The URL can be used to link to this page

94-4796 Auth Bond IssueGILMORE & BELL, P.C. Document No. K102212\RES3 CITY OF SALINA, KANSAS RESOLUTION NO. 94-4796 $1,230,000 COMBINED WATER AND SEWAGE SYSTEM IMPROVEMENT REVENUE BONDS SERIES 1994-B DATED: OCTOBER 1, 1994 ==:H============================================= S tion 1 S tion 2 S tion 3 Sdbtion 4 S S S 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29 RESOLUTION NO. 94-4796 OF THE CITY OF SALINA, KANSAS PAGE .............................................. 1 Definitions ....................................... Authorization of the Bonds ............................. Description of the Bonds, Designation of Paying Agent and Bond Registrar ................................ Method and Place of Payment of Principal of and Interest on the Bonds .................................... Execution, Authentication and Delivery of the Bonds ............. Registration, Transfer and Exchange of Bonds ................. Persons Deemed Owners of Bonds ........................ Mutilated, Lost, Stolen or Destroyed Bonds .................. Cancellation and Destruction of Bonds Upon Payment ............ Redemption of Bonds Prior to Maturity ..................... Form of Bonds .................................... Uncertificated Bonds ................................. Disposition of Proceeds ............................... Water and Sewage Fund ............................... Ratification and Creation of Funds and Accounts ............... Application of Moneys in Funds and Accounts ................. Deficiency in Payments or Credits into Funds or Accounts ......... Use of Other Accounts to Pay Bonds and Interest ............... Investments ....................................... Particular Covenants of the City .......................... Additional Bonds ................................... Tax Matters ...................................... Amendments ...................................... Acceleration in the Event of Default ....................... Enforcement ...................................... Defeasance ...................................... . Approval of Preliminary Official Statement and Official Statement ... . Authorization of Agreement with Bond Registrar and Paying Agent ................................. Severability ....................................... 1 1 1 2 3 4 5 5 5 5 8 13 13 14 14 16 19 20 20 20 22 24 24 24 25 26 26 26 26 RESOLUTION NO. 94-4796 A RESOLUTION PRESCRIBING THE FORM AND DETAILS OF AND AUTHORIZING THE DELIVERY OF $1,230,000 COMBINED WATER AND SEWAGE SYSTEM IMPROVEMENT REVENUE BONDS, SERIES 1994-B, OF THE CITY OF SALINA, KANSAS, PREVIOUSLY AUTHORIZED BY ORDINANCE NO. 94-9654; PROVIDING FOR THE COLLECTION SEGREGATION AND APPLICATION OF THE REVENUES OF SAID SYSTEM FOR THE PURPOSES AUTHORIZED BY LAW, INCLUDING PAYING THE COST OF OPERATION AND MAINTENANCE OF SAID UTILITY, PAYING THE PRINCIPAL OF AND INTEREST ON THE REVENUE BONDS OF SAID CITY ISSUED AGAINST SAID SYSTEM AND PROVIDING ADEQUATE RESERVE FUNDS, MAKING CERTAIN COVENANTS WITH RESPECT TO SAID BONDS; AND APPROVING A PRELIMINARY OFFICIAL STATEMENT AND OFFICIAL STATEMENT RELATING TO SAID BONDS. WHEREAS, the City has heretofore adopted the Ordinance authorizing the issuance of the Bonds; WHEREAS, the Ordinance authorized the governing body of the City to adopt a resolution pr scribing certain details and conditions and to make certain covenants with respect to the issuance of th Bonds. NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF A, KANSAS AS FOLLOWS: Section 1. Definitions. In addition to the words and terms defined herein, unless the context clearly indicate some other meaning, the words and terms used herein and defined in the Ordinance have the same meanings as set forth in the Ordinance when used herein. Section 2. Authorization of the Bonds. The Bonds have heretofore been authorized and directed to a issued pursuant to the Ordinance in the principal amount of $1,230,000, for the purpose of paying th cost of the Project. Section 3. Description of the Bonds Designation of Paving Agent and Bond Registrar. The Bo ds shall consist of fully registered Bonds, without coupons, transferable to subsequent owners only in t ie Bond Register maintained by the Bond Registrar as hereinafter provided. Each Bond shall be in the denomination of $5,000 or any integral multiple thereof not exceeding the principal amount of Bonds be ming due on the Stated Maturity of such Bond, as specified by the Holder of such Bond. The Bonds sh 1 be numbered in a manner determined by the Bond Registrar. The Bonds shall be dated October 1, as as It The Bonds shall have the Stated Maturities and shall bear interest at the rates per annum as Stated Maturity October 1 SERIAL BONDS Principal Amount Annual Rate of Interest 1995 $ 20,000 7.10% 1996 35,000 7.10% 1997 35,000 7.10% 1998 40,000 7.10% 1999 40,000 7.10% 2000 45,000 7.10% 2001 50,000 6.00% 2002 50,000 5.10% 2003 55,000 5.20% 2004 55,000 5.30% 2005 60,000 5.45% 2006 65,000 5.50% 2007 70,000 5.60% 2008 70,000 5.70% 2009 75,000 5.80% 2010 80,000 5.80% TERM BONDS Stated Annual Rate Maturity Principal of October 1 Amount Interest 2014 $385,000 5.90% The Bonds shall bear interest from the most recent Interest Payment Date to which interest has paid in full or, if no interest has been paid, from October 1, 1994. Interest on the Bonds at the aforesaid shall be payable semiannually on April 1 and October 1 in each year, beginning April 1, (the "Interest Payment Dates"). The Treasurer of the State of Kansas, Topeka, Kansas, is hereby nated as the Paying Agent and as the Bond Registrar for the Bonds. Section 4. Method and Place of Pavment of Principal of and Interest on the Bonds. The cipal of, redemption premium, if any, and interest (computed on the basis of a 360 -day year of twelve lay months) on the Bonds shall be payable in such coin or currency of the United States of America t the time of payment is legal tender for the payment of public and private debts. Payment of the -est on each Bond shall be made by the Paying Agent on each Interest Payment Date to the Person raring as the Holder thereof in the Bond Register at the close of business on the Record Date next eding said Interest Payment Date, by check or draft mailed to such Holder at the Holder's address appears in the Bond Register. The principal of and redemption premium, if any, for each Bond shall -2- payable to the Holder thereof upon the presentation of such Bond for payment and cancellation at its iturity at the principal office of the Paying Agent. Notwithstanding any of the foregoing provisions of this Section to the contrary, any interest on th Bonds which is payable, but is not punctually paid on any Interest Payment Date (herein called "Defaulted Interest"), shall be payable to the Persons in whose names the Bonds are registered at the close of business on a Special Record Date. The Special Record Date shall be fixed in the following in er: (1) the City shall notify the Bond Registrar in writing of the amount of Defaulted Interest proposed to be paid on the Bonds and the date of the proposed payment, which proposed payment date shall be at least 30 days after receipt by the Bond Registrar of such notice from the City; (2) at the same tinie the City shall deposit with the Paying Agent an amount of money equal to the aggregate amount to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Paying Agent fosuch deposit prior to the date of the proposed payment; and (3) thereupon, the Bond Registrar shall fi a Special Record Date for the payment of such Defaulted Interest which shall not be more than 15 nor le than 10 days prior to the date of the proposed payment. The Bond Registrar shall promptly notify the City of such Special Record Date and, in the name and at the expense of the City, shall cause notice of the proposed payment of such Defaulted Interest and tht Special Record Date therefor to be mailed, first class postage prepaid, to the Holder of each Bond at such Holder's address as it appears in the Bond Register, not less than 10 days prior to such Special R ord Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date thi refor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose n es the Bonds are registered at the close of business on such Special Record Date. Payment of principal of, redemption premium, if any, and interest on a Bond may be made by i other method of transferring funds as may be requested by the Holder of the Bond, provided that Paying Agent shall first receive a written request from such Holder (i) specifying the method and :e for transferring funds and (ii) providing for the Paying Agent to be reimbursed by the Holder for ;xr)enses incurred in connection with such fund transfers. Subject to the foregoing provisions of this Section, each Bond delivered under this Resolution i transfer of or in exchange for or in lieu of any other Bond shall carry the rights to interest accrued unpaid, and to accrue, which were carried by such other Bond. Section 5. Execution, Authentication and Delivery of the Bonds. The Bonds shall be executed on behalf of the City by the facsimile signature of the Mayor, attested by the facsimile signature of the City Clerk, with the facsimile seal of the City affixed. In the event any officer whose signature or facsimile thereof appears on any Bond shall cease to be such officer before the delivery of such Bond, su h signature or facsimile thereof shall nevertheless be valid and sufficient for all purposes, the same as f such person had remained in office until delivery. Any Bond may be executed by such persons as at :he actual time of the execution of such Bond shall be the proper officers to sign such Bond although at :he original date of such Bond such persons may not have been such officers. by The Bonds shall have endorsed thereon a Certificate of Authentication substantially in the form inafter set forth and which shall have the date of registration inserted and shall be manually executed ie Bond Registrar. -3- No Bond shall be entitled to any security or benefit under this Resolution or shall be valid or gatory for any purpose unless and until such Certificate of Authentication shall have been duly :uted by the Bond Registrar by manual signature. Such executed