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Legislation #: 080197 Introduction Date: 2/21/2008
Type: Ordinance Effective Date: 8/24/2008
Sponsor: None
Title: Authorizing the issuance of Water Revenue Bonds; prescribing the terms, provisions and conditions for the issuance of bonds and obligations of the City; and authorizing certain actions and documents and prescribing other matters relating thereto.

Legislation History
DateMinutesDescription
2/20/2008 Filed by the Clerk's office
2/21/2008 Referred to Finance and Audit Committee
2/27/2008 Do Pass as a Committee Substitute
2/28/2008 Assigned Third Read Calendar as Substituted
3/6/2008 Councilmember Hermann Move To Re-refer
3/6/2008 Re-Referred Finance and Audit Committee
3/12/2008 Hold On Agenda (3/19/2008)
3/19/2008 Hold Off Agenda
8/6/2008 Do Pass as a Second Committee Substitute
8/7/2008 Assigned Third Read Calendar as Substituted
8/14/2008 Passed As Second Substitute

View Attachments
FileTypeSizeDescription
Water Fund Audited Financial Statement CAFR_080197.pdf Other 758K Water Fund Audited Financial Statement CAFR_080197
080197b.pdf Authenticated 2153K Authenticated 2 of 2
080197a.pdf Authenticated 2383K Authenticated 1 of 2
Summary of Major Changes to Master Water Revenue Bond Ordinance.doc Other 20K Summary of Major Changes to Master Ordinance
CIty_of_Kansas_City_Restructuring_Update.ppt Other 371K Water Enterprise Restructuring Update
Water MBO Revised Factsheet.xls Fact Sheet 50K Fact Sheet
Water MBO Revised Fiscal Note.xls Fiscal Note 24K Water MBO Fiscal Note
WSD Operating and R and R Policy.doc Other 172K WSD Operating and Renewal and Replacement Reserve Policy

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COMMITTEE SUBSTITUTE FOR ORDINANCE NO. 080197

 

Authorizing the issuance of Water Revenue Bonds; prescribing the terms, provisions and conditions for the issuance of bonds and obligations of the City; and authorizing certain actions and documents and prescribing other matters relating thereto.

 

WHEREAS, the City of Kansas City, Missouri (the City), a constitutional charter city and political subdivision duly organized and existing under the Constitution and laws of the State of Missouri and the Citys Charter, as amended, approved by the voters for its government (the Charter), owns and operates a revenue-producing waterworks system (the System, as hereinafter more fully defined); and

 

WHEREAS, the City desires from time to time to issue revenue bonds to make certain additions, extensions and improvements to the System and is authorized under the provisions of the Charter to issue and sell revenue bonds for the purpose of providing funds for such purpose, upon obtaining the required voter approval and provided that the principal of and interest on such revenue bonds shall be payable solely from the revenues derived from the operation of the System; and

 

WHEREAS, the City further desires from time to time to issue refunding revenue bonds for the purpose of refunding prior issues of revenue bonds and is authorized under the provisions of the Charter to issue and sell refunding revenue bonds for the purpose of providing funds for such purpose, provided that the principal of and interest on such refunding revenue bonds shall be payable solely from the revenues derived from the operation of the System; NOW, THEREFORE,

 

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

 

ARTICLE I

 

DEFINITIONS AND OTHER PROVISIONS

OF GENERAL APPLICATION

 

Section 1.1. Definitions. The following words and terms shall have the meanings specified below, unless the context clearly requires otherwise.

 

Accreted Value means, with respect to each Capital Appreciation Bond, (i) the initial principal amount of such Capital Appreciation Bond plus, on the date of calculation, the interest accrued thereon to such date compounded at the interest rate thereof on each compounding date contained in such Capital Appreciation Bond, and (ii) with respect to any calculation on a date other than a compounding date, the amount determined pursuant to clause (i) above as of the immediately preceding compounding date plus interest on such amount from such compounding date to the date of calculation at a rate equal to the interest rate on such Capital Appreciation Bond.

 

Accumulation Payments shall have the meaning ascribed therefor in Section 4.4(f).

 

Additional Interest means, for any period during which any Pledged Bonds are owned by a Credit Facility Provider pursuant to a Credit Facility or Credit Facility Agreement, the amount of interest accrued on such Pledged Bonds at the Pledged Bond Rate less the amount of interest which would have accrued during such period on an equal Principal amount of Bonds at the Bond Rate.

 

Administrative Service Fees means fees paid to the general fund of the City for office space and certain administrative, information technology, accounting and other support services provided to the System of the City, but which may be used to pay Principal of and Interest on Senior and Subordinate Bonds if needed.

 

Annual Budget means the annual budget of the City relating to the System (which shall include all costs, obligations and expenses properly allocable to the System), as amended or supplemented in accordance with established procedures of the City, adopted or in effect for a particular Fiscal Year.

 

Auction Rate Bonds means any Bonds which bear interest at the auction rate determined pursuant to the auction bond provisions set forth in the Series Ordinance of the City authorizing such Auction Rate Bonds.

Balloon Bonds means any series of Bonds 25% or more of the Principal of which (i) is due in any 12-month period or (ii) may, at the option of the Bondholders, be required to be redeemed, prepaid, purchased directly or indirectly by the City, or otherwise paid in any 12-month period; provided that, in calculating the Principal of such Bonds due or required to be redeemed, prepaid, purchased, or otherwise paid in any 12-month period, such Principal shall be reduced to the extent that all or any portion of such amount is required to be redeemed or amortized prior to such 12‑month period.

 

Balloon Date means any Principal Maturity Date or Put Date on which more than 25% of the Principal of related Balloon Bonds mature or are subject to mandatory redemption or could, at the option of the Bondholders, be required to be redeemed, prepaid, purchased directly or indirectly by the City, or otherwise paid.

 

Beneficial Owner shall have the meaning specified in Section 2.10.

 

Bond Counsel means any firm of nationally recognized bond counsel experienced in matters relating to tax-exempt financing, appointed by the City.

 

Bond Ordinance means this Master Bond Ordinance as it may from time to time be modified, supplemented or amended by Supplemental Ordinances.

 

Bond Rate means the rate of interest per annum payable on specified Bonds other than Pledged Bonds.

 

Bond Register means the books for the registration, transfer and exchange of Bonds maintained by the Bond Registrar.

 

Bondholder means the registered owner of one or more Bonds.

 

Bonds means any revenue bonds authorized by and authenticated and delivered pursuant to the Bond Ordinance, including any Senior Bonds and any Subordinate Bonds.

 

Business Day means a day other than a Saturday, Sunday or holiday on which the Paying Agent, Bond Registrar or applicable Credit Facility Provider is scheduled in the normal course of its operations to be open to the public for conduct of its banking operations.

 

Capital Appreciation Bonds means Bonds which bear interest which is calculated based on periodic compounding, payable only at maturity or earlier redemption.

 

City means the City of Kansas City, 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.

 

Commitment when used with respect to Balloon Bonds, means a binding written commitment from a financial institution, surety or insurance company to refinance such Bonds on or prior to any Balloon Date thereof, including without limitation any Credit Facility for such Bonds.

 

Consulting Engineer means each independent engineer or engineering firm with experience in designing and constructing waterworks facilities and retained by the City.

 

Continuing Disclosure Agreement means the continuing disclosure agreement relating to a series of Bonds, as amended from time to time in accordance with its terms.

 

Costs with respect to any Project, means the total cost, paid or incurred, to study, plan, design, finance, acquire, construct, reconstruct, renovate, repair, replace, equip, install, or otherwise develop such Project and shall include, but shall not be limited to, the following costs and expenses relating to such Project and the reimbursement to the City for any such items previously paid by the City:

 

(i) the cost of all lands, real or personal properties, rights, easements, and franchises acquired;

 

(ii) the cost of all machinery and equipment, financing charges, and interest prior to and during construction and for six months after completion of construction;

 

(iii) the cost of the acquisition, construction, reconstruction or installation of such Project;

 

(iv) the cost of engineering, architectural, development and supervisory services, fiscal agents and legal expenses, plans and specifications, and other expenses necessary or incident to determining the feasibility or practicability of any Projects, administrative expenses, and such other expenses as may be necessary or incident to any financing by Bonds;

 

(v) the cost of placing such Project in operation;

 

(vi) the cost of condemnation of property necessary for such construction and operation;

 

(vii) costs of removal associated with retiring an asset;

 

(viii) any other costs which may be incident to such Project; and

 

(iv) Costs of Issuance.

 

Costs of Issuance means issuance costs with respect to the Bonds, including but not limited to the following: underwriters spread (whether realized directly or derived through purchase of Bonds at a discount below the price at which they are expected to be sold to the public), issuers fee on SRF Bonds, management fee and expenses; Credit Facility fees and Reserve Account Credit Facility fees; counsel fees (including bond counsel, underwriters counsel, Citys counsel, as well as any other specialized counsel fees incurred in connection with the borrowing); financial advisor fees of any financial advisor to the City incurred in connection with the issuance of the Bonds; initial remarketing agent fees or auction agent fees; rating agency fees; escrow agent, verification agent and paying agent fees; accountant fees and other expenses related to issuance of the Bonds; printing costs (for the Bonds and of the preliminary and final official statement relating to the Bonds); and fees and expenses of the City incurred in connection with the issuance of the Bonds.

 

Council means the City Council of the City.

 

Credit Facility means any letter of credit, insurance policy, guaranty, surety bond, standby bond purchase agreement, line of credit, revolving credit agreement, or similar obligation, arrangement, or instrument issued by a bank, insurance company, or other financial institution which is used by the City to perform one or more of the following tasks: (i) enhancing the Citys credit by assuring owners of any of the Bonds that Principal of and interest on such Bonds will be paid promptly when due; (ii) providing liquidity for the owners of Bonds through undertaking to cause Bonds to be bought from the owners thereof when submitted pursuant to an arrangement prescribed by a Series Ordinance; or (iii) remarketing any Bonds so submitted to the Credit Facility Provider (whether or not the same Credit Facility Provider is remarketing the Bonds). The term Credit Facility shall not include a Reserve Account Credit Facility.

 

Credit Facility Agreement means an agreement between the City and a Credit Facility Provider pursuant to which the Credit Facility Provider issues a Credit Facility and may include the promissory note or other instrument evidencing the Citys obligations to a Credit Facility Provider pursuant to a Credit Facility Agreement. The term Credit Facility Agreement shall not include a Reserve Account Credit Facility Agreement.

 

Credit Facility Provider means any issuer of a Credit Facility then in effect for all or part of the Bonds. The term Credit Facility Provider shall not include any Reserve Account Credit Facility Provider. Whenever in the Bond Ordinance the consent of the Credit Facility Provider is required, such consent shall only be required from the Credit Facility Provider whose Credit Facility is issued with respect to the series of Bonds for which the consent is required.

 

Current Interest Bonds means those Bonds which are not Capital Appreciation Bonds.

 

Debt Service Requirement means the total Principal and interest coming due on Senior Bonds, or all Bonds, as applicable, whether at maturity or upon mandatory redemption, in any specified period; provided, however, that Debt Service Requirement with respect to SRF Bonds shall mean the net amount of Principal and interest coming due on such SRF Bonds after taking into account any SRF Subsidy (i.e., the amount of anticipated investment earnings which will accrue on any reserve account relating to the SRF Bonds and which will reduce the debt service payments of the City with respect to such SRF Bonds). For the purpose of calculating the Debt Service Requirement on any Bonds Outstanding or proposed to be issued that bear interest at a Variable Rate, the interest coming due in any specified future period shall be determined as if the Variable Rate in effect at all times during such future period equaled the average of the SIFMA Municipal Bond Index (formerly BMA Municipal Bond Index) for the prior 5 calendar years, or any successor index as certified to the City by a Financial Advisor. If making an historical calculation with respect to Variable Rate Bonds, actual interest rates may be used. For the purpose of calculating the Debt Service Requirement on any Auction Rate Bonds that are Outstanding or proposed to be issued, the interest coming due in any specified future period shall be determined by the Series Ordinance of the City authorizing such Auction Rate Bonds. For the purpose of calculating the Debt Service Requirement on any Capital Appreciation Bonds that are Outstanding or proposed to be issued, the total Principal and interest coming due in any specified period shall be determined, with respect to such Capital Appreciation Bonds, by the Series Ordinance of the City authorizing such Capital Appreciation Bonds. With respect to any Bonds secured by a Credit Facility, Debt Service Requirement shall also include (i) any upfront or periodic commission or commitment fee obligations with respect to such Credit Facility, (ii) the outstanding amount of any Reimbursement Obligation owed to the applicable Credit Facility Provider and interest thereon, (iii) any Additional Interest owed on Pledged Bonds to a Credit Facility Provider, and (iv) any remarketing agent or surveillance fees. With respect to any Hedged Bonds, the interest on such Hedged Bonds during any Hedge Period and for so long as the provider of the related Hedge Agreement has not defaulted on its payment obligations thereunder shall be calculated by adding (x) the amount of interest payable by the City on such Hedged Bonds pursuant to their terms and (y) the amount of Hedge Payments payable by the City under the related Hedge Agreement and subtracting (z) the amount of Hedge Receipts payable by the provider of the related Hedge Agreement at the rate specified in the related Hedge Agreement; provided, however, that to the extent that the provider of any Hedge Agreement is in default thereunder, the amount of interest payable by the City on the related Hedged Bonds shall be the interest calculated as if such Hedge Agreement had not been executed. In determining the amount of Hedge Payments or Hedge Receipts payable or receivable for any future period which are not fixed throughout the Hedge Period (i.e., which are variable), such Hedge Payments or Hedge Receipts for any period of calculation (the Determination Period) shall be computed by assuming that the variables comprising the calculation (e.g., indices) applicable to the Determination Period are equal to the average of the actual variables which were in effect (weighted according to the length of the period during which each such variable was in effect) for the most recent twelve-month period immediately preceding the date of calculation for which such information is available (or shorter period if such information is not available for a twelve-month period). For the purpose of calculating the Debt Service Requirement on Balloon Bonds (1) which are subject to a Commitment or (2) which do not have a Balloon Date within 12 months from the date of calculation, such Bonds shall be assumed to be amortized in substantially equal annual amounts to be paid for Principal and interest over an assumed amortization period of 20 years at an assumed interest rate (which shall be the interest rate certified by a Financial Advisor to be the interest rate at which the City could reasonably expect to borrow the same amount by issuing Bonds with the same priority of lien as such Balloon Bonds and with a 20-year term); provided, however, that if the maturity of such Bonds (taking into account the term of any Commitment) is in excess of 20 years from the date of issuance, then such Bonds shall be assumed to be amortized in substantially equal annual amounts to be paid .for Principal and interest over an assumed amortization period of years equal to the number of years from the date of issuance of such Bonds to maturity (including the Commitment) and at the interest rate applicable to such Bonds. For the purpose of calculating the Debt Service Requirement on Balloon Bonds (1) which are not subject to a Commitment and (2) which have a Balloon Date within 12 months from the date of calculation, the Principal payable on such Bonds on the Balloon Date shall be calculated as if paid on the Balloon Date. The Principal of and interest on Bonds and Hedge Payments shall be excluded from the determination of Debt Service Requirement to the extent that (1) the same were or are expected to be paid with amounts on deposit on the date of calculation (or Bond proceeds to be deposited on the date of issuance of proposed Bonds) in the Project Fund, the Sinking Fund Account or a similar fund for Subordinate Bonds or (2) cash or non-callable Government Securities are on deposit in an irrevocable escrow or trust account in accordance with Section 9.1 hereof (or a similar escrow or trust account for Subordinate Bonds) and such amounts (including, where appropriate, the earnings or other increment to accrue thereon) are required to be applied to pay Principal or interest and are sufficient to pay such Principal or interest. Notwithstanding anything to contrary stated above, other than with respect to Capital Appreciation Bonds and SRF Bonds, if making an historical calculation, actual debt service may be used.

 

Debt Service Reserve Requirement means an amount determined from time to time by the City as a reasonable reserve for the payment of Principal of and interest on Senior Bonds which are not Senior SRF Bonds. Initially, this amount shall be the least of (a) 10% of the stated Principal amount of the Senior Bonds which are not Senior SRF Bonds (determined as of the issue date of each series of Senior Bonds which are not Senior SRF Bonds), (b) the maximum annual Principal and interest requirements on the Senior Bonds which are not Senior SRF Bonds (determined as of the issue date of each series of Senior Bonds which are not Senior SRF Bonds), or (c) 125% of the average annual Principal and interest requirements on the Senior Bonds which are not Senior SRF Bonds (determined as of the issue date of each series of Senior Bonds which are not Senior SRF Bonds). The City may in its sole discretion reduce this amount from time to time by Supplemental Ordinance, but in no event may the City reduce this amount unless each Rating Agency indicates in writing to the City that such reduction will not, by itself, result in a reduction or withdrawal of its current Rating on the Senior Bonds. The City may increase this amount from time to time by Supplemental Ordinance, subject to an opinion of Bond Counsel. If the aggregate initial offering price of a series of Bonds to the public is less than 98% or more than 102% of par, such offering price shall be used in lieu of the stated Principal amount. Notwithstanding the foregoing, the Debt Service Reserve Requirement, if any, in connection with any Senior SRF Bonds or any Subordinate Bonds, including Subordinate SRF Bonds, shall be as provided in the Series Ordinance authorizing the issuance of such Senior SRF Bonds or such Subordinate Bonds.

 

Debt Service Reserve Subaccount means the subaccount by that name within the Sinking Fund Account established in Article IV.

 

Director means, in reference to the Department of Water Services of the City, the Director of the Department of Water Services of the City or his or her designee, and in reference to the Department of Finance of the City, the Director of the Department of Finance of the City or his or her designee, in each case, such designee shall be designated in accordance with the Citys Charter.

 

DTC means The Depository Trust Company, New York, New York, or its nominee, or its successors and assigns, or any other depository performing similar functions under the Bond Ordinance.

 

Escrow Agent means, in each case, the escrow agent for each related series of Refunded Bonds.

 

Escrow Agreement means, in each case, the Escrow Deposit Agreement between the City and the Escrow Agent for each related series of Refunded Bonds.

 

Event of Default means any of the events defined as such in Article VII.

 

Expenses of Operation and Maintenance means all reasonable and necessary expenses of operating and maintaining the System, including any ongoing fees associated with Bonds (but, excluding Administrative Service Fees, capital lease payments, if any, interest paid on water revenue bonds, depreciation and amortization charges, any non-cash OPEB Obligations and any other items listed in Section 4.3(a)(2) (11)) pursuant to Section 4.3 of this Bond Ordinance.

 

Financial Advisor means an investment banking or financial advisory firm, commercial bank, or any other Person who or which is appointed by the City for the purpose of advising the City on questions relating to the availability and terms of specified types of Bonds and is actively engaged in and, in the good faith opinion of the City, has a favorable reputation for skill and experience in underwriting or providing financial advisory services in respect of similar types of securities.

