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HomeMy Public PortalAbout07571 O R D I N A N C E NO. 7571 An Ordinance to provide for the borrowing of funds in anticipation of revenues remaining to be collected by The Metropolitan St. Louis Sewer District (the "District") in its Clean Water Capital Improvement Trust Fund for its fiscal year ending June 30, 1989, such borrowing to be evidenced by the issuance of a warrant of the District reflecting the terms of the Note described herein (such warrant reflecting the terms of the Note shall be referred to herein as the "Note"); authorizing and approving the sale of such Note to Stifel, Nicolaus & Company. Incorporated (the "Settlor"); authorizing and approving of the deposit of the proceeds of the sale of such Note into an Investment Agreement (the "Investment Agreement") to be entered into by and among the provider thereof, the Settlor, and Mercantile Bank National Association, as Trustee (the "Trustee") under an Indenture of Trust to be dated as of October 1, 1988; authorizing the execution and delivery of a Note Purchase and Funding Agreement (the "Note Purchase and Funding Agreement") by and among the District, the Settlor and the Trustee; authorizing the execution of an Arbitrage Certificate and Use of Proceeds Agreement as may be necessary to establish and maintain the tax exempt status of interest on the Note; and authorizing any and all other agreements, documents, representations and certificates as may be necessary or convenient to effectuate the delivery of the Note and participation in the Cash Management Program, described herein, and all other documents attendant thereto, and containing an emergency clause. WHEREAS, this Board of Trustees finds that funds are not and will not be available in the District's Clean Water Capital Improvement Trust Fund in the Treasury of said District from time to time prior to the end of its fiscal year, to pay all of the legal obligations chargeable to the District's Clean Water Capital Improvement Trust Fund as they will become due and payable on and prior to the end of its fiscal year; and WHEREAS, the Treasurer of the District has informed the Board of Trustees that a cash flow deficiency can be anticipated in the District's Clean Water Capital Improvement Trust Fund at a time or times during the remainder of the District's fiscal year which, when aggregated with an amount which the District must keep on hand as a cash balance at all times in such Fund (generally, one month's anticipated expenditures), amounts to a sum in excess of Two Million Three Hundred Seventy Thousand Dollars ($2,370,000); and WHEREAS, this Board of Trustees is authorized by the laws of the State of Missouri and the District's Plan (the "Enabling Provisions") to borrow funds in anticipation of the revenues remaining to be collected as herein described, provided the amount of such loans at no time shall exceed 90% of the Board of Trustees' estimate of the receipts of such revenues for the District's Clean Water Capital Improvement Trust Fund for the fiscal year yet uncollected; and WHEREAS, the Board of Trustees does now find and determine that it is necessary and advisable that the District proceed to borrow an amount not to exceed Two Million Three Hundred Seventy Thousand Dollars ($2,370,000) or such lesser amount as may be permitted by the Enabling Provisions and regulations promulgated under Section 103 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), in anticipation of the collection of the aforesaid revenues for the Clean Water Capital Improvement Trust Fund of said District, in order to provide funds with which to pay and discharge the expenses and obligations properly payable from the said Clean Water Capital Improvement Trust Fund of said District in its fiscal year ending June 30, 1989, which expenses and obligations will become due and payable on and prior to the end of the fiscal year, but for the payment and discharge of which it is hereby estimated that funds will not be available otherwise in said Clean Water Capital Improvement Trust Fund; and WHEREAS, no funds heretofore have been borrowed in anticipation of the collection of said revenues other than any borrowing which will be immediately repaid with the proceeds of this borrowing; and WHEREAS, the Board of Trustees does now find and determine that the District will not have other funds available .to pay and discharge in a timely fashion the expenses and obligations properly payable from said Clean Water Capital Improvement Trust Fund of said District; and WHEREAS, to the end that said sums may be borrowed for said purpose, it is necessary that the Board of Trustees determine the terms and other incidents of said borrowing; and WHEREAS, the Board of Trustees hereby finds and determines that the Internal Revenue Code requires that loans to the District be subject to certain additional restrictions in order to maintain the tax exempt status of the interest thereon for federal income tax purposes and the District intends to comply with all applicable provisions of the Internal Revenue Code as it relates to the Note authorized by this Ordinance and is desirous of authorizing the execution of an Arbitrage Certificate and Use of Proceeds Agreement as necessary to establish and assure such compliance; and WHEREAS, Stifel, Nicolaus & Company, Incorporated, as Senior Managing Underwriter, has caused to be structured and developed the Cash Management Program for Missouri Political Subdivisions (the "Cash Management Program") with the objective, in part, of funding the aforementioned cash flow deficit of the District, by (a) acquiring the Note to be issued by the District pursuant to the Note Purchase and Funding Agreement, such Note to 3 be deposited with the Trustee under the Indenture of Trust to be entered into by and between the Settlor and the Trustee; (b) simultaneously causing all beneficial interest in the Note to be sold, such beneficial interest to be evidenced by Certificates of Participation (the "Certificates of Participation") to be issued by the Trustee and secured by a letter of credit issued by a bank or other financial institution having a rating from a national rating service of "AA" or better (the "Letter of Credit"); and (c) causing the proceeds derived by the District from the issuance and sale of the Note to be invested forthwith in accordance with the Investment Agreement until such proceeds and earnings derived from the investment thereof are drawn upon by the District to meet obligations as the same become due and owing; and WHEREAS, the Board of Trustees is desirous of authorizing the execution of the Note Purchase and Funding Agreement and further authorizing the Settlor and/or the Trustee to enter into the Investment Agreement on behalf of the District in consideration of the issuance and sale of the Note; and WHEREAS, the Executive Director and General Counsel of the District have received a presentation regarding the Cash Management Program and has reviewed certain legal documents to be utilized in connection therewith and have determined it to be in the best interest of the