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HomeMy WebLinkAbout83-2-2350494 ORDINANCE NO. 83-2-2350 AN ORDINANCE OF THE CITY OF PADUCAH, KENTUCKY, SUPPLEMENTING THE BOND AND NOTE ORDINANCE ENACTED BY THE CITY ON JANUARY 12, 1982, AUTHORIZING AND PROVIDING FOR THE ISSUANCE AND SALE OF SIXTEEN MILLION FOUR HUNDRED THIRTY THOUSAND DOLLARS ($16,430, 000),. PRINCIPAL AMOUNT _OF CITY OF PADUCAH WATER WORKS REVENUE BONDS, SERIES 1983, DATED MARCH 1, 1983, UNDER THE PROVISIONS OF SECTIONS 58.010 THROUGH 58.140 .OF THE KENTUCKY REVISED STATUTES, FOR THE PURPOSE OF EFFECTING THE IMMEDIATE REDEMPTION OF THE OUTSTANDING $15,860,000 OF CITY OF PADUCAH WATER WORKS REVENUE BOND ANTICI- PATION NOTES, DATED JANUARY 25, 1982, ISSUED FOR THE PURPOSE OF PROVIDING INTERIM FINANCING OF THE COST (NOT OTHERWISE PROVIDED) OF THE CONSTRUCTION OF EXTENSIONS, ADDITIONS, AND IMPROVEMENTS TO THE EXISTING MUNICIPAL WATER WORKS SYSTEM; PROVIDING FOR SAID BONDS TO RANK ON A PARITY WITH THE OUTSTANDING $1,280,000 OF CITY OF PADUCAH WATER WORKS REFUNDING REVENUE BONDS, SERIES OF 1978.; SETTING FORTH THE. TERMS AND CONDITIONS UPON WHICH SAID $16,430,000 OF BONDS (SERIES 1983) ARE TO BE AND MAY BE ISSUED AND OUTSTANDING; PROVIDING FOR THE COLLECTION, SEGREGATION, AND DISTRIBUTION OF THE REVENUES OF SAID WATER WORKS SYSTEM; AND PROVIDING FOR AN ADVERTISED PUBLIC COMPETITIVE SALE OF SAID SERIES 1983 BONDS. WHEREAS, the City of Paducah, a second class city, of McCracken County, Kentucky, owns and operates the existing municipal water works system (the "System") serving the City, pursuant to Sections 58.01.0 through 58.140 of the Kentucky Revised Statutes, and in that connection the City pres.ently .has outstanding $1,280,000 of Bonds designated as City of Paducah Water Works Refunding Revenue Bonds, Series of 1978, dated April 1, 1978 (the "Bonds of 1978" or the "Prior Bonds") scheduled to mature serially on July 1 in each of the respective years, 1989 through 2002, in- clusive, and in 2008, and WHEREAS, said Prior Bonds, by their terms are payable from and secured by a first pledge of the revenues derived from the operation of the System, and WHEREAS, in order to finance the cost (not otherwise provided) of a con- struction project consisting of the construction of extensions, additions, and improvements (the "Construction Project" or the "Project") to the System, and pur- suant to rights reserved in the 1978 Bond Ordinance, the City has heretofore enacted an Ordinance on January 12, 1982 (the 'Bond and Note Ordinance"), authorizing the issuance by the City of $14,530,000 of Bonds, Series 1982, ranking on a parity with said Prior Bonds, in compliance with the conditions prescribed in the 1978 Bond Ordi- nance for the issuance of bonds ranking on a parity with the Bonds of 1978, and the immediate issuance of $15,860,000 of its Water Works Revenue Bond Anticipation Notes, Series 1982, dated January 25, 1982 (The "Notes"),.maturing on July 25, 1984, to provide interim financing of such Construction Project in anticipation of the is- suance of the Series 1983 Bonds, which Notes were issued and sold at an interest rate of 11.40% per annum, and which Notes are now subject to redemption on any date (not limited to an interest payment date), and WHEREAS, in Section 17 of the Bond and Note Ordinance the City retained the right, prior to the issuance of the Series 1983 Bonds, to revise the Bond and Note Ordinance as to the date, amount, maturities, redemption provisions, and other provisions of such Bonds, consistent with market conditions and other pertinent factors at the time of such issuance, and WHEREAS, in view of current market conditions and other prevailing factors, the City deems it advisable to supplement and revise said Bond and Note Ordinance to provide that there shall be issued and sold $16,430,000 of Series 1983 bonds (the "Current Bonds"), that said Current Bonds shall be dated March 1, 1983, that the maturity schedule and redemption provisions with reference to the Current Bonds shall be revised, and that the proceeds of said Current Bonds, together with other funds on hand in the "Note and Coupon Redemption Fund", created in the Bond and Note Ordinance, shall be deposited_ into a special "Escrow Fund for Notest0, hereinafter created, shall be invested as provided herein, and shall be applied to the redemption 495 of the Notes immediately after the delivery of the Current Bonds, upon 30 days published notice, and WHEREAS, the proceeds of said Notes have been or will be supplemented by (a) a Federal (EDA) grant in the amount of approximately $1,000,000 (of which ap- proximately $907,000 has been received), (b) the sum of $500,000, furnished directly by the City, and (c) income from the investment of 'the proceeds of Notes pending disbursement of such proceeds, to provide the total cost of the Construction Project, NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF PADUCAH, KENTUCKY, AS FOL- LOWS: SECTION 1. DEFINITIONS. As used in this Ordinance, unless the context requires otherwise: "BOARD OF COMMISSIONERS" means the Board of Commissioners of the City of Paducah, Kentucky, or such other body -as shall be the governing body of said City under the laws of Kentucky at any given time. "BOND COUNSEL" refers to the firm of Rubin & Hays, Municipal Bond At- torneys, Suite 300, Fireside Building, 209 South Fifth Street, Louisville, Kentucky 40202, which firm has prepared the legal proceedings for the issuance of the Current Bonds, has furnished all of the customary services of Bond Counsel in this financing and will continue to furnish such services until the Current Bonds are delivered and paid for, including the rendering of the final approving Legal -Opinions with regard to the legality of the Current Bonds, and the tax exemption of the interest thereon. "BOND AND NOTE ORDINANCE" refers to the Bond and Note Ordinance, enacted on January 12, 1982, originally authorizing the issuance of .the Current. Bonds (subject to revision of the amounts and dates thereof, as revised in this Current Bond Ordi- nance), and which authorized the immediate (in January, 1982) issuance, sale, and delivery of the Notes. "BONDS OF 197814 or "PRIOR BONDS" refers to the outstanding $1,280,000 of Bonds of the original authorized $1,280,000 of City of Paducah Water Works Refunding Revenue Bonds, Series 1978, dated April 1, 1978. "BOND ORDINANCE OF 197811, 111978 BOND ORDINANCE" or "PRIOR BOND ORDINANCE10 refers to the Ordinance authorizing the Bonds of 1978, which Ordinance was enacted by the Board of Commissioners of the City of Paducah on April 5, 1978. "CERTIFIED PUBLIC ACCOUNTANTS" refers to an independent Certified Public Accountant or firm of -Certified Public Accountants, duly licensed in Kentucky, and may include Accountant(s) regularly employed to audit the financial affairs of the System and/or of other City financial matters. Until otherwise directed by the governing body of the City, such term shall be deemed to refer to the firm of Schuette & Taylor, 626 Kentucky Avenue, Paducah, Kentucky 42001. "CITY" refers to the City of Paducah, Kentucky. "CODE" or t4INTERNAL REVENUE CODE" refers to the United States Internal Revenue Code of 1954, as amended. "CONSTRUCTION PROJECT" or "CURRENT CONSTRUCTION PROJECT" or "PROJECTt1 refers to the proposed extensions, additions, and improvements to the municipal water works System of the City, the cost (not otherwise provided) of which Construction Project is being financed by the Current Bonds. "CURRENT BONDS" refers to the $16,430,000 of City of Paducah Water Works Revenue Bonds, Series 1983, dated March 1, 1983, authorized herein, the date of which Current Bonds may be changed at or prior to the date of sale of said Bonds, as set out in Section 16 hereof. Bonds. "CURRENT BOND ORDINANCE" refers to this Ordinance authorizing the Current 14DEBT SERVICE RESERVE FOR NOTES" or "NOTE RESERVE FUND" refers to the "Debt Service Reserve For Notes" created as part of the Note and Coupon Redemption Fund in Section 22 of (PART TWO) of the Bond and Note Ordinance. 496 11DEPOSITORY BANK" or "CONSTRUCTION ACCOUNT DEPOSITORY" refers to The Peoples First National Bank & Trust Co., Paducah, Kentucky, which is the Bank in which the Construction Account created herein will be deposited and maintained. "ELIGIBLE 15% OF OUTSTANDING BONDS" refers to an amount equal to 15% of the lesser of (a) the face amounts (par) of the original authorized issues or Series, or (b) the net proceeds thereof if originally sold at less than 98% of par, of whatever bonds are outstanding against and payable from the revenues of the System to the extent that such percentage of such bonds is, in the opinion of Bond Counsel, exempt from restriction as to investment yield under Section 103 of the Internal Revenue Code as amended, and the applicable arbitrage regulations thereunder. , "ENGINEER" or "INDEPENDENT CONSULTING ENGINEER" refers to an Independent Consulting Engineer or firm of Engineers of excellent national reputation or of recognized excellent reputation in Kentucky in the field of water works engineering. Until otherwise directed by the Governing Body of the City, such term shall be deemed to refer to the firm of G. Reynolds Watkins Consulting Engineers, Inc., 3399 Tates Creek Road, Lexington, Kentucky 40502, and Farris, Hatcher, Tremper & Associates, Consulting Engineers, 124 South 31st Street, Paducah, Kentucky 42001, or a member of either of said firms, or their respective successors. "FISCAL AGENT" refers to the firm of J.J.B. Hilliard, W.L. Lyons, Inc., 545 South Third Street, Louisville, Kentucky 40202. "GOVERNING BODY" refers to the following: (a) To the Board of Commissioners of the City of Paducah, Kentucky, or such other body as shall be the .governing body of the City under the laws of Kentucky at any given time, with reference to: (1) the issuance of parity bonds or other bonds; (2) the establishment and adjustment or revision of rates and charges for water service; (3) the reserved right of the City to amend ordinances previously adopted insofar as same may relate to the terms of office of members of the Commissioners of Water Works, the manner of electing or appointing the same, and the number thereof; (4) the determination that the amounts to be paid into the respective funds are proper and sufficient for the respective purposes thereof, as set out in Section 14 of the Prior Bond Ordinance; and (5) the responsibility of having each municipal officer having custody of any moneys administered under the provisions of. this Ordinance to be bonded in accordance with Section 15 of the Prior Bond Ordinance. (b) .To