 

Fiscal Year means the 12-month period used by the City for its general accounting purposes, as it may be changed from time to time. The Fiscal Year at the time this Bond Ordinance was adopted begins on May 1 and ends on April 30 of the immediately following calendar year. As of the date hereof, the City has approved an ordinance which effects a change to the Citys Fiscal Year, to be January 1 to December 31, beginning January 1, 2011. Pursuant to such ordinance, the Citys Fiscal Year beginning May 1, 2010 will end December 31, 2010.

 

Fitch means Fitch, Inc. or, if such corporation is dissolved or liquidated or otherwise ceases to perform securities rating services, such other nationally recognized securities rating agency as may be designated in writing by the City. At the time this Bond Ordinance was adopted, the notice address of Fitch is One State Street Plaza, New York, New York 10004.

 

Forecast Period means a period of two consecutive Fiscal Years commencing with the Fiscal Year in which any proposed Senior Bonds are to be issued.

 

Government Loans means loans to the City by the government of the United States or the State, or by any department, authority or agency of either, for the purpose of acquiring, constructing, reconstructing, improving, bettering or extending any part of the System.

 

Government Obligations means (a) direct obligations of the United States of America for the full and timely payment of which the full faith and credit of the United States of America is pledged or (b) obligations issued by a person controlled or supervised by and acting as an instrumentality of the United States of America, the full and timely payment of the principal of and the interest on which is fully and unconditionally guaranteed as a full faith and credit obligation of the United States of America (including any securities described in (a) or (b) issued or held in book-entry form on the books of the Department of the Treasury of the United States of America), which obligations, in either case, (i) are not subject to redemption or prepayment prior to maturity except at the option of the holder of such obligations and (ii) may include U.S. Treasury Trust Receipts.

 

Hedge Agreement means, without limitation, (i) any contract provided by a Qualified Hedge Provider known as or referred to or which performs the function of an interest rate swap agreement, currency swap agreement, forward payment conversion agreement, or futures contract; (ii) any contract provided by a Qualified Hedge Provider providing for payments based on levels of, or changes or differences in, interest rates, currency exchange rates, or stock or other indices; (iii) any contract provided by a Qualified Hedge Provider to exchange cash flows or payments or series of payments; (iv) any type of contract provided by a Qualified Hedge Provider called, or designed to perform the function of, interest rate floors, collars, or caps, options, puts, or calls, to hedge or minimize any type of financial risk, including, without limitation, payment, currency, rate, or other financial risk; and (v) any other type of contract or arrangement provided by a Qualified Hedge Provider that the City determines is to be used, or is intended to be used, to manage or reduce the cost of any Bonds, to convert any element of any Bonds from one form to another, to maximize or increase investment return, to minimize investment return risk, or to protect against any type of financial risk or uncertainty. Notwithstanding the foregoing, any Hedge Agreement must comply with the debt policy of the City.

 

Hedge Contingency Payments means amounts payable by the City out of the Revenue Fund pursuant to any Hedge Agreement as termination payments, fees, expenses and indemnity payments.

 

Hedge Payments means amounts payable by the City pursuant to any Hedge Agreement, other than Hedge Contingency Payments.

 

Hedge Period means the period during which a Hedge Agreement is in effect.

 

Hedge Receipts means amounts payable by any provider of a Hedge Agreement pursuant to such Hedge Agreement, other than termination payments, fees, expenses and indemnity payments.

 

Hedged Bonds means any Bonds for which the City shall have entered into a Hedge Agreement.

 

Independent Certified Public Accountant means a certified public accountant, or a firm of certified public accountants, who or which is independent as that term is defined in Rule 101 and related interpretations of the Code of Professional Ethics of the American Institute of Certified Public Accountants, of recognized standing, who or which does not devote his or its full time to the City (but who or which may be regularly retained by the City).

 

Interest Payment Date means each date on which interest is to become due on any Bonds, as established in the Series Ordinance for such Bonds.

 

Investment Earnings means all interest received on and profits derived from investments of moneys in all funds and accounts of the City described in Section 4.2 other than all funds and accounts established in connection with SRF Bonds under the bond ordinance(s) authorizing such SRF Bonds.

 

Letter of Representations means the Blanket Issuer Letter of Representations, dated January 4, 1996, between the City and DTC, as may be supplemented or amended from time to time.

 

Maximum Annual Debt Service means the maximum amount of Debt Service Requirements as computed for the then current or any future Fiscal Year.

 

Moodys means Moodys Investors Service, Inc. or, if such corporation is dissolved or liquidated or otherwise ceases to perform securities rating services, such other nationally recognized securities rating agency as may be designated in writing by the City. At the time this Bond Ordinance was adopted, the notice address of Moodys is 7 World Trade Center, 250 Greenwich Street, New York, New York 10007.

 

Net Operating Revenues means Operating Revenues, after provision for payment of all Expenses of Operation and Maintenance.

 

OPEB Obligations means the amount to which the Citys actual other post-employment benefits (OPEB) contributions are less than its OPEB cost, or expense for any Fiscal Year.

 

Operating Revenues means all income and revenues derived and accrued by the City from the ownership and operation of the System, including capital repayments actually received by the City in connection with improvements to the System, Investment Earnings and any amounts held in escrow in connection with the construction of extensions and improvements to the System to be applied during the period of determination to pay interest on water system revenue bonds, but excluding any profits or losses on the early extinguishment of debt or on the sale or other disposition of investments or fixed or capital assets not in the ordinary course of business.

 

Other System Obligations means obligations of any kind, including but not limited to, Government Loans, general obligation bonds, capital leases, installment purchase agreements, or notes (but excluding Bonds and related obligations to Credit Facility Providers, Reserve Account Credit Facility Providers and Qualified Hedge Providers), incurred or issued by the City to finance or refinance the cost of acquiring, constructing, reconstructing, improving, equipping, bettering, or extending any part of the System.

 

Outstanding means, when used in reference to Bonds, all Bonds which have been duly authenticated and delivered under the Bond Ordinance, with the exception of (a) Bonds in lieu of which other Bonds have been issued under agreement to replace lost, mutilated, stolen, or destroyed obligations, (b) Bonds surrendered by the owners in exchange for other Bonds under Section 2.8 or Section 3.4, and (c) Bonds for the payment of which provision has been made in accordance with Article IX. In determining the amount of Capital Appreciation Bonds Outstanding under the Bond Ordinance, the Accreted Value of such Capital Appreciation Bonds at the time of determination shall be used.

 

Paying Agent means the paying agent selected from time to time by the Director of Finance.

 

Payments Subaccount means the subaccount by that name within the Sinking Fund Account established in Article IV.

 

Permitted Investments means any of the following securities, if and to the extent the same are at the time legal for investment of the Citys moneys held in the funds and accounts referred to in Article IV:

 

(a) United States Treasury Securities (Bills, Notes, Bonds and Strips). Obligations of the United States government for which the full faith and credit of the United States are pledged for the payment of principal and interest.

 

(b) United States Agency Securities. Obligations issued or guaranteed by any agency, including government sponsored enterprises of the United States Government, which at the time of purchase have a liquid market and a readily determinable market value that are described as follows:

 

(i) U.S. Government Agency Coupon and Zero Coupon Securities.

 

(ii) U.S. Government Agency Discount Notes.

 

(iii) U.S. Government Agency Callable Securities. Restricted to securities callable at par only.

 

(iv) U.S. Government Agency Step-Up Securities. The coupon rate is fixed for an initial term. At coupon date, the coupon rate rises to a new, higher fixed interest rate.

 

(v) U.S. Government Agency Floating Rate Securities. The coupon rate floats off of only one index. Restricted to coupons with no interim caps that reset at least quarterly.

 

(vi) U.S. Government Agency Mortgage Backed Securities (MBS, CMO, Pass-Thru Securities). Restricted to securities with final maturities of five (5) years or less or have the final projected payment no greater than four (4) years when analyzed in a +300 basis point interest rate environment. Restricted to obligations of FNMA, FHLMC and GNMA only.

 

(c) Repurchase Agreements. Contractual agreements between the City and commercial banks or primary government securities dealers, organized under the laws of the United States or any state, which contractual agreements are continuously and fully secured by any one or more of the securities described in paragraphs (a) and (b) above and which have a market value, exclusive of accrued interest, at all times at least equal to the principal amount of such repurchase agreements. Securities acquired pursuant to repurchase agreements shall be valued at the lower of the current market value or the repurchase price thereof set forth in the repurchase agreement. The Securities Industry and Financial Markets Associations (or any successor association) guidelines for the Master Repurchase Agreement will be used and will govern all repurchase agreement transactions. All repurchase agreements shall result in transfer of legal title to identified securities that are segregated in a custodial or trust account for the benefit of the Paying Agent or delivered to the Paying Agent. Repurchase agreement transactions will be either physical delivery or tri-party.

 

(d) Bankers Acceptances. Bankers acceptances issued by domestic commercial banks possessing the highest rating issued by Moodys or Standard & Poors.

 

(e) Commercial Paper. Commercial paper issued by domestic corporations, which has received the highest rating issued by Moodys or Standard & Poors. Eligible paper is further limited to issuing corporations that have total assets in excess of five hundred million dollars ($500,000,000) and are not listed on Credit Watch with negative implications by any nationally recognized rating agency at the time of purchase.

(f) Any full faith and credit obligations of the State of Missouri rated at least A or A2 by Standard & Poors or Moodys.

 

(g) Any full faith and credit obligations of any county in which the City is located rated AA or Aa2 by Standard & Poors or Moodys.

 

(h) Any full faith and credit obligations of any school district in Kansas City, Missouri rated AA or Aa2 by Standard & Poors or Moodys.

 

(i) Any full faith and credit obligations or revenue bonds of the City of Kansas City, Missouri rated AA or Aa2 by Standard & Poors or Moodys.

 

(j) Any municipal obligation as defined in (f), (g), (h) or (i) that is not rated but either pre-refunded or escrowed to maturity with U.S. Treasury Securities as to both principal and interest.

 

(k) Money market mutual funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, rated in either of the two highest categories by Moodys and Standard & Poors (in either case without regard to any modifier).

 

(l) Such other investments not described above that are allowed pursuant to Missouri law and approved in the Charter.

 

References to particular ratings and rating categories in this definition are applicable only at the time of purchase of the Permitted Investment.

 

Person or person means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, body, authority, government, or agency or political subdivision thereof.

 

Pledged Bond means any Bond purchased and held by a Credit Facility Provider pursuant to a Credit Facility Agreement. A Bond shall be deemed a Pledged Bond only for the actual period during which such Bond is owned by a Credit Facility Provider pursuant to a Credit Facility Agreement.

 

Pledged Bond Rate means the rate of interest payable on Pledged Bonds, as may be provided in a Credit Facility or Credit Facility Agreement.

 

Pledged Revenues means Net Operating Revenues, Hedge Receipts, and all moneys paid or required to be paid into, and all moneys and securities on deposit from time to time in, the funds and accounts specified in Section 4.2, but excluding any amounts required in the Bond Ordinance to be set aside pending, or used for, rebate to the United States government pursuant to Section 148(f) of the Code, including, but not limited to, amounts in the Rebate Account.

 

Principal means (i) with respect to a Current Interest Bond, the principal amount of such Bond, and (ii) with respect to a Capital Appreciation Bond, the Accreted Value of such Capital Appreciation Bond.

 

Principal Maturity Date means each date on which Principal is to become due on any Bonds, by maturity or mandatory sinking fund redemption, as established in the Series Ordinance for such Bonds.

 

Project means the acquisition, construction, reconstruction, improvement, betterment, extension or equipping of the System, in whole or in part, with the proceeds of a series of Bonds.

 

Project Fund means the fund by that name established in Article IV.

 

Purchase Contract means the purchase contract between the City and the Underwriter relating to a series of Bonds.

 

Put Date means any date on which a Bondholder may elect to have Balloon Bonds redeemed, prepaid, purchased directly or indirectly by the City, or otherwise paid.

 

Qualified Hedge Provider means an entity whose senior unsecured long term obligations, financial program rating, counterparty rating, or claims paying ability, or whose payment obligations under the related Hedge Agreement are absolutely and unconditionally guaranteed by an entity whose senior unsecured long term obligations, financial program rating, counterparty rating, or claims paying ability, meet the requirements of the Citys debt policy which has been adopted pursuant to the Citys Charter and State law. An entitys status as a Qualified Hedge Provider is determined only at the time the City enters into a Hedge Agreement with such entity and shall not be redetermined with respect to that Hedge Agreement.

 

Rating means a rating in one of the categories by a Rating Agency, disregarding pluses, minuses, and numerical gradations.

 

Rating Agencies or Rating Agency means Fitch, Moodys, and Standard & Poors or any successors thereto and any other nationally recognized credit rating agency then maintaining a rating on any Bonds at the request of the City. If at any time a particular Rating Agency does not have a rating outstanding with respect to the relevant Bonds, then a reference to Rating Agency or Rating Agencies shall not include such Rating Agency.

 

Rebate Account means the account by that name established in Article IV.

 

Record Date means, with respect to any semiannual Interest Payment Date, the 15th day of the calendar month immediately preceding such Interest Payment Date, and any record dates designated by the City in a Series Ordinance.

 

Reimbursement Obligation means the obligation of the City to directly reimburse any Credit Facility Provider for amounts paid by such Credit Facility Provider under a Credit Facility, whether or not such obligation to so reimburse is evidenced by a promissory note or other similar instrument.

 

Renewal and Replacement Account means the account by that name established in Article IV.

 

Replenishment Payments shall have the meaning ascribed therefor in Section 4.4(f).

 

Reserve Account Credit Facility means any letter of credit, insurance policy, line of credit, or surety bond, together with any substitute or replacement therefor, if any, complying with the provisions of the Bond Ordinance, thereby fulfilling all or a portion of the Debt Service Reserve Requirement.

 

Reserve Account Credit Facility Agreement means any agreement between the City and a Reserve Account Facility Provider relating to the issuance of a Reserve Account Credit Facility, as such agreement may be amended from time to time.

 

Reserve Account Credit Facility Provider means any provider of a Reserve Account Credit Facility.

 

Revenue Fund means the fund by that name established in Article IV.

 

Senior Bonds means any Bonds, including Senior SRF Bonds, issued with a right to payment and secured by a lien on a parity with other Senior Bonds (except with respect to any Credit Facility which may be available only to one or more series of Senior Bonds and except that Senior SRF Bonds shall not be secured by the Debt Service Reserve Subaccount) pursuant to Section 5.3.

 

Senior Hedge Agreements means Hedge Agreements relating to Hedged Bonds which are Senior Bonds.

 

Senior SRF Bonds means SRF Bonds which are Senior Bonds.

 

Series Ordinance means a bond ordinance or bond ordinances of the City (which may be supplemented by one or more bond ordinances) to be adopted prior to and authorizing the issuance and delivery of any series of Bonds. Such a bond ordinance as supplemented shall establish the date or dates of the pertinent series of Bonds, the schedule of maturities of such Bonds, whether any such Bonds will be Capital Appreciation Bonds, the name of the purchaser(s) of such series of Bonds, the purchase price thereof, the rate or rates of interest to be borne thereby, whether fixed or variable, the interest payment dates for such Bonds, the terms and conditions, if any, under which such Bonds may be made subject to redemption (mandatory or optional) prior to maturity, the form of such Bonds, and such other details as the City may determine.

 

Sinking Fund Account means the account by that name established in Article IV.

 

SRF Bonds means such Bonds or other obligations issued in connection with the Citys participation in the Missouri State Revolving Fund Program of the Missouri Department of Natural Resources and the State Environmental Improvement and Energy Resources Authority, which SRF Bonds may be Senior SRF Bonds or Subordinate SRF Bonds.

 

Standard & Poors or S&P means Standard & Poors, a division of The McGraw-Hill Companies, Inc., or, if such corporation is dissolved or liquidated or otherwise ceases to perform securities rating services, such other nationally recognized securities rating agency as may be designated in writing by the City. At the time this Bond Ordinance was adopted, the notice address of Standard & Poors is 25 Broadway, New York, New York 10004.

 

State means the State of Missouri.

 

Subordinate Bonds means Bonds, including Subordinate SRF Bonds, issued with a right to payment from the Pledged Revenues and secured by a lien on the Pledged Revenues expressly junior and subordinate to the Senior Bonds.

 

Subordinate Hedge Agreements means Hedge Agreements relating to Hedged Bonds which are Subordinate Bonds.

 

Subordinate SRF Bonds means SRF Bonds which are Subordinate Bonds.

 

Supplemental Ordinance means (a) any Series Ordinance and (b) any modification, amendment, or supplement to this Bond Ordinance other than a Series Ordinance.

 

Surplus Account means the account by that name established in Article IV.

 

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. At the discretion of the City there may be excluded from the System facilities which are hereafter constructed or acquired, connected or separate from the System, which are not financed with the proceeds of revenue bonds payable from the revenues of the System, and for which the City maintains separate and distinct operations, facilities and records, and which if connected to the System are billed for System use as a customer of the System in accordance with the ordinances and regulations of the City.

 

Tax-Exempt Bonds means any Bonds the interest on which has been determined, in an opinion of Bond Counsel, to be excludable from the gross income of the owners thereof for federal income tax purposes.

 

Term Bonds means Bonds which mature on one Principal Maturity Date yet a portion of which are required to be redeemed, prior to maturity, under a schedule of mandatory redemptions established by the Bond Ordinance.

 

Underwriter means the underwriter(s) specified in the Series Ordinance authorizing a series of Bonds.

 

U.S. Treasury Trust Receipts means receipts or certificates which evidence an undivided ownership interest in the right to the payment of portions of the principal of or interest on obligations described in clauses (a) or (b) of the term Government Obligations, provided that such obligations are held by a bank or trust company organized under the laws of the United States acting as custodian of such obligations, in a special account separate from the general assets of such custodian.

 

Variable Rate means a rate of interest applicable to Bonds, other than a fixed rate of interest which applies to a particular maturity of Bonds, so long as that maturity of Bonds remains Outstanding.

 

Section 1.2. Construction of Certain Terms. For all purposes of the Bond Ordinance, except as otherwise expressly provided or unless the context otherwise requires, the following rules of construction shall apply:

 

(1) The use of the masculine, feminine, or neuter gender is for convenience only and shall be deemed and construed to include correlative words of the masculine, feminine, or neuter gender, as appropriate.

 

(2) All references in the Bond Ordinance to designated Articles, Sections, and other subdivisions are to the designated Articles, Sections, and other subdivisions of the Bond Ordinance. The words herein, hereof, and hereunder and other words of similar import refer to the Bond Ordinance as a whole and not to any particular Article, Section, or other subdivision.

 

(3) The terms defined in this Article shall have the meanings assigned to them in this Article and include the plural as well as the singular.

 

(4) Whenever an item or items are listed after the word including, such listing is not intended to be a listing that excludes items not listed.

 

(5) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as promulgated by the American Institute of Certified Public Accountants.