Certificate of Authentication upon Bond shall be conclusive evidence that such Bond has been duly authenticated and delivered under Resolution and that such registered owner has been entered of record in the Bond Register kept by Bond Registrar. The Certificate of Authentication shall be deemed to have been duly executed if ted and dated by any authorized officer or employee of the Bond Registrar, but it shall not be :scary that the same officer or employee sign the Certificate of Authentication on all of the Bonds that be issued hereunder at any one time. I The Mayor and City Clerk are hereby authorized and directed to prepare and execute the Bonds in he manner hereinbefore specified, to register the Bonds in the office of the City Clerk, and to cause the Bonds to be registered in the office of the State Treasurer of Kansas as provided by law, and when th6 Bonds have been duly registered with the Bond Registrar, to deliver the Bonds to the Underwriter, u n the payment of the purchase price of 100% of the principal amount of the Bonds plus accrued in rest to the date of payment and delivery together with any premium. Section 6. Registration, Transfer and Exchange of Bonds. So long as any of the Bonds remain oul standing, the City shall cause the Bond Register to be kept at the principal office of the Bond Registrar ant all of the Bonds and transfers and/or exchanges thereof shall be fully registered as to both principal and interest in the name of the Holders in the Bond Register and shall not be registered to bearer. Bonds may be transferred in the Bond Register only upon surrender thereof to the Bond Registrar du y endorsed for transfer or accompanied by a written instrument of transfer duly executed by the Hc der thereof or his attorney or legal representative in such form as shall be satisfactory to the Bond Re istrar. Upon any such transfer, the City shall execute and the Bond Registrar shall authenticate and de ver in exchange for such Bond a new Bond or Bonds, registered in the name of the transferee, of any de omination or denominations authorized by this Resolution in an aggregate principal amount equal to tht principal amount of such Bond, of the same Stated Maturity, bearing interest at the same rate and of the same series. Bonds, upon surrender thereof at the principal office of the Bond Registrar, together with a wr ten instrument of transfer duly executed by the Holder thereof or his attorney or legal representative in luch form as shall be satisfactory to the Bond Registrar, may, at the option of the Holder thereof, be ex anged for an equal aggregate principal amount of Bonds of the same Stated Maturity, of any de urination or denominations authorized by this Resolution, bearing interest at the same rate and of the s e series. In all cases in which Bonds shall be exchanged or transferred hereunder, the City shall execute anc the Bond Registrar shall authenticate and deliver at the earliest practicable time Bonds in accordance wit the provisions of this Resolution. All Bonds surrendered in any such exchange or transfer shall for hwith be cancelled by the Bond Registrar. No service charge shall be made to any Bondholder for registration, transfer or exchange of Bonds, but the City or the Bond Registrar may make a charge for every transfer or exchange of Bonds sufficient to reimburse it or them for any tax or other governmental ch ge required to be paid with respect to such transfer or exchange, and such charges shall be paid be re any such transfer or exchange shall be completed. -4- The City and the Bond Registrar shall not be required (i) to issue, transfer or exchange any Bond during a period beginning at the opening of business 15 days preceding a mailing of a notice of re emption for Bonds selected for redemption pursuant to Section 10 and ending at the close of business o the date of such mailing; (ii) to transfer or exchange any Bond so selected for redemption in whole or in part, or (iii) to issue, transfer or exchange any Bond during the period beginning at the opening of business on the day after receiving written notice from the City of its intent to pay Defaulted Interest and er iing at the close of business on the date fixed for the payment of Defaulted Interest pursuant to Section 4 f this Resolution. Section 7. Persons Deemed Owners of Bonds. The Person in whose name any Bond shall be ;istered shall be deemed and regarded by the City, the Bond Registrar and the Paying Agent as the volute owner thereof, whether such Bond shall be overdue or not, for the purpose of receiving payment refor or on account thereof and for all purposes, and neither the City, the Bond Registrar nor the ding Agent shall be affected by notice to the contrary. Payment of or on account of the principal of, :mium, if any, and interest on any Bond shall be made only to or upon the order of the Holder thereof his legal representative. All such payments shall be valid and effectual to satisfy and discharge the )ility upon such Bond, including the interest thereon, to the extent of the sum or sums so paid. Section 8. Mutilated, Lost, Stolen or Destroyed Bonds. In the event any Bond shall become mutilated, or be lost, stolen or destroyed, the City shall, if necessary, execute and the Bond Registrar shall authenticate and shall deliver a new Bond of like date and tenor as the Bond mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated Bond, such mutilated Bond shall first be su rendered to the Bond Registrar, and in the case of any lost, stolen or destroyed Bond, that the requirements of K.S.A. 84-8-405 are met and that an indemnity bond and affidavit of loss are provided to the Bond Registrar and the City at the expense of the Holder. Such indemnity bond and affidavit of los s must be sufficient, in the judgment of the Bond Registrar and the City, to protect the Bond Registrar a the City from any loss which either of them might suffer if the Bond is replaced. In the event any su h Bond shall have matured, instead of issuing a substitute Bond the City may pay or authorize the pa,iment of the same without surrender thereof. Upon the issuance of any substitute Bond, the City and tht Bond Registrar may require the payment of an amount sufficient to reimburse the City and the Bond Re istrar for any tax or other governmental charge that may be imposed in relation thereto and any other re isonable fees and expenses incurred in connection therewith. The provisions of this Section are ex lusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the re lacement or payment of mutilated, lost, stolen or destroyed Bonds. to as Section 9. Cancellation and Destruction of Bonds Upon Payment. All Bonds surrendered for ent, transfer or exchange shall be delivered to the Bond Registrar and, if not already cancelled, the Registrar shall cancel such Bonds and record such cancellation in the Bond Register. Thereafter, cancelled Bonds shall be delivered to the City. Section 10. Redemption of Bonds Prior to Maturitv. (a) Optional Redemption. At the option of the City, Bonds maturing on October 1, 2003, l thereafter may be called for redemption and payment prior to maturity (selection of the amounts and maturity or maturities of Bonds to be redeemed to be determined by the City, selection of the Bonds )e redeemed within a single maturity to be determined by the Bond Registrar in such equitable manner it may determine) on October 1, 2002, and thereafter in whole on any date or in part on any Interest -5- to nent Date, at a Redemption Price equal to 100% of the principal amount of the Bonds so redeemed paid, plus accrued interest thereon to the Redemption Date, without premium. (b) Mandatory Redemption. Each of the Term Bonds shall also be subject to mandatory tion and payment on October 1, 2011, and on each October 1 thereafter, pursuant to the tion schedule hereinafter set out, at a Redemption Price equal to 100% of the principal amount , plus accrued interest thereon to the Redemption Date, without premium. The City hereby agrees -m the following principal amounts of the Term Bonds in each of the following years: Maturity PRINCIPAL AMOUNT - $ 85,000 95,000 100,000 105,000 YEAR OCTOBERI 2011 2012 2013 2014* (c) Redemption Provisions. The Bond Registrar shall call Bonds for redemption and payment pursuant to paragraph (a) as herein provided upon mailing to the Bond Registrar at least 45 days prior to ihe Redemption Date of a written request of the City, such request to be mailed by United States re stered mail, postage prepaid, and a copy of such notice shall be sent to the Underwriter, but no such re est shall be required for Bonds being redeemed pursuant to paragraph (b). Such request shall specify thrincipal amount of Bonds and their maturities to be called for redemption, the applicable Redemption Pri a or Prices and the Redemption Date. Bonds shall be redeemed in the principal amount of $5,000 or any integral multiple thereof. In the case of a partial redemption of Bonds of the same maturity the Bonds to be redeemed shall be selected by 1he Bond Registrar from the Outstanding Bonds of that maturity by such method as the Bond Registrar sha, 1 deem equitable and which may provide for the selection for redemption of portions of the principal of utstanding Bonds of that maturity of a denomination larger than $5,000. The portions of the prii cipal of Outstanding Bonds so selected for partial redemption shall be equal to $5,000 or integral mu tiples thereof. Any Bond which is to be redeemed only in part shall be submitted to the Paying Agent an delivered to the Bond Registrar, who shall authenticate and deliver to the Holder of such Bond, wit out service charge, a new Bond or Bonds of the same series, of any authorized denomination as req ested by such Holder in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. If the Holder of any such Bond of a denomination gre ter than $5,000 shall fail to present such Bond to the Paying Agent for payment and exchange as afo esaid, such Bond shall, nevertheless, become due and payable on the Redemption Date to the extent of a principal amount of such Bond called for redemption (and to that extent only). If and when the City shall call any of the Bonds for redemption and payment prior to the maturity thereof, the Bond