the "Commissioners of Water Works", established in the Ordinance dated August 6, 1946, with reference to: (1) general management, control, and operation of the Water Works (other than as specifically reserved to the City's Board of Commissioners); (2) the adoption of a budget for current expenses, as set out in Section 16 of the Prior Bond Ordinance; (3) the responsibility of filing the reports as to "coverage" required by Section 17 o£ the Prior Bond Ordinance; (4) having jurisdiction to place and purchase insurance on the System, as set out in Section 21 of the Prior Bond Ordinance; (5) the furnishing of the records, audits, reports, and arrangements for engineering inspection, referred to in Section 22 of the prior Bond Ordinance. "INVESTMENTS". refers to investments of funds on deposit in the various funds created herein, and includes (a) direct obligations of or obligations guaranteed by the United States of America, or any of its agencies, including book- keeping entries; and (b) interest-bearing time deposits or Certificates of Deposit issued by FDIC Banks, fully secured, to the extent of the amount in excess of the amount insured by the Federal Deposit Insurance Corporation, by a pledge of direct obligations or obligations guaranteed by the United States of America, or any of its 497 agencies, having a fair market value, exclusive of accrued interest, equal to not less than 100% of such excess amount. "NET ANNUAL DEBT SERVICE REQUIREMENTS" refers to gross annual principal and interest requirements of all Outstanding Bonds, adjusted for projected net annual cash flow (positive.or negative) of the Invested Sinking Fund created in Section 13B of the 1978 Bond Ordinance. "NOTE AND COUPON REDEMPTION FUND" refers to the "City of Paducah. Water Works Bond Anticipation Note and Coupon Redemption Fund" created in Section 21 of (PART TWO) of the Bond and Note Ordinance. "NOTES" refers to the $15,860,000 of City of Paducah Water Works Revenue Bond Anticipation Notes, Series 1982, .dated January 25, 1982, maturing on July 25, 1984, authorized in PART TWO of the Bond and Note Ordinance, and which Notes are now subject to redemption at any time (not limited to an interest payment date) prior to maturity at a price of 100.50% of par plus accrued interest, upon 30 days' published notice. "OUTSTANDING BONDS" refers to the outstanding Current Bonds and the Out- standing Prior Bonds and does not refer to any bonds "defeased" as provided in Section 15 hereof. "PARITY BONDS" means bonds issued in the future, which bonds issued in the future will, -pursuant to the provisions of the Prior Bond Ordinance, the Bond and Note Ordinance, and this Current Bond Ordinance, rank on a basis of parity with the Current Bonds, and shall not be deemed to include, nor to prohibit the issuance of, bonds ranking inferior in security to the Current Bonds. "PAYEE BANK" refers to the Bank at which the Notes are payable and at which the Current Bonds will be payable, which Bank is The Paducah Bank & Trust Co., Paducah, Kentucky. "PRIOR BOND ORDINANCE" refers to the 1978.Bond Ordinance. "PRIOR DEPOSITORY" refers to the bank in which all of the Funds created in the Prior Bond Ordinance are and will be deposited and maintained and at which the principal of and interest on the Prior Bonds are and will be payable, which bank is the Citizens Bank & Trust Company, Paducah, Kentucky. "REQUIRED RESERVE" refers to an amount equal to not less than the maximum amount of principal and interest requirements falling due in any twelve month period on all of the outstanding Prior Bonds, Current Bonds, and any parity bonds, which Required Reserve is required to be accumulated in the Sinking Fund Reserve of 1978, as set out in Section 13B of ,the Prior Bond Ordinance, and in Section 9A of the Bond and Note Ordinance, as reaffirmed herein. "REVENUE FUND" refers to the City of Paducah Water Works Revenue Fund, created in the Prior Bond Ordinance for the benefit of the Prior Bonds, and which will continue to be maintained for the benefit of all of the Prior Bonds, Current Bonds, and any future parity bonds. "SINKING FUND" refers to the "City of Paducah Water Works Bond and Interest Redemption Fund," created in the Prior Bond Ordinance for the benefit of the Prior Bonds, and which will continue to be maintained for the benefit of all of the Prior Bonds, Current Bonds, and any future parity bonds. "SINKING FUND RESERVE" refers to the Sinking Fund Reserve created as a part of the Sinking Fund in the Prior Bond Ordinance, as adjusted in Section 9A hereof. "SYSTEM" and "WATER WORKS SYSTEM" shall be used synonymously in this Ordinance and shall be deemed to refer to the City of Paducah water works system, together with.all future extensions, additions, and improvements to said System. PART ONE - AUTHORIZATION OF CURRENT BONDS SECTION 2. CONSTRUCTION AWARD APPROVED; RATIFICATION OF PREVIOUS ACTION IN COMMMENCING CONSTRUCTION. The Board of Commissioners hereby authorizes, approves, ratifies, and confirms its previous action in (a) awarding the contracts for the construction of the Current Construction Project to the lowest and best bidders, (b) entering into 498 formal contracts with said bidders, and (c) undertaking the construction of the Construction Project according.to the plans and specifications heretofore prepared for the City. SECTION 3. AUTHORIZATION OF BONDS. For the purpose of redeeming the $15,860,000 of Notes, which have been heretofore issued for the purpose of defraying the costs (not otherwise provided) of the Current Construction Project, pending the issuance of the Current Bonds, there are hereby authorized to be presently issued and sold Sixteen Million Four Hundred Thirty Thousand Dollars ($16,430,000) principal amount of City of Paducah Water Works Revenue Bonds, Series 1983, dated and bearing interest from March 1, 1983, payable semi-annually on the first days of January and July in each year, except that the first interest coupon on each Bond shall represent (ten months) interest from March 1, 1983 to January 1, 1984. Said $16,430,000 of Bonds shall consist of three thousand, two hundred eighty-six (3,286) Bonds of the denomination of $5,000 each, numbered from 1 to 3,286, inclusive, shall bear interest at a coupon rate or rates to be fixed by supplemental Resolution as a result of the advertised sale of the Current Bonds, and shall mature serially and in numerical order on July first of the respective years as set out below. The numbering and maturities of said $16,430,000 of Current Bonds shall be as follows: SECTION 4. PLACE OF PAYMENT; MANNER OF EXECUTION; AND PROVISION AS TO PRIOR REDEMPTION. Both principal of and interest on the Current Bonds shall be payable at the main office of the Payee Bank, The Paducah Bank & Trust Co., Paducah, Kentucky, in such funds.as are at that time lawful moneys of the United States of America. The Current Bonds shall be executed on behalf of the City with the duly authorized reproduced facsimile signature of the Mayor of the City and -the reproduced facsimile of its corporate seal shall be imprinted thereon, and attested by the reproduced facsimile signature of the City Clerk; each Bond shall be signed manually by one -of said officials (part of the Bonds may be signed manually by one of such officials and the remainder of the Bonds by the other); and the interest coupons Principal Maturities of Maturity Current July 1 Bonds Numbering 1984 2,315,000 1-463 1985 140,000 464-491 1986 155,000 492-522 1987 175,000 523-557 1988 185,000 558-594 1989 210,000 595-636 1990 230,000 637-682 1991 250,000 683-732 1992 280,000 733-788 1993 355,000 789-859 1994 390,000 860-937 1995 430,000 938-1023 1996 475,000 1024-1118 1997 520,000 1119-1222 1998 570,000 1223-1336 1999 625,000 1337-1461 2000 690;000 1462-1559 2001 760,000 1600-1751 2002 835,000 1752-1918 2003 935,000 1919-2105 2004 1,030,000 2106-2311 2005 1,135,000 2312-2538 2006 13,245,000 2539-2787 2007 1,370,000 2788-3061 2008 1,125,000 3062-3286 SECTION 4. PLACE OF PAYMENT; MANNER OF EXECUTION; AND PROVISION AS TO PRIOR REDEMPTION. Both principal of and interest on the Current Bonds shall be payable at the main office of the Payee Bank, The Paducah Bank & Trust Co., Paducah, Kentucky, in such funds.as are at that time lawful moneys of the United States of America. The Current Bonds shall be executed on behalf of the City with the duly authorized reproduced facsimile signature of the Mayor of the City and -the reproduced facsimile of its corporate seal shall be imprinted thereon, and attested by the reproduced facsimile signature of the City Clerk; each Bond shall be signed manually by one -of said officials (part of the Bonds may be signed manually by one of such officials and the remainder of the Bonds by the other); and the interest coupons 499 attached to said Bonds shall be executed with the duly authorized reproduced fac- simile signatures of said Mayor and said City Clerk; and said officials, by the execution of appropriate certifications, shall adopt as and for their own proper signatures, their respective facsimile signatures on .said Bonds and Coupons. The Current Bonds and interest coupons shall be fully negotiable and shall pass merely by delivery. Current Bonds maturing on and after July 1, 1994, shall be subject to redemption by the City prior to maturity, in whole or in part, in the inverse order of their maturities (less than all of a single maturity to be selected by lot), on any interest payment date falling on or after July 1, 1993, upon payment of face amount plus all accrued interest evidenced by interest coupons maturing on and prior to the redemption date, plus a redemption premium expressed in terms of a percentage of the face amount of the Bonds called for redemption as follows: 3% from July 1, 1993, through July 1, 1997; 2% from January 1, 1998, through July 1, 2002; and 1% if thereafter and prior to final maturity. In the event that any of said Bonds are called for redemption as aforesaid, notice thereof identifying the Bonds to be redeemed shall be given by publication at least once not less than thirty days prior to the redemption date in a newspaper of general circulation throughout Kentucky, and in a periodical of general circulation among purchasers of bond issues published in New York,: New York. All of said Bonds as to which the City reserves and exercises the right of redemption and as, to which notice as foresaid shall have been given, and for the re- tirement of which, upon the terms aforesaid, funds are duly provided, will cease to bear interest on the redemption date. Notice of such redemption may be waived with