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HomeMy Public PortalAboutOrd 365 Agreement CCUA Gilmore & Bell, P.C. 2/19/2002 ORDINANCE NO. 3~S OF THE CITY OF BEL AIRE, KANSAS PASSED FEBRUARY 19,2002 WATER SUPPLY AND WASTEWATER SERVICE AGREEMENT CHISHOLM CREEK UTILITY AUTHORITY KMC\402708\BEL AIRE ORDINANCE TABLE OF CONTENTS ARTICLE I DEFINITIONS Section 101. Definitions of Words and Terms ...................,........,..,........,.........,...........,..............2 ARTICLE II AUTHORIZATION OF THE AGREEMENT Section 201. Authorization of the Agreement.... ........ ............... ............ ..............."............ .......... 9 Section 202. Calculation of Debt Service Requirements ,.....................,................,.....................9 Section 203. Preliminary and Final Official Statement.................,.............,.............................12 Section 204. Intentionally Omitted ,....... ...... ........ ......, .......... ........ ......... ..,.... ..,..,......... ............. ..12 Section 205. Redemption of Temporary Notes ......... ....,......,...................,..,.... ........,..... .... ........ 12 ARTICLE III SECURITY FOR AGREEMENT Section 301. Security for the Agreement.............................,.....,.....,....................,.....................12 ARTICLE IV ESTABLISHMENT OF FUNDS AND ACCOUNTS DEPOSIT AND APPLICATION OF BOND PROCEEDS Section 401. Creation of Funds and Accounts ..............,..............................,.............................13 Section 402. Deposit of Bond Proceeds...............................,...................................................... 13 ARTICLE V COLLECTION AND APPLICATION OF REVENUES Section 501. Revenue Fund '....,.. ,.......... ..............,........... ....... ...,.... ......... ......, ...... ..,.................... 14 Section 502. Application of Moneys in Funds and Accounts..,....................,.....................,...... 14 Section 503. Transfer of Funds to Paying Agent.....................,...........................,..,.................. 1 5 ARTICLE VI DEPOSIT AND INVESTMENT OF MONEYS Section 601. Deposits and Investment ofMoneys................................................,..................,..15 ARTICLE VII GENERAL COVENANTS AND PROVISIONS Section 701. Efficient and Economical Operation,..,....,..................,..,............,.................,....... 16 Section 702. Rate Covenant............,........ ....,..... ........... .......... .......... ....... ,..,....................... ,..,... .16 Section 703. Reasonable Charges for all Services .....................................................,...............17 Section 704. Restrictions on Mortgage or Sale of System. ,.......................................................17 Section 705. Insurance. ................. .....,................. ,.................. ......,................ ,................ .......... ..18 Section 706. Books, Records and Accounts..................,.............................,............,.........,........18 Section 707. Annual Budget........ ..,........... ,...... ..,..............................................,............... ....... ...18 Section 708. Annual Audit......... .....,........... ........... ,............... ,... .......... ............................,.......... 19 Section 709. Right of Inspection.. ,.......................................... .............. ..,........ ,...................... ,.. .20 Section 710. Administrative Personnel..,............................., ..........,....... ..,..............,.......,....., ...20 Section 711. Performance of Duties and Covenants..................................................................20 Section 712. Report on System Condition......,......................................,....,...........,...................20 KMC\402708\BEL AIRE ORDINANCE ARTICLE VIII ADDITIONAL INDEBTEDNESS Section 801. Senior Obligations ...... '..,....... ........... ..,........ "'" ......................... ....,................... .....20 Section 802. Additional Indebtedness ....... ........ ,... .......... ......,..... ......... ...'.. .,. ,.... ..... ............. ......20 Section 803. Additional Agreement Obligations.. ........... .......... ..,..,..,.. ....."............ ........,......... ,22 ARTICLE IX DEFAULT AND REMEDIES Section 901. Remedies,...........,.,..,.,..........,...,................,.,......,..,..,....,...............,...,.....,.........,.... ,23 Section 902. Remedies Cumulative.. ....,.... .... ........ ....,..... ..,............ ......,.... ,........ ..,.... ................ ,23 Section 903. No Obligation to Levy Taxes ....................................,.....................................,......23 ARTICLE X DEFEASANCE Section 1001. Defeasance......,.........",.....,..,.........".,...................""..........,..,...."..,......,.."...,..... .24 ARTICLE XI TAX COVENANTS Section 1101. General Covenants ..... .................... ........... ..... ....... ..... ...., ,................. ..,............ ....24 ARTICLE XII CONTINUING DISCLOSURE REQUIREMENTS Section 1201. Disclosure Requirements '... .........., ....,..,... ,........ ..... .....,..,...........,....... ....,..,......., ,25 Section 1202. Failure to Comply with Continuing Disclosure Requirements..........................25 ARTICLE XIII PROVISIONS RELATING TO THE BOND INSURANCE POLICY Section 1301. Consent of Bond Insurer ..... ............... ,...... ..,.. .... .............,.. ..,.......... ....,........ ...... ..25 Section 1302. Notices,.... ,........ ...... ... ".. ....,..,.. ,. "..., ,... ......." .,.. .,. ... ......,.., ."".,.... ...... ... ........... ...".25 ARTICLE XIV MISCELLANEOUS PROVISIONS Section 1401. Amendments.".,............"......",..................".".,.....,..,.......,........,.....,.......,....,...... .26 Section 1402. Notices, Consents and Other Instruments ..........................................................26 Section 1403. Notices.............................................,.........,...........".....,......,....,.......,.....,..,...........2 7 Section 1404. Inconsistent Provisions.,....,.... ....,....... ......... '" ..,.... .,.......... ..,.,..... ,. ,......... ,.. ,. ..,. ... .27 Section 1405. Further Authority ......... ...... ............. ......... .............. ..,...... ..,..... ,.......... ............. ....27 Section 1406. Severability .,.. ...........,....,. ,... .,....,. .,. ,. ..,.. ,." ...,..,.. ....,.. ..,.... ........... .... .,.... ....... .... ... .27 Section 1407. Governing Law,... ......,.. ............ ...... ..,.................... ,.. ,...... .............. ,..,........,........ ..27 Section 1408. Effective Date.... .......... ......... ....,...... ,..... ........."...................... ,..,.......................... .27 EXHIBIT A -FORM OF WATER SUPPLY AND WASTEWATER SERVICE AGREEMENT ... ...... .......... ............ ........ .............. ....... ............ ......... .... ................... A-I KMC\402708\BEL AIRE ORDINANCE 11 (PUBLISHED IN THE ARK VALLEY NEWS ON FEBRUARY _, 2002) ORDINANCE NO. 365 AN ORDINANCE AUTHORIZING THE EXECUTION OF A WATER SUPPLY AND WASTEWATER SERVICE AGREEMENT WITH CHISHOLM CREEK UTILITY AUTHORITY; MAKING CERTAIN COVENANTS AND AGREEMENTS TO PROVIDE FOR THE PAYMENT AND SECURITY OF THE OBLIGATIONS THEREUNDER; AUTHORIZING ALL OTHER NECESSARY DOCUMENTS AND ACTIONS WITH RESPECT THERETO. WHEREAS, the City is a city of the second class, duly created, organized and existing under the Constitution and laws of the State; and WHEREAS, pursuant to an Interlocal Cooperation Agreement, certain Kansas municipalities, including the City, have joined together under the provisions of K.S.A. 12-2901 et seq. (the "Act"), to organize and create the Chisholm Creek Utility Authority ("Authority"); and WHEREAS, Authority has undertaken to acquire, construct, furnish and equip a water treatment plant, a wastewater treatment plant, and associated facilities (the "Project") for the purpose of providing an economic means of long-term public water supply and wastewater collection and treatment for the mutual benefit of Authority members participating in the Project (the "Contracting Members"); and WHEREAS, in order to provide for funds to accomplish the financing of the Project, the Authority will issue its revenue bonds in one or more series (the "Bonds") which will be secured in part by revenues generated, and an assignment of the Authority's rights under, a Water Supply and Wastewater Service Agreement with the City and similar agreements with other Contracting Members; and WHEREAS, the City is a Contracting Member in the Authority and owns and operates a water and wastewater utility system; and WHEREAS, the City desires to participate in the Project and receive benefits therefrom; and WHEREAS, K.S.A. 12-825j authorizes the City to enter into contracts with any person, firm, corporation or other municipality for the acquisition of water upon such terms as may be deemed necessary and reasonable by the governing body of the City; provided such contracts shall not exceed a period oHorty years and shall not be payable by the levy of any tax; and WHEREAS, subject to certain limitations, K.S.A. 12-101 et seq. and K.S,A, 10-1116 authorize the City to enter into a contract for the treatment of wastewater, NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF BEL AIRE, KANSAS, AS FOLLOWS: KMC\402708\BEL AIRE ORDINANCE ARTICLE I DEFINITIONS Section 101. Definitions of Words and Terms. In addition to words and terms defined elsewhere herein and in the Water Supply and Wastewater Service Agreement, the following words and terms as used in this Ordinance shall have the meanings hereinafter set forth. Unless the context shall otherwise indicate, words importing the singular number shall include the plural and vice versa, and words importing persons shall include firms, associations and corporations, including public bodies, as well as natural persons, "Act" means the Constitution and statutes of the State including K.S.A. 12-101 et seq,; K,S.A. 12- 825j; K.S.A. 12-2901 et seq.; and K,S.A. 10-1116, all as amended and supplemented from time to time. "Additional Bonds" means any bonds secured by the Revenues hereafter issued by the City pursuant to Article 803 hereof. "Additional Indebtedness" means, collectively, Additional Bonds and Additional Obligations. "Additional Indebtedness Resolution" means this Ordinance and the ordinances or resolutions under which any Additional Indebtedness is authorized. "Additional Obligations" means any leases or other obligations of the City payable from the Revenues, other than Additional Bonds or Operating Expenses. "Agreement" means the Water Supply and Wastewater Service Agreement between the City and the Authority, dated as of March 1, 2002, as amended from time to time. "Agreement Obligations" means the required payment obligations from the City to the Authority under the Agreement. "Authority" means the Chisholm Creek Utility Authority, "Balloon Indebtedness" means Long-Term Indebtedness, 25% or more of the original amount of which becomes due during any consecutive twelve-month period, if such amount becoming due is not required to be amortized below such percentage by mandatory prepayment prior to such twelve-month period. "Base Charge" means, jointly, the Water Base Charge and Wastewater Base Charge set forth in the Agreement. "Bond Counsel" means the firm of Gilmore & Bell, P.C., or any other attorney or firm of attorneys whose expertise in matters relating to the issuance of obligations by states and their political subdivisions is nationally recognized and acceptable to the City, "Bond Insurance Policy" means, with respect to the Series 2002 Bonds, the financial guaranty insurance policy issued by the Bond Insurer on the date of