Registrar shall give written notice in the name of the City of its intention to redeem and pay such Bonds at the office of the Paying Agent. Notice of Redemption shall be given by first class Un ed States mail, postage prepaid, mailed not less than 30 days prior to the Redemption Date, to each Irel of Bonds to be redeemed, at his address appearing in the Bond Register. All notices of ion shall state: (i) The Redemption Date; (ii) The Redemption Price; (iii) If less than all Outstanding Bonds are to be redeemed, the identification (and, in the case it redemption, the respective principal amounts) of the Bonds to be redeemed; (iv) That on the Redemption Date, the Redemption Price will become due and payable upon such Bond, and that interest thereon shall cease to accrue from and after said date; and (v) The place where such Bonds are to be surrendered for payment of the Redemption Price ( ich shall be the office of the Paying Agent). The failure of the Holder of any Bond to be redeemed to receive written notice mailed pursuant h eto shall not affect or invalidate the redemption of said Bond. The Bond Registrar is also directed to ccrnply with any mandatory or voluntary standards for processing redemptions of municipal securities eslablished by the Securities and Exchange Commission. Failure to comply with such standards shall not of'Oct or invalidate the redemption of said Bonds being redeemed. (d) Effect of Redemption. If any Bond is called for redemption and payment as aforesaid, interest on such Bond shall cease from and after the date for which such call is made, provided funds made available to the Paying Agent for its payment on the Redemption Date at the Redemption Price. -7- in re Section 11. Form of Bonds. The Bonds issued in fully registered form shall be substantially as REGISTERED UNITED STATES OF AMERICA STATE OF KANSAS COUNTY OF SALINE CITY OF SALINA COMBINED WATER AND SEWAGE SYSTEM IMPROVEMENT REVENUE BOND Series 1994-B Maturity Bond Date Date CUSIP October 1, 1994 as] a0 ; CIPAL AMOUNT: DOLLARS THE CITY OF SALINA, in the County of Saline, State of Kansas (the "City"), for value 1, hereby promises to pay to the Registered Holder identified above, or registered assigns, on the i Date identified above, unless called for redemption prior to maturity, the Principal Amount d above and to pay interest thereon at the Interest Rate specified above from the most recent Payment Date to which interest has been paid in full or, if no interest has been paid, from 1, 1994, said interest being payable semiannually on April 1 and October 1 in each year, ig April 1, 1995 (the "Interest Payment Dates"). AS PROVIDED in the Ordinance and the Resolution (collectively, the "Ordinance") of the City rizing the issuance of this Bond, interest on this Bond will be paid on each Interest Payment Date ick or draft to the person in whose name this Bond (or one or more predecessor Bonds) is registered hereinafter referred to Bond Register at the close of business on the fifteenth day (whether or not iness day) of the month next preceding each Interest Payment Date (the "Record Date") to the ered owner hereof at such person's address as it appears in the Bond Register. Interest not ually paid will be paid as otherwise provided in the Ordinance. The principal of this Bond shall be le by check or draft to the Registered Holder upon presentation and surrender hereof at the principal of the Treasurer of the State of Kansas in the City of Topeka, Kansas. REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON REVERSE HEREOF. SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME ;CT AS IF SET FORTH HEREIN. -8- sf THIS BOND shall not be valid or become obligatory for any purpose or be entitled to any ty or benefit under the Ordinance until the Certificate of Authentication hereon shall have been and executed by the Bond Registrar. IT IS HEREBY DECLARED AND CERTIFIED that all acts, conditions and things required to done and to exist precedent to and in the issuance of the Bonds have been done and performed and exist in due and regular form and manner as required by the constitution and laws of the State of rias. I IN WITNESS WHEREOF, the City has caused this Bond to be executed by facsimile signatures oits Mayor and City Clerk and a facsimile of its corporate seal to be hereto affixed and this Bond to b dated October 1, 1994. ATTEST: a s City Clerk CITY OF SALINA, KANSAS (facsimile) Mayor CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the within -mentioned Ordinance. TRATION DATE: THE TREASURER OF THE STATE OF KANSAS Bond Registrar and Paying Agent Treasurer's Registration Number: 0322-085-100194-762 [ON REVERSE SIDE] FURTHER PROVISIONS THIS BOND is one of a duly authorized issue of Bonds of the City aggregating the principal it of $1,230,000 (the "Bonds"), to be known as the "Combined Water and Sewage System vement Revenue Bonds, Series 1994-B." The Bonds are issued for the purpose of repairing, g, extending, enlarging and improving the combined water and sewage system of the City by the ity of and in full compliance with the provisions, restrictions and limitations of the Constitution and s of the State of Kansas, including K.S.A. 12-856 to 12-869, inclusive, and all amendments to such s and all other provisions of the laws of said State applicable thereto. Ra ha of of ho of $2 of of THIS BOND and all interest hereon are special obligations of the City to be paid by said City ;ly from the revenues derived from the revenues, income and rents accrued by said City from the :ration of its combined water and sewage system subject to reasonable operational maintenance expense as described in the Ordinance and not from any other fund or source. The Bonds constitute a lien such revenues. The Bonds do not constitute general obligations of the City nor do they constitute an ebtedness of the City within the meaning of any constitutional or statutory provision, and the City is ler no obligation to levy any taxes to pay any of the principal of or interest on the Bonds. The Bonds e been authorized and issued under the provisions of the Ordinance to which reference is made for ascription of the covenants made by the City with respect to the collection, segregation and application he revenues of the City's combined water and sewage system, the nature and extent of the security ;uch Bonds, the rights, duties and obligations of the City with respect thereto and the rights of the ders thereof. The Bonds are junior and subordinate with respect to the payment of principal and :rest and in other respects to an issue of Combined Water and Sewage System Revenue Bonds, Series .977, dated April 1, 1977, in the original principal amount of $3,000,000. The Bonds are on a parity are equally and ratably secured with respect to the payment of principal and interest and in all other )ects to an issue of Combined Water and Sewage System Revenue Refunding Bonds, Series 1990-A, ad July 1, 1990, in the original principal amount of $5,655,000, an issue of Combined Water and vage System Revenue Bonds, Series 1990-B, dated July 1, 1990, in the original principal amount of 210,000, an issue of Combined Water and Sewage System Improvement Revenue Bonds, Series 1992, ad July 1, 1992, in the original principal amount of $15,000,000, an issue of Combined Water and age System Improvement Revenue Bonds, Series 1993-A, dated July 1, 1993, in the original principal unt of $3,200,000 and an issue of Combined Water and Sewage System Revenue Refunding Bonds, es 1994, dated January 1, 1994, in the original principal amount of $11,390,000. The Bonds, said es 1977 Bonds, said Series 1990-A Bonds, said Series 1990-B Bonds, said Series 1992 Bonds, said es 1993-A Bonds and said Series 1994 Bonds, as of the Bond Date, constitute the only obligations e City payable from the net revenues of the combined water and sewage system. The City may issue tional bonds payable from the net revenues produced from the combined water and sewage system e City as provided in and subject to the restrictions of the Ordinance and may provide that any such 'tional bonds shall enjoy equality of lien on said net revenues with the Bonds. THIS BOND has been duly registered in the office of the City Clerk of the City of Salina, as, and in the office or the Treasurer of the State of Kansas. THE BONDS maturing on October 1, 2003, and thereafter, at the option of the City, may be cal d for redemption and payment prior to maturity (selection of the amounts and the maturity or matarities of Bonds to be redeemed to be determined by the City, selection of the Bonds to be redeemed within a single maturity to be determined by the Bond Registrar in such equitable manner as it may det rmine) on October 1, 2002, and thereafter, in whole on any date or in part on any Interest Payment Da , ata redemption price equal to 100% of the principal amount of the bonds so redeemed and paid, plu accrued interest thereon to the date fixed for redemption and payment, without premium. EACH OF the Bonds of this issue maturing October 1, 2014 (the "Term Bonds") shall also be subject to mandatory redemption and payment on October 1, 2011 and on each October 1 thereafter (selection of bonds to be made by the Bond Registrar in such manner as it may deem equitable), pursuant to ffie redemption schedule hereinafter set forth, at the redemption price of 100% (expressed as a per entage of the principal amount), plus accrued interest thereon to the date of redemption: -10- Principal Year Amount October 1 $ 85,000 2011 95,000 2012 100,000 2013 105,000 2014* Maturity IN THE EVENT any of the Bonds are called for redemption and payment as aforesaid, written nctice thereof will be given by first class United States mail mailed not less than 30 days prior to the date fi d for redemption and payment to each holder of Bonds to be redeemed. All bonds so called for re emption will cease to bear interest on the specified redemption date, provided funds are deposited with tht aying Agent on such redemption date, and will no longer be secured by the Ordinance and will not be deemed to be outstanding under the provisions of the Ordinance. The failure of the holder of any Bond called for redemption to receive written notice mailed pursuant to the above provisions will not