the written consent of the holder(s) of the bond(s) so called for redemption. SECTION 5. REAFFIRMATION OF DECLARATION OF WATER WORKS SYSTEM TO CONSTITUTE REVENUE PRODUCING PUBLIC PROJECT. The previous action of the City (declared in the Prior Bond Ordinance and reaffirmed in the Bond and Note Ordinance) in declaring the existing Water Works System of the City to constitute a revenue-producing public project or System within the meaning of Sections 58.010 through 58.140 of the Kentucky Revised Statutes, is hereby authorized., approved, ratified, and confirmed; and so long as any of the Prior Bonds, Current Bonds, or any parity bonds shall remain outstanding, said System shall be owned, controlled, operated, and maintained on a revenue-producing basis, .for the security and source of payment of the Prior Bonds, Current Bonds, and any parity bonds, under the authority hereinbefore stated. SECTION 6. CURRENT BONDS PAYABLE OUT OF REVENUES ON A PARITY WITH PRIOR BONDS. All of the Current Bonds, with interest thereon, and any additional parity bonds that may be issued and outstanding under the conditions and restrictions of the Prior Bond Ordinance and of this Current Bond Ordinance, are to be issued in anti- cipation of the revenues to be derived from the operation of said Water Works System, all as hereinafter more specifically provided, shall be payable out of the Sinking Fund created in the Prior Bond Ordinance, -on a parity basis with the Prior Bonds, and shall be a valid claim of the holders thereof against said Sinking Fund and against a sufficient portion of the gross revenues of the System pledged to said Fund. SECTION 7. FORM OF BONDS. The Current Bonds in the amount of $16,430,000, and coupons, shall be in substantially the following form: (FORM OF BONDS) UNITED STATES OF AMERICA COMMONWEALTH OF KENTUCKY COUNTY OF McCRACKEN CITY OF PADUCAH WATER WORKS REVENUE BOND SERIES, 1983 S00 NO. $5,000 KNOW ALL MEN BY THESE PRESENTS: That the City of Paducah, in the County of McCracken, in the Commonwealth of Kentucky, for value received, hereby promises to pay to the bearer hereof, solely from the special fund hereinafter identified, the sum of FIVE THOUSAND DOLLARS on the first day of July, 19 and to pay interest on said sum from the date hereof at the rate of percent ( %) per annum, payable semi-annually, on the first days of January and July in each year until paid (first interest coupon representing ten months' interest due on January 1, 1984), except as the provisions hereinafter set forth with respect to prior redemption may be and become applicable hereto, such interest as may accrue on and prior to maturity of this Bond to be paid upon presentation and surrender of the annexed interest coupons as the same severally mature, both principal and interest being payable in lawful money of the United States of America at The Paducah Bank & Trust Co., Paducah, Kentucky. This Bond is one of a duly authorized series of bonds (said Bonds and the appertaining coupons being hereinafter collectively referred to as "the Current Bondst0) in the principal amount of Sixteen Million Four Hundred Thirty Thousand Dollars ($16,430,000), issued by said City pursuant to an Ordinance duly enacted (the "Current Bond Ordinance01) under and in full compliance with the Constitution and Statutes of the Commonwealth of Kentucky, and more specifically, Sections 58.010 through 58.140 of the Kentucky Revised Statutes, for the purpose of redeeming in advance of maturity, certain outstanding City of Paducah Water Works Revenue Bond Anticipation Notes, Series 1982, dated January 25, 1982, issued for the purpose of providing interim financing -of the cost (not otherwise provided) of constructing a construction project, consisting of extensions, additions, and improvements to the municipal Water Works'system (the "System") of the City, as is more fully identified in the Current Bond Ordinance, in anticipation of the issuance of these Current Bonds. This Bond and all of the $16,430,000 of Current Bonds rank on a parity as to security and source of payment with $1,280,000 of outstanding Water Works Refund- ing Revenue Bonds, Series of 1978, dated April 1, 1978 (the "Prior Bonds"), author- ized by an Ordinance enacted by the Board of Commissioners of said City on April 5, 1978 (the "Prior Bond Ordinance"). The Prior Bond Ordinance provided and the Current Bond Ordinance reaffirms that so long as any of the Prior Bonds, the Current Bonds, and/or any additional bonds ranking on a parity therewith, are outstanding, said municipal Water Works System shall be owned and operated as a revenue-producing public project or System within the meaning of Sections 58.010 through 58.1.40 of the Kentucky Revised Statutes, for the security and source of payment of any and all of such outstanding bonds. It is provided in and by the Prior Bond Ordinance and in and by the Current Bond Ordinance that additional bonds ranking on a parity with the Prior Bonds and with the Current Bonds, may be issued and outstanding upon the conditions and re- strictions (including the possible combination of the Paducah water works system and the Paducah sewer system and the future issuance of parity bonds to'finance ex- tensions, additions, and/or improvements to the then combined and consolidated system) provided in the Prior Bond Ordinance and in the Current Bond Ordinance; and these Current Bonds, together with such additional bonds ranking on a parity there- with as have been heretofore issued and are now outstanding, viz., the $1,280,000 of outstanding Prior Bonds, and as may be hereafter issued and outstanding from time to time under the parity conditions and restrictions of the Prior Bond Ordinance and the Current Bond Ordinance, are and will continue to be payable from and secured by a first pledge of a fixed portion of the gross income and revenues to be derived .from the operation of the System, which fixed portion of said gross income and revenues 501 shall be sufficient to pay the principal of and interest on all of said outstanding bonds against the System as and when the same become due and payable, and which shall be set aside as a special fund for that purpose and identified as the "Paducah Water Works Revenue Bond and Interest Redemption Fund" (the "Sinking Fund"). The City covenants that so long as any of the Prior Bonds, these Current Bonds, and/or any additional parity bonds are outstanding, the System will be con- tinuously owned and operated as a revenue-producing undertaking, and that the City will fix, charge, and adjust from time to time as needed, such rates for the services, and facilities of the System so that the income and revenues therefrom will be sufficient to pay all of the Prior Bonds, these Current Bonds, and any additional parity bonds, and the interest thereon, as the same become due, to pay the cost of operation and maintenance of the System, and to provide for the depreciation thereof. In and by the proceedings authorizing the Prior Bonds, the City has cove- nanted and agreed that so long as any bonds are outstanding against the System, the management, control, and operation of the System will continue to be vested in an independent commission known as the Commissioners of Water Works, which shall not be abolished so long as any of such bonds are outstanding against the System. These Current Bonds do not constitute an indebtedness of the City of Paducah, Kentucky, within the meaning of any constitutional or statutory provisions or limitations, but are payable as to both principal and interest solely out of the revenues of the System, as aforesaid. Current Bonds falling due on and after July 1, 1994, are subject to re- demption by the City prior to maturity, in whole or in part, in the inverse order of their maturities (less than all of a single maturity to be selected by lot), on any interest payment date falling on or after July 1, 1993, on notice published at least one time not less than thirty days prior to the redemption date, in (a) a newspaper of general circulation throughout Kentucky, and in (b) a periodical of general circulation among purchasers of bond issues published in New York, New York, upon payment of face amount plus all accrued interest evidenced by interest coupons maturing on and prior to the redemption date, plus a redemption premium expressed in terms of a percentage of the face amount of the Bonds called for redemption, as follows: .y 3% from July 1, 1993, through July 1, 1997; 2% from January 1, 1998, through July 1, 2002; and 1% on January 1, 2003, or thereafter and prior to final maturity. This Bond and the coupons, appertaining hereto are fully negotiable and shall pass merely by delivery. This Bond is exempt from taxation in the Commonwealth of Kentucky. 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 Current Bonds, have existed, have happened, and have been performed, in due time, form and manner as required by law, that the amount of this Bond, together with all .other obligations of said City, does not exceed .any limit pre- scribed by the Constitution or Statutes of the Commonwealth of Kentucky, and that a sufficient portion of the gross income and revenues of the System has been pledged to and will be set.aside into the Sinking Fund by the City for the prompt payment of the principal of and interest on this Bond,.all of the Current Bonds and all other bonds ranking on a parity therewith, including those issued heretofore (the Prior Bonds) and those which may be issued hereafter. IN WITNESS WHEREOF, the City of Paducah, in the Commonwealth of Kentucky, has caused this Bond to be executed with the duly authorized reproduced facsimile signature of its Mayor, and the reproduced facsimile of its corporate seal to be imprinted hereon, attested by the .reproduced facsimile signature of its City Clerk, and signed manually by one of said officials, and the coupons hereto attached to be executed with. the duly. authorized. reproduced facsimile signatures of said Mayor and said City Clerk, and this Bond to be dated the first day of March, 1983. 