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HomeMy WebLinkAbout1999-10-19-Resolutions 99-133_Bonds - Water Revenue Loan Agr - IssuanceCITY OFWaukee.II.THE KEY TO GOOD LIVING RESOLUTION NO.99-133 Resolution authorizing and approving a Loan Agreement and providing for the issuance and securing the payment of $610,000 Water Revenue Refunding Notes and for the prepayment of Water Revenues Notes,dated June 1,1989,and Water Revenue Notes,dated June 1,1992 WHEREAS,the City of Waukee,in Dallas County,Iowa (hereinafter sometimes referred to as the "City"),did heretofore establish a Municipal Waterworks System in and for the City (hereinafter sometimes referred to as the "Utility"),and the management and control of the Utility are vested in the City Council,and no board of trustees exists for this purpose;and WHEREAS,the City participated in a joint project with the City of Urbandale and the Des Moines Water Works in the construction of a project,and all project costs were paid through the Des Moines Water Works,who issued bonds for such purpose in 1988 (the "Series 1988 Water Revenue Bonds");and WHEREAS,in 1992,the Des Moines Water Works issued refunding bonds (the "Series 1992 Water Revenue Refunding Bonds")to refund the Series 1988 Water Revenue Bonds,and the outstanding balance of the City's share of the Series 1992 Water Revenue Refunding Bonds is $500,907 (the "City's Share of Des Moines Water Works Water Revenue Refunding Bonds"); and WHEREAS,the City participated in a joint project with the Cities of Clive,Urbandale and West Des Moines,the Xenia Rural Water District and the Des Moines Water Works in the construction of a project,and all project costs were paid through the Des Moines Water Works, who issued bonds for such purpose in 1992 (the "Series 1992 Water Revenue Bonds");and WHEREAS,the outstanding balance of the City's share of the Series 1992 Water Revenue Bonds is $1,655,000 (the "City's Share of Des Moines Water Works Water Revenue Bonds")(together,the City's Share of Des Moines Water Works Water Revenue Refunding Bonds and the City's Share of Des Moines Water Works Water Revenue Bonds are hereinafter referred to as the "City's Share of Des Moines Water Works Bonds");and WHEREAS,the City's share of the Des Moines Water Works projects referred to above included amounts to provide a bond reserve for the City's Share of Des Moines Water Works Bonds,and such bond reserve is being held by the Des Moines Water Works for the benefit of the owners of the Series 1992 Water Revenue Refunding Bonds and Series 1992 Water Revenue Bonds;and WHEREAS,pursuant to a resolution adopted and approved by the Council on May 23, 1989 (the "Series 1989 Note Resolution"),there have been heretofore issued $500,000 Water Revenue Notes,dated June 1,1989,of which $215,000 currently remain outstanding (the "Series 1989 Notes"),scheduled to mature on June 1 in each of the years and bearing interest at the respective rates as follows: Year Principal Interest Rate Amount Per Annum Year Principal Amount Interest Rate Per Annum 2000 2001 $50,000 $50,000 7.45% 7.55% 2002 2003 $55,000 $60,000 7.65% 7.75% but all of the Series 1989 Notes may be redeemed by the City prior to maturity on any interest payment date,commencing December 1,1999;and WHEREAS,pursuant to a resolution adopted and approved by the City Council on May 18,1992 (the "Series 1992 Note Resolution"),there have been heretofore issued $525,000 Water Revenue Notes,dated June 1,1992,of which $400,000 currently remain outstanding (the "Series 1992 Notes"),scheduled to mature on June 1 in each of the years and bearing interest at the respective rates as follows: Principal Interest Rate Principal Interest Rate Year Amount Per Annum Year Amount Per Annurn ]2000 $25,000 6.35%2004 $75,000 6.80% 2001 $25,000 6.50%2005 $75,000 6.90% 2002 $25,000 6.60%2006 $75,000 7% 2003 $25,000 6.70%2007 $75,000 7% but the Series 1992 Notes maturing on and after June 1,2001,may be redeemed by the City prior to maturity on any interest payment date,commencing June 1,2000 (such Series 1992 Notes, aggregating $375,000,are hereinafter sometimes referred to as the "Optional Series 1992 Notes", and the Series 1992 Notes maturing on June 1,2000,and aggregating $25,000,are hereinafter sometimes referred to as the "Non-optional Series 1992 Notes");and WHEREAS,pursuant to the provisions of Section 384.24A of the Code of Iowa,notice duly published and healing held thereon,the City has heretofore determined to contract indebtedness and enter into a loan agreement (the "Loan Agreement")to provide funds to pay the cost of refunding the Series 1989 Notes as of December 1,1999 (the "Series 1989 Note Redemption Date"),and effecting a cross-over refunding of the Optional Series 1992 Notes as of June 1,2000 (the "Optional Series 1992 Note Redemption Date");and WHEREAS,in and by the Series 1992 Note Resolution,the right was reserved to the City from time to time to authorize,issue and deliver under specified conditions additional water revenue obligations;and WHEREAS,it is deemed advisable and necessary that the City enter into an escrow agreement (the "Escrow Agreement")with Bankers Trust Company,Des Moines,Iowa,as hereinafter provided; NOW,THEREFORE,Be It Resolved by the City Council of the City of Waukee,Iowa, as follows: Section 1.It is hereby determined that the City shall enter into the Loan Agreement with the Ruan Securities Corporation,Des Moines,Iowa,as lender (the "Lender"),in substantially the form as has been placed on file with the City,providing for a loan to the City in the amount of $610,000,at a discount of $7,320,for the purposes set forth in the preamble hereof. The Mayor and City Clerk are authorized and directed to sign the Loan Agreement on behalf of the City,and the Loan Agreement is hereby approved. Section 2.Water Revenue Refunding Notes (the "Refunding Notes")are hereby authorized to be issued in evidence of the obligation of the City under