HomeMy WebLinkAbout06128ORDINANCE NO. 612
AN ORDINANCE AUTHORIZING THE ISSUANCE OF $11,100,000,
AGGREGATE PRINCIPAL AMOUNT OF CITY OF PUEBLO,
COLORADO, ACTING BY AND THROUGH ITS SEWER ENTERPRISE,
SEWER REFUNDING REVENUE BONDS, SERIES 1996; AUTHORIZING
THE USE OF THE PROCEEDS THEREOF FOR THE PURPOSE OF
REFUNDING THE CITY OF PUEBLO, COLORADO, SEWER REVENUE
REFUNDING BONDS, SERIES 1986 AND PAYING THE COSTS OF
ISSUING SAID BONDS; PROVIDING THE FORM, TERMS AND
CONDITIONS OF SAID BONDS, THE MANNER AND TERMS OF THEIR
ISSUANCE, THE MANNER OF THEIR EXECUTION, THE METHOD OF
PAYING THEM AND THE SECURITY THEREFOR; PLEDGING
CERTAIN REVENUES OF THE CITY'S SEWER ENTERPRISE FOR THE
PAYMENT OF SAID BONDS; PROVIDING CERTAIN COVENANTS AND
OTHER DETAILS CONCERNING THE BONDS AND THE CITY'S
SEWER ENTERPRISE; AND RATIFYING ACTION PREVIOUSLY TAKEN
AND APPERTAINING THERETO.
WHEREAS, the City of Pueblo (the "City "), in the County of Pueblo and State of
Colorado (the "State "), is a legally and regularly created, established, organized and existing
municipal corporation under the provisions of Article XX of the Constitution of the State and
the home rule charter of the City (the "Charter "); and
WHEREAS, under the Charter, the City is possessed of all powers which are necessary,
requisite or proper for the government and administration of its local and municipal affairs, all
powers which are granted to home rule municipalities by the Colorado Constitution, and all
rights and powers that now or hereafter may be granted to municipalities by the laws of the
State; and
WHEREAS, the City presently owns and operates a municipal sanitary sewer system as
more fully defined herein (the "Sewer Enterprise "); and
WHEREAS, the City has heretofore issued its City of Pueblo, Colorado, Sewer Revenue
Refunding Bonds, Series 1986 (the "Refunded Bonds "), currently outstanding in the aggregate
principal amount of $11,195,000; and
WHEREAS, the Refunded Bonds maturing on and after December 1, 1997 are subject
to redemption at the option of the City on and after December 1, 1996 at a redemption price of
101 % of par plus accrued interest to the redemption date; and
WHEREAS, the Refunded Bonds are secured by, and constitute a first and prior lien on,
the Net Pledged Revenues (as hereinafter defined); and
021107605.4
4
WHEREAS, Section 7 -24 of the Charter provides that whenever the City Council
determines it to be in the best interest of the City and its inhabitants, the City Council may by
ordinance, without an election, authorize the issuance of refunding bonds for the purpose of
paying outstanding bonds of the City, such refunding bonds to be in such amounts and maturities
and to bear interest as provided in the ordinance authorizing their issuance; and
WHEREAS, Article X, Section 20 of the Colorado Constitution ( "Amendment One ")
requires that districts (as defined in Amendment One) not issue bonded debt without prior voter
approval; and
WHEREAS, Amendment One specifically excludes "enterprises" (defined as
government -owned businesses authorized to issue their own revenue bonds and receiving under
10 % of their annual revenue in grants from all Colorado state and local governments) from the
restrictions contained therein; and
WHEREAS, the Sewer Enterprise constitutes a government -owned business authorized
to issue its own revenue bonds and receives under 10 % of its annual revenue in grants from all
Colorado state and local governments; and
WHEREAS, Amendment One also permits the issuance of bonds without an election for
the purpose of refunding outstanding indebtedness at a lower interest rate; and
WHEREAS, the City Council constitutes the governing body of the Sewer Enterprise;
M
WHEREAS, the City Council has determined and hereby declares that the current
refunding of the Refunded Bonds will result in a reduction in total debt service and an interest
cost saving, will effect other economies and is in the best interest of the City and its inhabitants;
and
WHEREAS, pursuant to and in accordance with Section 7 -24 of the Charter, by written
ordinance of the City Council, and in furtherance of the purposes of the Charter, the City and
the Sewer Enterprise desire to refund the Refunded Bonds; and
WHEREAS, to finance the refunding of the Refunded Bonds and to pay the costs of
issuing such refunding bonds, the City and the Sewer Enterprise deem it advisable and necessary
to issue $11,100,000 aggregate principal amount of "City of Pueblo, Colorado, acting by and
through its Sewer Enterprise, Sewer Refunding Revenue Bonds, Series 1996" (the "Bonds "),
payable solely from the Net Pledged Revenues of the Sewer Enterprise; and
WHEREAS, the Bonds will be issued, sold and delivered by the Sewer Enterprise to
Principal Financial Securities, Inc., Englewood, Colorado (the "Underwriter ") as provided
herein; and
WHEREAS, the City and the Sewer Enterprise desire to cause the Bonds to be issued,
to authorize and direct the application of the proceeds to finance the refunding of the Refunded
Bonds and pay the costs of issuance of the Bonds, as set forth herein, and to provide security
for the payment thereof, all in the manner hereinafter set forth; and
WHEREAS, upon the refunding of the Refunded Bonds, there will be no other
obligations of the City or the Sewer Enterprise having a lien upon the Net Pledged Revenues
other than the Bonds; and
WHEREAS, the payment of the principal of and interest on the Bonds will be insured
by a financial guaranty insurance policy (the "Bond Insurance Policy ") issued by MBIA
Insurance Corporation (the "Bond Insurer ") at the time of delivery of the Bonds; and
WHEREAS, copies of the Bond Purchase Agreement, the Escrow Agreement, the Paying
Agency Agreement and the Preliminary Official Statement, all as defined below, have been
presented to the Council at this meeting; and
WHEREAS, all things necessary to make the Bonds when authenticated by the Paying
Agent (as defined herein) and issued as provided in this Ordinance, the valid, binding and legal
obligations of the Sewer Enterprise according to the import thereof, and to constitute this
Ordinance a valid assignment and pledge of the amounts pledged to the payment of the principal
of and interest on the Bonds, have been done and performed, and the creation, execution and
delivery of the Bonds, subject to the terms hereof, have in all respects been duly authorized.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO:
Section 1. Definitions. The terms defined in this Section shall have the designated
meanings for all purposes of this Ordinance and of any amendatory or supplemental ordinance,
except where the context by clear implication requires otherwise.
"Bond Fund" means the Bond Fund created pursuant to Section 13 hereof.
"Bond Insurance Policy" means the financial guaranty insurance policy issued by the
Bond Insurer, which insures the payment of the principal of and interest on the Bonds when due.
"Bond Insurer" means MBIA. Insurance Corporation, and any successor or assign.
"Bond Purchase Agreement" means the Bond Purchase Agreement dated October 15,
1996, between the Sewer Enterprise and the Underwriter.
"Bond Year" means the one -year period beginning on the December 1 of each year and
ending on November 30 of the following year; provided, however, that the first Bond Year shall
commence on the date of issuance of the Bonds and will end on November 30, 1996.
0211076M.4 3
"Bonds" means the "City of Pueblo, Colorado, acting by and through its Sewer
Enterprise, Sewer Refunding Revenue Bonds, Series 1996."
"Business Day" shall mean any day on which banks located in the City, located in the
City of New York, New York or located in the city in which the principal corporate trust office
of the Paying Agent is located are not required or authorized by law to remain closed and on
which The New York Stock Exchange is open.
"Cede" means Cede & Co., the nominee of DTC, and any successor nominee of DTC.
"Charter" means the Home Rule Charter of the City, as amended.
"City" means the City of Pueblo, Colorado.
"Code" means the Internal Revenue Code of 1986, as amended.
"Council" means the City Council of the City, which serves also the governing body of
the Sewer Enterprise.
"DTC" means The Depository Trust Company, New York, New York, and its successors
and assigns.
"Escrow Agent" means The Bank of Cherry Creek, N.A., as escrow agent under the
Escrow Agreement, and any successors and assigns.
"Escrow Agreement" means the Escrow Agreement, dated as of November 1, 1996,
between the Sewer Enterprise and the Escrow Agent, and all amendments and supplements
thereto.
"Event of Default" means any occurrence or event specified in and defined by Section 26
hereof.
"Federal Securities" shall have the meaning ascribed to such term in Section 24 hereof.
"Fiscal Year" means the fiscal year of the Sewer Enterprise, presently the 12 months
commencing on the first day of January of any calendar year and ending on the last day of
• December of the same calendar year.
"Gross Revenues" means all income and revenues derived directly or indirectly from the
operation and use of and otherwise pertaining to the Sewer Enterprise, or any part thereof,
whether resulting from repairs, enlargements, extensions, betterments or other improvements
to the Sewer Enterprise, or otherwise, including without limitation:
OV1076M.4 4
(a) All fees, rates and other charges for the use of the Sewer Enterprise, or
for any service rendered by the Sewer Enterprise in its operations, directly or indirectly,
the availability of any such service, or the sale or other disposal of any commodities
derived therefrom, but:
(i) Excluding any moneys borrowed and used for the acquisition of
capital improvements,
(ii) Excluding any moneys received as grants, appropriations or gifts
from the Federal government, the State or other sources, the use of which is
limited or restricted by the grantor or donor to the construction of capital
improvements for the Sewer Enterprise or for other purposes resulting in the
general unavailability thereof, except to the extent any such moneys shall be
received as payments for the use of the Sewer Enterprise, services rendered
thereby, the availability of any such service, or the disposal of any commodities
therefrom,
(iii) Excluding any money and securities, and interest and other gain
from investment of such money and from such securities in any refunding fund
or escrow account or similar account pledged to the payment of any Bonds or
other obligations therein specified, and
(iv) Excluding connection fees deposited into the Sanitary Sewer
Collection System Improvement Fund and unavailable to pay debt service,
(b) All income or other gain from any investment (except as set forth in (a) (iii)
above),
(c) Upon an Event of Default, the proceeds of such securities themselves prior
to their encumbrance or obligation to defray any cost of an improvement or other project
for which the securities are issued, unless otherwise so provided; and such defined term
includes all income and revenues derived from the operation of any other utility or other
income- producing facilities added to the Sewer Enterprise and to which the pledge and
lien herein provided are extended by ordinance adopted by the Council or the qualified
electors of the City or by Charter amendment adopted by such electors, and
(d) Any unrestricted cash and investments in the Revenue Fund.
"Investment Instructions" means the letter of instructions provided to the Sewer Enterprise
on the date of issue of the Bonds in accordance with Section 18 hereof.
"Management Engineer" means a consulting engineering firm, selected by the Sewer
Enterprise, and nationally known for its expertise in the areas of service provided by the Sewer
Enterprise.
oytm6%.4 5
"Net Pledged Revenues" means the Gross Revenues remaining after the payment of the
Operating and Maintenance Expenses of the Sewer Enterprise.
"Operation and Maintenance Expenses" or any phrase of similar import, means all
reasonable and necessary current expenses of the Sewer Enterprise, paid or accrued, for
operating and maintaining the Sewer Enterprise or any component division or other part thereof,
or of any other designated facilities in connection with which such term is used; and the term
includes, at the option of the Sewer Enterprise, except as limited by law, without limitation:
(a) Engineering, auditing, reporting, legal and other overhead expenses
directly related and reasonably allocable to the administration, operation and maintenance
of the Sewer Enterprise;
(b) Fidelity bond premiums and property and liability insurance premiums
pertaining to the Sewer Enterprise, or a reasonably allocable share of a premium of any
blanket bond or policy pertaining to the Sewer Enterprise;
(c) Payments to pension, retirement, health and hospitalization funds, other
insurance, and to any self - insurance fund as insurance premiums not in excess of such
premiums which would otherwise be required for such insurance;
(d) Any assessments, excise taxes or other charges which may be lawfully
imposed on the City, the Sewer Enterprise, the revenues therefrom, or the City income
from or operations of any properties under its control and pertaining to the Sewer
Enterprise, or any privilege in connection with the Sewer Enterprise or this operation
(but no payments made in lieu of taxes or any general ad valorem taxes);
(e) The reasonable charges of the Paying Agent and any other depository bank
pertaining to the Bonds and any other securities payable from the Net Pledged Revenues
or otherwise pertaining to the Sewer Enterprise, except to the extent paid from the
proceeds of Bonds or other such securities;
(f) Contractual services, professional services, salaries, other administrative
expenses, and costs of materials, supplies, repairs and labor, pertaining to the Sewer
Enterprise or to the issuance of the Bonds or any other securities relating to the Sewer
Enterprise, including, without limitation, the expenses and compensation of any trustee,
. , receiver, or other fiduciary, except to the extent paid from the proceeds of Bonds or
other such securities;
(g) The costs incurred by the Sewer Enterprise in the collection and any
refunds of all or any part of the Gross Revenues;
(h) Any costs of utility services furnished to the Sewer Enterprise by the City
or otherwise; and
021107603.4 6
(i) All other administrative, general and commercial expenses pertaining to
the Sewer Enterprise, but
(i) Excluding any allowance for depreciation;
(ii) Excluding any costs of extensions, enlargements, betterments and
other improvements (or any combination thereof);
(iii) Excluding any reserves for major capital replacements (other than
normal repairs);
(iv) Excluding any reserves for operation, maintenance or repair of the
Sewer Enterprise;
(v) Excluding any allowance for the redemption of any bond or other
security evidencing a loan, or the payment of any interest thereon, or any prior
redemption premium due in connection therewith, or any reserve therefor; and
(vi) Excluding any liabilities incurred in the acquisition or improvement
of any properties comprising any project or any existing facilities (or any
combination thereof) pertaining to the Sewer Enterprise.
"Operations Minimum Reserve" means 20 % of the principal of and interest on the Bonds
coming due the next succeeding Fiscal Year, provided that if the next succeeding Fiscal Year
is the year in which the final principal is due on the Bonds or any issue or series of additional
bonds, there shall be deducted from such principal and interest requirements the amount required
to be transferred from the Bond Reserve Fund for the final payment of principal of and interest
on the Bonds and any such additional bonds if such transfer is required by the ordinance
authorizing the issuance of any such additional bonds.