502 ATTEST: (Facsimile Signature) 'City -Clerk CITY OF PADUCAH, KENTUCKY By (Facsimile Signature) Mayor Manual Signature of Mayor or City Clerk (Facsimile Seal of City) (FORM OF COUPON) COUPON NO. $ Unless the .Bond to .which this coupon appertains is redeemable and accord- ingly shall have been theretofore called for .prior redemption and payment of the redemption price shall have been duly made or provided for. On the first day of , 19., The City of Paducah, Kentucky, will pay to the bearer the amount shown hereon out of its."Paducah Water Works Revenue Bond and Interest Redemption Fund", at The Paducah Bank & Trust Co., Paducah, Kentucky., as, provided in and being interest - then due on its $5,000 Water Works Revenue Bond, Series 1983, dated March 1, 1983, numbered CITY OF.PADUCAH, KENTUCKY By ATTEST: City Clerk Mayor SECTION 8. COMPLIANCE WITH PARITY REQUIREMENTS OF PRIOR BOND ORDI- NANCE. In accordance with the requirements of Section 18 of the Prior Bond Ordi- nance, it is hereby certified, covenanted, and declared: (a) That the Construction Project shall upon completion constitute a part of the System, and the revenues of the System, including the new facilities resulting from the completion of the Construction Project, are pledged as security for the Current Bonds, as well as for the Prior Bonds, ranking on a parity. (b) That prior to the issuance of the Current Bonds, there will have been procured and filed with the City Clerk a statement, based on necessary investigation, by an independent, state licensed Certified Public Accountant, to the effect that the net revenues (defined in Subsection (1) below) of the System for twelve (22) con- secutive months out of the preceding eighteen (18) months (subject to adjustments permitted under the Prior Bond Ordinance, as specified in subsection (c)(2) below) were equal to at least one and thirty hundredths (1.30) times the average Net Annual Debt Service Requirements (as defined in Section 1 of the Prior Bond Ordinance and reaffirmed in Section 1 hereof) with respect to the Prior Bonds then outstanding and with respect to the Current Bonds. (c) That the foregoing is subject to the following: (1) For the purpose of the foregoing calculation, the term "net revenues" was defined in the Prior Bond Ordinance, as "gross income and revenues.of the System less operating.expenses, which shall include salaries, wages, cost of maintenance and operation, cost of water purchased, if any, materials and supplies, pumping costs, 503 insurance, and all other items that are normally and regularly so included under recognized accounting practices, exclusive of al- lowances for depreciation". (2) As provided in Section 18 (2) of the Prior Bond Ordinance, the "net revenues" referred to above may be adjusted (as evidenced by a certi- fication of an Independent Consulting Engineer) to reflect: (i) Any revisions in the schedule of rates and charges being imposed at the time of the issuance of such proposed parity bonds; plus (ii) Any increase in such net revenues projected by reason of the revenues anticipated to.be derived from the then proposed construction project, the cost of which project is to be paid (in whole or in part) through the issuance of the then proposed parity bonds; (3) An appropriate Certification will be duly filed with the City Clerk prior to'the"issuance of the Current Bonds; certifying that contracts, secured by 100% performance bonds, for -the Construction Project, have been entered into or will have been entered into prior to the issuance of the Current Bonds. It is hereby certified and declared that the City has on deposit in the Debt Service Reserve for Notes (funded from a portion of the proceeds of the out- standing Notes), invested in collateralized Certificates of Deposit of the Payee Bank, a principal amount ($1,808,040), which, together with the contractual interest that will have accrued thereon as of July 1, 1984 (including $253,125.60 interest in the period from July 1, 1983 to July 1, 1984), will be more than the principal maturity ($2,315,000) falling due on the Current Bonds on that date, which Certi- ficates of Deposit and other amounts will, simultaneously with the delivery of the Current Bonds, be transferred to the Sinking Fund Reserve (which will then and prior to July 1, 1983, constitute less than the Eligible 15% of Outstanding Bonds), and, together with other available funds,, will, after transfer to the Sinking Fund in July, 1983 (as set out in the ensuing Section 9 A(3), be available (and adequate) for the payment of the principal of and interest falling due on the Current Bonds on July 1, 1984. In calculating debt service coverage for the purpose of establishing that the Current Bonds rank on -a, parity with the Prior Bonds in compliance with parity requirements of Section 18 of the Prior Bond Ordinance, the Engineers and the Ac- countants, based on the opinion of Bond Counsel, .have excluded the requirement of such principal maturity of July 1, 1984, from consideration, on the assumption that such maturity has already been effectively provided for or defeased. Accordingly, based on the foregoing compliance with the requirements of Section 18 of the Prior Bond Ordinance, it is hereby found and declared that the Current Bonds shall rank and be payable on a parity with the outstanding Prior Bonds from the gross income and revenues of the System. SECTION 9. PROVISIONS OF PRIOR BOND ORDINANCE INCORPORATED HEREIN; ADJUSTMENTS IN REQUIRED DEPOSITS. All proceedings preliminary to and in connection with the issuance of the Prior Bonds, whereby provision was made for the receipt, custody, and application of the proceeds of the Prior -Bonds; for the operation of said System on a revenue- producing basis; for the segregation, allocation, and custody of the revenues derived from the operation of the System; and for the enforcement and payment of the Prior Bonds; and all other covenants for the benefit of bond -holders set out in the Prior Bond Ordinance, except as amended in the succeeding paragraph of this Section 9, are hereby ratified, confirmed, andreadopted, and shall continue in -force and inure to the security and benefit of the Current Bonds, as well as of the Prior Bonds, the same as if such provisions and proceedings were set out herein in full; provided that the amount of income and revenues of the System to be transferred from the Revenue Fund and paid into the Sinking Fund during each of the respective fiscal years, so long as any of the Prior Bonds and/or Current Bonds are outstanding, shall be suf- ficient to pay when due, the interest upon and principal of all of the Prior Bonds and all of the Current Bonds, to provide for the operation, maintenance, and 504 depreciation of the System, and to increase the reserves of certain funds, as hereinafter specified. In accordance with the requirements of Section 13B of the Prior Bond Ordinance, it is hereby .recogni.zed that, the City is obligated, upon the issuance of the Current Bonds, ranking on a parity with the Prior Bonds, to provide for addition- al payments into the Sinking Fund to provide for the additional principal, interest, and reserve requirements. It is further hereby recognized that in and by such Section of the Prior Bond Ordinance, provision was included for the accumulation in the Reserve Fund within the Sinking Fund, of a reserve in an amount equal to not less than the maximum Net Annual Debt .Service Requirements (as defined in the Prior Bond Ordinance and repeated in Section 1 hereof) required in any ensuing year for princi- pal and interest requirements with respect to the, Prior Bonds (the "Required Re- serve"). It was further provided in the aforementioned Section and is hereby reaf- firmed that as and when .additional parity bonds are issued, provision shall be made for increasing the Required Reserve of the Sinking Fund Reserve to an aggregate amount equal to. the maximum Net.Annual Debt Service Requirements thereafter becoming due with respect to all Outstanding Bonds, including the Prior Bonds, the Current Bonds, and any additional parity bonds, in any twelve-month period thereafter, which Sinking Fund.Reserve shall be similarly maintained and restored when necessary. A. Deposits into Sinking Fund .& Sinking. Fund Reserve. Accordingly, based on the additional principal and interest requirements of the Current Bonds, itis hereby determined that the amounts to be so set aside into the Sinking Fund and into the Sinking Fund Reserve maintained at the Prior Deposi- tory, on or before the. 15th day of each month, shall be not less than amounts con- stituting the total of the following: (1) A sum equal. to one-sixth (1/6) of.the next succeeding interest installment to become due on all of the outstanding Prior Bonds, Current Bonds, and any additional parity bonds, except that for and in the period from March 1, 1983, to January 1, 1984, but subject to a credit for accrued interest collected on the Current Bonds and deposited in the Sinking Fund, the amounts to be so deposited in -each month, retroactively to March 1, 1983, .in addition to the requirements of the Prior Bonds, shall be an amount equal to one-tenth (1/10) of the ten months' interest becoming due on the Current Bonds on January 1, 1984; (2) A sum equal to one -twelfth (1/12) of the principal amount of any Prior Bonds, Current Bonds, and any additional parity bonds, maturing on the next succeeding July first; (3) Into the Sinking Fund Reserve, an amount equal to 1/120 of the additional amount necessary to accumulate the Required Reserve, (apart from the transfers referred to in (a) and (b) below of this Section 9 A(3)), in order to assure accumulation of the full amount of the Required Reserve within a period of ten years from the date of issuance of the Current Bonds; provided that: (a) simultaneously with the delivery of the Current Bonds, there shall be transferred into the Sinking Fund Reserve the amount currently on deposit (in cash and Investments) in the Debt Service Reserve for Notes as set out in the preceding Section 8(c),hereof, consisting of $1.,808,040 principal plus accrued interest thereon (including $253,125.60 interest to be earned for the period from July 1, 1983 through July 1, 1984), which amount (after transfer to the .Sinking Fund in July, 1983, as set out below), together - with other available revenues, will be adequate to meet the July 1, 1984 principal maturity ($2,315,000) plus the interest requirements falling due on the Current Bonds on July 1, 1984; and (b) in the month of July, 1983, such investments shall be transferred from the Sinking Fund Reserve and held,,together with the investment income thereon) in the Sinking Fund earmarked for the purposes of the Sinking Fund. In compliance with the requirements of the Prior Bond Ordinance, the City covenants that monthly transfers shall continue until there shall have been ac- cumulated in the Sinking Fund an amount sufficient -to pay the interest on.and princi- pal of the Prior Bonds and Current Bonds as same shall become due during the ensuing one-year period, and to accumulate in.the Sinking Fund Reserve an amount equal to the Required Reserve, i.e.,. the