delivery of the Series 2002 Bonds insuring the payment when due of the principal of and interest on the Series 2002 Bonds, as provided therein. "Bond Insurer" means, with respect to the Series 2002 Bonds, MBIA. KMC\402708\BEL AIRE ORDINANCE 2 "Bond Payment Date" means any date on which principal of or interest on any Bond is payable. "Bonds" means the Series 2002 Bonds and any additional bonds of the Authority issued pursuant to the Indenture, secured in whole or in part by the Agreement. "Business Day" means a day other than a Saturday, Sunday or any day designated as a holiday by the Congress of the United States or by the Legislature of the State and on which the Trustee is scheduled in the normal course of its operations to be open to the public for conduct of its operations, "City" means the City of Bel Aire, Kansas. "Clerk" means the duly appointed and/or elected Clerk or, In the Clerk's absence, the duly appointed Deputy Clerk or Acting Clerk of the City. "Code" means the Internal Revenue Code of 1986, as amended, and the applicable regulations promulgated thereunder by the United States Department of the Treasury. "Consultant" means the Consulting Engineer, the Independent Accountant or an independent consultant qualified and having a favorable reputation for skill and experience in financial affairs selected by the City for the purpose of carrying out the duties imposed on the Consultant by this Ordinance, "Consulting Engineer" means an independent engineer or engineering firm or architect or architectural firm, having a favorable reputation for skill and experience in the construction, financing and operation of public utilities, at the time employed by the City for the purpose of carrying out the duties imposed on the Consulting Engineer by this Ordinance. "Coverage Ratio" means, for any Fiscal Year: (a) with respect to the covenants contained in Sections 702(h) and 803 hereof, the ratio determined by dividing (i) a numerator equal to the Net Operating Revenues for such Fiscal Year by (ii) a denominator equal to the Base Charge for such Fiscal Year; and (b) with respect to the covenants contained in Sections 702(c) and 802(h) hereof, the ratio determined by dividing (i) a numerator equal to the Net Revenues for such Fiscal Year by (ii) a denominator equal to the Maximum Annual Debt Service on all Additional Indebtedness. "Debt Service Requirements" means the aggregate principal payments (whether at maturity or pursuant to scheduled mandatory sinking fund redemption requirements) and interest payments on Additional Indebtedness for the period oftime for which calculated; provided, however, that for purposes of calculating such amount, principal and interest shall be excluded from the determination of Debt Service Requirements to the extent that such principal or interest is payable from amounts deposited in trust, escrowed or otherwise set aside for the payment thereof with the Paying Agent or other commercial bank or trust company located in the State and having full trust powers. "Dated Date" means March 1,2002, "Depreciation and Replacement Account" means the Water and Wastewater Utility System Depreciation and Replacement Account created by Section 401 hereof. "Depreciation and Replacement Requirement" means an amount equal to $10,000, KMC\402708\BEL AIRE ORDINANCE 3 "Derivative" means any investment instrument whose market price is derived from the fluctuating value of an underlying asset, index, currency, futures contract, including futures, options and collateralized mortgage obligations, "Disclosure Agreement" means the Continuing Disclosure Agreement relating to the Series 2002 Bonds and certain obligations contained in the SEC Rule. "Discount Indebtedness" means Long-Term Indebtedness that originally sold at a price (excluding accrued interest, but without deduction of any underwriters' discount) of less than 75% of the amount to be repaid including the amount of principal and interest to accrete at maturity of such Long-Term Indebtedness, "Event of Default" means each of the following occurrences or events: (a) Payment of the Agreement Obligations shall not be made when the same shall become due and payable; or (b) The City shall for any reason be rendered incapable of fulfilling its obligations hereunder; or (c) Any substantial part of the System shall be destroyed or damaged to the extent of impairing its efficient operation or adversely affecting its Revenues and the City shall not within a reasonable time commence the repair, replacement or reconstruction thereof and proceed thereafter to complete with reasonable dispatch the repair, replacement or reconstruction thereof; or (d) Final judgment for the payment of money shall be rendered against the City as a result of the ownership, control or operation of the System and any such judgment shall not be discharged within one hundred twenty (120) days from the entry thereof or an appeal shall not be taken therefrom or from the order, decree or process upon which or pursuant to which such judgment shall have been granted or entered, in such manner as to stay the execution of or levy under such judgment, order, decree or process or the enforcement thereof; or (e) An order or decree shall be entered, with the consent or acquiescence of the City, appointing a receiver or receivers of the System or any part thereof or of the revenues thereof, or if such order or decree, having been entered without the consent or acquiescence of the City, shall not be vacated or discharged or stayed on appeal within sixty (60) days after the entry thereof; or (f) Any proceeding shall be instituted, with the consent or acquiescence of the City, for the purpose of effecting a composition between the City and its creditors or for the purpose of adjusting the claims of such creditors pursuant to any federal or state statute now or hereafter enacted, if the claims of such creditors are under any circumstances payable from the Net Revenues of the System; or (g) The City shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Agreement or in this Ordinance (other than the covenants relating to continuing disclosure contained in Article XII hereof) on the part of the City to be performed, and such default shall continue for thirty (30) days after written notice specifying such default and requiring same to be remedied shall have been given to the City by the Authority or the Trustee; or (h) A monetary default shall have occurred on any Additional Indebtedness. KMC\402708\BEL AIRE ORDINANCE 4 "Expenses" means Operating Expenses and all Base Charges. "Fiscal Year" means the twelve month period ending on December 31. "Fitch" means Fitch, Inc., a corporation organized and existing under the laws of the State of New York, and its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Fitch" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. "Funds and Accounts" means funds and accounts created pursuant to or referred to in Article IV hereof. "Independent Accountant" means an independent certified public accountant or firm of independent certified public accountants at the time employed by the City for the purpose of carrying out the duties imposed on the Independent Accountant by this Ordinance. "Index Rate" means the rate of interest set forth in The Bond Buyer Revenue Bond Index (or, in the event that The Bond Buyer does not compile such index or ceases publication, another comparable publication recognized in the municipal bond market) published for the week immediately preceding the date of determination. "Insurance Consultant" means an individual or firm selected by the City qualified to survey risks and to recommend insurance coverage for entities engaged in operations similar to those of the System and having a favorable reputation for skill and experience in making such surveys and recommendations. "Interim Indebtedness" means Additional Indebtedness having a term not less than one year, and not in excess of five years, incurred or assumed in anticipation of being refinanced or refunded with Long- Term Indebtedness. "Issue Date" means the date when the City delivers any Additional Indebtedness to a purchaser thereof in exchange for the purchase price thereof. "Long-Term Indebtedness" means Additional Indebtedness having an original stated maturity or term greater than one year, or renewable or extendible at the option of the debtor for a period greater than one year from the date of original issuance or incurrence thereof. "Maturity" when used with respect to any Additional Indebtedness means the date on which the principal of such Additional Indebtedness becomes due and payable as therein and herein provided, whether at the Stated Maturity thereof or call for redemption or otherwise. "Mayor" means the duly elected and acting Mayor, or in the Mayor's absence, the duly appointed and/or elected Vice Mayor or Acting Mayor of the City. "Maximum Annual Debt Service" means the maximum amount of Debt Service Requirements as computed for the then current or any future Fiscal Year; provided that the Debt Service Requirements in the final Stated Maturity of any Additional Indebtedness shall be reduced by the value of cash and Permitted Investments on deposit in any reserve account therefore. "MBIA" means MBIA Insurance Corporation, Armonk, New York, KMC\402708\BEL AIRE ORDINANCE 5 "Moody's" means Moody's Investor's Service, Inc., a corporation organized and existing under the laws of the State of Delaware, and its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. "Net Operating Revenues" means, for the period of determination, all Revenues, less all Operating Expenses. "Net Revenues" means, for the period of determination, all Revenues, less all Expenses. "Notice Address" means with respect to the following entities: (a) To the City at: City Hall 4551 N. Auburn Bel Aire, Kansas 67220 (b) To the Authority: Chisholm Creek Utility Authority 4551 N. Auburn Bel Aire, Kansas 67220 (c) To the Bond Insurer: MBlA Insurance Corporation 113 King Street Armonk, New York 10504 (c) To the Trustee: INTRUST Bank, N.A. P.O. Box One Wichita, Kansas 67201 or such other address as is furnished in writing to the other parties referenced herein, "Notice Representative" means: (a) With respect to the City, the Clerk. (b) (c) Counsel. With respect to the Authority, the Manager thereof. With respect to the Bond Insurer, any Vice President, with a copy to its General (d) With respect to the Trustee, the senior Corporate Trust Officer. KMC\402708\BEL AIRE ORDINANCE 6 "Operating Expenses" means all reasonable and necessary expenses of operation, maintenance and repair of the System and keeping the System in good repair and working order (other than interest paid on Additional Indebtedness and depreciation and amortization charges during the period of determination), determined in accordance with generally accepted accounting principles, including without limiting the generality of the foregoing, all amounts and charges due and payable under the Agreement (other than Base Charges), current maintenance charges, expenses of reasonable upkeep and repairs, salaries, wages, costs of materials and supplies, paying agent fees and expenses, annual audits, periodic Consultant's reports, properly allocated share of charges for insurance, the cost of purchased water, gas and power, if any, for System operation, obligations (other than for borrowed money or for rents payable under capital leases) incurred in the ordinary course of business, liabilities incurred by endorsement for collection or deposit of checks or drafts received in the ordinary course of business, Short-Term Indebtedness incurred and payable within a particular Fiscal Year, other obligations or indebtedness incurred for the purpose of leasing (pursuant to a true or