District to participate therein and to sell the Note of the District to the Settlor at private sale in accordance with the provisions of the Note Purchase and Funding Agreement. NOW, THEREFORE, BE IT ORDAINED BY THE METROPOLITAN ST. LOUIS SEWER DISTRICT AS FOLLOWS: Section 1. The form of Note, substantially in the form attached hereto as Exhibit "A", in a principal amount not to exceed $2,370,000 and to bear interest as set forth in the form of Note, provided that the Initial Rate (as defined in the Note) shall not exceed 7.75% per annum is hereby approved. The Executive Director is hereby authorized to execute, acknowledge and deliver the Note (in the form of a warrant reflecting the terms set forth in Exhibit "A" hereto), attested by the Secretary-Treasurer of the District, with the Initial Rate completed within the limitations of this Ordinance and with such additions, deletions or other changes thereto as shall be approved by such persons executing the Note, their execution to constitute conclusive evidence of such approval, and the Secretary-Treasurer of the District is hereby authorized to affix to the Note the corporate seal of the District. Such Note shall be registered in the office of the Director of Finance and upon delivery shall also be registered in the office of the Secretary-Treasurer of the District. The Executive Director is further authorized to deliver, or to make due and appropriate 4 arrangements therefor, the Note to the Settlor in and for consideration of an undivided proportionate interest in the Investment Agreement equal to 100% of the principal amount such Note. Section 2. The form of the Note Purchase and Funding Agreement substantially in the form attached hereto as Exhibit "B" is hereby approved. The Executive Director is hereby authorized to execute, acknowledge and deliver the Note Purchase and Funding Agreement, attested by the Secretary-Treasurer of the District, with such additions, deletions or other changes thereto as shall be approved by such persons executing the Note Purchase and Funding Agreement and the General Counsel of the District, their execution to constitute conclusive evidence of such approval, and the Secretary-Treasurer of the District is hereby authorized to affix to the Note Purchase and Funding Agreement the corporate seal of the District. Section 3. The Note and the interest thereon shall constitute a limited obligation of the District, payable solely out of and secured by a pledge of revenues remaining to be collected in its Clean Water Capital Improvement Trust Fund for the District's fiscal year ending June 30, 1989, and said Note shall be negotiable in all respects in accordance with the Uniform Commercial Code of the State of Missouri. Such Note shall have preference and priority in payment from its date of registration by the Secretary-Treasurer over all warrants subsequently issued. Section 4. The Note herein authorized to be issued and the obligations of the District under said Note Purchase and Funding Agreement shall be and the same are established and regarded hereby as a first charge upon the revenues remaining to be collected in its Clean Water Capital Improvement Trust Fund for the District's fiscal year in anticipation of which the said Note is issued, and the said incoming revenues, or so much thereof as may be necessary, shall be and the same are irrevocably pledged hereby for and to the payment of the Note herein authorized to be issued and to the repayment of any drawings made under the Letter of Credit for the payment of such Note. The District hereby covenants and agrees that it will set aside such revenues for the payment of the Note and the repayment of any drawings made under the Letter of Credit for the payment of such Note and will not pledge such revenues to secure the payment of any other obligations. The District further covenants and a agrees that in the event that such revenues are not sufficient to pay the principal of and interest on the Note and the repayment of any drawings made under the Letter of Credit for the payment of such Note on the Due Date, the District will continue to set aside such revenues for such purposes and the payment of the Note and repayment of any drawings made under the Letter of Credit for the payment of such Note shall constitute a 5 first charge on such revenues until fully paid. Section 5. The Board of Trustees hereby expressly consents to the sale of Certificates of Participation by the Trustee in the Note of the District (and notes of other participants in the Cash Management Program) and further, expressly authorizes and consents to the assignment of the Note Purchase and Funding Agreement by the Settlor to the Trustee for the mutual benefit of the holders from time to time of the Certificates of Participation and the Bank which issues the Letter of Credit (the "Bank"), as their respective interests may appear in the Indenture and in the Reimbursement Agreement (as defined by the Indenture). Section 6. The Board of Trustees hereby expressly authorizes the proceeds derived from the sale of the Note to be deposited under the Investment Agreement provided that such investments shall be in compliance with applicable requirements of state law and shall be secured by collateral deposited with an independent Trustee or safe depositary in accordance with applicable law. The Investment Agreement provides for the deposit of such proceeds and the withdrawal thereof from time to time upon reasonable notice provided by the District and the reinvestment of other funds of the District from time to time thereunder. Section 7. The Board of Trustees of the District is hereby authorized to execute and deliver the Note and the Note Purchase and Funding Agreement, and any and all other instruments, documents and certificates which may be necessary or convenient, in connection therewith and in connection with the District's participation in the Cash Management Program including an Arbitrage Certificate and Use of Proceeds Agreement in such form as may be necessary to establish and maintain the tax exempt status of interest on the Notes. Section 8. The passage of this Ordinance and the borrowing of money to be provided for hereunder are necessary for the immediate preservation of the public health and safety of the District and its inhabitants; in particular, the funds to be provided under the provisions of this Ordinance are necessary to enable the District to obtain Federal and State grants to construct certain capital improvements necessary to abate pollution by stopping the discharge of improperly treated sewerage into the Mississippi River and its tributaries and such capital improvements are required by the Federal and Missouri Clean Water Acts and a court approved consent decree entered into between the State and the District; an emergency is hereby declared to exist under the terms and provisions of Section 5.100 of the District's Plan; and this Ordinance shall take effect immediately upon its passage by the Board of Trustees. 