maximum Net Annual Debt Service Requirements thereafter become due with respect to said Prior Bonds and Current Bonds. Whenever the amount 505 of the Required Reserve shall have been accumulated and is being maintained in the Sinking Fund Reserve, the monthly transfers into the Sinking Fund shall be reduced to the total of the following: (a) A sum equal to one-sixth (1/6) of the next succeeding interest installment to become due on all of the outstanding Prior Bonds, Current Bonds, and any additional parity bonds; plus (b) A sum equal to one -twelfth (1/12) of the principal amount of any Prior Bonds, Current Bonds, and any additional parity bonds, maturing on the next succeeding July first, but subject to resumption of the additional amounts required by Section 9(A)(3) above, if, to the extent of, and so long as necessary to restore the Required Re- serve. As and when additional parity bonds are issued, provision shall be made for additional payments into the Sinking Fund so as to pay the interest on and the principal of such additional parity bonds as and when the same become due, and for increasing the Sinking Fund Reserve by similar monthly amounts to an aggregate amount equal to the adjusted Required Reserve, viz., the maximum Net Annual Debt Service Requirements with respect to all Outstanding Bonds, including the Prior Bonds, the Current Bonds, and any additional parity bonds, in any period of twelve (12) months ending on July 1 of any year, which Sinking Fund Reserve shall be similarly main- tained and restored when necessary. Whenever the amount in the Sinking Fund Reserve is equal to or greater than the amount required to prepay or redeem all outstanding Bonds, including the Prior Bonds, the Current Bonds, and any parity bonds, such Sinking Fund Reserve shall be used to retire all of such outstanding Bonds in the following manner: (a) through call for redemption on the next permissible redemption date; (b) to purchase such outstanding Bonds in the open market at not exceeding the next applicable redemption price; or (c) to purchase such Bonds through advertisement for and receipt of tenders of Bonds, at not exceeding the next applicable redemption price, as may be determined by the Governing Body of the City; provided further, however, that said Sinking Fund Reserve shall not be used to prepay bonds in advance of maturity unless sufficient amounts are on deposit in the Sinking Fund and the Sinking Fund Reserve to prepay and retire all of such outstanding Bonds. B. Current Bond Payment Account. On or before the 20th days of June and December in each year, the Prior Depository shall transfer from the Sinking Fund and from the Sinking Fund Reserve (if necessary) a sum equal to the interest or a sum equal to the principal and interest, as the case may be, becoming due and payable on the Current Bonds at the Payee Bank, The Paducah Bank & Trust Co., Paducah, Kentucky, on the ensuing July 1 or January 1, and deposit same in an account at the Payee Bank entitled, "City of Paducah Water Works Bond and Interest Payment Accounti4, hereby created, to be maintained at the Payee Bank and held as a trust fund to be drawn upon to pay maturing coupons, or maturing Bonds and coupons, as the case may be; of the Current Bonds, upon presen- tation thereof on or after maturity and upon surrender of maturing Bonds and/or Coupons. C. Deposits into Depreciation Fund, In Section 13C of the Prior Bond Ordinance, a fund was created which is known as the "Paducah Water Works System Depreciation Fund" (the "Depreciation Fund"), which is required to be deposited in the Prior Depository, and into which Fund there was required to be deposited in each -month, an amount equal to ten percent (10%) of the balance of the income and revenues in the Revenue Fund, which deposits were to continue until there shall have been accumulated and is being maintained in the Depreciation Fund the sum of at least $250,000, which amount shall continue to be maintained, and when necessary, restored to said amount. It was further provided in said Section 13C that as and when additional parity bonds are issued, provision shall be made for additional payments into the Depreciation Fund, until there shall have been accumulated in said Fund in approximately equal monthly installments over a S06 period of 120 months, an additional amount equal to four percent (4%) of the Current Bonds and any additional outstanding parity bonds. In accordance therewith, it is hereby determined that 4% of the Current Bonds authorized herein is the sum of $657,200, which, when added to the sum of $250,000, currently required to be ac- cumulated in the Depreciation Fund, equals the total amount of $907,200. Accordingly, it is determined that the additional amount to be deposited in the Depreciation Fund in equal monthly installments over a period of 120 months, from the funds remaining after making the deposits required to be made by Section 9A above, shall be in an amount sufficient to accumulate such total amount of $907,200,. or (ii) an amount equal to ten percent (10%) of the balance of the income and revenues in the Revenue Fund, whichever is greater; provided further that, in accordance with the Prior Bond Ordinance, as hereby adjusted, based upon the recommendation of the Independent Consulting Engineers, if and whenever the amount accumulated in the Depreciation Fund shall equal either (a) an amount equivalent to 10% of the total amount of bonds outstanding against and payable from the revenues of the System; or (b) the sum of $907,200, whichever is greater, deposits into the Depreciation Fund may, -thereafter, at the option of the Governing Body of the City, be.discontinued; provided, further however, that if at the time of the issuance of any additional parity bonds, the Independent Consulting Engineers then employed by the City shall recommend in writing to the Governing Body, that (1) no further amounts need be accumulated in such Depreciation Fund, such deposits may be discontinued, subject to resumption whenever necessary to restore such amount, or that (2) a larger amount shall be accumulated in the Depreciation Fund than the amount specified in either (a) or (b) above, then such deposits shall continue until such larger amount has been so accumulated. All other provisions contained in the Prior. Bond Ordinance with reference to the application of the proceeds of the Depreciation Fund, the deposit,security, and investment thereof, and all other related provisions, are hereby readopted, ratified, and confirmed, except to the extent amended herein. D. Deposits into Operation and Maintenance Fund. It is further recognized that in and by Section 13D of the Prior Bond Ordinance a fund was created which is known as the "Paducah Water Works System Operation and Maintenance Fund's (the t4Operation and Maintenance Fund"), into which there was required to -be deposited in each month, after the transfers of the amounts required to be transferred by Sections 9A and 9B above, such amounts as are required to pay, as they accrue, the proper and necessary costs of operating, maintaining, and insuring the System, as set out in the "Current Expenses" contained in the Annual Budget; and all of the provisions of said Section 13D of the Prior Bond Ordinance are hereby readopted, ratified, and confirmed. E. Surplus Funds. It is hereby further recognized that it was provided in Section 13E of the Prior Bond Ordinance that if, at the end of any fiscal year, after making the pay- ments required by the foregoing, there shall remain a balance in said Revenue Fund in excess of the amount required to be transferred during the ensuing year, such balance within sixty (60) days after the end of such fiscal year, may, at the direction of the Governing Body of the City, be used as follows, in the order specified: (1) To retire or redeem outstanding Prior Bonds and/or_Current Bonds in inverse order of maturities, to purchase Bonds in -the open market, or to purchase Bonds through advertisement for and receipt of tenders of Bonds, at not exceeding the next applicable call -price, -as may be determined by the governing body of the City; (2) To transfer additional amounts to the Sinking Fund Reserve; (3) To transfer additional amounts to the Depreciation Fund; (4) To transfer additional amounts to the Operation and Maintenance Fund; (5) To pay principal and interest requirements of any outstanding junior and subordinate obligations against the System. 507 (6) Provided further that after the .following shall have been accumulated and are being maintained: (a) the Required Reserve (Sinking Fund Reserve); (b) the amount required to be accumulated in the Depreciation Fund, as specified in Section 13(1) and (2) of the Prior Bond Ordinance, and as reaffirmed in Section 9B above.- (c) bove;(c) an amount equal to one month's average requirements of the Operation and Maintenance Fund; and (d) an amount in the Sinking Fund (exclusive of the Required Reserve) equal to the Net Annual Debt Service Reserve Requirements for the ensuing year, any surplus in the Revenue Fund then remaining, may, at the direction of the Govern- ing Body, be transferred and used for any lawful purpose of the City. SECTION 10. PROVISION -PERMITTING ADDITIONAL PARITY BONDS. The Current Bonds shall not be entitled to priority one over the other in the application of the income and revenues of the System, regardless of the time or times of their. issuance, it being the intention that there shall be no priority among the Current Bonds, regardless of the fact that they may be actually issued and delivered at different times, and provided further that the lien and security of and for any bonds or obligations- hereafter issued that are payable from the income and revenues of the System shall, "except as set out herein, be -subject to the priority of the Prior Bonds and the Current Bonds as may from time to time be outstanding; provided the City has in said Prior Bond Ordinance reserved the right and privilege, and does hereby -reserve the right and privilege, of issuing additional Bonds from time to time payable from the income and revenues of.the, System ranking on a parity with the Prior Bonds and with the Current Bonds, but only under the conditions specified in Section 18 of the Prior Bond Ordinance, which conditions are hereinafter repeated, taking into account the issuance of the Current Bonds, as follows: The City reserves the right to add new water works facilities, and/or related auxiliary facilities, and/or to finance future extension, additions, and/or improvements to the System by the issuance of one or more