operating lease) equipment, fixtures, inventory or other personal property, and all other expenses incident to the operation of the System, but shall exclude all general administrative expenses of the City not related to the operation of the System and transfers into the Operating Reserve Account and Depreciation and Replacement Account provided for in this Ordinance. "Operating Reserve Account" means Water and Wastewater Utility System Operating Reserve Account created by Section 401 hereof. "Operating Reserve Requirement" means, during any Fiscal Year, an amount equal to the average monthly Agreement Obligations budgeted for such Fiscal Year, multiplied by two, "Operation and Maintenance Account" means the Water and Wastewater Utility System Operation and Maintenance Account created by Section 401 hereof. "Ordinance" means this Ordinance. "Permitted Investments" shall mean the investments hereinafter described, provided, however, no moneys or funds shall be invested in a Derivative: (a) investments authorized by K.S.A. 12-1675 and amendments thereto; (b) the municipal investment pool established pursuant to K.S.A. 12-1677a, and amendments thereto; (c) direct obligations of the United States Government or any agency thereof; (d) the City's temporary notes issued pursuant to K.s,A. 10-123 and amendments thereto; (e) interest-bearing time deposits in commercial banks or trust companies located in the county or counties in which the City is located which are insured by the Federal Deposit Insurance Corporation or collateralized by securities described in (c); (t) obligations of the federal national mortgage association, federal home loan banks or the federal home loan mortgage corporation; (g) repurchase agreements for securities described in (c) or (t); (h) investment agreements or other obligations of a financial institution the obligations of which at the time of investment are rated in either of the three highest rating categories by Moody's or Standard & Poor's; (i) investments and shares or units of a money market fund or trust, the portfolio of which is comprised entirely of securities described in (c) or (t); (j) receipts evidencing ownership interests in securities or portions thereof described in (c) or (t); (k) municipal bonds or other obligations issued by any municipality of the State as defined in K.S,A. 10-1101 which are general obligations of the municipality issuing the same; or (I) bonds of any municipality of the State as defined in K.S.A. 10-110 I which have been refunded in advance of their maturity and are fully secured as to payment of principal and interest thereon by deposit in trust, under escrow agreement with a bank, of securities described in (c) or (t), all as may be further restricted or modified by amendments to applicable State law. "Purchaser" means, with respect to the Series 2002 Bonds, U.S. Bancorp Piper Jaffray, Kansas City, Missouri, the original purchaser of the Series 2002 Bonds, and any successor and assigns. KMC\402708\BEL AIRE ORDINANCE 7 "Person" means any natural person, corporation, partnership, joint venture, association, firm, joint- stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof or other public body. "Project" shall mean the Authority improvements referred to in the preamble to the Ordinance. "Put Indebtedness" means Long-Term Indebtedness which are (a) payable or required to be purchased or redeemed from the holder by or on behalf of the underlying obligor, at the option of the holder thereof, prior to its stated maturity date, or (b) payable or required to be purchased or redeemed from the holder by or on behalf of the underlying obligor, other than at the option of the holder, prior to its stated maturity date, other than pursuant to any mandatory sinking fund or other similar fund, or other than by reason of acceleration upon the occurrence of an Event of Default under this Ordinance. "Rating Agency" means Moody's, Standard & Poor's, Fitch and any other company, agency or entity that provides ratings for any Bonds. "Redemption Fund" means the Redemption Fund for Temporary Notes, Series A, 2001, created by Section 401 hereof. "Revenue Fund" means the Water and Wastewater Utility System Revenue Fund created by Section 401 hereof. "Revenues" means all income and revenues derived and collected by the City from the operation and ownership of the System, including investment and rental income, net proceeds from business interruption insurance, transfers from the Surplus Account to the Revenue Fund of Net Operating Revenues derived in a prior Fiscal Year and any amounts deposited in escrow in connection with the acquisition, construction, remodeling, renovation and equipping of facilities to be applied during the period of determination to pay interest on System Indebtedness, but excluding any profits or losses on the early extinguishment of debt or on the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets. "SEe Rule" means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as may be amended from time to time. "Securities Depository" means, initially, DTC, and its successors and assigns. "Series 2002 Bonds" means the Authority's Water and Wastewater Facilities Revenue Bonds, Series 2002 (Cities of Bel Aire and Park City, Kansas Project), dated as ofthe Dated Date. "Short-Term Indebtedness" means Additional Indebtedness having an original maturity or term less than or equal to one year from the date of original incurrence thereof, and not renewable or extendible at the option ofthe obligor thereon for a term greater than one year beyond the date of original issuance. "Standard & Poor's" means Standard & Poor's Ratings Services, a Division of the McGraw-Hili Companies, New York, New York, a corporation organized and existing under the laws of the State of New York, and its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Standard & Poor's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City, "State" means the state of Kansas, KMC\402708\BEL AIRE ORDINANCE 8 "Stated Maturity" when used with respect to any System Obligation or any installment payment (of interest or otherwise) thereon means the date specified in such System Obligation as the fixed date on which any payment obligation (of principal, interest or otherwise) is due and payable. "Surplus Account" means the Water and Wastewater Utility System Surplus Account created by Section 401 hereof. "System" means the entire combined waterworks plant and system and sewerage plant and system owned and operated by the City for the production, storage, treatment and distribution of water, and for the collection, treatment and disposal of sewage, to serve the needs of the City and its inhabitants and others, including all appurtenances and facilities connected therewith or relating thereto, together with all extensions, improvements, additions and enlargements thereto hereafter made or acquired by the City. "System Indebtedness" means collectively the Agreement Obligations, the Additional Bonds and any Additional Obligations which are payable out of, or secured by an interest in, the income and Revenues derived from the operation of the System. "Treasurer" means the duly appointed and/or elected Treasurer or, in the Treasurer's absence, the duly appointed Deputy Treasurer or acting Treasurer of the City. "Trustee" means the trustee designated in the Indenture, which shall initially be INTRUST Bank, N.A., Wichita, Kansas. "United States Government Obligations" means bonds, notes, certificates of indebtedness, treasury bills or other securities constituting direct obligations of, or obligations the principal of and interest on which are fully and unconditionally guaranteed as to full and timely payment by, the United States of America, including evidences of a direct ownership interest in future interest or principal payment on obligations issued by the United States of America (including the interest component of obligations of the Resolution Funding Corporation), or securities which represent an undivided interest in such obligations, which obligations are rated in the highest rating category by a nationally recognized rating service and such obligations are held in a custodial account for the benefit of the City. "Variable Rate Indebtedness" means any Additional Indebtedness which provide for interest to be payable thereon at a rate per annum that may vary from time to time over the tenn thereof in accordance with procedures provided in the instrument creating such Additional Indebtedness. ARTICLE II AUTHORIZATION OF THE AGREEMENT Section 201. Authorization of the Agreement. The Agreement, including authorization therein to pledge the Project as security for the Bonds, is authorized and the Mayor and the Clerk are authorized and directed to execute the Agreement on behalf of the City in substantially the form presented with and attached to this Ordinance as Exhibit A, with such changes as may be approved by the Mayor and City Attorney. Section 202. Calculation of Debt Service Requirements. (a) Debt Service Requirements on Balloon, Put, Short-Term and Interim Indebtedness KMC\402708\BEL AIRE ORDINANCE 9 (I) The amount of Balloon Indebtedness, Put Indebtedness or Short-Term Indebtedness being treated as Long-Term Indebtedness under Section 802 hereof, or Interim Indebtedness shall be deemed due and payable at its Stated Maturity; provided, however, that at the election of the City for the purpose of any computation of Debt Service Requirements, whether historical or projected, the principal deemed payable on Balloon Indebtedness, Put Indebtedness or Short-Term Indebtedness being treated as Long-Term Indebtedness under Section 802 hereof, or Interim Indebtedness, shall be deemed to be payable as set forth below: (A) If the City has obtained a binding commitment of a bank or other financial institution (whose senior debt obligations, or the senior debt obligations of the holding company of which such bank or financial institution is the principal subsidiary, are then rated "A" or better by any Rating Agency) to refinance such Balloon Indebtedness, Put Indebtedness, Short-Term Indebtedness or Interim Indebtedness, or a portion thereof, including without limitation, a letter of credit or a line of credit, the Balloon Indebtedness, Put Indebtedness, Short-Term Indebtedness or Interim Indebtedness, or portion thereof to be refinanced, may be deemed to be payable in accordance with the terms of the refinancing arrangement; (B) If the City has entered into a binding agreement providing for the deposit by the City with a bank or other financial institution (whose senior debt obligations, or the senior debt obligations of the holding company of which such bank or financial institution is the principal subsidiary, are then rated "A" or better by any Rating Agency), in trust (herein called a "Special Redemption Fund") of amounts, less investment earnings realized and retained in the Special Redemption Fund, equal in aggregate to the principal amount of such Balloon Indebtedness, Put Indebtedness, Short-Term Indebtedness or Interim Indebtedness, or a portion thereof, when due from the sums so deposited and investment earnings realized thereon, then the principal amount of the Balloon Indebtedness, Put Indebtedness, Short-Term Indebtedness or Interim Indebtedness, or portion thereof, may be deemed to be payable in accordance with the terms of such agreement; (C) If the City has entered into arrangements or agreements with respect to the principal amount of such Balloon Indebtedness, Put Indebtedness, Short-Term Indebtedness or Interim Indebtedness, other than those referred to in subsections (A) and (B) above, which a Consultant in a certificate filed with the City determines, taking into account the interests of the Owners of System