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HomeMy Public PortalAbout11874O R D I N A N C E NO. 11874 AN ORDINANCE, authorizing the execution and delivery of certain documents by and on behalf of The Metropolitan St. Louis Sewer District (the “District”) in connection with the financing of sewer improvements for Subdistrict No. 99048 (West Watson Road- Nanell Lane) (the “Project”) through a loan from the Missouri Department of Natural Resources (the “MDNR”), and authorizing certain other actions pursuant thereto; and repealing Ordinance No. 11666. WHEREAS, the District was created pursuant to a Plan (the “Plan”) adopted by the voters of the City of St. Louis, Missouri and of St. Louis County, Missouri, at a special election held on February 9, 1954, and the governing plan was amended on November 7, 2000, all as provided and authorized by Sections 30(a) and (b) of Article VI of the Constitution of the State of Missouri; and WHEREAS, pursuant to Article 9 of the Plan, the District is authorized to make sewer improvements in special benefit subdistricts, to be paid for by the levying of special benefit assessments against the real property benefited by the construction of such improvements; and WHEREAS, Subdistrict No. 99048 (West Watson Road - Nanell Lane) (the “Subdistrict”) was formed by Ordinance No. 10973, adopted on June 14, 2001, following submission of a petition from interested property owners in September 1998; and WHEREAS, the District has undertaken the planning, acquisition, construction, improvement, repair, rehabilitation and extension of sewer improvements within Subdistrict No. 99048 (West Watson Road - Nanell Lane) including related appurtenances and facilities and extensions, improvements, additions and enlargements made or acquired by the District (the “Project”), and has applied for a loan from the MDNR in the principal amount not to exceed Five Hundred Thirty-Five Thousand Six Hundred Dollars ($535,600.00) (the “Loan”) to finance a portion of the costs of the Project; and WHEREAS, on March 8, 2001, the District adopted Ordinance No. 10928 providing procedures for the levying of special benefit assessments against real property benefited by the construction of sewer improvements to be paid by such special benefit assessments; and WHEREAS, on September 13, 2001, the District adopted Resolution No. 2422 declaring the necessity of an improvement consisting of the construction of lateral sanitary sewers in an area designated Subdistrict No. 99048 (West Watson Road - Nanell Lane), and provided that the cost of such improvement shall be paid for by Special Tax Bills or other evidence of special benefit assessments levied on all land benefited by such construction, whether public or private, exclusive or streets, roads and alleys within such Subdistrict; and WHEREAS, on October 11, 2001, the District adopted Resolution No. 2423 declaring the Project to be in the public interest and directed the Subdistrict to proceed to construction at the expense of the Subdistrict; and WHEREAS, final construction drawings and specifications have been prepared, and the District awarded the construction contract on July 8, 2004, by Ordinance No. 11777; and WHEREAS, it is the desire and intent of the District to authorize the execution and delivery of certain agreements and other documents necessary to evidence the Loan from MDNR to finance a portion of the cost of the Project; and WHEREAS, prior to the award of the construction contract, the District previously approved Ordinance No. 11666 on January 8, 2004, authorizing a loan for the Project and the execution of certain documents in substantially the form attached thereto, however, the form of said documents has been modified, and the District wishes to repeal said Ordinance No. 11666 in its entirety and to approve the Loan and the form of documents attached hereto pursuant to this Ordinance; NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF TRUSTEES OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT: Section One. The District does hereby authorize and approve the execution and delivery of all documents necessary or desirable in connection with evidencing the Loan from MDNR in connection with the Project, including but not necessarily limited to, the following: a. Financing Agreement dated as of the first day of the month in which the Loan is closed (the “Dated Date”), between the District and MDNR in substantially the form attached hereto as Exhibit A with such changes therein not inconsistent with the provisions of this Ordinance and which are approved by the officers of the District executing the Financing Agreement, such officers’ signatures thereon being conclusive evidence of their approval thereof. b. Escrow Trust Agreement dated as of the Dated Date, between the District and the Escrow Agent appointed in Section 5, in substantially the form attached hereto as Exhibit B with such changes therein not inconsistent with the provisions of this Ordinance and which are approved by the officers of the District executing the Escrow Trust Agreement, such officers’ signatures thereon being conclusive evidence of their approval thereof. Section Two. The Loan shall bear interest at an annual rate equal to 30% of the Twenty-five Revenue Bond Index as published in the Bond Buyer, immediately prior to the closing of the Loan, rounded to the nearest 0.1% (computed on the basis of a 360-day year of twelve 30-day months) and shall be payable in installments as more fully described in the Financing Agreement. The Loan shall not constitute an indebtedness of the District, the City of St. Louis, Missouri, St. Louis County, Missouri, or the State of Missouri within the meaning of any constitutional, statutory or charter debt limitation or restriction. The obligation of the District to make payments under the Financing Agreement is subject to annual appropriation as provided therein. Section Three. The Executive Director of the District is hereby authorized to execute and deliver, for and on behalf of and as the act and deed of the District, the Financing Agreement and the Escrow Trust Agreement and to execute such other documents, certificates and instruments as may be necessary or desirable to carry out and comply with the intent of this Ordinance. The Secretary- Treasurer of the District is hereby authorized to attest to the execution of, and to affix the District’s official seal to, the Financing Agreement, the Escrow Trust Agreement and any other documents, certificates and instruments as may be necessary or desirable to carry out and comply with the intent of this Ordinance. Section Four. The District shall, and the Executive Director and the Secretary-Treasurer are hereby authorized to, take such further actions and execute such other documents as may be necessary or desirable to carry out and comply with the intent of this Ordinance, and to carry out, comply with and perform the duties of the District with respect to the Financing Agreement, the Escrow Trust Agreement and all other documents, certificates and instruments in connection with the Loan. Section Five. The District hereby appoints the Hardwick Law Firm, L.L.C. and Gilmore & Bell, P.C. as special co-counsel in connection with this financing; and appoints Commerce Bank, N.A., as the Escrow Agent to administer funds under the Escrow Trust Agreement. Section Six. Ordinance No. 11666 is hereby repealed in its entirety. The foregoing Ordinance was adopted October 14, 2004. (EXHIBIT A) =============================================== FINANCING AGREEMENT Dated as of November 1, 2004 between MISSOURI DEPARTMENT OF NATURAL RESOURCES and THE METROPOLITAN ST. LOUIS SEWER DISTRICT relating to Subdistrict No. 99048 (West Watson Road – Nanell Lane) =============================================== (i) FINANCING AGREEMENT Table of Contents Page Parties ........................................................................................................................... 1 Recitals ......................................................................................................................... 1 ARTICLE I DEFINITIONS Section 1.1. Definitions .................................................................................................................. 2 Section 1.2. Rules of Interpretation .............................................................................................. 6 ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS Section 2.1. Representations, Warranties and Covenants of the District ................................. 7 Section 2.2. Representations by MDNR .................................................................................... 10 ARTICLE III EXECUTION OF AGREEMENT; DISBURSEMENTS Section 3.1. Execution and Delivery of Agreement ................................................................. 11 Section 3.2. Maximum Amount of Loan .................................................................................... 11 Section 3.3. Disbursements .......................................................................................................... 12 Section 3.4. Completion of Project and Initiation of Operations ............................................ 12 Section 3.5. Completion of Disbursements ................................................................................ 12 ARTICLE IV LOAN PROVISIONS Section 4.1. The Loan; Loan Term; Loan Payments; Prepayment ......................................... 13 Section 4.2. Termination of Loan Term ..................................................................................... 14 Section 4.3. Continuation of Loan Term .................................................................................... 14 Section 4.4. Non-Appropriation .................................................................................................. 14 Section 4.5. Loan Payments and Additional Payments Are Current Expenses ..................... 15 Section 4.6. Establishment of Funds and Accounts with Paying Agent. ................................. Section 4.7. Disposition of Loan Proceeds and Other Moneys ............................................... 15 Section 4.8. Application of Moneys in the Project Loan Fund ............................................... 15 Section 4.9. Loan Payments and Additional Payments ............................................................ 15 Section 4.10. Debt Service Reserve Fund .................................................................................... 16 Section 4.11. Investment of Moneys ............................................................................................. 16 Section 4.12. Disposition of Remaining Moneys ........................................................................ 16 (ii) ARTICLE V ASSIGNMENT Section 5.1. Assignment of Tax Bills. ........................................................................................ 17 ARTICLE VI EVENTS OF DEFAULTS AND REMEDIES Section 6.1. Events of Default ..................................................................................................... 17 Section 6.2. Notice of Default ..................................................................................................... 18 Section 6.3. Remedies on Default ............................................................................................... 18 Section 6.4. Attorneys’ Fees and Other Expenses .................................................................... 19 Section 6.5. Application of Moneys ........................................................................................... 19 Section 6.6. No Remedy Exclusive; Waiver; Notice ................................................................ 19 ARTICLE VII MISCELLANEOUS Section 7.1. Effect of Breach ....................................................................................................... 19 Section 7.2. Termination of Agreement ..................................................................................... 19 Section 7.3. Notices ....................................................................................................................... 19 Section 7.4. Exculpatory Provision ............................................................................................. 20 Section 7.5. Amendment .............................................................................................................. 21 Section 7.6. Severability of Invalid Provisions ......................................................................... 21 Section 7.7. Execution in Counterparts ...................................................................................... 21 Section 7.8. Applicable Law ........................................................................................................ 21 Section 7.9. Binding Effect .......................................................................................................... 21 Execution S-1 Schedule 1 Loan Payment Schedule Exhibit A Form of Requisition (SRF-01) Exhibit B Applicable Federal Requirements Exhibit C Closing Certificate of District Exhibit D Opinion of Special Counsel to District Financing Agreement dated as of November 1, 2004. FINANCING AGREEMENT THIS FINANCING AGREEMENT (this “Financing Agreement” or “Agreement”), dated as of November 1, 2004, between the MISSOURI DEPARTMENT OF NATURAL RESOURCES, a department of the State of Missouri (“MDNR”), and THE METROPOLITAN ST. LOUIS SEWER DISTRICT (the “District”), a body corporate, a municipal corporation and a political subdivision duly organized and existing under the Constitution and laws of the State of Missouri and the District’s Plan approved by the voters for its government. RECITALS 1. The Federal Water Quality Act of 1987, 33 U.S.C. Section 1381 et seq. (the “Federal Act”), authorizes the Administrator of the United States Environmental Protection Agency, including its Region VII office located in the City of Kansas City, Kansas (the “EPA”), to make capitalization grants to states for deposit in state water pollution control revolving funds to provide assistance for constructing publicly owned wastewater treatment works and for certain other purposes. 2. Section 644.122, Revised Statutes of Missouri, as amended (“RSMo”), establishes “The Water and Wastewater Loan Fund” in the Treasury of the State of Missouri and requires that all moneys received from the EPA capitalization grant program and state matching funds be deposited in The Water and Wastewater Loan Fund. 3. The Federal Act and regulatory requirements of EPA provide that The Water and Wastewater Loan Fund be operated in a manner which preserves The Water and Wastewater Loan Fund in perpetuity for the designated purposes thereof and thereby provide necessary and ongoing assistance to communities to attain and maintain compliance with the Federal Act. 4. In furtherance of the requirements to preserve The Water and Wastewater Loan Fund in perpetuity MDNR has entered into the Operating Agreement dated June 15, 1989, as amended (the “Operating Agreement”) with EPA under which MDNR and its management of The Water and Wastewater Loan Fund are required to meet certain operational requirements and are subject to annual oversight reviews by EPA. 5. Pursuant to 10 CSR 20-4.040 through 10 CSR 20-4.050 of the Code of State Regulations, MDNR, in cooperation with the Clean Water Commission of the State of Missouri (the “Clean Water Commission”), has developed and implemented the Missouri Direct Loan State Water Pollution Control Revolving Fund Program (the “SRF Direct Loan Program”) and has stated its intent to make loans to political subdivisions of the State of Missouri. 