 

Section 1.3. Table of Contents; Titles and Headings. The table of contents, the titles of the articles, and the headings of the sections of the Bond Ordinance are solely for convenience of reference, are not a part of the Bond Ordinance, and shall not be deemed to affect the meaning, construction, or effect of any of its provisions.

 

Section 1.4. Contents of Certificates or Opinions. Every certificate or opinion with respect to the compliance with a condition or covenant provided for in the Bond Ordinance shall include: (i) a statement that the person or persons making or giving such certificate or opinion have read such covenant or condition and the definitions in the Bond Ordinance relating thereto, (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (iii) a statement that, in the opinion of the signer(s), they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such covenant or condition has been complied with, and (iv) a statement as to whether, in the opinion of the signer(s), such condition or covenant has been complied with.

 

Any such certificate or opinion made or given by an official of the City may be based, insofar as it relates to legal or accounting matters, upon a certificate or an opinion of counsel or an accountant, which certificate or opinion has been given only after due inquiry of the relevant facts and circumstances, unless such official knows that the certificate or opinion with respect to the matters upon which his certificate or opinion may be based as aforesaid is erroneous or in the exercise of reasonable care should have known that the same was erroneous. Any such certificate or opinion made or given by counsel or an accountant may be based (insofar as it relates to factual matters with respect to information which is in the possession of an official of the City or any third party) upon the certificate or opinion of or representations by an official of the City or any third party on whom counsel or an accountant could reasonably rely unless such counsel or such accountant knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion may be based as aforesaid are erroneous or in the exercise of reasonable care should have known that the same were erroneous. The same official of the City, or the same counsel or accountant, as the case may be, need not certify or opine to all of the matters required to be certified or opined under any provision of the Bond Ordinance, but different officials, counsel, or accountants may certify or opine to different matters, respectively.

 

ARTICLE II

 

THE BONDS

 

Section 2.1. Authorization and Form of Bonds Generally. The Bonds authorized under the Bond Ordinance may be issued and sold from time to time in one or more series, shall be designated City of Kansas City, Missouri Water Revenue Bonds, and shall be in substantially the form set forth in the related Series Ordinance, but such variations, omissions, substitutions, and insertions may be made therein, and such particular series designation, legends, or text may be endorsed thereon, as may be necessary or appropriate to conform to and as required or permitted by this Bond Ordinance and any Series Ordinance or as may be necessary or appropriate to comply with applicable requirements of the Code. The Bonds also may bear such legend or contain such further provisions as may be necessary to comply with or conform to the rules and requirements of any brokerage board, securities exchange, or municipal securities rulemaking board.

 

Senior Bonds may be issued from time to time as provided in, and subject to the limitations set forth in, Article V. Subordinate Bonds may be issued from time to time as provided in, and subject to the limitations set forth in, Section 5.4.

 

Unless otherwise provided in a Series Ordinance, each Bond authenticated prior to the first Interest Payment Date thereon shall bear interest from its dated date. Each Bond authenticated on or after the first Interest Payment Date thereon shall bear interest from the Interest Payment Date thereon next preceding the date of authentication thereof, unless such date of authentication shall be an Interest Payment Date to which interest on such Bond has been paid in full or duly provided for, in which case from such date of authentication; provided that if, as shown by the records of the Paying Agent, interest on such Bond shall be in default, such Bond shall bear interest from the date to which interest has been paid in full on such Bond or, if no interest has been paid on such Bond, its dated date. Each Bond shall bear interest on overdue Principal at the rate borne by such Bond until the Principal balance thereof is paid in full.

 

Unless otherwise provided in a Series Ordinance, the Bonds shall be issued in fully registered form in the denomination of $5,000 each or integral multiples thereof and shall be dated as provided in the pertinent Series Ordinance, except that any Auction Rate Bonds shall be issued in the denomination of $5,000 and integral multiples thereof, Capital Appreciation Bond shall be issued in the denomination of $5,000 maturity amount or integral multiples thereof and any Bonds bearing interest at a Variable Rate may be issued in the denomination of $100,000 each or integral multiples of $5,000 in excess thereof.

 

The Principal of, premium, if any, and interest on the Bonds shall be payable in any coin or currency of the United States of America which, at the respective dates of payment thereof, is legal tender for the payment of public and private debts.

 

The Bonds and the Bond Registrars Certificate of Authentication shall be in substantially the form set forth in the Series Ordinance pursuant to which such series of Bonds are issued.

 

Section 2.2. Execution and Authentication of Bonds. The Bonds shall be executed by the Mayor and attested by the City Clerk and shall be sealed with the official seal or a facsimile of the official seal of the City. The facsimile signature of the Mayor and the City Clerk may be imprinted on the Bonds instead of their manual signatures. Bonds bearing the manual or facsimile signatures of a person in office at the time such signature was signed or imprinted shall be fully valid, notwithstanding the fact that before or after delivery of such Bonds such person ceased to hold such office.

 

Until definitive Bonds are ready for delivery, the City may execute, and upon request of the City the Bond Registrar shall authenticate and deliver, in lieu of definitive Bonds, but subject to the same limitations and conditions as definitive Bonds, temporary printed, engraved, lithographed or typewritten Bonds.

 

Only such Bonds as shall be authenticated by the endorsement thereon of a certificate substantially in the form contained on the form of Bond set forth in the Bond Ordinance, executed by the Bond Registrar by the manual signature of one of its authorized signatories, shall be secured by the Bond Ordinance or shall be entitled to any benefit under the Bond Ordinance. Every such certificate of the Bond Registrar upon any Bond purporting to be secured by the Bond Ordinance shall be conclusive evidence that the Bond so certified has been duly issued under the Bond Ordinance and that the owner is entitled to the benefit of the Bond Ordinance. It shall not be necessary for the same signatory to sign the certificate of authentication on all of the Bonds secured under the Bond Ordinance or on all Bonds of any series.

 

Section 2.3. Registration of Bonds. The City shall cause the Bond Register for the registration and for the transfer of the Bonds as provided in the Bond Ordinance to be kept by the Bond Registrar. The Bonds shall be registered as to Principal and interest on the Bond Register upon presentation thereof to the Bond Registrar which shall make notation of such registration thereon; provided that the City reserves the right to issue coupon Bonds payable to bearer whenever to do so would not result in any adverse federal tax consequences.

 

Section 2.4. Place of Payment. The Principal of and redemption premium, if any, on any Bonds shall be payable to the Bondholder at the principal payment office of the Paying Agent or at such other office designated by the Paying Agent for such purpose, upon presentation and surrender of such Bond. Payment of the interest on each Bond shall be made by the Paying Agent on each Interest Payment Date to the person appearing as the registered owner thereof as of the close of business on the Record Date preceding the Interest Payment Date by check mailed to such registered owner at its address as it appears on the Bond Register, or at such other address as is furnished in writing by such registered owner to the Bond Registrar prior to such Record Date, notwithstanding the cancellation of any such Bonds upon any exchange or transfer thereof subsequent to the Record Date and prior to such Interest Payment Date.

 

Notwithstanding the foregoing, interest on the Bonds of any series shall be payable to any registered owner of more than $500,000 in aggregate Principal of the Bonds of such series by deposit of immediately available funds to the account of such registered owner maintained with the Paying Agent or transmitted by electronic transfer to such registered owner at an account maintained at a commercial bank located within the United States of America, if the Paying Agent receives from such registered owner written deposit or electronic transfer instructions not less than 15 days prior to the Record Date preceding the Interest Payment Date for which the deposit or electronic transfer is requested.

 

The City may, by Supplemental Ordinance, provide for other methods or places of payment, including electronic transfer, as it may deem appropriate for any Bonds.

 

Section 2.5. Persons Treated as Owners. The person in whose name any Bond is registered in the Bond Register shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of either Principal or interest shall be made only to or upon the order of the registered owner thereof or such registered owners attorney duly authorized in writing. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid.

 

Section 2.6. Transfer and Exchange of Bonds. Bonds may be transferred by surrender for transfer at the principal corporate trust office of the Bond Registrar or at such other office designated by the Bond Registrar for such purpose, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or the registered owners attorney duly authorized in writing. The City shall cause to be executed and the Bond Registrar shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds of the same series, maturity, interest rate, aggregate Principal, and tenor of any authorized denomination or denominations, and bearing numbers not then outstanding.

 

Bonds may be exchanged at the principal corporate trust office of the Bond Registrar or at such other office designated by the Bond Registrar for such purpose, for a like aggregate Principal amount of Bonds of other authorized denominations of the same series, maturity, and interest rate, and bearing numbers not then outstanding. The City shall cause to be executed and the Bond Registrar shall authenticate and deliver Bonds which the Bondholder making the exchange is entitled to receive.

 

The Bond Registrar shall not be required to transfer or exchange any Bond after notice calling such Bond for redemption has been given or during the period of 15 days (whether or not a Business Day for the Bond Registrar, but excluding the date of giving such notice of redemption and including such 15th day) immediately preceding the giving of such notice of redemption.

 

In any exchange or registration of transfer of any Bond, the owner of the Bond shall not be required to pay any charge or fee; provided, however, if and to whatever extent any tax or governmental charge is at any time imposed on any such exchange or transfer, the City or the Bond Registrar may require payment of a sum sufficient for such tax or charge. In the event any Bondholder fails to provide a correct taxpayer identification number to the Bond Registrar, the Bond Registrar may impose a charge against such Bondholder 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 Bondholder hereunder or under the Bonds.

 

All Bonds surrendered for exchange or transfer of registration shall be cancelled and destroyed by the Bond Registrar in accordance with Section 2.7.

 

Section 2.7. Destruction of Bonds. All Bonds paid by the Paying Agent at maturity or upon redemption prior to maturity shall be cancelled and delivered to the Bond Registrar for destruction in accordance with the customary practices of the Bond Registrar and applicable record retention laws. All Bonds cancelled on account of payment, transfer, or exchange shall be cancelled and, in accordance with the customary practices of the Bond Registrar and applicable record retention laws, destroyed by the Bond Registrar and shall not be reissued.

 

Section 2.8. Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond is mutilated, lost, stolen or destroyed, the City may execute and deliver a new Bond of the same series, maturity, interest rate, aggregate Principal, and tenor in lieu of and in substitution for the Bond mutilated, lost, stolen or destroyed. In the case of any mutilated Bond, however, such mutilated Bond shall first be surrendered to the Bond Registrar, and, in the case of any lost, stolen or destroyed Bond, there shall first be furnished to the Bond Registrar evidence satisfactory to it of the ownership of such Bond and of such loss, theft or destruction, together with indemnity to the City and the Bond Registrar, satisfactory to each of them. If any such Bond shall have matured or a redemption date pertaining to the Bond shall have passed, instead of issuing a new Bond the City may pay or cause the Paying Agent to pay the Bond. The City, the Bond Registrar, and the Paying Agent may charge the owner of such Bond with their reasonable fees and expenses for replacing mutilated, lost, stolen or destroyed Bonds.

 

In executing a new Bond and in furnishing the Bond Registrar with the written authorization to deliver a new Bond as provided for in this Section, the City may rely conclusively on a representation of the Bond Registrar that the Bond Registrar is satisfied with the adequacy of the evidence presented concerning the mutilation, loss, theft or destruction of any Bond.

 

Section 2.9. 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 funds for any claim of whatever nature on his part under the Bond Ordinance or on, or with respect to, said Bond. If any Bond is not presented for payment within two 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 2.10. DTC Book-Entry. Unless otherwise provided in a Series Ordinance, the Bonds shall be initially issued in the name of Cede & Co., as nominee for DTC, as registered owner of the Bonds, and held in the custody of DTC or the Paying Agent as its Fast Agent. A single certificate will be issued and delivered to DTC or the Paying Agent as its Fast Agent for each maturity of the Bonds. The actual purchasers of the Bonds (the Beneficial Owners) will not receive physical delivery of Bond certificates except as provided herein. Beneficial Owners are expected to receive a written confirmation of their purchase providing details of each Bond acquired. For so long as DTC shall continue to serve as securities depository for the Bonds as provided herein, all transfers of beneficial ownership interests will be made by book-entry only, and no investor or other party purchasing, selling, or otherwise transferring beneficial ownership of Bonds is to receive, hold, or deliver any Bond certificate.

 

For every transfer and exchange of the Bonds, the Beneficial Owner may be charged a sum sufficient to cover such Beneficial Owners allocable share of any tax, fee, or other governmental charge that may be imposed in relation thereto.

 

Bond certificates are required to be delivered to and registered in the name of the Beneficial Owner under the following circumstances:

 

(a) DTC determines to discontinue providing its service with respect to a series of Bonds (such a determination may be made at any time by giving 30 days notice to the City and the Bond Registrar and discharging its responsibilities with respect thereto under applicable law), or

 

(b) DTC participants with a majority position in the Bonds (other than SRF Bonds) determine that continuation of the system of book-entry transfers through DTC (or a successor securities depository) is not in the best interests of the Beneficial Owners.

 

The City and the Bond Registrar will recognize DTC or its nominee as the Bondholder for all purposes, including notices and voting.

 

The City and the Bond Registrar covenant and agree, so long as DTC shall continue to serve as securities depository for the Bonds, to meet the requirements of DTC with respect to required notices and other provisions of the Letter of Representations.

 

The Bond Registrar is authorized to rely conclusively upon a certificate furnished by DTC and corresponding certificates from DTC participants and indirect participants as to the identity of, and the respective Principal of Bonds beneficially owned by, the Beneficial Owner or Beneficial Owners.

 

If at any time DTC ceases to hold the Bonds, a Supplemental Ordinance amending the relevant provisions of this Bond Ordinance shall be adopted and thereafter all references in this Bond Ordinance to DTC in connection with the Bonds shall be of no further force or effect.

 

ARTICLE III

 

REDEMPTION OF BONDS

 

Section 3.1. Optional and Mandatory Redemption of Bonds. The Bonds shall be subject to redemption as provided in the Series Ordinance pursuant to which such series of Bonds are issued.

 

Section 3.2. Notice of Redemption. Unless waived by any registered owner of Bonds to be redeemed and except as may be otherwise provided in a Series Ordinance, official notice of any such redemption shall be given by the Bond Registrar 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 date fixed for redemption to the registered owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such registered owner to the Bond Registrar.

 

All official notices of redemption shall be dated, shall contain the complete official name of the Bond issue, and shall state:

 

(1) the redemption date;

 

(2) the redemption price;

 

(3) the interest rate (unless such Bonds are Auction Rate Bonds or bear interest at a Variable Rate) and maturity date of the Bonds being redeemed;

 

(4) if less than all the Outstanding Bonds are to be redeemed, the Bond numbers, and, where part of the Bonds evidenced by one Bond certificate are being redeemed, the respective Principal amounts of such Bonds to be redeemed;

 

(5) that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption and that interest thereon shall cease to accrue from and after such date; and

 

(6) the place where such Bonds are to be surrendered for payment of the redemption price (which place of payment shall be the principal payment office of the Paying Agent or at such other office designated by the Paying Agent for such purpose) and the name, address, and telephone number of a person or persons at the Paying Agent who may be contacted with respect to the redemption.

 

Any notice of optional redemption of any Bonds may specify that the redemption is contingent upon the deposit of moneys with the Paying Agent in an amount sufficient to pay the redemption price (which price shall include the redemption premium, if any) of all the Bonds or portions of Bonds which are to be redeemed on that date.

 

Not later than the 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 which are to be redeemed on that date.

 

In addition to the official notice described above, further notice shall be given by the Bond Registrar as set forth below:

 

(1) Each further notice of redemption given shall contain the information required above for an official notice of redemption plus: (i) the CUSIP numbers of all Bonds being redeemed; (ii) the date of issue of the Bonds as originally issued; (iii) the rate of interest borne by each Bond being redeemed (unless the Bonds are Auction Rate Bonds or bear interest at a Variable Rate); (iv) the maturity date of each Bond being redeemed; and (v) any other descriptive information needed to identify accurately the Bonds being redeemed.

 

(2) Each further notice of redemption shall be sent at least 35 days (or such other number of days as may be specified in a Series Ordinance) before the redemption date by electronic transmission, registered or certified mail, or overnight delivery service, as determined by the Bond Registrar, to all registered securities depositories then in the business of holding substantial amounts of obligations of the types comprising the Bonds and to one or more national information services that disseminate notices of redemption of obligations such as the Bonds.

 

Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.

 

Not less than 60 days after the redemption date, the Bond Registrar shall send a second copy of the official notice of redemption to the registered owner of any Bond or Bonds to be redeemed if, by such date, such registered owner has not surrendered its Bond or Bonds for redemption. Such notice shall be sent by registered or certified mail, with a return receipt requested.

 

For so long as DTC is effecting bookentry transfers of the Bonds, the Bond Registrar shall provide the notices specified in this Section to DTC. It is expected that DTC shall, in turn, notify its participants and that the participants, in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of DTC or a participant, or failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice from the Bond Registrar, a participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond.

 

Any defect in any notice of redemption shall not affect the validity of proceedings for redemption of the Bonds.

 

Section 3.3. Notice to Bond Registrar; Bond Registrar Shall Give Notice of Redemption. Notice of redemption of Bonds to be redeemed shall be given by the Bond Registrar for and on behalf of the City whenever either: (i) such redemption is required to be made under the Series Ordinance for such Bonds, or (ii) such redemption is permitted to be made under the terms of such Bonds and the City requests that such redemption be made. In case of any redemption at the election of the City, the City shall, at least 45 days prior to the redemption date (unless a shorter notice shall be satisfactory to the Bond Registrar) give written notice to the Bond Registrar directing the Bond Registrar to call Bonds for redemption and give notice of redemption and specifying the redemption date, the principal amount and maturities of Bonds to be called for redemption, the applicable redemption price or prices and the provision or provisions of this Bond Ordinance pursuant to which such Bonds are to be called for redemption.

 

Section 3.4. Effect of Notice of Redemption. Official notice of redemption having been given in the manner and under the conditions provided in this Article and moneys for payment of the redemption price being held by the Paying Agent as provided in the Bond Ordinance, the Bonds or portions of Bonds called for redemption shall, on the redemption date designated in such notice, become and be due and payable at the redemption price provided for redemption of such Bonds or portions of Bonds on such date, and from and after such date interest on the Bonds or portions of Bonds called for redemption shall cease to accrue, such Bonds or portions of Bonds shall cease to be entitled to any lien, benefit, or security under the Bond Ordinance, and the owners of such Bonds or portions of Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. Upon surrender for partial redemption of any Bond, there shall be prepared for and delivered to the registered owner a new Bond or Bonds of the same series, maturity, and interest rate in the amount of the unpaid Principal.

 

Section 3.5. Redemption Among Series. Subject to the redemption provisions of any Series Ordinance, the City in its discretion may redeem the Bonds of any series, or a portion of the Bonds of any such series, before it redeems the Bonds of any other series. Within any particular series, any redemption of Bonds shall be effected in the manner provided in this Bond Ordinance and in any Series Ordinance.