6 EXHIBIT "A" NOTE THE METROPOLITAN ST. LOUIS SEWER DISTRICT (the "District"), for value received, hereby promises to pay to the order of Stifel, Nicolaus & Company, Incorporated (hereinafter, the "Settlor"), or its nominee, beneficiaries or assigns, on June 30, 1989 (the "Due Date"), the sum of __________ DOLLARS ($___________), together with interest accruing on the above-stated principal sum from the date hereof with interest calculated at the rate of percent (______ %) per annum (the "Initial Rate") to and including March 15, 1989, and thereafter, to and including the Due Date, at the rate of ten percent (10%) per annum (the "Increased Rate"); provided, however, that the Increased Rate shall not apply if an amount equal to the sum of the Advances (as defined in the Note Purchase and Funding Agreement) is reinvested in the Investment Agreement on or before March 15, 1989; and provided further, that if less than all of the Advances are reinvested by the District on or prior to March 15, 1989, then (i) the Increased Rate shall apply only to that portion of the principal amount of the Note equal to the sum of Advances not reinvested under the Investment Agreement on or prior to March 15, 1989, (ii) such Increased Rate shall apply only until the date that such outstanding Advances are reinvested, and (iii) from and after the date of such reinvestment, the principal amount of the Note equal to the amount so reinvested shall bear interest at the Initial Rate to and including the Due Date. Interest shall be calculated on the basis of actual days elapsed and a year of three hundred sixty-five (365) days. In the Event the Note shall not be fully paid by the District on the Due Date, the outstanding balance thereof shall bear interest from and after the Due Date until paid at the Default Rate calculated on the basis of actual days elapsed and a year of three hundred sixty (360) days. "Default Rate" shall mean the lower of (i) the Prime Lending Rate plus two percent (2%) per annum or (ii) ten percent (10%) per annum. "Prime Lending Rate" shall mean 100% of the rate of interest established by the Bank from time to time as its prime rate for commercial loans in the United States during any period that interest shall accrue at such rate, each change in such prime lending rate to become effective on the date such change is established by the Bank. Monies derived in respect to this Note shall be deposited in the Investment Agreement as authorized and required by the Note Purchase and Funding Agreement (the "Funding Agreement"). Terms used in this Note and not otherwise defined herein shall be ascribed the meaning set forth in the Ordinance of the Board of Trustees of the District authorizing the issuance and delivery of this Note. 7 The aggregate principal amount of this Note made hereunder shall be due and payable on the Due Date. Interest at the above stated rates shall be calculated on the aggregate principal amount of this Note commencing on the date hereof and ending on the Due Date. The payment of principal and interest under this Note shall be made in lawful money of the United States in immediately available funds to the Settlor. If any principal of or interest on this Note falls due on a Saturday, Sunday or legal holiday at the place of payment, then such Due Date shall be extended to the next succeeding business day at such place, and interest, in the case of a principal payment, shall be payable in respect of such extension. The acceptance of any partial payment by the holder of this Note subsequent to the Due Date shall not be held to establish a custom, or waive any rights of the holder to enforce prompt payment of the balance of this Note. The District hereby waives demand, presentment for payment, protest, notice of non-payment or protest, notice of dishonor and diligence in collection. The District further agrees that should all amounts payable under this Note be not paid on the Due Date and be placed with an attorney for collection, the District will pay, in addition to unpaid principal and accrued interest, all reasonable attorney fees incurred for the collection thereof. This Note is not subject to prepayment in whole or in part by the District. The District understands and acknowledges that this Note will be held by Mercantile Bank National Association, as Trustee under an Indenture of Trust by and between Stifel, Nicolaus & Company, Incorporated, as Settlor and the Trustee dated as of October 1, 1988 (the "Indenture") for the holders of Certificates of Participation and for the Bank, as their respective interests may appear. The District agrees to recognize each owner of this Note as the owner thereof and each owner of a Certificate of Participation as the owner of this Note to the extent of its pro rata interest in this Note. The holder of this Note takes with notice of the limitation that in the event of a default or failure of the Provider of the Investment Agreement to honor the terms thereof as to both principal and interest owing thereunder, the District shall be entitled to an offset, on and as of the Due Date, against its obligations under this Note in an amount equal to its proportionate interest in any unpaid obligations of the Provider of the Investment Agreement under the Investment Agreement. The District's proportionate share of the Investment Agreement shall include interest which, as of any date of calculation, has accrued on such share pursuant to the terms of the Investment 8 Agreement. The Note and the interest thereon shall constitute a limited obligation of The Metropolitan St. Louis Sewer District, payable solely out of and secured by a pledge of revenues remaining to be collected in its Clean Water Capital Improvement Trust Fund for the District's fiscal year ending June 30, 1989, and the said incoming revenues, or so much thereof as may be necessary, shall be and the same are irrevocably pledged hereby for and to the payment of this Note. This Note shall be negotiable in all respects in accordance with the Uniform Commercial Code of the State of Missouri. It is hereby certified, recited and declared that all acts, conditions and things required to exist, happen and be performed precedent to and in the execution, delivery and issuance of this Note do exist, have happened and have been performed in due time, form and manner as required by law; and that the issuance of this Note, together with all other obligations of the District, do not exceed or violate any constitutional or statutory limitation applicable to the District; and that the taxes and revenues pledged to the payment of the principal of and interest on this Note and the issue of which it forms a part, as the same becomes due, are designed to be sufficient in amount for that purpose. IN WITNESS WHEREOF, The Metropolitan St. Louis Sewer District has caused this Note to be executed in its name and to be signed by the Executive Director and attested by the Secretary-Treasurer of the District and its corporate seal to be impressed or imprinted hereon. THE METROPOLITAN ST. LOUIS SEWER DISTRICT (Seal) ______________________________ Executive Director ATTEST: ______________________________ Secretary-Treasurer 9 STATE OF MISSOURI ) ) SS. CITY OF ST. LOUIS ) It is hereby