the Loan Agreement,in the total aggregate principal amount of $610,000,to be dated November 1,1999,in the denomination of $5,000 each,or any integral multiple thereof,maturing on June I in each of the years,in the respective principal amounts and bearing interest at the respective rates,as follows: Principal Interest Rate Principal Interest Rate Year Amount Per Annum Year Amount Per Annum 2000 $55,000 4.50%2004 $75,000 5% 2001 $80,000 4.75%2005 $75,000 5.10% 2002 $85,000 4.85%2006 $75,000 5.20% 2003 $90,000 4.95%2007 $75,000 5.25% Section 3.Bankers Trust Company is hereby designated as the escrow agent (the "Escrow Agent")and also as the registrar and paying agent for the Refunding Notes and is sometimes hereinafter referred to as the "Registrar"or the "Paying Agent". All of the interest on the Refunding Notes shall be payable semiannually on the first day of June and December in each year,commencing June 1,2000.Payment of interest on the Refunding Notes shall be made to the registered owners appearing on the registration books of the City at the close of business on the fifteenth day of the month next preceding the interest payment date and shall be paid by check or draft mailed to the registered owners at the addresses shown on such registration books.Principal of the Refunding Notes shall be payable in lawful money of the United States of America to the registered owners or their legal representatives upon presentation and surrender of the Refunding Note or Notes at the office of the Paying Agent. The Refunding Notes shall be executed on behalf of the City with the official manual or facsimile signature of the Mayor and attested with the official manual or facsimile signature of the City Clerk and shall have the City's seal impressed or printed thereon,and shall be fully registered instruments without interest coupons.The issuance of the Refunding Notes shall be recorded in the office of the City Treasurer and the certificate on the back of each Refunding Note shall be executed with the official manual or facsimile signature of the City Treasurer.In case any officer whose signature or the facsimile of whose signature shall appear on the I Refunding Notes shall cease to be such officer before the delivery of such Refunding Notes,such . signature or such facsimile signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. Except as hereinafter provided with respect to certain escrowed funds (the "Escrowed Funds"),all of the Non-optional Series 1992 Notes and the Refunding Notes and any additional obligations as may be hereafter issued and outstanding from time to time ranking on a parity therewith under the conditions set forth herein (which additional obligations are hereinafter sometimes referred to as the "Parity Obligations"),together with interest thereon,shall be payable solely and only out of the future Net Revenues of the Utility and the Sinking Fund hereinafter referred to,both of which are hereby pledged for such purpose,and shall be a valid claim of the owners thereof against said Net Revenues and Sinking Fund.None of the Non- optional Series 1992 Notes or Refunding Notes arc general obligations of the City,nor payable in any manner by taxation,and under no circumstances shall the City be in any manner liable by reason of the failure of the Net Revenues of the Utility and the Escrowed Funds to be sufficient for the payment thereof,in whole or in part,including the interest thereon. Interest due on June 1,2000 on the portion of the Refunding Notes allocated to the refunding of the Optional Series 1992 Notes is payable from Escrowed Funds,and on June 1, 2000,the Escrowed Funds will also be used to prepay the principal of the Optional Series 1992 Notes as of that date.Principal of and interest due on June 1,2000 on the portion of the Refunding Notes allocated to the refunding of the Series 1989 Notes and both principal of and interest falling due after June 1,2000 on all of the Refunding Notes will be payable solely from the Net Revenues of the Utility and the Sinking Fund. The Refunding Notes shall be fully registered as to principal and interest in the names of the owners on the registration books of the City kept by the Registrar,and after such registration, payment of the principal and interest thereof shall be made only to the registered owners,their legal representatives or assigns.Each Refunding Note shall be transferable only upon the registration books of the City upon presentation to the Registrar,together with either a written instrument of transfer satisfactory to the Registrar or the assignment form thereon completed and duly executed by the registered owner or the duly authorized attorney for such registered owner. The record and identity of the owners of the Refunding Notes shall be kept confidential as provided by Section 22.7 of the Code ofIowa. The Refunding Notes shall not be valid or become obligatory for any purpose until the Certificate of Authentication thereon shall have been signed by the Registrar. Notwithstanding anything above to the contrary,the Refunding Notes shall be issued initially as Depository Bonds,with one fully registered Refunding Note for each maturity date,in principal amounts equal to the amount of principal maturing on each such date,and registered in the name of Cede &Co.,as nominee for The Depository Trust Company,New York,New York ("DTC").On original issue,the Refunding Notes shall be deposited with DTC for the purpose of maintaining a book-entry system for recording the ownership interests of its participants and the transfer of those interests among its participants (the "Participants").In the event that DTC determines not to continue to act as securities depository for the Refunding Notes or the City determines not to continue the book-entry system for recording ownership interests in the Refunding Notes with DTC,the City will discontinue the book-entry system with DTC.If the City does not select another