 

Section 3.6. Selection of Bonds to be Redeemed. If less than all of the Bonds of like maturity of any series shall be called for redemption, the particular Bonds, or portions of Bonds, to be redeemed shall be selected by the City. The portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the Principal amount of $5,000 or an integral multiple of $5,000 in excess thereof, and, in selecting portions of such Bonds for redemption, the City shall treat each such Bond as representing that number of Bonds which is obtained by dividing the Principal of such Bond to be redeemed in part by $5,000; provided, however, that with respect to Variable Rate Bonds, the portion of any such Bond of a denomination of more than $100,000 to be redeemed shall be in the Principal amount of $100,000 or an integral multiple of $5,000 in excess thereof, and, in selecting portions of such Bonds for redemption, the City shall treat each such Bond as representing that number of Bonds which is obtained by dividing the Principal of such Bond to be redeemed in part by $100,000 or $5,000 or an integral multiple of $5,000 in excess thereof, and with respect to Auction Rate Bonds the portion of any such Bond of a denomination of more than $5,000 to be redeemed shall be in the Principal amount of $5,000 or an integral multiple thereof, and, in selecting portions of such Bonds for redemption, the City shall treat each such Bond as representing that number of Bonds which is obtained by dividing the Principal of such Bond to be redeemed in part by $5,000 or an integral multiple thereof.

 

Section 3.7. Purchase in Open Market. Nothing herein contained shall be construed to limit the right of the City to purchase with any excess moneys in the Payments Subaccount (i.e., moneys not needed in the then current Fiscal Year to pay Principal of and interest on any Senior Bonds) and for Sinking Fund Account purposes, any Senior Bonds in the open market at a price not exceeding the callable price. Any such Senior Bonds so purchased shall not be reissued and shall be cancelled.

 

ARTICLE IV

 

PLEDGED REVENUES AND FLOW OF FUNDS

 

Section 4.1. Pledge of Revenues; Limited Obligations. Subject only to the rights of the City to apply amounts as provided in this Article IV and to Section 12.4 hereof, all Pledged Revenues shall be and are hereby pledged to the prompt payment of the Principal of, premium, if any, and interest on the Bonds. Such moneys and securities shall immediately be subject to the lien of this pledge for the benefit of the Bondholders without any physical delivery thereof or further act, and the lien of this pledge shall be valid and binding against the City and against all other persons having claims against the City, whether such claims shall have arisen in tort, contract, or otherwise, and regardless of whether such persons have notice of the lien of this pledge. This pledge shall rank superior to all other pledges which may hereafter be made of any of the Pledged Revenues, except for pledges of the Pledged Revenues hereafter made by the City in the Hedge Agreements to secure Hedge Payments, which may rank on a parity with this pledge as to the related Hedged Bonds. The lien of the pledge made in this Section 4.1 does not secure any obligation of the City other than the Bonds.

 

The Bonds shall be limited obligations of the City as provided therein payable solely from the Pledged Revenues. The Bonds and the interest thereon shall not constitute a general or moral obligation of the City nor a debt, indebtedness, or obligation of, or a pledge of the faith and credit of, the City or the State or any political subdivision thereof, within the meaning of any constitutional, statutory or charter provision whatsoever. Neither the full faith and credit nor the taxing power of the City, the State, or any political subdivision thereof is pledged to the payment of the Principal of, premium, if any, or interest on the Bonds or other costs incident thereto. The City has no authority to levy any taxes to pay the Bonds. Neither the members of the Council nor any person executing the Bonds shall be liable personally on the Bonds by reason of the issuance thereof.

 

Section 4.2. Funds and Accounts. The City hereby establishes or ratifies the establishment of the following funds and accounts, and the moneys deposited in such funds and accounts shall be held in trust for the purposes set forth in the Bond Ordinance:

 

4.2.1. City of Kansas City, Missouri Waterworks Revenue Fund (the Revenue Fund).

 

4.2.2. City of Kansas City, Missouri Waterworks Sinking Fund Account in the Revenue Fund (the Sinking Fund Account), and within said Sinking Fund Account, a Payments Subaccount and a Debt Service Reserve Subaccount.

 

4.2.3. City of Kansas City, Missouri Waterworks Renewal and Replacement Account in the Revenue Fund (the Renewal and Replacement Account).

 

4.2.4. City of Kansas City, Missouri Waterworks Rebate Account in the Revenue Fund (the Rebate Account).

 

4.2.5. City of Kansas City, Missouri Waterworks Project Fund (the Project Fund).

 

4.2.6. City of Kansas City, Missouri Waterworks Surplus Account in the Revenue Fund (the Surplus Account).

 

Each account listed above shall be held within the fund under which it is created. All funds and accounts listed above are further described in this Article, except for the Rebate Account as further described in Article VI. The City reserves the right, in its sole discretion, to create additional subaccounts or to abolish any subaccounts within any account from time to time.

 

Section 4.3. Revenue Fund.

 

(a) The City shall deposit and continue to deposit into the Revenue Fund all Operating Revenues and any extraordinary revenues from the sale of assets not in the ordinary course of business, from time to time as and when received. Moneys in the Revenue Fund shall be applied by the City from time to time to the following purposes and, prior to the occurrence and continuation of an Event of Default, in the following order of priority:

(1) to pay Expenses of Operation and Maintenance;

 

(2) to deposit into the Sinking Fund Account the amounts required by Section 4.4;

 

(3) to deposit into the Rebate Account the amounts required by Section 6.11;

 

(4) to make Replenishment Payments to the Debt Service Reserve Subaccount in accordance with Section 4.4(f), and to pay to any Credit Facility Provider any amounts due under a Credit Facility Agreement, including Additional Interest;

 

(5) to pay any amounts due any Reserve Account Credit Facility Provider pursuant to the Reserve Account Credit Facility Agreement;

 

(6) to deposit the amounts required to be deposited into the funds and accounts created by any Series Ordinance authorizing the issuance of Subordinate Bonds, for the purpose of paying Principal of (whether at maturity, upon mandatory redemption or as otherwise required by a Series Ordinance relating to Subordinate SRF Bonds) and interest on Subordinate Bonds, making Hedge Contingency Payments under Senior Hedge Agreements, making Hedge Payments and making Hedge Contingency Payments under Subordinate Hedge Agreements, and accumulating reserves for such payments;

 

(7) to make Accumulation Payments to the Debt Service Reserve Subaccount in accordance with Section 4.4(f);

 

(8) to pay any amounts required to be paid with respect to any Other System Obligations, subject to annual appropriation;

 

(9) to pay Administrative Service Fees;

 

(10) to deposit to the Renewal and Replacement Account an amount determined by the Operating and Capital Reserves Policy established and approved by the Water Services Department and the City Council, as may be amended from time to time, to be applied in accordance with Section 4.5 hereof; and

 

(11) to deposit any remaining amount in the Surplus Account.

 

(b) Any money withdrawn from the funds and accounts described in clause (6) of Section 4.3(a) for use in making payments described in said clause (6) shall be released from the lien of the Bond Ordinance. If at any time the amounts in any account of the Sinking Fund Account are less than the amounts required by the Bond Ordinance, and there are not on deposit in the Renewal and Replacement Account or the Surplus Account available moneys sufficient to cure any such deficiency, then the City shall withdraw from the funds and accounts of the City relating to Subordinate Bonds which are not Subordinate SRF Bonds and deposit in such account of the Sinking Fund Account, as the case may be, the amount necessary (or all the moneys in such funds and accounts, if less than the amount required) to make up such deficiency.

 

Section 4.4. Sinking Fund Account.

 

(a) Payments Subaccount-General. Sufficient moneys shall be paid in periodic installments from the Revenue Fund into the Payments Subaccount for the purpose of paying the Principal of and interest (excluding Additional Interest) on the Senior Bonds as they become due and payable and for the purpose of making Hedge Payments under Senior Hedge Agreements. Amounts held in the Payments Subaccount shall be used solely to pay interest (excluding Additional Interest) and Principal of the Senior Bonds as the same become due and payable (whether at maturity or upon redemption) and to pay Hedge Payments under Senior Hedge Agreements when due. Amounts held in the Payments Subaccount shall not be used to pay Additional Interest.

 

(b) Interest. Except as otherwise provided in any Series Ordinance authorizing Senior SRF Bonds, on or before the first day of each month, commencing 6 months prior to each Interest Payment Date for Senior Bonds (or, in the case of Senior Bonds that are Auction Rate Bonds or are bearing interest at a Variable Rate, on or before the Business Day preceding each Interest Payment Date), the City shall deposit in the Payments Subaccount an amount which, together with any other moneys already on deposit therein and available to make such payment and, in the case of Senior SRF Bonds, anticipated investment earnings on reserve funds held by a bond trustee relating to such Senior SRF Bonds, is not less than 1/6th of the amount of interest (excluding Additional Interest) coming due on such Senior Bonds on the next succeeding Interest Payment Date. The City shall also deposit and continue to deposit all Hedge Receipts under Senior Hedge Agreements in the Payments Subaccount from time to time as and when received.

 

(c) Principal. Except as otherwise provided in any Series Ordinance authorizing Senior SRF Bonds, on or before the first day of each month, commencing 12 months prior to each Principal Maturity Date for Senior Bonds, the City shall deposit in the Payments Subaccount an amount which, together with any other moneys already on deposit therein and available to make such payment, is not less than 1/12th of the Principal coming due on such Senior Bonds on the next succeeding Principal Maturity Date.

 

(d) Hedge Payments. On or before the 30th day preceding each payment date for Hedge Payments under Senior Hedge Agreements, the City shall deposit in the Payments Subaccount an amount which, together with any other moneys already on deposit therein and available to make such payment, is not less than such Hedge Payments coming due on such payment date.

 

(e) Application of Moneys in Payments Subaccount. No further payments need be made into the Payments Subaccount whenever the amount available in the Payments Subaccount, if added to the amount then in the Debt Service Reserve Subaccount (without taking into account any amount available to be drawn on any Reserve Account Credit Facility), is sufficient to retire all Senior Bonds then Outstanding and to pay all unpaid interest accrued and to accrue prior to such retirement. No moneys in the Payments Subaccount shall be used or applied to the optional purchase or redemption of Senior Bonds prior to maturity unless: (i) provision shall have been made for the payment of all of the Senior Bonds; or (ii) such moneys are applied to the purchase and cancellation of Senior Bonds which are subject to mandatory redemption on the next mandatory redemption date, which falls due within 12 months, such Senior Bonds are purchased at a price not more than would be required for mandatory redemption, and such Senior Bonds are cancelled upon purchase; or (iii) such moneys are applied to the purchase and cancellation of Senior Bonds at a price less than the amount of Principal which would be payable on such Senior Bonds, together with interest accrued through the date of purchase, and such Senior Bonds are cancelled upon purchase; or (iv) such moneys are in excess of the then required balance of the Payments Subaccount and are applied to redeem a part of the Senior Bonds Outstanding on the next succeeding redemption date for which the required notice of redemption may be given.

 

(f) Debt Service Reserve Subaccount. There shall be deposited into the Debt Service Reserve Subaccount the amounts specified in Series Ordinances with respect to Senior Bonds. Notwithstanding the foregoing, there shall be no deposit into the Debt Service Reserve Subaccount with respect to any SRF Bonds nor shall the Debt Service Reserve Subaccount secure any SRF Bonds. After the issuance of any Senior Bonds, the increase in the amount of the Debt Service Reserve Requirement resulting from the issuance of such Senior Bonds shall be accumulated, to the extent not covered by deposits from Bond proceeds or funds on hand, over a period not exceeding 61 months from the date of delivery of such Senior Bonds in monthly deposits (Accumulation Payments), none of which is less than 1/60 of the amount to be accumulated. The balance of the Debt Service Reserve Subaccount shall be maintained at an amount equal to the Debt Service Reserve Requirement (or such lesser amount that is required to be accumulated in the Debt Service Reserve Subaccount in connection with the periodic accumulation to the Debt Service Reserve Requirement after the issuance of Senior Bonds or upon the failure of the City to provide a substitute Reserve Account Credit Facility in certain events). There shall be transferred from the Revenue Fund on a pro rata basis (1) to the Debt Service Reserve Subaccount the amount necessary to restore, as further described below, the amount of cash and securities in the Debt Service Reserve Subaccount to an amount equal to the difference between (a) the Debt Service Reserve Requirement (or such lesser monthly amount that is required to be deposited into the Debt Service Reserve Subaccount after the issuance of Senior Bonds or upon the failure of the City to provide a substitute Reserve Account Credit Facility in certain events) and (b) the portion of the required balance of the Debt Service Reserve Subaccount satisfied by means of a Reserve Account Credit Facility, and (2) to any Reserve Account Credit Facility Provider the amount necessary to reinstate any Reserve Account Credit Facility which has been drawn down.

 

Whenever for any reason the amount in the Payments Subaccount is insufficient to pay all interest or Principal becoming due on the Senior Bonds and all Hedge Payments coming due pursuant to Senior Hedge Agreements within the next seven days (or, in the case of Senior Bonds that are Auction Rate Bonds or are bearing interest at a Variable Rate, on the next Business Day), the City shall make up any deficiency by transfers first from the Surplus Account, second from the Renewal and Replacement Account and third from the funds and accounts of the City relating to Subordinate Bonds which are not Subordinate SRF Bonds. Whenever, on the date that such interest, Principal or Hedge Payments on Senior Hedge Agreements is due, there are insufficient moneys in the Payments Subaccount available to make such payment, the City shall, without further instructions, apply so much as may be needed of the moneys in the Debt Service Reserve Subaccount to prevent default in the payment of such interest, Principal or Hedge Payments on Senior Hedge Agreements, with priority to interest payments. Whenever by reason of any such application or otherwise (other than required Accumulation Payments), the amount remaining to the credit of the Debt Service Reserve Subaccount is less than the amount then required to be in the Debt Service Reserve Subaccount, such deficiency shall be remedied in not more than twenty-four (24) equal monthly deposits (Replenishment Payments) from the Revenue Fund, commencing not later than the first day of the month immediately succeeding the date when the amount then required to be in the Debt Service Reserve Subaccount dropped below the Debt Service Reserve Requirement.

 

The City may elect to satisfy in whole or in part the Debt Service Reserve Requirement by means of a Reserve Account Credit Facility, subject to the following requirements: (A) the Reserve Account Credit Facility Provider must, at the time of issuance, be rated in one of the two highest rating categories by Standard & Poors and Moodys and, if rated by A.M. Best & Company, must also be rated in one of the two highest rating categories by A.M. Best & Company; (B) the City shall not secure any obligation to the Reserve Account Credit Facility Provider by a lien equal to or superior to the lien granted to the related series of Senior Bonds; (C) each Reserve Account Credit Facility shall have a term of at least one (1) year (or, if less, the remaining term of the related series of Senior Bonds) and shall entitle the City to draw upon or demand payment and receive the amount so requested in immediately available funds on the date of such draw or demand; (D) the Reserve Account Credit Facility shall permit a drawing by the City for the full stated amount in the event (i) the Reserve Account Credit Facility expires or terminates for any reason prior to the final maturity of the related series of Senior Bonds, and (ii) the City fails to satisfy the Debt Service Reserve Requirement by the deposit to the Debt Service Reserve Subaccount of cash, obligations, a substitute Reserve Account Credit Facility, or any combination thereof, on or before the date of such expiration or termination; (E) if all of the Ratings issued by any Rating Agency to the Reserve Account Credit Facility Provider are withdrawn or reduced below the lowest Rating assigned to the related series of Senior Bonds, immediately prior to such action by the Rating Agency, the City shall provide a substitute Reserve Account Credit Facility rated at least as high as the highest rating on the Senior Bonds, within sixty (60) days after such rating change, and, if no substitute Reserve Account Credit Facility is obtained by such date, shall fund the Debt Service Reserve Requirement in not more than thirty-six (36) equal monthly deposits commencing not later than the first day of the month immediately succeeding the date representing the end of such sixty (60) day period; (F) if the Reserve Account Credit Facility Provider commences any insolvency proceedings or is determined to be insolvent or fails to make payments when due on its obligations, the City shall provide a substitute Reserve Account Credit Facility within sixty (60) days thereafter, and, if no substitute Reserve Account Credit Facility is obtained by such date, shall fund the Debt Service Reserve Requirement in not more than thirty-six (36) equal monthly deposits commencing not later than the first day of the month immediately succeeding the date representing the end of such sixty (60) day period; and (G) the prior written consent of the Credit Facility Provider, as to the provider and the structure of the Reserve Account Credit Facility, shall be obtained by the City. If the events described in either clauses (E) or (F) above occur, the City shall not relinquish the Reserve Account Credit Facility at issue until after the Debt Service Reserve Requirement is fully satisfied by the provision of cash, obligations, or a substitute Reserve Account Credit Facility or any combination thereof. Any amount received from the Reserve Account Credit Facility shall be deposited directly into the Payments Subaccount, and such deposit shall constitute the application of amounts in the Debt Service Reserve Subaccount. Repayment of any draw-down on the Reserve Account Credit Facility (other than repayments which reinstate the Reserve Account Credit Facility) and any interest or fees due the Reserve Account Credit Facility Provider under such Reserve Account Credit Facility shall be secured by a lien on the Pledged Revenues subordinate to payments into the Sinking Fund Account and the Rebate Account and payments to any Credit Facility Provider securing Senior Bonds.

 

Any such Reserve Account Credit Facility shall be pledged to the benefit of the owners of all of the Senior Bonds and all Qualified Hedge Providers of Senior Hedge Agreements. The City reserves the right, if it deems it necessary in order to acquire such a Reserve Account Credit Facility, to amend the Bond Ordinance without the consent of any of the owners of the Bonds in order to grant to the Reserve Account Credit Facility Provider such additional rights as it may demand, provided that such amendment shall not, in the written opinion of Bond Counsel filed with the City, impair or reduce the security granted to the owners of Senior Bonds or any of them.

 

Section 4.5. Renewal and Replacement Account. Except as otherwise provided in this section, all sums accumulated and retained in the Renewal and Replacement Account shall be used to meet the costs of capital improvements to the System, necessary to keep the same in good operating condition or as is required by any governmental agency having jurisdiction over the System, and such sums may be encumbered by an estimation and appropriation ordinance of the City Council to accomplish the same. All unencumbered sums accumulated and retained in the Renewal and Replacement Account, if any, shall be used first to prevent a default in the payment of interest on or Principal of the Senior Bonds when due and then shall be applied by the City from time to time, as and when the City shall determine, to the following purposes and, prior to the occurrence and continuation of an Event of Default, in the order of priority determined by the City in its sole discretion: (a) to maintain and improve the System as described above and (b) to pay Principal of and Interest on Bonds and Other System Obligations. No moneys credited to the Renewal and Replacement Account shall ever be directed or applied to the general governmental or municipal functions of the City so long as any of the Bonds remain Outstanding. The total amount of money credited to the Renewal and Replacement Account shall not exceed the maximum amount established by the Operating and Capital Reserves Policy approved by the Water Services Department and the City Council, as may be amended from time to time.