"Operations Reserve Fund" means the Operations Reserve Fund created pursuant to
Section 13 hereof.
"Ordinance" means this Ordinance, and any amendments or supplements hereto as may
be adopted by the Council in compliance herewith.
"Participants" means those broker - dealers, banks and other financial institutions from
time to time for which DTC holds Bonds as a securities depository.
"Paying Agency Agreement" means the Paying Agency Agreement, dated as of
November 1 1996, between the Sewer Enterprise and the Paying Agent, and all amendments
and supplements thereto.
02/104608.4 7
"Paying Agent" means The Bank of Cherry Creek, N.A., in Denver, Colorado, and any
successors and assigns.
"Permitted Investments" means the following investments, so long as such investments
are permitted under the laws of the State, for funds of the City:
(a) Direct obligations of the United States of America (including obligations
issued or held in book -entry form on the books of the Department of the Treasury, and
CATS and TGRS) or obligations the principal of and interest on which are
unconditionally guaranteed by the United States of America.
(b) Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies and provided such obligations are
backed by the full faith" and credit of the United States of America (stripped securities
are only permitted if they have been stripped by the agency itself):
(i) U.S. Export - Import Bank (Eximbank)
Direct obligations of fully guaranteed certificates of
beneficial ownership
(ii) Farmers Home Administration (FHA)
Certificates of beneficial ownership
(iii) Federal Financing Bank
(iv) Federal Housing Administration Debentures (FHA)
(v) General Services Administration
Participation certificates
(vi) Government National Mortgage Association (GNMA or "Ginnie
Mae ")
GNMA - guaranteed mortgage - backed bonds
GNMA - guaranteed pass - through obligations
(vii) U.S. Maritime Administration
Guaranteed Title XI financing
(viii) U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures
U.S. Public Housing Notes and Bonds
(c) Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following non -full faith and credit U.S. government agencies
(stripped securities are only permitted if they have been stripped by the agency itself):
(i) Federal Home Loan Bank System
Senior debt obligations
(ii) Federal Home Loan Mortgage Corporation (FHIMC or
"Freddie Mac ")
Participation Certificates
Senior debt obligations
(iii) Federal National Mortgage Association (FNMA or "Fannie Mae ")
Mortgage - backed securities and senior debt obligations
(iv) Student Loan Marketing Association (SLMA or "Sallie Mae ")
Senior debt obligations
(v) Resolution Funding Corp. (REFCORP)
Only the interest component of REFCORP strips which
have been stripped by request to the Federal Reserve Bank
of New York in book entry form are acceptable
(vi) Farm Credit System
Consolidated systemwide bonds and notes.
(d) Money market funds registered under the Federal Investment Company Act
of 1940, whose shares are registered under the Federal Securities Act of 1933, and
having a rating by Standard & Poor's ( "S &P ") of "AAAm -G "; AAm"; or "AAW and
if rated by Moody's, rated "Aaa "; "Aal "; or
(e) Certificates of deposit secured at all times by collateral described in (a) or
(b) above. Such certificates must be issued by commercial banks, savings and loan
associations or mutual savings banks. The collateral must be held by a third party and
the Registered Owners of the Bonds must have a perfected first security interest in the
collateral.
(f) Certificates of deposit, savings accounts, deposit accounts or money
market deposits which are fully insured by FDIC, including BIF and SAIF.
(g) Investment Agreements, including GIC's, acceptable to the Bond Insurer.
(h) Commercial paper rated, at the time of purchase, "Prime - 1 " by Moody's
Investors Service ( "Moody's ") or "A -1 +" or better by S &P.
(i) Bonds or notes issued by any state or municipality which are rated by
Moody's or S &P in one of the two highest rating categories assigned by such agencies.
0) Federal funds or bankers acceptances with a maximum term of one year
of any bank which has an unsecured, uninsured and unguaranteed obligation rating of
"Prime - 1" or "A3" or better by Moody's and "A -1 +" or better by S &P.
(k) Repurchase Agreements ( "repos ") must satisfy the following criteria or be
approved by the Bond Insurer.
04/107603.4 9
(i) Repos must be between the municipal entity and a dealer bank or
securities firm:
(A) Primary dealers on the Federal Reserve reporting dealer list
which are rated "A" or better by S &P and Moody's, or
(B) Banks rated "A" or above by S &P and Moody's.
(ii) The written repo contract must include the following:
(A) Securities which are acceptable for transfer are:
(1) Direct U.S. governments, or
(2) Federal agencies backed by the full faith and credit
. of the U.S. government (and FNMA & FHLMC).
(B) The term of the repo may be tip to 30 days.
(C) The collateral must be delivered to the municipal entity,
trustee (if trustee is not supplying the collateral) or third
party acting as agent for the trustee (if the trustee is
supplying the collateral) before /simultaneous with payment
(perfection by possession of certificated securities).
(D) Valuation of Collateral:
(1) The securities must be valued weekly, marked -to-
market at current market price plus accrued interest.
The value of collateral must be equal to 104% of
the amount of cash transferred by the municipal
entity to the dealer bank or security firm under the
repo plus accrued interest. If the value of securities
held as collateral slips below 104% of the value of
the cash transferred by municipality, then additional
cash and/or acceptable securities must be
transferred. If, however, the securities used as
collateral are FNMA or FHLMC, then the value of
collateral must equal 105 %.
(iii) Legal opinion which must be delivered to the municipal entity and
Trustee: Repo meets guidelines under state law for legal
investment of public funds.
02/107608.4 10
(1) Pre- refunded municipal bonds rated "Aaa " by Moody's and 'AM" by
S &P. If, however, the issue is only rated by S &P (i.e., there is no Moody's, rating),
then the pre - refunded bonds must have been pre - refunded with cash, direct U.S. or U.S.
guaranteed obligations, or AAA rated pre - refunded municipals to satisfy this condition.
"Preliminary Official Statement" means the Preliminary Official Statement dated
October 1, 1996, prepared for use by the Underwriter in connection with the offering and sale
of the Bonds.
"Qualified Surety Bond" means any insurance policy, surety bond, letter of credit or
similar instrument deposited in or credited to the Reserve Fund in lieu of or in partial
substitution for cash or Permitted Investments on deposit in the Reserve Fund. Any such
insurance policy, surety bond, letter of credit or similar instrument must be issued by an entity
having a rating in the highest rating category assigned by Moody's Investors Service and
Standard & Poor's Ratings Group and, if rated by A.M. Best & Company, must also be rated
in the highest rating category by A.M. Best & Company, at the time such policy, surety, bond,
letter of credit or similar instrument is deposited in or credited to the Reserve Fund.
"Rebate Fund" means the Rebate Fund created pursuant to Section 13 hereof.
"Record Date" means the 15th day of the month (whether or not a business day) prior
to each interest payment date with respect to the Bonds.
"Refunded Bonds" means the City of Pueblo, Colorado, Sewer Revenue Refunding
Bonds, Series 1986, presently outstanding in the aggregate principal amount of $11,195,000.
"Registered Owner" means the person or persons in whose name or names a Bond shall
be registered on the books of the Sewer Enterprise maintained by the Paying Agent and kept for
that purpose in accordance with provisions of the Paying Agency Agreement and this Ordinance.
"Representation Letter" means the Blanket Letter of Representations from the City to
DTC.
"Reserve Fund" means the Reserve Fund created pursuant to Section 13 hereof.
"Reserve Fund Requirement" means $1,110,000.
"Reserve Fund Surety Bonds" means the Debt Service Reserve Fund Surety Bond issued
by the Bond Insurer in the amount of the Reserve Fund Requirement for the Bonds, and
deposited in the Reserve Fund.
"Revenue Fund" means the Revenue Fund created pursuant to Section 13 hereof.
021107608.4 11
"Sewer Enterprise" means the municipal sanitary sewer system and consisting of all
properties, real, personal, mixed or otherwise, now owned or hereafter acquired by the City,
through purchase, construction or otherwise, and used in connection with such Sewer Enterprise
of the City, and in any way pertaining thereto, whether or not located within or without or both
within and without the boundaries of the City; and such defined term includes any other utility
or other income - producing facilities added to the Sewer Enterprise and to which the lien and
pledge herein provided are extended by ordinance adopted by the City or the qualified electors
of the City or by Charter amendment adopted by such electors.
"State" means the State of Colorado.
"Underwriter" means Principal Financial Securities, Inc., Englewood, Colorado.
Section 2. Ratification.' All action heretofore taken (not inconsistent with the provisions
of this Ordinance) by the Council and officers of the City and the Sewer Enterprise relating to
the refunding of the Refunded Bonds and to the authorization, sale and issuance of the Bonds,
is hereby ratified, approved and confirmed.
Section 3. Authorization of Refunding of the Refunded Bonds. The refunding of the
Refunded Bonds is hereby authorized and the necessity thereof declared.
Section 4. Authorization and Sale of Bonds. There are hereby authorized and directed
to be issued the revenue bonds of the Sewer Enterprise to be designated "City of Pueblo,
Colorado, acting by and through its Sewer Enterprise, Sewer Refunding Revenue Bonds, Series
1996" in the aggregate principal amount of $11,100,000. The principal of and interest (except
as herein otherwise provided) on the Bonds are payable from, and secured by, the Net Pledged
Revenues. The Bonds as herein authorized shall be sold to the Underwriter at a price equal to
the principal amount thereof, plus accrued interest from November 1, 1996 to the date of their
delivery, less an underwriting discount of $55,500.00 and an original issue discount of
$23,368.00, such sale to be in accordance with the provisions of the Bond Purchase Agreement.
The Preliminary Official Statement is hereby approved and the use thereof by the Underwriter
is hereby ratified and confirmed. The President of the City Council is authorized and directed
to execute or deliver to the Underwriter a final Official Statement in substantially the form of
the Preliminary Official Statement.
Section 5. Bond Details. The Bonds shall be issuable as fully registered bonds without
• , coupons in the denomination of $5,000 or any integral multiple thereof.
The Bonds shall be dated as of November 1, 1996 and shall bear interest payable
semiannually from their date or such later dates as to which interest has been paid on each
June 1 and December 1, commencing June 1, 1997. Interest on the Bonds shall be calculated
on the basis of 360 -day year, assuming twelve 30-day months.
04/107605.4 12
The Bonds shall bear interest at the rates (per annum), mature in the principal amounts
and mature on the dates specified as follows:
Maturity
Principal Amount
Interest Rate
December 1, 1997
$1,095,000
3.85%
December 1, 1998
1,185,000
4.20
December 1, 1999
1,230,000
4.35
December 1, 2000
1,285,000
4.50
December 1, 2001
1,350,000
4.60
December 1, 2002
1,405,000
4.70
December 1, 2003
1,470,000
4.75
December 1, 2004
2,080,000
4.85
The principal of and interest on the Bonds shall be payable in lawful money of the United States
of America, with the principal of the Bonds payable at the principal corporate trust office of the
Paying Agent. Payment of interest on any Bond shall be made to the Registered Owner thereof
and shall be paid by check or draft of the Paying Agent mailed on the interest payment date to
the Registered Owner at his or her address as it appears on the registration books of the City or
at such other address as is furnished to the Paying Agent in writing by such Registered Owner
as of the Record Date; provided, however, any such interest not so timely paid or duly provided
for shall cease to be payable to the person who is the Registered Owner thereof at the close of
business on the Record Date and shall be payable to the person who is the Registered Owner
thereof at the close of business on a Special Record Date for the payment of any such defaulted
interest. Such Special Record Date shall be fixed by the Paying Agent whenever moneys
become available for payment of the defaulted interest, and notice of the Special Record Date
shall be given to the Registered Owners of the Bonds not less than ten days prior thereto by
first -class mail to each such Registered Owner as shown on the registration books on a date
selected by the Paying Agent, stating the date of the Special Record Date and the date fixed for
the payment of such defaulted interest. If any Bond shall remain unpaid upon presentation at
maturity, interest shall continue to accrue until paid at the rate designated in said Bond.
Section 6. Redemption. The Bonds shall not be subject to redemption prior to their
respective maturities.
0211076%.4 13
Section 7. Paying Agent; Transfer and Exchange. The Paying Agent is hereby
appointed as bond registrar for the Sewer Enterprise for purposes of the Bonds. The Paying
Agent shall maintain on behalf of the Sewer Enterprise, books for the purpose of registration and
transfer of the Bonds, and such books shall specify the person entitled to the Bonds and the
rights evidenced thereby, and all transfeis of Bonds and the rights evidenced thereby. Bonds
may be transferred or exchanged without cost, except for any tax or governmental charge
required to be paid with respect to such transfer or exchange and any cost of printing bonds in
connection therewith, at the principal corporate trust office of the Paying Agent. Bonds may
be exchanged for a like aggregate principal amount of Bonds of other authorized denominations
of the same maturity and interest rate. Upon surrender for transfer of any Bond, duly endorsed
for transfer or accompanied by an assignment duly executed by the Registered Owner or his or
her attorneys duly authorized in writing, the Sewer Enterprise shall execute and the Paying
Agent shall authenticate and deliver in the name of the transferee or transferees a new Bond or
Bonds of the same maturity and interest rate for a like aggregate principal amount. The person
in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner
thereof for all purposes, whether or not payment on any Bond shall be overdue, and neither the
Sewer Enterprise nor the Paying Agent shall be affected by any notice to the contrary.