6. The Clean Water Commission has approved a loan to the District from The Water and Wastewater Loan Fund to be made by MDNR pursuant to this Agreement. 2 Financing Agreement dated as of November 1, 2004. 7. The Loan will be made to the District to finance the Project described below. 8. MDNR and the District have determined to enter into this Agreement for the purposes of financing the Project and setting forth their covenants and agreements respecting the application of the proceeds of the Loan to finance the Project, in satisfaction of the obligations of MDNR under the Federal Act and EPA guidance to preserve The Water and Wastewater Loan Fund in perpetuity. AGREEMENT ARTICLE I DEFINITIONS Section 1.1. Definitions. In addition to words and terms defined elsewhere in this Agreement, the following words and terms as used in this Agreement shall have the following meanings, unless a different meaning clearly appears from the context: “Account” means any of the accounts established by Section 4 of the Escrow Agreement. “Actual Reimbursement Amount” means the amount of a Requisition approved for payment in accordance with Section 3.3(b). “Additional Interest” means additional interest on the Loan prior to the Completion of Disbursements in an amount equal to investment earnings on moneys in the Project Loan Fund in excess of investment earnings thereon calculated at the interest rate on the Loan, computed by the Paying Agent on a semiannual basis, commencing May 1, 2005. All references in this Agreement to the payment of interest on the Loan shall include any Additional Interest then due and payable. “Additional Payments” means the Administrative Fee, the Paying Agent’s fees and expenses and the extraordinary fees and expenses of the Paying Agent, if any. “Administrative Expense Fund” means the fund so designated and established by Section 4 of the Escrow Agreement, which Administrative Expense Fund shall not constitute part of the SRF Direct Loan Program. “Administrative Fee” means the administrative fee of MDNR in an amount equal to 0.50% per annum of the aggregate amount of the Loan outstanding as of each Administrative Fee Calculation Date for so long as the Loan is outstanding (including the maturity date thereof), payable to the Paying Agent no later than the 15th day after each Administrative Fee Calculation Date for deposit to the Administrative Expense Fund and subsequent transfer to MDNR as described in Section 8 of the Escrow Agreement. “Administrative Fee Calculation Date” means the Business Day preceding each November 1, commencing on the Business Day preceding November 1, 2005. 3 Financing Agreement dated as of November 1, 2004. “Business Day” means any day other than a Saturday, a Sunday or any other day on which banking institutions in the State are authorized or required not to be open for the transaction of regular banking business. “Closing Date” means November 1, 2004. “Completion of Disbursements” means the date, established by the District, that no further disbursements from the Project Loan Fund will be requested, as evidenced by a written certificate executed by the District and filed with MDNR and the Paying Agent. “Consulting Engineer” means each independent engineer or engineering firm or corporation of reputation for skill and experience with respect to the design and construction of wastewater treatment, sanitary sewerage or water pollution control facilities as may from time to time be retained by the District. “Debt Service Fund” means the fund so designated and established by Section 4 of the Escrow Agreement. “Debt Service Reserve Fund” means the fund so designated and established by Section 4 of the Escrow Agreement. “Debt Service Reserve Requirement” means the amount of $53,560, subject to reduction to an amount equal to 10% of the principal amount of the Loan outstanding upon the prepayment of the Loan in part pursuant to Section 4.1(c), (d) or (e). “Disbursement” means any amount advanced from the Project Loan Fund to the District by the Paying Agent under this Agreement and Section 6 of the Escrow Agreement to pay Eligible Costs and Financing Costs. “District Representative” means the Secretary-Treasurer of the District or any other person designated in writing by a certificate executed by the Secretary-Treasurer of the District and filed with the Paying Agent and MDNR. “Eligible Costs” means Project Costs determined by MDNR to be eligible under 10 CSR 20-4.040 of the Regulations and any amendments thereto. “Escrow Agreement” means the Escrow Trust Agreement dated as of November 1, 2004, between the District and the Paying Agent, as supplemented, modified or amended in accordance with the provisions hereof and thereof. “Event of Default” means an “Event of Default” as defined in Article VI. “Excess Debt Service Reserve Amount” means the amount of the reduction in the Debt Service Reserve Requirement which results from the prepayment of the Loan in part pursuant to Section 4.1. 4 Financing Agreement dated as of November 1, 2004. “Executive Director” means the current Executive Director or Acting Executive Director of the District as appointed by the Board of Trustees. “Financing Agreement” or “Agreement” means this Financing Agreement, as supplemented or amended in accordance with the provisions hereof. “Financing Costs” means the costs related to the making of the Loan as certified by the District on the Closing Date and approved by MDNR. “Fiscal Year” means the fiscal year of the District as may be established from time to time and of which the District gives written notice to MDNR and the Paying Agent. The Fiscal Year initially is July 1 to June 30. “Fund” means any of the funds established by Section 4 of the Escrow Agreement. “Ineligible Costs” means Project Costs which are not Eligible Costs. “Initiation of Operations” means the date on which the operation (within the meaning of the Regulations and as established by MDNR) of the Project commenced. “Interest Account” means the Interest Account established for the District within the Debt Service Fund under the Escrow Agreement. “Interest Payment Date” means May 1 and November 1 of each year, beginning on May 1, 2005. “Interest Period” means each six-month period from May 1 through October 31, inclusive, and November 1 through April 30, inclusive. “Investment Securities” has the meaning set forth in the Escrow Agreement. “Loan” means the loan in the Original Principal Amount made by MDNR to the District under the SRF Direct Loan Program in accordance with this Agreement. “Loan Payment” means each amount to be paid by the District in repayment of the Loan pursuant to Section 4.1, as set forth in the Loan Payment Schedule. “Loan Payment Date” means May 1 and November 1 of each calendar year, commencing May 1, 2005. “Loan Payment Schedule” means the Loan Payment Schedule attached as Schedule 1, as the same may be modified upon the partial prepayment of the Loan pursuant to Section 4.1(c), (d) or (e). “Loan Term” means the Original Term and all Renewal Terms, but ending on the occurrence of the earliest event specified in Section 4.2. 5 Financing Agreement dated as of November 1, 2004. “Maximum Loan Term” means the Original Term and all Renewal Terms through the Renewal Term ending November 1, 2014. “Ordinance” means Ordinance No. 11874 of the District, adopted October 14, 2004, authorizing this Agreement and the Escrow Agreement. “Original Principal Amount” means $535,600. “Original Term” means the period from the Closing Date until the end of the Fiscal Year of the District in effect at the Closing Date. “Paying Agent” means Commerce Bank, N.A., Kansas City, Missouri, the paying agent and escrow agent, and its successors and assigns acting at any time as paying agent and escrow agent under this Agreement and the Escrow Agreement. “Principal Account” means the Principal Account established for the District within the Debt Service Fund under the Escrow Agreement so designated and established by Section 4 of the Escrow Agreement “Project” means the planning, acquisition, construction, improvement, repair, rehabilitation, and extension of sewer improvements within Subdistrict No. 99048 including the related appurtenances and facilities and extensions, improvements, additions and enlargements thereto made or acquired by the District; which constitute a project for which MDNR is making the Loan to the District pursuant to this Financing Agreement, with such additions, deletions, modifications or changes as may be agreed to in writing by the District and MDNR, with written notice to the Paying Agent, provided that such written notice shall specify the scope of the changes. “Project Costs” means all costs or expenses which are necessary or incident to the Project and directly attributable thereto, which consist of Eligible Costs and Ineligible Costs, if any. “Project Loan Fund” means the fund so designated and established by Section 4 of the Escrow Agreement. “Regulations” means 10 CSR 20-4.040 through 10 CSR 20-4.050 of the Code of State Regulations, as amended. “Renewal Terms” means the optional renewal terms of the Loan pursuant to Article IV, each having a duration of one year and a term co-extensive with the Fiscal Year of the District. “Requisition” means Form SRF-01, in substantially the form of Exhibit A, with such changes thereto as are approved by MDNR with written notice to the District and the Paying Agent. “State” means the State of Missouri. 6 Financing Agreement dated as of November 1, 2004. “Subdistrict” means Subdistrict No. 99048 (West Watson Road - Nanell Lane) consisting of sixty (60) properties located in St. Louis County, Missouri, formed by Ordinance No. 10973 adopted on June 14, 2001, following submission of a petition from interested property owners in September 1998. “Supplemental Agreement” means any agreement supplementing or amending this Agreement pursuant to Section 7.5. “System” means the District’s entire wastewater treatment or sanitary sewerage facilities now or hereafter owned or operated by the District for the collection, treatment or disposal of sewage. “Tax Bills” means the special tax bills to be issued by the District pursuant to Section 9.060 of the Plan of the District, Ordinance No. 10928 and Ordinance No. 10973 creating the special benefit district for the Subdistrict of the District, constituting liens on the properties of the Subdistrict charged. Section 1.2. Rules of Interpretation. (a) Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. (b) Unless the context shall otherwise indicate, the 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. (c) All references in this Agreement to designated “Articles”, “Sections” and other subsections are, unless otherwise specified, to the designated Articles, Sections and subsections of this Agreement as originally executed. (d) The words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subsection. (e) Wherever an item or items are listed after the word “including” or “include,” such listing is not intended to be a listing that excludes items not listed. (f) All approvals, notices, consents and other actions of MDNR under this Agreement (other than the execution of this Agreement and any amendments hereto) shall be executed by the Director, Financial Assistance Center, Water Protection Program (“WPP”) of MDNR or designee, such designation to be made by a written instrument filed with the District and the Paying Agent by the Director, Financial Assistance Center, WPP, or in the event this position is vacant, the Acting Director, Financial Assistance Center. 7 Financing Agreement dated as of November 1, 2004. ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS Section 2.1. Representations, Warranties and Covenants of the District. The District represents and warrants to and covenants with MDNR as follows: a. Organization and Authority. (i) The District is a body corporate, a municipal corporation and a political subdivision of the State of Missouri duly created and validly existing under and pursuant to the constitution of the State of Missouri and the Plan of the District adopted by the voters of the District for its government and has all requisite power and authority to own its properties and carry on its governmental functions as now being conducted. (ii) The District has full legal right and authority and all necessary licenses and permits required as of the date hereof to own, operate and maintain the System, to carry on its activities relating thereto, to execute and deliver this Agreement, to undertake and complete the Project, and to carry out and consummate all transactions and obligations contemplated by this Agreement. (iii) The proceedings of the District’s governing body approving this Agreement and authorizing the District to undertake and complete the Project have been duly and lawfully adopted. (iv) This Agreement and the Escrow Agreement have been duly authorized, executed and delivered by the District and constitute the legal, valid and binding obligations of the District enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights and to the exercise of judicial discretion in accordance with general principles of equity. b. Full Disclosure. To the best knowledge of the District, after due investigation, there is no fact that the District has not disclosed to MDNR in writing on the District’s application for participation in the SRF Direct Loan Program, or otherwise, that materially adversely affects or that may materially adversely affect the properties or activities of the District, or the System, or the ability of the District to make all Loan Payments, issue the Tax Bills upon the Completion of Disbursements and otherwise observe and perform its duties, covenants, obligations and agreements under this Agreement. c. Pending Litigation. To the best knowledge of the District, after due investigation, there are no proceedings pending or, to the knowledge of the District, threatened against or affecting the District, in any court or before any governmental authority or arbitration board or tribunal that, if adversely determined, would materially adversely affect the properties, activities, prospects or condition (financial or otherwise) of the District or the System, or the ability of the District to make all Loan Payments, issue the Tax Bills upon the Completion of Disbursements and 8 Financing Agreement dated as of November 1, 2004. otherwise observe and perform its duties, covenants, obligations and agreements under this Agreement, that have not been disclosed in writing to MDNR in the District’s application for participation in the SRF Direct Loan Program or otherwise. d. Compliance with Existing Laws and Agreements. The agreements of the District in this Agreement will not constitute a default under any indenture, mortgage, deed of trust, lease or agreement or other instrument executed by the District or by which it or any of its property is bound or any applicable law, rule, regulation or judicial proceeding. e. No Defaults. No event has occurred and no condition exists that constitutes or, with the giving of notice