 

Section 4.6 Surplus Account. In addition to the deposits to be made to the Surplus Account pursuant to Section 4.3, the City shall deposit in the Surplus Account all termination payments received under any Hedge Agreements. All sums accumulated and retained in the Surplus Account shall be used first to prevent a default in the payment of interest on or Principal of the Senior Bonds when due and then shall be applied by the City from time to time, as and when the City shall determine, to the following purposes and, prior to the occurrence and continuation of an Event of Default, in the order of priority determined by the City in its sole discretion: (a) for the purposes for which moneys held in the Revenue Fund may be applied under Section 4.3, (b) to pay any amounts which may then be due and owing under any Hedge Agreement (including termination payments, fees, expenses, and indemnity payments), (c) to pay any governmental charges and assessments against the System or any part thereof which may then be due and owing, (d) to make acquisitions, betterments, extensions, repairs, or replacements or other capital improvements (including the purchase of equipment) to the System deemed necessary by the City (including payments under contracts with vendors, suppliers, and contractors for the foregoing purposes), (e) to acquire Senior Bonds by redemption or by purchase in the open market at a price not exceeding the callable price as provided and in accordance with the terms and conditions of the Bond Ordinance, which Senior Bonds may be any of the Senior Bonds, prior to their respective maturities, and when so used for such purposes the moneys shall be withdrawn from the Surplus Account and deposited into the Payments Subaccount for the Senior Bonds to be so redeemed or purchased and (f) for any other purpose of the City. Payments for the purposes set forth in clause (e) of the preceding sentence are not required payments described in Section 6.1.2(d). No moneys credited to the Surplus Account shall ever be directed or applied to the general governmental or municipal functions of the City so long as any of the Bonds remain Outstanding.

 

Section 4.7. Deposits and Security of Funds and Accounts. All moneys in the funds and accounts established under the Bond Ordinance, except those funds and accounts created by a Series Ordinance in connection with the issuance of SRF Bonds, shall be held by the City in one or more Depositories qualified for use by the City. Uninvested moneys shall, at least to the extent not guaranteed by the Federal Deposit Insurance Corporation, be secured to the fullest extent required by the laws of the State for the security of public funds.

 

Section 4.8. Investment of Moneys. Moneys in the funds and accounts established under the Bond Ordinance, except those funds and accounts created by a Series Ordinance in connection with the issuance of SRF Bonds, shall be invested and reinvested in Permitted Investments bearing interest at the highest rates reasonably available (except to the extent that a restricted yield is required or advisable under Section 148 of the Code) and containing such maturities as are deemed suitable by the City; provided, however, that without the prior written consent of the Credit Facility Provider, investments of moneys in the Debt Service Reserve Subaccount shall not have maturities extending beyond five years. Investment of moneys in funds and accounts created by a Series Ordinance in connection with the issuance of SRF Bonds shall be as set forth in such Series Ordinance.

 

Unless otherwise specified in a Series Ordinance authorizing the issuance of a series of Bonds, Investment Earnings in each fund and account (except the Debt Service Reserve Subaccount) shall be retained therein. Investment Earnings from the investment of moneys in the Debt Service Reserve Subaccount shall be retained in the Debt Service Reserve Subaccount at all times the balance is less than the Debt Service Reserve Requirement; thereafter and at all times the balance of the Debt Service Reserve Subaccount is equal to or greater than the Debt Service Reserve Requirement, such Investment Earnings shall be deposited in the Payments Subaccount.

 

The Series Ordinance authorizing the issuance of any Subordinate Bonds shall specify any maturity limitations and allocations of Investment Earnings on investments of moneys in the funds and accounts relating to such Subordinate Bonds.

 

Moneys in each of such funds shall be accounted for as a separate and special fund apart from all other City funds, provided that investments of moneys therein may be made in a pool of investments together with other moneys of the City so long as sufficient Permitted Investments in such pool, not allocated to other investments of contractually or legally limited duration, are available to meet the requirements of the foregoing provisions.

 

Section 4.9. Valuation of Investments. All investments made under the Bond Ordinance shall, for purposes of the Bond Ordinance, be valued at fair market value on the 45th day (or the next succeeding Business Day if such 45th day is not a Business Day) prior to each Interest Payment Date. The valuation of the investment of moneys in funds and accounts created by a Series Ordinance in connection with the issuance of SRF Bonds shall be as set forth in such Series Ordinance.

 

Section 4.10. Application of Excess in Sinking Fund Account. Whenever at the end of each Fiscal Year the amount of moneys in any subaccount of the Sinking Fund Account exceeds the amount then currently required to be held therein, the excess shall be applied in accordance with Section 4.3 hereof.

 

Section 4.11. Disposition of Moneys After Payment of Bonds. Any amounts remaining in any fund or account established under the Bond Ordinance after payment in full of the Principal of, redemption premium, if any, and interest on the Bonds (or after provision for payment thereof has been made), the fees, charges, and expenses of the Paying Agent and Bond Registrar, all amounts owing to any Credit Facility Provider, any Reserve Account Credit Facility Provider, and any Qualified Hedge Provider, and all other amounts required to be paid under the Bond Ordinance (including amounts required to be paid into the Rebate Account), shall be promptly paid to the City. All amounts remaining in funds and accounts created by a Series Ordinance in connection with the issuance of SRF Bonds, after the payment in full thereof as provided in such Series Ordinance, shall be paid as set forth in such Series Ordinance.

 

ARTICLE V

 

SENIOR BONDS AND SUBORDINATE BONDS

 

Section 5.1. No Prior Lien Bonds nor Senior Bonds Except as Permitted in the Bond Ordinance. All Senior Bonds shall have complete parity of lien on the Pledged Revenues despite the fact that any of the Senior Bonds may be delivered at an earlier date than any other of the Senior Bonds. The City may issue Senior Bonds in accordance with the Bond Ordinance, but the City shall issue no other obligations of any kind or nature payable from or enjoying a lien on the Pledged Revenues or any part thereof having priority over or, except as permitted in the Bond Ordinance, on a parity with the Senior Bonds.

 

Section 5.2. Refunding Bonds. Any or all of the Senior Bonds may be refunded prior to maturity, upon redemption in accordance with their terms, or with the consent of the owners of such Senior Bonds, and the refunding Bonds so issued shall constitute Senior Bonds, if:

 

5.2.1. The City shall have obtained a report from an Independent Certified Public Accountant or a Financial Advisor demonstrating that the refunding will reduce the total debt service payments on Outstanding Senior Bonds on a present value basis.

 

5.2.2. As an alternative to, and in lieu of, satisfying the requirements of Section 5.2.1, all Outstanding Senior Bonds are being refunded under arrangements which immediately result in making provision for the payment of the refunded Bonds.

 

5.2.3. The requirements of Sections 5.3.6 and 5.3.7 are met with respect to such refunding Bonds.

 

Section 5.3. Senior Bonds. Bonds (including refunding Bonds which do not meet the requirements of Section 5.2) may also be issued on a parity with other Senior Bonds pursuant to a Series Ordinance, and the Bonds so issued shall constitute Senior Bonds, if all of the following conditions are satisfied:

 

5.3.1. There shall have been filed with the City either:

 

(a) a report by a Consulting Engineer or an Independent Certified Public Accountant to the effect that the historical Net Operating Revenues, adjusted to exclude any revenues or expenses resulting from a gain or loss, or mark-to-market change to any Hedge Agreement, for the most recent available annual audit for the Fiscal Year prior to the issuance of the proposed Senior Bonds were equal to at least (i) 125% of the Maximum Annual Debt Service Requirement on all Senior Bonds which will be Outstanding immediately after the issuance of the proposed Senior Bonds and (ii) 115% of the Maximum Annual Debt Service Requirement on all Bonds and Other System Obligations which will be Outstanding immediately after the issuance of the proposed Senior Bonds, or

 

(b) a report by a Consulting Engineer or an Independent Certified Public Accountant to the effect that the forecasted Net Operating Revenues for each Fiscal Year in the Forecast Period are expected to equal at least (i) 125% of the Maximum Annual Debt Service Requirement on all Senior Bonds which will be Outstanding immediately after the issuance of the proposed Senior Bonds and (ii) 115% of the Maximum Annual Debt Service Requirement on all Bonds and Other System Obligations which will be Outstanding immediately after the issuance of the proposed Senior Bonds.

 

The report that is required by Section 5.3.1(a) may contain pro forma adjustments to historical Net Operating Revenues equal to 100% of the increased annual amount attributable to any revision in the schedule of rates, fees, and charges for the services, facilities, and commodities furnished by the System, adopted prior to the date of delivery of the proposed Senior Bonds (which date of adoption may be in the Fiscal Year in which the Senior Bonds are issued) not fully reflected in the historical Net Operating Revenues actually received during the most recent Fiscal Year for which an annual audit is available. Such pro forma adjustments shall be based upon a report of a Consulting Engineer as to the amount of Operating Revenues which would have been received during such period had the new rate schedule been in effect throughout such period.

 

The report that is required by Section 5.3.1(b) may not take into consideration any rate schedule to be imposed in the future, unless such rate schedule has been adopted by ordinance of the Council. Such rate schedule adopted by ordinance may contain, however, future effective dates.

 

For any Fiscal Year of less than 12 months the preceding calculations may be adjusted to reflect a Maximum Annual Debt Service Requirement that is prorated over the actual number of months in such Fiscal Year.

 

5.3.2. The City shall have received, at or before issuance of the Senior Bonds, a report from a Consulting Engineer or an Independent Certified Public Accountant to the effect that the payments required to be made into each subaccount of the Sinking Fund Account have been made and the balance in each subaccount of the Sinking Fund Account is not less than the balance required by the Bond Ordinance as of the date of issuance of the proposed Senior Bonds.

 

5.3.3. Except with respect to Senior SRF Bonds, the Series Ordinance authorizing the proposed Senior Bonds must require (i) that the amount to be accumulated and maintained in the Debt Service Reserve Subaccount be increased to not less than 100% of the Debt Service Reserve Requirement computed on a basis which includes all Senior Bonds which will be Outstanding immediately after the issuance of the proposed Senior Bonds and (ii) that the amount of such increase be deposited in such account on or before the date and at least as fast as specified in Section 4.4(f).

 

5.3.4. The Series Ordinance authorizing the proposed Senior Bonds must require the proceeds of such proposed Senior Bonds to be used solely to make capital improvements to the System, to fund interest on the proposed Senior Bonds and certain other allowable fees, to acquire existing or proposed waterworks utilities, to refund other obligations issued for such purposes (whether or not such refunding Bonds satisfy the requirements of Section 5.2), and to pay expenses incidental thereto and to the issuance of the proposed Senior Bonds.

 

5.3.5. If any Senior Bonds are Auction Rate Bonds or would bear interest at a Variable Rate, the Series Ordinance under which such Senior Bonds are issued shall provide a maximum rate of interest per annum which such Senior Bonds may bear.

 

5.3.6. The Director of Finance or the Director of Water Services shall have certified, by written certificate dated as of the date of issuance of the Senior Bonds, that the City is in compliance with all requirements of the Bond Ordinance.

 

5.3.7. The City shall have received an opinion of Bond Counsel, dated as of the date of issuance of the Senior Bonds, to the effect that the Series Ordinance and any related Supplemental Ordinance authorizing the issuance of Senior Bonds have been duly adopted by the City.

 

Section 5.4. Subordinate Bonds.

 

(a) Bonds may also be issued on a subordinate basis to the Senior Bonds pursuant to a Series Ordinance, and the Bonds so issued shall constitute Subordinate Bonds, if all of the following conditions are satisfied:

 

(1) There shall have been filed with the City either:

 

(i) a report by a Consulting Engineer or an Independent Certified Public Accountant to the effect that the historical Net Operating Revenues, adjusted to exclude any revenues or expenses resulting from a gain or loss, or mark-to-market change to any Hedge Agreement, for the most recent available annual audit for the Fiscal Year prior to the issuance of the proposed Subordinate Bonds were equal to at least (i) 115% of the Maximum Annual Debt Service Requirement on all Senior Bonds which will be Outstanding immediately after the issuance of the proposed Subordinate Bonds and (ii) 110% of the Maximum Annual Debt Service Requirement on all Bonds and Other System Obligations which will be Outstanding immediately after the issuance of the proposed Subordinate Bonds, or

 

(ii) a report by a Consulting Engineer or an Independent Certified Public Accountant to the effect that the forecasted Net Operating Revenues for each Fiscal Year in the Forecast Period are expected to equal at least (i) 115% of the Maximum Annual Debt Service Requirement on all Senior Bonds which will be Outstanding immediately after the issuance of the proposed Subordinate Bonds and (ii) 110% of the Maximum Annual Debt Service Requirement on all Bonds and Other System Obligations which will be Outstanding immediately after the issuance of the proposed Subordinate Bonds.

 

The report that is required by Section 5.4(a)(1)(i) may contain pro forma adjustments to historical Net Operating Revenues equal to 100% of the increased annual amount attributable to any revision in the schedule of rates, fees, and charges for the services, facilities, and commodities furnished by the System, adopted prior to the date of delivery of the proposed Subordinate Bonds and not fully reflected in the historical Net Operating Revenues actually received during the most recent Fiscal Year for which an annual audit is available. Such pro forma adjustments shall be based upon a report of a Consulting Engineer as to the amount of Operating Revenues which would have been received during such period had the new rate schedule been in effect throughout such period.

The report that is required by Section 5.4(a)(1)(ii) may not take into consideration any rate schedule to be imposed in the future, unless such rate schedule has been adopted by ordinance of the Council. Such rate schedule adopted by ordinance may contain, however, future effective dates.

 

For any Fiscal Year of less than 12 months the preceding calculations may be adjusted to reflect a Maximum Annual Debt Service Requirement that is prorated over the actual number of months in such Fiscal Year.

 

(2) The Series Ordinance authorizing the Subordinate Bonds shall provide that such Subordinate Bonds shall be junior and subordinate in lien and right of payment to all Senior Bonds Outstanding at any time.

 

(3) The Series Ordinance authorizing the Subordinate Bonds shall establish funds and accounts for the moneys to be used to pay debt service on the Subordinate Bonds, to pay Hedge Payments under Subordinate Hedge Agreements, and to provide reserves therefor.

 

(4) The requirements of Sections 5.3.4, 5.3.6, and 5.3.7 are met with respect to such Subordinate Bonds (as if such Bonds constituted Senior Bonds).

 

(b) In the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization, or other similar proceedings in connection therewith, relative to the City or to its creditors, as such, or to its property, and in the event of any proceedings for voluntary liquidation, dissolution, or other winding up of the City, whether or not involving insolvency or bankruptcy, the owners of all Senior Bonds then Outstanding and related Qualified Hedge Providers shall be entitled to receive payment in full of all Principal and interest due on all such Senior Bonds in accordance with the provisions of the Bond Ordinance and related Hedge Payments in accordance with the provisions of the Senior Hedge Agreements before the owners of the Subordinate Bonds or related Qualified Hedge Providers are entitled to receive any payment from the Pledged Revenues or the amounts held in the funds and accounts created under the Bond Ordinance on account of Principal of, premium, if any, or interest on the Subordinate Bonds or Hedge Payments under Subordinate Hedge Agreements.

 

(c) In the event that any of the Subordinate Bonds are declared due and payable before their expressed maturities because of the occurrence of an Event of Default (under circumstances when the provisions of paragraph (b) are not be applicable), no owners of Subordinate Bonds or related Qualified Hedge Providers may receive any accelerated payment from the Pledged Revenues or the amounts held in the funds and accounts created under the Bond Ordinance of Principal of, premium, if any, or interest on the Subordinate Bonds or Hedge Payments under Subordinate Hedge Agreements, until the owners of all Senior Bonds Outstanding and related Qualified Hedge Providers have received timely payments when due of all Principal of and interest on all such Senior Bonds and all Hedge Payments under related Senior Hedge Agreements.

 

(d) If any Event of Default shall have occurred and be continuing (under circumstances when the provisions of paragraph (b) are not applicable), the owners of all Senior Bonds then Outstanding and related Qualified Hedge Providers shall be entitled to receive payment in full of all Principal and interest then due on all such Senior Bonds and all Hedge Payments under related Senior Hedge Agreements before the owners of the Subordinate Bonds or related Qualified Hedge Providers are entitled to receive any Payment from the Pledged Revenues or the amounts held in the funds and accounts created under the Bond Ordinance of Principal of, premium, if any, or interest on the Subordinate Bonds or Hedge Payments under Subordinate Hedge Agreements.

 

(e) No owner of Senior Bonds or any related Qualified Hedge Provider shall be prejudiced in its right to enforce subordination of the Subordinate Bonds and Subordinate Hedge Agreements by any act or failure to act on the part of the City.

 

(f) The obligations of the City to pay to the owners of the Subordinate Bonds the Principal of, premium, if any, and interest thereon in accordance with their terms and to pay Hedge Payments to related Qualified Hedge Providers in accordance with the terms of the Subordinate Hedge Agreements shall be unconditional and absolute. Nothing in the Bond Ordinance shall prevent the owners of the Subordinate Bonds or related Qualified Hedge Providers from exercising all remedies otherwise permitted by applicable law or under the Bond Ordinance or the Subordinate Hedge Agreements upon default thereunder, subject to the rights contained in the Bond Ordinance of the owners of Senior Bonds and related Qualified Hedge Providers to receive cash, property, or securities otherwise payable or deliverable to the owners of the Subordinate Bonds and related Qualified Hedge Providers, and any Series Ordinance authorizing Subordinate Bonds may provide that, insofar as a trustee or paying agent for the Subordinate Bonds is concerned, the foregoing provisions shall not prevent the application by such trustee or paying agent of any moneys deposited with such trustee or paying agent for the purpose of the payment of or on account of the Principal of, premium, if any, and interest on such Subordinate Bonds and Hedge Payments under Subordinate Hedge Agreements if such trustee or paying agent did not have knowledge at the time of such application that such payment was prohibited by the foregoing provisions.

 

(g) Any series of Subordinate Bonds and related Subordinate Hedge Agreements may have such rank or priority with respect to any other series of Subordinate Bonds and related Subordinate Hedge Agreements as may be provided in the Series Ordinance authorizing such series of Subordinate Bonds and may contain such other provisions as are not in conflict with the provisions of the Bond Ordinance.

 

Section 5.5. Accession of Subordinate Bonds and Related Subordinate Hedge Agreements to Senior Status. By proceedings authorizing all or any Subordinate Bonds, the City may provide for the accession of such Subordinate Bonds and related Subordinate Hedge Agreements to the status of parity with the Senior Bonds and related Senior Hedge Agreements if, as of the date of accession, the conditions of Section 5.3.1(a), 5.3.6, and 5.3.7 are satisfied, on a basis which includes all Outstanding Senior Bonds and such Subordinate Bonds, and if on the date of accession:

 

5.5.1. the Debt Service Reserve Subaccount contains an amount equal to the Debt Service Reserve Requirement computed on a basis which includes all Outstanding Senior Bonds and such Subordinate Bonds (but which excludes, in the case of both Outstanding Senior Bonds and such Subordinate Bonds, any SRF Bonds); and

 

5.5.2. the Payments Subaccount contains the amount which would have been required to be accumulated therein on the date of accession if the Subordinate Bonds had originally been issued as Senior Bonds.