Section 8. Execution and Delivery of the Bonds. The Bonds shall be executed in the
name and on behalf of the Sewer Enterprise with the manual or facsimile signature of the
President or Vice President of the Council, shall bear a manual or facsimile of the seal of the
City and shall be attested by the manual or facsimile signature of the City Clerk or Deputy or
Assistant City Clerk. Should any officer whose manual or facsimile signature appears on the
Bonds cease to be such officer before delivery of any Bond, such manual or facsimile signature
shall nevertheless be valid and sufficient for all purposes. The President or Vice President of
the Council and the City Clerk are hereby authorized and directed to prepare and to execute the
Bonds in accordance with the requirements of this Ordinance. When the Bonds have been duly
executed, the officers of the Sewer Enterprise are authorized to, and shall, deliver the Bonds to
the Paying Agent for authentication. No Bond shall be secured by this Ordinance or entitled to
the benefit hereof, or shall be valid or obligatory for any purpose, unless the certificate of
authentication of the Paying Agent, in substantially the form set forth in this Ordinance, has been
duly executed by the Paying Agent. Such certificate of the Paying Agent upon any Bond shall
be conclusive evidence and the only competent evidence that such Bond has been authenticated
and delivered hereunder. The Paying Agent's certificate of authentication shall be deemed to
have been duly executed by it if manually signed by an authorized signatory of the Paying
Agent, but it shall not be necessary that the same signatory sign the certificate of authentication
• on all of the Bonds issued hereunder.
Upon the authentication of the Bonds, the Paying Agent shall deliver the same to the
Underwriter or its designees as directed by the order of the Sewer Enterprise as hereinafter
provided. Prior to the authentication and delivery by the Paying Agent of the Bonds there shall
be filed with the Paying Agent the following:
(a) A certified copy of this Ordinance.
02/10M.4 14
(b) Executed counterparts of the Escrow Agreement and the Paying Agency
Agreement.
(c) A request and authorization to the Paying Agent on behalf of the order of
the Sewer Enterprise and signed by the President or Vice President to authenticate and
deliver the Bonds to the Underwriter or the persons designated therein upon payment to
the order of the Sewer Enterprise of a sum specified in such request and authorization
plus accrued interest thereon to the date of delivery. The proceeds of such payment shall
be paid to the order of the Sewer Enterprise and deposited as provided in Section 12
hereof.
In the event any Bond is mutilated, lost, stolen or destroyed, the Sewer Enterprise shall
execute a new Bond of like maturity, interest rate and denomination to that mutilated, lost, stolen
or destroyed, provided that, in the case of any mutilated Bond, such mutilated Bond shall first
be surrendered to the Sewer Enterprise, and in the case of any lost, stolen or destroyed Bond,
there shall be first furnished to the Sewer Enterprise evidence of such loss, theft or destruction
satisfactory to the Sewer Enterprise, together with an indemnity satisfactory to the Sewer
Enterprise. In the event any such Bond shall have matured, instead of issuing a duplicate Bond,
the Sewer Enterprise may pay the same without surrender thereof, making such requirements
as it deems fit for its protection, including a lost instrument bond. The Sewer Enterprise may
charge the Registered Owner of such Bond with its reasonable fees and expenses in this
connection.
Section 9. Special Obligations; Bond Insurance and Reserve Fund Surety Bond. The
Bonds are special, limited revenue obligations of the Sewer Enterprise and are payable solely
out of the Net Pledged Revenues and other moneys pledged or available therefor under this
Ordinance. Except as expressly provided in this Ordinance, the Net Pledged Revenues shall be
and hereby are irrevocably assigned, pledged and set aside to pay the principal of and interest
on the Bonds, as more particularly set forth herein. The Bonds constitute an irrevocable and
first lien (but not an exclusive first lien) upon the Net Pledged Revenues on a parity with any
parity debt subsequently issued. The Bonds are equally and ratably secured by a lien on the Net
Pledged Revenues and shall not be entitled to any priority one over the other in the application
of the Net Pledged Revenues regardless of the time or times of the issuance of the Bonds. The
Bonds shall not be payable from any general or other fund of the City, and the Bonds shall not
constitute general obligations of the City. The Bonds shall not constitute an indebtedness or a
debt within the meaning of the Charter or any applicable constitutional or statutory provision or
• limitation. The Bonds shall not be payable in whole or in part from ad valorem taxes of the
City, and the full faith and credit of the City is not pledged for the payment of the Bonds.
Payment of the principal of and interest on the Bonds when due will be insured by the
Bond Insurance Policy issued by the Bond Insurer. In addition the Reserve Fund will be funded
by the Reserve Fund Surety Bond issued by the Bond Insurer in the amount of the Reserve Fund
Requirement, and deposited in the Reserve Fund established by the Sewer Enterprise with the
Paying Agent pursuant to Section 13 hereof. Payments under the Reserve Fund Surety Bond
OV1076M.4 15
are governed by the Financial Guaranty Agreement, dated as of July 11, 1996 (the "Financial
Guaranty Agreement ") by and between the City and the Bond Insurer.
Section 10. Bond Form. The Bonds shall be in substantially the form hereinafter set
forth, with such variations, omissions and insertions as are permitted or required by this
Ordinance:
02/10760E.4 16
(Form of Bond)
[FRONT OF BOND]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ( "DTC "), TO THE SEWER ENTERPRISE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS'WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
EXCEPT AS OTHERWISE PROVIDED IN THE ORDINANCE, THIS GLOBAL
BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO
ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY (AS DEFINED HEREIN)
OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A
SUCCESSOR SECURITIES DEPOSITORY.
UNITED STATES OF AMERICA
STATE OF COLORADO
COUNTY OF PUEBLO
CITY OF PUEBLO
ACTING BY AND THROUGH ITS SEWER ENTERPRISE
SEWER REFUNDING REVENUE BOND
SERIES 1996
NO. R-
Interest Rate Maturity Date Original Issue Date CUSIP
November 1, 1996
.. PRINCIPAL SUM:
REGISTERED OWNER:
FDTGI ff I% �
The CITY OF PUEBLO, ACTING BY AND THROUGH ITS SEWER ENTERPRISE,
in the County of Pueblo and State of Colorado (the "Sewer Enterprise "), for value received,
hereby promises to pay to the order of the Registered Owner named above, or registered assigns,
solely from the special funds as hereinafter set forth, on the Maturity Date stated above, the
OVIM60E.4 17
Principal Sum stated above, with interest thereon from the Original Issue Date stated above or
such later date as to which interest has been paid at the Interest Rate per annum stated above,
payable semiannually on the 1st day of June and the 1st day of December of each year,
commencing June 1, 1997, the principal of this bond being payable upon the surrender of this
bond at the principal corporate trust office of The Bank of Cherry Creek, N.A., in Denver,
Colorado, as Paying Agent, or its successor (the "Paying Agent "), and the interest hereon to be
paid to such person as is the Registered Owner hereof as of the close of business at the principal
corporate trust office of the Paying Agent on the Record Date by check or draft of the Paying
Agent mailed to said Registered Owner. The Record Date is the 15th day of the month (whether
or not a business day) preceding any interest payment date. All payments of principal of and
interest on this bond shall be made in lawful money of the United States of America.
This bond is one of a duly authorized series of Bonds designated "City of Pueblo,
Colorado, acting by and through its Sewer Enterprise, Sewer Refunding Revenue Bonds, Series
1996" (the "Bonds "), limited in aggregate principal amount to $11,100,000, issued under and
pursuant to the Constitution and laws of the State of Colorado, and the home rule charter (the
"Charter ") of the City of Pueblo, Colorado (the "City "), and pursuant to an ordinance duly
adopted by the City Council of the City, as governing body of the Sewer Enterprise, prior to
the issuance hereof (the "Ordinance "). The Bonds are issued for the purpose of refunding the
"City of Pueblo, Colorado, Sewer Revenue Refunding Bonds, Series 1986" (the "Refunded
Bonds ") currently outstanding in the aggregate principal amount of $11,195,000 and paying costs
of issuing the Bonds.
The Ordinance provides that upon the terms and conditions set forth therein, the Sewer
Enterprise may issue or incur obligations other than pursuant to the Ordinance which are payable
or secured by the Net Pledged Revenues (as defined herein) on a parity with the Bonds. In
addition, under certain circumstances set forth in the Ordinance, the Sewer Enterprise may also
issue subordinate bonds payable from the Net Pledged Revenues having a lien thereon which is
subordinate and junior to the lien on the Net Pledged Revenues securing the Bonds. "Net
Pledged Revenues" means the Gross Revenues (as defined in the Ordinance) of the City's
municipal sanitary sewer system, after the payment of the Operating and Maintenance Expenses
(as defined in the Ordinance) of the Sewer Enterprise.
The Bonds are special, limited revenue obligations of the Sewer Enterprise payable solely
out of and secured by an irrevocable assignment and pledge (but not an exclusive assignment and
pledge) of the Net Pledged Revenues. The Net Pledged Revenues may also secure parity and
• subordinate bonds hereafter issued, as noted above. This bond shall not constitute an
indebtedness or a debt within the meaning of the Charter or any applicable constitutional or
statutory provision or limitation, nor shall it be considered or held to be a general obligation of
the City. This bond is not payable in whole or in part from ad valorem taxes of the City, and
the full faith and credit of the City is not pledged to pay the principal of or interest on this bond.
Payment of the principal of and interest on this bond shall be made solely from, and as
security for such payment there are irrevocably (but not necessarily exclusively) pledged,
02/107606.4 18
pursuant to the Ordinance, moneys deposited and to be deposited in a special fund of the Sewer
Enterprise (the "Bond Fund ") into which fund the Sewer Enterprise has covenanted under the
Ordinance to pay from the Net Pledged Revenues, a sum sufficient to pay when due the principal
of and interest on the Bonds. The Bonds are additionally secured by funds from time to time
on deposit in a special fund created under the Ordinance (the "Reserve Fund "). As more fully
set forth in the Ordinance, the amounts on deposit in the Reserve Fund are to be used to pay the
principal of and interest on the Bonds whenever amounts on deposit in the Bond Fund shall be
insufficient for such purpose. Except as otherwise specified in the Ordinance, this bond is
entitled to the benefits of the Ordinance equally and ratably as to principal and interest with all
other Bonds issued and to be issued under the Ordinance, to which reference is made for a
description of the rights of the Registered Owners of the Bonds and the rights and obligations
of the City and the Sewer Enterprise.
In addition, payment of the principal of and interest on the Bonds is secured by an
insurance policy issued by MBIA Insurance Corporation, as set forth below under "Statement
of Insurance."
The Bonds are issuable solely in the form of fully registered bonds, without coupons, in
the denomination of $5,000 or any integral multiple thereof. This bond may be transferred or
exchanged at the principal corporate trust office of the Paying Agent in Denver, Colorado, but
only in the manner, subject to the limitations and upon payment of the charges provided in the
Ordinance (including any tax or governmental charge required to be paid with respect thereto
and any cost of printing bonds in connection therewith), and upon surrender and cancellation of
this bond. Upon surrender for any transfer, duly endorsed for transfer or accompanied by an
assignment duly executed by the Registered Owner hereof or his or her attorneys duly authorized
in writing, a new registered Bond or Bonds of the same maturity and interest rate and of
authorized denomination or denominations ($5,000 and integral multiples thereof) for the same
aggregate principal amount will be issued to the transferee in exchange therefor. In addition,
this bond may be exchanged for a like aggregate principal amount of Bonds of other authorized
denominations of the same maturity and interest rate. The Sewer Enterprise and the Paying
Agent may deem and treat the Registered Owner hereof as the absolute owner hereof (whether
or not payment on this Bond shall be overdue) for the purpose of receiving payment of or on
account of principal hereof and interest due hereon and for all other purposes, and-neither the
Sewer Enterprise nor the Paying Agent shall be affected by any notice to the contrary.
Notwithstanding the foregoing, so long as the ownership of the Bonds is maintained in
book -entry form by The Depository Trust Company (the "Securities Depository") or a nominee
thereof, this bond may be transferred in whole but not in part only to the Securities Depository
or a nominee thereof or to a successor Securities Depository or its nominee.
The Bonds are not subject to redemption prior to maturity.
M/1046M.4 19
This bond and all other Bonds of the series of which it forms a part are issued pursuant
to and in full compliance with the Constitution and laws of the State of Colorado, and the
Charter, and pursuant to the Ordinance which has been duly adopted by the Sewer Enterprise.
NEITHER THE CITY NOR THE PAYING AGENT WILL HAVE ANY
RESPONSIBILITY OR OBLIGATION TO THE SECURITIES DEPOSITORY'S
PARTICIPANTS OR INDIRECT PARTICIPANTS, OR THE PERSONS FOR WHOM THEY
ACT AS NOMINEES, WITH RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF
NOTICE FOR THE SECURITIES DEPOSITORY'S PARTICIPANTS, THE INDIRECT
PARTICIPANTS OR THE BENEFICIAL OWNERS OF THE BONDS.
No recourse shall be had for the payment of the principal of or interest on any of the
Bonds or for any claim based thereon or upon any obligation, covenant or agreement set forth
in the Ordinance, against any past, present or future councilmember, officer, employee or agent
of the Sewer Enterprise or the City, or through the Sewer Enterprise or the City, or any
successor thereof, under any rule of law or equity, statute or constitution or by the enforcement
of any assessment or penalty or otherwise, and all such liability of any such councilmember,
officer, employee or agent as such is hereby expressly waived and released as a condition of and
in consideration for the adoption of the Ordinance and the execution, issuance and delivery of
any of the Bonds.
The Ordinance permits, with certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the Sewer Enterprise and the rights
of the Registered Owners of the Bonds at any time by the Sewer Enterprise with the consent of
the Registered Owners of 66 -2/3 % in aggregate principal amount of the Bonds at the time
outstanding. Any such consent or waiver by the owner of this bond shall be conclusive and
binding upon such Registered Owner and upon all future Registered Owners of this bond and
of any Bond issued in replacement thereof whether or not notation of such consent or waiver is
made upon this bond.
It is hereby certified, recited and declared that all acts and conditions required to be
performed precedent to and in the adoption of the Ordinance, and the issuance of this bond, have
been performed in due time, form and manner as required by law and that the issuance of this
bond and the series of which it forms a part does not exceed or violate any constitutional,
statutory or home rule charter limitation or requirement applicable hereto.
This bond shall not be entitled to any benefit under the Ordinance, or become valid or
obligatory for any purpose, until the Paying Agent shall have signed the certificate of
authentication hereon.
QVIO 8.4 20
r
IN WITNESS WHEREOF, the City of Pueblo, Colorado, acting by and through its
Sewer Enterprise, has caused this bond to be signed with the manual or facsimile signature of
the President of the City Council, sealed with the impression of the City seal or a facsimile
thereof, and attested with the manual or facsimile signature of the City Clerk.
