled and destroyed by the Paying Agent as provided herein and shall not be reissued. In addition to the foregoing notice, further notice shall be given by the Paying Agent on behalf of the City as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if official notice thereof is given as above prescribed. (a) Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus (1) the CUSIP numbers of all Bonds being redeemed; (2) the date of issue of the Bonds as originally issued; (3) the rate of interest borne by each Bond being redeemed; (4) the Stated Maturity of each Bond being redeemed; and (5) any other descriptive information needed to identify accurately the Bonds being redeemed. -16- (b) Each further notice of redemption shall be sent at least one day before the mailing of notice to Bondowners by first class, registered or certified mail or overnight delivery as determined by the Paying Agent to all registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds and to one or more national information services that disseminate notices of redemption of obligations such as the Bonds. (c) Each check or other transfer of funds issued for the payment of the Redemption Price of Bonds being redeemed, shall bear or have enclosed the CUSIP number of the Bonds being redeemed with the proceeds of such check or other transfer. The Paying Agent is also directed to comply with any mandatory or voluntary standards established by the Securities and Exchange Commission then in effect for processing redemptions of municipal securities. Failure to comply with such standards shall not affect or invalidate the redemption of any Bond. ARTICLE IV SECURITY FOR BONDS Section 401. Security for Bonds. The Bonds shall be special obligations of the City payable solely from, and secured as to the payment of principal and interest by a pledge of, the net income and revenues derived from the operation of the System, after providing for the costs of operation and maintenance thereof, including operating income, investment income, gifts, bequests, contributions, grants and other moneys made available to the City with respect to the System from sources other than funds raised by taxation, and the City hereby pledges said net income and revenues to the payment of the principal of and interest on the Bonds. The Bonds shall not be or constitute a general obligation of the City, nor shall they constitute an indebtedness of the City within the meaning of any constitutional, statutory or charter provision, limitation or restriction, and the taxing power of the City is not pledged to the payment of the Bonds, either as to principal or interest. The covenants and agreements of the City contained herein and in the Bonds shall be for the equal benefit, protection and security of the legal owners of any or all of the Bonds, all of which Bonds shall be of equal rank and without preference or priority of one Bond over any other Bond in the application of the funds herein pledged to the payment of the principal of and the interest on the Bonds, or otherwise, except as to rate of interest, date of maturity and right of prior redemption as provided in this Ordinance. The Bonds shall stand on a parity and be equally and ratably secured with respect to the payment of principal and interest from the net income and revenues derived from the operation of the System and in all other respects with any Parity Bonds. The Bonds shall not have any priority with respect to the payment of principal or interest from said net income and revenues or otherwise over the Parity Bonds and the Parity Bonds shall not have any priority with respect to the payment of principal or interest from said net income and revenues or otherwise over the Bonds. -17- ARTICLE V CREATION AND RATIFICATION OF FUNDS AND ACCOUNTS; DEPOSIT AND APPLICATION OF BOND PROCEEDS AND OTHER MONEYS Section 501. Establishment of Funds and Accounts. There are hereby created or ratified and ordered to be established and maintained in the treasury of the City the following separate funds and accounts to be known respectively as the: (a) Waterworks System Revenue Fund (the "Revenue Fund"). (b) Waterworks System Operation and Maintenance Account (the "Operation and Maintenance Account"). (c) Debt Service Account for Waterworks System Refunding Revenue Bonds, Series 1995 (the "Debt Service Account"). (d) Debt Service Account for Waterworks System Revenue Bonds, Series 1992 (the "Series 1992 Debt Service Account"). (e) Debt Service Reserve Account for Waterworks System Revenue Bonds (the 'Debt Service Reserve Account"). (f) Waterworks System Depreciation and Replacement Account (the 'Depreciation and Replacement Account"). (g) Waterworks System Surplus Account (the "Surplus Account"). (h) Costs of Issuance Account (the "Costs of Issuance Account"). (i) Rebate Fund for Waterworks System Revenue Bonds, Series 1995 (the "Rebate Fund"). In addition to the funds and accounts described above, the Escrow Agreement establishes the Escrow Fund to be held and administered by the Escrow Agent in accordance with the provisions of the Escrow Agreement. The funds and accounts referred to above (other than in paragraph (d)) shall be maintained and administered by the City solely for the purposes and in the manner as provided in the Act and in this Ordinance so long as any of the Bonds remain Outstanding within the meaning of this Ordinance. The account referred to in paragraph (d) shall be maintained and administered by the City solely for the purposes and in the manner as provided in the Act and in the Series 1992 Ordinance so long as any of the Series 1992 Bonds remain Outstanding. The Escrow Fund shall be maintained and administered by the Escrow Agent as provided in this Ordinance and in the Escrow Agreement. Section 502. Deposit of Bond Proceeds and Other Moneys. The net proceeds received from the sale of the Bonds and certain other moneys of the City shall be deposited simultaneously with the delivery of the Bonds, as follows: (a) Any premium and accrued interest on the Bonds shall be deposited in the Debt Service Account and applied in accordance with Section 602(b) hereof. (b) The sum of $8,711,864.13 from the proceeds of the Bonds shall be paid and transferred to the Escrow Agent for deposit in the Escrow Fund, to be applied in accordance with Section 503 hereof. (c) The sum of $95,589.47 from the proceeds of the Bonds shall be deposited in the Costs of Issuance Account and shall be disbursed by the Finance Director on orders of the City Council to pay costs of issuing the Bonds, including the fees of attorneys, financial consultants, accountants, rating agencies, printers and others employed to render professional services and other costs, fees and expenses incurred in connection with the issuance of the Bonds and the creation of the trust described in and created by the Escrow Agreement and in carrying out the duties, terms and provisions of the Escrow Agreement. Any such moneys not used for such purpose and remaining on deposit on June 1, 1996 shall be transferred to and deposited in the Debt Service Account. Section 503. Application of Moneys in the Escrow Fund. Under the Escrow Agreement, the Escrow Agent will apply moneys in the Escrow Fund to purchase the Escrowed Securities and to establish an initial cash balance in accordance with the Escrow Agreement. The cash and Escrowed Securities held in the Escrow Fund will be applied by the Escrow Agent solely to the payment of the principal of, redemption premium, if any, and interest on the Refunded Bonds. All money deposited with the Escrow Agent shall be deemed to be deposited in accordance with and subject to all of the provisions contained in the Series 1992 Ordinance and the Escrow Agreement. Section 504. Verification of Certified Public Accountant; Discharge of Refunded Bonds. Prior to or concurrently with the issuance and delivery of the Bonds and the creation of the escrow provided for herein, the City shall obtain the certification of an independent certified public accountant that such accountant has verified the accuracy of the calculations that demonstrate that the money and obligations required to be deposited with the Escrow Agent pursuant to Section 502 of this Ordinance and the Escrow Agreement, together with the earnings to accrue thereon, will be sufficient for the timely payment of the principal of, redemption premium, if any, and interest on the Refunded Bonds as and when the same become due. Section 505. Redemption of Refunded Bonds. The Refunded Bonds, becoming due on March 1 in the year 2006 and thereafter, in the aggregate the principal amount of $8,090,000, are hereby called for redemption and payment prior to maturity on March 1, 2002. Said Refunded Bonds shall be redeemed at the office of Mercantile Bank of St. Louis [National Association, in the City of St. Louis, Missouri, the paying agent for said bonds, on said redemption date by the payment of the principal thereof, together with the accrued interest thereon to the redemption date. In accordance with the requirements of the Series 1992 Ordinance, the Deputy City Clerk is hereby directed to cause notice of the call for redemption and payment of the Refunded Bonds to be given in the manner provided in the Series 1992 Ordinance. The officers of the City and the paying agent for said bonds are hereby authorized and directed to take such other action as may be necessary in order to effect the redemption and payment of said Refunded Bonds as herein provided. -19- ARTICLE VI APPLICATION OF REVENUES Section 601. Revenue Fund. The City covenants and agrees that from and after the delivery of the Bonds, and continuing as long as any of the Bonds remain Outstanding hereunder, all of the revenues derived and collected from the operation of the System shall as and when received be paid and deposited into the Revenue Fund. Said revenues shall be segregated and kept separate and apart from all other moneys, revenues, funds and accounts of the City and shall not be commingled with any other moneys, revenues, funds and accounts of the City. The Revenue Fund shall be administered and applied solely for the purposes and in the manner provided in this Ordinance. Section 602. Application of Moneys in Funds and Accounts. The City covenants and agrees that from and after the delivery of the Bonds and continuing so long as any of the Bonds shall remain Outstanding, it will on the first day of each month administer and allocate all of the moneys then held in the Revenue Fund as follows: (a) Operation and Maintenance Account. There shall first be paid and credited to the Operation and Maintenance Account an amount sufficient to pay the estimated cost of operating and maintaining the System during the ensuing month. All amounts paid and credited to the Operation and Maintenance Account shall be expended and used by the City solely for the purpose of paying the Expenses of the System. (b) Debt Service Account. There shall next be paid and credited monthly to the Debt Service Account, to the extent necessary to meet on each Bond Payment Date the payment of all interest on and principal of the Bonds, the following sums: (1) Beginning with the first of said monthly deposits and continuing on the first day of each month thereafter to and including February 1, 1996, an equal pro rata portion of the amount of interest becoming due on the Bonds on March 1, 1996; and thereafter, beginning on March 1, 1996, and continuing on the first day of each month thereafter so long as any of the Bonds remain Outstanding and unpaid, an amount not less than 1/6 of the amount of interest that will become due on the Bonds on the next succeeding Interest Payment Date; and (2) Beginning with the first of said monthly deposits and continuing on the first day of each month thereafter to and including February 1, 1996, an equal pro rata portion of the amount of principal becoming due on the Bonds on March 1, 1996; and thereafter, beginning on March 1, 1996, and continuing on the first day of each month thereafter so long as any of the Bonds remain Outstanding and unpaid, an amount not less than 1/12 of the amount of principal that will become due on the Bonds on the next succeeding Maturity date. The amounts required to be paid and credited to the Debt Service Account pursuant to this Section shall be made at the same time and on a parity with the amounts at the time required to be paid and credited to the debt service accounts established for the payment of principal and interest on Parity Bonds under the provisions of the Parity Ordinances. -20- Any amounts deposited in the Debt Service Account as accrued interest shall be credited against the City's payment obligations as set forth in subsection (b)(1) of this Section. All amounts paid and credited to the Debt Service Account shall be expended and used by the City for the sole purpose of paying the interest on and principal of the Bonds as and when the same become due at Maturity and on each Interest Payment Date. If at any time the moneys in the Revenue Fund are insufficient to make in full the payments and credits at the time required to be made to the Debt Service Account and to the debt service accounts established to pay the principal of and interest on any Parity Bonds, the available moneys in the Revenue Fund shall be divided among such debt service accounts in proportion to the respective principal amounts of said series of bonds at the time outstanding which are payable from the moneys in said debt service accounts. (c) Debt Service Reserve Account. Except as hereinafter provided in this Section, all amounts paid and credited to the Debt Service Reserve Account shall be expended and used by the City solely to prevent any default in the payment of interest on or principal of the Bonds or the Series 1992 Bonds on any Maturity date or Interest Payment Date if the moneys in the Debt Service Account are insufficient to pay the interest on or principal of said Bonds or Series 1992 Bonds as they become due. So long as the Debt Service Reserve Account aggregates the Debt Service Reserve Requirement, no further payments into said Account shall be required, but if the City is ever required to expend and use a part of the moneys in said Account for the purpose herein authorized and such expenditure reduces the amount of said Account below the Debt Service Reserve Requirement, the City shall, after all payments and credits required at the time to be made under the provisions of paragraphs (a) and (b) of this Section have been made, make 12 substantially equal monthly payments into said Account in order to restore the Account to the Debt Service Reserve Requirement within one year of such occurrence. Moneys in the Debt Service Reserve Account may be used to call the Bonds for redemption and payment prior to their Stated Maturity, provided all of the Bonds at the time Outstanding are called for payment and funds are available to pay the