Indebtedness, provides adequate assurances that the City will be able to meet the Debt Service Requirements due on such System Indebtedness, the Balloon Indebtedness, Put Indebtedness, Short-Term Indebtedness or Interim Indebtedness may be deemed to be payable in accordance with the terms of such arrangement or agreement; or (D) Such Balloon Indebtedness, Put Indebtedness or Short- Term Indebtedness may be deemed to be Additional Indebtedness which, at the date of its original incurrence, was payable over a term not to exceed KMC\402708\BEL AIRE ORDINANCE 10 twenty (20) years in equal annual installments of principal and interest at the Index Rate. A Consultant shall deliver to the City a certificate stating that it is reasonable to assume that installment obligations of such term of the City can be incurred and stating the interest rate then applicable to installment obligations of such term of comparable quality. Interim Indebtedness may be deemed to be Additional Indebtedness which, at the date of its original incurrence, would meet the conditions specified in the statement of the Consultant as required in Section 802; provided that the Consultant shall for each annual period that the Payment Obligation Requirement is computed, provide a supplemental statement that at such period, the certifications contained in the statement are reasonable. (2) Interest that is payable prior to the Stated Maturity of any Balloon Indebtedness, Put Indebtedness, Short-Term Indebtedness or Interim Indebtedness shall be taken into account for such appropriate period in computation of Debt Service Requirements, Interest payable at maturity or early redemption on Balloon Indebtedness, Put Indebtedness, Short-Term Indebtedness or Interim Indebtedness may either be amortized over the anticipated maturity or such longer period as is permitted under Section 902 or Section 210(a)(1)(D) or may be treated as principal payable on the principal maturity date of such Balloon Indebtedness, Put Indebtedness, Short-Term Indebtedness or Interim Indebtedness. (3) In measuring compliance with the applicable tests hereunder in connection with incurring Put Indebtedness and generally for purposes of determining the Debt Service Requirements relating thereto, Put Indebtedness shall be deemed to mature based upon the actual amortization requirements for the Put Indebtedness, only to the extent that the City has a commitment to refinance such Put Indebtedness. (b) Debt Service Requirements on Discount lndebtedness. At the election of the City for the purpose of any computation of Debt Service Requirements, whether historical or projected, the principal and interest deemed payable on Discount Indebtedness shall be deemed to be payable as set forth below: (1) If the City has obtained a binding commitment of a bank or other financial institution (whose senior debt obligations, or the senior debt obligations of the holding company of which such bank or financial institution is the principal subsidiary, are then rated "A" or better by any Rating Agency) to refinance such Discount Indebtedness, or a portion thereof, including without limitation, a letter of credit or a line of credit, the Discount Indebtedness, or portion thereofto be refinanced, may be deemed to be payable in accordance with the terms of the refinancing arrangement; (2) If the City has entered into a binding agreement providing for the deposit with a bank or other financial institution (whose senior debt obligations, or the senior debt obligations of the holding company of which such bank or financial institution is the principal subsidiary, are then rated "A" or better by any Rating Agency), in trust (herein called a "Special Redemption Fund") of amounts, less investment earnings realized and retained in the Special Redemption Fund, equal in aggregate to the principal amount of such Discount Indebtedness, or a portion thereof, and providing for the payment of such principal amount when due from the sums so deposited, and investment earnings realized thereon, then the Discount Indebtedness, or portion thereof, may be deemed to be payable in accordance with the terms of such agreement; KMC\402708\BEL AIRE ORDINANCE II (3) If the City has entered into arrangements or agreements with respect to the principal amount of such Discount Indebtedness, other than those referred to in subsections (1) and (2) above, which a Consultant in a certificate filed with the City determines, taking into account the interests of the holders of Additional Indebtedness, provides adequate assurances that the City will be able to meet the Debt Service Requirements due on such Additional Indebtedness, the Discount Indebtedness may be deemed to be payable in accordance with the terms of such arrangement or agreement; or (4) As of any time the maturity amount represented by Discount Indebtedness shall be deemed to be the accreted value of such Additional Indebtedness computed on the basis of a constant yield to maturity, (c) Debt Service Requirements on Variable Rate Indebtedness. When calculating interest requirements on Variable Rate Indebtedness which bears a variable rate of interest for periods as to which the rate of interest has not been determined, the rate of interest on Outstanding Variable Rate Indebtedness shall be the average annual rate of interest which was payable on such Variable Rate Indebtedness during the twelve (12) months immediately preceding the date as of which the calculation is made; and the rate of interest on Variable Rate Indebtedness to be incurred (or incurred less than twelve (12) months preceding such date) shall be the average annual rate of interest which would have been payable on such Variable Rate Indebtedness had it been outstanding for a period of twelve (12) months immediately preceding the date as ofwhich the calculation is made, all as set forth in a certificate of a Consultant, delivered to the City. Section 203. Preliminary and Final Official Statement. The portions of the Preliminary Official Statement relating to the Series 2002 Bonds setting forth City information, including Appendix A-I thereto, are hereby ratified and approved. The portions of the final Official Statement setting forth City information, including AppendixA-I thereto, are hereby authorized to be prepared by supplementing, amending and completing the Preliminary Official Statement, with such changes and additions thereto as are necessary to conform to and describe the transaction. The use and public distribution of the portions of the final Official Statement setting forth City information, including Appendix A-I thereto, by the Purchaser in connection with the reoffering of the Series 2002 Bonds is hereby authorized. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Official Statement, dated as of the date of payment for and delivery of the Series 2002 Bonds. Section 204. Intentionally Omitted. Section 205. Redemption of Temporary Notes. The City's Temporary Notes, Series A, 2001, the proceeds of which temporarily financed a portion of the Project costs, are hereby called for redemption and payment on April 1, 2002 or as soon thereafter as can occur. The Clerk is authorized and instructed to provide appropriate notice of such redemption in accordance with the resolution authorizing the issuance of such Notes. ARTICLE III SECURITY FOR AGREEMENT Section 301. Security for the Agreement. The Agreement Obligations of the City shall constitute an Expense of the System, payable solely from, and secured as to the payment of it by a pledge of, the Revenues, and the City hereby pledges said Revenues to the payment thereof. The Agreement KMC\402708\BEL AIRE ORDINANCE 12 Obligations shall not be or constitute a general obligation of the City, nor shall they constitute an indebtedness of the City within the meaning of any constitutional, statutory or charter provision, limitation or restriction, and the taxing power of the City is not pledged to the payment of the obligations under the Agreement. The City's Agreement Obligations shall not have any priority with respect to the payment thereof from said Revenues or otherwise over other Operating Expenses and other Operating Expenses shall not have any priority with respect to the payment thereof from said Revenues or otherwise over the City's Agreement Obligations. ARTICLE IV ESTABLISHMENT OF FUNDS AND ACCOUNTS DEPOSIT AND APPLICATION OF BOND PROCEEDS AND OTHER MONEYS Section 401. Creation of Funds and Accounts. Simultaneously with the issuance of the Series 2002 Bonds, there shall be created within the Treasury ofthe City the following Funds and Accounts: (a) Redemption Fund for Temporary Notes, Series 2001-2; (b) Water and Wastewater Utility System Revenue Fund; (c) Water and Wastewater Utility System Operation and Maintenance Account; (d) Operating Reserve Account for Water and Wastewater Utility System; (e) Water and Wastewater Utility System Depreciation and Replacement Account; (f) Water and Wastewater Utility System Surplus Account. The Funds and Accounts established herein shall be administered in accordance with the provisions of this Ordinance so long as the Agreement Obligations are Outstanding. Section 402. Deposit of Bond Proceeds. A portion of the net proceeds received from the Authority from the sale of the Series 2002 Bonds shall be deposited simultaneously with the delivery of the Series 2002 Bonds as follows: (a) An amount that is sufficient to provide for the redemption of Temporary Notes as described in Section 205 hereof shall be deposited in the Redemption Fund and thereafter paid and transferred to the paying agent for such Temporary Notes, with irrevocable instructions to apply such amount to the payment of the principal of, redemption premium, and interest on the Temporary Notes. (b) All other amounts received from the Authority from the proceeds of the Series 2002 Bonds shall be deposited into the Revenue Fund. KMC\402708\BEL AIRE ORDINANCE 13 ARTICLE V COLLECTION AND APPLICATION OF REVENUES Section 501. Revenue Fund. The City covenants and agrees that from and after the beginning of the first Contract Year (as defined in the Agreement), and continuing as long as the Agreement remains in effect, all of the Revenues derived and collected from the operation of the System shall as and when received be paid and deposited into the Revenue Fund. Said Revenues shall be segregated and kept separate and apart from all other moneys, revenues, Funds and Accounts of the City and shall not be commingled with any other moneys, revenues, Funds and Accounts of the City. The Revenue Fund shall be administered and applied solely for the purposes and in the manner provided in this Ordinance. Section 502. Application of Moneys in Funds and Accounts. The City covenants and agrees that it will on the first day of each month administer and allocate all of the moneys then held in the Revenue Fund as follows: (a) Operation and Maintenance Account. There shall first be paid and credited to the Operation and Maintenance Account an amount sufficient to pay the estimated cost of operating and maintaining the System during the ensuing month. All amounts paid and credited to the Operation and Maintenance Account shall be expended and used by the City solely for the purpose of paying the Expenses of the System. (b) Operating Reserve Account. Except as hereinafter provided in this Section, all amounts paid and credited to the Operating Reserve Account shall be expended and used by the City solely to prevent any default in the payment of Expenses of the System if the moneys in the Operation and Maintenance Account are insufficient to pay as they become due. If the Operating Reserve Account aggregates the Operating Reserve Requirement, no payments into the Operating Reserve Account shall be required, but