 

Section 5.6. Adoption of Proceedings. The City shall adopt a Series Ordinance authorizing the issuance of any additional Bonds and reciting that the requirements of this Article have been satisfied, and shall set forth in such proceedings, among other things, the date or-dates such additional Bonds shall bear and the rate or rates of interest, interest payment date or dates, maturity date or dates, and redemption provisions with respect to such additional Bonds and any other matters applicable to such additional Bonds as the City may deem advisable.

 

Any such Series Ordinance shall restate and reaffirm, by reference, all of the applicable terms, conditions and provisions of the Bond Ordinance not modified by the Series Ordinance.

 

Section 5.7. Proceedings Authorizing Additional Bonds. No Series Ordinance authorizing the issuance of additional Bonds as permitted under this Article shall conflict with the terms and conditions of the Bond Ordinance, except to the extent that the Series Ordinance is adopted for one of the purposes set forth in Section 10.1 and complies with the provisions of Section 10.1 for the adoption of Supplemental Ordinances without the consent of Bondholders.

 

Section 5.8. Applicability to Additional Bonds. The provisions of the Bond Ordinance shall be construed as including and being applicable to any future series of Bonds, and any such Bonds shall be treated as if they had been pursuant to the terms of this Bond Ordinance.

 

Section 5.9. Credit Facilities and Hedge Agreements. In connection with the issuance of any Bonds under the Bond Ordinance, the City may obtain or cause to be obtained one or more Credit Facilities providing for payment of all or a portion of the Principal of, premium, if any, or interest due or to become due on such Bonds, providing for the purchase of such Bonds by the Credit Facility Provider, or providing funds for the purchase of such Bonds by the City. In connection therewith the City shall enter into Credit Facility Agreements with such Credit Facility Providers providing for, among other things, (i) the payment of fees and expenses to such Credit Facility Providers for the issuance of such Credit Facilities; (ii) the terms and conditions of such Credit Facilities and the Bonds affected thereby; and (iii) the security, if any, to be provided for the issuance of such Credit Facilities. The City may secure any Credit Facility by an agreement providing for the purchase of the Bonds secured thereby with such adjustments to the rate of interest, method of determining interest, maturity, or redemption provisions as are specified by the City in the applicable Series Ordinance. The City may in a Credit Facility Agreement agree to directly reimburse such Credit Facility Provider for amounts paid under the terms of such Credit Facility, together with interest thereon; provided, however, that no Reimbursement Obligation shall be created for purposes of the Bond Ordinance until amounts are paid under such Credit Facility. Any such Reimbursement Obligation shall be deemed to be a part of the Bonds to which the Credit Facility relates which gave rise to such Reimbursement Obligation, and references to Principal and interest payments with respect to such Bonds shall include Principal and interest (except for Additional Interest and Principal amortization requirements with respect to the Reimbursement Obligation that are more accelerated than the amortization requirements for the related Bonds, without acceleration) due on the Reimbursement Obligation incurred as a result of payment of such Bonds with the Credit Facility. All other amounts payable under the Credit Facility Agreement (including any Additional Interest and Principal amortization requirements with respect to the Reimbursement obligation that are more accelerated than the amortization requirements for the related Bonds, without acceleration) shall be fully subordinate to the payment of debt service on the related class of Bonds. Any such Credit Facility shall be for the benefit of and secure such Bonds or portion thereof as specified in the applicable Series Ordinance.

 

In connection with the issuance of any Bonds or at any time thereafter so long as such Bonds remain Outstanding, the City may enter into Hedge Agreements with Qualified Hedge Providers, and no other providers, with respect to any Bonds. The City shall authorize the execution, delivery, and performance of each Hedge Agreement in a Supplemental Ordinance, in which it shall designate the related Hedged Bonds. The Citys obligation to pay Hedge Payments may be secured by a pledge of, and lien on, the Pledged Revenues on a parity with the lien created by Section 4.1 to secure the related Hedged Bonds, or may be subordinated in lien and right of payment to the payment of the Bonds, as determined by the City.

 

Section 5.10. Other Obligations. The City expressly reserves the right, at any time, to adopt one or more other bond ordinances and reserves the right, at any time, to issue any other obligations not secured by the amounts pledged under the Bond Ordinance.

 

ARTICLE VI

 

GENERAL PROVISIONS

 

Section 6.1. Rate Covenant. Except as otherwise provided in Section 6.4, the City shall continuously own, control, operate, and maintain the System in an efficient and economical manner and on a revenue producing basis and shall at all times prescribe, fix, maintain, and collect rates, fees, and other charges for the services, facilities, and commodities furnished by the System fully sufficient at all times to:

 

6.1.1. provide for 100% of the Expenses of Operation and Maintenance; and

 

6.1.2. produce Net Operating Revenues, adjusted to exclude any revenues or expenses resulting from a gain or loss, or mark-to-market change to any Hedge Agreement, in each Fiscal Year which, together with Investment Earnings:

 

(a) will equal at least 125% of the Debt Service Requirement on all Senior Bonds then Outstanding for the year of computation and 115% of the Debt Service Requirement on all Bonds and Other System Obligations then Outstanding for the Fiscal Year of computation; and

 

(b) will enable the City to make all required payments, if any, into the Debt Service Reserve Subaccount and the Rebate Account and to any Credit Facility Provider, any Reserve Account Credit Facility Provider, and any Hedge Payments; and

 

(c) will enable the City to make all payments, if any, required by the Operating and Capital Reserves Policy established and approved by the Water Services Department and the City Council, as may be amended from time to time; and

 

(d) will remedy all deficiencies in required payments into any of the funds and accounts established under the Bond Ordinance from prior Fiscal Years.

 

If the City fails to prescribe, fix, maintain, and collect rates, fees, and other charges, or to revise such rates, fees, and other charges, in accordance with the provisions of this Section, the owners of not less than 25% in aggregate Principal of the Bonds then Outstanding, without regard to whether any Event of Default shall have occurred, may institute and prosecute in any court of competent jurisdiction an appropriate action to compel the City to prescribe, fix, maintain, or collect such rates, fees, and other charges, or to revise such rates, fees, and other charges, in accordance with the requirements of this Section.

 

Section 6.2. Maintenance of the System in Good Condition. The City covenants that it will enforce reasonable rules and regulations governing the System and the operation thereof, that it will operate the System in an efficient and economical manner and will at all times maintain the System in good repair and in sound operating condition, that it will make all necessary repairs, renewals, and replacements to the System, and that it will comply with all valid acts, rules, regulations, orders, and directions of any legislative, executive, administrative, or judicial body applicable to the System and the Citys operation thereof.

 

Section 6.3. Insurance. With respect to the System, the City will carry adequate public liability, fidelity and property insurance, such as is maintained by similar utilities as the System.

 

The City shall indemnify itself against the usual hazards incident to the construction of any Project, and without in any way limiting the generality of the above, shall: (a) require each construction contractor and each subcontractor to furnish a bond, or bonds, of such type and in amounts adequate to assure the faithful performance of their contracts and the payment of all bills and claims for labor and material arising by virtue of such contracts; and (b) require each construction contractor or the subcontractor to maintain at all times until the completion and acceptance of the Project adequate compensation insurance for all of their employees and adequate public liability and property damage insurance for the full and complete protection of the City from any and all claims of every kind and character which may arise by virtue of the operations under their contracts, whether such operations be by themselves or by anyone directly or indirectly for them, or under their control.

 

All such policies shall be for the benefit of and made payable to the City and shall be on deposit with the City; provided, however, the City may elect to be a self-insurer with respect to any risks for which insurance is required under this Section 6.3. The cost of such insurance may be paid as an Expense of Operation and Maintenance.

 

All moneys received for losses under any such insurance policies, except public liability policies, are hereby pledged by the City as security for the Bonds until and unless such proceeds are paid out in making good the loss or damage in respect of which such proceeds are received, either by repairing the property damaged or replacing the property destroyed or by depositing the same in the Renewal and Replacement Account. Adequate provision for making good such loss and damage shall be made within 120 days from the date of the loss. Insurance proceeds not used in making such provision shall be deposited in the Surplus Account on the expiration of such 120-day period. Such insurance proceeds shall be payable to the City by appropriate clause to be attached to or inserted in the policies.

 

Section 6.4. No Sale, Lease or Encumbrance; Exceptions. Except as expressly permitted in the Bond Ordinance, the City irrevocably covenants, binds, and obligates itself not to sell, lease, encumber, or in any manner dispose of the System as a whole or in part until all of the Bonds and all interest thereon shall have been paid in full or provision for payment has been made in accordance with Article IX.

 

The City shall have and hereby reserves the right to sell, lease, or otherwise dispose of any of the property comprising a part of the System in the following manner, if any one of the following conditions exists: (i) such property is not necessary for the operation of the System; (ii) such property is not useful in the operation of the System; (iii) such property is not profitable in the operation of the System; or (iv) the disposition of such property will be advantageous to the System and will not adversely affect the security for the Bondholders. Other than as set forth in Section 4.3(a) hereof, all proceeds of any such sale, lease or other disposition shall be deposited in the Surplus Account.

 

Prior to any such sale, lease or other disposition, there shall be filed with the City: (i) an opinion of Bond Counsel to the effect that such sale, lease or other disposition will not adversely affect the extent to which interest on any Tax-Exempt Bonds is excluded from gross income for federal income tax purposes (provided that such opinion shall not be required if the Director of Water Services determines that such portion of the System was not financed with the proceeds of any Tax-Exempt Bonds); and (ii) an opinion of a Consulting Engineer or an Independent Certified Public Accountant expressing the view that such sale, lease or other disposition will not result in any diminution of Net Operating Revenues to the extent that in any future Fiscal Year the Net Operating Revenues will be less than (A) 125% of the Maximum Annual Debt Service Requirement on all Senior Bonds to be Outstanding after such sale, lease or other disposition or (B) 115% of the Maximum Annual Debt Service Requirement on all Bonds and Other System Obligations to be Outstanding after such sale, lease or other disposition. In reaching this conclusion, the Consulting Engineer or the Independent Certified Public Accountant, as applicable, shall take into consideration such factors as he or she may deem significant, including (i) anticipated diminution of Operating Revenues, (ii) anticipated increase or decrease in Expenses of Operation and Maintenance attributable to the sale, lease or other disposition, and (iii) reduction in the annual Debt Service Requirement attributable to the application of the proceeds of such sale, lease or other disposition to the provision for payment of Bonds theretofore Outstanding. Such sale, lease or other disposition may include a partial interest in a waterworks facility owned or to be owned in whole or in part by the City.

 

The City reserves the right to transfer the System as a whole to any political subdivision or authority or agency of one or more political subdivisions of the State to which may be delegated the legal authority to own and operate the System, or any portion thereof, on behalf of the public, and which undertakes in writing, filed with the City, the Citys obligations under the Bond Ordinance, provided that there shall be first filed with the City: (i) an opinion of Bond Counsel to the effect that such sale will not adversely affect the extent to which interest on any Tax-Exempt Bonds is excluded from gross income for federal income tax purposes; and (ii) an opinion of a Consulting Engineer or an Independent Certified Public Accountant expressing the view that such transfer will not result in any diminution of Net Operating Revenues to the extent that in any future Fiscal Year the Net Operating Revenues will be less than (A) 125% of the Maximum Annual Debt Service Requirement on all Senior Bonds to be Outstanding after such transfer or (B) 115% of the Maximum Annual Debt Service Requirement on all Bonds and Other System Obligations to be Outstanding after such transfer. In reaching this conclusion, the Consulting Engineer or Independent Certified Public Accountant, as applicable, shall take into consideration such factors as he or she may deem significant, including any rate schedule adopted by the transferee political subdivision, authority, or agency.

 

Upon receipt of an opinion of Bond Counsel to the effect that such action will not adversely affect the extent to which interest on any Tax-Exempt Bonds is excluded from gross income for federal income tax purposes, the City may enter into such management contracts and sale/leaseback agreements as the City may deem appropriate, and such management contracts and sale/leaseback agreements shall not constitute a sale, lease or other disposition within the meaning of this Section.

 

Section 6.5. No Impairment of Rights. The City shall not enter into any contract or contracts, nor take any action, the results of which might materially impair the rights of the Bondholders.

 

Section 6.6. Satisfaction of Liens. The City will from time to time duly pay and discharge or cause to be paid and discharged all taxes, assessments, and other governmental charges, if any, lawfully imposed upon the System or any part thereof or upon the Pledged Revenues, as well as any lawful claims for labor, materials, or supplies which if unpaid might by law become a lien or charge upon the System or the Pledged Revenues or any part thereof or which might impair the security of the Bonds, except when the City in good faith contests its liability to pay the same.

 

Section 6.7. Enforcement of Charges and Connections. Except as otherwise determined in accordance with City policy and provided that such action or inaction will not materially impair the rights of the Bondholders, the City shall compel the prompt payment of rates, fees, and charges imposed for service rendered on every lot or parcel connected with the System, and to that end will vigorously enforce all of the provisions of any resolution or ordinance of the City having to do with waterworks connections and with waterworks charges, and all of the rights and remedies permitted the City under law. The City by this Section expressly covenants and agrees that such charges will be enforced and promptly collected to the full extent permitted by law, including the requirement for the making of reasonable deposits by customers of the System to the extent required by the City and the discontinuation of services to any premises delinquent in the payment of such charges.

 

None of the facilities or services afforded by the System will be furnished to any user without a reasonable charge being made therefore, except as otherwise provided for the Parks and Recreation Department in the Code of Ordinances..

 

Section 6.8. Payments. All payments becoming due on the Bonds for Principal and interest shall be made by the City from the Pledged Revenues or, at the Citys option, other legally available funds to the owners thereof when due in full, and all reasonable and authorized charges made by the Bond Registrar and any Paying Agent shall be paid by the City when due.

 

Section 6.9. No Loss of Lien on Revenues. The City shall not do, or omit to do, or permit to be done or to be omitted any matter or thing whatsoever whereby the lien of the Bond Ordinance on the Pledged Revenues or any part thereof might or could be lost or impaired.

 

Section 6.10. Annual Budget and Annual Financial Report. The City agrees to adopt an Annual Budget for the System for each Fiscal Year in compliance with the Charter and the rate covenants as stated in Section 6.1. The annual financial report relating to the Citys finances, required by Section 96, Article IV, of the Charter, shall contain complete statements covering the results of the years operations and the financial condition of the System. Said statements shall bear the certificate of the firm of certified public accountants making the annual audit. A copy of each such annual report will be filed with the City Clerk and will be open for public inspection, and a copy will be forwarded promptly without cost to the manager of the underwriting group purchasing the Bonds.

 

Section 6.11. Tax Provisions; Rebate Account. The City recognizes that the purchasers and owners of Tax-Exempt Bonds will have accepted the Tax-Exempt Bonds on, and paid for the Tax-Exempt Bonds a price which reflects, the understanding that interest on such Tax-Exempt Bonds is not included in the gross income of the owners of the Tax-Exempt Bonds for federal income tax purposes under laws in force at the time the Tax-Exempt Bonds shall have been delivered.

 

The City shall take any and all action which may be required from time to time in order to assure that interest on the Tax-Exempt Bonds shall remain excludable from the gross income of the owners of the Tax-Exempt Bonds for federal income tax purposes and shall refrain from taking any action which would adversely affect such status.

 

Prior to or contemporaneously with delivery of each series of Tax-Exempt Bonds, the Director of Finance shall execute a certificate, in form satisfactory to Bond Counsel, on behalf of the City respecting the investment of the proceeds of such series of Tax-Exempt Bonds. Such certificate shall be a representation and certification of the City, and an executed copy thereof shall be delivered to the Bond Registrar. The City shall not knowingly invest or participate in the investment of any moneys held under the Bond Ordinance if such investment would cause interest on any Tax-Exempt Bonds to become included in gross income for federal income tax purposes.

 

The Director of Finance may also execute and deliver, on behalf of the City: (i) such agreements, filings, and other writings as may be necessary or desirable to cause or bind the City to comply with any requirements for rebate under Section 148(f) of the Code, or (ii) such certificate or other writing as may be necessary or desirable to qualify for exemption from such rebate requirements.

 

The City shall calculate, from time to time, as required in order to comply with the provisions of Section 148(f) of the Code, the amounts required to be rebated (including penalties) to the United States and shall deposit or cause to be deposited into the Rebate Account any and all of such amounts promptly following a determination of any such amount.

 

The City shall keep all moneys held in the Rebate Account invested in Permitted Investments. To the extent and at the times required in order to comply with Section 148(f) of the Code, the City may withdraw funds from the Rebate Account for the purpose of making rebate payments (including penalties) to the United States as required by Section 148(f) of the Code. Except as otherwise specifically provided in this Section, moneys in the Rebate Account may not be withdrawn from the Rebate Account for any other purpose.

 

All earnings on investments held in the Rebate Account shall be retained in the Rebate Account and shall become part of the Rebate Account. Moneys held in the Rebate Account, including the Investment Earnings thereon, if any, shall not be subject to a pledge in favor of the owners of the Bonds under the Bond Ordinance and may not be used to pay amounts due on the Bonds or under any Credit Facility Agreements or Hedge Agreements or amounts required for the operation, maintenance, enlargement, or extension of the System.

 

The City shall have the right to create special accounts, from time to time, in the Rebate Account as it may deem desirable.

 

If the City has filed all reports required to be filed with the United States pursuant to Section 148(f) of the Code and has made all payments required to be made to the United States pursuant to Section 148(f) of the Code, then all moneys or investments remaining in the Rebate Account may be used by the City for any lawful purpose.

 

The City may employ any rebate analyst or other expert to perform any of the Citys duties with respect to the Rebate Account, other than payment of moneys into the Rebate Account.

 

The City hereby covenants and agrees that it will not use or permit any use of the proceeds of the sale of any Tax-Exempt Bonds, or any other moneys arising out of the ownership or operation of the System or otherwise, or use or permit the use of any of the facilities being financed or refinanced thereby or any other portion of the System, which would cause any Tax-Exempt Bonds or any portion thereof to be private activity bonds within the meaning of Section 141 of the Code.

 

The covenants, certifications, representations, and warranties contained in this Section shall survive payment in full or provision for payment in full of the Tax-Exempt Bonds.

 

Section 6.12. Payments to City Must be in Money. The City shall require all payments to be made to the City for service charges of the System to be made in lawful moneys of the United States of America.

 

Section 6.13. Designation of Paying Agent and Bond Registrar. The Director of Finance shall designate the 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 (in such capacity, the Bond Registrar); provided, however, that in connection with the issuance of any SRF Bonds, the City shall appoint such Paying Agent designated by the issuer of the SRF Bonds.