same according to their terms. Moneys in the Debt Service Reserve Account shall be used to pay and retire the last Outstanding Bonds unless such Bonds and all interest thereon are otherwise paid. Any amounts in the Debt Service Reserve Account in excess of the Debt Service Reserve Requirement on any Valuation Date shall be transferred to the Debt Service Account. If on any Valuation Date the amount on deposit in the Debt Service Reserve Account is less than the Debt Service Reserve Requirement due to a decline in market value of Permitted Investments purchased with funds from such Account, the City shall make a deposit to the Debt Service Reserve Account in the amount necessary to restore the Account to the Debt Service Reserve Requirement by the next succeeding Valuation Date. If at any time the moneys in the Revenue Fund are insufficient to make in full the payments and credits at the time required to be made to the Debt Service Reserve Account and to the debt service reserve accounts established to protect the payment of any Parity Bonds, the available moneys in the Revenue Fund shall be divided among such debt service reserve accounts in proportion to the respective principal amounts of said series of bonds at the time outstanding which are payable from the moneys in such debt service reserve accounts. -21- (d) Depreciation and Replacement Account. After all payments and credits required at the time to be made under the provisions of paragraphs (a), (b) and (c) of this Section have been made, there shall next be paid and credited to the Depreciation and Replacement Account the sum of $2,500 each month until said Account aggregates the sum of $150,000. Except as hereinafter provided in Section 603, moneys in the Depreciation and Replacement Account shall be expended and used by the City, if no other funds are available therefor, solely for the purpose of making emergency replacements and repairs in and to the System as may be necessary to keep the System in good repair and working order and to assure the continued effective and efficient operation thereof. After the Depreciation and Replacement Account aggregates the sum of $150,000, no payments into said Account shall be required, but if the City is ever required to expend a part of the moneys in said Account for its authorized purposes and such expenditure reduces the amount of said Account below the sum of $150,000, then the City shall resume and continue said monthly payments until said Account again aggregates the sum of $150,000. The amounts required to be paid and credited to the Depreciation and Replacement Account pursuant to this Section shall not be in addition to any amounts at the time required to be paid and credited to said Account under the provisions of the Series 1992 Ordinance. (e) Surplus Account. After all payments and credits required at the time to be made under the provisions of paragraphs (a), (b), (c) and (d) of this Section have been made, all moneys remaining in the Revenue Fund shall be paid and credited to the Surplus Account. Moneys in the Surplus Account may be expended and used for the following purposes as determined by the governing body of the City: (1) Paying the cost of the operation, maintenance and repair of the System to the extent that may be necessary after the application of the moneys held in the Operation and Maintenance Account under the provisions of paragraph (a) of this Section; (2) Paying the cost of extending, enlarging or improving the System; (3) Preventing default in, anticipating payments into or increasing the amounts in the Debt Service Account, the Debt Service Reserve Account or the Depreciation and Replacement Account referred to in paragraphs (b), (c) and (d) of this Section, or any one of them, or establishing or increasing the amount of any debt service account or debt service reserve account created by the City for the payment of any Parity Bonds; (4) Calling, redeeming and paying prior to Stated Maturity, or, at the option of the City, purchasing in the open market at the best price obtainable not exceeding the redemption price (if any bonds are callable), the Bonds or any Parity Bonds, including principal, interest and redemption premium, if any; or (5) Any other lawful purpose in connection with the operation of the System and benefiting the System. So long as any of the Bonds remain Outstanding, no moneys derived from the operation of the System shall be diverted to the general governmental or municipal functions of the City. (f) Deficiency of Payments into Funds and Accounts. If at any time the revenues derived from the operation of the System are insufficient to make any payment on the date or dates -22- hereinbefore specified, the City will make good the amount of such deficiency by making additional payments or credits out of the first available revenues thereafter received from the operation of the System, such payments and credits being made and applied in the order hereinbefore specified in this Section. Section 603. Transfer of Funds to Paying Agent. The Finance Director or other authorized officer of the City is hereby authorized and directed to withdraw from the Debt Service Account, and, to the extent necessary to prevent a default in the payment of either principal of or interest on the Bonds, from the Debt Service Reserve Account, the Surplus Account and the Depreciation and Replacement Account as provided in Section 602 hereof, sums sufficient to pay the principal of and interest on the Bonds as and when the same become due on any Bond Payment Date, and to forward such sums to the Paying Agent in a manner which ensures the Paying Agent will have available funds in such amounts on or before the Business Day immediately preceding each Bond Payment Date. If, through lapse of time, or otherwise, the Registered Owners of Bonds are no longer entitled to enforce payment of their obligations, it shall be the duty of the Paying Agent forthwith to return said funds to the City. All moneys deposited with the Paying Agent shall be deemed to be deposited in accordance with and subject to all of the provisions contained in this Ordinance. Section 604. Payments Due on Saturdays, Sundays and Holidays. In any case where a Bond Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Bond Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Bond Payment Date, and no interest shall accrue for the period after such Bond Payment Date. Section 605. Nonpresentment of Bonds. If any Bond is not presented for payment when the principal thereof becomes due at Maturity, if funds sufficient to pay such Bond have been made available to the Paying Agent all liability of the City to the Registered Owner thereof for the payment of such Bond shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Paying Agent to hold such funds, without liability for interest thereon, for the benefit of the Registered Owner of such Bond, who shall thereafter be restricted exclusively to such fonds for any claim of whatever nature on his part under this Ordinance or on, or with respect to, said Bond. If any Bond is not presented for payment within six years following the date when such Bond becomes due at Maturity, the Paying Agent shall repay to the City the funds theretofore held by it for payment of such Bond, and such Bond shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of the City, and the Registered Owner thereof shall be entitled to look only to the City for payment, and then only to the extent of the amount so repaid to it by the Paying Agent, and the City shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Section 606. Application of Moneys in the Rebate Fund. (a) There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Arbitrage Instructions. All money in the Rebate Fund shall be held in trust, to the extent required to satisfy the Rebate Amount (as defined in the Arbitrage Instructions), for payment to the United States of America, and neither the City nor the Registered Owner of any Bond shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section and the Arbitrage Instructions. (b) The City shall periodically determine the rebatable arbitrage under Section 148(f) of the Code in accordance with the Arbitrage Instructions, and the City shall make payments to the United States -23- Government at the times and in the amounts determined under the Arbitrage Instructions. Any funds remaining in the Rebate Fund after redemption and payment of all of the Bonds and the interest thereon, and payment and satisfaction of any Rebate Amount, or provision made therefor, shall be released to the City. (c) Notwithstanding any other provision of this Ordinance, including in particular Article XI hereof, the obligation to pay rebatable arbitrage to the United States and to comply with all other requirements of this Section and the Arbitrage Instructions shall survive the defeasance or payment in full of the Bonds. Section 607. Payments Under the Bond Insurance Policy. As long as the Bond Insurance Policy is in full force and effect, the City and any Paying Agent agree to comply with the following provisions: (a) If, on the third day preceding any Interest Payment Date, there is not on deposit with the Paying Agent sufficient moneys available to pay all principal of and interest on the Bonds due on such Interest Payment Date, the Paying Agent shall immediately notify the Bond Insurer and State Street Bank and Trust Company, N.A., New York, New York, or its successor as its Fiscal Agent (the "Fiscal Agent") of the amount of such deficiency. If, by said Interest Payment Date, the City has not provided the amount of such deficiency, the Paying Agent shall simultaneously make available to the Bond Insurer and to the Fiscal Agent the registration books for the Bonds maintained by the Paying Agent. In addition: (i) The Paying Agent shall provide the Bond Insurer with a list of the Owners of Bonds entitled to receive principal or interest payments from the Bond Insurer under the terms of the Bond Insurance Policy and shall make arrangements with the Bond Insurer and its Fiscal Agent (1) to mail checks or drafts to Owners of Bonds entitled to receive full or partial interest payments from the Bond Insurer and (2) to pay principal of the Bonds surrendered to the Fiscal Agent by the Owners of Bonds entitled to receive full or partial principal payments from the Bond Insurer; and (ii) The Paying Agent shall, at the time it makes the registration books available to the Bond Insurer pursuant to (a) above, notify Owners of Bonds entitled to receive the payment of principal of or interest on the Bonds from the Bond Insurer (1) as to the fact of such entitlement, (2) that the Bond Insurer will remit to them all or part of the interest payments coming due subject to the terms of the Bond Insurance Policy, (3) that, except as provided in paragraph (b) below, in the event that any Owner of Bonds is entitled to receive full payment of principal from the Bond Insurer, such Owner of Bonds must tender his Bond with the instrument of transfer in the form provided on the Bond executed in the name of the Bond Insurer, and (4) that, except as provided in paragraph (b) below, in the event that such Owner of Bonds is entitled to receive partial payment of principal from the Bond Insurer, such Owner must tender his Bond for payment first to the Paying Agent, which shall note on such Bond the portion of principal paid by the Paying Agent, and then, with an acceptable form of assignment executed in the name of the Bond Insurer, to the Fiscal Agent, which will then pay the unpaid portion of principal to the Owner of Bonds subject to the terms of the Bond Insurance Policy. (b) In the event that the Paying Agent has notice that any payment of principal of or interest on a Bond has been recovered from a Owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Paying Agent shall, at the time it provides notice to the Bond Insurer, notify all Owners of Bonds that in the event that any such Owner's payment is so recovered, such Owner will be entitled to payment from the Bond Insurer to the extent of such recovery, and the Paying Agent shall furnish to the Bond Insurer its -24- records evidencing the payments of principal of and interest on the Bonds which have been made by the Paying Agent and subsequently recovered from Owners of Bonds, and the dates on which such payments were made. (c) The Bond Insurer shall, to the extent it makes payment of principal of or interest on the Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Bond Insurance Policy and, to evidence such subrogation, (1) in the case of subrogation as to claims for past due interest, the Paying Agent shall note the Bond Insurer's rights as subrogee on the registration books maintained by the Paying Agent upon receipt from the Bond Insurer of proof of the payment of interest thereon to the Owners of such Bonds and (2) in the case of subrogation as to claims for past due principal, the Paying Agent shall note the Bond Insurer's rights as subrogee on the registration books for the Bonds maintained by the Paying Agent upon receipt of proof of the payment of principal thereof to the Owners of such Bonds. Notwithstanding anything in this Resolution or the Bonds to the contrary, the Paying Agent shall make payment of such past due interest and past due principal directly to the Bond Insurer to the extent that the Bond Insurer is a subrogee with respect thereto. Section 605. Bond Insurer Deemed Owner. Notwithstanding anything in this Resolution to the contrary, for all purposes of this Article VI except the giving of any notice to the Owners, so long as the Bond Insurer is not in default in its payment obligations under the Bond Insurance Policy, the Bond Insurer shall be deemed to be the sole owner of the Bonds. ARTICLE VII DEPOSIT AND INVESTMENT OF MONEYS Section 701. Deposit and Investment of Moneys. (a) Money in each of the funds and accounts created by and referred to in this Ordinance shall be deposited in a bank or banks located in the State of Missouri that are members of the Federal Deposit Insurance Corporation. All such deposits shall be continuously and adequately secured by the banks holding such deposits as provided by the laws of the State of Missouri. (b) Money held in any fund or account referred to in this Ordinance other than the Escrow Fund may be invested in Permitted Investments; provided, however, that no such investment shall be made for a period extending longer than the date when the money invested may be needed for the purpose for which such fund or account was created, and no investments purchased with funds on deposit in the Debt Service Reserve Account shall have a term to maturity of greater than five years. All earnings on any investments held in any fund or account shall accrue to and become a part of such fund or account. All earnings on investments held in the Debt Service Reserve Account shall accrue to and