if the City is ever required to expend and use a part of the moneys in said Account for the purpose herein authorized and such expenditure reduces the amount of the Operating Reserve Account below the Operating Reserve Requirement, or if the valuation of the Account as provided in Section 601 establishes that the value of the Operating Reserve Account is below the Operating Reserve Requirement, the City shall monthly transfer available Revenues, after providing for the transfers set forth above, into the Operating Reserve Account, so that within 12 months the Operating Reserve Account shall aggregate the Operating Reserve Requirement. (c) Depreciation and Replacement Account. Except as hereinafter provided, moneys in the Depreciation and Replacement Account shall be expended and used by the City, if no other funds are available therefor, solely for the purpose of making emergency replacements and repairs in and to the System as may be necessary to keep the System in good repair and working order and to assure the continued effective and efficient operation thereof. No moneys in the Depreciation and Replacement Account shall be used for the purpose of extending, improving or enlarging the System. Ifthe Depreciation and Replacement Account aggregates the Depreciation and Replacement Requirement, no payments into the Depreciation and Replacement Account shall be required, but if the City is ever required to expend and use a part of the moneys in said Account for the purpose herein authorized and such expenditure reduces the amount of the Depreciation and Replacement Account below the Depreciation and Replacement Requirement, or if the valuation of the Account as provided in Section 601 establishes that the value of the Depreciation and Replacement Account is below the Depreciation and Replacement Requirement, the City shall monthly transfer available Revenues, after providing for the transfers set forth above, into the Depreciation and Replacement Account, so that within 12 months the Depreciation and Replacement Account shall aggregate the Depreciation and Replacement Requirement. KMC\402708\BEL AIRE ORDINANCE 14 (d) Surplus Account, After all payments and credits required at the time to be made under the provisions of the preceding subsections have been made, all moneys remaining in the Revenue Fund shall be paid and credited to the Surplus Account. Moneys in the Surplus Account may be expended and used for the following purposes as determined by the governing body ofthe City: (1) Paying the cost of the operation, maintenance and repair of the System to the extent that may be necessary after the application of the moneys held in the Operation and Maintenance Account under the provisions of paragraph (a) of this Section; (2) Paying the cost of extending, enlarging or improving the System; (3) Preventing default in, anticipating payments into or increasing the amounts in the any debt service account for Additional Bonds, the Operating Reserve Account or the Depreciation and Replacement Account referred to in this Section, or anyone of them; (4) Prepaying all or a part of the obligations under the Agreement or calling, redeeming and paying prior to Stated Maturity, or, at the option ofthe City, purchasing in the open market at the best price obtainable not exceeding the redemption price (if any bonds are callable), any Additional Bonds, including principal, interest and redemption premium, if any; (5) Any other lawful purpose in connection with the operation of the System and benefiting the System; (6) To make transfers to the Revenue Fund; (7) To make lawful transfers to any fund of the City. (e) Deficiency of Payments into Funds and Accounts. If at any time the Revenues derived from the operation of the System are insufficient to make any payment on the date or dates hereinbefore specified, the City will make good the amount of such deficiency by making additional payments or credits out of the first available Revenues thereafter received from the operation of the System, such payments and credits being made and applied in the order hereinbefore specified in this Section. Section 503. Transfer of Funds to the Authority or Trustee. The Treasurer of the City is hereby authorized and directed to withdraw from the Operation and Maintenance Account, and, to the extent necessary to prevent a default in the payment of either principal of or interest on the Bonds, from the Operating Reserve Account, the Depreciation and Replacement Account and the Surplus Account as provided in Section 502 hereof, sums sufficient to pay the Agreement Obligations as and when the same become due, and to forward such sums to the Authority, or the Trustee. ARTICLE VI DEPOSIT AND INVESTMENT OF MONEYS Section 601. Deposits and Investment of Moneys. (a) Moneys in each of the Funds and Accounts shall be deposited in a bank, savings and loan association or savings bank: (a) organized under the laws ofthe State or the United States with main offices located in the county or counties in which the City is located; or (b) under certain conditions of State law, KMC\402708\BEL AIRE ORDINANCE 15 __. _ . '~'~_"_'_~M~~__~___"..__....~".."^...._,,_...<.;_________~.,_______~ organized under the laws of the United States or any other State thereof, with main offices located outside of the State, but with a branch located in the county or counties in which the City is located. All such depositaries shall be members of the Federal Deposit Insurance Corporation. All such deposits shall be invested in Permitted Investments as set forth in this Article or shall be adequately secured as provided by the laws of the State. All moneys held in the Funds and Accounts shall be kept separate and apart from all other funds of the City so that there shall be no commingling with any other funds ofthe City. (b) Moneys held in any Fund or Account other than the Escrow Fund may be invested in accordance with this Ordinance and the Arbitrage Instructions, in Permitted Investments; provided, however, that no such investment shall be made for a period extending longer than to the date when the moneys invested may be needed for the purpose for which such fund was created. All earnings on any investments held in any Fund or Account shall accrue to and become a part of such Fund or Account. All earnings on investments held in the Operating Reserve Account shall accrue to and become a part of the Operating Reserve Account until the amount on deposit in the Operating Reserve Account shall aggregate the Operating Reserve Requirement; thereafter, all such earnings shall be credited to the Revenue Fund. All earnings on investments held in the Depreciation and Replacement Account shall accrue to and become a part of the Depreciation and Replacement Account until the amount on deposit in the Depreciation and Replacement Account shall aggregate the Depreciation and Replacement Requirement; thereafter, all such earnings shall be credited to the Revenue Fund, In determining the amount held in any Fund or Account under any of the provisions of this Ordinance, Permitted Investments shall be valued at the lower of the cost or the market value thereof. Such valuation shall be made as of January 1 of each year. If and when the amount held in any Fund or Account shall be in excess of the amount required by the provisions of this Ordinance, the City shall direct that such excess be paid and credited to the Revenue Fund, ARTICLE VII GENERAL COVENANTS AND PROVISIONS The City covenants and agrees that so long as the Agreement remains in effect, it will comply with each ofthe following covenants: Section 701. Efficient and Economical Operation. The City will continuously own and will operate the System as a revenue producing facility in an efficient and economical manner and will keep and maintain the same in good repair and working order. The City will establish and maintain such rules and regulations for the use of the System as may be necessary to assure maximum utilization and most efficient operation of the System. Section 702. Rate Covenant. The City, in accordance with and subject to applicable legal requirements, will fix, establish, maintain and collect such rates and charges for the use and services furnished by or through the System as will produce Revenues sufficient to (a) pay the Expenses of the System; (b) enable the City to have in each Fiscal Year, a Coverage Ratio of not less than 1,25 with respect to the Base Charges; ( c) enable the City to have in each Fiscal Year a Coverage Ratio of net less than 1.10 on any Additional Indebtedness and (d) provide reasonable and adequate reserves for the payment of Additional Indebtedness and for the protection and benefit ofthe System as provided in this Ordinance, The City will require the prompt payment of accounts for service rendered by or through the System and will promptly take whatever action is legally permissible to enforce and collect delinquent charges. The City will, from time to time as often as necessary, in accordance with and subject to applicable legal requirements, revise the rates and charges aforesaid in such manner as may be necessary or proper so that KMC\402708\BEL AIRE ORDINANCE 16 the Revenues, Net Revenues and Net Operating Revenues will be sufficient to cover the obligations under this Section and otherwise under the provisions of this Ordinance. If in any Fiscal Year, Revenues, Net Revenues or Net Operating Revenues are an amount less than as hereinbefore provided, the City will immediately employ a Consultant to make recommendations with respect to such rates and charges. A copy of the Consultant's report and recommendations shall be filed with the Clerk, the Bond Insurer and the Authority. The City shall, to the extent feasible, follow the recommendations ofthe Consultant. Section 703. Reasonable Charges for all Services. None of the facilities or services provided by the System will be furnished to any user (excepting the City itself) without a reasonable charge being made therefor. If the Revenues derived from the System are at any time insufficient to pay the reasonable Expenses of the System and also to pay the Debt Service Requirements of any Additional Indebtedness as and when the same become due, then the City will thereafter pay into the Revenue Fund a fair and reasonable payment in accordance with effective applicable rates and charges for all services or other facilities furnished to the City or any of its departments by the System, and such payments will continue so long as the same may be necessary in order to prevent or reduce the amount of any default in the payment of Expenses or the Debt Service Requirements of any Additional Indebtedness. Section 704. Restrictions on Mortgage or Sale of System. The City will not mortgage, pledge or otherwise encumber the System or any part thereof, nor will it sell, lease or otherwise dispose of the System or any material part thereof; provided, however, the City may: (a) sell at fair market value any portion ofthe System which has been replaced by other similar property of at least equal value, or which ceases to be necessary for the efficient operation of the System, and in the event of sale, the City will apply the proceeds to either (1) redemption of Additional Indebtedness then Outstanding and any remaining Agreement Obligations in accordance with the provisions governing repayment thereof in advance of Stated Maturity, or (2) replacement of the property so disposed of by other property the revenues of which shall be incorporated into the System as hereinbefore provided; (b) cease to operate, abandon or otherwise dispose of any property which has become obsolete, nonproductive or otherwise unusable to the advantage of the City; (c) grant a security interest in equipment to be