HomeMy WebLinkAbout97-11-5760Alo.
BOND ORDINANCE
CITY OF PADUCAH, KENTUCKY
WATER WORKS REVENUE REFUNDING BONDS,
SERIES 1997
INDEX
Section
1
Definitions.......................................................1
....................... 13
Section
2
Authorization of Bonds .............................................
6
Section 3 Current Bonds to be Issued as Fully Registered Bonds;
Registered Owners ................................................ 6
Section 4 Place of Payment and Manner of Execution ............................. 6
Section 5 Provisions as to Mandatory and Optional Redemption ..................... 8
Section 6 Refinancing in the Public Interest ..................................... 9
Section 7 Mutilated, Lost, Stolen or Destroyed Bonds ............................ 10
Section 8 Authentication of Bonds ........................................... 10
Section 9 Current Bonds Secured by and Payable From First Lien
on Revenues of System ............................................ 10
Section 10 Bond Form......................................................10
Section 11 Sale of Bonds .................................................... 10
Section 12 Acceptance of Bid for Purchase of Bonds; Determination of
Amount of Bonds to be Issued and Sold ............................... 12
Section
13
Determination that Refunding is a Public Purpose
....................... 13
Section
14
Reaffirmation of Special Funds ......................................
13
Section 15 Disposition of Proceeds of Current Bonds; Escrow Fund;
Investment Provisions; Arbitrage Limitations .......................... 14
Section 16 Federal Limitations on Investment of Funds ............................ 15
Section 17 Defeasance of Bonds .............................................. 16
Section 18 Refunded Bonds will be Fully Provided for through Escrow
of the Proceeds of the Current Bonds ................................. 16
Section
19
Existing Funds and Deposits ........................................
17
Section
20
Flow of Funds ...................................................
17
Section
21
Determination by City that Proportions of Revenues
to be Deposited are Correct .........................................
22
Section
22
City Officials to be Bonded .........................................
22
Section
23
Adoption of Budget of Current Expenses; Fiscal Year ....................
23
Section
24
Rates and Charges for Services of the System ...........................
23
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Section 25 Provision Permitting Additional Parity Bonds .......................... 24
Section 26 General Covenants of the City with Regard to the
Operation of the System ........................................... 29
Section 27 Insurance.......................................................30
Section 28 Additional Covenants Respecting the System ........................... 31
Section 29 Commissioners of the Water Works; Existence and
Continuance Contractual with Bondholders ............................ 32
Section 30 Signatures of Officers ............................................. 32
Section 31 Appointment and Duties of Bond Registrar, Transfer Agent
and Payee Bank; Duties of Escrow Bank .............................. 32
Section 32 Supplemental Ordinances not Requiring Consent of Bondowners
orMBIA.......................................................34
Section 33 Supplemental Ordinances Requiring Consent of Bondowners
andMBIA......................................................35
Section 34 Provisions in Conflect Repealed ..................................... 35
Section 35 Severability Clause ............................................... 36
Section 36 Effective Date of Ordinance ........................................ 36
Certificate of City Clerk ............................................ 37
Acceptance by the
as Bond Registrar, Transfer Agent and Payee Bank ...................... 38
Exhibit A - Maturity Schedule A-1
Exhibit B - Bond Form B-1
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ORDINANCE No. 97-11-5760
ORDINANCE OF THE CITY OF PADUCAH, KENTUCKY, AUTHORIZING
AND PROVIDING FOR THE ISSUANCE OF $5,930,000 PRINCIPAL
AMOUNT (WHICH MAYBE INCREASED OR REDUCED BY AS MUCH AS
$590,000) OF CITY OF PADUCAH, KENTUCKY WATER WORKS
REVENUE REFUNDING BONDS, SERIES 1997, FOR THE PURPOSE OF
REFUNDING A PORTION OF THE OUTSTANDING CITY OF PADUCAH
WATER WORKS REVENUE REFUNDING BONDS, SERIES 1991, DATED
APRIL 1, 1991 AND PROVIDING FOR THE PAYMENT OF THE
PRINCIPAL OF AND INTEREST ON SAID SERIES 1997 BONDS;
PROVIDING FOR THE RIGHTS OF THE OWNERS OF SAID SERIES 1997
BONDS AND THE ENFORCEMENT THEREOF; AND PROVIDING FOR
AN ADVERTISED, PUBLIC, COMPETITIVE SALE OF SAID SERIES 1997
BONDS.