become a part of such Account until the amount on deposit in such Account aggregates the Debt Service Reserve Requirement; thereafter, all such earnings shall be credited to the Debt Service Account. In determining the amount held in any fund or account under any of the provisions of this Ordinance, obligations shall be valued at the lower of the cost or the market value thereof; provided, however, that investments held in the Debt Service Reserve Account shall be valued at market value only. If and when the amount held in any fund or account is in excess of the amount required by the provisions of this Ordinance, the City shall direct that such excess be paid and credited to the Debt Service Account. -25- (c) So long as any of the Parity Bonds remain outstanding and unpaid, any investments made pursuant to this Section shall be subject to any restrictions in the Parity Ordinance with respect to the funds and accounts created by and referred to in the Parity Ordinance. ARTICLE VIII GENERAL COVENANTS AND PROVISIONS The City covenants and agrees with each of the Registered Owners of any of the Bonds that so long as any of the Bonds remain Outstanding and unpaid it will comply with each of the following covenants: Section 801. Efficient and Economical Operation. The City will continuously own and will operate the System as a revenue producing facility in an efficient and economical manner and will keep and maintain the same in good repair and working order. Section 802. Rate Covenant. The City in accordance with and subject to applicable legal requirements will fix, establish, maintain and collect such rates and charges for the use and services furnished by or through the System as will produce revenues sufficient to (a) pay the costs of the operation and maintenance of the System; (b) pay the principal of and interest on the Bonds as and when the same become due at the Maturity thereof or on any Interest Payment Date; (c) enable the City to have in each fiscal year Net Revenues Available for Debt Service not less than 120% of the Debt Service Requirements for such fiscal year; and (d) provide reasonable and adequate reserves for the payment of the Bonds and the interest thereon and for the protection and benefit of the System as provided in this Ordinance. The City will require the prompt payment of accounts for service rendered by or through the System and will promptly take whatever action is legally permissible to enforce and collect delinquent charges. The City will, from time to time as often as necessary, in accordance with and subject to applicable legal requirements, revise the rates and charges aforesaid in such manner as may be necessary or proper so that the Net Revenues Available for Debt Service will be sufficient to cover the obligations under this Section and otherwise under the provisions of this Ordinance. If in any fiscal year Net Revenues Available for Debt Service are an amount less than as hereinbefore provided, the City will immediately employ a Consultant to make recommendations with respect to such rates and charges. A copy of the Consultant's report and recommendations shall be filed with the Deputy City Clerk and the Purchaser of the Bonds and shall be furnished to any Registered Owner of the Bonds requesting a copy of the same, at the cost of such Registered Owner. The City shall, to the extent feasible, follow the recommendations of the Consultant. Section 803. Reasonable Charges for all Services. None of the facilities or services provided by the System will be furnished to any user (excepting the City itself) without a reasonable charge being made therefor. If the revenues derived from the System are at any time insufficient to pay the reasonable Expenses of the System and also to pay all interest on and principal of the Bonds as and when the same become due, then the City will thereafter pay into the Revenue Fund a fair and reasonable payment in accordance with effective applicable rates and charges for all services furnished to the City by the System, and such payments will continue so long as the same may be necessary in order to prevent or reduce the amount of any default in the payment of the interest on or principal of the Bonds. Section 804. Restrictions on Mortgage or Sale of System. The City will not mortgage, pledge or otherwise encumber the System or any part thereof, nor will it sell, lease or otherwise dispose of the System or any material part thereof; provided, however, the City may: -26- (a) sell at fair market value any portion of the System which has been replaced by other similar property of at least equal value, or which ceases to be necessary for the efficient operation of the System, and in the event of sale, the City will apply the proceeds to either (1) redemption of Outstanding Bonds in accordance with the provisions governing repayment of Bonds in advance of Stated Maturity, or (2) replacement of the property so disposed of by other property the revenues of which shall be incorporated into the System as hereinbefore provided; (b) cease to operate, abandon or otherwise dispose of any property which has become obsolete, nonproductive or otherwise unusable to the advantage of the City; or (c) lease, (1) as lessor, any real or personal property which is unused or unimproved, or which has become obsolete, nonproductive or otherwise unusable to the advantage of the City, or which is being acquired as a part of a lease/purchase financing for the acquisition and/or improvement of such property; and/or (2) as lessee, with an option of the City to purchase, any real or personal property for the extension and improvement of the System. Property being leased as lessor and/or lessee pursuant to this subparagraph (c) shall not be treated as part of the System for purposes of this Section 804 and may be mortgaged, pledged or otherwise encumbered. Section 805. Insurance. The City will carry and maintain insurance with respect to the System and its operations against such casualties, contingencies and risks (including but not limited to property and casualty, fire and extended coverage insurance upon all of the properties forming a part of the System insofar as the same are of an insurable nature, public liability, worker's compensation and employee dishonesty insurance), such insurance to be of the character and coverage and in such amounts as would normally be carried by other enterprises engaged in similar activities of comparable size and similarly situated. In the event of loss or damage, the City, with reasonable dispatch, will use the proceeds of such insurance in reconstructing and replacing the property damaged or destroyed, or in paying the claims on account of which such proceeds were received, or if such reconstruction or replacement is unnecessary or impracticable, then the City will pay and deposit the proceeds of such insurance into the Revenue Fund. The City will annually review the insurance it maintains with respect to the System to determine that it is customary and adequate to protect its property and operations. The City may elect to be self-insured for all or any part of the foregoing requirements if (i) the City annually obtains a written evaluation with respect to such self-insurance program from an Insurance Consultant, (ii) the evaluation is to the effect that the self-insurance program is actuarially sound, (iii) unless the evaluation states that such reserves are not necessary, the City deposits and maintains adequate reserves for the self-insurance program with a corporate trustee, who may be the Paying Agent, and (iv) in the case of workers' compensation, adequate reserves created by the City for such self-insurance program are deposited and maintained in such amount and manner as are acceptable to the State of Missouri. The City shall pay any fees and expenses of such Insurance Consultant in connection therewith. The cost of all insurance obtained pursuant to the requirements of this Section shall be paid as an Expense out of the Revenues of the System. Section 806. Books, Records and Accounts. The City will install and maintain proper books, records and accounts (entirely separate from all other records and accounts of the City) in which complete and correct entries will be made of all dealings and transactions of or in relation to the System. Such accounts shall show the amount of Revenues received from the System, the application of such Revenues, and all financial transactions in connection therewith. Said books shall be kept by the City according to standard accounting practices as applicable to the operation of facilities comparable to the System. Section 807. Annual Budget. Prior to the commencement of each fiscal year, the City will cause to be prepared and filed with the Deputy City Clerk a budget setting forth the estimated receipts and -27- expenditures of the System for the next succeeding fiscal year. The Deputy City Clerk, promptly upon the filing of said budget in the Deputy City Clerk's office, will mail a copy of said budget to the Purchaser of the Bonds. Said annual budget shall be prepared in accordance with the requirements of the laws of Missouri and shall contain all information that is required by such laws. Section 808. Annual Audit. Annually, promptly after the end of the fiscal year, the City will cause an audit to be made of the System for the preceding fiscal year by a certified public accountant or firm of certified public accountants to be employed for that purpose and paid from the revenues of the System. Said annual audit shall cover in reasonable detail the operation of the System during such fiscal year. Within 30 days after the completion of each such audit, a copy thereof shall be filed in the office of the Deputy City Clerk, and a duplicate copy of the audit shall be mailed to the Purchaser of the Bonds. Such audits shall at all times during the usual business hours be open to the examination and inspection by any taxpayer, any user of the services of the System, any Registered Owner of any of the Bonds, or by anyone acting for or on behalf of such taxpayer, user or Registered Owner. As soon as possible after the completion of the annual audit, the governing body of the City shall review such audit, and if the audit discloses that proper provision has not been made for all of the requirements of this Ordinance and the Act, the City will promptly cure such deficiency and will promptly proceed to increase the rates and charges to be charged for the use and services furnished by the System as may be necessary to adequately provide for such requirements. Section 809. Right of Inspection. The Bond Insurer, the Purchaser of the Bonds and any Registered Owner or Owners of 10 % of the principal amount of the Bonds then Outstanding shall have the right at all reasonable times to inspect the System and all records, accounts and data relating thereto, and shall be furnished all such information concerning the System and the operation thereof which the Purchaser or such Registered Owner or Owners may reasonably request. Section 810. Administrative Personnel. The City shall use its best efforts to employ at all times administrative personnel experienced and well qualified to operate the System. The City further agrees that such administrative personnel shall be employed in sufficient numbers to ensure that the System will be operated in a prudent and efficient manner, following procedures generally accepted within the United States of America. Section 811. Performance of Duties and Covenants. The City will faithfully and punctually perform all duties, covenants and obligations with respect to the operation of the System now or hereafter imposed upon the City by the Constitution and laws of the State of Missouri and by the provisions of this Ordinance. Section 812. Consultant's Report. At least once every five years, the City will cause a Consultant to make an examination of and report on the condition and operations of the System, such report to include recommendations as to any changes in such operations deemed desirable. Each such report shall also make reference to any unusual or extraordinary items of maintenance and repair and any extensions or improvements that may be needed in the ensuing five-year period. A copy of each such report shall be filed in the office of the Deputy City Clerk and, upon written request, sent to the Bond Insurer, the Purchaser of the Bonds or any Bondowner (at the expense of such Bondowner). 01 Section 813. Parity Bond Certification. The City hereby represents and covenants that the Bonds directed to be issued by this Ordinance are so issued in full compliance with the restrictions and conditions upon which the City may issue additional bonds payable out of the revenues derived from the operation of the System and which stand on a parity with the Series 1992 Bonds heretofore issued and outstanding, as set forth and contained in the Series 1992 Ordinance, and that the Bonds herein directed to be issued are so issued in all respects on a parity and equality with the Series 1992 Bonds heretofore issued and outstanding. Section 814. Tax Covenants. (a) The City covenants that (1) it will comply with all applicable provisions of the Code, including Sections 103 and 141 through 150, necessary to maintain the exclusion from federal gross income of the interest on the Bonds, and (2) it will not use or permit the use of any proceeds of Bonds or any other funds of the City, nor take or permit any other action, or fail to take any action, which would adversely affect the exclusion from federal gross income of the interest on the Bonds. The City will also adopt such other ordinances or resolutions and take such other actions as may be necessary to comply with the Code and with other applicable future law, in order to ensure that the interest on the Bonds will remain excluded from federal gross income, to the extent any such actions can be taken by the City. (b) The City covenants that (1) it will use the proceeds of the Bonds as soon as practicable for the purposes for which the Bonds are issued, and (2) it will not invest or directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the City in any manner, or take or omit to take any action, that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code. (c) The City covenants that it will pay or provide for the payment from time to time of all rebatable arbitrage to the United States pursuant to Section 148(f) of the Code and the Arbitrage Instructions. This covenant shall survive payment in full or defeasance of the Bonds. The Arbitrage Instructions may be amended or replaced if, in the opinion of Bond Counsel, such amendment or replacement will not adversely affect the exclusion from federal gross income of the interest on the Bonds. (d) The City covenants that it will not use any portion of the proceeds of the Bonds, including any investment income earned on such proceeds, directly