additional series of bonds to be secured by.a parity lien on and ratably payable from, the revenues of the System, provided in each instance that: (a) The facility or facilities to be constructed from the proceeds of the additional parity bonds is or are made a part of the System and its or their revenues are pledged as additional security for the additional parity bonds and the outstanding Prior Bonds and Current Bonds. (b) There shall have been procured and filed with the City Clerk a statement by a Certified Public Accountant, as defined herein, reciting the opinion based upon necessary investigation that the net revenues of the System for 12 consecutive months of the preceding 18 months (with adjustments as hereinafter provided) were equal to at least one and thirty hundredths (1.30) times the average Net Annual Debt Service Requirements (as defined in Section 1 of the Prior Bond Ordinance and reaffirmed in Section 1 hereof) of the Prior Bonds, the Current Bonds, and any additional parity bonds including the bonds then proposed to be issued. "Net revenues" as herein used are defined as gross income and revenues less operating expenses, which shall include salaries, wages, cost of main- tenance and operation, cost of water purchased, if any, materials and supplies, pumping costs, insurance; and all other items that are normally and regularly so included under recognized accounting practices, exclusive of allowances for depreciation. "Gross income and revenues" shall include investment income, connection fees, disconnection fees, and all other items of income which have been established as "reasonably anticipated annual income of the System", based upon a certification -of Independent Consulting Engineers and/or Certified Public Accountants, as defined herein. "Operating expenses" shall include only those items of costs of maintenance and operation which are "reasonably anticipated annual operation and maintenance expense of the System", and shall exclude any unusual items of operation and maintenance expense which are of a generally non-recurring nature, according to the certification of Independent Consulting Engineers and/or of Certified Public Accountants, as defined herein. 508 Such "net revenues" may be adjusted for the purpose of the foregoing computations to reflect (i) any revisions in the schedule of rates or charges being imposed at the time of the issuance of any such additional parity bonds, and also to reflect (ii) any increase in such net revenues projected by reason of the revenues anticipated to be derived from the extensions, additions, and/or improvements to the System or any separately acquired (or to be acquired) water works system or facilities being fi- nanced (in whole or in part) by such additional parity bonds; provided such latter adjustment shall be made only if contracts (secured by 100% per- formance bond) for the immediate acquisition and/or construction of such extensions, additions, and/or improvements or contracts for the acquisition of an existing water works system or existing water works facilities have been or will have been entered into prior to the 4ssuance of such ad- ditional parity bonds. All of -such adjustments shall be based upon the written certification of an Independent Consulting Engineer, as defined herein. (c) The interest payment dates for all such additional parity bonds shall be semi-annually on January I and July 1 of each year, and the principal maturities thereof shall" be on July 1 of the year in which any such princi- pal is scheduled to become due. (d) The City hereby readopts, ratifies, and confirms the provisions of Section 18(3) of the Prior.Bond Ordinance,.in which the City reserved the right to issue parity bonds to refund or refinance outstanding bonds, provided such right shall henceforth apply to the refunding or refinancing of any part or all of the Prior Bonds, and of the Current Bonds. (e) The City readopts, ratifies, and confirms the provisions of Section 18(4) .of.the Prior Bond Ordinance, in which the City (i) reserved the right to combine and consolidate the Water Works System of the City with the Sewer System of the City into a single combined and consolidated revenue- producing project or system (the "Consolidated System"),.(ii) to issue parity bonds payable from the revenues of the Consolidated System to refund or refinance any of the bonds outstanding against the sewer system of the City, and thereafter, (iii) to issue parity bonds to finance additional water and/or sewer facilities to the Consolidated System. (f) The City hereby.readopts, ratifies, and confirms the provisions of Section 18(5) of the Prior Bond Ordinance, entitled, "Priority of Lien, Permissible Disposition of Surplus or Obsolete Facilities; Conditions". SECTION 11. SALE OF BONDS. The Current Bonds shall be sold at public sale at.a regular, adjourned regular, or special, called meeting of the Governing Body, after public advertisement as required by law, informing prospective bidders that they may obtain from the City Clerk or from the Fiscal Agent, a copy of the Official Terms and Conditions of Sale of Bonds, setting out the following specific terms and.conditions; A. Bids must be made on forms, which, together with an Official Statement, may be obtained at the office of the City Clerk or from the Fiscal Agent, J.J.B. Hilliard, W. L. Lyons, Inc., 545 South Third Street, Louisville, Kentucky 40202. Bids must be enclosed in sealed envelopes marked "Proposal for City of Paducah Water Works Revenue Bonds, Series 1983," and bids must be -received by the City Clerk prior to the date and hour stated in the Notice of Bond Sale. B. Bids will be considered only for the entire $16,430,000 of Bonds; at a minimum price of $16,101,400 (98% of par), plus accrued interest from the date of the Bonds (March 1, 1983) to the date of delivery. C. Each proposal shall be accompanied by a good faith check in the amount of $164,300, which shall be represented by a certified check or bank cashier's check in that amount, payable to the order of the City of Paducah, Kentucky. (If the amount of said check is to be credited against the purchase price on the date of delivery, said check must be in Federal funds). D. Bidders must state an interest coupon rate or rates in a multiple of 1/8, 1/10', or 1/20 of 1%, and there is 'no stated maximum interest rate. E. No more than 17 different interest rates may be specified, provided repetition of a rate shall not be considered to be a different rate.- F-. There shall be no maximum differential between the highest and lowest interest coupon rates stipulated in any bid. 509 G. All Bonds of the same maturity shall bear the same and a single interest coupon rate from the date thereof to maturi- ty, and interest becoming due on.any interest payment date may not be represented by more than one coupon on any Bond. H. Coupon rates must be on an ascending scale, in that the coupon rate for Bonds of any maturity may not be less than the coupon rate stipulated for any preceding maturity. I. The right to reject bids for any reason deemed advisable by the Board of Commissioners, and the right to waive any possible informalities or irregularities in any bid which, in the judgment of the Board of Commissioners, with the advice of the Fiscal Agent, shall be minor or immaterial, shall be expressly_reserved. J. The -purchaser must accept delivery of the Bonds and make payment for same, in -Federal funds, at the accepted purchase price, when tendered for delivery in Louisville, Kentucky, at no cost to the purchaser other than any charge made by any closing Bank, if any, for the cost of the closing, or else- where, at the purchaser's expense. K. Upon wrongful refusal of said purchaser to take delivery of and pay for the Bonds when tendered for delivery, the amount of the good faith check shall be forfeited by such purchaser, and such amount shall be -deemed liquidated damages for such default, provided, however, if said Bonds are not ready_ for delivery and payment within forty-five (45) days from the date of sale herein provided for, said purchaser shall be relieved of any liability to accept the Bonds hereunder, whereupon, at the written request of such purchaser, his good faith check will be returned, without interest. L. At the time of delivery of the Bonds the purchaser may, at his option, either_ pay the full purchase price in Federal funds, and have his good faith check returned, or, if the good faith check -is in Federal funds, deduct the good faith check from the purchase price and pay the net balance of such purchase price. It shall not be necessary that the published "Notice of Bond Sale" set forth any or all of the special conditions stated herein, but the substance thereof shall be made apparent to prospective bidders in one or more of the appropriate documents, viz., the "Notice of Bond Sale,." the "Official Terms and Conditions of Sale of Bonds" and/or in the "Bid Form." A suggested form of "Notice of Bond Sale," a suggested form of "Official Terms and Conditions of Sale of Bonds", and a suggested form of, "Bid Form," having been prepared in advance, in accordance with the instructions of the Fiscal Agent, by Rubin & Hays, Municipal Bond Attorneys, Louisville, Kentucky, and the same having been found to conform to -the above conditions, the same are hereby approved. The Notice of Bond Sale shall be signed by the City Clerk, and may be used for the purpose. of publishing notice of the sale of the Bonds. Copies of said documents shall be furnished to a list of known interested bidders and to any interested parties who may request same. SECTION 12., ACCEPTANCE OF BID FOR PURCHASE OF BONDS. Upon the date and at the hour set forth for the opening and consideration of purchase. bids, as .provided in the instruments hereinabove approved, the sealed bids received by the City .Clerk shall be publicly -opened and publicly read by the presiding officer. If. there shall be, one or more bids that conform in -all respects to the prescribed terms and conditions, the same shall be compared and the Board of Commissioners agrees that if it accepts any bid, it will, on the same day -that such bids are received, accept the best of such bids, as measured in terms. of, the lowest interest cost to the City, .as calculated in the manner prescribed in the "Official Terms and Conditions of Sale of Bonds", If upon the basis of the foregoing, the Board of Commissioners shall accept a purchase bid for.the Current Bonds, the Board of Commissioners shall adopt an Order to that effect, supply proper evidence of such acceptance to the bidder submitting the accepted purchase bid, and thereupon arrangements shall be made .for the Bonds. to be printed in accordance therewith. 