WHEREAS, the existing waterworks system of the City of Paducah, Kentucky (the "City")
is a revenue producing public project or system (the "System"), and
WHEREAS, in that connection, the City presently has outstanding and payable from the
revenues of said System:
$9,260,000 principal amount of City of Paducah, Kentucky Water Works Revenue
Refunding Bonds, Series 1991, dated April 1, 1991 (the "Series 1991 Bonds") now
scheduled to mature on July 1 in each of the years 1998 through 2009, and
WHEREAS, the City deems it advisable to authorize the issuance and sale of $5,930,000
(subject to an adjustment of plus or minus $590,000) of City of Paducah, Kentucky Water Works
Revenue Refunding Bonds, Series 1997, to be dated as of the 1 st or 15th day of the month in which
the bonds are sold, for the purpose of providing funds for refunding a portion of the Series 1991
Bonds maturing in the years 2003 through 2009 inclusive;
BE IT ORDAINED BY THE CITY OF PADUCAH, KENTUCKY, AS FOLLOWS:
Section 1. Definitions and Recitals. As used in this Ordinance, unless the context requires
otherwise:
"Act" refers to Sections 82.082, 58.010 through 58.140 and 58.440 of the Kentucky Revised
Statutes, within the meaning of the decision of the Supreme Court of Kentucky in the case of
Hemlepp v. Aronberg, Ky., 369 S.W. 2d 121.
"Bondholder" or 'Bondowner" means and contemplates unless the context otherwise
indicates, the registered owner of the Bonds at the time issued and outstanding hereunder, or any one
of them.
"Bond Counsel" refers to a nationally recognized firm of Bond Counsel, including the firm
of Rubin & Hays, Municipal Bond Attorneys, First Trust Centre, 200 South Fifth Street, Louisville,
Kentucky, which firm has prepared the legal proceedings for the issuance of the Current Bonds, has
furnished all ofthe 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 opinion with regard to the legality of the Current Bonds and the tax exemption of
the interest thereon.
"Bonds" refers to the Current Bonds, the Prior Bonds and any Parity Bonds issued in the
future.
"1991 Bond Ordinance" refers to the Ordinance enacted by the Governing Body of the City,
authorizing the Series 1991 Bonds.
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"Bond Register" means the books and records maintained by the Bond Registrar as to the
registered ownership and transfers of ownership of the Bonds from time to time.
"Bond Registrar", "Registrar", "Transfer Agent" or "Payee Bank" refers to the bank which
shall constitute the Bond Registrar, Transfer Agent and Payee Bank with respect to the Bonds, which
Bank shall have the duties and responsibilities of (a) issuing semiannual checks in payment of
interest requirements as to the Bonds, (b) paying the principal (and premium, if any) of same at
maturity or applicable redemption prior to maturity upon surrender of the Bonds, (c) authenticating,
issuing and delivering the Bonds to the original purchasers of same in accordance with the sale of
the Bonds, at the direction of the City, (d) maintaining the Bond Register, (e) handling exchanges,
cancellations, reissuance, redemption and all appurtenant duties of a bond registrar and transfer agent
with respect to the Bonds, as hereinafter set out. The initial Bond Registrar, Transfer Agent and
Payee Bank hereby designated is , Paducah, Kentucky; provided, however,
it is understood that the Commission reserves the right to designate a different FDIC instrumentality
to perform any and all of such functions of Bond Registrar, Transfer Agent and Payee Bank as to
the Bonds.