 

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 (1) 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 and subject to supervision or examination by federal or state regulatory authority and (2) shall have a reported capital (exclusive of borrowed capital) plus surplus of not less than $100,000,000 or consideration may be given by the City to a bank not meeting this amount if the bank submits an acceptable form of guarantee for its financial obligations to the City. If such institution publishes reports of conditions at least annually pursuant to law or regulation, then for the purposes of this Section the capital and surplus of such institution shall be deemed to be its capital and surplus as set forth in its most recent report of condition so published.

 

The Paying Agent shall be paid in accordance with its proposal for fees and expenses submitted to the Director of Finance as an operating expense of the System.

 

Section 6.14. Authorization of Continuing Disclosure Agreement. The City covenants and agrees to enter into a Continuing Disclosure Agreement for the benefit of the Bondholders or similar undertaking, if necessary, intended to satisfy the ongoing disclosure requirements of Securities and Exchange Commission Rule 15c2-12. The Director of Finance is authorized to enter in a Continuing Disclosure Agreement substantially in the form on file with the office of the Director of Finance, with such changes therein as he or she deems necessary or desirable.

 

ARTICLE VII

 

EVENTS OF DEFAULT AND REMEDIES

 

Section 7.1. Events of Default. An Event of Default shall mean the occurrence of any one or more of the following:

 

7.1.1. failure to pay the Principal or redemption price of any Bond when the same shall become due and payable, either at maturity or by proceedings for redemption or otherwise; or

 

7.1.2. failure to pay any installment of interest on any Bond when and as such installment of interest shall become due and payable; or

 

7.1.3. default shall be made by the City in the performance of any obligation in respect to the Debt Service Reserve Subaccount and such default shall continue for 30 days thereafter; or

 

7.1.4. the City shall (1) admit in writing its inability to pay its debts generally as they become due, (2) file a petition in bankruptcy or take advantage of any insolvency act, (3) make an assignment for the benefit of its creditors, (4) consent to the appointment of a receiver of itself or of the whole or any substantial part of its property, or (5) be adjudicated a bankrupt; or

 

7.1.5. a court of competent jurisdiction shall enter an order, judgment, or decree appointing a receiver of the System or any of the funds or accounts established in Article IV or Article XI, or of the whole or any substantial part of the Citys property, or approving a petition seeking reorganization of the City under the federal bankruptcy laws or any other applicable law or statute of the United States of America or the State, and such order, judgment, or decree shall not be vacated or set aside or stayed within 60 days from the date of the entry thereof; or

 

7.1.6. under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of any of the funds or accounts established in Article IV or Article XI, or of the whole or any substantial part of the Citys property, and such custody or control shall not be terminated or stayed within 60 days from the date of assumption of such custody or control; or

 

7.1.7. the City shall fail to perform any of the other covenants, conditions, agreements, and provisions contained in the Bonds or in the Bond Ordinance (other than in Section 6.14) on the part of the City to be performed, and such failure shall continue for 90 days after written notice specifying such failure and requiring it to be remedied shall have been given to the City by the owners of not less than, or a Credit Facility Provider securing not less than, 25% in aggregate Principal of the Bonds then Outstanding; provided, however, if the failure stated in such notice can be corrected, but not within such 90-day period, the City shall have 180 days after such written notice to cure such default if corrective action is instituted by the City within such 90-day period and diligently pursued until the failure is corrected; or

 

7.1.8. (a) an Event of Default relating to the non-payment of the Principal or redemption price or installment of interest shall occur under any Series Ordinance; or

 

(b) an Event of Default, other than as described in Section 7.1.8(a), shall occur under any Series Ordinance; or

 

7.1.9. failure by any Credit Facility Provider to pay the purchase price of Bonds under any Credit Facility then in effect; or

 

7.1.10. delivery to the City by a Credit Facility Provider of written notice stating that an Event of Default has occurred under any Credit Facility Agreement; or

 

7.1.11. delivery to the City by a Qualified Hedge Provider of written notice stating that an Event of Default has occurred under any Senior Hedge Agreement.

 

Section 7.2. Remedies.

 

(a) Upon the happening and continuance of any Event of Default specified in Section 7.1.1, 7.1.2 or 7.1.8(a) as to any Senior Bond, then and in every such case, upon the written declaration of the owners of more than 50% in aggregate Principal of all Senior Bonds then Outstanding (other than Senior Bonds secured by a Credit Facility), the Principal of all Senior Bonds then Outstanding (other than Senior Bonds secured by a Credit Facility) shall become due and payable immediately, together with the interest accrued thereon to the date of such acceleration, at the place of payment provided therein, and interest on such Senior Bonds shall cease to accrue after the date of such acceleration, anything in the Bond Ordinance or in the Senior Bonds to the contrary notwithstanding. With respect to any Senior Bonds secured by a Credit Facility, only the applicable Credit Facility Provider may give written demand to declare the Principal of and accrued interest on such Senior Bonds to be immediately due and payable.

 

Upon the happening and continuance of any Event of Default specified in Section 7.1.9, then and in every such case, upon the written declaration of the owners of more than 50% in aggregate Principal of the Senior Bonds of the affected series then Outstanding, the Principal of all Senior Bonds of the affected series then Outstanding shall become due and payable immediately, together with the interest accrued thereon to the date of such acceleration, at the place of payment provided therein, and interest on the Senior Bonds of the affected series shall cease to accrue after the date of such acceleration, anything in the Bond Ordinance or in the Senior Bonds of the affected series to the contrary notwithstanding.

 

Upon the happening and continuance of any Event of Default specified in Section 7.1.10, then and in every such case, upon the written demand of the applicable Credit Facility Provider, the Principal of all Senior Bonds of the affected series then Outstanding shall become due and payable immediately, together with the interest accrued thereon to the date of such acceleration, at the place of payment provided therein, and interest on the Senior Bonds of the affected series shall cease to accrue after the date of such acceleration, anything in the Bond Ordinance or in the Senior Bonds of the affected series to the contrary notwithstanding.

 

Upon the happening and continuance of any Event of Default specified in Section 7.1.11, then and in every such case, upon the written declaration of the owners of more than 50% in aggregate Principal of the Senior Bonds of the affected series then Outstanding, the Principal of all Senior Bonds of the affected series then Outstanding shall become due and payable immediately, together with the interest accrued thereon to the date of such acceleration, at the place of payment provided therein, and interest on the Senior Bonds of the affected series shall cease to accrue after the date of such acceleration, anything in the Bond Ordinance or in the Senior Bonds of the affected series to the contrary notwithstanding. Notwithstanding the foregoing, with respect to any Senior Bonds secured by a Credit Facility, only the applicable Credit Facility Provider may give written demand to declare the Principal of and accrued interest on such Senior Bonds to be immediately due and payable.

 

Upon any declaration of acceleration under the Bond Ordinance, the City shall immediately draw under the applicable Credit Facility to the extent permitted by the terms thereof that amount which, together with other amounts on deposit under the Bond Ordinance, shall be sufficient to pay the Principal of and accrued interest on the related Senior Bonds so accelerated.

 

The above provisions, however, are subject to the condition that if, after the Principal of the Senior Bonds shall have been so accelerated, all arrears of interest upon such Bonds, and interest on overdue installments of interest at the rate on such Bonds, shall have been paid by the City, the Principal of such Bonds which has matured (except the Principal of any Bonds not then due by their terms except as provided above) have been paid, and the City shall also have performed all other things in respect to which it may have been in default under the Bond Ordinance, and, if applicable, each Credit Facility Provider shall have reinstated the Credit Facility in the full amount available to be drawn thereunder by written notice to the City, then, in every such case, the owners of more than 50% in aggregate Principal of all Senior Bonds then Outstanding by written notice to the City, may waive such default and its consequences and such waiver shall be binding upon the City and upon all owners of the Bonds; but no such waiver shall extend to or affect any subsequent default or impair any right or remedy consequent thereon. Notwithstanding the foregoing, as long as the applicable Credit Facility Provider shall not then continue to dishonor draws under the Credit Facility, no Event of Default with respect to the related Senior Bonds may be waived without the express written consent of such Credit Facility Provider.

 

(b) Upon the happening and continuance of any Event of Default, any owner of Bonds then Outstanding affected by the Event of Default or a duly authorized agent for such owner may proceed to protect and enforce its rights and the rights of the owners of Bonds by such of the following remedies as it shall deem most effectual to protect and enforce such rights:

 

(1) by mandamus or other suit, action, or proceeding at law or in equity, enforce all rights of the owners of Bonds, including the right to require the appointment of a receiver for the System or to exercise any other right or remedy provided by the Constitution and laws of the State and the Charter and to require the City to perform any other covenant or agreement contained in the Bond Ordinance;

 

(2) by action or suit in equity, require the City to account as if it were the trustee of an express trust for the owners of the Bonds;

 

(3) by action or suit in equity, enjoin any acts or things which may be unlawful or in violation of the rights of the owners of the Bonds; or

 

(4) by pursuing any other available remedy at law or in equity or by statute.

 

In the enforcement of any remedy under the Bond Ordinance, owners of Senior Bonds shall be entitled to sue for, enforce payment on, and receive any and all amounts then or during any default becoming, and at any time remaining, due from the City for Principal, redemption premium, interest, or otherwise, under any provision of the Bond Ordinance or of the Senior Bonds, and unpaid, with interest on overdue payments at the rate or rates of interest specified in such Senior Bonds, together with any and all costs and expenses of collection and of all proceedings under the Bond Ordinance and under such Senior Bonds, without prejudice to any other right or remedy of the owners of Senior Bonds, and to recover and enforce a judgment or decree against the City for any portion of such amounts remaining unpaid, with interest, costs, and expenses, and to collect from any moneys available for such purpose, in any manner provided by law, the moneys adjudged or decreed to be payable.

 

If no Senior Bonds are then Outstanding or if no Event of Default with respect to any Senior Bonds has then occurred and is continuing, in the enforcement of any remedy under the Bond Ordinance, owners of Subordinate Bonds shall be entitled to sue for, enforce payment on, and receive any and all amounts then or during any default becoming, and at any time remaining, due from the City for Principal, redemption premium, interest, or otherwise, under any provision of the Bond Ordinance or of the Subordinate Bonds, and unpaid, with interest on overdue payments at the rate or rates of interest specified in such Subordinate Bonds, together with any and all costs and expenses of collection and of all proceedings under the Bond Ordinance and under such Subordinate Bonds, without prejudice to any other right or remedy of the owners of Subordinate Bonds, and to recover and enforce a judgment or decree against the City for any portion of such amounts remaining unpaid, with interest, costs, and expenses, and to collect from any moneys available for such purpose, in any manner provided by law, the moneys adjudged or decreed to be payable. Nothing in this paragraph is intended to diminish the rights of the owners of Subordinate Bonds described in clauses (1) through (4) of subsection (b) of this Section.

 

Section 7.3. Remedies Cumulative. No remedy conferred upon or reserved to the Bondholders is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Bond Ordinance or now or hereafter existing at law or in equity or by statute.

 

Section 7.4. Waiver of Default. No delay or omission of any Bondholder to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default, or an acquiescence therein, and every power and remedy given by the Bond Ordinance to the Bondholders may be exercised from time to time and as often as may be deemed expedient.

 

Section 7.5. Application of Moneys After Default. If an Event of Default occurs and shall not have been remedied, the City or a receiver appointed for the purpose shall apply all Pledged Revenues as follows and in the following order of priority:

 

7.5.1. Expenses of Receiver and Paying Agent and Bond Registrar - to the payment of the reasonable and proper charges, expenses, and liabilities of any receiver and the Paying Agent and Bond Registrar under the Bond Ordinance;

 

7.5.2. Expenses of Operation and Maintenance and Renewals and Replacements - to the payment of all reasonable and necessary Expenses of Operation and Maintenance and necessary renewals and replacements to the System;

 

7.5.3. Principal or Redemption Price, Interest, and Hedge Payments Relating to Senior Bonds - to the payment of the interest and Principal or redemption price then due on the Senior Bonds and Hedge Payments then due under Senior Hedge Agreements, as follows:

 

(a) Unless the Principal of all the Senior Bonds shall have become due and payable, all such moneys shall be applied as follows:

 

first: To the payment to the persons entitled thereto of all installments of interest then due on the Senior Bonds, in the order of the maturity of such installments (with interest on defaulted installments of interest at the rate or rates borne by the Senior Bonds with respect to which such interest is due, but only to the extent permitted by law), and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or preference. If some of the Senior Bonds bear interest payable at different intervals, and if at any time moneys from the Debt Service Reserve Subaccount must be used to pay any such interest, the moneys in the Debt Service Reserve Subaccount shall be applied (to the extent necessary) to the payment of all interest becoming due on the dates upon which such interest is payable to and including the next Interest Payment Date. After such date, moneys in the Debt Service Reserve Subaccount plus any other moneys available in the Payments Subaccount shall be set aside for the payment of interest on Senior Bonds of each class (a class consisting of all Senior Bonds payable as to interest on the same dates) pro rata among Senior Bonds of the various classes on a daily basis so that there shall accrue to each owner of a Senior Bond throughout each Fiscal Year the same proportion of the total interest payable to such owner of a Senior Bond as shall so accrue to every other owner of a Senior Bond during such Fiscal Year. As to any Capital Appreciation Bond which is a Senior Bond, such interest shall accrue on the Accreted Value of such Bond and be set aside on a daily basis until the next compounding date for such Bonds, whereupon it shall be paid to the owner of such Bond as interest on a defaulted obligation and only the unpaid portion of such interest (if any) shall be treated as Principal of such Bond.

 

second: To the payment of the Hedge Payments due under any Senior Hedge Agreements pursuant to their terms.

 

third: To the payment to the persons entitled thereto of the unpaid Principal of any of the Senior Bonds which shall have become due at maturity or upon mandatory redemption prior to maturity (other than Senior Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of Article IX), in the order of their due dates, with interest upon such Senior Bonds from the respective dates upon which they became due, and, if the amount available shall not be sufficient to pay in full Senior Bonds due on any particular date, together with such interest, then to the payment first of such interest, ratably according to the amount of such interest due on such date, and then to the payment of such Principal, ratably according to the amount of such Principal due on such date, to the persons entitled thereto without any discrimination or preference. If some of the Senior Bonds mature (including mandatory redemption prior to maturity as a maturity) upon different dates, and if at any time moneys from the Debt Service Reserve Subaccount must be used to pay any such Principal becoming due, the moneys in the Debt Service Reserve Subaccount not required to pay interest under paragraph first above shall be applied (to the extent necessary) to the payment of all Principal becoming due on the dates upon which such Principal is payable to and including the final annual Principal Maturity Date. After such date, moneys in the Debt Service Reserve Subaccount not required to pay interest plus any other moneys available in the Payments Subaccount shall be set aside for the payment of Principal of Senior Bonds of each class (a class consisting of all Senior Bonds payable as to Principal on the same date) pro rata among Senior Bonds of the various classes which mature or must be redeemed pursuant to mandatory redemption prior to maturity throughout each Fiscal Year in such proportion of the total Principal payable on each such Senior Bond as shall be equal among all classes of Senior Bonds maturing or subject to mandatory redemption within such Fiscal Year. The Accreted Value of a Capital Appreciation Bond which is a Senior Bond (except for interest which shall have been paid under paragraph first above) shall be treated as Principal for purposes of this paragraph third.

 

fourth: To the payment of the redemption premium on and the Principal of any Senior Bonds called for optional redemption pursuant to their terms.

 

(b) If the Principal of all the Senior Bonds shall have become due and payable, all such moneys shall be applied to the payment of the Principal and interest then due and unpaid upon the Senior Bonds, with interest thereon as aforesaid, and due and unpaid Hedge Payments under Senior Hedge Agreements, without preference or priority of Principal over interest or Hedge Payments or of interest over Principal or Hedge Payments, or of Hedge Payments over Principal or interest, or of any installment of interest over any other installment of interest, or of any Senior Bond over any other Senior Bonds, or of any such Hedge Payment over any other such Hedge Payment, ratably, according to the amounts due respectively for Principal, interest, and Hedge Payments, to the persons entitled thereto without any discrimination or preference.

 

7.5.4. Principal or Redemption Price, Interest, and Hedge Payments Relating to Subordinate Bonds and Hedge Contingency Payments - to the payment of the interest and Principal or redemption price then due on the Subordinate Bonds, Hedge Contingency Payments and Hedge Payments then due under Subordinate Hedge Agreements, as follows:

 

(a) Unless the Principal of all the Subordinate Bonds shall have become due and payable, all such moneys shall be applied as follows:

 

first: To the payment to the persons entitled thereto of all installments of interest then due on the Subordinate Bonds, in the order of the maturity of such installments (with interest on defaulted installments of interest at the rate or rates borne by the Subordinate Bonds with respect to which such interest is due, but only to the extent permitted by law), and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or preference. If some of the Subordinate Bonds bear interest payable at different intervals or upon different dates and if at any time moneys from the Debt Service Reserve Subaccount must be used to pay any such interest, the moneys in the Debt Service Reserve Subaccount shall be applied (to the extent necessary) to the payment of all interest becoming due on the dates upon which such interest is payable to and including the next succeeding semiannual Interest Payment Date. After such date, moneys in the Debt Service Reserve Subaccount plus any other moneys available in the Payments Subaccount shall be set aside for the payment of interest on Subordinate Bonds of each class (a class consisting of all Subordinate Bonds payable as to interest on the same dates) pro rata among Subordinate Bonds of the various classes on a daily basis so that there shall accrue to each owner of a Subordinate Bond throughout each Fiscal Year the same proportion of the total interest payable to such owner of a Subordinate Bond as shall so accrue to every other owner of a Subordinate Bond during such Fiscal Year. As to any Capital Appreciation Bond which is a Subordinate Bond, such interest shall accrue on the Accreted Value of such Bond and be set aside on a daily basis until the next compounding date for such Bonds, whereupon it shall be paid to the owner of such Bond as interest on a defaulted obligation and only the unpaid portion of such interest (if any) shall be treated as Principal of such Bond.

 

second: To the payment of the Hedge Payments due under any Subordinate Hedge Agreements pursuant to their terms.