qualified securities depository to replace DTC (or a successor depository)in order to continue a book-entry system,the City will register and deliver replacement notes in the form of fully registered certificates,in authorized denominations of $5,000 or integral multiples of $5,000,in accordance with instructions from Cede &Co.,as nominee for DTC.In the event that the City identifies a qualified securities depository to replace DTC,the City will register and deliver replacement notes,fully registered in the name of such depository,or its nominee,in the denominations as set forth above,as reduced from time to time prior to maturity in connection with redemptions or retirements by call or payment,and in such event,such depository will then maintain the book-entry system for recording ownership interests in the Refunding Notes. Ownership interest in the Refunding Notes may be purchased by or through Participants. Such Participants and the persons for whom they acquire interest in the Refunding Notes as nominees will not receive certificated Refunding Notes,but each such Participant will receive a credit balance in the records of DTC in the amount of such Participant's interest in the Refunding Notes,which will be confirmed in accordance with DTC's standard procedures.Each such person for which a Participant has an interest in the Refunding Notes,as nominee,may desire to make arrangements with such Participant to have all notices of redemption or other communications of the City to DTC,which may affect such person,forwarded in writing by such Participant and to have notification made of all interest payments. The City will have no responsibility or obligation to such Participants or the persons for whom they act as nominees with respect to payment to or providing of notice for such Participants or the persons for which they act as nominees. As used herein,the term "Beneficial Owner"shall hereinafter be deemed to include the person for whom the Participant acquires an interest in the Refunding Notes. DTC will receive payments from the City,to be remitted by DTC to the Participants for subsequent disbursement to the Beneficial Owners.The ownership interest of each Beneficial Owner in the Refunding Notes will be recorded on the records of the Participants whose ownership interest will be recorded on a computerized book-entry system kept by DTC. When reference is made to any action which is required or perruitted to be taken by the Beneficial Owners,such reference shall only relate to those perruitted to act (by statute, regulation or otherwise)on behalf of such Beneficial Owners for such purposes.When notices arc given they shall be sent by the City to DTC,and DTC shall forward (or cause to be forwarded)the notices to the Participants so that the Participants can forward the same to the Beneficial Owners. Beneficial Owners will receive written confirmations of their purchases from the Participants acting on behalf of the Beneficial Owners detailing the terms of the Refunding Notes acquired.Transfers of ownership interest in the Refunding Notes will be accomplished by book entries made by DTC and the Participants who act on behalf of the Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in the Refunding Notes,except as specifically provided herein.Interest and principal will be paid when due by the City to DTC,then paid by DTC to the Participants and thereafter paid by the Participants to the Beneficial Owners. Section 4.The Refunding Notes shall be in substantially the following form: ] (Form of Refunding Note) ~EDSTATESOFAMERICA STATE OF IOWA COUNTY OF DALLAS CITY OF WAUKEE WATER REVENUE REFUNDING NOTE No._ RATE MATURITY DATE NOTE DATE CUSIP November 1,1999 The City of Waukee (the "City"),in the County of Dallas,State of Iowa,for value received,promises to pay on the maturity date of tins Note to 1 or registered assigns,the principal sum of DOLLARS in lawful money of the United States of America upon presentation and surrender of this Note at the office of Bankers Trust Company,Des Moines,Iowa (hereinafter referred to as the "Registrar"or the "Paying Agent"),with interest on said sum,until paid,at the rate per annum specified above from the date of this Note,or from the most recent interest payment date on which interest has been paid,on June 1 and December 1 of each year,commencing June 1,2000, except as the provisions hereinafter set forth with respect to redemption prior to maturity may be and become applicable hereto.Interest on this Note is payable to the registered owner appearing on the registration books of the City at the close of business on the fifteenth day of the month next preceding the interest payment date,and shall be paid by check or draft mailed to the registered owner at the address shown on such registration books.Interest shall be calculated on the basis of a 360-day year comprised of twelve 3D-day months. This Note shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by the Registrar.I This Note and the series of notes of which it is a part (the "Refunding Notes")are issued by the City pursuant to and in strict compliance with the provisions of Division V of Chapter 384 of the Code of Iowa,1999,and all other laws amendatory thereof and supplemental thereto,and in conformity with a resolution of the City Council of the City authorizing and providing for the sale and issuance and securing the payment of the Refunding Notes (the "Refunding Note Resolution"),and reference is hereby made to the Refunding Note Resolution for a more complete statement as to the source of payment of the Refunding Notes and the rights of the owners of the Refunding Notes. The Refunding Notes are issued for the purpose of paying a portion of the cost of refunding the City's $215,000 Water Revenue Notes,dated June I,1989 (the "Series 1989 Notes"),which are scheduled to mature on and after June 1,2000,and $375,000 of the City's outstanding Water Revenue Notes,dated June 1,1992 (the "Series 1992 Notes"),which are scheduled to mature on and after June 1,2001 (the "Optional Series 1992 Notes"),and are not general obligations of the City,but the Refunding Notes are payable from the same source and rank on a parity with the uurefunded portion of the Series 1992 Notes;and the City's outstanding share of Series 1992 Water Revenue Refunding Bonds and Water Revenue Bonds issued by the Des Moines Water Works,and all of such obligations,together with any additional obligations as may be hereafter issued and outstanding from time to time ranking on a parity therewith under the conditions set forth in the Refunding Note Resolution,are payable from the future Net Revenues of the Municipal Waterworks System of the City and certain escrowed funds, including investments thereon,set aside and pledged for that purpose,as provided in the Refunding Note Resolution and a certain Escrow Agreement authorized thereunder.This Note is not payable in any manner by taxation,and under no circumstances shall the City be in any manner liable by reason of the failure of the said Net Revenues and escrowed funds and investments to be sufficient for the payment of this Note and the interest hereon. This Note is fully negotiable but shall be fully registered as to both principal and interest in the names of the owners on the books of the City in the office of the Registrar,after which no transfer shall be valid unless made on said books and then only upon presentation of this Note to the Registrar,together with either a written instrument of transfer satisfactory to the Registrar,or the assignment form hereon completed and duly executed by the registered owner or the duly authorized attorney for such registered owner. The City,the Registrar and the Paying Agent may deem and treat the registered owner hereof as the absolute owner for the purpose of receiving payment of or on account of principal hereof,premium,if any,and interest due hereon and for all other purposes,and the City,the Registrar and the Paying Agent shall not be affected by any notice to the contrary. And It Is Hereby Certified,Recited and Declared that all acts,conditions and things required to exist,happen and be performed precedent to and in the issuance of the Refunding Notes have existed,have happened and have been performed in due time,form and manner,as required by law,and that the issuance of this Note does not exceed or violate any constitutional or statutory limitation or provision. IN TESTIMONY WHEREOF,the City of Waukee,Iowa,by its City Council,has caused this Note to be sealed with the facsimile of its official seal,to be executed with the duly authorized facsimile signature of its Mayor and attested with the duly authorized facsimile signature of its City Clerk,all as of November 1,1999. CITY OF WAUKEE,IOWA By --!(F~a~cs;>!illll~·l~e'______"'S'!jign~a""tu"'r~e) Mayor Attest: (Facsimile Signature) City Clerk (Facsimile Seal) Registration Date:(Closing Date) REGISTRAR'S CERTIFICATE OF AUTHENTICATION This Note is one of the Refunding Notes described in the within-mentioned Refunding Note Resolution. BANKERS TRUST COMPANY Des Moines,Iowa By (Signature) Authorized Officer ) j 1 (On the back of each Refunding Note the following certificate shall be executed with the duly authorized facsimile signature of the City Treasurer): STATE OF IOWA CITY OF WAUKEE COUNTY OF DALLAS SS:CITY TREASURER'S CERTIFICATE The original issuance of the Refunding Notes,of which this Note is a part,was duly and properly recorded in my office as of November 1,1999. Signature) (Facsimile City Treasurer ABBREVIATIONS The following abbreviations,when used in this Note,shall be construed as though tbey were written out in full according to applicable laws or regulations: TEN COM TENENT TEN as tenants in common as tenants by the entireties as joint tenants with right of survivorship and not as UTMA _ As Custodian for _ (Minor) under Uniform Transfers to Minors Act tenants in common (State) Additional abbreviations may also be used though not in the list above. ASSIGNMENT For valuable consideration,receipt of which is hereby acknowledged,the undersigned assigns this Note to (Please print or type name and address of Assignee) PlEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE and does hereby irrevocably appoint ,Attomey,to transfer this Note on the booles kept for registration thereof with full power of substitution. Dated:_ Signature guaranteed: (Signature guarantee must be provided in accordance with the prevailing standards and procedures of the Registrar and Transfer Agent.Such standards and procedures may require signatures to be guaranteed by certain eligible guarantor institutions that participate in a recognized signature guarantee program.) I I NOTICE:The signature to this Assignment must correspond with the name of the registered owner as it appears on this Note in every particular,without alteration or enlargement or any change whatever. Section 5.The Refunding Notes shall be executed as herein provided as soon after the adoption of this resolution as may be possible and thereupon they shall be delivered to the Registrar,for registration,authentication and delivery to the purchaser,as determined by the City Council,upon receipt of the purchase price thereof,with accrued interest thereon,and all action heretofore taken in connection with the Loan Agreement and the Refunding Notes is hereby ratified and confirmed in all respects. Section 6.So long as any of the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or any Parity Obligations are outstanding, the Utility shall continue to be maintained in good condition and operated in an efficient manner and at a reasonable cost as a revenue producing undertaking.On or before the beginning of each fiscal year,the City shall establish,impose,adjust and provide for the collection of rates to be charged to customers of the Utility,including the City,to produce gross revenues (hereinafter sometimes referred to as the "Gross Revenues")for the next fiscal year at least sufficient to pay the expenses of operation and maintenance of the Utility,which shall include salaries,wages, cost of maintenance and operation,materials,supplies,insurance and all other items normally included under recognized accounting practices (but does not include allowances for depreciation in the valuation of physical property)(which such expenses are hereinafter sometimes referred to as the "Operating Expenses")for the next fiscal year,and to leave a balance of net revenues (herein referred to as the "Net Revenues")at least sufficient to pay the expenses of operation and maintenance of the Utility,which shall include salaries,wages,cost of maintenance and operation,materials,supplies,insurance and all other items normally included under recognized accounting practices (but does not include allowances for depreciation in the valuation of physical property)(which such expenses are hereinafter sometimes referred to as the "Operating Expenses")for the next fiscal year and to leave a balance of net revenues (herein referred to as the "Net Revenues")at least sufficient at all times to pay the principal of and interest on all of the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or any Parity Obligations,as the same become due. Section 7.The provisions,covenants,undertakings and stipulations for the operation of the Utility and for the collection,application and use of the Gross Revenues and income from such operation,as set forth in the Series 1992 Note Resolution shall inure and appertain to the Refunding Notes to the same extent and with like force and effect as if herein set out in full, except to the extent that the same may be inconsistent with this resolution. The provisions of the Series 1992 Note Resolution and the provisions of this resolution are to be construed wherever possible so that the same will not be in conflict.In the event such construction is not possible,the provisions of the resolution first adopted shall prevail until such time as the obligations authorized by such resolution have been paid or otherwise satisfied as therein provided,at which time the provisions of this resolution shall again prevail. Section 8.The provisions of the Series 1992 Note Resolution with respect to the issuance of Parity Obligations are hereby recognized.It is hereby determined and declared that the officially reported Net Revenues of the Utility for the fiscal year which ended June 30,1999, were equal to at least 125%of the average amount that will be required in any future year to pay (i)principal of and interest on the Non-optional Series 1992 Notes;(ii)principal of and interest on the City's Share of Des Moines Water Works Bonds;(iii)principal of and interest on the Refunding Notes,other than interest on the Refunding Notes to be paid from the Escrow Account referred to in Section 9 hereof;and (iv)interest on the Optional Series 1992 Notes to be paid p110r to and including the Series 1992 Note Redemption Date. Section 9.The Mayor and City Clerk are hereby authorized and directed to execute the Escrow Agreement on behalf of the City,and the Escrow Agreement is hereby approved. 1 The Optional Series 1989 Notes are hereby called for prepayment as of the Series 1989 Note Redemption Date,and the Series 1992 Notes are hereby called for prepayment as of the Series 1992 Note Redemption Date,and notices of such prepayments shall be given by the Escrow Agent pursuant to the terms of the Series 1989 Note Resolution,the Series 1992 Note Resolution and the Escrow Agreement. Simultaneously with the delivery of the Refunding Notes,a portion of the loan proceeds shall be deposited into a special account with the Escrow Agent (the "Escrow Account")and of this amount,a portion shall be held as an initial cash balance,and a portion shall be invested in federal securities,all as authorized and set forth in the Escrow Agreement,maturing on such dates and bearing interest at such rates as are required to provide funds sufficient,with cash retained in the Escrow Account,to pay a portion of the interest on and principal of the Refunding Notes,as provided in the Escrow Agreement,and to redeem the Optional Series 1992 Notes on the Redemption Date.The remaining proceeds,including accrued interest,if any,shall be (i) used to pay issuance expenses of the Refunding Notes;(ii)used to prepay the Series 1989 Notes as of December 1,1999;and (iii)deposited into the Sinking Fund hereinafter referred to and used to pay interest on the Refunding Notes on the next interest payment date. Section 10.The Refunding Notes shall be payable from the Sinking Fund herein referred to.In addition to the sums hereinafter provided to be deposited into the Sinking Fund, there shall be credited to the Sinking Fund the following: (a)Any amount initially deposited therein pursuant to Section 9 hereof; (b)All receipts of principal of and interest on the investments held in the Escrow Account to and including June 1,2000 (other than the sum of $375,000 received from maturing investments on or p110r to that date required to be used to redeem the Optional Series 1992 Notes); (c)Any other funds appropriated by the City Council for the payment of the Refunding Notes. Section 11.The provisions in and by the Series 1992 Note Resolution whereby there is to be maintained a Water Revenue Fund (the "Revenue Fund")to be used in maintaining and operating the Utility and,thereafter to the extent provided in the Series 1992 Note Resolution for the payment of principal of and interest on the Series 1992 Notes and any Parity Obligations,are hereby ratified and confirmed;and from and after the issuance of the Refunding Notes and throughout the time any of the Series 1992 Notes,the City's Share of Des Moines Water Works I Bonds,the Refunding Notes or any Parity Obligations are outstanding,the Gross Revenues of the Utility shall