"Certified Public Accountant" refers to an independent Certified Public Accountant or firm
of Certified Public Accountants, duly licensed in Kentucky, and may include Accountants regularly
employed to audit the financial affairs of the City's System and/or of other financial matters of the
City.
"City" or refers to the City of Paducah, Kentucky. '
"Code" or "Internal Revenue Code" refers to the United States Internal Revenue Code of
1986, as amended.
"Commission" or "Commissioners of Water Works" refers to the Paducah Commissioners
of Water Works created by an ordinance enacted by the City vesting the management, control and
operation of the System, in such Commission. u
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"Current Bond Ordinance" or "Ordinance" refers to this Ordinance authorizing the Current
Bonds.
"Current Bonds" refers to City of Paducah, Kentucky Water Works Revenue Refunding
Bonds, Series 1997, to be dated as of the 1 st or 15th day of the month in which the Current Bonds
are sold, authorized herein, which will be issued in the principal amount of not less than $5,340,000
and not more than $6,520,000, in such amount as may be issued and sold by the City (within such
limits) pursuant to the provisions hereof.
"Depreciation Fund Depository" refers to the bank at which the Depreciation Fund shall be
deposited, which initially shall be Peoples First National Bank and Trust Company, Paducah,
Kentucky; provided, however, the Commission shall have the right to designate from time to time
a different FDIC instrumentality for such purpose.
"Escrow Agreement" refers to the agreement between the City and the Escrow Bank,
authorized pursuant to Section 15(a)(3) of this Ordinance, providing for the deposit of sufficient
funds in the Escrow Account created in the Escrow Agreement for the purpose of providing for the
payment of principal of and interest on the Refunded Bonds as same mature and/or as same may be
called for redemption prior to maturity.
"Escrow Bank" refers to the Paducah Bank and Trust Company, Paducah, Kentucky, where
funds will be escrowed to pay all principal and interest of the Refunded Bonds as same become due
and/or as part of such Refunded Bonds may be called for redemption in advance of maturity.
"Escrow Fund" refers to the City of Paducah, Kentucky Water Works Revenue Bond Escrow
Fund) created in the Escrow Agreement, and discussed in detail in Section 15 of this Ordinance.
"FDIC" refers to the Federal Deposit Insurance Corporation or its successors or assigns.
"Fiscal Agent" refers to J.J.B. Hilliard, W.L. Lyons, Inc., Hilliard -Lyons Center, Louisville,
Kentucky 40202.
"Funds" refers to the General Fund, the Sinking Fund, the Depreciation Fund and the
Operation and Maintenance Fund described in Section 14 of this Current Bond Ordinance.
"General Fund Depository"refers to the bank at which the General Fund shall be deposited,
which initially shall be Citizens Bank and Trust Company, Paducah, Kentucky, provided, however,
the Commission shall have the right from time to time to designate a different FDIC instrumentality
for such purpose.
"General Manager" refers to the General Manager of the System.
"Governing Body" refers to the Board of Commissioners of the City, or such other body as
shall be the governing body of the City under the laws of Kentucky at any given time.
"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 waterworks system engineering.
"Interest Payment Date" shall mean January 1 and July 1 of each year.
"Investments "refers to investments of funds on deposit in the various funds created herein,
and includes: (a) U.S. Obligations, 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 FDIC by a pledge of direct obligations or obligations guaranteed by the United States of
America, having a fair market value, exclusive of accrued interest, equal to not less than 100% of
such excess amount.
"Maximum Annual Debt Service " refers to the maximum amount falling due in any Sinking
Fund Year for payment of interest on and principal of the Bonds, including both principal falling due
and principal due by reason of call for mandatory redemption, less any amounts provided by an
invested sinking fund established in conjunction with the issuance of the City of Paducah Water
Refunding Revenue Bonds, Series of 1978, dated April 1, 1978.