invalidate or affect the redemption of such Bond. THE PRINCIPAL of and interest (computed on the basis of a 360 -day year of twelve 30 -day mnths) on this Bond are payable in such coin or currency of the United States of America as at the time of ayment is legal tender for the payment of public and private debts. to is I pri of pal THIS BOND is negotiable and is transferable, as provided in the Ordinance, only in the Bond ister at the office of the Bond Registrar upon surrender of this Bond to the Bond Registrar duly )rsed for transfer or accompanied by a written instrument of transfer satisfactory to the Bond istrar duly executed by the Registered Holder hereof or his attorney or legal representative, and eupon a new Bond or Bonds of the same series in the same aggregate principal amount shall be issued ie transferee in exchange therefor subject to the conditions provided in the Ordinance. The Bonds each maturity are issuable only in the form of fully registered bonds, without coupons, in the )mination of $5,000 or any integral multiple thereof. The Registered Holder of any Bond or Bonds surrender the same in exchange for an equal aggregate principal amount of Bonds of any authorized )mination in the manner and subject to the conditions provided in the Ordinance. No service charge 1 be made for any such transfer or exchange, but, prior to any transfer or exchange, the registered er hereof shall pay to the City or the Bond Registrar an amount sufficient to reimburse it or them for tax or other governmental charge required to be paid with respect to such transfer or exchange. The the Bond Registrar and the Paying Agent may deem and treat the person in whose name this Bond :gistered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the cipal hereof and interest due hereon and for all other purposes. If the date for making any payment iterest or principal occurs on a Saturday, Sunday or holiday in the City of Topeka, Kansas, then such nent may be made on the next succeeding business day with the same force and effect. -11- (FORM OF ASSIGNMENT) BOND ASSIGNMENT FOR VALUE RECEIVED the undersigned does (do) hereby sell, assign and transfer to (Name and Address) (Social Security or Taxpayer Identifying No.) tht bond to which this assignment is affixed in the outstanding principal amount of $ , standing in he name of the undersigned on the books of the Treasurer of the State of Kansas, Topeka, Kansas. T undersigned does (do) hereby revocably constitute and appoint attorney to tr sfer the said bond, on the books of said Treasurer of the State of Kansas, with full power of su stitution in the premises. Dz ed Signature (Sign Here Exactly as Name or Names Appear on the Face of the Certificate) Signature Guaranteed By: (Name of Eligible Guarantor Institution) By _ Title: -12- (FORM OF CITY CLERK'S CERTIFICATE) kTE OF KANSAS ) SS. UNTY OF SALINE ) I, the undersigned, City Clerk of the City of Salina, Kansas, do hereby certify that this Bond has duly registered in my office according to law. WITNESS my hand and official seal. CSIMILE SEAL] (facsimile) City Clerk (FORM OF STATE TREASURER'S CERTIFICATE) OFFICE OF THE TREASURER, STATE OF KANSAS I, SALLY THOMPSON, Treasurer of the State of Kansas, do hereby certify that a transcript of proceedings leading up to the issuance of this Bond has been filed in my office and that this Bond was listered in my office according to law on , 1994. WITNESS my hand and official seal. [FACSIMILE SEAL] SALLY THOMPSON Treasurer of the State of Kansas Assistant State Treasurer Section 12. Uncertificated Bonds. There will be no uncertificated bonds. Section 13. Disposition of Proceeds. All accrued interest and premium, if any, received from sale of the Bonds shall be credited to and deposited in the 1994-B Principal and Interest Account !inafter created by Section 15 of this Resolution. of LThere shall next be deposited in the 1994-B Reserve Account hereinafter created by Section 15 s Resolution, the sum of $106,000, the average annual debt service on the Bonds. spe the The remaining proceeds received from the sale of the Bonds shall be deposited in a separate fund :by created in the treasury of the City to be known as the "Combined Water and Sewage Utility .struction Fund of 1994" (herein called the "Construction Fund") and shall be used by the City for sole purpose of paying the cost of the portion of the Project in accordance with the plans and :ifications therefor prepared by the City's engineers heretofore approved by the governing body of City and on file in the office of the City Clerk, including any alterations in or amendments to said -13- and specifications deemed advisable by the City's engineers and approved by the governing body City. Withdrawals from the Construction Fund shall be made only on duly authorized and executed w rrant or check therefor approved by the governing body of the City upon its determination that such pa ment is being made for a purpose within the scope of this Resolution and that the amount of such pa iment represents only the contract price of the property, equipment, labor, materials or service being pa d for, or if such payment is not being made pursuant to an express contract, that such payment is not in xcess of the reasonable value thereof. Nothing hereinbefore contained shall prevent the payment out of the Construction Fund of all costs and expenses incident to the issuance of the Bonds without a de ermination from the City's governing body. Upon completion of the Project as hereinbefore provided, any surplus remaining in the C4istruction Fund shall be deposited in the 1994-B Principal and Interest Account created by Section 15 of I his Resolution. Section 14. Water and Sewage Fund. The City covenants and agrees that so long as any of the 19 4-B Bonds remain outstanding and unpaid all of the Revenues derived by the City from the operation of is Water and Sewage Utility, including all Revenues from improvements, extensions and enlargements in nd to the Water and Sewage Utility, will be paid and deposited in the City's "Water and Sewage F d" and that said Revenues will not be mingled with the other funds of the City and shall be ad inistered and used solely as hereinafter in this Resolution provided. Section 15. Ratification and Creation of Funds and Accounts. The prior establishment of the separate accounts known respectively as the (a) "Combined Water and Sewage System Depreciation and Emergency Replacement Account" (herein called the "Depreciation and Emergency Replacement Account"), and (b) "Combined Water and Sewage System Extension and Bond Retirement Account" (herein called the "Extension and Bond Retirement Account") be,11 and the same is, hereby ratified and confirmed, and in addition to the accounts aforesaid there were cr ted and established by the 1977 Ordinance of the City two separate accounts known respectively as the! (c) "Bond and Interest Account for Combined Water and Sewage System Revenue Bonds, Series of 1977". and (d) "Reserve Account for Combined Water and Sewage System Revenue Bonds, Series of 1977" the same are hereby ratified and confirmed, and in addition to the accounts aforesaid, there were ted and established by the 1990 Ordinance of the City two separate accounts known respectively as (e) "Principal and Interest Account for Combined Water and Sewage System Revenue Bonds, Series 1990 (the "1990 Principal and Interest Account"), and -14- (f) "Reserve Account for Combined Water and Sewage System Revenue Bonds, Series 1990 (the " 1990 Reserve Account") the same are hereby ratified and confirmed, and in addition to the accounts aforesaid, there were :ed and established by the 1992 Ordinance of the City two separate accounts known respectively as (g) "Principal and Interest Account for Combined Water and Sewage System Improvement Revenue Bonds, Series 1992" (the " 1992 Principal and Interest Account"), and (h) "Reserve Account for Combined Water and Sewage System Improvement Revenue Bonds, Series 1992" (the "1992 Reserve Account") the same are hereby ratified and confirmed, and in addition to the accounts aforesaid, there were ted and established by the 1993 Ordinance of the City two separate accounts known respectively as (i) "Principal and Interest Account for Combined Water and Sewage System Improvement Revenue Bonds, Series 1993-A" (the "1993 Principal and Interest Account"), and (j) "Reserve Account for Combined Water and Sewage System Improvement Revenue Bonds, Series 1993-A" (the "1993 Reserve Account") the same are hereby ratified and confirmed, and in addition to the accounts aforesaid, there were :ed and established by the 1994 Ordinance of the City three separate accounts known respectively as (k) "Principal and Interest Account for Combined Water and Sewage System Refunding Revenue Bonds, Series 1994" (the "1994 Principal and Interest Account"), (1) "Reserve Account for Combined Water and Sewage System Refunding Revenue Bonds, Series 1994" (the "1994 Reserve Account"), and (m) "Rebate Fund for Combined Water and Sewage System Refunding Revenue Bonds, Series 1994 (the " 1994 Rebate Fund") the same are hereby ratified and confirmed, and in addition to the accounts aforesaid, there are :by created and established in the treasury of the City three separate accounts known respectively as (n) "Principal and Interest Account for Combined Water and Sewage System Improvement Revenue Bonds, Series 1994-B" (the "1994-B Principal and Interest Account"), (o) "Reserve Account for Combined Water and Sewage System Improvement Revenue Bonds, Series 1994-B" (the "1994-B Reserve Account"), and (p) "Rebate Fund for Combined Water and Sewage System Improvement Revenue Bonds, Series 1994-B (the "1994-B Rebate Fund"). -15- TI e accounts referred in (a), (c) and (d) aforesaid shall be maintained and administered by the City in acizordance with the provisions of the 1977 Ordinance so long as any of the 1977 Bonds remain o standing and unpaid. The accounts referred to in (e) and (f) aforesaid shall be maintained and administered by the City in accordance with the provisions of the 1990 Ordinance so long as any of the 1 0 Bonds remain outstanding and unpaid. The accounts referred to in (g) and (h) aforesaid shall be m intained and administered by the City in