510 Upon the acceptance of a bid for the purchase of the Current Bonds, the Board of Commissioners will cause to be published, a Notice of Redemption of Notes, calling the Notes for redemption as soon as reasonably possible after the scheduled delivery of the Current Bonds, upon 30 days' notice in advance of such redemption date. SECTION .13.- -TRANSFERS AND DEPOSITS SIMULTANEOUSLY WITH DELIVERY OF CURRENT BONDS. Simultaneously with the delivery of the Current Bonds, the City covenants that it will transfer and deposit. (a) into the Sinking Fund Reserve referred to in Section 9A above, all sums on deposit (in cash and/or Investments) in the Debt Service Reserve for Notes, created in the Bond and Note Ordinance, subject to trans- fer of such Investments from the Sinking Fund Reserve into the Sinking Fund in July, 1983, as set out in said Sections 8(c), andr 9 A(3) hereof, and. (b) into the Escrow Fund hereinafter created, all sums on deposit (in cash and/or Investments) in the Note and Coupon Redemption Fund (but not the Debt Service Reserve for Notes) created in the Bond and Note Ordinance. SECTION 14. DISPOSITION_.OF PROCEEDS OF BONDS; ESCROW FUND; INVESTMENT PROVISIONS. Upon the sale and delivery of the Current Bonds and upon receipt by the City of the purchase price thereof, as required by Section 13B of the Bond and Note Ordinance, it is hereby acknowledged and ordered that: (a) Escrow Fund. There is hereby created and established the "City of Paducah Water Works Revenue Bond Escrow Fund for Notes" (the "Escrow Fund"), at The Paducah' Bank & Trust Co., Paducah, Kentucky (the "Escrow Bank"), into which Escrow Fund there shall be deposited from, the first proceeds of the Current Bonds, -an amount sufficient (when added to the deposit required by Section 13 hereof (amounts on deposit in the Note and Coupon Redemption Fund) to be made into such Escrow Fund), when invested, to pay the principal of the Notes ($15,860,000) called for. redemption, plus the interest falling due on the Notes on the scheduled date of redemption of the Notes (the "Notes Redemption Date"), and the applicable $79,300 redemption premium (1/2% of the face amount of the Notes); provided, however, that simultaneously with the delivery of the Current Bonds, the City shall obtain a commitment or commitments for the investment of such Escrowed Funds in Investments, as defined in Section 1 above (such Invest- ments, and any uninvested cash in the Escrow Fund being hereinafter collectively referred to as the "Escrow Investments"). Escrowed Funds so invested shall be scheduled to mature on or prior to the Notes Redemption Date, in such amounts as are necessary to pay the principal, accrued interest, and redemption premium on the Notes on the Notes Redemption Date, plus the fee, if any, of the Escrow Bank. The Mayor and/or the City Clerk and City Treasurer are hereby authorized to act upon behalf of the City in obtaining such a commitment or commitments directly or through the designee of either of them. Such Escrowed Funds (or Escrow Investments, including interest income earned thereon) shall be used only as provided in Section 14(e) hereof. (b) Deposit of Collected Accrued Interest in Current Sinking Fund. There shall next be deposited into the Current Sinking Fund an amount equal to the accrued interest collected from the purchaser of the Bonds for the period from the date of the Bonds (March 1, 1983) to the date of delivery. (c) Payment of Fees and Expenses. There shall next be paid from the proceeds of the Bonds all expenses incident to the issuance, sale, and delivery of the Bonds, including the fee of the Fiscal Agent, J.J.B. Hilliard, W. L. Lyons, Inc., 54S South Third Street, Louisville, Kentucky 40202, and the fee of W. David Denton, Corporation Counsel for the City, according to the terms of the respective Contracts of said Fiscal Agent and said Counsel for the City, plus the fee of the rating agency and such other expenses as may be approved by the Governing Body. 511 (d) Balance to be Deposited in Construction Account. Any Bond proceeds then remaining shall be deposited into the Construction Account created in Section 13B of the Bond and Note Ordinance. (e) Escrow Fund Earmarked to Pay Notes. Amounts on deposit in the Escrow Fund shall be earmarked and held for credit to the account of the Note and Coupon Redemption Fund created in the Bond and Note Ordinance. The amounts so deposited in. the Escrow Fund and all of the Escrow Investments therein shall be held in the Escrow Fund, provided the principal and interest of the Escrow Investments must be determined to be sufficient and to be available in ample time to redeem, on the Notes Redemption Date (after 30 days' published notice), in advance of Maturity, the principal amount ($15,560,000). of the Notes, to pay interest on the Notes falling due on the Notes Redemption Date, and to pay the applicable $79,300 (1/2%) r-edemption premium. (f) The Construction Account. The Construction Account, created in Section 13B of the, Bond ,and Note Ordinance, into which the spendable proceeds of the Notes were deposited, shall continue to be invested and expended in the manner prescribed in said Section 13B, until the completion of the Current Construction Project, as certified by the Engi- neers,.. -after which, any balance then remaining on deposit in the Construction Account shall, subject .to any and all applicable legal provisions and applicable arbitrage regulations necessary to assure the exemption of interest on the Current Bonds from Federal income taxation, upon orders of the -Governing Body, be (1) Transferred to the Sinking Fund Reserve in the Sinking Fund, or (2) be transferred to the Depreciation Reserve, but shall be used for no other purpose. for n SECTION 15. INVESTMENTS; LIMITATION ON INVESTMENT OF FUNDS. The City covenants and certifies, in compliance with Federal arbitrage regulations, as follows: (a) The City certifies, on the basis of known facts and circumstances in existence on the date of adoption of this Bond and Note Ordinance, that the proceeds of the Notes have not been, and it is not expected that the proceeds of the Current Bonds, the Notes, or the revenues of the System will be, used in a manner which would cause such Bonds or Notes to be arbitrage bonds. The City covenants to the pur- chasers and/or holders of the Current Bonds and to the holders of the Notes that (1) the City will make no use of the proceeds of said Bonds or Notes, or the revenues of the System, which, if such use had been reasonably expected on the date of issue of such Bonds or Notes, would have caused such Bonds or Notes to be "arbitrage bonds", and (2) that the City will comply with (i) all of the requirements of Section 103(c) of the Internal Revenue Code, and (ii) all of the requirements of applicable Income Tax Regulations thereunder, to whatever extent is necessary to assure that neither the Current Bonds nor the Notes shall not be treated as arbitrage bonds. (b) -The City certifies, based on information furnished by the Engineers, on known facts and reasonable expectations at this time, as follows: (1) that the -City has entered into contracts with the Engineers in connection with the construction of the Project financed by the Notes and the Current Bonds, and the fees to be paid to such Engineers will exceed the lesser of either (i) the sum of $100,000, or (ii) an amount equal to 2=1/2% of the total cost of the Project; (2) that work on the Project has commenced; (3) that the construction of the Project has proceeded and will proceed hereafter to completion with due diligence on the part of the City; (4) that at least 95% of the spendable proceeds of the Current Bonds will be expended on the costs of the Project within less than three years from the date of issuance of the Notes or of the Bonds; (5) that it is anticipated that amounts on deposit in the Sinking Fund will be used within thirteen. C13) months from the date of deposit for the S12 payment of debt service on the Outstanding Bonds and that the Sinking Fund will annually be depleted through such application, for current debt service requirements of the Bonds, except for an amount- equal to not more than the greater of (a) one -twelfth (1/12) of debt service requirements of the Current Bonds for the then ensuing year, or (b) one year's earnings on" the Sinking,.Fund, (6)- that -it is not anticipated that amounts will be accumulated in any reserve funds) anticipated to be used.for debt service on the Outstanding Bonds or Notes in excess of the Eligible 150 of Outstanding Bonds; as defined herein. (7) that itis not reasonably anticipated that amounts accumulated in the -Depreciation Fund will be used for payment of debt service - on any Outstanding Bonds,. even though such Fund will be so available if necessary to prevent a default in the payment of principal and interest on such Bonds; and (8) that the City has not been advised of any listing or contemplated listing by the Internal Revenue Service determining that such certification with respect to its obligations may not be relied on; Prior to or at the time of delivery of th Current Bonds, the Mayor, the City Clerk, and the City Treasurer, who are jointly and severally charged with the responsibility for the issuance of the Current Bonds, are jointly and severally authorized to execute the appropriate certification with reference to the matters referred to above, setting out all known and contemplated facts (apart from legal conclusions) concerning such anticipated construction, expenditures, and investments, including the execution of necessary and/or desirable certifications of the type contemplated by the "Proposed Arbitrage Regulations", as amended, in order to assure that interest on the Current Bonds and on the Notes will be exempt from all Federal income taxes and that neither such Bonds nor Notes will be treated as "arbitrage bonds". SECTION 16. BONDS MAY BE SOLD AT A LATER DATE: DATE, AMOUNT AND OTHER TERMS OF CURRENT BONDS MAYBE REVISED BEFORE ISSUANCE. The Mayor of the City is hereby authorized to make a determination, with the advice of the Fiscal Agent and with the approval of or subject to the later approval of the Governing Body of the City, in order to take advantage of the market conditions and other pertinent factors, either (a) to'proceed with an immediate sale of the -Current Bonds, or (b) to advertise the Current Bonds for sale at a later date, with appropriate revisions in the maturity date, redemption dates, and other