"MBIA "refers to the Municipal Bond Investors Assurance Corporation, Armonk, New York,
which is a corporation engaged in the business, among other things, of insuring or guaranteeing the
payment of the principal of and interest on municipal bond issues and/or of certain funds created or
required to be maintained in connection therewith or its predecessor, Municipal Bond Insurance
Association.
"Operation and Maintenance Fund Depository" refers to the bank at which the Operation
and Maintenance Fund shall be deposited, which initially shall be Citizens Bank and Trust
Company, Paducah, Kentucky; provided, however that the Commission reserves the right from time
to time to designate a different FDIC instrumentality for such purpose.
"Original Purchasers" or "Purchasers" refers to the Original Purchasers of the Current
Bonds at the public sale, including all members of their purchasing syndicate or group.
"OutstandingBonds"refers to the outstanding Current Bonds, Prior Bonds and Parity Bonds,
if any, and does not refer to, nor include, (1) any of the Refunded Bonds for the payment of the
principal and interest of which sufficient funds will have been escrowed, as permitted herein, or
(2) any of the Previously Issued Bonds.
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"Parity Bonds" means bonds issued in the future, which bonds issued in the future, will,
pursuant to the provisions of this Ordinance, rank on a basis of parity with the Bonds, and shall not
be deemed to include, nor to prohibit the issuance of, bonds ranking inferior in security to the Bonds.
"Previously Issued Bonds "refers to the following bonds previously effectively defeased:
(a) The City of Paducah Water Works Revenue Bonds, Series 1965, dated July 1,1965;
(b) The City of Paducah Water Works Revenue Bonds, Series 1972, dated October 1,
1972; and
(c) The City of Paducah Water Refunding Revenue Bonds, Series of 1978, dated April
1, 1978.
"Prior Bond Ordinances" refers to the 1991 Bond Ordinance authorizing the outstanding
Series 1991 Bonds.
"Prior Bonds" refers to the outstanding Series 1991 Bonds maturing in the years 1998
through 2009, inclusive.
"Refunded Bonds" refers to a portion of the outstanding Series 1991 Bonds in the
approximate principal amount of $5,285,000 maturing in the years 2003 through 2009, inclusive,
which are being refunded by the Current Bonds.
"Regular Record Date" shall mean with respect to any Interest Payment Date, the close of
business on June 15 or December 15, as the case may be, next preceding such Interest
Payment Date, whether or not such June 15 or December 15 is a business day.
"Reserve Account Insurance Policy" refers to an insurance policy issued by the MBIA,
-guaranteeing the payment of whatever reserve account or commitment related thereto is described
in such insurance policy. i :)
"Series 1991 Bonds" refers the outstanding City of Paducah, Kentucky Water Works
Revenue Refunding Bonds, Series 1991, dated April 1, 1991.
"Sinking Fund Depository" refers to the bank at which the Sinking Fund will be deposited.
Initially such Sinking Fund Depository shall be The Paducah Bank and Trust Company, Paducah,
Kentucky; provided, however it is understood that the Commission reserves the right to designate
a different FDIC instrumentality for such purpose.
"Sinking Fund Year" refers to July 1 through the ensuing June 30.
"System " refers to the water works system of the City.
"U.S. Obligations" refers to bonds, notes or Treasury Bills which are direct obligations of
the United States of America or obligations fully guaranteed by the United States of America,
including book -entry obligations of the United States Treasury State and Local Government Series
and Trust Receipts representing an ownership interest in direct obligations of the United States of
America.
Section 2. Authorization of Bonds. There are hereby authorized to be presently issued and
sold Five Million Nine Hundred Thirty Thousand Dollars ($5,930,000) principal amount of City of
Paducah, Kentucky Water Works Revenue Refunding Bonds, Series 1997, dated and bearing interest
from the 1 st or the 15th day of the month in which the Current Bonds are sold, which amount may
be increased or reduced by as much as $590,000, as provided in Sections 11 and 12 hereof. Said
Current Bonds shall mature serially on July 1 of the respective years, as set forth in Exhibit A
attached hereto, and shall bear interest payable semiannually on the first days of January and July
0
of each year, beginning on July 1, 1997, at an interest rate or rates to be fixed by Order of the
Governing Body as a result of the advertised sale of the Current Bonds.