certified that the attached Note has been registered in our offices in accordance with the requirements of the District's Plan. ______________________________ Director of Finance ______________________________ Secretary-Treasurer of the District ENDORSEMENT Pay to the order of ___________________________________ without recourse or representations or warranties of any kind except as provided in the Indenture of Trust, dated as of October 1, 1988, between the undersigned and Mercantile Bank National Association, as Trustee. STIFEL, NICOLAUS & COMPANY, INCORPORATED By ___________________________ Its __________________________ Attest: (Seal) ______________________________ (Asst.) Secretary Revised 10/12/88 Exhibit "B" NOTE PURCHASE AND FUNDING AGREEMENT by and among STIFEL, NICOLAUS & COMPANY, INCORPORATED (the "Settlor"), THE METROPOLITAN ST. LOUIS SEWER District (the "Issuer"), and MERCANTILE BANK NATIONAL ASSOCIATION, as Trustee (the "Trustee") relating to the SERIES 1988 CASH MANAGEMENT PROGRAM FOR MISSOURI POLITICAL SUBDIVISIONS NOTE PURCHASE AND FUNDING AGREEMENT TABLE OF CONTENTS Page Section 1. Definitions . . . . . . . . . . . . . . . . . 1 Section 2.Obligation of Settlor to Fund the Purchase of Note; Investment Agreement . . . . . . . . . 2 Section 2.1. Purchase of Note; Deposit of Note in Trust . . . . . . . . . . 4 Section 2.2. Terms of Note and Investment Agreement . . . 4 Section 2.3. Investments if Provider of Investment Agreement is in Default . . . . . . . . . . . 5 Section 2.4. Waiver of Presentation of the Note for Payment . . . . . . . . . . . . . . 8 Section 2.5. Documentation of Authorization . . . . . . . 8 Section 3. Agreements by Issuer . . . . . . . . . . . . 9 Section 3.1. Valid and Binding Obligations . . . . . . . . 9 Section 3.2. Instruments of Further Assurance . . . . . . 9 Section 3.3. Notice of Default . . . . . . . . . . . . . . 9 Section 3.4. Maintenance of Tax Exemption . . . . . . . . 9 Section 3.5. Pledge of Issuer's Interest in Investment Agreement . . . . . . . . . . . 9 Section 4. Representations . . . . . . . . . . . . . . . 10 Section 4.1. Representations by the Settlor . . . . . . . 10 Section 4.2. Representations by the Issuer . . . . . . . . 10 Section 5. Amendments . . . . . . . . . . . . . . . . . 10 Section 5.1. Amendments, Changes and Modifications . . . . 11 Section 6. Miscellaneous . . . . . . . . . . . . . . . . 13 Section 6.1. Settlor Obligation Limited . . . . . . . . . 13 Section 6.2. Effect of Breach . . . . . . . . . . . . . . 13 Section 6.3. Execution of Counterparts . . . . . . . . . . 13 Section 6.4. Severability of Invalid Provisions . . . . . 13 Section 6.5. Notices . . . . . . . . . . . . . . . . . . . 13 Section 6.6. Applicable Law . . . . . . . . . . . . . . . 13 Section 6.7. Section Headings Not Controlling . . . . . . 13 EXHIBIT A - Form of Note . . . . . . . . . . . . . . . . A-1 EXHIBIT B - Form of Opinion of Counsel . . . . . . . . . B-1 EXHIBIT C - Form of Ordinance . . . . . . . . . . . . . . C-1 EXHIBIT D - Form of Arbitrage and Use of Proceeds Certificate . . . . . . . . . . . . . . . . . D-1 THIS NOTE PURCHASE AND FUNDING AGREEMENT (the "Agreement"), dated this day of October, 1988, and effective as of the date of delivery, by and among STIFEL, NICOLAUS & COMPANY, INCORPORATED (the "Settlor"), and THE METROPOLITAN ST. LOUIS SEWER DISTRICT (the "Issuer"), a political subdivision of the State of Missouri (the "State"), and MERCANTILE BANK NATIONAL ASSOCIATION, a national banking institution, as Trustee (the "Trustee") under the Indenture hereinafter referred to. WITNESSETH: WHEREAS, the Issuer has all necessary and proper powers under the statutes of the State to issue, register and pay when due the Note (as hereinafter defined) the proceeds of which are to be used for the payment of claims and for other purposes authorized by State law; and WHEREAS, within the aforementioned powers, the Issuer has full power and authority to issue its Note which is payable from revenues of the Issuer remaining to be collected by the Issuer in its Clean Water Capital Improvement Trust Fund for the Issuer's current Fiscal Year; and WHEREAS, the Settlor has established its Cash Management Program for Missouri Political Subdivisions (the "Program") with certain political subdivisions throughout the State, under which the Settlor will purchase, on the date of delivery thereof, the Note and certain other Notes (references in the plural to "Notes" shall refer to all the Notes issued by all participating political subdivisions in the Program) and simultaneously with the acquisition thereof deposit the same with the Trustee in trust for the holders of the Certificates of Participation (as hereinafter defined) and the Bank (as hereinafter defined) as their interests may appear; and WHEREAS, the Trustee will hold the Note until the Due Date (as hereinafter defined), when the same will be due and payable by the Issuer; and WHEREAS, simultaneously with the delivery of this Agreement and the agreements of similar terms of other political subdivisions participating in the Program (the "Political Subdivisions") (a) the Political Subdivisions shall receive from the Settlor the full purchase price of the Notes, which purchase price shall be 100% of the principal amount of the Notes; (b) the purchase price shall be paid by the Settlor to the Trustee, on behalf of the Political Subdivisions: (c) the purchase price shall be invested by the Trustee on behalf of the Political Subdivisions in the Investment Agreement (hereinafter defined); and (d) the Trustee shall hold the Notes in a trust entitled the 1988 Cash Management Trust (the "Trust"), and shall cause to be issued and authenticated Certificates of Participation in the Trust; and 2 WHEREAS, the Issuer is and shall be the owner of, and shall have the use, benefits, dominion and control of, such proportionate share of the sum so deposited pursuant to such Investment Agreement and the earnings attributed to such share as provided herein, subject to the provisions hereof; and WHEREAS, the Settlor has entered into an Indenture of Trust, dated as of October 1, 1988 (the "Indenture"), between the Settlor and Mercantile Bank National Association, as Trustee (the Trustee"), pursuant to which the Certificates of Participation are to be issued and all the rights of the Settlor hereunder have been assigned to the Trustee for the benefit of the holders of the Certificates of Participation and the Bank as their interests may appear and the duties and obligations of the Settlor have been assumed by the Trustee; and NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Settlor and the Issuer agree as follows: Section 1. Definitions. As used in this Agreement, unless a different meaning is clearly indicated by the context: "Advances" means, for purposes of this Agreement, all drawings or advances of funds to the Issuer made under the Investment Agreement. "Agreement" means this Note Purchase and Funding Agreement by and between the Settlor and the Issuer, including any amendments or supplements hereto, made in accordance with the provisions hereof. "Authorized Officer of the Issuer" means the Issuer Executive. "Bank" means The Sanwa Bank, Limited, a banking corporation organized and existing under the laws of Japan, acting through its New York Branch and its successors and assigns. "Closing Date" means October ______, 1988. "Collateral Securities" means any securities to the extent the same are at the time legal security for investments by Political Subdivisions in accordance with the provisions of Sections 30.270 and 110.010 to 110.060, R.S.Mo. 1986, as amended, and other applicable laws. "Default Rate" means the lower of (i) the Prime Lending Rate plus two percent (2%) per annum or (ii) ten percent (10%) per annum. 