or the lapse of time, would constitute an Event of Default. To the best knowledge of the District, after due investigation, the District is not in violation of any agreement which would materially adversely affect the ability of the District to make all Loan Payments or otherwise observe and perform its agreements under this Agreement. f. Governmental Consent. To the best of its knowledge, the District has made all filings which it is obligated to make with, and has obtained all permits, licenses, franchises, consents, authorizations and approvals required to date from, all federal, state and local regulatory agencies having jurisdiction to the extent, if any, required by applicable laws and regulations to be made or to be obtained in undertaking the Project or this Agreement. To the best of its knowledge, the District has complied with all applicable provisions of law requiring any notification to any governmental body or officer in connection with this Agreement or with the undertaking, completion or financing of the Project. g. Source of Revenue. The District has established a dedicated revenue source for the payment of its obligations under this Agreement. The dedicated source of revenue includes the Tax Bills when issued and any other source of revenue lawfully available to the District for such purpose. Nothing contained in this Agreement shall be construed to constitute a pledge of any moneys or revenues of, or impose any payment obligation on, the District except as set forth in Article IV. h. Performance Under Agreement. The District covenants and agrees: (i) to comply with all applicable State and federal laws, rules and regulations in the performance of this Agreement, including federal laws and executive orders referenced in Exhibit B; and (ii) to cooperate with MDNR in the timely observance and performance of the respective duties, covenants, obligations and agreements of the District and MDNR under this Agreement. i. Completion of Project and Provision of Moneys Therefore. The District covenants and agrees: (i) to complete the Project in a timely manner; and 9 Financing Agreement dated as of November 1, 2004. (ii) to provide from its own financial resources, to the extent of legally available funds, all moneys in excess of the amount available under this Agreement required to complete the Project. j. Requests for Disbursements; Use of Proceeds. The District shall request Disbursements to pay Eligible Costs in accordance with this Agreement to the extent moneys are available in the Project Loan Fund for Disbursements in order to provide for the prompt payment of the contractors. The District will apply the Disbursements to finance a portion of the Project Costs, and, where applicable, to reimburse the District for a portion of the Project Costs, which portion was paid or incurred in anticipation of reimbursement from moneys held in the Project Loan Fund and is eligible for such reimbursement pursuant to the Regulations. All costs will be Eligible Costs which MDNR is authorized to finance pursuant to the Act and the Regulations. The District is obligated to meet its obligations to its construction contractors whether or not Disbursements are received by the District. k. Completion Required Without Regard to Sufficiency of Loan Proceeds. Subject to the provisions of the Ordinance, the District agrees to complete the Project regardless of whether or not the proceeds of the Loan are sufficient to complete the Project. l. Notice of Completion. The District agrees to provide written notice of the completion of construction and Initiation of Operation of the Project to MDNR. m. Compliance Certification. Promptly after the first anniversary of the Initiation of Operation, the District will certify to MDNR whether the Project meets the performance standards for the Project. Any statement of noncompliance must be accompanied by a corrective action report containing an analysis of the cause of the Project’s failure to meet performance standards, actions necessary to bring it into compliance and a projected date for positive certification of the Project. Timely corrective action will be implemented by the District. n. Retention of Project Records. The District will retain all records related to the Project for a minimum period of four years following the Completion of Disbursements. The District shall retain all Project records related to post-completion activities for a minimum period of four years following the repayment of the Loan. o. Operation and Maintenance of System. The District covenants and agrees that it shall, in accordance with prudent wastewater treatment utility practice and subject to applicable law, (i) at all times operate the System in an efficient manner, (ii) maintain the System in good repair, working order and operating condition over the structural and design life of the System, (iii) implement the user charge and sewer use ordinance or resolution as approved by MDNR prior to the Initiation of Operation and for the life of the System, and 10 Financing Agreement dated as of November 1, 2004. (iv) in accordance with 10 CSR 20-9.020 of the Regulations, provide a certified operator for the life of the System. p. Records and Accounts. (i) The District will keep accurate records and accounts for the System (the “System Records”) separate and distinct from its other records and accounts (the “General Accounts”). If the aggregate Disbursements made under this Agreement exceeds $500,000 during any Fiscal Year of the District, the District will complete an audit of its System Records for the Fiscal Year in accordance with OMB Circular No. A−133, Audits of States, Local Governments, and Non-Profit Organizations (which has replaced OMB Circular No. A-128). The System Records and General Accounts will be available for inspection by MDNR at any reasonable time, and a copy of the District’s annual audit, including all written comments and recommendations of the accountant, will be furnished to MDNR within the time period provided in OMB Circular No. A−133. (ii) The District will maintain the System Records in accordance with generally accepted accounting principles as codified in the Governmental Accounting Standards Board’s Codification of Governmental Accounting and Financial Reporting Standards (Codification). q. Inspections; Information. The District will permit EPA, MDNR and any party designated by MDNR to examine, visit and inspect the Project at any reasonable time, and to inspect and make copies of any accounts, books and records, including (without limitation) its records regarding receipts, disbursements, contracts, investments, financial standing and other related matters, and will supply such reports and information as EPA and MDNR may reasonably require in that connection. r. Insurance. The District will carry and maintain such reasonable amount of all risk insurance on the properties and operations of the System as would be carried by similar municipal operators of wastewater treatment facilities, insofar as the properties are of an insurable nature. s. Notice of Material Adverse Change. The District will promptly notify the Paying Agent and MDNR of any material adverse change in the activities, prospects or condition (financial or otherwise) of the System, or in the ability of the District to make all Loan Payments and otherwise observe and perform its duties, covenants, obligations and agreements under this Agreement. Section 2.2. Representations by MDNR. MDNR represents to and covenants with the District, as follows: a. MDNR is a department of the State and a governmental instrumentality duly organized and existing under the laws of the State with lawful power and authority to enter into this Agreement acting by and through its duly authorized officers. 11 Financing Agreement dated as of November 1, 2004. b. MDNR is the State’s administrative body responsible for the enforcement and management of the SRF Direct Loan Program. c. The execution, delivery and performance of this Agreement by MDNR will not result in a breach of any of the terms of, or constitute a default under, any indenture, mortgage, deed of trust, lease or agreement or other instrument to which MDNR is a party or by which it or any of its property is bound or any applicable law, rule or regulation. d. MDNR will, in a timely manner, process Requisitions in accordance with this Agreement. e. MDNR acknowledges and consents to the form and substance of the Escrow Agreement. ARTICLE III EXECUTION OF AGREEMENT; DISBURSEMENTS Section 3.1. Execution and Delivery of Agreement. Simultaneously with the execution of this Agreement, the District will deliver to MDNR and the Paying Agent each of the following: (a) a copy of the Ordinance, certified as true and correct by the Secretary- Treasurer of the District; (b) a certificate of the District executed by a District Representative (in the form attached hereto as Exhibit C); (c) a signed copy of the opinion of special counsel to the District (in the form attached hereto as Exhibit D); (d) a signed opinion of general counsel to the District (in the form attached as Exhibit E); and (e) an executed counterpart of the Agreement, or a copy thereof certified as true and correct by the Secretary-Treasurer of the District. Section 3.2. Maximum Amount of Loan. Subject to all of the terms, provisions and conditions of this Agreement, including particularly Article IV, MDNR will make the Loan to the District in the maximum amount equal to the Original Principal Amount to pay all or a portion of the Eligible Costs of the Project and, if applicable, subject to the written approval of MDNR, Financing Costs. The Original Principal Amount of the Loan may be reduced without revision of any other terms, provisions or conditions of this Agreement to reflect reductions in the estimated or actual total Eligible Costs as impacted by opening of bids, changes in the Project approved by MDNR, final actual Eligible Costs and prepayments. 12 Financing Agreement dated as of November 1, 2004. Section 3.3. Disbursements. (a) Disbursements from the Project Loan Fund will be made in accordance with this Section and Section 6 of the Escrow Agreement. Disbursements can be requested only once each calendar month. The District will deliver, by overnight delivery service, first class mail or other similar means, a completed Requisition to MDNR and the Paying Agent. The Requisition must be executed by the District Representative, set forth the amounts due and payable to the payees identified in signed invoices or statements attached to the Requisition as submitted to MDNR and contain such additional information as MDNR may request. The execution and delivery of a Requisition shall be deemed to be a representation by the District that, to the best knowledge of the District, the amounts for which a Disbursement is requested are due and payable and constitute Eligible Costs. (b) MDNR will undertake a full review of a Requisition within ten Business Days after the receipt thereof to determine if any Project Costs are Ineligible Costs. This determination shall be conclusive and binding on all parties. By the close of business on the tenth Business Day following the receipt of a Requisition, MDNR will notify the Paying Agent of MDNR’s approval of the Requisition in whole or in part by transmitting to the Paying Agent the approved Requisition by facsimile transmission. The approved Requisition will not be accompanied by applicable vouchers and statements. The Paying Agent will pay the Actual Reimbursement Amount, as set forth in each Requisition from moneys available for such purpose, to the District within five Business Days after the Paying Agent’s receipt of the approved Requisition. MDNR will not approve any Disbursement upon an Event of Default by the District, an event of non-appropriation by the District or the issuance of a stop-work order by EPA or MDNR. (c) Any proceeds remaining in the Project Loan Fund on the Completion of Disbursements, shall be applied to prepay the Loan in accordance with Section 4.1(c). Section 3.4. Completion of Project and Initiation of Operations. The completion of construction of the Project shall be evidenced to the Paying Agent and MDNR by a certificate signed by the District Representative stating (i) that the construction of the Project has been completed in accordance with the plans and specifications therefor, (ii) that all costs and expenses incurred in the construction of the Project have been paid except costs and expenses the payment of which is not yet due or is being retained or contested in good faith by the District, (iii) the Initiation of Operation, and (iv) that the Project meets NPDES permit limits, if applicable. This certificate must be accompanied by a certification by the Consulting Engineer that the Project meets NPDES permit limits, if applicable. This certificate may state that it is given without prejudice to any rights of the District against third parties which exist at the date of the certificate or which may subsequently come into being. Section 3.5. Completion of Disbursements. The Completion of Disbursements will be the date of a certificate, signed by the District Representative and delivered to the Paying Agent and MDNR, stating that no further disbursements from the Project Loan Fund will be requested by the District. The District agrees that it will request no further disbursements following execution by it of such certificate. 