purchased with the proceeds of any loan, lease or other obligation undertaken in accordance with Article VIII hereof; or (d) sell, lease or convey all or substantially all of the System to another entity or enter into a management contract with another entity if: (I) The transferee entity is a political subdivision organized and existing under the laws of the State, or instrumentality thereof, or an organization described in Code S 501 (c )(3), and expressly assumes in writing the due and punctual payment of the principal of and premium, if any, and interest on all Outstanding System Indebtedness according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Ordinance; (2) If there remains unpaid any System Indebtedness which bears interest that is not includable in gross income under the Code, the City receives an opinion of Bond Counsel, in form and substance satisfactory to the City, to the effect that under then existing law the consummation of such sale, lease or conveyance, whether or not contemplated on any date of the delivery of such System Indebtedness, would not cause the interest payable on such System Indebtedness to become includable in gross income under the Code; KMC\402708\BEL AIRE ORDINANCE 17 (3) The City receives a certificate of the Consultant which demonstrates and certifies that immediately upon such sale or conveyance the transferee entity will not, as a result thereof, be in default in the performance or observance of any covenant or agreement to be performed or observed by it under this Ordinance; (4) Such transferee entity possesses such licenses to operate the System as may be required if it is to operate the System; (5) The City receives an opinion of Bond Counsel, in form and substance satisfactory to the City, as conclusive evidence that any such sale, lease or conveyance, and any such assumption, is permitted by law and complies with the provisions ofthis Section; and (6) The City receives the written consent of the Bond Insurer, provided that any Bonds insured by the Bond Insurer are Outstanding and the Bond Insurance Policy remains in effect. Section 705. Insurance. The City will carry and maintain insurance with respect to the System and its operations against such casualties, contingencies and risks (including but not limited to property and casualty, fire and extended coverage insurance upon all of the properties forming a part of the System insofar as the same are of an insurable nature, public liability, business interruption or use and occupancy insurance, worker's compensation and employee dishonesty insurance), such insurance to be of the character and coverage and in such amounts as would normally be carried by other enterprises engaged in similar activities of comparable size and similarly situated; provided the amount of such liability insurance shall be in amounts not less than the then maximum liability of a governmental entity for claims arising out of a single occurrence, as provided by the State's tort claims act or other similar future law (currently $500,000 per occurrence). In the event of loss or damage, the City, with reasonable dispatch, will use the proceeds of such insurance in reconstructing and replacing the property damaged or destroyed, or in paying the claims on account of wh ich such proceeds were received, or if such reconstruction or replacement is unnecessary or impracticable, then the City will pay and deposit the proceeds of such insurance into the Revenue Fund. The City will annually review the insurance it maintains with respect to the System to determine that it is customary and adequate to protect its property and operations. The cost of all insurance obtained pursuant to the requirements of this Section shall be paid as an Expense out of the Revenues of the System. Section 706. Books, Records and Accounts. The City will install and maintain proper books, records and accounts (entirely separate from all other records and accounts of the City) in which complete and correct entries will be made of all dealings and transactions of or in relation. to the System. Such accounts shall show the amount of Revenues received from the System, the application of such Revenues, and all financial transactions in connection therewith. Said books shall be kept by the City according to generally accepted accounting principles as applicable to the operation of municipal utilities. The City shall make comparative quarterly reports to the Office of the City Administrator relative to Revenues, Expenses, Net Revenues and Net Operating Revenues. Section 707. Annual Budget. Prior to the commencement of each Fiscal Year, the City will cause to be prepared and filed with the Clerk a budget setting forth the estimated receipts and expenditures of the System for the next succeeding Fiscal Year. The Clerk, promptly upon the filing of said budget in the Clerk's office, will mail a copy of said budget to the Authority and the Bond Insurer. Said annual budget shall be prepared in accordance with the requirements of the laws of the State and shall contain all information that is required by such laws, including: (a) An estimate of the Revenues from the System during the next ensuing Fiscal Year. (b) A statement of the estimated Expenses of the System during the next ensuing Fiscal Year, KMC\402708\BEL AIRE ORDINANCE 18 Year. (c) A statement of any anticipated unusual Expenses for the System during the next Fiscal (d) A statement of any necessary repairs or replacements to the System which may be anticipated during the next Fiscal Year. (e) A statement of the amount to be paid on System Indebtedness to be paid from Revenues, Net Revenues or Net Operating Revenues of the System during the next Fiscal Year. (t) Fiscal Year. A statement of the estimated Net Revenues and Net Operating Revenues during the next Section 708. Annual Audit. Annually, promptly after the end of the Fiscal Year, the City will cause an audit to be made of the System for the preceding Fiscal Year by an Independent Accountant to be employed for that purpose and paid from the Revenues of the System. Said annual audit shall cover in reasonable detail the operation ofthe System during such Fiscal Year. The report of said annual audit shall include: (a) A classified statement of the Revenues received, the Expenses for operation and maintenance, the Net Revenues, and the Net Operating Revenues and the amount of any capital expenditures made in connection with the System during the previous Fiscal Year; (b) A complete balance sheet as of the end of each Fiscal Year with the amount on hand at the end of such Fiscal Year in each of the Funds and Accounts created by and referred to in this Ordinance; (c) A statement of all System Indebtedness matured or redeemed and interest paid thereon during said Fiscal Year; (d) A statement of the number of customers served by the System at the beginning and the end of such Fiscal Year; (e) A statement showing the amount and character of the insurance carried on the property constituting the System and showing the names of the insurers, the expiration dates of the policies and the premiums thereon; and (t) Such remarks and recommendations regarding the practices and procedures of operating the System and its accounting practices as said Independent Accountant may deem appropriate. Within 30 days after the completion of each such annual audit, a copy of the report of thereof shall be filed in the office of the Clerk, and a duplicate copy shall be mailed to the Authority and to the Bond Insurer. Such audit reports shall at all times during the usual business hours be open to the examination and inspection by any user of the services of the System, the Authority, or by the Trustee. As soon as possible after the completion of the annual audit, the governing body of the City shall review the report of such audit, and if the audit report discloses that proper provision has not been made for all of the requirements of this Ordinance and the Act, the City will promptly cure such deficiency and will promptly proceed to modii)' the rates and charges to be charged for the use and services furnished by the System or take such other action as may be necessary to adequately provide for such requirements. KMC\402708\BEL AIRE ORDINANCE 19 Section 709. Right ofInspection. The Authority, the Bond Insurer, and the Trustee shall have the right at all reasonable times to inspect the System and all records, accounts and data relating thereto, and shall be furnished all such information concerning the System and the operation thereofwhich the Authority or the Trustee may reasonably request. Section 710. Administrative Personnel. The City shall use its best efforts to employ at all times administrative personnel experienced and well qualified to operate the System. The City further agrees that such administrative personnel shall be employed in sufficient numbers to ensure that the System will be operated in a prudent and efficient manner. Section 711. Performance of Duties and Covenants. The City will faithfully and punctually perform all duties, covenants and obligations with respect to the operation of the System now or hereafter imposed upon the City by the Constitution and laws ofthe State and by the provisions of this Ordinance. Section 712. Report on System Condition. The City shall annually cause a qualified employee of the City to make an examination of and report on the condition and operations of the System. At least every five years such examination and report shall be made by the Consulting Engineer, Each such report shall make recommendations as to any changes in operations ofthe System deemed desirable and shall also make reference to any unusual or extraordinary items of maintenance and repair and any extensions, enlargements or improvements that may be needed in the period prior to the preparation of the next report required by this Section. A copy of each such report shall be filed in the office of the Clerk, shall be sent to the Authority, the Bond Insurer and the Trustee. ARTICLE VIII ADDITIONAL INDEBTEDNESS Section 801. Senior Obligations. The City covenants and agrees that so long as the Agreement remains effective, the City will not issue or incur any Additional Indebtedness payable out of the Revenues of the System or any part thereof which are superior to the City's Agreement Obligations. Section 802. Additional Indebtedness. The City covenants and agrees that so long as the Agreement remains effective, it will not incur any Additional Indebtedness unless the following conditions are met: (a) The City shall not be in default in the payment of any of the City's Agreement Obligations at the time Outstanding or in making any payment at the time required to be made into the respective Funds and Accounts created by and referred to in this Ordinance or any Additional Indebtedness Resolution (unless such Additional Indebtedness is being incurred to cure such default) nor shall any other Event of Default have occurred and be continuing; (b) The City shall deliver the following: (I) following: Long-Term Indehtedness. A certificate signed by the City evidencing either of the (i) The Coverage Ratio for the Fiscal Year immediately preceding the issuance of such Additional Indebtedness, as reflected by information provided by the Independent Accountant, shall be not less than 1.10, including the Additional Indebtedness proposed to be secured. In the event that the City has instituted any increase in rates for the use and KMC\402708\BEL AIRE ORDINANCE 20 services of the System and such increase shall not have been in effect during the full Fiscal Year immediately preceding the issuance of such proposed Additional Indebtedness, the additional Net Revenues which would have resulted from the operation of the System