or indirectly, (1) in a manner that would cause any Bond to be a "private activity bond" within the meaning of Section 141(a) of the Code, or (2) to make or finance a loan to any Person. (e) The City hereby designates the Bonds as "qualified tax-exempt obligations" as defined in Section 265(b)(3) of the Code. In addition, the City hereby represents that: (1) the aggregate face amount of all tax-exempt obligations (other than private activity bonds which are not "qualified 501(c)(3) bonds") which will be issued by the City (and all subordinate entities thereof) during the calendar year in which the Bonds are issued is not reasonably expected to exceed $10,000,000; and (2) the City (including all subordinate entities thereof) will not issue an aggregate principal amount of obligations designated by the City to be "qualified tax-exempt obligations" during the calendar year in which the Bonds are issued, including the Bonds, in excess of $10,000,000, without first obtaining an opinion of Bond Counsel that the designation of the Bonds as "qualified tax-exempt obligations" will not be adversely affected. -29- The Mayor is hereby authorized to take such other action as may be necessary to make effective the designation in this subsection (e). (f) The foregoing covenants shall remain in full force and effect notwithstanding the defeasance of the Bonds pursuant to Article XI of this Ordinance or any other provision of this Ordinance, until the final Maturity of all Bonds Outstanding. ARTICLE IX ADDITIONAL BONDS AND OBLIGATIONS Section 901. Senior Lien Bonds. The City covenants and agrees that so long as any of the Bonds remain Outstanding, the City will not issue any additional bonds or incur or assume any other debt obligations appearing as liabilities on the balance sheet of the City for the payment of moneys determined in accordance with generally accepted accounting principles consistently applied, including capital leases as defined by generally accepted accounting principles, payable out of the net income and revenues of the System or any part thereof which are superior to the Bonds. Section 902. Parity Lien Bonds and Other Obligations. The City covenants and agrees that so long as any of the Bonds remain Outstanding, it will not issue any additional bonds or other long-term obligations payable out of the net income and revenues of the System or any part thereof which stand on a parity or equality with the Bonds ("Parity Bonds") unless the following conditions are met: (a) The City shall not be in default in the payment of principal of or interest on any Bonds or any Parity Bonds at the time outstanding or in making any payment at the time required to be made into the respective funds and accounts created by and referred to in this Ordinance or any Parity Ordinance; and (b) The City shall either: (1) Certify that the annual Net Revenues Available for Debt Service derived by the City from the operation of the System, for the fiscal year immediately preceding the issuance of additional bonds, shall have been equal to at least 120% of the average amount required to be paid out of said Revenues in any succeeding fiscal year on account of both principal (at maturity or upon mandatory redemption) and interest becoming due with respect to all System Revenue Bonds of the City, including the additional bonds proposed to be issued. In determining the Net Revenues Available for Debt Service for the purpose of this subsection, the City may retain a Consultant who may adjust said Net Revenues Available for Debt Service by adding thereto, in the event the City has made any increase in rates for the use and services of the System and such increase has been in effect during all of the fiscal year immediately preceding the issuance of additional bonds, the amount, as estimated by the Consultant, of the additional Net Revenues Available for Debt Service which would have resulted from the operation of the System during said preceding fiscal year had such rate increase been in effect for the entire period. (2) Obtain a certificate of a Consultant showing the annual Net Revenues Available for Debt Service projected to be derived by the City from the operation of the System for the fiscal year immediately following the fiscal year in which the improvements -30- to the System, the cost of which is being financed by such additional bonds, are to be in commercial operation, shall be equal to at least 120% of the average annual debt service required to be paid out of said revenues in any succeeding fiscal year following such commercial operation on account of both principal (at maturity or upon mandatory redemption) and interest becoming due with respect to all System Revenue Bonds of the City, including the additional bonds proposed to be issued. In determining the average amount required to be paid out in any succeeding fiscal year, there shall be credited against the principal amount payable in the final Maturity of any System Revenue Bonds any amounts deposited in debt service reserve accounts that could be available to pay such final principal payments. No variable rate Parity Bonds shall be issued without the prior approval of the Bond Insurer. Simultaneously with the issuance of additional Parity Bonds under this Section, the City shall cause to be deposited in a debt service reserve account for the Parity Bonds an amount equal to the Debt Service Reserve Requirement with respect to such additional Parity Bonds. Additional revenue bonds of the City issued under the conditions set forth in this Section shall stand on a parity with the Bonds and shall enjoy complete equality or lien on and claim against the net revenues of the System with the Bonds, and the City may make equal provision for paying said bonds and the interest thereon out of the Revenue Fund and may likewise provide for the creation of reasonable debt service accounts and debt service reserve accounts for the payment of such additional bonds and the interest thereon out of moneys in the Revenue Fund. Section 903. Junior Lien Bonds and Other Obligations. Nothing in this Section contained shall prohibit or restrict the right of the City to issue additional revenue bonds or other revenue obligations for any lawful purpose in connection with the operation of the facility and benefitting the System and to provide that the principal of and interest on said revenue bonds or obligations shall be payable out of the revenues of the System, provided at the time of the issuance of such additional revenue bonds or obligations the City is not in default in the performance of any covenant or agreement contained in this Ordinance, and provided further that such additional revenue bonds or obligations shall be junior and subordinate to the Bonds so that if at any time the City shall be in default in paying either interest on or principal of the Bonds, or if the City is in default in making any payments required to be made by it under the provisions of paragraphs (a), (b) and (c) of Section 602 of this Ordinance, the City shall make no payments of either principal of or interest on said junior and subordinate revenue bonds or obligations until said default or defaults be cured. In the event of the issuance of any such junior and subordinate revenue bonds or obligations, the City, subject to the provisions aforesaid, may make provision for paying the principal of and interest on said revenue bonds or obligations out of moneys in the Revenue Fund. Section 904. Refunding Bonds. The City shall have the right, without complying with the provisions of Section 902 hereof, to refund any of the Bonds under the provisions of any law then available, and the refunding bonds so issued shall enjoy complete equality of pledge with any of the Bonds which are not refunded, if any, upon the revenues of the System; provided, however, that if only a portion of the Bonds are refunded and if said Bonds are refunded in such manner that the refunding bonds bear a higher average rate of interest or become due on a date earlier than that of the Bonds which are refunded, then said Bonds may be refunded without complying with the provisions of Section 902 hereof only by and with the written consent of the Registered Owners of a majority in principal amount of the Bonds not refunded. -31- If a forward supply contract is employed in connection with the refunding, (i) a verification report shall expressly state that the adequacy of the escrow to accomplish the refunding project relies solely on the initial escrowed investments and the maturing principal thereof and interest income thereon and does not assume performance under or compliance with the forward supply contract, and (ii) the applicable escrow agreement shall provide that in the event of any discrepancy or difference between the terms of the forward supply contract and the escrow agreement and the ordinance, the terms of the escrow agreement and the ordinance shall be controlling. ARTICLE X DEFAULT AND REMEDIES Section 1001. Acceleration of Maturity Upon Default. The City covenants and agrees that if (1) it defaults in the payment of the principal of or interest on any of the Bonds as the same become due on any Bond Payment Date (without giving effect to any payments made under the Bond Insurance Policy), or (2) the City or its governing body or any of the officers, agents or employees thereof fail or refuse to comply with any of the provisions of this Ordinance or of the constitution or statutes of the State of Missouri, and such default specified in (2) above continues for a period of 60 days after written notice specifying such default has been given to the City by the Registered Owner of any Bond then Outstanding, then, at any time thereafter and while such default continues, the Registered Owners of 25 % in principal amount of the Bonds then Outstanding may, subject to the prior written consent of the Bond Insurer (provided the Bond Insurer has not failed to comply with its payment obligations under the Bond Insurance Policy), by written notice to the City filed in the office of the Deputy City Clerk or delivered in person to said Deputy City Clerk, declare the principal of all Bonds then Outstanding to be due and payable immediately. Upon any such declaration given as aforesaid, all of said Bonds shall become and be immediately due and payable, anything in this Ordinance or in the Bonds contained to the contrary notwithstanding. This provision, however, is subject to the condition that if at any time after the principal of said Outstanding Bonds has been so declared to be due and payable, all arrears of interest upon all of said Bonds, except interest accrued but not yet due on such Bonds, and all arrears of principal upon all of said Bonds has been paid in full and all other defaults, if any, by the City under the provisions of this Ordinance and under the provisions of the statutes of the State of Missouri have been cured, then and in every such case the Registered Owners of a majority in principal amount of the Bonds then Outstanding, may, subject to the prior written consent of the Bond Insurer (provided the Bond Insurer has not failed to comply with its payment obligations under the Bond Insurance Policy), by written notice to the City given as hereinbefore specified, rescind and annul such declaration and its consequences, but no such rescission or annulment shall extend to or affect any subsequent default or impair any rights consequent thereon. Section 1002. Other Remedies. The provisions of this Ordinance, including the covenants and agreements herein contained, shall constitute a contract between the City and the Registered Owners of the Bonds, and the Registered Owner or Owners of not less than 10% in principal amount of the Bonds at the time Outstanding shall have the right for the equal benefit and protection of all Registered Owners of Bonds similarly situated: (a) by mandamus or other suit, action or proceedings at law or in equity to enforce the rights of such Registered Owner or Owners against the City and its officers, agents and employees, and to require and compel duties and obligations required by the provisions of this Ordinance or by the Constitution and laws of the State of Missouri; _32_ (b) by suit, action or other proceedings in equity or at law to require the City, its officers, agents and employees to account as if they were the trustees of an express trust; and (c) by suit, action or other proceedings in equity or at law to enjoin any acts or things which may be unlawful or in violation of the rights of the Registered Owners of the Bonds. Section 1003. Limitation on Rights of Bondowners. No one or more Bondowners secured hereby shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security granted and provided for herein, or to enforce any right hereunder, except in the manner herein provided, and all proceedings at law or in equity shall be instituted, had and maintained for the equal benefit of all Registered Owners of such Outstanding Bonds. Section 1004. Remedies Cumulative. No remedy conferred herein upon the Bondowners is intended to be exclusive of any other remedy, but each such remedy shall be cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred herein. No waiver of any default or breach of duty or contract by the Registered Owner of any Bond shall extend to or affect any subsequent default or breach of duty or contract or shall impair any rights or remedies consequent thereon. No delay or omission of any Bondowner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein. Every substantive right and every remedy conferred upon the Registered Owners of the Bonds by this Ordinance may be enforced and exercised from time to time and as often as may be deemed expedient. If any suit, action or proceedings taken by any Bondowner on account of any default or to enforce any right or exercise any remedy has been discontinued or abandoned for any reason, or has been determined adversely to such Bondowner, then, and in every such case, the City and the Registered Owners of the Bonds shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies, powers and duties of the Bondowners shall continue as if no such suit, action or other proceedings had been brought or taken. Section 1005. No Obligation to Levy Taxes. Nothing contained in this Ordinance shall be construed as imposing on the City any duty or obligation to levy any taxes either to meet any obligation incurred herein or to pay the principal of or interest on the Bonds. Section 1006. Rights of Bond Insurer Upon Default. (a) The Bond Insurer shall be deemed to be the sole Owner of the Bonds for all purposes under this Article (except with respect to any right of Bondowners to receive notices from the City or the Paying Agent), provided the Bond Insurer has not failed to comply with its payment obligations under the Bond Insurance Policy. (b) The City shall deliver notice to the Bond Insurer