[SEAL) CITY OF PUEBLO, COLORADO, ACTING BY
AND THROUGH ITS SEWER ENTERPRISE
By
Attest: President, City Council
By
City Clerk
(Form of Paying Agent's Certificate of Authentication)
Date of Authentication:
We hereby certify that this is one of the Bonds described in the Ordinance described
herein.
THE BANK OF CHERRY CREEK, N.A., as
Paying Agent
By (Manual Signature)
Authorized Representative
(End of Form of Paying Agent's Certificate of Authentication)
02/10760E.4
21
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer ") has issued a policy containing the following
provisions, such policy being on file at The Bank of Cherry Creek, N.A., Denver, Colorado.
The Insurer, in consideration of the payment of the premium and subject to the terms of
this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter
defined, of the following described obligations, the full and complete payment required to be
made by or on behalf of the Sewer Enterprise to The Bank of Cherry Creek, N.A., or its
successor (the "Paying Agent ") of an amount equal to (i) the principal of (either at the stated
maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and
interest on, the Obligations (as that term is defined below) as such payments shall become due
but shall not be so paid (except that in the event of any acceleration of the due date of such
principal by reason of mandatory or optional redemption or acceleration resulting from default
or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund
payment, the payments guaranteed hereby shall be made in such amounts and at such times as
such payments of principal would have been due had there not been any such acceleration); and
(ii) the reimbursement of any such payment which is subsequently recovered from any owner
pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes
an avoidable preference to such owner within the meaning of any applicable bankruptcy law.
The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to
herein collectively as the "Insured Amounts." "Obligations" shall mean:
$11,100,000
CITY OF PUEBLO, COLORADO
Acting By and Through its
SEWER ENTERPRISE
SEWER REFUNDING REVENUE BONDS
SERIES 1996
Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in
writing by registered or certified mail, or upon receipt of written notice by registered or certified
mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an
Insured Amount for which is then due, that such required payment has not been made, the
Insurer on the due date of such payment or within one business day after receipt of notice of
such nonpayment, whichever is later, will make a deposit of funds, in an account with State
• Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient
for the payment of any such Insured Amounts which are then due. Upon presentment and
surrender of such Obligations or presentment of such other proof of ownership of the
Obligations, together with any appropriate instruments of assignment to evidence the assignment
of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate
instruments to effect the appointment of the Insurer as agent for such owners of the Obligations
in any legal proceeding related to payment of Insured Amounts on the Obligations, such
instrument being in a form satisfactory to State Street Bank and Trust Company, N.A., State
02n0760E.4 22
Street Bank- and Trust Company, N.A. shall disburse to such owners or the Paying Agent
payment of the Insured Amounts due on such Obligations, less any amount held by the Paying
Agent for the payment of such Insured Amounts and legally available therefor. This policy does
not insure against loss of any prepayment premium which may at any time be payable with
respect to any Obligation.
As used herein, the term "owner" shall mean the registered owner of any Obligation as
indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer
for such purpose. The term owner shall not include the Issuer or any party whose agreement
with the Issuer constitutes the underlying security for the Obligations.
Any service of process on the Insurer may be made to the Insurer at its offices located
at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and
binding.
This policy in non - cancelable for any reason. The premium on this policy is not
refundable for any reason including the payment prior to maturity of the Obligations.
M 3IA INSURANCE CORPORATION
04/107605.4 23
[Form of Assignment]
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
(Tax Identification or Social Security No.) this bond of the City of
Pueblo, Colorado, acting by and through its Sewer Enterprise, and does hereby irrevocably
constitute and appoint ,
Attorney, to transfer this bond on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated:
Signature Guaranteed
NOTICE: Signature(s) must be guaranteed
by a member of the Security Transfer
Agent's Medallion Program.
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within bond in every
particular, without alteration or enlargement
or any change whatever.
[Form of Legal Opinion Certificate for the Bonds]
STATE OF COLORADO ]
COUNTY OF PUEBLO ] ss. LEGAL OPINION CERTIFICATE
CITY OF PUEBLO ]
I, the undersigned City Clerk of the City of Pueblo, in the State of Colorado, do hereby
certify that an approving opinion of Kutak Rock, Denver, Colorado in substantially the following
form was delivered on the date of the delivery of and payment for the bonds of the series of
which this bond is one, and that originally signed copy of that opinion is on file with the records
of the Sewer Enterprise in my office.
(Attorneys' approving opinion to be inserted in submargins, including complimentary
closing and " /s/ Kutak Rock ")
02/107608.4 24
IN WITNESS WHEREOF, I have caused to be hereunto affixed the facsimile of my
official signature, as of November 1, 1996.
(Facsimile Si nature)
City Clerk
[End of Form of Bond]
02/10760E.4 25
I ! 1 11111 �1 11� "III
Section 11. Delivery of Bonds. When the Bonds shall have been duly executed,
and payment therefor duly received in accordance with the terms hereof and of the Bond
Purchase Agreement, the Sewer Enterprise shall deliver them pursuant to Section 8
hereof.
Section 12. Disposition of Bond Proceeds; Initial Deposits in Funds. Upon the
issuance, sale and delivery of the Bonds, (a) accrued interest on the Bonds from
November 1, 1996 to the date of delivery and payment of the Bonds shall be deposited into
the Bond Fund; (b) an amount equal to $10,861,070.39 shall be transferred to Escrow
Agent to be deposited pursuant to the Escrow Agreement; and (c) the remaining proceeds
shall be applied to payment of costs of issuance of the Bonds. On November 14, 1996,
money shall be deposited in the Operations Reserve Fund from the operations reserve
fund for the Refunded Bonds in amounts sufficient to accumulate the Operations Minimum
Reserve. The Reserve Fund shall be funded in the amount of the Reserve Fund
Requirement, which means, with respect to the Bonds, $1,110,000, which may be satisfied
by the deposit of cash or a Reserve Fund Surety Bond issued by the Bond Insurer in at
least the required amount of the Reserve Fund Requirement with respect to the Bonds.
Section 13. Creation of Funds. There is hereby created by the City the following
funds and accounts:
(a) the Bond Fund, designated as the "City of Pueblo, Colorado, acting
by and through its Sewer Enterprise, Sewer Refunding Revenue Bonds, Series
1996, Bond Fund';
(b) the Operations Reserve Fund, designated as the "City of Pueblo,
Colorado, acting by and through its Sewer Enterprise, Sewer Refunding Revenue
Bonds, Series 1996, Operations Reserve Fund';
(c) the Reserve Fund, designated as the "City of Pueblo, Colorado, acting
by and through its Sewer Enterprise, Sewer Refunding Revenue Bonds, Series
1996, Reserve Fund';
(d) the Revenue Fund, designated as the "City of Pueblo, Colorado,
acting by and through its Sewer Enterprise, Sewer Refunding Revenue Bonds,
Series 1996, Revenue Fund'; and
(e) the Rebate Fund, designated as the "City of Pueblo, Colorado, acting
by and through its Sewer Enterprise, Sewer Refunding Revenue Bonds, Series
1996, Rebate Fund."
Section 14. Underwriter Not Responsible. The Underwriter, any associate
thereof, and any subsequent Registered Owner of any Bond shall not be responsible for
the application or disposal by the City, or by any agent or employee of the City, of the
proceeds derived from the sale of the Bonds or of any other moneys herein designated.
02/107608.4 26
''ill ILt:e1 l
Section 15. Application of Gross Revenues. So long as any of the Bonds shall remain
outstanding, all Gross Revenues, as they are received, shall be deposited into the Revenue Fund,
and the Gross Revenues are hereby appropriated for such purpose. Moneys on deposit in the
Revenue Fund shall be transferred from the Revenue Fund and applied to the following purposes
and in the following order of priority:
(a) First, there shall be maintained in the Revenue Fund amounts sufficient
to pay Operation and Maintenance Expenses promptly as they become due and payable;
(b) Second, there shall be credited to the Bond Fund on the fifteenth (15th)
day of each month, beginning December 15, 1996, an amount which, together with any
moneys therein and available therefor, is equal to one -sixth (1/6) of the maturing
principal of and interest_ on the Bonds on the next June 1 or December 1;
(c) Third, on or before the 20th day of each month, beginning December 20,
1996, there shall be credited to the Reserve Fund an amount, if any, necessary to
increase the amount on deposit in the Reserve Fund to the Reserve Fund Requirement,
as more fully set forth in Section 16(c) below. No payment need be made into the
Reserve Fund so long as the moneys therein shall equal not less than the Reserve Fund
Requirement. The Reserve Fund Requirement shall be accumulated and maintained in
the Reserve Fund as a continuing reserve to be used except as hereinafter provided, only
to prevent deficiencies in the payment of the principal of and interest on the Bonds
resulting from the failure to deposit into the Bond Fund sufficient funds to pay the same
as they accrue;
(d) Fourth, on December 28 of each year (or the first Business Day thereafter,
if December 28 is not a Business Day), beginning in 1996, and subject to the payments
required by the above provisions, there shall be deposited into the Operations Reserve
Fund amounts which are necessary to bring the total amount in the Operations Reserve
Fund up to at least the Operations Minimum Reserve for the next succeeding Fiscal
Year. Moneys in the Operations Reserve Fund shall be available as a reserve to meet
unanticipated Operation and Maintenance Expenses or to meet any deficiencies in the
Bond Fund or the Reserve Fund. Upon determination by the Director of Finance that
there are insufficient moneys in the Revenue Fund to pay any specified amount of
Operation and Maintenance Expenses due or be become due within any month, the Sewer
Enterprise shall transfer the necessary amount from the Operations Reserve Fund to the
Revenue Fund; and
(e) Fifth, after the deposits of Revenue described above, there shall be paid
to the Bond Insurer an amount representing interest due on amounts, if any, advanced
under the Reserve Fund Surety Bond pursuant to the terms and conditions of the
Financial Guaranty Agreement.
02/107608.4 27
0111.111 l all
No payment need be made into either the Bond Fund, Reserve Fund or the Operations
Reserve Fund if the amounts in the Bond Fund, Reserve Fund and the Operations Reserve Fund
total a sum at least equal to the entire amount of the outstanding Bonds, including all principal
and interest requirements, to their respective maturities, and both accrued and not accrued
interest, in which case moneys in the three funds in an amount at least equal to such principal
and interest requirements shall be used solely to pay such as the same accrue, and any moneys
in excess thereof in the three funds may be used in any lawful manner by the Sewer Enterprise.
If in any period the Sewer Enterprise shall for any reason fail to pay into the Bond Fund
the full amount covenanted above, then an amount shall be immediately paid into the Bond Fund
from the Reserve Fund or, to the extent unavailable therein, from the Operations Reserve Fund,
equal to the difference between that paid from the Revenue Fund and the full amount so
covenanted. The money so used shall be replaced in the Reserve Fund and /or the Operations
Reserve Fund from the first Net Pledged Revenues thereafter received not required to be
otherwise applied by this Section, but excluding any payments required for any subordinate
obligations. In the event other obligations are outstanding, the lien on Net Pledged Revenues
to secure the payment of which is on a parity with the lien thereon of the Bonds, and the
proceedings authorizing the issuance of those obligations require the replacement of moneys in
a reserve fund therefor, then the moneys replaced in the Reserve Fund and/or the Operations
Reserve Fund and in each such other fund shall be on a pro rata basis as moneys become
available therefor. If in any period the Sewer Enterprise shall for any reason fail to pay into the
Reserve Fund the full amount above stipulated from the Net Pledged Revenues, the difference
between the amount paid and the amount so stipulated shall in a like manner be made from the
first Net Pledged Revenues thereafter received not required to be applied otherwise by this
Section, but excluding any payments required for any subordinate obligations. The moneys in
the Bond Fund and in the Reserve Fund shall be used solely for the purpose of paying the
principal of and interest on the Bonds; provided, however, that any moneys at any time in excess
of the Reserve Fund Requirement in the Reserve Fund may be withdrawn therefrom and used
in any lawful manner by the Sewer Enterprise. The Sewer Enterprise shall forward to the
Paying Agent prior to each principal or interest payment on the Bonds, in immediately available
funds, amounts sufficient to pay debt service on the Bonds on each such date.
Concurrently with (in the case of parity lien obligations) or subsequent to (in- the case of
subordinate lien obligations) the payments required by paragraphs (b), (c) and (d) of this Section,
any remaining amounts in the Revenue Fund shall be used by the Sewer Enterprise for the
payment of principal of and interest on any additional obligations hereafter authorized to be
• issued and payable from the Net Pledged Revenues, including reasonable reserves therefor, as
the same accrue.
After making the payments required to be made by this Section, any remaining amounts
in the Revenue Fund may be used in any lawful manner by the Sewer Enterprise.
02110M.4 28
Section 16. General Administration of Funds. The funds and accounts established
pursuant to this ' Ordinance, with the exception of the Rebate Fund, shall be administered as
follows, subject to the limitations stated in the first paragraph of Section 18 of this Ordinance:
(a) Investment of Money. Any moneys in any such fund and account may be
invested only in Permitted Investments. The Permitted Investments in which moneys in
each fund or account are invested shall be deemed at all times to be part of the respective
fund or account, and any appreciation or loss resulting therefrom shall be recorded to
such fund or account. Interest accruing on the investment of any moneys in the Reserve
Fund and the Operations Reserve Fund shall be deposited as received into the Revenue
Fund, and interest accruing on the investment of any moneys in any other such fund or
account shall be credited to the fund or account from which it is derived. The City
Finance Director shall present for redemption or sale in the prevailing market any
obligations so purchased as an investment of moneys in the fund or account whenever
it shall be necessary to do so in order to provide moneys to meet any payment or transfer
from said fund or account.
(b) Deposits of Funds. The moneys and investments comprising each of such
funds and accounts shall be deposited in one or more banks or savings and loan
associations, each of which is a member of the Federal Deposit Insurance Corporation.
Each payment shall be made into and credited to the proper fund or account on the date
specified, but if such date shall be other than a Business Day, such payment shall be
made on the next preceding Business Day. Nothing herein shall prevent the
establishment of one or more such bank accounts, for all of such funds and accounts, or
shall prevent the combination of such funds and accounts with any other bank account
or accounts for other accounts of the Sewer Enterprise.