13 Financing Agreement dated as of November 1, 2004. Section One. ARTICLE IV LOAN PROVISIONS Section 4.1. The Loan; Loan Term; Loan Payments; Prepayment. (a) MDNR will make the Loan to the District on the Closing Date by depositing the Original Principal Amount with the Paying Agent for deposit in the Project Loan Fund and the Debt Service Reserve Fund, as provided in the Escrow Agreement. The Loan will bear interest at the annual interest rate of ____%, plus Additional Interest, from the Closing Date, and will be for the Original Term, subject to renewal for successive Renewal Terms as provided in paragraph (b). The Loan is subject to repayment and prepayment in accordance with this Article IV. (b) Subject to the terms, provisions and conditions of this Agreement, including this Article IV, the District will repay the Loan by making Loan Payments during the Loan Term as provided in Section 4.9. A portion of Loan Payments due on each Principal Payment Date constitutes interest and a portion constitutes principal. The interest component and the principal component of each Loan Payment is designated in the Loan Payment Schedule. The Original Term of the Loan will commence on the Closing Date and will terminate on June 30, 2005, the last day of the District’s current Fiscal Year. The Loan Term may be continued, solely at the option of the District, at the end of the Original Term or any Renewal Term for an additional Renewal Term up to the Maximum Loan Term. At the end of the Original Term and at the end of each Renewal Term until the Maximum Loan Term has been completed, the District will be deemed to have exercised its option to continue the Loan Term for the next Renewal Term unless the District has terminated this Agreement pursuant to Section 4.2. The terms and conditions of the Loan during any Renewal Term shall be the same as the terms and conditions during the Original Term, except that the Loan Payments for each Renewal Term will be in the amounts set forth in the Payment Schedule. (c) The Loan will be prepaid in part, in an amount equal to the amount remaining on deposit in the Project Loan Fund upon the receipt by the Paying Agent of the Certificate of the District establishing the Completion of Disbursements, on the earliest practicable date for which notice may be given, without prepayment penalty, plus accrued interest to the date of prepayment. (d) The Loan will be prepaid in part upon the District’s receipt of the prepayment of a Tax Bill, on the earliest practicable date for which notice may be given, without prepayment penalty, plus accrued interest to the date of prepayment. (e) At the option of the District, the Loan may be prepaid in whole or in part on any Interest Payment Date without prepayment penalty, plus accrued interest thereon to the date of prepayment. (f) Notice of any prepayment must be given by the Paying Agent on behalf of the District by mailing a copy of an official prepayment notice to MDNR by first class mail, postage 14 Financing Agreement dated as of November 1, 2004. prepaid, at least 15 days, but not more than 30 days, prior to the date fixed for prepayment. All official notices of prepayment shall be dated and shall state (i) the prepayment date, (ii) the principal amount of the Loan being prepaid, and (iii) the amount of accrued interest on such principal prepaid. Unless waived, the District shall give the Paying Agent written notice of the prepayment date not less than 10 days prior to the date that the Paying Agent is required to mail MDNR the prepayment notice. (g) Upon the prepayment of the Loan in part, the Loan Payment Schedule will be modified by MDNR, without the prior written consent of the District, in a written instrument delivered to the Paying Agent and the District. Section 4.2. Termination of Loan Term. The Loan Term shall terminate upon the earliest of any of the following events: (a) the expiration of the Original Term or any Renewal Term and the non- renewal of the Loan in the event of non-appropriation of funds pursuant to Section 4.4; (b) a default by the District and MDNR’s election to terminate this Agreement under Article VI; or (c) the payment by the District of all Loan Payments authorized or required to be paid by the District during the Maximum Loan Term. Section 4.3. Continuation of Loan Term. The District currently intends, subject to the provisions of Section 4.4, to continue the Loan Term through the Original Term and all Renewal Terms and to pay the Loan Payments. The District reasonably believes that legally available funds will be available in an amount sufficient to make the Loan Payments and the Additional Payments during the Original Term and each of the Renewal Terms. The District currently intends to do all things lawfully within its power to obtain and maintain funds from which the Loan Payments and the Additional Payments may be made, including making provision for such payments to the extent necessary in each proposed annual budget submitted for approval in accordance with applicable procedures of the District and to exhaust all available reviews and appeals in the event such portion of the budget is not approved. Notwithstanding the foregoing, the decision whether or not to appropriate funds or to extend the Loan for any Renewal Term is solely within the discretion of the then-current governing body of the District. Section 4.4. Non-Appropriation. The obligation of the District to make Loan Payments and Additional Payments are limited to such funds as may lawfully budgeted and appropriated by the District for that purpose for the District’s then current Fiscal Year. If sufficient funds are not appropriated or are not otherwise legally available to make the Loan Payments due in the next Renewal Term, the Loan will be deemed to be terminated at the end of the then current Original Term or Renewal Term. The District agrees to deliver notice to the Paying Agent and MDNR of termination within one week after the approval of the District’s budget for the Fiscal Year by the governing body of the District, but failure to give this notice will not extend the Loan Term beyond the Original Term or Renewal Term. 15 Financing Agreement dated as of November 1, 2004. Section 4.5. Loan Payments and Additional Payments Are Current Expenses. The obligations of the District to pay Loan Payments and Additional Payments constitute a current expense of the District, are from Fiscal Year to Fiscal Year and do not constitute a mandatory payment obligation of the District in any Fiscal Year beyond the then current Fiscal Year of the District. The District’s obligations under this Agreement and the Escrow Agreement will not in any way be construed to be a debt of the District in contravention of any applicable constitutional, statutory or charter limitation or requirement concerning the creation of indebtedness by the District, nor will anything contained in this Agreement or the Escrow Agreement constitute a pledge of the general credit, tax revenues, funds or moneys of the District. Section 4.6. Establishment of Funds and Accounts with Paying Agent. The District hereby agrees to cause to be created and established the following special funds and accounts, each of which will be held by the Paying Agent under the Escrow Agreement: (a) Debt Service Fund, consisting of a Principal Account and an Interest Account; (b) Project Loan Fund; (c) Debt Service Reserve Fund; and (d) Administrative Expense Fund. Section 4.7. Disposition of Loan Proceeds and Other Moneys. The proceeds of the Loan in the Original Principal Amount will be deposited on the Closing Date with the Paying Agent. The Paying Agent shall deposit $482,040 in the Project Loan Fund and $53,560 in the Debt Service Reserve Fund, which moneys shall be disbursed in accordance with this Agreement and Sections 6 and 7 of the Escrow Agreement. Section 4.8. Application of Moneys in the Project Loan Fund. (a) Moneys in the Project Loan Fund will be disbursed to the District for the sole purpose of paying Eligible Costs and for paying the costs and expenses incident to the Loan. (b) Requisitions shall be submitted for withdrawals from the Project Loan Fund in accordance with Article III, and accompanied by a certificate executed by the District Representative that such payment is being made for a purpose within the scope of this Agreement and that the amount of such payment represents only the contract price of the property, equipment, labor, materials or service being paid for or, if such payment is not being made pursuant to an express contract, that such payment is not in excess of the reasonable value thereof. Section 4.9. Loan Payments and Additional Payments. (a) The District will repay the Loan by making Loan Payments on each Loan Payment Date (or if that day is not a Business Day, the next succeeding Business Day), with the interest portion of each Loan Payment and the Additional Interest deposited to the Interest Account and the principal portion deposited to the Principal Account, provided that an amount equal to the moneys 16 Financing Agreement dated as of November 1, 2004. remaining in the Debt Service Fund after the payment of Loan Payment to MDNR on an Interest Payment Date shall be credited against the next Loan Payment due after that Interest Payment Date, and an amount equal to actual investment earnings on moneys in the Project Loan Fund (other than an amount equal to Additional Interest) and the Debt Service Reserve Fund will be credited against the Loan Payments due on and prior to the next Interest Payment Date on a pro rata basis. (b) The District will pay the Additional Payments on each Interest Payment Date to the Paying Agent for deposit to the Administrative Expense Fund, upon receipt of an invoice for the Additional Payments from the Paying Agent. Section 4.10. Debt Service Reserve Fund. (a) On the Closing Date an amount equal to the Debt Service Reserve Requirement will be deposited in the Debt Service Reserve Fund from proceeds of the Loan. (b) The Paying Agent is authorized to transfer from the Debt Service Reserve Fund the amount of the deficiency in any Loan Payment or other payment on any date specified in Section 4.9(b) pursuant to the Escrow Agreement, at the written direction of MDNR. If the Loan is terminated at the end of the then current Original Term or Renewal Term in accordance with Section 4.4, moneys then on deposit in the Debt Service Reserve Fund will be transferred by the Paying Agent prior to the end of the then current Original Term or Renewal Term, to the Interest Account to the extent of interest then due and payable on the Loan and the balance to the Principal Account. On the date on which the Loan is prepaid in part pursuant to Section 4.1, the Paying Agent will transfer the Excess Debt Service Reserve Amount to the District. (c) If at any time a transfer is made from the Debt Service Reserve Fund pursuant to the first sentence of paragraph (b), the District will pay the amount transferred within 30 days of such transfer to the Paying Agent for deposit into the Debt Service Reserve Fund. (d) At the written direction of the District, moneys in the Debt Service Reserve Fund will be used to make the final Loan Payments in inverse order of their due dates. Any amounts in the Debt Service Reserve Fund in excess of the Debt Service Reserve Requirement on any Interest Payment Date will be transferred to the Interest Account. Section 4.11. Investment of Moneys. Moneys held by the Paying Agent in the Funds and Accounts established pursuant to the Escrow Agreement shall be invested at the written direction of the District in Investment Securities in accordance with Section 10 of the Escrow Agreement. All earnings on any investments held in any Fund or Account shall be credited to Funds and Accounts as provided in Section 10 of the Escrow Agreement, for further application as provided in Sections 6 and 7 thereof. In determining the amount held in any Fund or Account under any of the provisions of this Agreement, obligations will be valued at the lower of the cost or the market value thereof. Section 4.12. Disposition of Remaining Moneys. Following the payment in full of the Loan and the payment of the Additional Payments, the Paying Agent will transfer the remaining 17 Financing Agreement dated as of November 1, 2004. balances in the Principal Account, the Interest Account and the Debt Service Reserve Fund to the District. Section Two. ARTICLE V ASSIGNMENT Section 5.1. Assignment of Tax Bills. To secure the repayment of the Loan in full, upon the issuance of the Tax Bills the District will assign all of its right, title and interest in the Tax Bills to MDNR. The District will execute any documentation reasonably requested by MDNR to perfect the security interest of MDNR in the Tax Bills. Section Three. ARTICLE VI EVENTS OF DEFAULTS AND REMEDIES Section 6.1. Events of Default. Any of the following events will be an “Event of Default” under this Agreement: (a) failure by the District to pay, or cause to be paid, any Loan Payment required to be paid when due pursuant to Article IV; (b) failure by the District to observe and perform any agreement on its part to be observed or performed under this Agreement, other than as referred to in paragraph (a), and the continuation of the failure for a period of 30 days after written notice is given pursuant to Section 6.2; except if the failure stated in the notice is correctable but cannot be corrected within the applicable period and corrective action is instituted and diligently pursued by the District, MDNR may not unreasonably withhold its consent to an extension to the date which is 90 days after the delivery of the original notice; (c) any representation made by or on behalf of the District contained in this Agreement or in any instrument furnished in compliance with or with reference to this Agreement, is determined by MDNR to be false or misleading in any material respect; (d) a petition is filed by or against the District under any federal or state bankruptcy or insolvency law or other similar law, unless any petition filed against the District is dismissed within 30 days after such filing and the dismissal is final and not subject to appeal; and (e) the District generally fails to pay its debts as they become due. Notwithstanding anything in this Agreement to the contrary, if any condition, event or act which, with the giving of notice or the passage of time, or both, would constitute an Event of 18 Financing Agreement dated as of November 1, 2004. Default under this Agreement occurs, MDNR in its sole discretion, with written notice to the District and the Paying Agent, may refrain from approving Disbursements. Section 6.2. Notice of Default. The District shall give the Paying Agent and MDNR prompt telephonic notice of the occurrence of any Event of Default referred to in Section 6.1(d) or (e) and of the occurrence of any other event or condition which, with the passage of time or the giving of notice, or both, would constitute an Event of Default. Telephonic notice will be immediately followed by written notice of the Event of Default. Notice of default given to the District by MDNR will specify the event or condition, state that the event or condition constitutes an Event of Default if not remedied, and request that the event or condition be remedied. Except as provided in the first sentence of this Section, notice will be given in the manner provided in Section 7.3. Section 6.3. Remedies on Default. Whenever an Event of Default referred to in Section 6.1 shall have occurred and be continuing, MDNR shall have the right, by written notice to the District, with a copy to the Paying Agent, (a) to declare all Loan Payments and other amounts payable by the District under this Agreement to the end of the then current Original Term or Renewal Term to be due; (b) to apply moneys in the Debt Service Reserve Fund to the remaining balance of the Loan; (c) by mandamus or other suit, action or proceedings at law or in equity to enforce the rights of MDNR against the District and its officers, agents and employees, and to require and compel duties and obligations required by the provisions of this Agreement or by the constitution and laws of the State; (d) by suit, action or other proceedings in equity or at law to require the District, its officers, agents and employees to account as if they were the trustees of an express trust; (e) by suit, action or other proceedings in equity or at law to enjoin any acts or things which may be unlawful or in violation of the rights of MDNR; (f) to withhold approval of any Disbursement; and (g) to take such action as otherwise provided by law; provided, however, that any amounts payable by the District are expressly limited by the provisions of Article IV. 19 Financing Agreement dated as of November 1, 2004. Section 6.4. Attorneys’ Fees and Other Expenses. (a) To the extent permitted by law, upon (i) an Event of Default or (ii) the occurrence and continuance of any event which, with the giving of notice or lapse of time or both, would constitute an Event of Default, the District, on demand, will pay to the Paying Agent and MDNR the reasonable fees and expenses of attorneys and other reasonable fees, costs and expenses (including the reasonably allocated costs of in-house counsel and legal staff) incurred