accordance with the provisions of the 1992 Ordinance so long as iny of the 1992 Bonds remain outstanding and unpaid. The accounts referred to in (i) and 0) aforesaid shill be maintained and administered by the City in accordance with the 1993 Ordinance so long as any of he 1993 Bonds remain outstanding and unpaid. The accounts referred to in (k), (1) and (m) aforesaid shill be maintained and administered by the City in accordance with the 1994 Ordinance so long as any of the 1994 Bonds remain outstanding and unpaid. The accounts referred to in (b), (n), (o) and (p) aforesaid shall be maintained and administered by the City as hereinafter provided in this Resolution so log as any of the Bonds remain Outstanding. Section 16. Application of Moneys in Funds and Accounts. Moneys paid and deposited in the ater and Sewage Fund" heretofore established by the City and hereinbefore referred to shall be iinistered and disposed of by the City so long as any of the Bonds remain outstanding, in the following er, to wit: (a) The City each month shall pay or make provision for the payment of the reasonable and per Operating Expenses for the current month. So long as the 1977 Bonds remain outstanding and aid, no moneys in the Water and Sewage Fund shall be used for the purpose of extending or enlarging City's Water and Sewage Utility, except as provided in paragraph (g) of this Section 16; thereafter, provisions of this sentence shall be of no force or effect. (b) After paying or making provision for the payment each month of the reasonable and proper expenses of operating and maintaining the City's Water and Sewage Utility for the current month, the City shall next pay or credit from time to time from the Water and Sewage Fund to the Bond and Int rest Account for Combined Water and Sewage System Revenue Bonds, Series of 1977, so long as atil of the 1977 Bonds remain outstanding, amounts (if any) at the time required to be paid or credited by he provisions of the 1977 Ordinance. (c) After making the payments and credits at the time required to be made by the City under rovisions of paragraphs (a) and (b) aforesaid the City shall pay or credit from time to time from the r and Sewage Fund to the Reserve Account for Combined Water and Sewage System Revenue s, Series of 1977, so long as any of the 1977 Bonds remain outstanding, any amounts at the time red to be paid or credited by the provisions of the 1977 Ordinance. (d) After making all payments and credits at the time required to be made by the City under the provisions of paragraphs (a), (b) and (c) aforesaid, the City shall next pay or credit from the Water and Sewage Fund to the 1994-B Principal and Interest Account, to the extent necessary to meet at the Staled Maturity thereof the interest on and principal of the Bonds, the following amounts: (i) Beginning on the first day of each month from and after the delivery of the Bonds, and continuing on the first day of each month thereafter to and including March 1, 1995, an equal pro rata portion of the amount of interest that will become due on the Bonds on April 1, 1995, and beginning on April 1, 1995, and continuing on the first day of each month -16- thereafter, an amount not less than one-sixth (1/6) of the interest that will become due on the Bonds on the next succeeding Interest Payment Date; and (ii) Beginning on the first day of each month from and after the delivery of the Bonds, and continuing on the first day of each month thereafter to and including September 1, 1995, an equal pro rata portion of the principal amount of the Bonds that will become due on October 1, 1995; and beginning on October 1, 1995, and continuing on the first day of each month thereafter, an amount not less than one twelfth (1/12) of the principal amount of the Bonds that will become due on the next succeeding Stated Maturity; and (iii) On the first day of each month preceding a month in which fees of the Bond Registrar and Paying Agent are scheduled to become due, such amounts as may be required to pay such fees. All amounts paid and credited to the 1994-B Principal and Interest Account shall be used and ded by the City for the sole purpose of paying the interest on and principal of the Bonds as and the same become due and the fees of the Paying Agent and Bond Registrar for acting hereunder. If at any time the moneys in the Water and Sewage Fund shall be insufficient to make in full the tents and credits at the time required to be made by the City to the principal and interest accounts )lished by the City to pay the principal of and interest on the outstanding revenue bonds of the City, iding only the Bonds and any other combined water and sewage system revenue bonds of the City tofore or hereafter issued and standing on a parity with the Bonds, the available moneys in the Water Sewage Fund shall be divided among such principal and interest accounts in proportion to the active principal amounts of said series of combined water and sewage system revenue bonds of the at the time outstanding which are payable from the moneys in said principal and interest accounts. The amounts required to be paid and credited to the 1994-B Principal and Interest Account t to this paragraph (d) shall be made at the same time and on a parity with the amounts at the time I to be paid and credited to the 1990 Principal and Interest Account, the 1992 Principal and Account, the 1993 Principal and Interest Account and the 1994 Principal and Interest Account. (e) Concurrently with the issuance and delivery of the Bonds, there shall be paid and credited tohe 1994-B Reserve Account from the proceeds of the Bonds, the sum referred to in the second pa graph of Section 13 in the aggregate sum of $106,000 (the "Reserve Requirement"). All amounts paid or credited to the 1994-B Reserve Account shall be used and expended solely to Prevent any default in the payment of interest on or principal of the Outstanding Bonds of the City if the moneys in the 1994-B Principal and Interest Account hereinbefore created are insufficient to pay the int rest on or principal of the Bonds as they become due. No part of said 1994-B Reserve Account shall ever be expended or used by the City to call any Bonds for payment prior to their ultimate maturity un ss all of the Outstanding Bonds be called for payment and funds are available to pay the same according to their terms. So long as the amount on hand in the 1994-B Reserve Account aggregates the Re erve Requirement, no further payments into the 1994-B Reserve Account shall be required, but if the Citshall ever be compelled to use and expend any part of the 1994-B Reserve Account for the purpose of Jaying the interest on or principal of Bonds of the City and such expenditure shall reduce the amount of e 1994-B Reserve Account below the Reserve Requirement, then the City, after making all payments or redits at the time required to be made by the City under the provisions of paragraphs (a), (b), (c) and -17- hereof, will thereafter, each month, pay or credit on the first day of each month from the Water and nage Fund to the 1994-B Reserve Account the sum of $3,800 each month until the Reserve Account ;regates the Reserve Requirement. At no time shall the balance of moneys on hand in the 1994 Reserve Account exceed the sum of $1 2,000. If at any time the moneys in the Water and Sewage Fund shall be insufficient to make in full the payments and credits at the time required to be made by the City to the bond reserve accounts established by the City to protect the payment of the outstanding combined water and sewage system revenue bonds of the City, including only the Bonds and any other combined water and sewage system revenue bonds of he City heretofore or hereafter issued and standing on a parity with the Bonds, the available moneys in i he Water and Sewage Fund shall be divided among such bond reserve accounts in proportion to the re ective principal amounts of said series of combined water and sewage system revenue bonds of the City at the time outstanding which are payable from the moneys in such bond reserve accounts. The amounts required to be paid and credited to the 1994-B Reserve Account pursuant to this pa graph (e) shall be made at the same time and on a parity with the amounts at the time required to be pa and credited to the 1990 Reserve Account, the 1992 Reserve Account, the 1993 Reserve Account an the 1994 Reserve Account. (f) After making all payments and credits at the time required to be made by the City under the provisions of paragraphs (a), (b), (c), (d) and (e) aforesaid, the City shall next pay or credit from time to time from the Water and Sewage Fund to the Combined Water and Sewage System Depreciation and Eniergency Replacement Account, so long as any of the 1977 Bonds remain outstanding and unpaid, any am unts at the time required to be paid or credited by the provisions of the 1977 Ordinance, said De reciation and Emergency Replacement Account to be administered in accordance with the 1977 Or finance. At no time shall the balance of monies on hand in said Depreciation and Emergency Replacement Account exceed the sum of $125,000. From and after the time there are no longer any 1977 Bo�reciation ds remaining outstanding and unpaid, the City shall transfer all amounts then on hand in said De and Replacement Account to the Surplus Account (hereinafter referred to). (g) After all amounts required at the time to be paid or credited by the City from the Water and Sewage Fund to the accounts hereinbefore named in paragraphs (a) (b), (c), (d), (e) and (f) of this Section shall have been so paid or credited, and if at the time the City shall not be in default in the per ormance of any covenant or agreement contained in this Resolution, all moneys remaining in the Wa er and Sewage Fund shall be credited monthly to the Extension and Bond Retirement Account so long as ny of the 1977 Bonds remain outstanding and unpaid, and all moneys in the Extension and Bond Ret rement Account shall be used as provided in Section 10(f) of the 1977 Ordinance and the City shall con ply with the covenants and agreements set forth in said Section 10(f) so long as any of the 1977 Bonds re in outstanding and unpaid. the (f) From and after the time there are no longer any 1977 