 

third: To the payment of Hedge Contingency Payments, if any, due under any Senior Hedge Agreements pursuant to their terms and to the persons entitled thereto of the unpaid Principal of any of the Subordinate Bonds which shall have become due at maturity or upon mandatory redemption prior to maturity (other than Subordinate Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of Article IX), in the order of their due dates, with interest upon such Subordinate Bonds from the respective dates upon which they became due, and, if the amount available shall not be sufficient to pay in full such Hedge Contingency Payments and Subordinate Bonds due on any particular date, together with such interest, then to the payment first of such Hedge Contingency Payments and interest, ratably according to the amount of such interest and Hedge Contingency Payments due on such date, and then to the payment of such Principal, ratably according to the amount of such Principal due on such date, to the persons entitled thereto without any discrimination or preference. If some of the Subordinate Bonds mature (including mandatory redemption prior to maturity as a maturity) upon a different date or dates and if at any time moneys from the Debt Service Reserve Subaccount must be used to pay any such Principal becoming due, the moneys in the Debt Service Reserve Subaccount not required to pay interest under paragraph first above shall be applied (to the extent necessary) to the payment of all Principal becoming due on the dates upon which such Principal is payable to and including the final annual Principal Maturity Date. After such date, moneys in the Debt Service Reserve Subaccount not required to pay interest plus any other moneys available in the Payments Subaccount shall be set aside for the payment of Principal of Subordinate Bonds of each class (a class consisting of all Subordinate Bonds payable as to Principal on the same date) pro rata among Subordinate Bonds of the various classes which mature or must be redeemed pursuant to mandatory redemption prior to maturity throughout each Fiscal Year in such proportion of the total Principal payable on each such Subordinate Bond as shall be equal among all classes of Subordinate Bonds maturing or subject to mandatory redemption within such Fiscal Year. The Accreted Value of a Capital Appreciation Bond which is a Subordinate Bond (except for interest which shall have been paid under paragraph first above) shall be treated as Principal for purposes of this paragraph third.

 

fourth: To the payment of Hedge Contingency Payments, if any, due under any Subordinate Hedge Agreements pursuant to their terms.

 

fifth: To the payment of the redemption premium on and the Principal of any Subordinate Bonds called for optional redemption pursuant to their terms.

 

(b) If the Principal of all the Subordinate Bonds shall have become due and payable, all such moneys shall be applied to the payment of the Principal and interest then due and unpaid upon the Subordinate Bonds, with interest thereon as aforesaid, and due and unpaid Hedge Contingency Payments and Hedge Payments under Subordinate Hedge Agreements, without preference or priority of Principal over interest, Hedge Contingency Payments or Hedge Payments or of interest over Principal, Hedge Contingency Payments or Hedge Payments, or of Hedge Contingency Payments over Principal, Hedge Payments or interest, or of Hedge Payments over Principal, interest or Hedge Contingency Payments, or of any installment of interest over any other installment of interest, or of any Subordinate Bond over any other Subordinate Bonds, or of any such Hedge Contingency Payment or any other such Hedge Contingency Payment or of any such Hedge Payment over any other such Hedge Payment, ratably, according to the amounts due respectively for Principal, interest, Hedge Contingency Payments and Hedge Payments, to the persons entitled thereto without any discrimination or preference.

 

Section 7.6. Rights of Credit Facility Provider. Notwithstanding any other provision of the Bond Ordinance, in the event that the City shall draw under a Credit Facility any amount for the payment of Principal of or interest on any Bonds, then upon such payment the related Credit Facility Provider shall succeed to and become subrogated to the rights of the recipients of such payments and such Principal or interest shall be deemed to continue to be unpaid and Outstanding for all purposes and shall continue to be fully secured by the Bond Ordinance until the Credit Facility Provider, as successor and subrogee, has been paid all amounts owing in respect of such subrogated payments of Principal and interest. Such rights shall be limited and evidenced by having the City note the Credit Facility Providers rights as successor and subrogee on its records, and the City shall, upon request, deliver to the Credit Facility Provider (i) in the case of interest on the Bonds, an acknowledgment of the Credit Facility Providers ownership of interest to be paid on the Bonds specifying the amount of interest owed, the period represented by such interest, and the CUSIP numbers of the Bonds on which such interest is owed and (ii) in the case of Principal of the Bonds, either the Bonds themselves duly assigned to the Credit Facility Provider or new Bonds registered in the name of the Credit Facility Provider or in such other name as the Credit Facility Provider shall specify. Whenever moneys become available for the payment of any interest then overdue, the Credit Facility Provider shall be treated as to interest owed to it as and as if it had been the Bondholder of the Bonds upon which such interest is payable on any special record date therefor.

 

Section 7.7. No Obligation to Levy Taxes. Nothing contained in the Bond 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.

 

ARTICLE VIII

 

BOND OWNERSHIP

 

Section 8.1. Manner of Evidencing Ownership of Bonds. Any request, direction, or other instrument required by the Bond Ordinance to be signed or executed by Bondholders may be in any number of counterparts or writings of similar tenor and may be signed or executed by such Bondholders in person or by agent appointed in writing. Proof of the execution of any such request, direction, or other instrument, or of the writing appointing such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any purpose of the Bond Ordinance.

 

The fact and date of the execution by any person of any such writing may be proved by the certificate of any officer in any jurisdiction, who, by the laws thereof, has power to take acknowledgments within such jurisdiction, to the effect that the person signing such writing acknowledged before him the execution thereof, or by an affidavit of a witness to such execution; provided that the execution of the form of assignment on each Bond may be guaranteed only by an eligible guarantor institution as defined by SEC Rule 17Ad-15 or any similar rule which the Bond Registrar deems applicable. The fact of ownership of the Bonds by any Bondholder, the amount and issue numbers of such Bonds, and the date of ownership shall be proved by the Bond Register.

 

Section 8.2. Call of Meetings of Bondholders. The City or the owners of not less than 25% in aggregate Principal of the Bonds Outstanding of either the Senior Bonds or the Subordinate Bonds may at any time call a meeting of the Bondholders.

 

ARTICLE IX

 

DEFEASANCE

 

Section 9.1. Defeasance. Except as otherwise provided in any Series Ordinance with respect to Bonds secured by a Credit Facility, Bonds for the payment or redemption of which sufficient moneys or sufficient Government Obligations shall have been deposited with the Paying Agent (whether upon or prior to the maturity or the redemption date of such Bonds) shall be deemed to be paid and no longer Outstanding under the Bond Ordinance; provided, however, that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been duly given as provided in Article III or firm and irrevocable arrangements shall have been made for the giving of such notice; and, provided, further, that Bonds that are Auction Rate Bonds or are bearing interest at a Variable Rate shall not be deemed to have been paid and discharged within the meaning of this Section unless the interest rate payable on such Bonds is calculated at the maximum interest rate specified for such Bonds to the earlier of the first tender or redemption date. Government Obligations shall be considered sufficient for purposes of this Article IX only: (i) if such Government Obligations are not callable by the issuer of the Government Obligations prior to their stated maturity, and (ii) if such Government Obligations fall due and bear interest in such amounts and at such times as will assure sufficient cash to pay currently maturing interest and to pay Principal and redemption premiums, if any, when due on the Bonds without rendering the interest on any Tax-Exempt Bonds includable in gross income of any owner thereof for federal income tax purposes.

 

The City may at any time surrender to the Bond Registrar for cancellation by it any Bonds previously authenticated and delivered under the Bond Ordinance which the City may have acquired in any manner whatsoever. All such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired.

ARTICLE X

 

SUPPLEMENTAL ORDINANCES

 

Section 10.1. Supplemental Ordinances Not Requiring Consent of Bondholders. The City, from time to time and at any time, subject to the conditions and restrictions in the Bond Ordinance, may adopt one or more Supplemental Ordinances which thereafter shall form a part of the Bond Ordinance, for any one or more or all of the following purposes:

 

10.1.1. To add to the covenants and agreements of the City in the Bond Ordinance other covenants and agreements thereafter to be observed or to surrender, restrict, or limit any right or power reserved in the Bond Ordinance to or conferred upon the City (including but not limited to the right to issue Senior Bonds);

 

10.1.2. To make such provisions for the purpose of curing any ambiguity, or of curing, correcting, or supplementing any defective provision contained in the Bond Ordinance, or in regard to matters or questions arising under the Bond Ordinance, as the City may deem necessary or desirable and not inconsistent with the Bond Ordinance;

 

10.1.3. To subject to the lien and pledge of the Bond Ordinance additional revenues, receipts, properties, or other collateral;

 

10.1.4. To evidence the appointment of a successor to any Paying Agent;

 

10.1.5. To modify, amend, or supplement the Bond Ordinance in such manner as to permit the qualification of the Bond Ordinance under the Trust Indenture Act of 1939 or any federal statute hereinafter in effect, and similarly to add to the Bond Ordinance such other terms, conditions, and provisions as may be permitted or required by such Trust Indenture Act of 1939 or any similar federal statute;

 

10.1.6. To make any modification or amendment of the Bond Ordinance required in order to make any Bonds eligible for acceptance by DTC or any similar holding institution or to permit the issuance of any Bonds or interests therein in book-entry form;

 

10.1.7. To modify any of the provisions of the Bond Ordinance in any respect if such modification shall not become effective until after the Bonds Outstanding immediately prior to the effective date of such Supplemental Ordinance shall cease to be Outstanding and if any Bonds issued contemporaneously with or after the effective date of such Supplemental Ordinance shall contain a specific reference to the modifications contained in such subsequent proceedings;

 

10.1.8. Subject to the provisions of Article XI, to modify the provisions of the Bond Ordinance with respect to the disposition of any moneys remaining in the Project Fund upon the completion of any Project;

 

10.1.9. To increase the size or scope of the System, to add other utilities to the System, to create additional subaccounts or to abolish any subaccounts within any account, or to change the amount of the Debt Service Reserve Requirement, but not below the amount specified in such definition;

 

10.1.10. To modify the Bond Ordinance to permit the qualification of any Bonds for offer or sale under the securities laws of any state in the United States of America;

 

10.1.11. To modify the Bond Ordinance to provide for the issuance of Senior Bonds or Subordinate Bonds, and such modification may deal with any subjects and make any provisions which the City deems necessary or desirable for that purpose;

 

10.1.12. To make such modifications in the provisions of the Bond Ordinance as may be deemed necessary by the City to accommodate the issuance of Bonds which (i) are Auction Rate Bonds, (ii) are Capital Appreciation Bonds (including, but not limited to, provisions for determining the Debt Service Requirement for such Capital Appreciation Bonds and for treatment of Accreted Value in making such determination) or (iii) bear interest at a Variable Rate; and

 

10.1.13. To modify any of the provisions of the Bond Ordinance in any respect (other than a modification of the type described in Section 10.2 requiring the unanimous written consent of the Bondholders); provided that for (i) any Outstanding Bonds which are assigned a Rating and which are not secured by a Credit Facility providing for the payment of the full amount of Principal and interest to be paid thereon, each Rating Agency shall have given written notification to the City that such modification will not cause the then applicable Rating on any Bonds to be reduced or withdrawn, and (ii) any Outstanding Bonds which are secured by Credit Facilities providing for the payment of the full amount of the Principal and interest to be paid thereon, each Credit Facility Provider shall have consented in writing to such modification.

 

Any Supplemental Ordinance authorized by the provisions of this Section may be adopted by the City without the consent of or notice to the owners of any of the Bonds at the time Outstanding, notwithstanding any of the provisions of Section 10.2.

 

Any Supplemental Ordinance of the City may modify the provisions of the Bond Ordinance in such a manner, and to such extent and containing such provisions, as the City may deem necessary or desirable to effect any of the purposes stated above.

 

As used in this Section, the term modify shall mean modify, amend, or supplement and the term modification shall mean modification, amendment, or supplement.

 

Section 10.2. Supplemental Ordinances Requiring Consent of Bondholders. With the consent (evidenced as provided in Article VIII) of the owners of not less than a majority in aggregate Principal of the Outstanding Bonds of each class (senior and subordinate), voting separately by class, the City may from time to time and at any time adopt a Supplemental Ordinance for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Bond Ordinance or of any Supplemental Ordinance; provided, however, that no such Supplemental Ordinance shall: (1) extend the maturity date or due date of any mandatory sinking fund redemption with respect to any Bond Outstanding under the Bond Ordinance; (2) reduce or extend the time for payment of Principal of, redemption premium, or interest on any Bond Outstanding under the Bond Ordinance; (3) reduce any premium payable upon the redemption of any Bond under the Bond Ordinance or advance the date upon which any Bond may first be called for redemption prior to its stated maturity date; (4) give to any Senior Bond or Senior Bonds (or related Hedge Payments) a preference over any other Senior Bond or Senior Bonds (or related Hedge Payments); (5) permit the creation of any lien or any other encumbrance on the Pledged Revenues having a lien equal to or prior to the lien created under the Bond Ordinance for the Senior Bonds; (6) reduce the percentage of owners of senior or subordinate classes of Bonds required to approve any such Supplemental Ordinance; or (7) deprive the owners of the Bonds of the right to payment of the Bonds or from the Pledged Revenues, without, in each case, the consent of the owners of all the affected Bonds then Outstanding. No amendment may be made under this Section which affects the rights or duties of any Credit Facility Provider securing any of the Bonds or any Qualified Hedge Provider under any Hedge Agreement without its written consent.

 

If the City intends to enter into or adopt any Supplemental Ordinance as described in this Section, the City shall mail, by registered or certified mail, to the registered owners of the Bonds at their addresses as shown on the Bond Register, a notice of such intention along with a description of such Supplemental Ordinance not less than 30 days prior to the proposed effective date of such Supplemental Ordinance. The consents of the registered owners of the Bonds need not approve the particular form of wording of the proposed Supplemental Ordinance, but it shall be sufficient if such consents approve the substance thereof. Failure of the owner of any Bond to receive the notice required in the Bond Ordinance shall not affect the validity of any Supplemental Ordinance if the required number of owners of the Bonds of each class shall provide their written consent to such Supplemental Ordinance.

 

Notwithstanding any provision of the Bond Ordinance to the contrary, upon the issuance of a Credit Facility to secure any Bonds and for the period in which such Credit Facility is outstanding, the Credit Facility Provider may have the consent rights of the owners of the Bonds which are secured by such Credit Facility pertaining to some or all of the amendments or modifications of the Bond Ordinance, to the extent provided in the applicable Series Ordinance. Notwithstanding the foregoing, if a Credit Facility Provider is granted the consent rights of the owners of any Bonds in a Series Ordinance and refuses to exercise such consent rights, either affirmatively or negatively, then the registered owners of the Bonds secured by the related Credit Facility may exercise such consent rights.

 

Section 10.3. Notice of Supplemental Ordinances. The City shall cause the Bond Registrar to mail a notice by registered or certified mail to the registered owners of all Bonds Outstanding, at their addresses shown on the Bond Register or at such other address as has been furnished in writing by such registered owner to the Bond Registrar, setting forth in general terms the substance of any Supplemental Ordinance which has been: (i) adopted by the City pursuant to Section 10.1 or (ii) approved by Bondholders or any Credit Facility Provider and adopted by the City pursuant to Section 10.2.

 

ARTICLE XI

 

PROJECT FUND

 

Section 11.1. Project Fund.

 

(a) Moneys in the Project Account for each Project shall be used solely for the purpose of paying part of the cost of that Project as hereinbefore provided, in accordance with the plans therefor and heretofore approved by the Council of the City and on file in the office of the Director of the Department of Water Services, including any alterations in or amendments to said plans deemed advisable by the Director of the Department of Water Services and approved by the Council of the City.

 

(b) Moneys in the Costs of Issuance Account shall be used solely for the purpose of paying the costs and expenses incident to the issuance of the Bonds upon certification thereof by the Director of Finance. Unless a later date is specified in the Series Ordinance authorizing a series of Bonds, on the latest to occur of (i) the payment in full of such amounts (as certified by the Director of Finance) or (ii) the date which is six months following the date on which the Bonds are issued and authenticated, any moneys remaining in the Costs of Issuance Account shall be transferred to the Project Account and applied in accordance with the provisions of this Section.

 

Section 11.2. Purposes of Payments. Moneys in each separate account in the Project Fund shall be used for the payment or reimbursement of the Costs of the Project for which such account was established as provided in this Article XI.

 

Section 11.3. Documentation of Payments. Withdrawals from the Project Fund shall be made only when authorized by the Council and only on duly authorized and executed warrants or vouchers therefor prepared in accordance with procedures issued by the Director of the Department of Water Services that such payment is being made for a purpose within the scope of this Bond Ordinance and that the amount of such payment represents only the contract price of the property, equipment, labor, materials or service being paid for or, if such payment is not being made pursuant to an express contract, that such payment is not in excess of the reasonable value thereof.

 

Section 11.4. Funds Remaining on Completion of Projects. Upon completion of a Project, any surplus moneys remaining in the respective Project Account and not required for the payment of unpaid costs thereof shall be deposited in the Payments Subaccount. Any surplus credited to the Payments Subaccount shall be applied by the Paying Agent as directed by the City solely to the payment of principal of, redemption premium, if any, and interest on the related series of Bonds through the payment or redemption thereof at the earliest date permissible under the terms of the Bond Ordinance. The balance transferred to the Payments Subaccount may first be used to pay any principal payment on the related series of Bonds coming due in that current bond year. If the balance transferred is greater than the current bond year principal payment, the excess shall be used to optionally call Bonds for redemption. Any Bonds purchased by the Paying Agent pursuant to this provision with moneys from the Payments Subaccount will be deemed cancelled.

 

ARTICLE XII

 

MISCELLANEOUS PROVISIONS

 

Section 12.1. Severability. In case any one or more of the provisions of the Bond Ordinance or of the Bonds shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of the Bond Ordinance or of the Bonds, but the Bond Ordinance and the Bonds shall be construed and enforced as if such illegal or invalid provision had not been contained therein. In case any covenant, stipulation, obligation, or agreement contained in the Bonds or in the Bond Ordinance shall for any reason be held to be unenforceable or in violation of law, then such covenant, stipulation, obligation, or agreement shall be deemed to be the covenant, stipulation, obligation, or agreement of the City to the full extent that the power to incur such obligation or to make such covenant, stipulation, or agreement shall have been conferred on the City by law.

 

Section 12.2. Requests of City. Whenever any action is to be taken by the Paying Agent at the request of the City under the Bond Ordinance, if no other means of authenticating such request is required, such request shall be evidenced by a written instrument signed by the Director of Finance and City Clerk or by such other City official or employee (one or more) as may from time to time be designated in writing by the Director of Finance and City Clerk. A duly certified copy of such designation must be filed with the Paying Agent.

 

Section 12.3. Payments Due on Saturdays, Sundays, etc. Whenever a date upon which a payment is to be made under the Bond Ordinance falls on a date which is not a Business Day, such payment may be made on the next succeeding Business Day without interest for the intervening period.

 

Section 12.4. Applicable Provisions of Law. The Bond Ordinance shall be governed by and construed and enforced in accordance with the laws of the State and the Charter.

 

Section 12.5. Repeal of Conflicting Ordinances and Resolutions. Any and all ordinances and resolutions, or parts of ordinances or resolutions, if any, in conflict with the Bond Ordinance are hereby repealed.

 

Section 12.6. No Individual Responsibility of Officers of City. No stipulations, obligations, or agreements of any member of the Council or of any officer of the City shall be deemed to be stipulations, obligations, or agreements of any such trustee or officer in his or her individual capacity.

 

Section 12.7. Governing Law. This Master Bond Ordinance shall be governed by and construed in accordance with the applicable laws of the State.

Section 12.8. Effective Date. This Ordinance shall take effect and be in full force ten (10) days after its passage.

 

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Approved as to form and legality:

 

 

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Alan Holtkamp

Assistant City Attorney