(c) Reserve Fund. On the date of delivery of the Bonds, the Reserve Fund
Surety Bond in the amount of the Reserve Fund Requirement, issued by the Bond
Insurer, will be delivered to the Paying Agent and will constitute the Reserve Fund.
Prior to any draws on the Reserve Fund Surety Bond, the Paying Agent shall deliver to
the Bond Insurer a Demand For Payment in the form attached as an exhibit to the
Financial Guaranty Agreement at least three days prior to the date on which funds are
required.
If at any time any amounts are drawn upon the Reserve Fund Surety Bond or
withdrawn from the Reserve Fund, then during each month thereafter, after the deposits
to the Bond Fund required under Section 15(b) above, there is to be deposited, in the
following order of priority, (i) to the credit of the Bond Insurer an amount equal to the
amount drawn upon the Reserve Fund Surety Bond and (ii) then to the credit of the
Reserve Fund an amount equal to any amount so withdrawn or of any deficiency, until
the Reserve Fund Surety Bond has been reinstated in its full amount and/or the amount
on deposit in the Reserve Fund shall be equal to the Reserve Fund Requirement.
OV1076M.4 29
Moneys in the Reserve Fund or, after any cash in the Reserve Fund has been
depleted; the Reserve Fund Surety Bond, shall be used solely to make up any deficiencies
in moneys available in the Bond Fund required for payment of principal of or interest on
the Bonds when due.
Section 17. Rebate Fund; Deposits and Disbursements. The Rebate Fund shall be
expended in accordance with the provisions hereof and the Investment Instructions. The Sewer
Enterprise shall make deposits and disbursements from the Rebate Fund in accordance with the
Investment Instructions, shall invest the Rebate Fund pursuant to said Investment Instructions
and shall deposit income from said investments immediately upon receipt thereof in the Rebate
Fund, all as set forth in the Investment Instructions. The Sewer Enterprise shall make the
calculations, deposits, disbursements and investments as may be required by the immediately
preceding sentence, or, to the extent it deems necessary in order to ensure the tax- exempt status
of interest on the Bonds, shall employ at its expense a person or firm with recognized expertise
in the area of rebate calculations to make such calculations. The Investment Instructions may
be superseded or amended by new Investment Instructions drafted by, and accompanied by an
opinion of, nationally recognized bond counsel addressed to the Sewer Enterprise to the effect
that the use of said new Investment Instructions will not cause the interest on the Bonds to
become includable in gross income for purposes of federal income taxation.
The Sewer Enterprise shall make any requested rebate deposit described in the Investment
Instructions. Any required deposits to the Rebate Fund shall be made first from the Net Pledged
Revenues and then from any other lawfully available funds of the Sewer Enterprise. Records
of the determinations required by this Section and the Investment Instructions shall be retained
by the Sewer Enterprise until six (6) years after the final retirement of the Bonds.
Not later than sixty (60) days after the end of the fifth Bond Year (i.e., the year ending
November 30, 2001 and every five (5) years thereafter), the Sewer Enterprise shall pay to the
United States of America ninety percent (90%) of the amount required to be on deposit in the
Rebate Fund as of such payment date. Not later than sixty (60) days after the final retirement
of the Bonds, the Sewer Enterprise shall pay to the United States of America one hundred
percent (100%) of the balance remaining in the Rebate Fund. Each payment required to be paid
to the United States of America pursuant to this Section shall be filed with the Internal Revenue
Service Center, Philadelphia, Pennsylvania 19255. Each payment shall be accompanied by an
Internal Revenue Form 8038 -T, and, if necessary, a statement summarizing the determination
of the amount to be paid to the United States of America.
Section 18. Covenants Concerning Compliance With the Code. The Sewer Enterprise
covenants that it shall not use or permit the use of any proceeds of the Bonds or any other funds
of the Sewer Enterprise from whatever source derived, directly or indirectly, to acquire any
securities or obligations and shall not take or permit to be taken any other action or actions,
which would cause any of the Bonds to be an "arbitrage bond" within the meaning of Section
148 of the Code, or would otherwise cause the interest on the Bonds to be includable in gross
income for federal income tax purposes. The Sewer Enterprise covenants that it shall at all
02/107608.4 30
times do and perform all acts and things permitted by law and which are necessary or desirable
in order to assure that interest paid by the Sewer Enterprise on the Bonds shall, for purposes of
federal income taxation, not be includable in gross income under the Code or any other valid
provision of law.
In particular, but without limitation, the Sewer Enterprise further represents, warrants
and covenants to comply with the following restrictions of the Code, unless it receives an
opinion of nationally recognized bond counsel stating that such compliance is not necessary:
(a) Gross proceeds of the Bonds will not be used in a manner which will cause
the Bonds to be considered "private activity bonds" within the meaning of the Code.
(b) The Bonds are not and shall not become directly or indirectly "federally
guaranteed."
(c) The Sewer Enterprise shall timely file Internal Revenue Form 8038 -G,
which shall contain the information required to be filed pursuant to Section 149(e) of the
Code.
(d) The Sewer Enterprise shall comply with the Investment Instructions
delivered to it on the date of issue of the Bonds with respect to the application and
investment of Bond proceeds, subject to Section 17 hereof.
Section 19. First Lien on Net Pledged Revenues. The Bonds are secured by a pledge
of, and constitute an irrevocable and first lien (but not an exclusive first lien) on, the Net
Pledged Revenues.
Section 20. Equality of Bonds. The Bonds shall be equally and ratably secured by the
Net Pledged Revenues and shall not be entitled to any priority one over the other in the
application of the Net Pledged Revenues.
Section 21. Additional Obligations. So long as the Bonds may be outstanding:
(a) Limitations Upon Issuance of Parity Obligations. Nothing in this
Ordinance shall be construed to prevent the issuance by the Sewer Enterprise of
additional obligations (including refunding obligations) payable in whole or in part from
the Net Pledged Revenues (or any designated part thereof) and constituting a lien thereon
on a parity with, but not prior or superior to, the lien of the Bonds; provided, however,
that before any such additional parity obligations are authorized or actually issued:
(i) The Sewer Enterprise is then current in all payments required to
have been accumulated in the Bond Fund, the Reserve Fund and the Operations
Reserve Fund, and there is not otherwise an Event of Default as defined in
Section 26 hereof.
OVIOM A 31
(ii) The revenues derived from the entire Net Pledged Revenues for the
twelve consecutive calendar months immediately preceding the month of issuance
of such additional parity obligations shall have been sufficient to pay an amount
equal to one hundred and twenty percent (120 %) of the combined maximum
annual principal and interest requirements (to and including the final maturity of
the Bonds) on the then - outstanding Bonds, any then - outstanding parity lien
obligations theretofore issued, and the parity lien obligations then proposed to be
issued (including any reserve requirements therefor). In determining the amount
of such Net Pledged Revenues, the Net Pledged Revenues shall be adjusted if any
new rates, fees and charges have been established for the Sewer Enterprise prior
to the issuance of the parity lien obligations to be issued, in which case the Net
Pledged Revenues shall be adjusted by applying such new rates, fees and charges
to customer billings for such twelve month period as if such rates, fees and
charges had been in effect during the whole of such twelve month period.
(iii) The ordinance authorizing such additional parity lien obligations
shall require that a reserve fund for such obligations be created or accumulated
(in not more than ten semiannual installments) in an amount equal to the least of
(A) ten percent (10 %) of the principal amount of the parity obli gations proposed
to be issued, (B) maximum annual principal and interest requirements of the
parity lien obligations proposed to be issued or (C) 125 % of the average annual
debt service on the parity lien obligations proposed to be issued. The Sewer
Enterprise may, however, comply with the reserve requirerniM 1hroagh a
Qualified Surety Bond.
(b) Certificate of Revenues. A written certification by a certified public
accountant who is not a regular salaried employee of the City or the Sewer Enterprise
that such Net Pledged Revenues are sufficient to pay the amounts required by paragraph
(a)(ii) of this Section shall be conclusively presumed to be accurate in determining the
right of the Sewer Enterprise to authorize, issue, sell and deliver additional obligations
on a parity with the Bonds.
(c) Subordinate Obligations Permitted. Nothing in this Ordinance shall be
construed to prevent the issuance by the Sewer Enterprise of additional obligations
(including refunding obligations) payable from the Net Pledged Revenues (or any
designated part thereof) and having a lien thereon subordinate or junior to the lien of the
• Bonds.
(d) Superior Obligations Prohibited. Nothing in this Ordinance shall be
construed to permit the Sewer Enterprise to issue additional obligations (including
refunding obligations) payable from the Net Pledged Revenues (or any designated part
thereof) having a lien thereon prior and superior to the lien of the Bonds.
OV1076 a.a 32
Section 22. Refunding Obligations. The provisions of Section 21 of this Ordinance are
subject to the following exceptions:
(a) Privilege of Issuing Refunding Obligations. If at any time after the Bonds,
or any part thereof, shall have been issued and remain outstanding, the Sewer Enterprise
shall find it desirable to refund all or any part of the outstanding Bonds or other
outstanding obligations payable in whole or in part from the Net Pledged Revenues, such
Bonds or other obligations, or any part thereof, may be refunded (but only with the
consent of the Registered Owner or Registered Owners thereof, unless such Bonds or
other obligations, at the time of their required surrender for payment, shall then mature,
or shall then be subject to redemption prior to maturity).
(b) Limitations Upon Issuance of Parity Refunding Obligations. No refunding
obligations payable from the Net Pledged Revenues (or any designated part thereof) shall
be issued on a parity with the Bonds, unless:
(i) The lien on such Net Pledged Revenues of the outstanding
obligations so refunded is on a parity with the lien thereon of the Bonds; or
(ii) The refunding obligations are issued in compliance with paragraph
(a) of Section 21 of this Ordinance.
(c) Partial Refunding of Bonds. Any refunding obligations so issued to refund
any of the Bonds shall enjoy complete equality of lien with any Bonds which are not
refunded.
(d) Limitations Upon Refundings. Any refunding obligations payable from the
Net Pledged Revenues may be issued with such details as the Sewer Enterprise may by
ordinance provide, but without any impairment of any contractual obligations imposed
upon the Sewer Enterprise by this Ordinance.
Section 23. Protective Covenants. The Sewer Enterprise hereby additionally covenants
and agrees with each and every Registered Owner of the Bonds that:
(a) Use of Bond Proceeds. The Sewer Enterprise will proceed to refund the
Refunded Bonds without delay, as herein provided.
(b) Payment of Bonds Herein Authorized. The Sewer Enterprise will promptly
pay or cause to be paid the principal of and interest on the Bonds at the place, on the
dates and in the manner provided in this Ordinance and in the Bonds, according to the
true intent and meaning of this Ordinance.
(c) Per of Duties. The Sewer Enterprise shall faithfully and
punctually perform, or cause to be performed, all duties which respect to the Gross
os1076M.4 33
Revenues, the Net Pledged Revenues and the municipal sewer system required by the
Constitution and laws of the State and the Charter and various ordinances of the City.
(d) Further Assurances. At any and all times the Sewer Enterprise shall, so
far as it may be authorized by law, pass, make, do, execute, acknowledge, deliver and
file or record all and every such further instruments, acts, deeds, conveyances,
assignments, transfers, other documents and assurances as may be necessary or desirable
for the better assuring, conveying, granting, assigning and confuming all and singular
the rights, the Gross Revenues, the Net Pledged Revenues and other moneys and
accounts hereby pledged or assigned, or intended so to be, or which the Sewer Enterprise
may hereafter become bound to pledge or to assign, or as may be reasonable and
required to carry out the purposes of this Ordinance and to comply with any ordinance
of the Sewer Enterprise Amendatory thereof, or supplemental thereto, including, without
limitation, this Ordinance, and the Charter. The Sewer Enterprise shall at all times, to
the extent permitted by law, defend, preserve and protect the pledge of the Net Pledged
Revenues and other moneys and accounts pledged hereunder and all the rights of every
Registered Owner of any Bond hereunder against all claims and demands of all Persons
whomsoever.
(e) Conditions Precedent. Upon the date of issuance of any Bonds, all
conditions, acts and things required by the Federal or State Constitution or Federal or
State statutes, including, without limitation, the Charter or by this Ordinance to exist, to
have happened and to have been performed precedent to or in the issuance of the Bonds
shall exist, have happened and have been performed; and the Bonds, together with all
other obligations of the Sewer Enterprise, shall not contravene any debt or other
limitation prescribed by the State Constitution, the State statutes or the Charter.
(f) Efficient Operation and Maintenance. The Sewer Enterprise shall at all
times operate properly and in a sound and economical manner; and the Sewer Enterprise
shall maintain, preserve and keep the municipal sewer system properly or cause the same
so to be maintained, preserved and kept, with the appurtenances and every part and
parcel thereof in good repair, working order and condition, and shall from time to time
make or cause to be made all necessary and proper repairs, replacements and renewals
so that at all times the operation of the Sewer Enterprise may be properly and
advantageously conducted. All salaries, fees, wages and other compensation paid by the
Sewer Enterprise in connection with the maintenance, repair and operation of the Sewer
Enterprise shall be reasonable and proper.
(g) Rules, Regulations and OtherDetalls. The Sewer Enterprise shall establish
and enforce reasonable rules and regulations governing the operation, use and services
of the municipal sewer system. The Sewer Enterprise shall observe and perform all of
the terms and conditions contained in this Ordinance and the Charter, except to the extent
it is superseded by this Ordinance or any other ordinance of the City, the Sewer
Enterprise or the Charter, and shall comply with all valid acts, rules, regulations, orders
02/1076M.4 34
and directions of any legislative, executive, administrative or judicial body applicable to
the Sewer Enterprise or to the City.