3 "Due Date" means, with respect to the Note, June 30, 1989. "Fiscal Year" means the fiscal year of the Issuer ending June 30, 1989. "Fund" means the fund or funds referred to in the Local Legislation as a source of payment on the Note. "Indenture" means the Indenture of Trust dated as of October 1, 1988, as originally executed by the Settlor and the Trustee, as from time to time amended and supplemented in accordance with the provisions of the Indenture. "Investment Agreement" means the Investment Agreement dated October 1988, by and among the Settlor, the Trustee and the Provider of the Investment Agreement. "Investment Agreement Account" means the 1988 Series Investment Agreement Account established under Section 2.2 hereof. "Issuer" means The Metropolitan St. Louis Sewer District. "Local Legislation" means the resolution, ordinance, order or other local legislation of the Issuer authorizing the issuance of the Note. "Market Value" means the fair market value of the Collateral Securities, marked to market weekly. "Note" means the note or notes in substantially the form attached hereto as Exhibit "A" executed and delivered by the Issuer and purchased by the Settlor to be deposited with and held by the Trustee for the benefit of the holders of the Certificates of Participation and the Bank as their interests may appear. "Outstanding" means, when used with reference to the Note, the Note purchased by the Settlor pursuant to this Agreement and not theretofore paid by the Issuer pursuant to its terms. "Prime Lending Rate" means 100% of the rate of interest established by the Bank from time to time as its prime rate for commercial loans in the United States during any period that interest shall accrue at such rate pursuant to the terms of the Reimbursement Agreement, each change in such prime lending rate to become effective on the date such change is established by the Bank, such rate to be calculated on the basis of a 360-day year, 4 actual number of days elapsed. "Program" means the Cash Management Program for Missouri Political Subdivisions, Series 1988, sponsored by the Settlor. 5 "Provider of the Investment Agreement" means a state or federal commercial banking institution, bank holding company, savings and loan association, savings bank, qualified insurance company or any other financial institution approved by the Settlor, the Trustee and the Bank as named and designated in the Investment Agreement. "Register" means the books kept by the Issuer for the registration of the Note if required by applicable law. "Reimbursement Agreement" shall mean the Reimbursement Agreement dated as of October 1, 1988 between the Bank and the Settlor, pursuant to which the letter of credit shall be issued. "Reimbursement Obligations" means the obligation of the Issuer to pay to the Bank, or to the Trustee on behalf of the Bank, a portion of the reimbursement obligations to the Bank under the Reimbursement Agreement for draws under the letter of credit in an amount equal to the principal of and interest on the Note. "Settlor" means Stifel, Nicolaus & Company, Incorporated. "Treasurer" means the Secretary-Treasurer of the Issuer, designated and authorized by applicable State law. "Trustee" means Mercantile Bank National Association, St. Louis, Missouri, as trustee under the Indenture. Section 2. Obligation of Settlor to Fund the Purchase of Note; Investment Agreement. 2.1 Purchase of Note; Deposit of Note in Trust. The Note of the Issuer shall be purchased by the Settlor simultaneously with the execution and delivery of this Agreement. The Issuer acknowledges and understands that the proceeds of sale of the Note will be deposited with the Trustee who, in turn, will invest such proceeds of sale in the Investment Agreement. In and for consideration of the Note, the Settlor, using the proceeds of the simultaneous sale of the Certificates of Participation, shall cause the Trustee, on behalf of the Issuer, to fund an Investment Agreement which shall be owned, used and controlled by the Issuer to the extent of the fractional undivided interest of the Issuer therein. The purchase price of the Note shall be at par. 2.2 Terms of Note and Investment Agreement. The Note shall bear interest from the date hereof at the rate of ______ percent (______ %) per annum (the "Initial Rate") to and including March 15, 1989 and thereafter, to and including the Due 6 Date, at the rate of ten percent (10%) per annum (the "Increased Rate"); PROVIDED, HOWEVER, that the Increased Rate shall not apply if an amount equal to the sum of the Advances is reinvested by the Issuer in the Investment Agreement on or before March 15, 1989, and PROVIDED FURTHER, that, if less than all of the advances are reinvested by the Issuer on or prior to March 15, 1989, then (i) the Increased Rate shall apply only to that portion of the principal amount of the Note equal to the sum of Advances not reinvested under the Investment Agreement on or prior to March 15, 1989, (ii) the Increased Rate shall apply only until the date that such outstanding advances are reinvested, and (iii) from and after the date of such reinvestment, the principal amount of the Note equal to amounts so reinvested shall bear interest at the Initial Rate to and including the Due Date. In the event the Note shall not be fully paid by the Issuer on the Due Date, the outstanding balance thereof shall bear interest from and after the Due Date until paid at the Default Rate. The Issuer shall be entitled to draw Advances from time to time to and including December 31, 1988 up to the full amount of the Issuer's proportionate interest in the principal of the funds invested in the Investment Agreement with notice to the Trustee as provided below. The Issuer agrees to use its best efforts to restore and repay all Advances on or before March 15, 1989. No deposits shall be made by the Issuer under the Investment Agreement on or after a date that is fifteen (15) days prior to the Due Date. There is hereby ordered created and ordered established an interest bearing account to be known as the "1988 Series Investment Agreement Account". The Investment Agreement Account shall be maintained by the Trustee as agent for and on behalf of the Political Subdivisions, including the Issuer, and shall be used for the following purposes: (i) to receive moneys from the Settlor to the Trustee as payment of the purchase price of the Notes; (ii) to invest such moneys in the Investment Agreement; (iii) to hold the Investment