Bonds remaining outstanding and unpaid, -'ity shall change the name of the Extension and Bond Retirement Account to the Combined Water Sewage System Surplus Account (the "Surplus Account"). Thereafter, after all payments and credits sired at the time to be made by the City under the provisions of paragraphs (a), (b), (c), (d), (e) and if this Section have been made, all moneys remaining in the Water and Sewage Fund shall be paid -18- credited to the Surplus Account. Moneys in the Surplus Account may be expended and used for the )wing purposes as determined by the governing body of the City: (i) paying the cost of the operation, maintenance and repair of the System if no other funds are available therefor; preventing certain defaults as hereinafter described in Section 18; (iii) paying the cost of extending, enlarging or improving the System; (iv) preventing default in, anticipating payments into or increasing the amounts in the other accounts referred to in this Section, or establishing or increasing the amount of any principal and interest account or bond reserve account created by the City for the payment of any combined water and sewage system revenue bonds of the City hereafter issued under the conditions hereinafter specified; or (v) calling, redeeming and paying prior to maturity, or, at the option of the City, purchasing in the open market at the best price obtainable not exceeding the call price (if any bonds are callable), the Bonds or any other combined water and sewage system revenue bonds of the City hereafter issued under the conditions hereinafter specified. So long as any of the Bonds remain outstanding and unpaid, no Revenues or moneys held in the is Account shall be diverted to the general governmental or municipal functions of the City. (h) There shall be deposited in the 1994-B Rebate Fund such amounts as are required to be )ted therein pursuant to the Letter of Instructions. All money in the Rebate Fund shall be held in to the extent required to satisfy the Rebate Amount (as defined in the Letter of Instructions), for ;nt to the United States of America, and neither the City nor the Holder of any Bond shall have any in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be zed by this Section and the Letter of Instructions. (i) The City shall periodically determine the rebatable arbitrage under Section 148(f) of the e in accordance with the Letter of Instructions, and the City shall make payments to the United States ernment at the times and in the amounts determined under the Letter of Instructions. Any funds lining in the Rebate Fund after redemption and payment of all of the Bonds and the interest thereon, payment and satisfaction of any Rebate Amount, or provision made therefor, shall be released to the 0) Notwithstanding any other provision of this Resolution, including in particular Section 26 iereof, the obligation to pay rebatable arbitrage to the United States and to comply with all other requirements of this Section and the Letter of Instructions shall survive the defeasance or payment in full of the Bonds. Section 17. Deficiency in Payments or Credits into Funds or Accounts. If at any time the ies derived by the City from the operation of its Water and Sewage Utility shall be insufficient to any payment or credit on the date or dates hereinbefore specified, the City shall make good the it of such deficiency by making payments or credits out of the first available revenues thereafter ed by the City from the operation of its Water and Sewage Utility, such payments and credits being and applied in the order hereinbefore specified in Section 16 hereof. 'M' as Section 18. Use of Other Accounts to Pay Bonds and Interest. If at any time the moneys in the 94-B Principal and Interest Account and in the 1994-B Reserve Account are not sufficient to pay the ncipal of and interest on the Bonds as and when the same become due, then the amount of such Ficiency shall be made up by transfer of moneys from other funds and accounts hereinbefore referred in the following order: First, from the Extension and Bond Retirement Account or the Surplus count, as applicable, secondly from the Depreciation and Emergency Replacement Account (so long it exists), and thirdly from moneys held in the Water and Sewage Fund, provided, however, that there ill always remain in the Water and Sewage Fund an amount sufficient to pay the reasonable and proper )enses of operating and maintaining the City's Water and Sewage Utility during the next succeeding -iod of thirty days. Section 19. Investments. Any moneys held in any fund or account which are not immediately needed for the purposes of such fund or account may be invested in Permitted Investments but in accordance with and as provided in Section 13 of the 1977 Ordinance so long as any of the 1977 Bonds rerriain outstanding and unpaid. From and after the time there are no longer any 1977 Bonds remaining oul standing and unpaid, any moneys held in any fund or account which are not immediately needed for th purposes of such fund or account may be invested in obligations in which public funds are permitted to a invested under Kansas law; provided, however, that no such investment shall be made for a period exlending longer than to the date when the moneys invested may be needed for the purpose for which Sul h fund or account was created. Cash moneys in each of the funds and accounts herein created or es blished shall be deposited in a bank or banks in the City of Salina, Kansas, which are members of th Federal Deposit Insurance Corporation, and all such bank deposits shall be adequately secured by the b holding such deposits. Except as to interest accumulated in the Bond and Interest Account and in the Reserve Account relating to the 1977 Bonds, which interest shall be deposited in the escrow account for the 1977 Bonds, all interest on any investments held in any fund or account created by or referred to in this Resolution shall accrue to and become a part of such fund or account, except that interest on in stments in the 1994-B Reserve Account and interest on investments in the Depreciation and Emergency Replacement Account if the City shall not be in default in making any payment into said accounts at the time required to be made by the provisions of Section 16, shall immediately be paid and credited to the Water and Sewage Fund and used and applied for the purposes and in the order heinbefore specified in Section 16 of this Resolution. In determining the amount held in any fund or ac unt under any of the provisions of this Resolution, obligations in which moneys are invested shall be clued at fair market value and marked to market on December 31 of each year. Section 20. Particular Covenants of the City. The City covenants that it will comply with the covenants and agreements set forth in the 1977 Ordinance so long as any of the 1977 Bonds remain ou tanding and unpaid. From and after the time there are no longer any 1977 Bonds remaining ou tanding and unpaid, the 1977 Ordinance shall be of no force or effect. The City covenants with each of a purchasers and owners of any of the Bonds that so long as any of said Bonds remain outstanding ano unpaid: (a) Rates. The City will fix, establish and maintain rates, fees and other charges for the sale of kater and sewage services and commodities of the Water and Sewage Utility as shall be required to provide Revenues at least sufficient in each fiscal year to pay: (i) operation and maintenance expenses during such fiscal year, including reserves, if any, provided for in the annual budget for such fiscal year; (ii) an amount equal to at least 125 % of the amount required to be paid in the current fiscal year on account of principal of and interest on all obligations payable from the Revenues at the time outstanding (except to the extent any such principal and interest is to be paid from moneys held in trust for the specific purpose of making such payments); (iii) an amount, if any, to be paid during such fiscal year into -20- 1994-B Reserve Account; (iv) to the extent not otherwise provided for, an amount equal to debt rice on the 1977 Bonds for such fiscal year; (v) an amount, if any, to be paid into the reserve account the 1977 Bonds and into the Depreciation and Emergency Replacement Account during such fiscal r; and (vi) any and all charges or liens whatsoever payable out of Revenues during such fiscal year. (b) No Free Service: Service to City. None of the facilities or services afforded by the Water Sewage Utility will be furnished to any user without a reasonable charge being made therefor. The will require the prompt payment of accounts and will discontinue water and sewage service to any omer delinquent in the payment of his account for a period which shall not exceed sixty (60) days. City will pay monthly into the Water and Sewage Fund for the water and sewage service furnished City in accordance with effective applicable rates, fees and charges. (c) Good Repair. The City will maintain in good repair and working order the City's Water Sewage Utility and will operate the same in an efficient manner and at reasonable cost. (d) Disposal of Property. The City will not mortgage, pledge or otherwise encumber the W ter and Sewage Utility or any part thereof or any improvement, extension or enlargement thereof, nor will they sell, lease or otherwise dispose of said Water and Sewage Utility or any material part thereof, provided, however, that the City may dispose of any property which has become obsolete, nonproductive or therwise unusable to the advantage of the City. Any cash proceeds derived from the sale of such pr perty shall be used by the City to improve, extend or enlarge the City's Water and Sewage Utility. Fmin and after the time there are no longer any 1977 Bonds remaining outstanding and unpaid, the City may lease, with an option to purchase, real and personal property for the extension or improvement of th Water and Sewage Utility, and such property being leased shall not be treated as part of the Water an Sewage Utility for purposes of this paragraph (d) and may be mortgaged, pledged or otherwise PAVl (fl of of (e) Insurance. The City will carry and maintain a reasonable amount of all-risk insurance z the properties forming