by the Paying Agent and MDNR in the collection of Loan Payments or the enforcement of any agreements of the District. (b) Prior to incurring any fees, costs and expenses, the Paying Agent and MDNR will provide written notice to the District that it intends to incur fees, costs and expenses. Failure by the Paying Agent or MDNR to give the notice will not affect the Paying Agent’s or MDNR’s right to receive payment for attorney’s fees and expenses under this Section. Upon request by the District, the Paying Agent and MDNR will provide the District with copies of statements evidencing the fees, costs and expenses for which the Paying Agent or MDNR is requesting payment. The statements may be edited to maintain the attorney-client privilege. Section 6.5. Application of Moneys. Any moneys collected by MDNR pursuant to Section 6.3 will be applied first, to pay interest on the Loan then due and payable, second, to pay principal of the Loan then due and payable, third, to pay the fees, costs and expenses owed by the District pursuant to Section 6.4, and fourth, to pay other amounts due and payable under this Agreement. Section 6.6. No Remedy Exclusive; Waiver; Notice. No remedy conferred upon or reserved to MDNR or the Paying Agent is intended to be exclusive and every such remedy is cumulative and in addition to every other remedy given under this Agreement or existing at law or in equity. No delay or omission to exercise any right, remedy or power accruing upon any Event of Default will impair any right, remedy or power or will be construed as a waiver. Any right, remedy or power may be exercised from time to time and as often as may be deemed expedient. Neither the Paying Agent nor MDNR are required to give notice to the District in advance of the exercise of any right, remedy or power reserved to them in this Article, except as expressly provided in this Article. Section Four. ARTICLE VII MISCELLANEOUS Section 7.1. Effect of Breach. Failure on the part of MDNR in any instance or under any circumstances to observe or fully perform any obligation assumed by or imposed upon it by this Agreement or by law shall not make MDNR liable in damages to the District or relieve the District from making any payment to MDNR or fully performing any other agreement under this Agreement. The District may have and pursue any other remedies provided by law for compelling performance by MDNR of any agreement of MDNR. 20 Financing Agreement dated as of November 1, 2004. Section 7.2. Termination of Agreement. This Agreement will terminate with respect to the District upon the payment in full of the Loan and when the District and MDNR have fully performed all agreements under this Agreement. Section 7.3. Notices. All notices, filings and other communications will be given by first- class mail, postage pre-paid, or sent by telegram, telecopy or telex or other similar communication, or delivered by a reputable private courier or overnight delivery service, addressed as follows (notice to the Paying Agent shall be effective only upon receipt): MDNR: General: Missouri Department of Natural Resources Water Protection Program P.O. Box 176 (zip code 65102) 205 Jefferson Jefferson City, Missouri 65101 Attention: Director, Financial Assistance Center For Requisitions: Missouri Department of Natural Resources Water Protection Program P.O. Box 176 (zip code 65102) 205 Jefferson Jefferson City, Missouri 65101 Attention: Payment and Account Specialist Financial Assistance Center Paying Agent: Commerce Bank, N.A. 922 Walnut Street, TBMZ-5 Kansas City, Missouri 64106 Attention: Corporate Trust Department District: The Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, Missouri 63103 Attention: Executive Director Each party may change its address by giving written notice of the new address to the other parties. Section 7.4. Exculpatory Provision. In exercising powers under this Agreement, the District and MDNR and their members, directors, officers, employees and agents will not be 21 Financing Agreement dated as of November 1, 2004. liable to any other party to this Agreement (i) for any actions taken or omitted by it or its members, officers, directors, employees or agents in good faith and believed by it or them to be authorized or within their discretion or rights or powers conferred upon them, or (ii) for any claims based on this Agreement against any member, director, officer, employee or agent of the District or MDNR in his or her individual capacity. Section 7.5. Amendment. This Agreement may be amended by a written instrument executed by the parties to this Agreement. No amendment affecting the rights, duties or obligations of the Paying Agent shall be effective unless consented to by the Paying Agent. Section 7.6. Severability of Invalid Provisions. If any agreement provided in this Agreement is contrary to law, that agreement will be severable from the remaining agreements and will not affect the validity of the other provisions of this Agreement. Section 7.7. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which will be regarded for all purposes as one original and constitute one and the same instrument. Section 7.8. Applicable Law. This Agreement shall be governed exclusively by the applicable laws of the State. Section 7.9. Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the District and MDNR and their respective successors and assigns. IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed by their respective officers hereunto duly authorized and dated as of the day and year first above written. [remainder of this page intentionally left blank] S-1 Financing Agreement dated as of November 1, 2004. THIS FINANCING AGREEMENT is executed as of the date first hereinabove written. MISSOURI DEPARTMENT OF NATURAL RESOURCES By Department Director S-2 Financing Agreement dated as of November 1, 2004. THIS FINANCING AGREEMENT is executed as of the date first hereinabove written. THE METROPOLITAN ST. LOUIS SEWER DISTRICT By Title: Executive Director [SEAL] ATTEST: Secretary-Treasurer of the District Approved as to form: General Counsel Taxpayer Identification No.: 43-6011991 1-1 SCHEDULE 1 LOAN PAYMENT SCHEDULE The following Loan Payments shall be made in accordance with, and subject to, the credits and limitations set forth in Article IV and this Payment Schedule. Additional Interest is payable on each Interest Payment Date. Loan Principal Interest Total Fiscal Year Payment Date Component Component Loan Payment Total A−1 EXHIBIT A FORM OF REQUISITION (Form SRF-01) B−1 EXHIBIT B APPLICABLE FEDERAL REQUIREMENTS Age Discrimination Act, PL 94−135 Civil Rights Act of 1964, PL 88−352 Prohibition against sex discrimination under Section 13 of the Federal Water Pollution Control Act, PL 92−500 Section 504 of the Rehabilitation Act of 1973, PL 93−112 (including Executive Orders 11914 and 11250) C−1 EXHIBIT C CLOSING CERTIFICATE OF DISTRICT We, the undersigned, hereby certify that we are the duly appointed, qualified and acting Executive Director and Secretary-Treasurer, respectively, of The Metropolitan St. Louis Sewer District (the “District”), and as such officers we are familiar with the books and records of the District. In connection with the making of a loan by the Missouri Department of Natural Resources (“MDNR”) to the District in the original principal amount of $535,600 (the “Loan”), we hereby further certify as follows: (1) Due Organization. The District is a body corporate, a municipal corporation and a political subdivision of the State of Missouri duly created and validly existing under and pursuant to the constitution and statutes of the State of Missouri and the Plan of the District adopted by the voters of the District for its government and has all requisite power and authority to own its properties and carry on its governmental functions as now being conducted. (2) Transcript of Proceedings. The transcript of proceedings (the “Transcript”) relating to the authorization of the Loan includes a true and correct copy of the proceedings had by the District and other records, proceedings and documents relating to the receipt of the Loan by the District; such proceedings of the District shown in said Transcript have not been modified, amended or repealed and are in full force and effect as of the date hereof; and such proceedings have been duly filed in the official records of the District. (3) Regular Meetings. All meetings of the District as shown in the Transcript were regular meetings, or were held pursuant to regular adjournment at the next preceding meeting, or were special meetings called and held as shown in the Transcript, and each such meeting was duly held, was open to the public at all times and a quorum was present throughout. At all such meetings where required, proper notice of the time, place and purposes of each such meeting was given to the members of the Board of Trustees (the “Board”) of the District or was waived and proper notice was given to the public as required by law, including Chapter 610, RSMo, as amended. All meetings of the District at which any action was taken by the District in connection with the authorization of the hereinafter referred to Financing Documents was attended by a quorum and such action received the necessary affirmative vote of a majority of the Board. (4) Incumbency of Officers. The following named persons were and are the duly appointed, qualified and acting members of the Board and officers of the District at all times during the proceedings relating to the authorization of the Financing Documents and at the present time, as follows: C−2 Name Title Robert J. Baer Chair Harold Crumpton Vice Chair Dee Joyce-Hayes Trustee Bart J. Margiotta Trustee Marian A. Rhodes Trustee Joan M. Swartz Trustee Jeffrey Theerman Executive Director Karl J. Tyminski Secretary-Treasurer (5) Ordinance. Ordinance No. 11874 of the District adopted on October 14, 2004, attached as Exhibit A (the “Ordinance”), is a full, true and correct copy of the Ordinance duly adopted at a meeting of the District duly held on such date, a quorum being present and voting thereon, as such Ordinance appears on the records of the District, and the same has not been modified, amended or repealed and is in full force and effect as of the date hereof. (6) Execution of Documents. The following documents have been duly executed and delivered in the name and on behalf of the District by the undersigned, pursuant to and in full compliance with the Ordinance; the copies of said documents contained in the Transcript are true, complete and correct copies or complete and correct copies or counterparts of said documents as executed and delivered by the District, and are in substantially the same form and text as the copies of such documents which were before the District and approved by the Ordinance; and said documents have not been amended, modified or rescinded and remain in full force and effect as of the date hereof: (a) Financing Agreement dated as of November 1, 2004 (the “Financing Agreement”), between the District and MDNR; and (b) Escrow Trust Agreement dated as of November 1, 2004 (the “Escrow Agreement”), between the District and Commerce Bank, N.A. The above-referenced documents are hereinafter referred to as the “Financing Documents”. The undersigned each certify that the signature of the other appearing hereon is the genuine signature of such other officer. (7) No Litigation. To the knowledge of the undersigned, after due inquiry, there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, public board or body for which the District has been served with process or official notice or threatened against or affecting the District, wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by the Financing Documents or any agreement or instrument to which the District is a party and which is used or contemplated for use in the transactions contemplated by the Financing Documents or the ability of the District to make all C−3 Loan Payments (as defined in the Financing Documents) and otherwise perform its duties, covenants, obligations and agreements under the Financing Documents. (8) Representations, Certifications and Warranties. The representations, certifications and warranties of the District contained in the Financing Documents (subject to the limitations and qualifications in those representations and warranties, such as “to the District’s knowledge”) are true and correct in all material respects as of the date hereof, and, to the District’s knowledge, it has complied with all covenants and satisfied all conditions in terms of the Financing Documents required on its part to be performed or satisfied at or prior to the date hereof. (9) No Default. To the District’s knowledge, at the date hereof, no event of default of the District specified in the Financing Documents, and no event which, with the giving of notice or the lapse of time or both, would become such an event of default of the District under the Financing Documents, has occurred. (10) Authorization and Effect of Documents. The District has duly authorized, by all necessary action, the execution, delivery, receipt and due performance of the Financing Documents and any and all such other agreements and documents as may be reasonably required to be executed, delivered and received by the District in order to carry out, give effect to and consummate the transactions contemplated by the Financing Documents and the Ordinance. The Financing Documents, as executed and delivered, constitute legal, valid and binding obligations of the District enforceable against it in accordance with their respective terms. (11) Government Purpose. The construction of the Project, as described in the Financing Documents, is necessary, convenient and in furtherance of the District’s governmental purposes and is in the best interests of the District. During the term of the Financing Documents, the Project will at all times be used by the District for the purpose of performing its lawful governmental functions. (12) District Representatives. The following named persons have been designated the District Representative and Alternative District Representative, respectively, under the Financing Documents, and the signatures appearing opposite their names are the true and genuine signatures of such persons: Name Signature District Representative Karl J. Tyminski Alternate District Representative Janice M. Zimmerman Alternate District Representative Theresa A. Bellville C−4 (13) No Pecuniary Interest. To the District’s knowledge, no member of the Board and no official of the District has any pecuniary interest, directly or indirectly, in any contract, employment, purchase or sale made, or to be made, in connection with the proposed transaction contemplated by the Financing Documents. (14) No Violation or Breach. To the District’s knowledge, the execution and delivery by the District of the Financing Documents, the performance of the terms thereof by the District will not violate any provision of Missouri law or the District’s Plan, or any resolution or ordinance of the District, or any applicable judgment, order, rule or regulation of any court or of any public or governmental agency or authority, and will not conflict with, violate or result in the breach of any of the provisions of or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the District is a party, or by which it or its properties are bound. (15) Consents and Approvals. To the District’s knowledge, all approvals, consents, authorizations and orders, if any, required to be obtained by the District in connection with the execution and delivery of the Financing Documents and the performance of the terms thereof by the District have been duly obtained. WITNESS our hands and the seal of the District this 1st day of November, 2004. Signature Official Title Executive Director [SEAL] Secretary-Treasurer EXHIBIT D OPINION OF SPECIAL COUNSEL TO DISTRICT [Closing Date] Missouri Department of Natural Resources Jefferson City, Missouri The Metropolitan St. Louis Sewer District St. Louis, Missouri Commerce Bank, N.A., as Paying Agent Kansas City, Missouri Re: SRF Direct Loan Program Project Financing for Subdistrict No. 99048 (West Watson Road – Nanell Lane) Ladies and Gentlemen: We have acted as special co-counsel to The Metropolitan St. Louis Sewer District (the “District”), and as such, in connection with the referenced financing, we have examined the Constitution and statutes of the State of Missouri and the Plan of the District adopted by the voters of the District for its government (the “Plan”), the relevant proceedings and Ordinance No. _____ of the District adopted by the District on October 14, 2004 (the “Ordinance”), the hereinafter referred to Financing Documents, and such other records, proceedings, instruments, certificates and documents as we deem relevant in rendering this opinion. Based upon such examination, we are of the opinion that: 1. The District is a body corporate, a municipal corporation and a political subdivision of the State of Missouri duly created and validly existing under and pursuant to the Constitution and statutes of the State of Missouri and the Plan. 2. The Ordinance has been duly adopted by the District and is in full force and effect as of the date hereof. 