continue to be set aside into the Revenue Fund,which shall be used in maintaining and operating the Utility,and after payment of the proper necessary maintenance and operation expenses,the remaining Net Revenues shall,to the extent hereinafter provided,be used to pay the interest on and principal of outstanding Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or any Parity Obligations. Section 12.The provisions in and by the Series 1992 Note Resolution whereby there is to be maintained an Water Revenue Sinking Fund (herein sometimes referred to as the "Sinking Fund")and for the payment into said fund from the future Net Revenues of the Utility of such portion thereof as will be sufficient to pay the interest upon and principal of the Series 1992 Notes are all hereby ratified and confirmed,and all such provisions shall inure and constitute the security for the payment of the interest on and the principal of the Refunding Notes from time to time outstanding;provided,however,that from and after the issuance of the Refunding Notes, the amount required to be set aside and paid into the Sinking Fund in equal monthly installments during each year ending on the next following June 1 shall be equal to the sum of: (i)one-sixth (1/6)of the interest payable with respect to the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or any Parity Obligations on the next succeeding June 1 and December 1 interest payment dates,plus (ii)one-twelfth (1/12)of the principal payable with respect to the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or any Parity Obligations on the next succeeding June 1 principal payment date;provided,however,that in making such calculation there shall be subtracted from the amount of interest payable on any interest payment date or principal payable on any principal payment date amounts which will be paid from the Escrow Account referred to in Section 9 above. No further payments need be made into the Sinking Fund when and so long as the amount therein is sufficient to retire all of the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or any Parity Obligations then outstanding and to pay all interest to become due thereon prior to such retirement or funds sufficient therefor have been set aside and pledged for that purpose. All of such payments required to he made into the Sinking Fund shall be made in equal monthly installments as hereinbefore provided on the first day of each month,except that when the first day of any month shall be a Sunday or legal holiday,then such payments shall be made on the next succeeding secular day.The Sinking Fund and that portion of the Net Revenues contained therein shall be used solely and only and are hereby pledged for the purpose of paying the interest on and principal of the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or any Parity Obligations,and for no other purpose.If and to whatever extent any Parity Obligations are issued under the conditions and restrictions set forth in this resolution,provisions shall be made for increasing such payments into the Sinking Fund to meet maturing installments of principal of and interest on such Parity Obligations.If at any time there be a failure to pay into the Sinking Fund the full amount above stipulated,then an amount equivalent to the deficiency shall be set apart and paid into the Sinking Fund from the Net Revenues of the Utility as soon as available,and the same shall be in addition to the amount otherwise required to be so set apart and paid into the Sinking Fund.]Section 13.The provisions in and by the Series 1992 Note Resolution whereby there is to be maintained a separate Principal and Interest Reserve Account (the "Reserve Account")for the purpose of paying the principal of and interest on the Series 1992 Notes whenever for any reason the funds on deposit in the Sinking Fund are insufficient,are all hereby ratified and confirmed.From and after the issuance of the Refunding Notes,if the sum on deposit in the Reserve Account is reduced to less than $85,000 (the "Required Reserve Account Balance")by the expenditure of all or a portion of the funds on deposit therein for any of the purposes specified herein,there shall be deposited into such Reserve Account the remaining Net Revenues after first making the required deposits into the Sinking Fund,until the sum on deposit in the Reserve Account has been restored to the Required Reserve Account Balance;provided, however,that the City shall not be obligated to maintain a balance in excess of the amount which may be invested consistent with regulations under Section 148 of the Internal Revenue Code of 1986 (or equivalent future legislation)without restriction of yield.From and after the issuance of the Refunding Notes and throughout the time any of the Non-optional Series 1992 Notes,the Refunding Notes or any Parity Obligations (except for the City's Share of Des Moines Water Works Bonds)are outstanding,all money credited to the Reserve Account shall be used and is hereby pledged for the payment of the principal of and interest on the Non-optional Series 1992 Notes,the Refunding Notes or any Parity Obligations (except for the City's Share of Des Moines Water Works Bonds),whenever for any reason the funds on deposit in the Sinking Fund are insufficient to pay such principal and interest when due.If and to whatever extent Parity Obligations shall be issued under the conditions set forth in this resolution,provision shall be made to create and maintain a reasonable reserve therefor.] Section 14.The provisions in and by the Series 1992 Note Resolution whereby there has been created and is to be maintained a "Surplus Fund"are hereby ratified and confirmed. From and after the issuance of the Refunding Notes and so long as any of the Non-optional Series 1992 Notes,City's Share of Des Moines Water Works Bonds,Refunding Notes or Parity Obligations remain outstanding,the Surplus Fund shall continue to be maintained,and