(h) Payment of Government Charges. The Sewer Enterprise shall pay or cause
to be paid all taxes and assessments or other municipal governmental charges, if any,
lawfully levied or assessed upon or in respect of the Sewer Enterprise, or upon any part
thereof, or upon any portion of the Gross Revenues or the Net Pledged Revenues, when
the same shall become due, and shall duly observe and comply with all valid
requirements of any municipal or governmental authority relative to the Sewer Enterprise
or any part thereof, except for any period during which the same are being contested in
good faith by proper legal proceedings. Neither the Sewer Enterprise nor the City shall
create or suffer to be created any lien or charge upon the Sewer Enterprise, or any part
thereof, or upon the Gross Revenues or the Net Pledged Revenues, except the pledge and
lien created by this Ordinance, and except as herein otherwise or heretofore permitted.
The Sewer Enterprise shall pay or cause to be discharged or shall make adequate
provision to satisfy and discharge, within sixty (60) days after the same shall become
payable, all lawful claims and demands for labor, materials, supplies or other objects
which, if unpaid, might by law become a lien upon the Sewer Enterprise, or any part
thereof, or the Gross Revenues or the Net Pledged Revenues; but nothing herein requires
the Sewer Enterprise to pay or cause to be discharged or to make provision for any such
tax, assessment, lien or charge, so long as the validity thereof is contested in good faith
and by appropriate legal proceedings.
(i) Protection of Security. The City, the Sewer Enterprise and the officers,
agents and employees of the City and the Sewer Enterprise shall not take any action in
such manner or to such extent as might prejudice the security for the payment of the
Bonds and any other securities payable from the Net Pledged Revenues according to the
terms thereof. No contract shall be entered into nor any other action taken by which the
rights of any Registered Owner of any Bond or other security payable from Net Pledged
Revenues might be prejudicially and materially impaired or diminished.
0) Accumulation of Interest Claims. In order to prevent any accumulation of
claims for interest after maturity, the Sewer Enterprise shall not directly or indirectly
extend or assent to the extension of the time for the payment of any claim for interest on
any of the Bonds or any other securities payable from Net Pledged Revenues; and the
Sewer Enterprise shall not directly or indirectly be a party to or approve any
arrangements for any such extension or for the purpose of keeping alive any such claims
for interest. If the time for the payment of any such installment of interest is extended
in contravention of the foregoing provisions, such installment or installments of interest
after such extension or arrangement shall not be entitled in case of default hereunder to
the benefit or the security of this Ordinance, except upon the prior payment in full of the
principal of all Bonds and any such other securities then outstanding and of all matured
interest on such securities the payment of which has not been extended.
OV1076 a.4 35
(k) Use of Bond Fund and Reserve Fund. The Bond Fund and the Reserve
Fund shall be used solely and only, and the moneys credited to such accounts are hereby
pledged, for the purpose of paying the Bonds to their respective maturities, subject to the
provisions concerning surplus moneys in Section 15 hereof.
(1) Other Liens. Other than as provided herein, there are no liens or
encumbrances of any nature whatsoever on or against any property of the Sewer
Enterprise, or any part thereof, or on or against the Net Pledged Revenues derived or
to be derived from the operation of the Sewer Enterprise.
(m) Disposal of Sewer Enterprise Prohibited. Except for the use of the Sewer
Enterprise and services pertaining thereto in the normal course of business, neither all
nor a substantial part of the Sewer Enterprise shall be sold, leased, mortgaged, pledged,
encumbered, alienated car otherwise disposed of, until all the Bonds have been paid in
full, or unless provision has been made therefor, or until the Bonds have otherwise been
redeemed, including, without limitation, the termination of the pledge as herein
authorized; and the City shall not dispose of its title to the Sewer Enterprise or to any
useful part thereof, including any property necessary to the operation and use of the
Sewer Enterprise and the lands and interests in lands comprising the sites of the Sewer
Enterprise, except as provided in paragraph (o) below. Nothing herein shall be
construed, however, as prohibiting the City from disposing of the Sewer Enterprise to
the Board of Water Works of Pueblo, Colorado, provided that such disposition is in
accordance with law and provided further that such Board assumes all obligations of the
Sewer Enterprise hereunder.
(n) Disposal of Unnecessary Property. The City at any time and from time
to time may sell, exchange, lease or otherwise disposed of any property constituting a
part of the Sewer Enterprise and not useful in the construction, reconstruction or
operation thereof, or which shall cease to be necessary for the efficient operation of the
Sewer Enterprise, or which shall have been replaced by other property of at least equal
value. Any proceeds of any such sale, exchange or other disposition received and not
used to replace such property so sold or so exchanged or otherwise so disposed of, shall
be deposited by the City or the Sewer Enterprise in the Revenue Fund or into a special
book account for betterment, enlargement, extension, other improvement and equipment
of the Sewer Enterprise, or any combination thereof, as the Council may determine, and
any proceeds of any lease received shall be deposited by the City or the Sewer Enterprise
as Gross Revenues in the Revenue Fund.
(o) Competing System. So long as any of the Bonds are Outstanding, the City
shall not grant any franchise or license to any competing sewer facilities or systems, such
that the Gross Revenues shall not be sufficient to meet the minimum requirement of the
rate maintenance covenant in paragraph (u) below.
OV10708.4 36
(p) Loss from Condemnation. If any part of the Sewer Enterprise is taken by
the exercise of a power of eminent domain, the amount of any award received by the
City or the Sewer Enterprise as a result of such taking shall be paid into the Revenue
Fund or a capital improvement account pertaining to the Sewer Enterprise for the
purposes thereof, or shall be applied to the redemption of the outstanding Bonds in
accordance with the provisions hereof and of any other ordinance pertaining to the
issuance of parity securities at maturity or prior thereto if the authorizing proceedings
authorize the prior redemption of such securities, including the Bonds, respectively, or
held as a reserve for deposit subsequently into such a capital improvement account or for
such prior redemption of securities or for both such deposit and such redemption, as the
Council may determine.
(q) Competent Management. The Sewer Enterprise shall employ experienced
and competent management personnel, who shall have full control over the Sewer
Enterprise, subject to the reasonable control by and direction of the Council.
(r) Employment of Management Engineers. If the Sewer Enterprise defaults
in paying the Bonds or any other securities payable from the Net Pledged Revenues, or
in the keeping of any covenants herein contained, and if such default continues for a
period of sixty (60) days, or if the Net Pledged Revenues in any Fiscal Year fail to equal
at least the amount of payments of principal and interest coming due during such Fiscal
Year on the outstanding Bonds and any other securities (including all reserves therefor
specified in the authorizing proceedings, including, without limitation, this Ordinance)
payable from the Net Pledged Revenues, the Sewer Enterprise shall retain a Management
Engineer to assist the management of the Sewer Enterprise so long as such default
continues or so long as the Net Pledged Revenues are less than the amount hereinabove
designated in this paragraph.
(s) Fidelity Bonds. The Sewer Enterprise shall maintain fidelity bonds on
such persons and in such amounts as, in its reasonable judgment, are maintained by
similar entities in connection with municipal sewer systems and funds related thereto.
The costs of each such bond or a reasonably allocated share of the costs of any such
blanket bond shall be regarded and paid as Operation and Maintenance Expenses of the
Sewer Enterprise.
(t) Budgets. The Council and officials of the Sewer Enterprise shall annually
and at such other times as may be provided by law prepare and adopt a budget pertaining
to the Sewer Enterprise.
(u) Adequacy and Applicability of Charges. There shall be charged against
users of service pertaining to use of the Sewer Enterprise, including the City, except as
may otherwise be required by law, such fees, rates and other charges so that the Gross
Revenues shall be adequate to meet the requirements of this paragraph and paragraph (b)
021107608.4 37
above. Such charges pertaining to the Sewer Enterprise shall be at least sufficient so that
the Gross Revenues are sufficient to pay in each Fiscal Year:
(i) Operation and Maintenance Expenses. An amount equal to the
annual Operation and Maintenance Expenses for such Fiscal Year,
(ii) Bond, Reserve Fund and Operating Reserve Fund Requirements.
An amount equal to the principal of and interest on the Bonds and any other
securities payable from the Net Pledged Revenues in that Fiscal Year, and any
payments required to be made to any reserve fund or operating reserve fund, on
or with respect to the Bonds and any other securities payable from the Net
Pledged Revenues,
(iii) Deficiencies. Any amounts required to meet then existing
deficiencies pertaining to any fund or account relating to the Net Pledged
Revenues or any securities payable therefrom, and
(iv) Financial Guaranty Agreement. All amounts owed to the Bond
Insurer under the terms of the Financial Guaranty Agreement.
(v) Limitations Upon Free Service. No free service of facilities shall be
furnished by the Sewer Enterprise.
(w) Collection of Charges. The Sewer Enterprise shall cause all fees, rates
and other charges pertaining to the Sewer Enterprise to be collected as soon as reasonable
(as permitted by law), shall prescribe and enforce rules and regulations or impose
contractual obligations for the payment of such charges, and for the use of the Sewer
Enterprise, and shall provide methods of collection and penalties, to the end that the
Gross Revenues of the Sewer Enterprise shall be adequate to meet the requirements of
this Ordinance and any other instrument supplemental hereto.
(x) Maintenance of Records. So long as any of the Bonds and any other
securities payable from the Net Pledged Revenues remain Outstanding, proper books of
record and account shall be kept by the Sewer Enterprise, separate and apart from all
other records and accounts.
(y) Inspection of Records. Any Registered Owner of any of the Bonds or any
other securities payable from the Net Pledged Revenues, any duly authorized agent or
agents of such Registered Owner, or the Underwriter shall have the right at all
reasonable times to inspect all records, accounts and data relating thereto, concerning the
Sewer Enterprise or the Gross Revenues or Net Pledged Revenues, or both, to make
copies of such records, accounts and data, and to inspect the Sewer Enterprise and all
properties comprising the Sewer Enterprise.
OV107OX.4 38
(z) Audits and Statements Required. The Sewer Enterprise, within 60 days
following the close of each Fiscal Year, shall order an audit for the Fiscal Year of such
books and accounts to be made forthwith by an independent accountant in accordance
with generally accepted accounting principles, and order an audit report showing the
receipts and disbursements for each account pertaining to the Sewer Enterprise or to the
Gross Revenues, or to both. In addition, the Sewer Enterprise shall request that an
independent accountant state in writing whether or not, for such preceding Fiscal Year,
the Sewer Enterprise was in compliance with the provisions of paragraph (u) above.
Each such audit report and statement with regard to paragraph (u) above shall be
completed within 120 days of the end of the Fiscal Year, and shall be available for
inspection by the Underwriter or any Registered Owner of any of the Bonds. All
expenses incurred in the making of the audits and reports required by this paragraph shall
be regarded and paid as Operation and Maintenance Expenses of the Sewer Enterprise.
The audit shall also be" furnished, within 30 days after its completion, to the Paying
Agent and the Underwriter.
(aa) Insurance and Reconstruction. Except to the extent of any self - insurance,
the Sewer Enterprise shall at all times maintain with responsible insurers, fire and
extended coverage insurance, workmen's compensation insurance, public liability
insurance, and all such other insurance as is customarily maintained with respect to
utilities of like character against loss of or damage to the Sewer Enterprise and against
public and other liability to the extent reasonably necessary to protect the interests of the
Sewer Enterprise, the City and of each Registered Owner of a Bond or any other
securities payable from Net Pledged Revenues. The costs of such insurance shall be
considered as Operation and Maintenance Expenses. If any useful part of the Sewer
Enterprise shall be damaged or destroyed, the Sewer Enterprise shall, as expeditiously
as may be possible, commence and diligently prosecute the repair or replacement of the
damaged property so as to restore the same to use. The proceeds of any such insurance
shall be payable to the Sewer Enterprise and (except for proceeds of any use and
occupancy insurance) shall be applied to the necessary costs involved in such repair and
replacement and to the extent not so applied shall (together with the proceeds of any such
use and occupancy insurance) be deposited in the Revenue Fund by the Sewer Enterprise
as revenues derived from the operation of the Sewer Enterprise. If the costs of such
repair and replacement of the damaged property exceed the proceeds of such insurance
available for the payment of the same, moneys in the Revenue Fund shall be used to the
extent necessary for such purposes, as permitted by Section 15 hereof.
(bb) Title to Sites. Any improvements constructed and installed shall be
constructed and installed on land owned in fee simple by the City or over which the City
has a perpetual easement, free and clear of all lien nd encu mbrances of whatsoever
nature, except for any facilities located in a public street or highway or upon other lands
of any railroad or any public body politic and corporate, which lands in the opinion of
counsel for the City are sufficient for its purposes. Promptly, from time to time, the
City shall take such action as may be necessary or proper to remedy or cure any defect
04/107608.4 39
in or cloud upon such title to such lands owned in fee simple or subject to an easement
(other than any such excepted public lands), or any part thereto, whether now existing
or hereafter developing, and shall prosecute all such suits, actions and other proceedings
as may be appropriate for such purpose.
(cc) Impairment of Contract. The Sewer Enterprise and the City agree that any
law, ordinance or resolution of the Sewer Enterprise or the City in any manner affecting
the Net Pledged Revenues or the Bonds shall not be repealed or otherwise directly or
indirectly modified in such a manner as to impair any Bonds outstanding, unless in the
case of this Ordinance the required consent of the Registered Owners of the then
outstanding Bonds is obtained pursuant to Section 34 of this Ordinance.
(dd) Performing Duties. The Sewer Enterprise and the City will faithfully and
punctually perform all duties with respect to the Net Pledged Revenues required by the
Charter and the Constitution and laws of the State, and the ordinances and resolutions
of the Sewer Enterprise and the City, including but not limited to, the proper segregation
of the Net Pledged Revenues and their application to the respective funds.
Section 24. Defeasance. When all Bonds and interest thereon have been duly paid, and
all sums due the Bond Insurer hereunder and pursuant to the Financial Guaranty Agreement have
been duly paid, the pledge and lien and all obligations hereunder shall thereby be discharged as
to such Bonds, and such Bonds shall no longer be deemed to be outstanding within the meaning
of this Ordinance. There shall be deemed to be such due payment when the Sewer Enterprise
has placed in escrow and in trust with a commercial bank located within or without the State and
exercising trust powers, an amount sufficient (including the known minimum yield from Federal
Securities in which such amount may be initially invested) to make all payments of principal of
and interest on such Bonds as the same become due at their final maturities. The Federal
Securities shall become due prior to the respective times on which the proceeds thereof shall be
needed, in accordance with a schedule established and agreed upon between the Sewer Enterprise
and the bank at the time of the creation of the escrow, or the Federal Securities shall be subject
to the redemption at the option of the holders thereof to assure such availability as so needed to
meet such schedule. "Federal Securities" within the meaning of this Section shall include only
direct obligations of, or obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America and which are not callable before maturity by the
issuer of such obligations.