during said preceding Fiscal Year had such rate increase been in effect for the entire period may be added to the stated Net Revenues for the calculation of the Coverage Ratio, provided that such estimated additional Net Revenues shall be determined by a Consultant. (ii) The estimated Coverage Ratio (as determined by a Consultant), for the Fiscal Year immediately following the Fiscal Year in which the Additional Indebtedness is to be incurred, shall be not less than 1.10 including the Additional Indebtedness proposed to be incurred. In the event that the City anticipates additional Revenues as a result of expansion or modification of the System by such Additional Indebtedness, the City may adjust the estimated Net Revenues in determining the Coverage Ratio, by adding thereto any estimated increase in Net Revenues that will result, or would have resulted, in the opinion of the Consultant, are reasonable. (2) Sltort-Term Indebtedness. A certificate signed by the City evidencing anyone of the following: (i) The principal amount of all Outstanding Short-Term Indebtedness does not exceed 15% of the Revenues for the most recently ended Fiscal Year for which financial information is available from the Independent Accountant; (ii) The Short-Term Indebtedness could be incurred under subsection (b)(l) hereof assuming it was Long-Term Indebtedness, (iii) There is delivered to the City a certificate of a Consultant to the effect that it is such Consultant's opinion that it is reasonable to assume that the City will be able to refinance such Short-Term Indebtedness prior to its Stated Maturity in compliance with the provisions of this Section and the conditions described in subsection (b)(l) are met with respect to such Short-Term Indebtedness when it is assumed that such Short-Term Indebtedness is Long-Term Indebtedness maturing over 20 years (or such shorter period as such Consultant indicates is reasonable to assume in such statement) from the date of issuance of the Short-Term Indebtedness and bears interest on the unpaid principal balance at the Index Rate and is payable on a level annual debt service basis over a 20- year period (or such shorter period as such Consultant indicates is reasonable to assume in such statement), (3) following: Interim Indebtedness. A certificate signed by the City evidencing eitlter of the (i) The Interim Indebtedness could be incurred under subsection (b)(l) hereof assuming it was Long-Term Indebtedness. (ii) There is delivered to the City a certificate of a Consultant to the effect that it is such Consultant's opinion that it is reasonable to assume that the City will be able to refinance such Interim Indebtedness prior to its Stated Maturity in compliance with the provisions of this Section and the conditions described in subsection (b)(l) are met with respect to such Interim Indebtedness when it is assumed that such Interim Indebtedness is Long- Term Indebtedness maturing over 20 years (or such shorter period as such Consultant indicates is reasonable to assume in such statement) from the date of issuance KMC\402708\BEL AIRE ORDINANCE 21 of the Interim Indebtedness and bears interest on the unpaid principal balance at the Index Rate and is payable on a level annual debt service basis over a 20-year period (or such shorter period as such Consultant indicates is reasonable to assume in such statement). (c) When the issuance of Additional Indebtedness is permitted by the Statutes of the State. (d) The Additional Indebtedness Resolution shall contain or provide for substantially the same terms, conditions, covenants and procedures as established in this Ordinance. Notwithstanding the foregoing restrictions, Additional Indebtedness may be issued under this Section if it is necessary: (1) in the opinion of the Consulting Engineer to do so to repair the System if damaged or destroyed by disaster to such extent necessary to keep it in good operating condition; or (2) in the opinion of the City's legal counsel to remedy any deficiency of the System relating to environmental pollution matters or to comply with the requirements of any governmental agency having jurisdiction over the City with respect thereto. The City shall make provision for paying the Additional Indebtedness out of the Revenue Fund and may likewise provide for the creation of reasonable reserve accounts for the payment of such Additional Indebtedness out of moneys in the Revenue Fund. Section 803. Additional Agreement Obligations. Nothing in this Article shall prohibit or restrict the right of the City to permit the amendment of the Agreement to provide for increases in the Base Charge or other Agreement Obligations, including those increases resulting from the issuance of Bonds (other than the Series 2002 Bonds) by the Authority for any lawful purpose in connection with the operation of and benefiting the System and to provide that such additional Agreement Obligations shall be payable out of the Revenues of the System. Prior to incurring any additional Agreement Obligations, the City shall deliver a certificate signed by the City evidencing either of the following: (i) The Coverage Ratio for the Fiscal Year immediately preceding the incurrence of such additional Agreement Obligations, as reflected by information provided by the Independent Accountant, shall be not less than 1,25, including the additional Agreement Obligations proposed to be secured. In the event that the City has instituted any increase in rates for the use and services of the System and such increase shall not have been in effect during the full Fiscal Year immediately preceding the issuance of such proposed additional Agreement Obligations, the additional Net Operating Revenues which would have resulted from the operation of the System during said preceding Fiscal Year had such rate increase been in effect for the entire period may be added to the stated Net Operating Revenues for the calculation of the Coverage Ratio, provided that such estimated additional Net Operating Revenues shall be determined by a Consultant. (ii) The estimated Coverage Ratio (as determined by a Consultant), for the Fiscal Year immediately following the Fiscal Year in which the additional Agreement Obligations is to be incurred, shall be not less than 1.25 including the additional Agreement Obligations proposed to be incurred, In the event that the City anticipates additional Revenues as a result of expansion or modification of the System by such additional Agreement Obligations, the City may adjust the estimated Net Revenues in determining the Coverage Ratio, by adding thereto any estimated increase in Net Revenues that will result, or would have resulted, in the opinion of the Consultant, are reasonable. KMC\402708\BEL AIRE ORDINANCE 22 Additional Agreement Obligations incurred under the conditions set forth in this Section shall stand on a parity with existing Agreement Obligations and shall enjoy complete equality or lien on and claim against the Revenues of the System, and the City shall make equal provision for paying such additional Agreement Obligations out of the Revenue Fund and may likewise provide for the creation of reasonable reserve accounts for the payment of such additional Agreement Obligations out of moneys in the Revenue Fund. ARTICLE IX DEFAULT AND REMEDIES Section 901. Remedies. The provisions of this Ordinance, including the covenants and agreements herein contained, shall constitute a contract between the City and the Authority. If an Event of Default occurs and shall be continuing, the Authority, or the Trustee, on behalf of the Authority, shall have the right: (a) by mandamus or other suit, action or proceedings at law or in equity to enforce the rights of such Owner or Owners against the City and its officers, agents and employees, and to require and compel duties and obligations required by the provisions of this Ordinance or by the Constitution and laws of the State; (b) by suit, action or other proceedings in equity or at law to require the City, its officers, agents and employees to account as if they were the trustees of an express trust; and (c) by suit, action or other proceedings in equity or at law to enjoin any acts or things which may be unlawful or in violation of the rights ofthe Authority. The City hereby directs the Authority or Trustee to notify the Bond Insurer of any Event of Default of which either has actual notice. Section 902. Remedies Cumulative. No remedy conferred herein is intended to be exclusive of any other remedy, but each such remedy shall be cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred herein. No waiver of any default or breach of duty or contract shall extend to or affect any subsequent default or breach of duty or contract or shall impair any rights or remedies thereon. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein. Every substantive right and every remedy conferred upon the Authority by this Ordinance may be enforced and exercised from time to time and as often as may be deemed expedient. If action or proceedings taken by the Authority on account of any default or to enforce any right or exercise any remedy has been discontinued or abandoned for any reason, or shall have been determined adversely to the Authority, then, and in every such case, the City and the Authority shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies, powers and duties of the Authority shall continue as if no such suit, action or other proceedings had been brought or taken. Section 903. No Obligation to Levy Taxes. Nothing contained in this Ordinance shall be construed as imposing on the City any duty or obligation to levy any taxes to meet any obligation incurred herein. KMC\402708\BEL AIRE ORDINANCE 23 ARTICLE X DEFEASANCE Section 1001. Defeasance. When the Base Charge as been paid and discharged, then the requirements contained in this Ordinance and the pledge of the Revenues hereunder and all other rights granted hereby shall terminate with respect to the Agreement shall be deemed to have been paid and discharged within the meaning of this Ordinance if there has been deposited with the Trustee, or other commercial bank or trust company located in the State and having full trust powers, in trust for and irrevocably appropriated thereto, moneys and/or Defeasance Obligations which, together with the interest to be earned on any such Defeasance Obligations, will be sufficient for the payment of all Base Charge amounts due or to become due under the Agreement. Any money and Defeasance Obligations that at any time shall be deposited with the Paying Agent or other commercial bank or trust company by or on behalf of the City, for the purpose of paying and discharging all Base Charge amounts due or to become due under the Agreement, shall be and are hereby assigned, transferred and set over to the Trustee or other bank or trust company in trust for the Authority, and such moneys shall be and are hereby irrevocably appropriated to the payment and discharge thereof. All money and Defeasance Obligations deposited with the Trustee or such bank or trust company shall be deemed to be deposited in accordance with and subject to all of the provisions of this Ordinance. The City shall notify the Bond Insurer of any defeasance under this section. ARTICLE XI TAX COVENANTS Section 1101. General Covenants. (a) The City covenants and agrees that (1) it will comply with all applicable provisions of the Code, including Code 99 103 and 141 through 150, necessary to maintain the exclusion from gross income for federal income tax purposes of the interest on the Series 2002 Bonds and (2) it will not use or permit the use of any proceeds of the Series 2002 Bonds or any other funds of the City, will not take or permit any other action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the Series 2002 Bonds, The City will, in addition, adopt such other ordinances or resolutions and take such other actions as may be necessary to comply with the Code and with all other applicable future laws, regulations, published rulings and judicial decisions, in order to ensure that the interest on the Series 2002 Bonds will remain excluded from federal gross income, to the extent any such actions can be taken by the City, (b) The City covenants and agrees that (1) it will use any proceeds of the Series 2002 Bonds as soon as practicable and with all reasonable dispatch for the purposes for which such proceeds are intended, and (2) it will not invest or directly or indirectly use or permit the use of any proceeds of the Series 2002 Bonds or any other funds of the City in any manner, or take or omit to take any action, that would cause the Series 2002 Bonds to be "arbitrage bonds" within the meaning of Code 9 I 48(a). (c) The City covenants and agrees that it will not use any portion of the proceeds of the Series 2002 Bonds, including any investment income earned on such proceeds, directly or indirectly, in a manner that would cause any Series 2002 Bond to be a "private activity bond" within the meaning of Code 9 141(a), or to make or finance a loan to any Person other than the State or a political subdivision thereof. KMC\402708\BEL AIRE ORDINANCE 24 .._.