there shall be set apart and paid all of the Net Revenues of the Utility remaining after first making the required payments hereunder and the required payments under the Series 1992 Note Resolution, and after all of the special funds created and to be maintained pursuant hereto and to the Series 1992 Note Resolution contain their required fund balances.Funds on deposit in the Surplus Fund shall be transferred and credited to the Sinking Fund whenever necessary to prevent or remedy a default in the payment of the principal of or interest on the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes and any Parity Obligations or shall be transferred and credited to the Reserve Fund created and to be maintained under the Series 1992 note Resolution whenever any deficiency may exist in the Reserve Fund. Section 15.All money held in any fund created or to be maintained under the terms of this resolution shall be deposited in lawful depositories of the City or invested in accordance with Chapters 12B and 12C of the Code of Iowa and continuously held and secured as provided I by the laws of the State of Iowa relating to the depositing,securing,holding and investing of public funds.All interest received by the City as a result of investments under this section shall be considered to constitute Gross Revenues of the Utility and shall be deposited in or transferred to the Water Revenue Fund and used solely and only for the purposes specified for such fund. The City hereby covenants and agrees that no such investment shall ever be made so as to cause the interest on the Bonds to become taxable as "arbitrage bonds"pursuant to the provisions of Section 148 the Internal Revenue Code of 1986,as amended. Section 16.The City hereby covenants and agrees with the owner or owners of the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations,or any of them,that from time to time may be outstanding,that it will faithfully and punctually perform all duties with reference to the Utility required and provided by the Constitution and laws of the State of Iowa,that it will segregate the Gross Revenues of the Utility and make application thereof in accordance with the provisions of this resolution and that it will not sell,lease or in any manner dispose of the Utility or any part thereof,including any and all extensions and additions that may be made thereto,until all of the Bonds shall have been paid in full,both principal and interest,or unless and until provisions shall have been made for the payment of the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations and interest thereon in full;provided,however,that the City may dispose of any property which in the judgment of the Council,or the duly constituted body as may then be charged with the operation of the Utility,is no longer useful or profitable in the operation of the Utility nor essential to the continued operation thereof and when the sale thereof will not operate to reduce the revenues to be derived from the operation of the Utility. Section 17.Upon a breach or default of a term of the Non-optional Series 1992 Notes, the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations and this resolution,a proceeding may be brought in law or in equity by suit,action or mandamus to enforce and compel performance of the duties required under the terms of this resolution and Division V of Chapter 384 of the Code of Iowa or an action may be brought to obtain the appointment of a receiver to take possession of and operate the Utility and to perform the duties required by this resolution and Division V of Chapter 384 of the Code of Iowa. Section 18.The Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations shall not be entitled to priority or preference one over the other in the application of the Net Revenues of the Utility regardless of the time or times of the issuance thereof,it being the intention that there shall be no priority among the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations regardless of the fact that they may have been actually issued and delivered at different times.The City hereby covenants and agrees that so long as any of the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations are outstanding and unpaid,no other bonds or obligations payable from the Net Revenues of the Utility will be issued except upon the basis of such additional bonds or obligations being subject to the priority and security for payment of any Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations then outstanding;provided,however,that the City reserves the light and privilege of issuing Parity Obligations in order to pay the cost of improvements and extensions to the Utility or for refunding any bonds or obligations payable from the Net Revenues of the Utility only if the officially reported Net Revenues of the Utility for the last preceding fiscal year prior to the issuance of such Parity Obligations (with adjustments as hereinafter provided)were equal to at least 125%of the average amount that will ] become due in any fiscal year during the life of any of the then outstanding Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations for both the principal thereof and interest thereon and the Parity Obligations then proposed to be issued. The amount of Gross Revenues of the Utility may be adjusted for the purpose of the foregoing computations by an independent certified public accountant or by a consulting engineer,not a regular employee of the City,so as to reflect any revision in the schedule of rates and charges being imposed at the time of the issuance of any such Parity Obligations. Refunding obligations issued to refund Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations shall not be subject to the foregoing restrictions,provided the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations being refunded mature within three (3)months of the date of such refunding and no other funds are available to pay such maturing Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations,or the issuance of the refunding obligations will not cause an increase in the annual debt service requirements during the life of any Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations then outstanding which are not being refunded but otherwise any Parity Obligations shall only be issued subject to the restrictions of this resolution.