3. The Financing Agreement dated as of November 1, 2004, between the District and the Missouri Department of Natural Resources (“MDNR”) and the Escrow Trust Agreement dated as of November 1, 2004 (the “Escrow Trust Agreement”), between the District and Commerce Bank, N.A. (collectively, the “Financing Documents”) have been duly authorized, executed and delivered by and for and on behalf of the District and constitute the legal, valid and binding agreements of the District enforceable in accordance with their terms. 4. The execution and delivery by the District of the Financing Documents, and compliance with the provisions thereof by the District under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute a breach of or default under any indenture or other agreement or instrument to which the District is a party or any regulation, court order or consent decree to which the District is subject. 5. No additional or further approval, consent or authorization of any governmental or public agency or authority of the State of Missouri (other than any permits (including building permits), governmental permissions (including environmental clearances), rights and licenses as may be necessary, as to which we express no opinion) not already obtained is required by the District in connection with the transactions contemplated by the Financing Documents, or the entering into and performance of its obligations under the Financing Documents, other than the approvals, consents or authorizations of any governmental or public agency or authority of the State of Missouri which the District is required to obtain pursuant to the Financing Documents. It is to be understood that the enforceability of the Financing Documents may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally heretofore or hereafter enacted and as limited by equitable principles applicable to the remedy of specific performance and that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. Very truly yours, EXHIBIT E OPINION OF GENERAL COUNSEL TO DISTRICT [Closing Date] Missouri Department of Natural Resources Jefferson City, Missouri The Metropolitan St. Louis Sewer District St. Louis, Missouri Commerce Bank, N.A., as Paying Agent Kansas City, Missouri RE: SRF Direct Loan Program Project Financing for Subdistrict No. 99048 (West Watson Road – Nanell Lane) Ladies and Gentlemen: I am General Counsel to The Metropolitan St. Louis Sewer District (the "District"), and as such, in connection with the referenced financing, I have examined the following: 1. Ordinance No. 11874 (relating to the approval of the hereinafter-mentioned Financing Agreement and Escrow Trust Agreement) adopted by the Board of Trustees of the District on October 14, 2004 (the "Ordinance"); 2. The Financing Agreement dated as of November 1, 2004 (the "Financing Agreement") between the District and the Missouri Department of Natural Resources; 3. The Escrow Trust Agreement dated as of November 1, 2004 (the "Escrow Trust Agreement"), between the District and Commerce Bank, N.A.; and 4. Such other records, proceedings, instruments, certificates and documents as I deem relevant in rendering this opinion. Based on the foregoing, I am of the opinion that there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending to which the District has been served with process or with other official notice or of which I am aware, or to the best of my knowledge, threatened against or affecting the District, wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by the Ordinance, the Financing Agreement or the Escrow Trust Agreement or the validity of the Ordinance, the Financing Agreement or the Escrow Trust Agreement. Very truly yours, Randy E. Hayman General Counsel (EXHIBIT B) =============================================== ESCROW TRUST AGREEMENT Dated as of November 1, 2004 between THE METROPOLITAN ST. LOUIS SEWER DISTRICT and COMMERCE BANK, N.A., as paying agent and escrow agent relating to Subdistrict No. 99048 (West Watson Road – Nanell Lane) =============================================== 1 ESCROW TRUST AGREEMENT THIS ESCROW TRUST AGREEMENT (this “Escrow Agreement” or “Agreement”), dated as of November 1, 2004, by and between THE METROPOLITAN ST. LOUIS SEWER DISTRICT (the “District”), a body corporate, a municipal corporation and a political subdivision duly organized and existing under the Constitution and laws of the State of Missouri and the District’s Plan approved by the voters for its government, and COMMERCE BANK, N.A., a national banking association duly organized, existing and authorized to accept and execute trusts of the character herein set out by virtue of the laws of the United States of America, with its principal corporate trust office located in Kansas City, Missouri, as paying agent and escrow agent (the “Paying Agent”); RECITALS: 1. The Federal Water Quality Act of 1987, 33 U.S.C. Section 1381 et seq. (the “Federal Act”), authorizes the Administrator of the United States Environmental Protection Agency (the “EPA”) to make capitalization grants to states for deposit in state water pollution control revolving funds to provide assistance for constructing publicly owned wastewater treatment works and for certain other purposes. 2. Section 644.122, Revised Statutes of Missouri, as amended (“RSMo”), establishes “The Water and Wastewater Loan Fund” in the Treasury of the State of Missouri and requires that all moneys received from the EPA capitalization grant program and state matching funds be deposited in The Water and Wastewater Loan Fund. 3. The Federal Act and regulatory requirements of EPA provide that The Water and Wastewater Loan Fund be operated in a manner which preserves The Water and Wastewater Loan Fund in perpetuity for the designated purposes thereof and thereby provide necessary and ongoing assistance to communities to attain and maintain compliance with the Federal Act. 4. In furtherance of the requirements to preserve The Water and Wastewater Loan Fund in perpetuity the Missouri Department of Natural Resources, a department of the State of Missouri (“MDNR”), has entered into the Operating Agreement dated June 15, 1989, as amended (the “Operating Agreement”) with EPA under which MDNR and its management of The Water and Wastewater Loan Fund are required to meet certain operational requirements and are subject to annual audits by EPA. 5. Pursuant to 10 CSR 20-4.040 through 10 CSR 20-4.050 of the Code of State Regulations, MDNR, in cooperation with the Clean Water Commission of the State of Missouri (the “Clean Water Commission”), has developed and implemented the Missouri Direct Loan State Water Pollution Control Revolving Fund Program (the “SRF Direct Loan Program”) and has stated its intent to make loans to political subdivisions of the State of Missouri. 2 6. The Clean Water Commission has approved a loan in a principal amount not to exceed $535,600 under the terms of the MDNR Fiscal Year 2004 Intended Use Plan, of which authorization the District has applied for a loan and a loan shall be made in the principal amount of $535,600 (the “Loan”) to the District from The Water and Wastewater Loan Fund to be made by MDNR pursuant to the below defined Financing Agreement. 7. MDNR and the District have determined to enter into the Financing Agreement dated as of November 1, 2004 (the “Financing Agreement”), for the purposes of providing the financing for the Project and setting forth their covenants and agreements respecting the application of the net proceeds of the Loan to finance the project as described in the Financing Agreement and in satisfaction of the obligations of MDNR under the Federal Act and EPA guidance to preserve The Water and Wastewater Loan Fund in perpetuity. 8. As a condition to the execution and delivery of the Financing Agreement, MDNR has required that the District enter into this Escrow Agreement with the Paying Agent. AGREEMENT: Section 1. Definitions. The words and terms defined in this Section and in the Recitals hereto shall for all purposes of this Agreement have the meanings herein and therein specified, unless the context clearly otherwise requires. In addition to words and terms defined in this Agreement, the words and terms used in this Agreement shall have the meanings ascribed to them in Section 1.1 of the Financing Agreement. “Account” means any of the accounts established by Section 4. “Administrative Expense Fund” means the fund so designated and established by Section 4. “Business Day” means any day other than a Saturday, a Sunday or any other day on which banking institutions in the State are authorized or required not to be open for the transaction of regular banking business. “Debt Service Fund” means the fund so designated and established by Section 4. “Debt Service Reserve Fund” means the fund so designated and established by Section 4. “Federal Securities” means any direct obligation of, or obligation the timely payment of the principal of and interest on which are unconditionally guaranteed by, the United States of America and backed by the full faith and credit thereof. “Fund” means any of the funds established by Section 4. “Interest Account” means the Interest Account established within the Debt Service Fund. “Interest Payment Date” means each May 1 and November 1, commencing May 1, 2005. 3 “Investment Securities” means any of the following securities legal for the investment of funds of the District at the time of purchase thereof; as provided in the Charter Plan of the District, funds of the District may be invested in the same manner as the State Treasurer may invest funds of the State, pursuant to Article IV, Section 15 of the Constitution of the State: (a) Obligations of the United States Government; (b) Obligations of any agency or instrumentality of the United States; (c) Time certificates of deposit (including those issued by the Paying Agent or any affiliate) secured by collateral as required by the Constitution and laws of the State; (d) Repurchase agreements maturing and payable within 90 days and secured by collateral as required by the Constitution and laws of the State; (e) Deposits with “Approved Depository Banks” provided the Approved Depository Banks shall give a bond equal to the deposit, with good and sufficient sureties, or the deposit of collateral as required by the Constitution and laws of the State; (f) Banker’s Acceptances issued by domestic commercial banks possessing the highest rating issued by a nationally recognized rating agency and maturing and becoming payable not more than one hundred eighty days from the date of purchase; (g) Commercial paper issued by domestic corporations which has received the highest rating issued by a nationally recognized rating agency and maturing and becoming payable not more than one hundred eighty days from the date of purchase. Eligible commercial paper is further limited to issuing corporations that have a total commercial paper program size in excess of five hundred million dollars ($500,000,000.00); and (h) Money market funds rated in the highest rating category by a nationally recognized rating service, consisting of or secured by Government Obligations or repurchase agreements consisting of or secured by Government Obligations. “Loan Payments” means the amounts to be paid by the Paying Agent to MDNR on each Interest Payment Date and Principal Payment Date in repayment of the Loan pursuant to Section 6 and Section 4.1 of the Financing Agreement, as set forth in the Loan Payment Schedule, plus Additional Interest. “Loan Payment Schedule” means the Loan Payment Schedule attached as Schedule 1, and any replacement schedule provided by MDNR in accordance with Section 4.1(f) of the Financing Agreement upon the partial prepayment of the Loan. “Moody’s” means Moody’s Investors Service. 4 “Paying Agent’s Fee” means the Paying Agent’s fees and ordinary expenses (excluding any extraordinary fees and expenses) in an amount equal to $750 per annum, payable on each Principal Payment Date for services performed as the paying agent and escrow agent under this Agreement, plus an acceptance fee of $750 payable on the Closing Date. “Principal Account” means the Principal Account established within the Debt Service Fund. “Principal Payment Date” means each November 1 commencing November 1, 2005. “Project Loan Fund” means the fund so designated and established by Section 4. “Standard & Poor’s” means Standard & Poor’s, a Division of the McGraw-Hill Companies. “State” means the State of Missouri. Section 2. Rules of Interpretation (a) Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. (b) Unless the context shall otherwise indicate, the 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. (c) All references in this Agreement to designated “Articles”, “Sections” and other subsections are, unless otherwise specified, to the designated Articles, Sections and subsections of this Agreement as originally executed. (d) The words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subsection. (e) All approvals, notices, consents and other actions of MDNR under this Agreement shall be executed by the Director, Financial Assistance Center, Water Protection Program (“WPP”) of MDNR or any other person designated by a written instrument executed by the Department Director of MDNR and filed with the District and the Paying Agent. Section 3. Receipt of Documents. The Paying Agent hereby acknowledges receipt of a certified copy (certified as true and correct by the Secretary-Treasurer of the District) or executed counterpart of the Financing Agreement. Reference herein to, or citation herein of, any provisions of the Financing Agreement shall be deemed to incorporate the same as a part hereof in the same manner and with the same effect as if they were fully set forth herein. On the Closing Date the District shall cause to be delivered to the Paying Agent and the Paying Agent shall have received the documents described in Section 3.1 of the Financing Agreement. 