Agreement; and (iv) to make advances to the Political Subdivisions, including the Issuer, and receive deposits from the Political Subdivisions, including the Issuer, under and pursuant to the terms of the Investment Agreement. Moneys to be invested pursuant to the Investment Agreement shall be invested pursuant to the requirements state law and the Issuer's Plan. As a condition precedent to the deposit of moneys held by the Trustee in the Investment Agreement, the Provider of the Investment Agreement shall (i) deposit with the Trustee and the Trustee shall receive Collateral Securities, or (ii) provide the Trustee with a certificate of safekeeping or other evidence that Collateral Securities have been deposited with a disinterested banking institution or safe depository, as escrow agent or trustee, to secure the deposits of the Political Subdivisions pursuant to the Investment Agreement, 7 and such Collateral Securities shall be equal in Market Value to one hundred three percent (103%) of the amount of funds held by the Provider of the Investment Agreement pursuant to the Investment Agreement. Simultaneously with the increase of deposits of moneys pursuant to the Investment Agreement, the Provider of the Investment Agreement shall make additional deposits of Collateral Securities with the Trustee and the Trustee shall receive Collateral Securities equal in Market Value to one hundred three percent (103%) of the amount by which deposits are increased. The Provider of the Investment Agreement may, at any time, withdraw any of the Collateral Securities so deposited upon depositing in lieu thereof other Collateral Securities of like kind and character at least equal in Market Value to one hundred three percent (103%) of the Collateral Securities withdrawn. Collateral Securities so deposited with the Trustee, or with a disinterested banking institution or safe deposit depositary, as escrow agent or trustee, shall be pledged to secure payment by the Provider of the Investment Agreement of moneys held pursuant to the Investment Agreement and said Collateral Securities shall be converted into money by the Trustee, in the event that the Provider of the Investment Agreement should fail to pay said secured funds or any part hereof on the demand of the Trustee. The holder of the Note takes with notice of the limitation that in the event of a default or failure of the Provider of the Investment Agreement to honor the terms thereof as to both principal and interest owing thereunder, the Issuer shall be entitled to an offset, on and as of the Due Date, against its obligations under the Note in an amount equal to its proportionate interest in any unpaid obligation of the Provider of the Investment Agreement under the Investment Agreement. The Issuer's proportionate share of the Investment Agreement shall include interest which, as of any date of calculation, has accrued on such share pursuant to the terms of the Investment Agreement. The aggregate principal amount of Advances made to the Issuer under the Investment Agreement shall be evidenced upon each advance by entries on the schedule of advances maintained by the Trustee. The Trustee shall establish such accounts as it may deem necessary to provide for the accurate accounting of and segregation of Advances under the Investment Agreement, the payments of such Advances to the Issuer and the making of deposits by the Issuer under the Investment Agreement. The Trustee shall make all Advances and deposits under the Investment Agreement on behalf of the Issuer in conformity with the terms and conditions of the Investment Agreement, and the Issuer shall cooperate with the Trustee in complying with the terms and conditions of the Investment Agreement with respect to advances and deposits thereunder. Interest payable under the terms of the 8 Investment Agreement to the Issuer shall be calculated monthly on a daily basis by the Trustee on the basis of the Issuer's proportionate interest in the principal and interest earned upon the amount deposited in the Investment Agreement on each day less the aggregate sum of the Advances to the Issuer outstanding on each day, such calculation to be made on the first day of each month during the period commencing with the deposit of monies into the Investment Agreement and ending on the termination date of the Investment Agreement. Interest on the Issuer's proportionate principal balance shall be calculated on the basis of a year of three hundred sixty-five (365) days, actual days elapsed. The Investment Agreement shall expressly provide that monies in an amount equal to the Issuer's proportionate interest in the funds held thereunder, inclusive of both principal and interest earned, are held for the use and benefit of the Issuer to the extent of its interest therein and that upon delivery of the notices heretofore set forth, the Issuer is entitled to request and receive one or more Advances until December 31, 1988. Fifteen (15) days prior to the Due Date, the Trustee shall send written notice to the Issuer setting forth (i) the aggregate amount of principal and interest due to be paid by the Issuer on the Due Date with respect to the Note, (ii) the amount of the Issuer's pro rata interest in the Investment Agreement as of the Due Date; (iii) the difference, if any, between the amount specified in (i) and (ii); (iv) that the amount specified in (iii) shall be paid by the Issuer to the Trustee on or prior to the Due Date if the amount specified in (i) is greater than the amount specified in (ii); and (v) that the amount specified in (iii) shall be paid by or upon the order of the Trustee to the Issuer on the Due Date if the amount specified in (i) is less than the amount specified in (ii). It is understood that the Bank will issue its unconditional and irrevocable letter of credit in favor of the Trustee securing the principal of and interest at the Initial Rate on the Note and the Issuer's payments with respect to the Note shall be applied by the Trustee to reimburse the Bank for any such drawing under the letter of credit. Accordingly, the Trustee is authorized and directed on the Due Date to withdraw an amount equal to that fractional and proportionate interest representing the Issuer's interest in the proceeds of the Investment Agreement, and to apply such funds first, to reimburse the Bank for any drawings on the letter of credit the proceeds of which drawings have been used to pay the principal of or interest on the Note, and second, to pay the principal of and interest on the Note to the extent that the proceeds of a drawing on the letter of credit have not been used to pay the principal of and interest on the Note. Any surplus remaining to pay the principal of and interest on the Note after the application of such funds as provided in the preceding sentence shall be promptly returned 9 by the Trustee to the Issuer to the extent of its fractional proportionate interest in the Investment Agreement. Any deficiency in amounts available to pay the principal of and interest on the Note on the Due Date shall be paid promptly by the Issuer to the Trustee, all pursuant to the terms of and as set forth in the Note. It is further understood by the Issuer and the Issuer expressly agrees that the Trustee, pursuant to the terms of the Indenture, will hold the Note in a trust established by the Settlor for the benefit of the holders of the Certificates of Participation and the Bank as their interests may appear. The Issuer further expressly agrees to the assignment by the Settlor to the Trustee of all of the Settlor's rights and obligations hereunder. The Issuer agrees to recognize each owner of the Certificate of Participation as the owner thereof and each owner of a Note as the owner of the Certificate of Participation to the extent of its pro rata interest in the Note. It is further understood and agreed that the Issuer's obligations hereunder shall be limited to the payment of the principal of and interest on the Note, and that the Issuer shall have no obligation to pay the principal of or interest on the Notes of any other Political Subdivision. 