}Section 19.The City agrees that so long as any of the Non-optional Series 1992 Notes, the City's Share of Des Moines Water Works Bonds,the Refunding Notes or any Parity Obligations remain outstanding it will maintain insurance,for the benefit of the owners of the Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations upon all properties of the Utility which may be of an insurable nature,such insurance to be of a type and kind and in an amount which usually would be carried by other municipalities or private companies rendering services of a similar character. The proceeds of any insurance,except liability insurance,shall be used to repair or replace the part or parts of the Utility damaged or destroyed,or if not so used shall be placed in the Revenue Fund.The City will keep proper books of record and account,separate from all other records and accounts,showing the complete and correct entries of all transactions relating to the Utility, in accordance with generally accepted accounting practices.The original purchaser of the Refunding Notes and any owners of outstanding Non-optional Series 1992 Notes,the City's Share of Des Moines Water Works Bonds,the Refunding Notes or Parity Obligations shall have the right at all reasonable times to inspect the Utility and all records,accounts and data of the City relating thereto. Section 20.The provisions of this resolution shall constitute a contract between the City and the owners of the Refunding Notes as may from time to time be outstanding and after the issuance of any of the Refunding Notes no change,variation or alteration of any kind of the provisions of this resolution shall be made which will adversely affect the owners of the I Refunding Notes until all of the said Refunding Notes and the interest thereon shall have been paid in full. Section 21.It is the intention of the City that interest on the Refunding Notes be and remain excluded from gross income for federal income tax purposes pursuant to the appropriate provisions of the Internal Revenue Code of 1986,as amended,and the Treasury Regulations in effect with respect thereto (all of the foregoing herein referred to as the "Internal Revenue Code").In furtherance thereof the City covenants to comply with the provisions of the Internal Revenue Code as they may from time to time be in effect or amended and further covenants to comply with applicable future laws,regulations,published rulings and court decisions as may be necessary to insure that the interest on the Refunding Notes will remain excluded from gross income for federal income tax purposes.Any and all of the officers of the City are hereby authorized and directed to take any and all actions as may be necessary to comply with the covenants herein contained. The City hereby designates the Refunding Notes as "Qualified Tax Exempt Obligations" as that term is used in Section 265(b )(3)(B)of the Intemal Revenue Code. Section 22.Continuing Disclosure.Continuing Disclosure.The Securities and Exchange Commission (the "SEC")has promulgated certain amendments to Rule 15c2-12 under the Securities Exchange Act of 1934 (17 c.P.R.§240.15c2-12)(the "Rule")that make it ] unlawful for an underwriter to participate in the primary offering of municipal securities in a principal amount of $1,000,000 or more unless,before submitting a bid or entering into a purchase contract for the bonds,it has reasonably determined that the issuer or an obligated person has undertaken in writing for the benefit of the bondholders to provide certain disclosure information to prescribed information repositories on a continuing basis or unless and to the extent the offering is exempt from the requirements of the Rule. The principal amount of the Refunding Notes is less than $1,000,000.The City hereby represents that it has not issued within the six months before the date of issuance of the Refunding Notes,and that it reasonably expects that it will not issue within six months after the date of issuance of the Refunding Notes,other securities of the City of substantially the same security and providing financing for the same general purpose or purposes as the Refunding Notes.Consequently,this Council hereby finds that the Rule is inapplicable to the Refunding Notes,because the aggregate principal amount of the Refunding Notes and any other securities required to be integrated with the Refunding Notes under the Rule is less than $1,000,000. Section 23.The Mayor and City Clerk,with the advice and consent of counsel,may make such additional changes and corrections to the technical terms of this resolution prior to the final issuance of the Refunding Notes as are deemed necessary to clarify or comply with the terms of final sale and offering of the Refunding Notes and which do not change the lights and security of the Refunding Notes. Section 24.If any section,paragraph,clause or provision of this resolution shall be held invalid,the invalidity of such section,paragraph,clause or provision shall not affect any of the remaining provisions of this resolution. 1 Section 25.All resolutions and orders or parts thereof in conflict with the provisions of this resolution are,to the extent of such conflict,hereby repealed. Section 26.This resolution shall be m full force and effect immediately upon its adoption and approval,as provided by law. Passed and approved on October 19,1999. Attest: I Mark J.Arents ti City Administrator/Clerk Nicholas C.Gruber Marvin Berger Robyn S.Heath Bill Peard x X X X IROLLCALLVOTEAYENAYABSENT LalTY Lyon x