a part of the Water and Sewage Utility insofar as they are of an insurable re, the amount of such insurance being such amount as would normally be insured by a private oration engaged in a similar type of business. In the event of loss or damage, the City, with all onable dispatch, will use the proceeds of such insurance in reconstructing and replacing the property aged or destroyed, or, if such reconstruction or replacement be unnecessary, then in redeeming or :hasing outstanding bonds of the City, such redemption or purchase being made in accordance with )rovisions of the Resolution authorizing the issuance of the bonds. The City in operating the Water Sewage Utility will carry and maintain public liability and workmen's compensation insurance in such unts as would normally be maintained by a private corporation engaged in a similar type of business, the proceeds derived from any such policies shall be used in paying the claims on account of which i proceeds were received, provided, however, that the City may elect to accept the provisions of the kers Compensation Act of the State of Kansas as authorized by K.S.A. 44-505 and any amendments -to hereafter enacted, and, in such event, may elect to carry its own risk in accordance with the ,isions of the statutes of the State of Kansas. The cost of all insurance referred to in this paragraph hall be paid as an Operating Expense out of the revenues of the City's Water and Sewage Utility. (f) Books and Records: Annual Audit. The City will install and maintain proper books, rds and accounts in which complete and correct entries will be made of all dealings and transactions r in relation to the properties, business and affairs of the Water and Sewage Utility of the City. Such unts shall show the amount of revenue received from said Water and Sewage Utility, the application uch revenue, and all financial transactions in connection therewith. Said books shall be kept by the -21- V according to standard accounting practices as applicable to the operation of water and sewage ities. The City will operate the Water and Sewage Utility on the basis of a fiscal year beginning on uary 1st and ending on December 31st. Annually, as soon as possible following the close of each fiscal r, the City will cause an audit to be made by a competent firm of certified public accountants erienced in public utility accounting of the accounts of its Water and Sewage Utility for the preceding al year. In addition to such matters as are customarily included in the audit report, the accountants 11, without limiting the generality of the foregoing, furnish to the City separately a summary of the ountants' recommendations as to the City's practices and procedures of water and sewage system rations. Within thirty (30) days after the completion of each such audit, said accountants shall file )py thereof in the office of the City Clerk and shall forward copies of such audit to the Underwriter. If such audit shall disclose that proper provision has not been made for all of the requirements .e law under which the Bonds herein authorized are issued, and of this Resolution, the City covenants agrees that it will promptly proceed to cause to be charged for the services rendered by the City's �r and Sewage Utility rates which will adequately provide for such requirements. Ij (g) Right to Inspect. The Holder of any of the Bonds of the City herein authorized shall have thright at all reasonable times to inspect the Water and Sewage Utility and all records, accounts and data re ting thereto, and any such Holder shall be furnished by the City all such information concerning said W ter and Sewage Utility and the operation thereof which he may reasonably request. (h) Operation and Maintenance. The City will punctually perform all duties and obligations wi h respect to the operation and maintenance of the Water and Sewage Utility, including all im rovements, extensions and enlargements thereof, now or hereafter imposed upon the City and by the Coastitution and laws of the State of Kansas, and by the provisions of this Resolution. in by Section 21. Additional Bonds. The City hereby covenants and agrees that so long as any of the herein authorized remain outstanding and unpaid, said City will not issue any additional bonds or obligations payable out of the Revenues of its Water and Sewage Utility which have a claim on lues superior to the Bonds and that it will not issue any such additional bonds or obligations which on a parity or equality with the Bonds herein authorized unless all of the following conditions are (a) The issuance of the additional bonds shall be authorized or permitted under the laws of State of Kansas. (b) The City shall not be in default in the payment of principal of or interest on the Bonds, ng any payment at the time required to be made into the respective funds and accounts created referred to in this Resolution or in the performance of any covenant herein contained; and (c) Either: (i) the annual Net Revenues for the fiscal year next preceding the issuance of additional bonds shall have been not less than 125 % of the average amount required to be paid in all succeeding fiscal years on account of both principal and interest becoming due with respect to all obligations payable from the Net Revenues (except to the extent any such principal and interest is to be paid from moneys held in trust for the specific purpose of making such payments), including the additional bonds proposed to be issued; or -22- A' (c (ii) if the City shall have made changes in its rates, fees and charges for the use and services furnished by the Water and Sewage Utility, which changes shall not have been in effect for the fiscal year next preceding the issuance of additional bonds, the City shall obtain an investigation and report from a Consulting Engineer as to the amount of annual Net Revenues which the City would have received from the operation of the Water and Sewage Utility during said preceding fiscal year if such increased rates had been in effect during all of said period, which investigation and report shall certify that, in the opinion of the Consulting Engineer, the requirements of subparagraph (i) above would have been met if the increased rates had been in effect during all of such period; or (iii) the City shall obtain an investigation and report from a Consulting Engineer incorporating projections which indicate that the Net Revenues for the twelve months immediately following the month in which the additional bonds are being issued will be equal to at least 125 % of the average amount required to be paid in all succeeding fiscal years on account of principal and interest becoming due with respect to all obligations payable from the Net Revenues (except to the extent any such principal and interest is to be paid from moneys held in trust for the specific purpose of making such payments), including the additional bonds proposed to be issued. If the City shall have made any increase in the rates, fees and charges for the use and services of the System which is not in effect at the time such report is issued but which shall be in effect during the period covered by an investigation and report made pursuant to this subparagraph (iii), then the report of the Consulting Engineer shall certify that such increased rates are economically feasible and reasonably necessary for the projected operation of the System. Prior to the issuance of any additional parity bonds, the City shall obtain a certificate of an thorized Officer evidencing either full compliance with the provisions of subparagraph (i) of paragraph or stating that in the opinion of the Authorized Officer the conclusions set forth in the investigation I report made pursuant to subparagraph (ii) or subparagraph (iii) of paragraph (c) is reasonable. An estigation and report made pursuant to subparagraph (ii) or subparagraph (iii) of paragraph (c) above ill be considered final and conclusive and shall govern in determining the right of the City to issue litional parity bonds under the provisions contained therein. Such report shall be filed in the office the City Clerk. Notwithstanding the restrictions upon the issuance of additional bonds set out above, additional bonds may be issued if it is necessary in the opinion of the Consulting Engineers to repair any damage or loss to the Water and Sewage Utility if the Water and Sewage Utility has been destroyed or damaged by disaster to such an extent that it cannot be operated or if it is necessary to keep the Water and Sewage U Pity in good operating condition. Additional bonds of the City issued under the conditions hereinbefore in this section set forth shall staad on a parity with the Bonds herein authorized and shall enjoy complete equality of lien on and claim ag inst the Revenues of the City's Water and Sewage Utility with the Bonds herein authorized, and the Cfty may make equal provision for paying said Bonds and the interest thereon out of the Water and Se age Fund and may likewise provide for the creation of reasonable reserve accounts out of moneys in aid Water and Sewage Fund. Nothing in this section contained shall prohibit or restrict the right of the City to issue additional w er and sewage system revenue bonds or other revenue obligations for the purpose of reconstructing, alt ring, repairing, improving, extending or enlarging the City's Water and Sewage Utility and to provide that the principal of and interest on said revenue bonds or obligations shall be payable out of the revenues -23- :he City's Water and Sewage Utility, provided that such additional revenue bonds or obligations shall junior and subordinate to the Bonds so that if at any time the City shall be in default in paying either :rest on or principal of the Bonds the City shall make no payments of either principal of or interest said junior and subordinate revenue bonds or obligations until said default or defaults be cured. In event of the issuance of any such junior and subordinate revenue bonds or obligations, the City, eject to the provisions aforesaid, may make provision for paying the principal of and interest on said enue bonds or other revenue obligations out of moneys in the Water and Sewage Fund. Section 22. Tax Matters. The City