details, with the further provision. that any such sale pursuant to any revised provisions would be subject to the approval of such Governing Body at the time of acceptance of the successful bid for the purchase of the Bonds. -SECTION 17 NOTES WILL BE FULLY PROVIDED FOR THROUGH ESCROW OF THE PROCEEDS OF THE CURRENT BONDS.. Provisions thus having been made for the 'redemption prior to maturity of all of the Notes and interest coupons thereon, it is hereby recognized and acknow- ledged that as of the date ofdelivery of the Current Bonds, provision will have been for the performance of all covenants and agreements of the City incident to the issuance of the Notes, and -that accordingly, and in compliance -with all that has been heretofore provided, the City will -have no further obligations with reference to the Notices, except to assure that the Notes are redeemed and paid on the Notes Re- . demption Date, from the funds so escrowed in accordance with the provisions of such escrow arrangement. SECTION 18. DEFEASANCE OF BONDS. The, -City reserves the right, at any time, to cause the pledge of ,the revenues securing the Prior Bonds, the Current Bonds, and all Parity Bonds, to be defeased and released by paying an amount into an escrow fund sufficient, when invested (or sufficient without such investment, as the case may be) in cash and/or direct or fully guaranteed obligations of the United States Government, to assure the availability in such escrow fund of an adequate amount (a) to call for redemption and to redeem and retire all of such outstanding bonds, both as to principal and as to 513 interest, on the next optional redemption date, including all costs and expenses in connection therewith, and to pay all principal and interest falling due on such outstanding bonds to and on said date, or (b) to pay all principal and interest requirements on such -outstanding bonds as same mature; without redemption in advance of maturity, the determination of whether to defease under (a) or (b) or both to be made by the Governing Body of the City. Such investments shall have such maturities as to assure that there will be sufficient funds for such -purpose. If such de- feasance is to be accomplished pursuant to (a), the City shall take all steps neces- sary to publish notice of the redemption of such outstanding bonds on the next applicable redemption date. Upon the proper amount of such investments being placed in escrow and so secured,. such revenue pledge shallbe automatically fully defeased and released without any further action being necessary. Provided no such de- feasement shall be accomplished through the use of amounts on deposit in the Sinking Fund Reserve or through any other funds if such defeasement would, in the opinion of recognized Bond Counsel, adversely affect the exemption of interest on any of the outstanding bonds from Federal income taxation. SECTION 19. REAFFIRMATION OF COVENANTS OF PRIOR ORDINANCE. In addition to the -covenants heretofore made for the benefit of the holders of the Current Bonds, the City hereby. specifically reaffirms those provisions of the Prior Bond Ordinance included in Sections 17, 21, 22 and 23 thereof, entitled as follows: "SECTION 17. RATES AND CHARGES FOR SERVICES OF THE SYSTEM". "SECTION 21. INSURANCE." "SECTION 22. RECORDS, AUDITS AND REPORTS: MONTHLY REPORTS: ENGINEERING INSPECTION." "SECTION 23. GENERAL COVENANTS." .The City further acknowledges that under Section 17 of the Prior Bond Ordinance,.the City has. covenanted Cl) not to reduce water rates without establishing that the proposed reduction will not reduce the required coverage below the amount of coverage (revenues; as adjusted, equal to at least 1.30 times average "Net Annual Debt Service Requirements", as defined herein) which would be required in order to enable the City to issue additional parity bonds, and (2) .to cause a report to be filed with the Governing Body within four months after the end of each fiscal year by Certified Public Accountants and/or Independent Consulting Engineers, setting forth what was the precise percentage (!'coverages")_of the average Net Annual Debt Service Requirements falling due thereafter for principal of and interest on all of the then outstanding bonds payable from the revenues of the System, produced or provided by the net revenues of the System in that fiscal year, calculated in the manner speci- fied in Section 18 of the Prior Bond Ordinance; and that if and whenever such report so filed shall establish that such coverage of net revenues for such year was less than 115% of the average Net Annual Debt .Service -Requirements thereafter, the City shall increase the rates by an amount sufficient, in -the opinion of such Engineers and/or Accountants, to establish the existence of or immediate projection of, such minimum 115 coverage. Such covenants are hereby specifically readopted and reaffirmed. SECTION 20. SUPERVISION OF WATER WORKS SYSTEM CONTRACTUALLY VESTED IN COMMISSIONERS OF WATER WORKS, Recognition is hereby taken of the fact that pursuant to an Ordinance heretofore enacted, the supervision, management, and conduct of the water works System is vested in a municipal commission, designated as the "Commissioners of Water Works" (the "Commission Ordinance"), which --Commission Ordinance shall constitute a contract between the City and the holders of the Prior Bonds and the Current Bonds, and any additional parity bonds issued pursuant to the Prior Bond Ordinance and this Current Bond Ordinance; and said Commission Ordinance may not be amended or repealed S14 so long as any of the Prior Bonds and the Current Bonds, and/or any parity bonds are outstanding and unpaid (and have not been defeased), without the consent of at least 80% in amount of the holders of all of such outstanding bonds (and/or Notes). SECTION 21. CONTRACTUAL NATURE OF ORDINANCE. The provisions of this Ordinance shall constitute a contract between the City and the holders of the Current Bonds; and after the issuance of any of the Current Bonds, no change, variation, or alteration of any kind, in the provisions of this Ordinance shall be made in any manner, except for the purpose of curing an ambiguity or of curing, correcting, or supplementing any defective or inconsistent provisions contained herein or in any proceeding pertaining hereto, and except as herein provided," until such time as all of the Current Bonds and the interest thereon have been paid in. full; provided, however, that the holders of eighty percent (80%) in principal amount of the Current Bonds at any time outstanding shall have the right to consent to and approve the adoption of resolutions, ordinances, or other pro- ceedings, modifying or amending any of the terms or provisions contained in this Current Bond Ordinance; provided, however, that no such modifications or amendments shall be made which will permit: (a) an extension of the maturity of any of the Bonds, or (b) a reduction in the principal amount of any Bond or the redemption premium or the rate of interest thereon, or (c) the creation of a lien upon or a pledge of revenues of the System ranking prior to or on a parity with the lien or pledge of the Prior Bonds or the Current Bonds, except as expressly authorized herein, or (d) a preference or priority of any Current or Parity Bond or Bonds over any other Current or Parity Bond or Bonds, or (e) a reduction in the percentage of the aggregate principal amount of the Prior Bonds and/or Current Bonds, required to consent to any such modification or amendment, or (f) impair in any way the rights of the holders of the Current Bonds. SECTION 22. PROVISIONS IN CONFLICT REPEALED. All ordinances, resolutions, and orders, or parts thereof, in conflict herewith are, to the extent of such conflict, hereby repealed, and it is hereby specifically ordered and provided that except for the permissible issuance of parity bonds pursuant to Section 10 hereof, any proceedings heretofore taken for the is- suance of other bonds payable or secured in any manner by all or any part of the income and revenues of the System, or any part thereof, and which have not heretofore been issued and delivered, are hereby revoked and rescinded, and none of such other bonds shall be issued and"delivered. SECTION 23. SIGNATURES OF OFFICERS. If any of the officers whose signatures or facsimile signatures appear on the Current Bonds, or coupons, cease to be such officers before delivery of the Bonds, such signatures shall nevertheless be valid for all purposes the same as if said officers had remained in office until delivery, as provided in KRS 58.040 and in KRS 61.390. SECTION 24.' SEVERABILITY CLAUSE. If any section, paragraph, clause, or provision of this Ordinance shall be held invalid, the invalidity of such section, paragraph, clause, or provision shall not affect any of the remaining provisions of this Ordinance. SECTION 25. EFFECTIVE DATE OF ORDINANCE. This Ordinance shall take effect and be in force immediately upon its enactment and upon publication of a"certified summary hereof, as provided by law. Given first reading by the Board of Commissioners on February 1, 1983. Given second reading and enacted by the Board of Commissioners, on February 8, 1983. Recorded by Louise McKinney, City Clerk, on February 8, 1983. Joe Viterisi Mayor Protem CERTIFICATE OF CITY CLERK I, LOUISE McKINNEY, hereby certify that I am the duly qualified and acting City Clerk of the City of Paducah, Kentucky, that the foregoing Ordinance is a true and correct copy of an Ordinance authorizing the issuance of (1) $16,430,000 of City of Paducah Water Works Revenue Bonds, Series 1983, dated March 1, 1983, that said Ordinance was introduced and given its first reading by the Board of Commissioners of said City on February 1, 1983, that it was placed and remained on file .in my office for public inspection in that identical, completed form until February 8, 1983, on which date it was given its second reading and enactment by said Board; and that a certified Notice Pursuant to KRS 83A.090 and Summary of such Ordinance has been ordered to be published as re- quired by law. I. further certify that said meetings were duly held in accordance with all applicable requirements of Kentucky law, including KRS 61.810, 61.815, 61.820, and 61.825, that a.quorum was present at each of said meeting, that said Ordinance has not been modified, amended, revoked, or repealed, and that same is now in full force and effect. IN TESTIMONY WHEREOF, witness my signature as City Clerk and the official Seal of said City this 8th day of February, 1983. Louise McKinney City Clerk (Seal of City) 515