5 Section 4. Establishment of Funds and Accounts. There are hereby created and established with the Paying Agent the following special and irrevocable separate trust funds and accounts, each of which shall be held by the Paying Agent under this Agreement: (a) Debt Service Fund, consisting of a Principal Account and an Interest Account; (b) Project Loan Fund; (c) Debt Service Reserve Fund; and (d) Administrative Expense Fund. Section 5. Debt Service Fund. (a) There shall be deposited in the Debt Service Fund moneys from the sources, in the amounts and on the dates as follows: (1) on each Interest Payment Date, from the Project Loan Fund and the Debt Service Reserve Fund, in the Interest Account, the investment earnings at such time held in the Project Loan Fund and the Debt Service Reserve Fund; (2) upon the Completion of Disbursements, the amount remaining in the Project Loan Fund (other than investment earnings, which shall be applied as provided in Section 6(d)), in the Principal Account, such amount to be applied to the mandatory prepayment of the Loan pursuant to Section 4.1(c) of the Financing Agreement; (3) on each Loan Payment Date, in the Principal Account the principal component of each Loan Payment (as set forth in the Payment Schedule) and in the Interest Account the balance of the monthly Loan Payment and any other moneys received from the District for deposit in the Interest Account; and (4) on each Interest Payment Date, to the extent moneys in the Debt Service Fund are not sufficient to pay the Loan Payment then due, from the Debt Service Reserve Fund an amount equal to such deficiency. (b) Moneys on deposit in the Debt Service Fund will be applied solely to pay to MDNR (i) the Loan Payments on each Interest Payment Date and Principal Payment Date and (ii) the principal amount of the Loan prepaid by the District pursuant to Section 4.1 of the Financing Agreement, plus interest, to the date fixed for prepayment of the Loan. (c) No later than the 15th day of the month after each Interest Payment Date the Paying Agent shall provide a written notice to the District of the amount remaining in the Interest Account of the Debt Service Fund which will constitute a credit against the Loan Payments in accordance with Section 4.9(a) of the Financing Agreement. 6 (d) Except as provided in Section 6(d), moneys remaining in the Debt Service Fund at the close of business on November 1, 2014 will be transferred to the District in accordance with Section 4.12 of the Financing Agreement. Section 6. Project Loan Fund. (a) On the Closing Date a portion of the proceeds of the Loan in the amount of $482,040 shall be deposited by the Paying Agent in the Project Loan Fund. Moneys in the Project Loan Fund shall be disbursed as provided in this Section. (b) Written requisitions, in the form attached to the Financing Agreement as Exhibit A, shall be submitted for withdrawals (including Loan origination costs) from the Project Loan Fund in accordance with Article III and Section 4.8 of the Financing Agreement. Prior to making any Disbursement from the Project Loan Fund, the Paying Agent will receive a Requisition setting forth the Actual Reimbursement Amount approved by MDNR (as described in Section 3.3 of the Financing Agreement) and a certificate executed by the District Representative that payment is being made for a purpose within the scope of the Financing Agreement and that the amount of such payment represents only the contract price of the property, equipment, labor, materials or service being paid for or, if such payment is not being made pursuant to an express contract, that such payment is not in excess of the reasonable value thereof. Each Disbursement made from the Project Loan Fund for the payment of Project Costs shall be in the amount of the Actual Reimbursement Amount as set forth in the applicable Requisition. In making disbursements from the Project Loan Fund, the Paying Agent shall be entitled to conclusively rely upon each written requisition and certificate of the District Representative without inquiry or investigation. It is understood that the Paying Agent shall not be required to make any inspections of the Project or improvements thereto, make any provision to obtain completion bonds, mechanic’s or materialmen’s lien releases or otherwise supervise the Project. The approval of each requisition by MDNR and certification as aforesaid by the District Representative shall constitute, unto the Paying Agent, an irrevocable determination that all conditions precedent to the payment of the specified amounts from the Project Loan Fund have been completed. (c) Investment earnings on moneys held in the Project Loan Fund shall be deposited into the Project Loan Fund and then transferred to the Interest Account of the Debt Service Fund pursuant to Section 5. (d) All Disbursements from the Project Loan Fund shall be made prior to the receipt by the Paying Agent of the Certificate of the District establishing the Completion of Disbursements. Any moneys remaining in the Project Loan Fund (other than investment earnings) on the Completion of Disbursements shall be transferred to the Principal Account of the Debt Service Fund and applied to the mandatory prepayment of the Loan in accordance with Section 4.1(c) of the Financing Agreement. Investment earnings (other than the amount constituting Additional Interest payable on the Loan) remaining in the Project Loan Fund on the Completion of Disbursements shall be transferred to the Interest Account of the Debt Service Fund; any amount 7 of investment earnings remaining in the Project Loan Fund constituting Additional Interest shall be separately accounted for as Additional Interest. (e) On each Interest Payment Date prior to the Completion of Disbursements and on the Completion of Disbursements, the Paying Agent shall determine the Additional Interest payable on the Loan on such Interest Payment Date and on the Interest Payment Date next following the Completion of Disbursements and shall provide written notice thereof to the District and MDNR. Section 7. Debt Service Reserve Fund. (a) On the Closing Date a portion of the proceeds of the Loan in the amount of $53,560, constituting 10% of the aggregate loan amount, will be deposited in the Debt Service Reserve Fund. Moneys in the Debt Service Reserve Fund shall be disbursed as provided in this Section. No further deposits in the Debt Service Reserve Fund will be required except as provided in Section 4.10(c) of the Financing Agreement. (b) Investment earnings on moneys held in the Debt Service Reserve Fund shall be deposited into the Debt Service Reserve Fund and then transferred to the Interest Account of the Debt Service Fund pursuant to Section 5. (c) On any date on which the Loan is prepaid under Section 4.1 of the Financing Agreement, the Paying Agent will transfer the Excess Debt Service Reserve Amount to the District. On each Interest Payment Date, if moneys in the Debt Service Fund are not sufficient to pay the Loan Payment then due, the Paying Agent will immediately transfer an amount equal to such deficiency from the Debt Service Reserve Fund to the Debt Service Fund. Moneys in the Debt Service Reserve Fund may, with the prior written consent of the District, be applied to the optional prepayment of the Loan, provided the Loan is prepaid in whole and funds are available (including the amount on deposit in the Debt Service Reserve Fund) to prepay the Loan. Moneys in the Debt Service Reserve Fund will be used to make the final Loan Payments in inverse order of their due dates unless the Loan and all interest thereon is otherwise paid. Any amounts in the Debt Service Reserve Fund in excess of the Debt Service Reserve Requirement on any Interest Payment Date will be transferred to the Interest Account. Section 8. Administrative Expense Fund. There shall be deposited in the Administrative Expense Fund such amounts as are received from the District for the payment of the Paying Agent’s Fee, the Paying Agent’s extraordinary fees and expenses (if any), and the Administrative Fee as provided in Section 4.9(b) of the Financing Agreement. The Paying Agent shall withdraw the Paying Agent’s Fee when due and shall promptly disburse the Administrative Fee to MDNR. Moneys in the Administrative Expense Fund shall not be invested. Section 9. Notice of Prepayment. At the written request of the District, the Paying Agent shall give official notice of any prepayment by mailing an official prepayment notice to MDNR by first-class mail, at least 15 days, but not more than 30 days, prior to the date fixed for prepayment. All notices of prepayment shall be dated and shall state (i) the prepayment date, (ii) the principal 8 amount of the Loan being prepaid, and (iii) the amount of interest to be accrued through the prepayment date on such principal amount to be prepaid. Section 10. Investments. Moneys in the Debt Service Fund, the Project Loan Fund and the Debt Service Reserve Fund shall at all times be invested by the Paying Agent in Investment Securities at the written direction of the District, provided such Investment Securities shall mature at such times and in such amounts as will make cash available for the purposes of such Funds and Accounts as needed. Net investment earnings on the Accounts of each Fund shall be credited to such Accounts except that investment earnings on the Principal Account shall be deposited in the Interest Account. If an investment is purchased at a premium above par, net earnings on such investment shall be deemed to be reduced by the straight-line amortization of such premium over the remaining term of such investment. If an investment is purchased at a discount, net earnings are deemed to include the amount paid in excess of the discounted purchase price upon maturity or redemption of such investment, at the time such principal amount is received. The term “net earnings” means aggregate earnings less aggregate losses from investments during the applicable period, less any transaction fees incurred in purchasing or selling investments. Section 11. Assignment of Moneys and Investment Securities. The District hereby assigns and pledges to the Paying Agent its right, title and interest in the moneys and Investment Securities hereunder, and all earnings thereon, until used and applied in accordance with this Agreement for the benefit and security of MDNR to secure (i) the payment of the principal of and interest on the Loan when due, (ii) the payment of all sums due under this Escrow Agreement and the Financing Agreement in the manner herein and therein described, and (iii) the punctual performance by the District of all of its obligations under the terms and provisions of this Escrow Agreement and the Financing Agreement. The matured principal of and earnings on the Investment Securities and any cash in the Funds and Accounts hereunder are hereby pledged and assigned and shall be applied solely for the payment of the principal of, redemption premium, if any, and interest on the Loan, except as otherwise expressly provided herein. Section 12. Acceptance of the Trusts. The Paying Agent hereby accepts the trusts imposed upon it by this Agreement, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions, and no implied covenants or obligations shall be read into this Agreement against the Paying Agent: a. The Paying Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement. The Paying Agent shall exercise such of the rights and powers vested in it by this Agreement and use the same degree of care and skill in their exercise as a prudent corporate trust department under reasonably similar circumstances would exercise or use under the circumstances in the conduct of such department’s affairs; b. The Paying Agent may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers, employees or such other professionals as may be reasonably necessary but shall be answerable for the conduct of the same in accordance with the standard specified above, and shall be entitled to act upon the opinion or advice of its counsel, who may be counsel to the District or MDNR or 9 the Paying Agent, concerning all matters of trust hereof and the duties hereunder, and, subject to the provisions of Sections 5, 6 and 7, may in all cases pay such reasonable compensation to all such attorneys, agents, receivers, employees and such other professionals as may reasonably be employed in connection with the trusts hereof. The Paying Agent may act upon an opinion or advice of counsel, as aforesaid, and shall not be responsible for any loss or damage resulting from any action or non-action by it taken or omitted to be taken in good faith in reliance upon any such opinion of counsel; c. The Paying Agent shall not be responsible for any recital herein or in the Financing Agreement, or for the validity of the execution by the District of this Agreement or for any supplements hereto or instruments of further assurance, or for the sufficiency of the security for the Loan, and the Paying Agent shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions or agreements on the part of the District in connection with the matters referred to in this Agreement, except as hereinafter set forth, and the Paying Agent shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with this Agreement; d. The Paying Agent, in its individual or other capacity, may engage in or be interested in any financial or other transaction with the District or MDNR, with the same rights it would have were it not Paying Agent; e. The Paying Agent shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, opinion of counsel, letter, telegram or other paper or document reasonably believed by it to be genuine and correct and to have been signed or sent by the proper person or persons; f. As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Paying Agent shall be entitled to rely upon a certificate signed on behalf of the District by the District Representative as sufficient evidence of the facts therein contained, and prior to the occurrence of a default of which the Paying Agent has been notified as provided in subsection h of this Section, or of which by said subsection it is deemed to have notice, the Paying Agent shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same. The Paying Agent may accept a certificate of the District Representative to the effect that a resolution in the form therein set forth has been adopted by the District, as applicable, as conclusive evidence that such resolution has been duly adopted and is in full force and effect; g. The permissive right of the Paying Agent to do things enumerated in this Agreement shall not be construed as a duty and the Paying Agent shall not, except as provided in subsection a of this Section, be answerable for other than its negligence or willful misconduct; 10 h. The Paying Agent shall not be required to take notice or be deemed to have notice of any default hereunder except failure by the District to cause to