Section 25. Delegated Powers. The officers of the Sewer Enterprise hereby are
authorized and directed to take all action necessary or appropriate to effectuate the provisions
of this Ordinance, including without limitation the printing of the Bonds and the execution of
such certificates as may be required by the Underwriter.
Section 26. Events of Default. If any of the following events occurs, it is hereby
declared to constitute an Event of Default:
os107WS.4 40
. (a) Default in the due and punctual payment of the principal of, or interest on
any Bond (without regard to payments made by the Bond Insurer under the Bond
Insurance Policy) or any parity debt when due; or
(b) Either the Sewer Enterprise or the City is for any reason rendered
incapable of fulfilling its-obligations hereunder; or
(c) Default in the due and punctual performance of the Sewer Enterprise's or
the City's covenants or conditions, agreements and provisions as set forth in the Bonds
or in this Ordinance, other than those delineated in paragraphs (a) and (b) of this Section
and other than Section 31 of this Ordinance, and such default has continued for 30 days
after written notice specifying the default and requiring the same to be remedied has been
given to the Sewer Enterprise by the Underwriter, the Paying Agent or the Registered
Owners of 25 % or more in principal amount of the Bonds then outstanding; provided
that, so long as it is not in default in any of its obligations under the Bond Insurance
Policy, the Bond Insurer shall be deemed a Registered Owner of the Bonds for purposes
of such notice; or
(d) The Sewer Enterprise or the City fails to carry out and to perform (or in
good faith to begin the performance of) all acts and things lawfully required to be carried
out or to be performed by it under any contract relating to the Gross Revenues or the Net
Pledged Revenues or to the Sewer Enterprise, or otherwise, including, without limitation,
this Ordinance, and such failure continues for 60 days after receipt of notice from either
the Underwriter or from the Registered Owners of 25 % or more in principal amount of
the Bonds then Outstanding;
(e) The Sewer Enterprise discontinues or unreasonably delays or fails to carry
out with reasonable dispatch the reconstruction of any material or necessary part of the
Sewer Enterprise which is destroyed or damaged and is not promptly repaired or replaced
(whether such failure promptly to repair the same is due to impracticability of such repair
or replacement or is due to a lack of moneys therefor or for any other reason);
(f) The City or the Sewer Enterprise shall file a petition for bankruptcy or
shall be declared insolvent by a court of competent jurisdiction.
Section 27. Remedies for Events of Default. Upon the happening and continuance of
. any of the Events of Default as provided in Section 26 of this Ordinance, then and in every case,
the Bond Insurer or the Registered Owner or Registered Owners of not less than 25 % in
principal amount of the Bonds then outstanding with the consent of the Bond Insurer, including
but not limited to, a trustee or trustees therefor, may proceed against the Sewer Enterprise and
the City and their agents, officers and employees, to protect and enforce the rights of any
Registered Owner of Bonds under this Ordinance by mandamus or other suit, action or special
proceedings in equity or at law, in any court of competent jurisdiction, either for the
appointment of a receiver, for the specific performance of any covenant or agreement contained
02/107W8.4 41
herein or in an award of execution of any power herein granted for the enforcement of any
proper legal or equitable remedy as the Bond Insurer or such Registered Owner or Registered
Owners may deem most effectual to protect and enforce the rights aforesaid, or thereby to enjoin
any act or thing which may be unlawful or in violation of any right of the Bond Insurer or any
Registered Owner, or to require the governing body to act as if it were the trustee of an express
trust, or any combination of such remedies. All such proceedings at law or in equity shall be
instituted, had and maintained for the equal benefit of all Registered Owners of the Bonds then
outstanding. The failure of the Bond Insurer or any such Registered Owner so to proceed shall
not relieve the City, the Sewer Enterprise or any of their officers, agents or employees of any
liability for failure to perform any duty. Each right or privilege of the Bond Insurer or any such
Registered Owner (or trustee thereof) is in addition and cumulative to any other right or
privilege, and the exercise of any right or privilege by or on behalf of the Bond Insurer or any
Registered Owner shall not be deemed a waiver of the Bond Insurer or any other right or
privilege thereof. "
Section 28. Receiver's Rights and Privileges. Any receiver appointed in any
proceedings to protect the rights of the Registered Owners of the Bonds, the consent to any such
appointment being hereby expressly granted by the City and the Sewer Enterprise, may enter
and may take possession of the Sewer Enterprise, may operate and maintain the same, may
prescribe fees, rates and other charges and may collect, receive and apply all Gross Revenues
arising after the appointment of such receiver in the same manner as the City and the Sewer
Enterprise might do.
Section 29. Rights and Privileges Cumulative. The failure of the Bond Insurer or any
Registered Owner of any outstanding Bond to proceed in any manner herein provided shall not
relieve the City or the Sewer Enterprise, or any of their officers, agents or employees of any
liability for failure to perform or carry out any duty, obligation or other commitment. Each
right or privilege of any such Registered Owner (or trustee thereof) is in addition and is
cumulative to any other right or privilege, and the exercise of any right or privilege by or on
behalf of any Registered Owner shall not be deemed a waiver of any other right or privilege
thereof.
Section 30. Duties Upon Default. Upon the happening of any of the Events of Default
as provided in Section 26 of this Ordinance, the Sewer Enterprise will do and perform all proper
acts on behalf of and for the Registered Owners of the Bonds to protect and preserve the security
created for the payment of their Bonds and to insure the payment of the principal of and interest
on the Bonds promptly as the same become due. All proceeds derived from the Net Pledged
Revenues, during such period of default and so long as any of the Bonds, as to any principal and
interest, are outstanding and unpaid, shall be paid into the Bond Fund, and ratably and equally
into similar funds for parity obligations, if any, - heretofore or hereafter issued pursuant to the
terms hereof, and used for the purposes therein provided. In the event the Sewer Enterprise fails
or refuses to proceed as provided in this Section, the Registered Owner or Registered Owners
of not less than 25 % in principal amount of the Bonds then outstanding, after demand in writing,
may proceed to protect and enforce the rights of the Registered Owners as herein provided.
OVIO MA 42
Section 31. Continuing Disclosure.
(a) This Section constitutes the written undertaking of the Sewer Enterprise
for the benefit of the Registered Owners of the Bonds required by Section (b)(5)(i) of
Securities and Exchange Commission Rule 15c2 -12 under the Securities Exchange Act
of 1934, as amended (17 CFR Part 240, § 240. 15c2 -12) (the "Rule "). The Registered
Owners of the Bonds for purposes of this Section shall be the beneficial owners as well
as the Registered Owners. This Section is for the benefit of the Registered Owners of
Bonds and each Registered Owner of a Bond shall be a beneficiary of this Section with
the right to enforce this Section directly against the Sewer Enterprise.
(b) The Sewer Enterprise, as an "obligated person" within the meaning of the
Rule, undertakes to provide the following information:
(i) Annual Financial Information; and
(ii) Material Event Notices.
The term "Annual Financial Information" shall mean the financial information, which
shall be based on financial statements prepared in accordance with generally accepted
accounting principles ( "GAAP "), and operating data of the type contained in the Official
Statement, including audited financial statements and financial information and operating
data relating to the City and the Sewer Enterprise, the Sewer Enterprise's and the City's
general funds, and their outstanding debt and other obligations. The term "Material
Event Notices" shall mean written or electronic notice of a Material Event. The term
"Material Event" shall mean any of the following events, if material, with respect to the
Bonds: (A) Principal and interest payment delinquencies; (B) Non - payment related
defaults; (C) Unscheduled draws on debt service reserves reflecting financial difficulties;
(D) Unscheduled draws on credit enhancements reflecting financial difficulties;
(E) Substitution of credit or liquidity providers or their failure to perform; (F) Adverse
tax opinions or events affecting the tax- exempt status of the Bonds; (G) Modifications to
rights of the Registered Owners of the Bonds; (H) Calls of Bonds; (I) Defeasances of
Bonds; (1) Release, substitution, or sale of property securing repayment of the Bonds;
and (K) Rating changes.
(c) The Sewer Enterprise shall while any Bonds are legally outstanding
.. provide, or cause the City to provide, Annual Financial Information within 188 days after
the end of the City's fiscal year (the "Submission Date "), beginning with the City's fiscal
year ending December 31, 1997, to each then existing NRMSIR and the SID, if any,
such Annual Financial Information within two -lays of the day it receives it (the "Report
Date ") while any Bonds are outstanding. It shall be sufficient if the Sewer Enterprise
provides to each then existing NRMSIR and the SID, if any, the Annual Financial
Information by specific reference to documents previously provided to each NRMSIR and
the SID, if any, or filed with the Securities and Exchange Commission and, if such a
OV1076%.4 43
document is a final official statement within the meaning of the Rule, available from the
MSRB. "The term "NRMSIR" shall mean a nationally recognized municipal securities
information repository, as recognized from time to time by the Securities and Exchange
Commission for the purposes referred to in the Rule. The NRMSIRs as of the date of
this Ordinance are as follows: Kenny Information Systems, 65 Broadway -16th Floor,
New York, New York 10006 -2503; Thompson Financial Services, Attention: Municipal
Disclosure, 395 Hudson Street, New York, New York 10014 -3669; Disclosure Inc.,
5161 River Road, Bethesda, Maryland 20816 -1584; Moody's NRMSIR, 99 Church
Street, New York, New York 10007; Bloomberg Municipal Repositories, P.O. Box 840,
Princeton, New Jersey 08542 -0840; and R.R. Donnelley Financial Municipal Securities
Disclosure Archive, 55 Main Street, Hudson, Massachusetts 01749. The term "SID"
shall mean any state information depository as operated or designated by the State as
such for the purposes referred to in the Rule. As of the date of this Ordinance, no SID
exists within the State. The term WSW' shall mean the Municipal Securities
Rulemaking Board. The current address of the MSRB is 1640 King Street, #300,
Alexandria, Virginia 22314. All expenses incurred in complying with this Section shall
be regarded and paid as Operation and Maintenance Expenses of the Sewer Enterprise.
(d) If a Material Event occurs while any Bonds are legally outstanding, the
Sewer Enterprise shall promptly provide or cause the Board to provide to the MSRB and
the SID, if any, such Material Event Notice. Each Material Event Notice shall be so
captioned and shall prominently state the date, title, and CUSIP numbers of the Bonds.
(e) Unless otherwise required by law and subject to technical and economic
feasibility, the Sewer Enterprise shall employ such methods of information transmission
as shall be reasonably requested or recommended by the designated recipients of the
Sewer Enterprise's information.
(f) The undertaking in this Section will be in effect from the date of delivery
of the Bonds until the earliest of (i) the date the Bonds are no longer legally outstanding
pursuant to the terms of this Ordinance; (ii) the date that the Sewer Enterprise shall no
longer constitute an "obligated person" within the meaning of the Rule; or (iii) the date
on which those portions of the Rule which required this written undertaking.are held to
be invalid by a court of competent jurisdiction in a non - appealable action, have been
repealed retroactively or otherwise do not apply to the Bonds.
(g) This Section may be amended without the consent of the Registered
Owners of the Bonds, in compliance with the Rule and any interpretive guidance related
to the Rule. The Sewer Enterprise shall provide notice of such amendment to each
NRMSIR.
(h) Any failure by the Sewer Enterprise to perform in accordance with this
Section shall not constitute an "Event of Default" under this Ordinance, and the rights
and remedies provided by this Ordinance upon the occurrence of an "Event of Default"
02/107608.4 44
shall not apply to any such failure. The Registered Owners of Bonds may enforce
specific performance of the undertakings herein by any available judicial proceeding.
Unless otherwise required by law, no Registered Owner of a Bond shall be entitled to
damages for the Sewer Enterprise's non - compliance with its obligations under this
Section.
Section 32. Severability Clause. If any section, paragraph, clause or provision of this
Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or
unenforceability of such section, paragraph, clause or provision shall not affect any of the
remaining provisions of this Ordinance.
Section 33. Repealer Clause. All bylaws, orders, resolutions and ordinances, or parts
thereof, inconsistent herewith are hereby repealed to the extent only of such inconsistency. This
repealer shall not be construed to revive any bylaw, order, resolution or ordinance, or part
thereof, heretofore repealed.
Section 34. Amendment. This Ordinance may be amended or supplemented by
ordinance adopted by the Council in accordance with law, without receipt by the Sewer
Enterprise of additional consideration and without the consent of the Registered Owners, but
only with the written consent of the Bond Insurer, to make any amendment or supplement to this
Ordinance which, in the opinion of nationally recognized bond counsel, is not to the material
prejudice of the Registered Owners. This Ordinance may be amended or supplemented by
ordinance adopted by the Council in accordance with law, without receipt by the Sewer
Enterprise of any additional consideration, but with the written consent of the Bond Insurer and
the Registered Owners of 66 -2/3 % of the Bonds outstanding at the time of the adoption of the
amendatory ordinance, excluding any Bonds held for the account of the Sewer Enterprise;
provided, however, that no such ordinance, without the consent of the Bond Insurer and the
Registered Owners of all outstanding Bonds which will be adversely affected, shall have the
effect of permitting:
(a) An extension of the maturity of any Bond authorized by this Ordinance;
or
(b) A reduction in the principal amount of any Bond or the rate of interest
thereon; or
• (c) The creation of a lien upon or pledge of Net Pledged Revenues ranking
prior to the lien or pledge of Net Pledged Revenues created by this Ordinance in favor
of the Bonds; or
(d) A reduction of the principal amount of Bonds required for consent to such
amendatory or supplemental ordinance; or
OV1076%.4 45
MII W
(e) The establishment of priorities as between Bonds issued and outstanding
under the provisions of this Ordinance; or
(f) The modification of or otherwise affecting the rights of the Registered
Owners of less than all of the Bonds then outstanding.