immediately upon the occurrence of any default in the payment of the principal of or interest on the Bonds. The City and the Paying Agent shall deliver the Bond Insurer notice of any other default hereunder within 30 days after such default becomes known to either of them. (c) The Bond Insurer shall be included as a party in interest and as a party entitled to (1) notify the City or the Paying Agent of the occurrence of an event of default and (ii) request the City or the Paying Agent to intervene in judicial proceedings that affect the Bonds or the security therefor. The City and the Paying Agent shall be required to accept notice of default from the Bond Insurer. -33- (d) Neither the City nor the Paying Agent shall take the Bond Insurance Policy into account in determining whether the rights of Bondowners and adversely affected by actions taken pursuant to the terms and provisions of this Ordinance. ARTICLE XI DEFEASANCE Section 1101. Defeasance. When any or all of the Bonds or the interest payments thereon have been paid and discharged, then the requirements contained in this Ordinance and the pledge of revenues made hereunder and all other rights granted hereby shall terminate with respect to the Bonds so paid and discharged. Bonds or the interest payments thereon shall be deemed to have been paid and discharged within the meaning of this Ordinance if there has been deposited with the Paying Agent, or other commercial bank or trust company located in the State of Missouri and having full trust powers, at or prior to the Stated Maturity or Redemption Date of said Bonds, in trust for and irrevocably appropriated thereto, money and/or Defeasance Obligations which, together with the interest to be earned thereon, will be sufficient for the payment of the principal or Redemption Price of said Bonds, and/or interest to accrue on such Bonds to the Stated Maturity or Redemption Date, as the case may be, or if default in such payment shall have occurred on such date, then to the date of the tender of such payments; provided, however, that if any such Bonds shall be redeemed prior to the Stated Maturity thereof, (1) the City shall have elected to redeem such Bonds, (2) either notice of such redemption shall have been given, or the City shall have given irrevocable instructions, or shall have provided for an escrow agent to give irrevocable instructions, to the Paying Agent to redeem such Bonds in compliance with Section 302(a) of this Ordinance, and (3) in the event of an advance refunding (as determined by Section 149(d) of the Code), the City shall cause to be delivered to the Bond Insurer a verification report of an independent nationally recognized certified public accountant. Any money and Defeasance Obligations that at any time shall be deposited with the Paying Agent or other commercial bank or trust company by or on behalf of the City, for the purpose of paying and discharging any of the Bonds or the interest payments thereon, shall be and are hereby assigned, transferred and set over to the Paying Agent or other bank or trust company in trust for the respective Registered Owners of the Bonds, and such money shall be and are hereby irrevocably appropriated to the payment and discharge thereof. All moneys and Defeasance Obligations deposited with the Paying Agent or other bank or trust company shall be deemed to be deposited in accordance with and subject to all of the provisions contained in this Ordinance. ARTICLE XII MISCELLANEOUS PROVISIONS Section 1201. Amendments. The rights and duties of the City and the Bondowners, and the terms and provisions of the Bonds or of this Ordinance, may be amended or modified at any time in any respect by ordinance of the City with the written consent of the Registered Owners of not less than a majority in principal amount of the Bonds then Outstanding, such consent to be evidenced by an instrument or instruments executed by such Registered Owners and duly acknowledged or proved in the manner of a deed to be recorded, and such instrument or instruments shall be filed with the Deputy City Clerk, but no such modification or alteration shall: (a) extend the maturity of any payment of principal or interest due upon any Bond; -34- (b) effect a reduction in the amount which the City is required to pay by way of principal of or interest on any Bond; (c) permit the creation of a lien on the revenues of the System prior or equal to the lien of the Bonds or Parity Bonds; (d) permit preference or priority of any Bonds over any other Bonds; or (e) reduce the percentage in principal amount of Bonds required for the written consent to any modification or alteration of the provisions of this Ordinance. Any provision of the Bonds or of this Ordinance may, however, be amended or modified by ordinance duly adopted by the governing body of the City at any time in any respect with the written consent of the Registered Owners of all of the Bonds at the time Outstanding. Without notice to or the consent of any Bondowners, the City may amend or supplement this Ordinance for the purpose of curing any formal defect, omission, inconsistency or ambiguity therein or in connection with any other change therein which is not materially adverse to the interests of the Bondowners. Every amendment or modification of the provisions of the Bonds or of this Ordinance, to which the written consent of the Bondowners is given, as above provided, shall be expressed in an ordinance adopted by the governing body of the City amending or supplementing the provisions of this Ordinance and shall be deemed to be a part of this Ordinance. A certified copy of every such amendatory or supplemental ordinance, if any, and a certified copy of this Ordinance shall always be kept on file in the office of the Deputy City Clerk, and shall be made available for inspection by the Registered Owner of any Bond or a prospective purchaser or owner of any Bond authorized by this Ordinance, and upon payment of the reasonable cost of preparing the same, a certified copy of any such amendatory or supplemental ordinance or of this Ordinance will be sent by the Deputy City Clerk to any such Bondowner or prospective Bondowner. Any and all modifications made in the manner hereinabove provided shall not become effective until there has been filed with the Deputy City Clerk a copy of the ordinance of the City hereinabove provided for, duly certified, as well as proof of any required consent to such modification by the Registered Owners of the Bonds then Outstanding. It shall not be necessary to note on any of the Outstanding Bonds any reference to such amendment or modification. The City shall furnish to the Paying Agent a copy of any amendment to the Bonds or this Ordinance made hereunder which affects the duties or obligations of the Paying Agent under this Ordinance. Notwithstanding any provision of this Section to the contrary, the City shall not amend, modify or supplement this Ordinance without the prior written consent of the Bond Insurer, and the City shall provide the Bond Insurer with a transcript of all proceedings relating to any supplemental ordinance. In addition, any rating agency rating the Bonds shall receive a notice of each amendment and a copy thereof at least 15 days prior to its adoption by the governing body of the City. Section 1202. Notices, Consents and Other Instruments by Bondowners. Any notice, consent, request, direction, approval, objection or other instrument required by this Ordinance to be signed and -35- executed by the Bondowners may be in any number of concurrent writings of similar tenor and may be signed or executed by such Bondowners in person or by agent appointed in writing. Proof of the execution of any such instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the purposes of this Ordinance, and shall be conclusive in favor of the City and the Paying Agent with regard to any action taken, suffered or omitted under any such instrument, namely: (a) The fact and date of the execution by any person of any such instrument may be proved by a certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such instrument acknowledged before such officer the execution thereof, or by affidavit of any witness to such execution. (b) The fact of ownership of Bonds, the amount or amounts, numbers and other identification of Bonds, and the date of holding the same shall be proved by the Bond Register. In determining whether the Registered Owners of the requisite principal amount of Bonds Outstanding have given any request, demand, authorization, direction, notice, consent or waiver under this Ordinance, Bonds owned by the City shall be disregarded and deemed not to be Outstanding under this Ordinance, except that, in determining whether the Bondowners shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Bonds which the Bondowners know to be so owned shall be so disregarded. Notwithstanding the foregoing, Bonds so owned which have been pledged in good faith shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Bondowners the pledgee's right so to act with respect to such Bonds and that the pledgee is not the City. Any notices to the Bondowners shall be delivered to the addresses of such Bondowners as shown on the Bond Register. Any notices to the Bond Insurer and the Fiscal Agent shall be delivered to: Financial Guaranty Insurance Company 115 Broadway New York, New York 10006 Attention: General Counsel State Street Bank and Trust Company, N.A. 61 Broadway New York, New York 10006 Attention: Corporate Trust Department Section 1203. Information to Be Provided to the Bond Insurer. The City shall provide the Bond Insurer with the following information while the Bonds remain Outstanding: (a) Within 120 days after the end of the City's fiscal year, a budget for the next fiscal year, annual audited financial statements, a statement of the amount on deposit in the Debt Service Reserve Account as of the last Valuation Date, and, if not presented in the audited financial statements, a statement of the Net Revenues Available for Debt Service for the fiscal year just ended; (b) Any official statement of other disclosure document, if any, prepared in connection with the issuance of additional debt payable from revenues of the System, whether or not it is on a parity with the Bonds, within 30 days after the sale of such debt; -36- (c) Notice of any draw upon or deficiency due to market fluctuation in the amount, if any, on deposit in the Debt Service Reserve Account; (d) Notice of the redemption, other than mandatory sinking fund redemption, of any of the Bonds, including the principal amount, maturities and CUSIP numbers thereof; (e) Notice of the resignation or removal of the Paying Agent and the appointment of any successor thereto. (f) Simultaneously with the delivery of the annual audited financial statements: (1) The number of System users as of the end of the fiscal year; (2) Notification of the withdrawal of any System user comprising 5 % or more of System sales measured in terms of revenue dollars since the last reporting date; (3) Any significant plant retirements or expansions planned or undertaken since the last reporting date; (4) Maximum and average daily usage of the System for the fiscal year; (5) Updated capital plans for expansion and improvement projects to the System; and (6) Results of annual engineering inspections, if any, with respect to the System occurring at the end of the fiscal year; and (g) Such additional information as the Bond Insurer may reasonably request from time to time. Section 1204. Bond Insurer as Third Party Beneficiary. To the extent that this Ordinance confers upon or gives or grants to the Bond Insurer any right, remedy or claim under or by reason of this Ordinance, the Bond Insurer is hereby explicitly recognized as being a third -party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder. Section 1205. Amendment to Series 1992 Ordinance. In accordance with Section 1201 of the Series 1992 Ordinance, the City hereby amends Section 202 of the Series 1992 Ordinance by deleting the portion of the Maturity Schedule relating to the Term Bonds and inserting the following in lieu thereof: TERM BONDS Stated Maturity Principal Annual Rate March 1 Amount of Interest 2005 $1,665,000 7.45% 2012 7,385,000 6.40 Section 1206. Further Authority. The officers of the City, including the Mayor and Deputy City Clerk, shall be, and they hereby are, authorized and directed to execute all documents and take such actions as they may deem necessary or advisable in order to carry out and perform the purposes of this -37- Ordinance and to make ministerial alterations, changes or additions in the foregoing agreements, statements, instruments and other documents herein approved, authorized and confirmed which they may approve and the execution or taking of such action shall be conclusive evidence of such necessity or advisability. Section 1207. Severability. If any section or other part of this Ordinance, whether large or small, is for any reason held invalid, the invalidity thereof shall not affect the validity of the other provisions of this Ordinance. Section 1208. Governing Law. This Ordinance shall be governed exclusively by and constructed in accordance with the applicable laws of the State of Missouri. Section 1209. Effective Date. This Ordinance shall take effect and be in full force immediately after its passage by the City Council. Section 1210. Emergency Ordinance. The City Council finds that an emergency exists within the meaning of Section 3.15(a) of the City Charter, as a volatile bond market requires that the City commit to interest rates on the Bonds the same day this bill is introduced in order to obtain the lowest rates possible on such obligations. The City Council further finds that this Bill is one which concerns the immediate preservation of the public peace, property, health, safety or morals as provided in said Section. PASSED by the City Council of the City of Cape Girardeau, Missouri, this 4th day of December, 1995. (Seal) ATTEST: J oad Deput3OCity Clerk No a Mayo Registered No. Interest Rate EXHIBIT A (FORM OF BONDS) UNITED STATES OF AMERICA STATE OF MISSOURI CITY OF CAPE GIRARDEAU, MISSOURI WATERWORKS SYSTEM REFUNDING REVENUE BOND SERIES 1995 Maturity Date OWNER: PRINCIPAL AMOUNT: Dated Date December n 1, 1995 Registered CUSIP Number DOLLARS The CITY OF CAPE GIRARDEAU, MISSOURI, a home rile charter city and a political subdivision of the State of Missouri (the "City"), for value received, hereby promises to pay to the Registered Owner shown above, or registered assigns, but solely from the source and in the manner herein specified, the principal amount shown above on the maturity date shown above, and to pay interest thereon, but solely from the source and in the manner herein specified, at the interest rate per annum shown above (computed on the basis of a 360 -day year of twelve 30 -day months) from the Dated Date