will comply with the covenants set forth in the Ordinance ining to the Internal Revenue Code of 1986 (the "Code"), including Section 103 thereof, and the ations of the Treasury Department thereunder, from time to time proposed or in effect, in order to :ain the exclusion from gross income for purposes of federal income taxation of the interest on the Section 23. Amendments. The provisions of the Bonds authorized by this Resolution and the pr visions of this Resolution may be modified at any time by the City with the written consent of the Holders of not less than sixty-six and two-thirds percent (66 2/3 %) in aggregate principal amount of the Bonds at the time Outstanding; provided, however, that no such modification or amendment shall permit or be construed as permitting (a) the extension of the maturity or the principal of any of the Bonds, or the extension of the maturity of any interest on any Bonds, or (b) a reduction in the principal amount of an Bonds or the rate of interest thereon, or (c) a reduction in the aggregate principal amount of Bonds the consent of the Holders of which is required for any such amendment or modification. Any provision of a Bonds or of this Resolution may, however, be modified or amended in any respect with the written co sent of the Holders of all of the Bonds then Outstanding. Amendments to this Resolution which correct errors or which add to or supplement the security of the Holders of the Bonds may be adopted by the City without the consent of such Holders. Every amendment or modification of a provision of the Bonds or of this Resolution to which the written consent of the Holders is given as above provided sh 1 be expressed in an ordinance and shall be deemed to be a part of this Resolution. It shall not be neabssary to note on any of the Outstanding Bonds any reference to such amendment or modification, if any. A certified copy of every such amendatory or supplemental ordinance, if any, and a certified copy of is Resolution shall always be kept on file in the office of the City Clerk and shall be made available for inspection by the Holder of any Bond or prospective purchaser or Holder of any Bond authorized by thi Resolution, and upon payment of the reasonable cost of preparing the same, a certified copy of any su amendatory or supplemental ordinance or of this Resolution will be sent by the City Clerk to any su Holder or prospective bondholder. Section 24. Acceleration in the Event of Default. The City agrees that if any of the following occur: (i) the City shall default in the payment of the principal of or interest on any of the Bonds as the same shall become due and such default shall continue for a period of thirty (30) days; or (ii) if the Net Revenues for the preceding fiscal year did not equal 100% of the annual amount required to be paid in the current fiscal year on account of principal of and interest on all obligations payable from the Net Revenues (except to the extent any such principal and interest is to be paid from moneys held in trust for the specific purpose of making such payments); or -24- to (iii) the City or its governing body or any of the officers, agents or employees thereof shall fail or refuse to comply with any provisions of this Resolution or of the statutes of the State of Kansas for a period of 6 months after a written request to so comply has been delivered to the City by the Holders of twenty-five percent (25%) of the amount of the Bonds then outstanding, i, upon the occurrence of any one or more of the above events and at any time thereafter and while t event shall continue, the Holders of twenty-five percent (25%) of the amount of the Bonds then standing may, by written notice to the City filed in the office of the City Clerk or delivered in person tid City Clerk, declare the principal of all Bonds then Outstanding to be due and payable immediately, upon any such declaration given as aforesaid, all of said Bonds shall become and be immediately due payable, anything in this Resolution or in said Bonds contained to the contrary notwithstanding. This iision, however, is subject to the condition that if at any time after the principal of said Bonds shall been so declared to be due and payable, all arrears of interest upon all of said Outstanding Bonds, :pt interest accrued but not yet due on such Bonds, and all arrears of principal upon all of said Bonds 1 have been paid in full, and all other defaults, if any, by the City under the provisions of this elution and under the provisions of the statutes of the State of Kansas shall have been cured, then, in every such case, the Holders of a majority in amount of the Bonds then Outstanding, by written ce to the City given as hereinbefore specified, may rescind and annul such declaration and its >equences, but no such rescission or annulment shall extend to or affect any subsequent default or air any rights consequent thereon. Section 25. Enforcement. The provisions of this Resolution, including the covenants and :ements hereinbefore contained, shall constitute a contract between the City and the Holders of the ds, and the Holder or Holders of not less than ten percent (10%) of the Bonds at the time Outstanding 1 have the right for the equal benefit and protection of all Holders of Bonds similarly situated: (a) By mandamus or other suit, action or proceeding at law or in equity to enforce his or their rights against the City and its officers, agents and employees, and to require and compel the City and. its officers, agents and employees to perform all duties and obligations required by the provisions of his Resolution or by the Constitution and laws of the State of Kansas. (b) By suit, action or other proceeding in equity or at law to require the City, its officers, and employees to account as if they were the trustees of an express trust. (c) By suit, action or other proceeding in equity or at law to enjoin any acts or things which be unlawful or in violation of the rights of the Holders of the Bonds. Nothing contained in this Resolution, however, shall be construed as imposing on the City any duor obligation to levy any taxes either to meet any obligations incurred herein or to pay the principal of ir interest on the Bonds. No remedy conferred hereby upon any holder of the Bonds herein authorized is intended to be exc lusive of any other remedy, but each such remedy is cumulative and in addition to every other remedy an may be exercised without exhausting and without regard to any other remedy conferred hereby. No waver of any default or breach of duty or contract by the Holder of any Bond shall extend to or affect an subsequent default or breach of duty or contract or shall impair any rights or remedies thereon. No del v or omission of the Holder to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein. Ev ry substantive right and every remedy conferred upon the Holders of the Bonds may be enforced and -25- rcised from time to time and as often as may be deemed expedient. In case any suit, action or seeding to enforce any right or exercise any remedy shall be brought or taken and then discontinued .bandoned, or shall be determined adversely to the Holders of the Bonds, then, and in every such case, City and the Holders of the Bonds shall be restored to their former positions and rights and remedies f no such suit, action or other proceeding had been brought or taken. Section 26. Defeasance. When all of the Bonds shall have been paid and discharged, then the irements contained herein and the pledge of Revenues made hereunder and all other rights granted by shall cease and determine. Bonds shall be deemed to have been paid and discharged within the ning of this Resolution if there shall have been deposited with the Paying Agent, or with a Kansas : having full trust powers, at or prior to the maturity or redemption date of such Bonds, in trust for irrevocably appropriated thereto, moneys and/or direct obligations of, or obligations the principal of interest on which are unconditionally guaranteed by, the United States of America, which, together the interest to be earned on such investments, will be sufficient for the timely payment of the .ipal of such Bonds, the redemption premium thereon, if any there be, and interest accrued to the of maturity or redemption, as the case may be; provided, however, always that if any such Bonds I be redeemed prior to the maturity thereof, the City shall have elected to redeem such Bonds and rocable instructions to give notice of such redemption shall have been given. Section 27. Approval of Preliminary Official Statement and Official Statement. The Preliminary Official Statement dated August 22, 1994, a copy of which has been submitted to and reviewed by the Go verning Body of the City on the date hereof and is attached hereto as Exhibit "A," was final within the meaning of Rule 15c2-12 under the Securities Exchange Act of 1934 and the information therein was ac urate and complete. Said Preliminary Official Statement and the final Official Statement, in su istantially the form of the Preliminary Official Statement, and the public distribution of the same by the Underwriters is hereby approved. The Mayor of the City is hereby authorized and directed to execute anJ deliver said final Official Statement on behalf of the City with such changes therein or amendments or upplements thereto as shall be approved by the Mayor, the Mayor's execution thereof to be conclusive ev ence of said representative's approval thereof. Section 28. Authorization of Agreement with Bond Registrar and Paying Agent. The agreement ,een the City and the State Treasurer of Kansas with respect to the duties of the State Treasurer as J Registrar and Paying Agent, in the form attached to this Resolution and marked Exhibit "B", in all acts hereby approved, authorized and confirmed and the Mayor and City Clerk are hereby authorized directed to execute said agreement for and on behalf of and as the act and deed of the City. Section 29. Severability. If any part of this Resolution, whether large or small, shall be held id, the invalidity thereof shall not affect the other provisions of this Resolution. -26- PASSED by the governing body of the City of Salina, Kansas, this 19th day of September, 1994. Mayor -27-