2.3 Investments if Provider of Investment Agreement is in Default. If the Provider of the Investment Agreement shall be in default under the terms of the Investment Agreement or of this Agreement, the Trustee shall invest any money which it holds on behalf of the Issuer in such investments as the Issuer shall direct in writing, with the written approval of the Bank, subject to the laws of the State. 2.4 Waiver of Presentation of the Note for Payment. The Note shall be due and payable on the Due Date. The Issuer by the terms of the Note waives presentment for payment and notice of dishonor thereof. 2.5 Documentation of the Authorization. Prior to the purchase of the Note through the funding of the Investment Agreement and as a condition precedent thereto, the Issuer shall deliver to the Trustee on behalf of the Settlor, the following: (a) A copy of a certified copy of the Local Legislation authorizing the issuance of the Note and this Agreement, or extracts so certified from the minutes of the special or regular meeting of the Governing Body at which such ordinance regarding and approving the Note and this Agreement was adopted and approved, (b) A signed copy of the opinion of counsel to the Issuer 10 or, in the alternative, an opinion of counsel acceptable to the Settlor and the Bank, substantially in the form attached hereto as Exhibit "B", and (c) A copy of an original signed copy of the Arbitrage and Use of Proceeds Certificate of the Issuer relating to the Note. Section 3. Agreements by Issuer. 3.1 Valid and Binding Obligations. The Issuer shall issue the Note to be purchased by the Settlor in compliance with the Constitution and statutes and other applicable law of the State so that such Note will be the valid and binding enforceable obligation of the Issuer to pay the sum set forth therein from the sources described therein. 3.2 Instruments of Further Assurance. The Issuer covenants that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered such further acts, instruments and other documents as the Settlor, the Trustee or the Bank may reasonably require for the payment of the Note. 3.3 Notice of Default. The Issuer shall promptly notify the Settlor, the Trustee and the Bank if it is in default under any provision of this Agreement or any other agreement for the payment of borrowed money. 3.4 Maintenance of Tax Exemption. The Issuer shall not take any action or, to the extent within its control, suffer or permit any action to be taken or condition to exist which would adversely affect the exclusion of interest from Federal income taxation claimed by the owner of a beneficial interest in the Note. The Issuer will not use or permit the use of the proceeds of the Note in any manner that would cause the Note to be an "arbitrage bond" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. The Issuer has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the Issuer is an issuer of obligations whose arbitrage certification may not be relied upon. 3.5 Pledge of Issuer's Interest in Investment Agreement. As additional security for the Note and the Reimbursement Obligations, the Issuer hereby grants a pledge of and security interest in the Issuer's pro rata interest in the Investment Agreement to the Trustee, on behalf of the Bank and the owners of the Certificates of Participation. Any interest of the Issuer in the Investment Agreement shall be subject and subordinate to such pledge and security interest. 11 3.6. Financial Information. The Issuer shall provide such information as the Bank may reasonably request from time to time relating to the financial condition of the Issuer. Section 4. Representations. 4.1 Representations by the Settlor. The Settlor represents and warrants to the Issuer and the assignees of its rights hereunder, including the Bank, that: (a) The Settlor is duly organized and existing under the laws of the State of Missouri with lawful power and authority to (i) enter into this Agreement and the Indenture (ii) purchase the Note through the funding of the Investment Agreement and (iii) place the Note in trust with the Trustee for the benefit of the holders of the Certificates of Participation and the Bank as their respective interests may appear; 12 (b) The execution, delivery and performance of this Agreement and the Indenture have been duly authorized by the Settlor and such authorizations have not been modified, amended or repealed and this Agreement and the Indenture constitute the legal, valid and binding obligations of the Settlor, enforceable in accordance with their respective terms; and (c) The execution, delivery and performance of this Agreement, the Indenture and the Investment Agreement by the Settlor 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 other agreement or instrument to which the Settlor is a party or by which it or any of its property is bound or any of the constitutional or statutory rules or regulations applicable to the Settlor or its property. 4.2 Representations by the Issuer. The Issuer hereby represents and warrants to the Settlor and the Bank that as of the Closing Date: (a) The Issuer is a duly organized and existing political subdivision under the laws of the State; (b) The Issuer has lawful power and authority to enter into, execute and deliver this Agreement and the Note and to carry out its obligations hereunder and thereunder, including the issuance of the Note in and for consideration of the funding of the Investment Agreement, and by all necessary action has been duly authorized to execute and deliver this Agreement and the Note acting by and through the Authorized Officer of the Issuer; and this Agreement and the Note are the legal, valid and binding obligations of the Issuer enforceable against the Issuer in accordance with their restrictive; terms. (c) The Issuer has complied with all applicable provisions of State law and the District's Plan in the authorization, sale, issuance and delivery of the Note and the maximum principal amount of the Note and the obligations under this Agreement do not exceed the amount permitted by law or the provisions of this Agreement; (d) The Note issued simultaneously with the