shown above or from the most recent interest payment date to which interest has been paid or duly provided for, payable semiannually on March 1 and September 1 in each year, beginning on March 1, 1996, until said principal amount has been paid. The principal or redemption price of this Bond shall be paid at maturity by check or draft or upon earlier redemption to the person in whose name this Bond is registered at the maturity or redemption date thereof, upon presentation and surrender of this Bond at the payment office of MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION, St. Louis, Missouri (the 'Paying Agent"). The interest payable on this Bond on any interest payment date shall be paid to the person in whose name this Bond is registered on the Bond Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Paying Agent to such Registered Owner at the address shown on the Bond Register or (b) in the case of an interest payment to any Registered Owner of $250,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Registered Owner upon written notice given to the Paying Agent by such Registered Owner not less than 15 days prior to the Record Date for such A-1 interest, containing the electronic transfer instructions including the bank (which shall be in the continental United States), ABA routing number and account number to which such Registered Owner wishes to have such transfer directed. THE TERMS AND PROVISIONS OF THIS BOND ARE CONTINUED ON THE REVERSE SIDE HEREOF AND SUCH CONTINUED TERMS AND PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Ordinance until the Certificate of Authentication hereon has been executed by the Paying Agent. IT IS HEREBY CERTIFIED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Bonds have existed, happened and been performed in due time, form and manner as required by law, and that before the issuance of the Bonds, provision has been duly made for the collection and segregation of the revenues of the System and for the application of the same as provided in the Ordinance. IN WITNESS WHEREOF, the CITY OF CAPE GIRARDEAU, MISSOURI, has executed this Bond by causing it to be signed by the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of its City Clerk and its official seal to be affixed hereto or unprinted hereon. CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the issue described in the within -mentioned Ordinance. Registration Date CITY OF CAPE GIRARDEAU, MISSOURI I� Mayor (Seal) MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION, Paying Agent ATTEST: 0 Authorized Officer or Signatory A-2 Deputy City Clerk (FORM OF REVERSE SIDE OF BOND) ADDITIONAL PROVISIONS This Bond is one of a duly authorized series of bonds of the City designated "Waterworks System Refunding Revenue Bonds, Series 1995," aggregating the principal amount of n $9.095.000 (the "Bonds"), issued by the City for the purpose of (a) advance refunding $8,090,000 principal amount of the City's outstanding Waterworks System Revenue Bonds, Series 1992, maturing in the year 2006 and thereafter, and (b) paying the costs of issuing the Bonds. The Bonds are being issued under the authority of and in full compliance with the Constitution and laws of the State of Missouri, including particularly Sections 91.010 and 108.140 of the Revised Statutes of Missouri, as amended, Article VI, Section 27 of the Missouri Constitution and the charter of the City, and pursuant to an ordinance duly adopted by the governing body of the City (herein called the "Ordinance"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Ordinance. At the option of the City, Bonds or portions thereof maturing on March 1, 2007 and thereafter may be called for redemption and payment prior to maturity on March 1, 2006 and thereafter in whole at any time or in part on any interest payment date in the order of maturity designated by the City (Bonds of less than a fall maturity to be selected in multiples of $5,000 principal amount in such equitable manner as the Paying Agent shall designate) at a redemption price equal to 100% of the principal amount thereof, plus accrued interest thereon to the redemption date. Bonds maturing on March 1, 2012 are subject to mandatory redemption and payment prior to maturity pursuant to the mandatory redemption requirements of the Ordinance on March 1, n 2010 and on each March 1 thereafter prior to maturity, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date. Notice of redemption, unless waived, is to be given by the Paying Agent by mailing an official redemption notice by first class mail at least 30 days prior to the redemption date, to the original purchaser of the Bonds and each Registered Owner of each of the Bonds to be redeemed at the address shown on the Bond Register. Notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City defaults in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. The Bonds are special obligations of the City payable solely from, and secured as to the payment of principal and interest by a pledge of, the revenues derived from the operation of the System, and the taxing power of the City is not pledged to the payment of the Bonds either as to principal or interest. The Bonds shall not be or constitute a general obligation of the City, nor shall they constitute an indebtedness of the City within the meaning of any constitutional or statutory provision, limitation or restriction. The Bonds stand on a parity and are equally and ratably secured with respect to the payment of principal and interest from the net income and revenues of the System and in all other respects with the Waterworks System Revenue Bonds, Series 1992, of the City, dated April 15, 1992, outstanding, as of the date of this Bond, in the principal amount of $3,610,000. Under the conditions set forth in the Ordinance, the City has the right to issue additional parity bonds and other obligations payable from the same source and secured by the same revenues as the Bonds; provided, however, that such additional bonds may be so A-3 issued only in accordance with and subject to the covenants, conditions and restrictions relating thereto set forth in the Ordinance. The City hereby covenants and agrees with the Registered Owner of this Bond that it will keep and perform all covenants and agreements contained in the Ordinance, and will fix, establish, maintain and collect such rates, fees and charges for the use and services furnished by or through the System, as will produce revenues sufficient to pay the costs of operation and maintenance of the System, pay the principal of and interest on the Bonds as and when the same become due, and provide reasonable and adequate reserve funds. Reference is made to the Ordinance for a description of the covenants and agreements made by the City with respect to the collection, segregation and application of the revenues of the System, the nature and extent of the security for the Bonds, the rights, duties and obligations of the City with respect thereto, and the rights of the Registered Owners thereof. The Bonds are issuable in the form of fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof. This Bond may be transferred or exchanged, as provided in the Ordinance, only on the Bond Register upon surrender of this Bond together with a written instrument of transfer or exchange satisfactory to the Paying Agent duly executed by the Registered Owner or the Registered Owner's duly authorized agent, and thereupon a new Bond or Bonds in any authorized denomination of the same maturity and in the same aggregate principal amount shall be issued to the transferee in exchange therefor as provided in the Ordinance and upon payment of the charges therein prescribed. The City and the Paying Agent may deem and treat the person in whose name this Bond is registered on the Bond Register as the absolute owner hereof for the purpose of receiving payment of, or on account of, the principal or redemption price hereof and interest due hereon and for all other purposes. FEW, ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto Print or Type Name, Address and Social Security Number or other Taxpayer Identification Number of Transferee the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints _ agent to transfer the within Bond on the Bond Register kept by the Paying Agent for the registration thereof, with full power of substitution in the premises. Dated: A-5 NOTICE: The signature to this assignment must correspond with the name of the Registered Owner as it appears upon the face of the within Bond in every particular. Signature Guaranteed By: (Name of Eligible defined by SEC Rule Ad -15)) By: _ Title: Guarantor Institution as 17 Ad -15 (17 CFR 240.17 STATEMENT OF INSURANCE Financial Guaranty Insurance Company ("Financial Guaranty") has issued a policy containing the following provisions with respect to the City of Cape Girardeau, Missouri, Waterworks System Refunding Revenue Bonds, Series 1995 (the "Bonds"), such policy being on file at the principal corporate trust office of the paying agent (the "Paying Agent"): Financial Guaranty hereby unconditionally and irrevocably agrees to pay for disbursement to the Bondholders that portion of the principal of and interest on the Bonds which is then due for payment and which the issuer of the Bonds (the "Issuer") shall have failed to provide. Due for payment means, with respect to the principal, the stated maturity date thereof, or the date on which the same shall have been duly called for mandatory sinking fund redemption, but not any earlier date on which the payment of principal of the Bonds is due by reason of acceleration, and with respect to interest, the stated date for payment of such interest. Upon receipt of telephonic or telegraphic notice, subsequently confirmed in writing, or written notice by registered or certified mail, from a Bondholder or the Paying Agent to Financial Guaranty that the required payment of principal or interest has not been made by the Issuer to the Paying Agent, Financial Guaranty on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with State Street Bank and Trust Company, N.A., or its successor as its agent (the "Fiscal Agent"), sufficient to make the portion of such payment not paid by the Issuer. Upon presentation to the Fiscal Agent of evidence satisfactory to it of the Bondholder's right to receive such payment and any appropriate instruments of assignment required to vest all of such Bondholder's right to such payment in Financial Guaranty, the Fiscal Agent will disburse such amount to the Bondholder. As used herein the term "Bondholder" means the person other than the Issuer who at the time of nonpayment of a Bond is entitled under the terms of such Bond to payment thereof. The policy is non -cancellable for any reason. FINANCIAL GUARANTY INSURANCE COMPANY A-6 LEGAL OPINION The following is a true and correct copy of the approving legal opinion of Gilmore & Bell, P.C., Bond Counsel, which was dated and issued as of the date of original issuance and delivery of such Bonds: GILMORE & BELL, P.C. One Metropolitan Square, Suite 2350 St. Louis, Missouri 63102 (LEGAL OPINION OF BOND COUNSEL) EXHIBIT B PRELIMINARY OFFICIAL STATEMENT [On file in the City Clerk's Office.] EXHIBIT C FORM OF BOND PURCHASE AGREEMENT [On file in the City Clerk's Office.] C-1 $9,095,000 CITY OF CAPE GIRARDEAU, MISSOURI WATERWORKS SYSTEM REFUNDING REVENUE BONDS SERIES 1995 November 28, 1995 BOND PURCHASE AGREEMENT Mayor and City Council Cape Girardeau, Missouri Ladies and Gentlemen: On the basis of the representations, warranties and covenants and upon the terms and conditions contained in this Bond Purchase Agreement, the undersigned, A.G. Edwards & Sons, Inc. and Piper Jaffray Inc. (the "Purchasers"), hereby offer to purchase $9,095,000 aggregate principal amount of Waterworks System Refunding Revenue Bonds, Series 1995 (the "Bonds"), to be issued by the City of Cape Girardeau, Missouri (the "City") under and pursuant to an Ordinance to be adopted by the City Council of the City on December 4, 1995 (the "Ordinance"). Capitalized terms used herein shall have the meanings set forth in the Ordinance unless some other meaning is plainly indicated. This offer is made subject to acceptance of this Bond Purchase Agreement by the City on or before 11:59 p.m., central standard time, on November 28, 1995. SECTION 1. CITY'S REPRESENTATIONS AND WARRANTIES By acceptance hereof, the City, hereby represents and warrants to the Purchasers that: (a) The City is a home rule charter city and political subdivision organized and existing under the laws of the State of Missouri. (b) The City has complied with all provisions of the Constitution and the laws of the State of Missouri, and has full power and authority to consummate all transactions contemplated by the Ordinance and this Bond Purchase Agreement, and all other agreements relating thereto. (c) The City has duly authorized or will duly authorize by all necessary action to be taken by the City (1) the adoption and performance of the Ordinance; (2) the execution, delivery and performance of this Bond Purchase Agreement; (3)the execution and performance of the Escrow Trust Agreement dated as of December 1, 1995 (the "Escrow Trust Agreement"), between the City and Mercantile Bank of St. Louis National Association, St. Louis, Missouri, as escrow agent (the "Escrow Agent"); (4) the approval of the Official Statement; (5) the execution and performance of any and all such other agreements and documents as may be required to be executed, delivered and performed by the City in order to carry out, give effect to and consummate the transactions contemplated by the Ordinance and this Bond Purchase Agreement; and (6)the carrying out, giving effect to and consummation of the transactions contemplated by the Ordinance and this Bond Purchase Agreement. Executed counterparts of the Ordinance and all such other agreements and documents specified herein will be delivered to the Purchasers by the City at the Closing Time (as defined below). (d) The Ordinance, the Escrow Trust Agreement and this Bond Purchase Agreement, when executed and delivered by the City, will be the legal, valid and binding obligations of the City enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by any applicable bankruptcy, reorganization, insolvency, moratorium or other law or laws affecting the enforcement of creditors' rights generally or against entities such as the City and further subject to the availability of equitable remedies. (e) The Bonds will be duly authorized by the City, and when issued, delivered and paid for as provided for herein and in the Ordinance, will have been duly executed, authenticated, issued and delivered and will constitute valid and binding obligations of the City enforceable in accordance with their terms and entitled to the benefits and security of the Ordinance (subject to any applicable bankruptcy, reorganization, insolvency, moratorium