~-----~~._~._+"-..-.....,._._-_._,-_.._~-,._.~---- ARTICLE XII CONTINUING DISCLOSURE REQUIREMENTS Section 1201. Disclosure Requirements. The City hereby covenants with the Purchaser and the Beneficial Owners to provide and disseminate such information as is required by the SEC Rule and as further set forth in the Disclosure Agreement for the Series 2002 Bonds, which are incorporated herein by reference. Such covenant shall be for the benefit of and enforceable by the Authority and the Beneficial Owners. Section 1202. Failure to Comply with Continuing Disclosure Requirements. In the event the City fails to comply in a timely manner with its covenants contained in the preceding section, the Authority and/or any Beneficial Owner may make demand for such compliance by written notice to the City. In the event the City does not remedy such noncompliance within 10 days of receipt of such written notice, the Authority or any Beneficial Owner may in its discretion, without notice or demand, proceed to enforce compliance by a suit or suits in equity for the specific performance of such covenant or agreement contained in the preceding section or for the enforcement of any other appropriate legal or equitable remedy, as the Authority and/or any Beneficial Owner shall deem effectual to protect and enforce any of the duties of the City under such preceding section. The Authority or Beneficial Owner shall provide a copy of any such demand or notice to the Bond Insurer. ARTICLE XIII PROVISIONS RELATING TO THE BOND INSURANCE POLICY Section 1301. Consent of Bond Insurer. Any provision of this Ordinance expressly recognizing or granting rights in or to the Bond Insurer may not be amended in any manner which affects the rights of the Bond Insurer hereunder without the prior written consent of the Bond Insurer. The Bond Insurer's consent shall be required in addition to Authority consent, when required, for the execution and delivery of any supplemental Ordinance, or any amendment, supplement or change to or modification of other documents relating to the security for the Agreement Obligations. Section 1302. Notices. (a) While the Bond Insurance Policy is in effect, the City shall furnish to the Bond Insurer: (1) As soon as practicable after the filing thereof, a copy of any financial statement of the City and a copy of any audit and annual report of the City; (2) A copy of any notice to be given to the Authority, including, without limitation, notice of defeasance of the Agreement Obligations; and (3) Such additional information it may reasonably request. (b) The City shall notify the Bond Insurer of any failure of the City to provide relevant notices, certificates, etc. KMC\402708\BEL AJRE ORDINANCE 25 ~-'>-~~~-_._...~,,-_._--_._,.,.... .~_..,,~"._.^~_._.._.~---~-,------~ (c) Notwithstanding any other provision of this Ordinance, the City shall immediately notify the Bond Insurer if at any time there are insufficient moneys to make any payments of Agreement Obligations and immediately upon the occurrence of any Event of Default hereunder. (d) All notices required to be given to the Bond Insurer under this Ordinance shall be in writing and shall be sent by registered or certified mail addressed to the Notice Address, ARTICLE XIV MISCELLANEOUS PROVISIONS Section 1401. Amendments. The rights and duties of the City and the terms and provisions of this Ordinance, may be amended or modified at any time in any respect by ordinance of the City with the written consent of the Authority, the Bond Insurer, and the Trustee, such consent to be evidenced by an instrument or instruments executed by the Bond Insurer an the Authority and duly acknowledged or proved in the manner of a deed to be recorded, and such instrument or instruments shall be filed with the Clerk, but no such modification or alteration shall: (a) alter the requirements for the written consent to any modification or alteration of the provisions of this Ordinance; or (b) permit the creation of a lien on the Revenues of the System prior to the lien of the Agreement Obligations. Without notice to or the consent of any other entity, the City may amend or supplement this Ordinance for the purpose of curing any formal defect, omission, inconsistency or ambiguity herein, to grant to or confer any additional rights, remedies, powers or authority that may lawfully be granted to or conferred, to conform this Ordinance to the Code or future applicable federal law concerning tax-exempt obligations, or in connection with any other change therein which is not materially adverse to the interests of the Authority. Every amendment or modification of the provisions of this Ordinance, to which the written consent ofthe Bond Insurer, the Authority and Trustee is given, as above provided, shall be expressed in a resolution adopted by the governing body of the City amending or supplementing the provisions of this Ordinance and shall be deemed to be a part of this Ordinance. A certified copy of every such amendatory or supplemental ordinance, if any, and a certified copy of this Ordinance shall always be kept on file in the office of the Clerk, shall be delivered to the Bond Insurer and shall be made available for inspection by the Authority and Trustee or a prospective purchaser or owner of any Series 2002 Bond. Any and all modifications made in the manner hereinabove provided shall not become effective until there has been filed with the Clerk a copy of the resolution of the City hereinabove provided for, duly certified, as well as proof of any required consent to such modification by the Authority, Trustee, the Bond Insurer and the Owners of the Series 2002 Bonds then Outstanding. Section 1402. Notices, Consents and Other Instruments. Any notice, consent, request, direction, approval or other instrument to be signed and executed by the Authority, Trustee, or Bond Insurer may be in any number of concurrent writings of similar tenor and may be signed or executed by such Authority in person or by agent appointed in writing. Proof of the execution of any such instrument or of the writing appointing any such agent, if made in the following manner, shall be sufficient for any of the KMC\402708\BEL AIRE ORDINANCE 26 '-"~_'___'C""'<'-'_'_~"_""_~_'.'M_'~_'~'""'~__'~''"''~.____~'___~__~__ purposes of this Ordinance, and shall be conclusive in favor of the City with regard to any action taken, suffered or omitted under any such instrument, namely: The fact and date of the execution by any person of any such instrument may be proved by a certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such instrument acknowledged before such officer the execution thereof, or by affidavit of any witness to such execution. Section 1403. Notices. Any notice, request, complaint, demand or other communication required or desired to be given or filed under this Ordinance shall be in writing, given to the Notice Representative at the Notice Address and shall be deemed duly given or filed if the same shall be: (a) duly mailed by registered or certified mail, postage prepaid; or (b) communicated via fax, with electronic or telephonic confirmation of receipt. Copies of such notices shall also be given to the Authority, Trustee and the Bond Insurer. The City, the Authority, Trustee and the Bond Insurer may from time to time designate, by notice given hereunder to the others of such parties, such other address to which subsequent notices, certificates or other communications shall be sent. All notices given by: (a) certified or registered mail as aforesaid shall be deemed duly given as of the date they are so mailed; (b) fax as aforesaid shall be deemed duly given as of the date of confirmation of receipt. If, because of the temporary or permanent suspension of regular mail service or for any other reason, it is impossible or impractical to mail any notice in the manner herein provided, then such other form of notice as shall be made with the approval of the Paying Agent shall constitute a sufficient notice. Section 1404. Inconsistent Provisions. In case anyone or more of the provisions of this Ordinance shall for any reason be inconsistent with the provisions of any ordinance or resolution authorizing any Additional Indebtedness, the provisions of this Ordinance shall prevail so long as any Agreement Obligations are Outstanding. Section 1405. Further Authority. The officers and officials of the City, including the Mayor and Clerk, are hereby authorized and directed to execute all documents and take such actions as they may deem necessary or advisable in order to carry out and perform the purposes of this Ordinance and to make ministerial alterations, changes or additions in the foregoing agreements, statements, instruments and other documents herein approved, authorized and confirmed which they may approve, and the execution or taking of such action shall be conclusive evidence of such necessity or advisability. Section 1406. Severability. If any section or other part of this Ordinance, whether large or small, is for any reason held invalid, the invalidity thereof shall not affect the validity of the other provisions of this Ordinance. Section 1407. Governing Law. This Ordinance shall be governed exclusively by and construed in accordance with the applicable laws of the State. Section 1408. Effective Date. This Ordinance shall take effect and be in full force from and after its passage by the governing body of the City. [BALANCE OF THIS P AGE INTENTIONALLY LEFT BLANK] KMC\402708\BEL AIRE ORDINANCE 27 ~.~_.~--~-_..._~-_._~._.~.,.._.._'"-~_._--_._-~~~--- PASSED by the governing body of the City on February 19, 2002, and APPROVED AND SIGNED by the Mayor. ""Ace AJli#, ~ v___"_,~ ( (' (s~~'[~~)\~\ '~'>. " r~t)'1 '" ,f. \ . . v "', _,,--- r' '\ ~ ~. J<\ I '(:"\K'~ \ \,\" ':. ~ : A'EfESn', I ;\'._\.\~"'. I ,. \ ,~\.,.'., \~ \ /:/ \.':>, \' 1,./ -" \;.\\\\ ,\ t\. ,', '. , \. ."\' ..... , h,." ,,' t. \ ~~Y'. ~r::~ <..........,.;,......" CERTIFICATE I, the undersigned, hereby certity that the above and foregoing is a true and correct copy of the Ordinance No. 3~S- (the "Ordinance") of The City of Bel Aire, Kansas, passed by the governing body on February 19, 2002 as the same appears of record in my office, and that this Ordinance has not been modified, amended or repealed and is in full force and effect as of this date. DATED: February 19,2002. ~/~ lerk KMC\402708\BEL AIRE ORDINANCE 28