The principal amount and the maturities of 'the Current Bonds are subject to revision based
on the increased or reduced principal amount of th6 Cui`dit Bonds shall be set forth in the Municipal
Order approving the successful bid for the purchase of the Current Bonds.
Section 3. Current Bonds to be Issued as Fully Registered Bonds; Registered Owners.
The Current Bonds shall be issued only in fully registered form, without coupons, in the
denomination of $5,000 or any integral multiple thereof within a single maturity, and shall be
numbered consecutively from R-1 upward. Each initially issued Current Bond and each Current
Bond issued prior to the first Interest Payment Date on the Current Bonds, shall be dated as of and
shall bear interest from the first or the 15th day of the month in which the Current Bonds are sold.
Each Current Bond issued (as a result of exchange or transfer) after such first Interest Payment Date
on the Bonds shall be dated as of and shall bear interest from the Interest Payment Date next
preceding the date on which such Current Bond is issued, unless such Current Bond is issued on an
Interest Payment Date, in which case it shall be dated as of and shall bear interest from such date of
issue; provided, however, that if at the time of issuance of any Current Bonds the interest thereon
is in default, such Current Bond shall be dated as of the date to which interest has been paid in full.
The person in whose name any Bond is registered on the Bond Register maintained by the
Bond Registrar, on the Regular Record Date with respect to an Interest Payment Date, shall be
entitled to receive the interest payable on such Interest Payment Date (unless such Bond shall have
been called for redemption on a redemption date which is prior to such Interest Payment Date)
notwithstanding the cancellation of such Bond upon any registration of transfer or exchange thereof
subsequent to such Regular Record Date and prior to such Interest Payment Date, except in the event
of default.
Section 4. Place of Payment and Manner of Execution. The principal of, premium, if any
and interest on the Current Bonds shall be payable in lawful money of the United States of America
as they respectively become due, whether at maturity or by prior redemption. Principal of each Band
is payable upon surrender of same at the principal corporate trust office of the Payee Bank and Bond
Registrar. Interest on the Bonds shall be paid by check mailed by the Payee Bank to the persons
entitled thereto as of the end of business on the Regular record Date preceding each applicable
Interest Payment Date, at the respective addresses appearing on the Bond Register.
So long as any Bonds or Parity Bonds remain outstanding, the Registrar shall keep at its
principal office a Bond Register showing and recording a register of the owners of the Bonds and
shall provide for the registration and transfer of Bonds in accordance with the terms of this
Ordinance, subject to such reasonable regulations as the Bond Registrar may prescribe.
The Bonds shall be executed on behalf of the City with the duly authorized reproduced
facsimile signature of the Mayor of the City (the "Mayor"), and the reproduced facsimile of the
City's corporate seal shall be imprinted thereon and attested by the reproduced facsimile signature
of the City Clerk of the City (the "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; provided the Authentication Certificate of Bond Registrar must be executed by the
manual signature of the Registrar on each Bond before such Bond shall be valid, as set out in Section
8 below.
T The Bond Registrar shall have the right to order the preparation of whatever number of
printed bond certificates as, in the sole discretion of the Bond Registrar, shall be deemed necessary
in order to enable the Bond Registrar to maintain an adequate reserve supply of such bond
certificates to effect properly the continuing transfers and exchanges of ownership of bond
certificates as same are sold, exchanged, and/or otherwise surrendered in the future. No further
action regarding the authorization or execution of additional bond certificates shall be required by
the Governing Body, theMayor or -the City Clerk.