or other law or laws affecting the enforcement of creditors' rights generally or against entities such as the City and further subject to the availability of equitable remedies). The Bonds will not pledge the full faith and credit of the State or any political subdivision thereof, including the City, nor shall they be secured by a lien against any of their respective properties, except as provided for in the Ordinance. The Bonds shall be limited obligations of the City payable solely out of the net income and revenues derived from the operation of the System(except to the extent paid out of moneys attributable to Bond proceeds or the income from the temporary investment thereof), and the Bonds shall not constitute an indebtedness of the City within the meaning of any constitutional, statutory or charter provision, limitation or restriction. (f) The execution and delivery of the Ordinance, this Bond Purchase Agreement, the Bonds, the Escrow Trust Agreement and the Official Statement and compliance with the provisions thereof, will not conflict with or constitute on the part of the City a violation or breach of, or a default under, any existing law, regulation, court or administrative decree or order, or any agreement, Ordinance, mortgage, lease or other instrument to which it is subject or by which it is or may be bound. (g) The City is not, or with the giving of notice or lapse of time or both would not be, in violation of or in default under any indenture, mortgage, deed of trust, loan agreement, bonds or other agreement or instrument to which the City is a party or by which it is or may be bound, except for violations and defaults which individually and in the aggregate are not material to the City and will not be material to the holders of the Bonds. As of the Closing Time, no event will have occurred and be continuing which with the lapse of time or the giving of notice, or both, would constitute an event of default under the Ordinance, the Escrow Trust Agreement or the Bonds. (h) The information contained in the Preliminary Official Statement dated November 21, 1995, as amended and supplemented by the Official Statement dated December 4, 1995, and in any amendment or supplement thereto that may be authorized for use by the City with respect to the Bonds (collectively, the "Official Statement"), relating to (1) the City and the System, including the organization, operations, structure, and financial and other affairs of the foregoing, (2) the financial statements including income statements and balance sheets referred to in subsection (j) hereof, (3) application by the City of the -2- proceeds to be received by it from the sale of the Bonds, and (4)the City's participation in the transactions contemplated by the Ordinance and this Bond Purchase Agreement is, and as of the Closing Time will be, true, correct and complete in all material respects and does not omit and will not omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (i) For the purpose of enabling the Purchasers to comply with the requirements of Rule 15c2-12(b)(1)of the Securities and Exchange Commission, promulgated under the Securities Exchange Act of 1934, as amended(the "1934 Act"), the City hereby deems the information regarding the City contained in the Preliminary Official Statement to be "final" as of its date, except for the omission of such information as is permitted by Rule 15c2-12(b)(1), such as offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings, identity of the underwriters and other terms of the Bonds depending on such matters. (j) The financial statements of the City for the fiscal year ended June 30, 1995, audited by Begley, Janssen, Young & Birk, CPA's, contained in the Official Statement, except as noted therein, present fairly and accurately the financial condition of the City as of the dates indicated and the results of its operations for the periods specified, and such financial statements are prepared in conformity with generally accepted accounting principles consistently applied in all material respects for the periods involved. (k) The City has not, since June 30, 1995, incurred any material liabilities and there has been no material adverse change in the condition of the City or the System, financial or otherwise, other than as set forth in the Official Statement. (1) There is no action, suit, proceeding, inquiry or investigation at law or in equity or before or by any court, public board or body pending or, to the knowledge of the City, threatened against or affecting the City or the System(or, to its knowledge, any basis therefor) wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated hereby or by the Ordinance or the validity of the Bonds, the Ordinance, the Escrow Trust Agreement, this Bond Purchase Agreement or any agreement or instrument to which the City is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby or by the Ordinance. (m) The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the City is a bond issuer whose arbitrage certifications may not be relied upon. (n) The City will execute a Continuing Disclosure Certificate, which will require the City to provide the annual financial information and event notices to information repositories in the manner and to the extent required by Rule 15c2-12 under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"). (o) At no time since July 3, 1995, has the City failed to comply in any material respect with any of the information reporting requirements contained in Rule 15c2-12. Any certificate signed by any of the authorized officials of the City and delivered to the Purchasers in connection with the Closing shall be deemed a representation and warranty by the City to the Purchasers as to the statements made therein. -3- SECTION 2. COVENANTS AND AGREEMENTS OF CITY The City covenants and agrees with the Purchasers for the time period specified, and if no period is specified, for so long as any of the Bonds remain outstanding, as follows: (a) To cooperate with the Purchasers and their counsel in any reasonable endeavor to qualify the Bonds for offering and sale under the securities or "Blue Sky" laws of such jurisdictions of the United States as the Purchasers may reasonably request; provided that nothing contained herein shall require the City to file written consents to suit or written consents to service of process in any jurisdiction in which such consent may be required by law or regulation so that the Bonds may be offered or sold. The City consents to the use of drafts of the Preliminary Official Statement, the Preliminary Official Statement and drafts of the Official Statement prior to the availability of the Official Statement by the Purchasers in obtaining such qualification. The Purchasers shall pay all expenses and costs (including legal, registration and filing fees) incurred in connection therewith. (b) If, prior to the earlier of(1) 90 days after the "end of the underwriting period" (as defined in Rule 15c2-12 under the 1934 Act) or (2) the time when the Official Statement is available to any person from a nationally recognized municipal securities information repository, but in no case earlier than 25 days after the end of the underwriting period, any event shall occur relating to or affecting the City or the System, as a result of which it is necessary to amend or supplement the Official Statement in order to make the statements therein, in the light of the circumstances existing when the Official Statement is delivered to a purchaser, not materially misleading, or the Official Statement is required to be amended or supplemented to comply with law, the City shall promptly prepare and furnish, at the expense of the City, to the Purchasers and to the dealers (whose names and addresses the Purchasers will furnish to the City) to which Bonds may have been sold by the Purchasers and to any other dealers upon request, such amendments or supplements to the Official Statement as may be necessary so that the statements in the Official Statement as so amended or supplemented will not, in the light of the circumstances existing when the Official Statement is delivered to a purchaser of the Bonds, be misleading or so that the Official Statement will comply with law. (c) Within seven business days after the date of this Bond Purchase Agreement or within sufficient time to accompany any confirmation that requests payment from any customer of the Purchasers, whichever is earlier, the City shall provide to the Purchasers sufficient copies of the Official Statement to enable the Purchasers to comply with the requirements of Rule 15c2-12(b)(4) under the 1934 Act, and with the requirements of Rule G-32 of the Municipal Securities Rulemaking Board. (d) From the date hereof until the Closing Time, the City shall furnish the Purchasers with a copy of any proposed amendment or supplement to the Official Statement for review and shall not use any such proposed amendment or supplement to which the Purchasers reasonably object. -4- (e) The proceeds of the Bonds will be used as provided in the Ordinance. Neither said proceeds nor the System have been used or shall be used in a manner which would jeopardize the tax exempt status of interest on the Bonds under the provisions of Section 103 of the Code, as long as any of the Bonds are outstanding. SECTION 3. PURCHASE, SALE AND DELIVERY OF THE BONDS On the basis of the representations, warranties, covenants and agreements contained herein and in the other agreements and documents referred to herein, and subject to the terms and conditions herein set forth, at the Closing Time the Purchasers agree to purchase from the City and the City agrees to sell to the Purchasers the Bonds at a purchase price of$8,807,453.60 (equal to $9,095,000.00 principal amount less $202,053.40 original issue discount less $85,493.00 underwriters' discount)plus accrued interest from the date of the Bonds to the date of payment and delivery. The Bonds shall be issued under and secured and subject to redemption as provided in the Ordinance, and the Bonds shall have the maturities and interest rates as set forth in Exhibit A attached hereto. The Purchasers initially agree to offer the Bonds to the public at the prices set forth on Exhibit A hereto, but may subsequently change such offering prices. The Purchasers agree to notify the City of such changes, if such changes occur prior to the Closing Time, but failure so to notify shall not invalidate such changes. The Purchasers may offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) at prices lower than the public offering prices. Payment for the Bonds shall be made by federal wire transfer or certified or official bank check or draft in immediately available federal funds payable to the order of the City for the account of the City, at the offices of Gilmore & Bell, P.C., One Metropolitan Square, Suite 2350, St. Louis, Missouri, at 9:00 A.M., local time, on December 14, 1995, or such other place, time or date as shall be mutually agreed upon by the City and the Purchasers. Upon such payment, the Bonds shall be delivered and released upon the instructions of the Purchasers to The Depository Trust Company, New York, New York. The date of such delivery and payment is herein called the "Closing Date", and the hour and date of such delivery and payment is herein called the "Closing Time". The delivery of the Bonds shall be made in definitive form, as fully registered bonds (in such denominations as the Purchasers shall specify in writing at least 48 hours prior to the Closing Time) duly executed and authenticated and bearing CUSIP numbers (provided neither the printing of a wrong number on any Bond nor the failure to print a number thereon shall constitute cause to refuse delivery of any Bond); provided, however, that the Bonds may be delivered in temporary form. If delivered in definitive form, the Bonds shall be available for examination and packaging by the Purchasers at least 24 hours prior to the Closing Time. SECTION 4. USE OF OFFICIAL STATEMENT The City hereby ratifies and confirms the Purchasers' use of the Preliminary Official Statement; and the City authorizes, and will make available, the Official Statement for the use by the Purchasers in connection with the sale of the Bonds. -5- SECTION 5. CONDITIONS TO THE PURCHASERS' OBLIGATIONS The Purchasers' obligations hereunder shall be subject to the due performance by the City of its obligations and agreements to be performed hereunder at or prior to the Closing Time and to the accuracy and completeness of the City's representations and warranties contained herein, as of the date hereof and as of the Closing Time, and are also subject to the following conditions: (a) The Bonds and the Ordinance shall have been duly authorized, executed and delivered in the form heretofore approved by the Purchasers with only such changes therein as shall be mutually agreed upon by the Purchasers and the City. (b) The Continuing Disclosure Certificate of the City contains provisions requiring the City to provide the annual financial information and event notices to information repositories in the manner and to the extent required by Rule 15c2-12 under the Securities Exchange Act of 1934, as amended. (c) At the Closing Time, the Purchasers shall receive: (1) The opinion in form and substance satisfactory to the Purchasers, dated as of the Closing Date, of Gilmore & Bell, P.C., Bond Counsel, relating to the valid authorization and issuance of the Bonds, the due authorization and adoption of the Ordinance by the City Council of the City, the exclusion of interest on the Bonds from gross income for federal income tax purposes and certain other matters. (2) Certified copies of resolutions or ordinances, as appropriate, of the City authorizing or approving, as appropriate, the execution and delivery of the Official Statement, this Bond Purchase Agreement, the Ordinance, the Escrow Trust Agreement and the Bonds, together with certificates dated the Closing Date to the effect that such resolutions or ordinances have not been modified, amended or repealed. (3) A certificate of the City, satisfactory in form and substance to the Purchasers, dated as of the Closing Date, to the effect that (i) since the date of the Preliminary Official Statement there has not been any material adverse change in the business, properties, financial condition or results of operations of the City or the System, whether or not arising from transactions in the ordinary course of business, from that set forth in the Preliminary Official Statement, and except in the ordinary course of business or as set forth in the Preliminary Official Statement, the City has not incurred any material liability with respect to the System; (ii) there is no action, suit, proceeding or, to the knowledge of the City, any inquiry or investigation at law or in equity or before or by any public board or body pending or, to the knowledge