delivery of this Agreement and the obligations under this Agreement do not violate any constitutional statutory or debt limitation; (e) The execution and delivery of this Agreement and the Note issued simultaneously herewith by the Issuer and purchased by the Settlor will not conflict with or result in a breach of any of the terms of, or constitute a default 13 under, any indenture, mortgage, deed of trust, lease or other agreement or instrument to which the Issuer is a party or by which it or any of its property is bound or any rules or regulations applicable to the Issuer or its property or any order of any court or other governmental body; (f) No litigation, proceedings or investigations are pending or, to the knowledge of the Issuer, threatened against the Issuer, except: (i) litigation involving liability claims, the probable recoveries in which and the estimated costs and expenses of defenses of which, in the opinion of counsel to the Issuer, will be entirely within the Issuer's applicable insurance policy limits (subject to applicable deductions) or are not in excess of the total of the available reserves held under the Issuer's applicable self-insurance program and (ii) litigation involving other types of claims which if adversely determined will not, in the opinion of counsel to the Issuer, materially and adversely affect the financial condition or operations of the Issuer. In addition, no litigation, proceedings or investigations are pending or, to the knowledge of the Issuer, threatened against the Issuer seeking to restrain, enjoin or in any way limit the approval or issuance and delivery of the Note or this Agreement by the Issuer, the collection of revenues pledged to pay the principal of and interest on the Note, or which would in any manner challenge or adversely affect the existence or powers of the Issuer to enter into and carry out the transactions described in or contemplated by the execution, validity or performance by the Issuer of the terms and provisions of the Note or this Agreement; (g) The Issuer has not defaulted and is not in default upon a debt obligation; (h) The Issuer did not have a negative cash balance at the beginning of the Fiscal Year in the Fund; (i) The Note does not exceed fifty percent (50%) of amounts projected to be available to the Issuer for payment to the Fund from which the Note shall be paid pursuant to the Local Legislation; (j) The Issuer's most recent audited financial statements present fairly, in accordance with generally accepted accounting principles, the financial condition of the Issuer as of the date thereof and the results of operation for the period covered thereby. There has been no change in the financial condition of the Issuer since the date of such audited financial statement that might have a materially adverse effect on the Issuer or the Issuer's ability to 14 perform its obligations under this Agreement and the Note. The Bank and the Settlor may waive, in writing, the representations and warranties set forth in (g) through (j) above. Section 5. Amendments. 5.1 Amendment, Changes and Modifications. This Agreement may not be amended, changed, modified, altered or terminated without the written consent of the Trustee and the Bank and then only to the extent permitted under the Indenture. Section 6. Miscellaneous. 6.1 Settlor Obligation Limited. Except as may be otherwise expressly agreed and consented to by the Settlor, nothing in this Agreement is intended to require or obligate the Settlor for any purpose or at any time whatsoever, to provide, apply or expend any funds coming into the hands of the Settlor other than the funds derived from the issuance of the Certificates of Participation. 6.2 Effect of Breach. Failure on the part of the Settlor in any instance or under any circumstance to observe or fully perform any obligation assumed by or imposed upon it by this Agreement or by law, including the funding of the purchase of the Certificate of Indebtedness, shall not make the Settlor liable in damages to the Issuer or relieve the Issuer from paying the Note or fully performing any other obligation required of it under this Agreement; however, the Issuer may have and pursue any and all other remedies provided by law for compelling performance by the Settlor of said obligation assumed by or imposed upon the Settlor. If the Issuer defaults under any provision of this Agreement, the Settlor, the Trustee or the Bank shall have and may pursue any and all remedies provided by law and as provided by the Indenture. 6.3 Execution of Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be executed by the Settlor and by the Issuer and all of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. 6.4 Severability of Invalid Provisions. If any one or more of the covenants or agreements provided in this Agreement on the part of the Settlor or the Issuer 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. 15 6.5 Notices. All notices, filings and other communications shall be sent by first class mail, postage prepaid, addressed as follows: If to the Trustee, to Mercantile Bank National Association, P.O. Box 321, St. Louis, Missouri 63166, Attention: Corporate Trust Department; If to the Settlor, to Stifel, Nicolaus & Company, Incorporated, 500 North Broadway, Suite 1500, St. Louis, Missouri 63166, Attention: Joy Howard; and If to the Issuer, to The Metropolitan St. Louis Sewer District, 2000 Hampton Avenue, St. Louis, Missouri 63139, Attention: Executive Director. 6.6 Applicable Law. This Agreement shall be governed exclusively by the applicable laws of the State of Missouri. 6.7 Section Headings Not Controlling. The headings of the several Sections of this Agreement have been prepared for convenience of reference only and shall not control, affect the meaning of or be taken as an interpretation of any provision of this Agreement. IN WITNESS WHEREOF, the Issuer has caused its seal to be hereunto affixed and attested and the Settlor and the Issuer have caused this Agreement to be signed by their respective officers hereunto duly authorized and this Agreement to be dated as of the day and year above written. STIFEL, NICOLAUS & COMPANY, INCORPORATED, as Settlor ATTEST: By:___________________________ ______________________________ (SEAL) THE METROPOLITAN ST. LOUIS SEWER DISTRICT 16 ATTEST: By:___________________________ ______________________________ (SEAL) 17 Mercantile Bank National Association, as Trustee, acting under and pursuant to the Indenture of Trust dated as of October 1, 1988, between the Settlor and such Bank, has assumed and agreed to perform all the duties and obligations of the Settlor under this Agreement other than those set forth in Section 2.1 hereof and any other provision of this Agreement relating to the obligation of the Settlor to establish the Program, purchase the Notes and deposit the Notes in the Trust. DATED this ______ day of October, 1988. MERCANTILE BANK NATIONAL ASSOCIATION, as Trustee ATTEST: By:___________________________ Title:________________________ ______________________________ Title: Assistant Secretary The foregoing Ordinance was adopted October 12, 1988.