be made any of the payments to the Paying Agent required to be made by or on behalf of the District pursuant to this Agreement or the Financing Agreement unless the Paying Agent shall be specifically notified in writing of such default by the District or MDNR; and all notices or other instruments required by this Agreement to be delivered to the Paying Agent, must, in order to be effective, be delivered at the principal corporate trust office of the Paying Agent and in the absence of such notice so delivered the Paying Agent may conclusively assume there is no default except as aforesaid; i. At any and all reasonable times the Paying Agent, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives shall have the right, but shall not be required, to inspect all books, papers and records of the District pertaining to the Financing Agreement and this Agreement, and to make copies thereof and take such memoranda therefrom and in regard thereto as may be desired; j. The Paying Agent shall not be required to give any bond or surety in respect of the execution of the trusts and powers under this Agreement; k. Notwithstanding anything elsewhere in this Agreement contained, the Paying Agent shall have the right, but shall not be required, to demand, in respect to the withdrawal of any cash or any action whatsoever within the scope of this Agreement, any showings, certificates, opinions, appraisals or other information, or action or evidence thereof, in addition to that by the terms hereof required, as a condition of such action, deemed by the Paying Agent desirable for the purpose of establishing the right of the District to the withdrawal of any cash or the taking of any other action by the Paying Agent; l. Notwithstanding anything otherwise prescribed in this Agreement, before taking any action under this Agreement other than any action under Sections 5, 6, and 7, the Paying Agent may, in its discretion, require that satisfactory indemnity be furnished to it by MDNR or other parties for the reimbursement of all expenses which it may incur or advance and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct, by reason of any action so taken; and m. All moneys received by the Paying Agent shall, until used or applied or invested as herein provided, be held in trust in the manner and for the purposes for which they were received but need not be segregated from other funds except to the extent required by this Agreement or law. The Paying Agent shall not be under any liability for interest on any moneys received hereunder except for accounting for income on Investment Securities. Section 13. Records; Reporting Requirements. (a) The Paying Agent’s records related to activities performed under this Agreement are subject to audit and inspection by the State upon receipt of notice during normal business 11 hours. The Paying Agent will maintain such financial transaction records in accordance with generally accepted accounting principles. (b) The Paying Agent will provide monthly and annual (as of June 30) financial reports to MDNR. Each financial report will cover financial activities during the preceding period. These reports will consist of financial transaction registers. Financial transaction register means a register of all financial transactions during the reporting period for each Fund and Account maintained under this Agreement. Each financial transaction register will identify the Loan and contain, for each Fund and Account, a date, description and amount for all financial transactions and starting and ending balances. Section 14. Obligations of Paying Agent Limited. (a) In order to make the payments required by this Agreement, the Paying Agent is hereby authorized to redeem or otherwise dispose of Investment Securities in order to provide sufficient amounts to make such payments. The liability of the Paying Agent to make the payments required by this Agreement shall be limited solely to the money and Investment Securities in the Funds and Accounts hereunder. The Paying Agent shall not be liable for any loss resulting from any investment, sale, transfer or other disposition made pursuant to this Agreement in compliance with the provisions hereof. The Paying Agent shall not be liable for the accuracy of the calculations as to the sufficiency of the Loan Payments. So long as the Paying Agent applies the amounts in the Funds and Accounts as provided herein, the Paying Agent shall not be liable for any deficiencies in the amounts necessary to pay the Loan caused by such calculations. Notwithstanding the foregoing, the Paying Agent shall not be relieved of liability arising from and proximate to its failure to comply fully with the terms of this Agreement. (b) The financial obligations of the District under this Agreement are subject to the limitations of Article IV of the Financing Agreement. Section 15. Fees, Charges and Expenses of the Paying Agent. The District shall pay to the Paying Agent reasonable compensation for all services performed by the Paying Agent hereunder, and also the reasonable expenses, charges and other disbursements of the Paying Agent, and those of its attorneys, agents, employees and other professionals as may be reasonably necessary incurred in and about the administration and execution of the trusts hereby created and performance of its powers and duties hereunder; provided that the total amount of such fees, charges and expenses for ordinary services under this Agreement shall not exceed the Paying Agent’s Fees. Notwithstanding the preceding provisions of this Section, the Paying Agent shall be entitled to reimbursement from the District of its reasonable out-of-pocket, legal or extraordinary expenses incurred in carrying out the duties, terms or provisions of this Agreement, including but not limited to costs incurred for giving notice of the prepayment of the Loan. Claims for such reimbursement may be made to the District. In each instance in which this Agreement provides for compensation, reimbursement or indemnification of the Paying Agent, such provision shall be deemed to provide for, whether or not expressly so stated, the payment of all related fees, costs, charges, advances and expenses of the Paying Agent (including without limitation, attorney’s fees and expenses), unless the context shall clearly indicate otherwise. 12 Section 16. Resignation or Removal of Paying Agent; Successor Paying Agent. (a) The Paying Agent may at any time resign and be discharged from its duties and responsibilities hereby created by giving written notice to the District and MDNR not less than 60 days prior to the date when the resignation is to take effect. Such resignation shall take effect immediately upon the acceptance by the District and MDNR of the resignation, the appointment of a successor Paying Agent (which may be a temporary Paying Agent) by the District, with the prior written consent of MDNR, the acceptance of such successor Paying Agent of the terms, covenants and conditions of this Agreement, the transfer of the Funds and Accounts hereunder, including the money and Investment Securities held therein, to such successor Paying Agent and the completion of any other actions required for the principal of and interest on the Investment Securities to be made payable to such successor Paying Agent rather than the resigning Paying Agent. (b) The Paying Agent may be removed at any time by MDNR or the District by an instrument or concurrent instruments in writing, not less than 60 days prior to the date such removal is to take effect unless the Paying Agent is being removed for its negligence or willful misconduct in which case such removal may be effective immediately, delivered to the Paying Agent and the District or MDNR, as applicable. Any removal pursuant to this paragraph shall become effective upon the appointment of a successor Paying Agent (which may be a temporary successor Paying Agent) by the District, with the prior written consent by MDNR, the acceptance of such successor Paying Agent of the terms, covenants and conditions of this Agreement, the transfer of the Funds and Accounts hereunder, including the money and Investment Securities held therein, to such successor Paying Agent and the completion of any other actions required for the principal of and interest on the Investment Securities to be made payable to such successor Paying Agent rather than the Paying Agent being removed. (c) If the Paying Agent resigns or is removed, or is dissolved, or is in the course of dissolution or liquidation, or otherwise becomes incapable of acting hereunder, or if the Paying Agent is taken under the control of any public officer or officers, or of a receiver appointed by a court, the District, with the prior written consent of MDNR, shall appoint a temporary Paying Agent to fill such vacancy until a successor Paying Agent is appointed by the District, with the prior written consent of MDNR, and has accepted such appointment, in the manner above provided, and any such temporary Paying Agent so appointed by the District, with the prior written consent of MDNR, shall immediately and without further act be superseded by the successor Paying Agent so appointed. (d) If no appointment of a successor Paying Agent or a temporary successor Paying Agent has been made by MDNR or the District, with the prior written consent of MDNR, pursuant to the foregoing provisions of this Section within 60 days after written notice of resignation of the Paying Agent has been given to the District and MDNR, or written notice of removal has been delivered to the Paying Agent, MDNR or any retiring or removed Paying Agent may apply to any court of competent jurisdiction for the appointment of a successor Paying Agent, and such court may thereupon, after such notice, if any, as it shall deem proper, appoint a successor Paying Agent. (e) No successor Paying Agent shall be appointed unless such successor Paying Agent (i) is a corporation with trust powers authorized to do business in the State and organized under the 13 banking or corporate laws of the United States or the State and (ii) either (A) has at the time of appointment capital and surplus of not less than $25,000,000, (B) is owned by a company that has at the time of appointment capital and surplus of not less than $25,000,000, or (C) has assets under corporate trust management of not less than $100,000,000. (f) Every successor Paying Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and to the District and MDNR an instrument in writing accepting such appointment hereunder, and thereupon such successor Paying Agent without any further act, deed or conveyance shall become fully vested with all the rights, immunities, powers, trusts, duties and obligations of its predecessor, but such predecessor shall, nevertheless, on the written request of such successor Paying Agent, the District or MDNR, execute and deliver an instrument transferring to such successor Paying Agent all the estates, properties, rights, powers and trusts of such predecessor hereunder, and every predecessor Paying Agent shall deliver all securities and money held by it to its successor and the duties and obligations of the predecessor Paying Agent hereunder shall thereupon cease and terminate. Should any transfer, assignment or instrument in writing from the District be required by any successor Paying Agent for more fully and certainly vesting in such successor Paying Agent the estates, rights, powers and duties hereby vested or intended to be vested in the predecessor Paying Agent, any such transfer, assignment and instruments in writing shall, on request, be executed, acknowledged and delivered by the District. (g) Any corporation into which the Paying Agent may be merged or consolidated, to which the Paying Agent sells all or substantially all of its corporate trust business, or that results from any merger, conversion, consolidation or reorganization involving the Paying Agent, will be the successor Paying Agent under this Agreement without the execution or filing of any paper or any other act on the part of the parties hereto. Section 17. Amendment. This Agreement is made for the benefit of the District and MDNR, and it shall not be repealed, revoked, altered or amended without the written consent of the parties hereto and MDNR. Section 18. Notices. All notices, filings and other communications shall be given by first- class mail, postage pre-paid, or sent by telegram, telecopy or telex or other similar communication, or delivered by a reputable private courier or overnight delivery service, addressed as follows (notice to the Paying Agent shall be effective only upon receipt): MDNR: Missouri Department of Natural Resources Water Protection Program 201 Jefferson P.O. Box 176 (zip code 65102) Jefferson City, Missouri 65101 Attention: Director Financial Assistance Center (573) 751-9396 - FAX 14 Paying Agent: Commerce Bank, N.A. 922 Walnut Street, TBMZ-5 Kansas City, Missouri 64106 Attention: Corporate Trust Department District: The Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, Missouri 63103 Attention: Executive Director Each party may change its address by giving written notice of the new address to the other parties. Section 19. Payments Due on Other Than Business Day. In any case where any Interest Payment Date, Principal Payment Date or other date for the payment of interest on or principal of the Loan or any other payment is due hereunder shall not be a Business Day, then such payment need not be made on such date but may be made (without additional interest) on the next succeeding Business Day with the same force and effect as if made on the scheduled date. Section 20. Severability of Invalid Provisions. If any one or more of the covenants or agreements provided in this Escrow Agreement on the part of the Paying Agent, the District to be performed should be contrary to law, then such covenant or covenants or agreement or agreements shall be deemed severable from the remaining covenants and agreements and shall in no way affect the validity of the other provisions of this Agreement. Section 21. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be executed by the Paying Agent and the District and all of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. Section 22. Survival. This Agreement, including all representations, warranties, covenants and obligations, shall remain in effect until the Paying Agent and the District have fully performed all of their obligations hereunder. Section 23. Applicable Law. This Agreement shall be governed exclusively by the applicable laws of the State. Section 24. Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the District and the Paying Agent and their respective successors and assigns. 15 IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed by their respective officers hereunto duly authorized and dated as of the day and year first above written. [remainder of this page intentionally left blank] 16 THIS ESCROW TRUST AGREEMENT is executed as of the date first hereinabove written. [SEAL] COMMERCE BANK, N.A., as Escrow Agent and Paying Agent ATTEST: By Title: Title: 17 THIS ESCROW TRUST AGREEMENT is executed as of the date first hereinabove written. THE METROPOLITAN ST. LOUIS SEWER DISTRICT By Title: Executive Director [SEAL] ATTEST: Secretary-Treasurer of the District Approved as to form: General Counsel 18 SCHEDULE 1 LOAN PAYMENT SCHEDULE