of the City, threatened against or affecting the City or the System, its officers or its property or, to the best of the knowledge of the City, any basis therefor, wherein an unfavorable decision, ruling or finding would adversely affect the System, the transactions contemplated hereby or by the Ordinance, the Escrow Trust Agreement or the Official Statement or the validity or enforceability of the Bonds, the Escrow Trust Agreement or the Bond Purchase Agreement, which are not disclosed in the Official Statement; (iii) to the knowledge of the City, the information relating to the City contained in the Official Statement is true in all material respects and does not contain any untrue statement of a material fact and does not omit to state a material fact necessary in order to make the statements made, in the light of the -6- circumstances under which they were made, not misleading; (iv) the City has duly authorized, by all necessary action, the execution, delivery and due performance by the City of the Escrow Trust Agreement and this Bond Purchase Agreement; and (v) the representations and warranties of the City set forth herein were accurate and complete as of the date hereof and are accurate and complete as of the Closing Time. (4) A completed form 8038-G (Information Return for Tax-Exempt Governmental Obligations). (5) Evidence satisfactory to the Purchasers that the Bonds have been rated "AAA" and "Aaa" by Standard & Poor's and Moody's Investors Service, Inc., respectively; (6) An executed, original Bond Insurance Policy issued by Financial Guaranty Insurance Company insuring the payment of principal of and interest on the Bonds; and (7) Such additional certificates, legal and other documents, listed on a closing agenda to be approved by Bond Counsel and counsel to the Purchasers, as the Purchasers may reasonably request to evidence performance or compliance with the provisions hereof and the transactions contemplated hereby and by the Ordinance, or as Bond Counsel shall require in order to render its opinion, all such certificates and other documents to be satisfactory in form and substance to the Purchasers. SECTION 6. CONDITIONS TO THE CITY'S OBLIGATIONS The obligations of the City hereunder are subject to the Purchasers' performance of their obligations hereunder. SECTION 7. THE PURCHASERS' RIGHT TO CANCEL The Purchasers shall have the right to cancel their obligations hereunder to purchase the Bonds (which cancellation shall not constitute a default for purposes of Section 3 hereof) by notifying the City in writing or by telegram of their election to make such cancellation prior to the Closing Time, if at any time prior to the Closing Time: (a) The Preliminary Official Statement deemed by the City to be "final" pursuant to Section 1(i) is thereafter amended or supplemented in a manner that may, in the reasonable judgment of the Purchasers, have a material adverse effect on the marketability of the Bonds. (b) A committee of the House of Representatives or the Senate of the Congress of the United States has pending before it legislation which, if enacted in its form as introduced or as amended, would have the purpose or effect of imposing federal income taxation upon revenues or other income of the general character to be derived by the City or by any similar body or upon interest received on obligations of the general character of the Bonds, or the Bonds, which, in the Purchasers' opinion, materially adversely affects the market price of the Bonds; (c) A tentative decision with respect to legislation is reached by a committee of the House of Representatives or the Senate of the Congress of the United States, or legislation is favorably reported by such a committee or be introduced, by amendment or otherwise, in or is -7- passed by the House of Representatives or the Senate, or is recommended to the Congress of the United States for passage by the President of the United States, or is enacted by the Congress of the United States, or a decision by a court established under Article III of the Constitution of the United States or the Tax Court of the United States is rendered, or a ruling, regulation or order of the Treasury Department of the United States or the Internal Revenue Service is made or proposed having the purpose or effect of imposing federal income taxation, or any other event has occurred which results in the imposition of federal income taxation, upon revenues or other income of the general character to be derived by the City or by any similar body or upon interest received on obligations of the general character of the Bonds, or the Bonds, which, in the Purchasers' opinion, materially and adversely affects the market price of the Bonds; (d) Any legislation, ordinance, rule or regulation is introduced in or is enacted by the General Assembly of the State of Missouri or by any other governmental body, department or agency of the State of Missouri, or a decision by any court of competent jurisdiction within the State of Missouri is rendered which, in the Purchasers' opinion, materially and adversely affects the market price of the Bonds, or litigation challenging the law under which the Bonds are to be issued is filed in any court in the State of Missouri; (e) A stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter is issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of any provision of the Securities Act of 1933, as amended(the "1933 Act"), the 1934 Act or the Trust Indenture Act of 1939, as amended; (0 Legislation is enacted by the Congress of the United States of America, or a decision by a court of the United States of America is rendered, to the effect that obligations of the general character of the Bonds, or the Bonds, including all the underlying obligations, are not exempt from registration under or from other requirements of the 1933 Act or the 1934 Act; (g) Any event has occurred, or information becomes known, which, in the Purchasers' opinion, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement as originally circulated, or has the effect that the Preliminary Official Statement as originally circulated contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (h) Additional material restrictions not in force as of the date hereof have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; (i) The New York Stock Exchange or any other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increases materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Purchasers; -8- (j) Any general banking moratorium has been established by federal, New York or Missouri authorities; (k) A material default has occurred with respect to the obligations of, or proceedings have been instituted under the Federal bankruptcy laws or any similar state laws by or against, any state of the United States or any city located in the United States having a population in excess of one million persons or any entity issuing obligations on behalf of such a city or state which, in the Purchasers' opinion, materially adversely affects the market price of the Bonds; (1) Any proceeding is pending or threatened by the Securities and Exchange Commission against the City; or (m) A war involving the United States has been declared, or any conflict involving the armed forces of the United States has escalated, or any other national emergency relating to the effective operation of government or the financial community has occurred, which, in the Purchasers' opinion, materially adversely affects the market price of the Bonds. SECTION 8. INDEMNIFICATION The City agrees, to the extent legally permitted, to indemnify and hold harmless the Purchasers, any director, officer, employee or controlling person of the Purchasers within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"), against any and all losses, claims, damages, liabilities or expenses whatsoever caused by any untrue statements or misleading statement or allegedly misleading statement of a material fact contained in the Official Statement or caused by any omission or alleged omission from the Official Statement of any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; provided that the City shall have no indemnification obligation with respect to any statement or omission in the information contained in the Official Statement under the heading "Miscellaneous - Underwriting." If any action is brought against one or more of the Indemnified Parties based upon the Official Statement and in respect of which indemnity may be sought against the City, the Indemnified Parties shall promptly notify the City in writing and the City shall promptly assume the defense thereof, including the employment of counsel, the payment of all expenses and the right to negotiate and consent to settlement. Any one or more of the Indemnified Parties shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Indemnified Parties unless employment of such counsel has been specifically authorized by the City. The City shall not be liable for any settlement of any such action effected without its consent by any of the Indemnified Parties, but if settled with the consent of the City or if there be a final judgment for the plaintiff in any such action against the City or any of the Indemnified Parties, with or without the consent of the City, the City agrees to indemnify and hold harmless the Indemnified Parties to the extent provided herein. If a claim for indemnification under this Section is determined to be unenforceable by a final judgment of a court of competent jurisdiction, then the City shall contribute to the aggregate losses, claims, damages or liabilities to which the Purchasers or their officers, directors, agents, employees or controlling persons may be subject in such amount as is appropriate to reflect the relative benefits received by the City, on the one hand, and the Purchasers, on the other, and the relative faults of the City and the person seeking contribution. The provisions of this Section shall survive the delivery of the Bonds hereunder. -9- SECTION 9. PAYMENT OF EXPENSES Whether or not the Bonds are sold by the City to the Purchasers (unless such sale is prevented at the Closing Time by the Purchasers' default), the Purchasers shall be under no obligation to pay any expenses incident to the performance of the obligations of the City hereunder. If the Bonds are sold by the City to the Purchasers, all expenses and costs to effect the authorization, preparation, issuance, delivery and sale of the Bonds (including, without limitation, the fees and disbursements of Gilmore & Bell, P.C., as Bond Counsel, the fees and disbursements of the Purchasers in connection with the offering and sale of the Bonds, and the expenses and costs for the preparation, printing, photocopying, execution and delivery of the Bonds, the Official Statement, this Bond Purchase Agreement and all other agreements and documents contemplated hereby) shall be paid by the City out of the proceeds of the Bonds. If the Bonds are not sold by the City to the Purchasers (unless such sale is prevented at the Closing Time by the Purchasers' default), all such expenses and costs shall be paid by the City. SECTION 10. NOTICE Any notice or other communication to be given under this Bond Purchase Agreement may be given by mailing or delivering the same in writing to the applicable person, as follows: (a) If to the City: Mr. John Richbourg Finance Director P.O. Box 617 Cape Girardeau, Missouri 63702-0617 (b) If to the Purchasers: Ms. Amelia A.J. Bond A.G. Edwards & Sons, Inc. One North Jefferson St. Louis, Missouri 63103 Mr. Jack Dillingham Mr. William Henderson Piper Jaffray Inc. 4600 Madison, Suite 1200 Kansas City, Missouri 64112 SECTION 11. APPLICABLE LAW: NONASSIGNABILITY This Bond Purchase Agreement shall be governed by the laws of the State of Missouri. This Bond Purchase Agreement shall not be assigned. SECTION 12. EXECUTION OF COUNTERPARTS This Bond Purchase Agreement may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. -10- NOU-29-1995 12 53 AGE FA GROUP 314 289 5980 P.02 • • SECTION 13. RIGHTS HEREUNDER This Bond Purchase Agreement is made for the bene5t of the City and the Purchasers and no other person including any purchaser of the Bonds shall acquire or have any rights hereunder or by virtue hereof. SECTION.14. EFFECTIVE DATE This Bond Purchase Agreement shall become effective upon acceptance hereof by the City. Upon your acceptance of the offer, the foregoing agreement will be binding upon you and the Purchasers. Please acknowledge your agreement with the foregoing by executing the enclosed copy of this Bond Purchase Agreement prior to the date and time specified on page I hereof and returning it to the undersigned. Very truly yours, A.G.ED ARDS&SONS,INC. By: wax. r. . Vice 'dent PIPER JABFRAY INC. By: Managing Director • -11- TOTAL P.02 11-28-1995 10: 14AM FROM PIPER JAFFRAY INC 816 360 3093 P. 2 SECTION 13. RIGHTS HEREUNDER This Bond Purchase Agreement is made for the benefit of the City and the Purchasers and no other person including any purchaser of the Bonds shall acquire or have any rights hereunder or by virtue hereof. SECTION 14. EFFECTIVE DATE This Bond Purchase Agreement shall become effective upon acceptance hereof by the City. Upon your acceptance of the offer, the foregoing agreement will be binding upon you and the Purchasers. Please acknowledge your agreement with the foregoing by executing the enclosed copy of this Bond Purchase Agreement prior to the date and time specified on page 1 hereof and returning it to the undersigned. Very truly yours, A.G. EDWARDS & SONS, INC. By: Vice President ' • PIPER JAFFRAY INC. // By: / Il. /L- ,.ing Director • -11- Accepted and agreed to as of the date first above written. CITY OF CAPE GIRARDEAU MISSOURI By: Title: Michael G. Miller City Manager -12- EXHIBIT A SERIAL BONDS Stated Maturity Principal Annual Rate Price or March 1 Amount of Interest Yield 1996 $ 160,000.00 3.700% 3.700% 1997 70,000.00 3.900 3.900 1998 75,000.00 4.100 4.100 1999 80,000.00 4.200 4.200 2000 80,000.00 4.300 4.300 2001 85,000.00 4.400 4.400 2002 90,000.00 4.500 4.500 2003 90,000.00 4.500 4.600 2004 95,000.00 4.600 4.700 2005 100,000.00 4.750 4.800 2006 810,000.00 4.875 4.950 2007 890,000.00 5.000 5.050 2008 980,000.00 5.000 5.150 2009 1,010,000.00 5.200 5.250 TERM BONDS Stated Maturity Principal Annual Rate Price or March 1 Amount of Interest Yield 2012 $4,480,000 5.00% 96.125 A-1 EXHIBIT D FORM OF ESCROW TRUST AGREEMENT [On file in the City Clerk's Office.] D-1 EXHIBIT E CONTINUING DISCLOSURE CERTIFICATE [On file in the City Clerk's Office.] E-1 This redlined draft, generated by CompareRite - The Instant Redliner, shows the differences between - original document : C:\SHARE\MDG\S-200393\ORD.3 and revised document: C:\SHARE\MDG\5-200393\ORD.4 CompareRite found 51 change(s) in the text Deletions appear as a double underlined ^ surrounded by [] Additions appear as double underlined text E-2