Section 35. Approval of Bond Purchase Agreement. The Bond Purchase Agreement,
in substantially the form presented to the Council, is hereby authorized and approved, and the
President or Vice President of the Council and the City Clerk or any Deputy or Assistant City
Clerk are hereby directed to execute and deliver the Bond Purchase Agreement on behalf of the
Sewer Enterprise in substantially the form approved, but with such changes therein as shall be
approved by the City Attorney and deemed necessary or desirable by the officers executing the
same, their execution to be conclusive evidence of the Sewer Enterprise's approval of any
changes from the form hereby approved.
Section 36. Approval of Escrow Agreement. The Escrow Agreement, in substantially
the form presented to the Council, is hereby authorized and approved, and the President or Vice
President of the Council and the City Clerk or any Deputy or Assistant City Clerk are hereby
directed to execute and deliver the Escrow Agreement on behalf of the Sewer Enterprise in
substantiall y the form approved, but with such changes therein as shall be approved by the City
Attorney and deemed necessary or desirable by the officers executing the same, their execution
to be conclusive evidence of the Sewer Enterprise's approval of any changes from the form
hereby approved.
Section 37. Approval of Paying Agency Agreement. The Paying Agency Agreement,
in substantially the form presented to the Council, is hereby authorized and approved, and the
President or Vice President of the Council and the City Clerk or any Deputy or Assistant City
Clerk are hereby directed to execute and deliver the Paying Agency Agreement on behalf of the
Sewer Enterprise in substantially the form approved, but with such changes therein as shall be
approved by the City Attorney and deemed necessary or desirable by the officers executing the
same, their execution to be conclusive evidence of the Sewer Enterprise's approval of any
changes from the form hereby approved.
Section 38. Miscellaneous Documents. The President or Vice President of the City
Council and the City Clerk or Deputy or Assistant City Clerk, are hereby authorized and
directed to execute and deliver any and all closing documents necessary or desirable in
• connection with the issuance of the Bonds.
Section 39. Exercise of Home Rule Power. Pursuant to Article XX of the State
Constitution and the Charter, the City and the Sewer Enterprise hereby dct�e and declare
the issuance of the Bonds to be a local matter, and therefore all statutes of the State which might
otherwise apply in connection with the issuance of the Bonds are hereby superseded.
OV1076 a.4 46
«�
Section 40. Recordation. A true copy of this Ordinance, as adopted by the governing
body of the Sewer Enterprise, shall be numbered and recorded, and its adoption and publication
shall be authenticated by the signatures of the President and the City Clerk and by a certification
of publication.
Section 41. FaWher Action. The officers of the Sewer Enterprise are authorized and
directed to take all action necessary or appropriate to effectuate the provisions of this Ordinance,
including, without limiting the generality of the foregoing, the printing of the Bonds and the
execution of such certificates as may be required by the Underwriter relating to, but not limited
to, the signing of the Bonds, the use of the proceeds thereof, the tenure and identity of the
municipal officials, the receipt of the Bonds' purchase price, and the absence of litigation,
pending or threatened, if in accordance with the facts, affecting the validity thereof.
Section 42. Captions. The captions or headings in this Ordinance are for convenience
only and in no way define, limit or describe the scope or intent of any provisions or sections of
this Ordinance.
Section 43. Applicable Provisions of Law. This Ordinance shall be governed by and
construed in accordance with the laws of the State.
Section 44. Book -Entry System; Limited Obligation of Authority.
(a) —.Notwithstanding any other provision hereofrthe Bonds shall be initially
issued in the form of a separate single certificated fully registered Bond for each of the
maturities set forth in Section 5 hereof. Upon initial issuance, the ownership of each
Bond shall be registered in the registration records kept by the Paying Agent in the name
of Cede, as nominee of DTC. Except as provided in this Section, all of the outstanding
Bonds shall be registered in the registration records kept by the Paying Agent in the
name of Cede, as nominee of DTC.
(b) With respect to Bonds registered in the registration records kept by the
Paying Agent in the name of Cede, as nominee of DTC, the Sewer Enterprise and the
Paying Agent shall have no responsibility or obligation to any Participant or to any
person on behalf of which a Participant holds an interest in the Bonds. Without limiting
the immediately preceding sentence, the Sewer Enterprise and the Paying Agent shall
have no responsibility or obligation with respect to (i) the accuracy of the records of
• DTC, Cede or any Participant with respect to any ownership interest in the Bonds, (ii)
the delivery to any Participant or any other person, other than a Registered Owner, as
shown in the registration records kept by the Paying Agent, or any notice with respect
to the Bonds, -including Any-notice of redemption or (iii) -the payment -to any Participant
or any other person, other than a Registered Owner, as shown in the registration records
kept by the Paying Agent, of any amount with respect to principal of or interest on the
Bonds. The Sewer Enterprise and the Paying Agent may treat and consider the person
in whose name each Bond is registered in the registration records kept by the Paying
OVIOMMA 47
Agent as the absolute owner of such Bond for the purpose of payment of principal and
interest with respect to such Bond, for the purpose of giving notices of redemption and
other matters with respect to such Bond, for the purpose of registering transfers with
respect to such Bond, and for all other purposes whatsoever. The Paying Agent shall
pay all principal of and the interest on the Bonds only to or upon the order of the
respective Registered Owners, as shown in the7registration records kept by the Paying
Agent, or their respective attorneys duly authorized in writing, as provided in Section 5
hereof, and all such payments shall be valid and effective to fully satisfy and discharge
the obligations with respect to payment of principal of and interest on the Bonds to the
extent of the sum or sums so paid. No person other than a Registered Owner, as shown
in the registration records kept by the Paying Agent, shall receive a certificated Bond
evidencing the obligation to make payments of principal and interest pursuant to this
Ordinance. Upon delivery by DTC to the Paying Agent of written notice to the effect
that DTC has determined to substitute a new nominee in place of Cede, and subject to
the provisions herein with respect to Record Dates, the word "Cede" in this Ordinance
shall refer to such new nominee of DTC.
(c) The Representation Letter, with such changes, omissions, insertions and
revisions as the Sewer Enterprise shall approve, is hereby authorized and the President
or the Vice President shall execute and deliver such Representation Letter. The approval
by the Sewer Enterprise of any such changes, omissions, insertions and revisions shall
be conclusively established by the President's or Vice President's execution and delivery
of the Representation Letter which shall not in any way limit the - provisions of this
Section or in any other way impose upon the Sewer Enterprise any obligation whatsoever
with respect to persons having interests in the Bonds other than the Registered Owners,
as shown on the registration records kept by the Paying Agent. The Paying Agent shall
take all action necessary for all representations of the Sewer Enterprise in the
Representation Letter with respect to the paying agents and the bond registrar,
respectively, to at all times to be complied with.
(d) (i) DTC may determine to discontinue providing its services with
respect to the Bonds at any time by giving notice to the Sewer Enterprise and the
Paying Agent and discharging its responsibilities with respect thereto under
applicable law.
(ii) The Sewer Enterprise, in its sole discretion and without the consent
of any other person, may terminate the services of DTC with respect to the Bonds
if the Sewer Enterprise determines that:
-(A) DTC is Amble to discharge it&xespensibilities with respect
to the Bonds, or
(B) a continuation of the requirement that all of the outstanding
Bonds be registered in the registration records kept by the Paying Agent
02/107608.4 48
in the name of Cede or any other nominee of DTC, is not in the best
interest of the beneficial owners of the Bonds.
(iii) Upon the termination of the services of DTC with respect to the
Bonds pursuant to subsection 44(d)(ii)(B) hereof, or upon the discontinuance or
termination of the services of DTC with respect to the Bonds pursuant to
subsection 44 or subsection 44(d)(i) hereof after which no substitute securities
depository willing to undertake the functions of DTC hereunder can be found
which, in the opinion of the Paying Agent, is willing and able to undertake such
functions upon reasonable and customary terms, the Paying Agent is obligated to
deliver Bond certificates at the expense of the beneficial owners of the Bonds, as
described in this Ordinance, and the Bonds shall no longer be restricted to being
registered in the registration records kept by the Paying Agent in the name of
Cede as nominee of DTC, but may be registered in whatever name or names
Registered Owners transferring or exchanging Bonds shall designate, in
accordance with the provisions of this Ordinance.
(e) Notwithstanding any other provision of this Indenture to the contrary, so
long as any Bond is registered in the name of Cede, as nominee of DTC, all payments
with respect to principal of and interest on such Bond and all notices with respect to such
Bond shall be made and given, respectively, in the manner provided in the Representation
Letter.
Section 45. No Recourse. No recourse shall be had for the payment of the principal of
or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant
or agreement contained in this Ordinance or the Paying Agency Agreement against any past,
present or future officer, employee or agent of the City, or of any successor public corporation,
as such, either directly or through the City or any successor public corporation, under any rule
of law or equity, statute or constitution or by the enforcement of any assessment or penalty or
otherwise, and all such liability of any such officers, employees or agents as such is hereby
expressly waived and released as a condition of and consideration for the passage of this
Ordinance, the execution of the Paying Agency Agreement, and the issuance of the Bonds.
Section 46. Bond Insurance. In the event that, on the second Business Day, and again
on the Business Day, prior to any interest payment date on the Bonds, the Paying Agent has not
received sufficient moneys to pay all the principal of and interest on the Bonds due on the
• second following or following, as the case may be, Business Day, the Paying Agent shall
immediately notify the Bond Insurer or its designee on the same Business Day by telephone or
telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency.
In the event of any such deficiency, the Paying Agent shall first call upon the Bond Insurer to
pay the amount of the deficiency pursuant to the Reserve Fund Surety Bond deposited in the
Reserve Fund, pursuant to the Financial Guaranty Agreement, and only then shall call upon the
Bond Insurer to pay under the Bond Insurance Policy.
=1076M.1 49
If the deficiency is made up in whole or in part prior to or on the interest payment date,
the Paying Agent shall so notify the Bond Insurer or its designee.
In addition, if the Paying Agent has notice that any Registered Owner has been required
to disgorge payments of principal of or interest on the Bonds to a trustee in bankruptcy or
creditors or others pursuant to a final judgment by a court of competent jurisdiction that such
payment constitutes a voidable preference to such Registered Owner within the meaning of any
applicable bankruptcy laws, then the Paying Agent shall notify the Bond Insurer or its designee
of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified
mail.
The Paying Agent is hereby irrevocably designated, appointed, directed and authorized
to act as attorney -in -fact for Registered Owners of the Bonds as follows: if and to the extent
there is a deficiency in amounts required to pay principal of or interest on the Bonds, the Paying
Agent shall (i) execute and deliver to State Street Bank and Trust Company, N.A., or its
successors under the Bond Insurance Policy (the "Insurance Paying Agent "), in form satisfactory
to the Insurance Paying Agent, an instrument appointing the Bond Insurer as agent for such
Registered Owners in any legal proceeding related to the payment of such principal and /or
interest and an assignment to the Bond Insurer of the claims for principal and /or interest to
which such deficiency relates and which are paid by the Bond Insurer, (ii) receive as designee
of the respective Registered Owners (and not as Paying Agent) in accordance with the tenor of
the Bond Insurance Policy payment from the Insurance Paying Agent with respect to the claims
for principal and /or interest so assigned, and (iii) disburse the same to such respective Registered
Owners.
Payments with respect to claims for principal of or interest on Bonds disbursed by the
Paying Agent from proceeds of the Bond Insurance Policy shall not be considered to discharge
the obligation of the Sewer Enterprise with respect to such Bonds, and the Bond Insurer shall
become the owner of such unpaid Bonds and claims for the interest or principal in accordance
with the tenor of the assignment made to it under the provisions of this subsection or otherwise.
Irrespective of whether any such assignment is executed and delivered, the Sewer
Enterprise and the Paying Agent hereby agree for the benefit of the Bond Insurer that:
(a) They recognize that to the extent the Bond Insurer makes payments,
directly or indirectly (as by paying through the Paying Agent), on account of the
• principal of and interest on the Bonds, the Bond Insurer will be subrogated to the rights
of such Registered Owners to receive the amount of such principal and interest from the
Sewer Enterprise, with interest thereon as provided and solely from the sources stated
in this Ordinance and the Bonds; and
(b) They will accordingly pay to the Bond Insurer the amount of such
principal and interest (including principal and interest recovered under subparagraph (ii)
of the first paragraph of the Bond Insurance Policy, which principal and interest shall be
04/107608.1 50
deemed past due and not to have been paid), with interest thereon as provided in this
Ordinance and the Bonds, but only from the sources and in the manner provided herein
for the payment of principal and interest on the Bonds to Registered Owners, and will
otherwise treat the Bond Insurer as the owner of such rights to the amount of such
principal and interest.
In connection with the issuance of parity lien bonds, the Sewer Enterprise shall deliver
to the Bond Insurer a copy of the disclosure document, if any, circulated with respect to such
parity lien bonds.
Copies of any amendments made to the documents executed in connection with the
issuance of the Bonds which are consented to by the Bond Insurer shall be sent to Standard &
Poor's Ratings Group, as division of The McGraw -Hill Companies, Inc.
The Bond Insurer shall receive notice of the resignation or removal of the Paying Agent
and the appointment of a successor thereto.
The Bond Insurer shall receive copies of all notices required to be delivered to Registered
Owners or to the Paying Agent and, on an annual basis, copies of the City's and the Sewer
Enterprise's audited financial statements and annual budget. All notices required to be given to
the Bond Insurer under this Ordinance shall be in writing and shall be sent by registered or
certified mail addressed to Municipal Bond Investors Assurance Corporation, 113 King Street,
Armonk, New York 10504 Attention: Surveillance.
OV 107Wa.1 51
$BI �
INTRODUCED, AND PRESENTED FOR A FIRST TIME ON SEPTEMBER 23, 1996,
ORDERED PUBLISHED BY TITLE ONLY, PRESENTED A SECOND TIME AND
FINALLY PASSED AND ADOPTED ON OCTOBER 15, 1996.
INTRODUCED: September 23, 1996
[SEAL] By Charles Jones
Councilperson
ATTEST: APPROVED:
By
City lerk Presid�fthe of the City Council, acting as governing
body Sewer Enterprise
o2�io�6oa.t 52