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All Bonds shall be exchangeable and transferable upon the presentation and surrender thereof
at the office of the Bond Registrar, duly endorsed for transfer or accompanied by an assignment duly
executed by the registered owner or his authorized representative, for a Bond or Bonds of the same
maturity and interest rate and in the denomination of $5,000 and/or a multiple thereofwithin a single
maturity, in an aggregate principal amount or amounts equal to the unpaid principal amount of the
Bond or Bonds presented for exchange. The Bond Registrar shall be and is hereby authorized to
authenticate and deliver exchange Bonds in accordance with the provisions of this Section 4. Each
exchange Bond delivered in accordance with this Section 4 shall constitute an original contractual
obligation of the City and shall be entitled to the benefits and security of this Ordinance to the same
extent as the Bond or Bonds in lieu of which such exchange Bond or Bond is delivered.
In the event of non-payment of interest on one or more maturities on a scheduled Interest
Payment Date, and for 30 days thereafter, a new record date for such interest payment for such
maturity or maturities (the "Special Record Date") will be established by the Bond Registrar, if and
when funds for the payment of such interest shall have been received from the City. Notice of the
Special Record Date and of the scheduled payment date of the past Due interest (the "Special
Payment Date"), which shall be fifteen days after the Special Record Date) shall be sent at least five
business days prior to the Special Record Date by United States mail, first class postage prepaid, to
the address of each owner of a Bond, as shown on the Bond Register, of such maturity or maturities
appearing on the books of the Transfer Agent at the close of business on the last business day next
preceding the date of mailing of such notice.
Section 5. Provisions as to Mandatory and Optional Redemption. (a) Mandatory
Redemption. Bidders for the Current Bonds may require that a portion of the Current Bonds be term
bonds maturing on one or more dates (the "Term Bonds") provided however, that the City may
require such Term Bonds to be subject to mandatory redemption by lot at a redemption price of
100% of the principal amount thereof plus accrued interest to the date of redemption on July 1 of the
years and in the principal amounts set forth in the Order of the City awarding the purchase of the
Current Bonds to the Original Purchaser.
If the Current Bonds shall include Term Bonds, then at the option of the City, to be exercised
at least 45 days prior to the date for application of the mandatory redemption of the Current Bonds,
the City may receive a credit against the mandatory redemption requirement for Term Bonds of the
same Term Bonds subject to the application of such mandatory redemption requirement which, prior
to the date for application of such requirement (and for which a credit has not previously been taken)
(i) have been redeemed other than through the application of such mandatory redemption procedure,
and cancelled by the Registrar or (ii) have been delivered to the Bond Registrar by the City for
cancellation.
(b) Optional Redemption. The Current Bonds maturing on and after July 1, 2008, are subject
to redemption prior to maturity, at the option of the City, at any time on and after September 1, 2007,
in any order of maturities and by lot within a single maturity at the following redemption prices
(expressed as a percentage of principal amount) plus accrued interest to the date of redemption as
follows:
Redemption Date Redemption Price
September 1, 2007 through and
including December 31, 2007 102%
January 1, 2008 through and
including June 30, 2008 101%
July 1, 2008 and thereafter 100%
The City has entered into an agreement with MBIA to the effect that the City shall not
exercise its option to redeem any of the Current Bonds without the consentof MBIA if and whenever
n
the Debt Service Reserve,Fund is not fullyinsured, or if any amount is owed to MBIA with respect
to the Reserve Account Insurance Policy.
(c) Redemption of Less Than All of Single Bond. In the event that a Bond subject to
redemption is in a denomination larger than $5,000 a portion of such Bond may be redeemed, but
only in a principal amount equal to $5,000 or any integral multiple thereof, if the Bond is one of the
maturities or amounts or part of the maturities or amounts called for redemption. Upon surrender
of any Bond for redemption in part, the Bond Registrar shall authenticate and deliver an exchange
Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond so
surrendered.
(d) Notice of Redemption. ;The Bond Registrar shall give notice of any redemption by
sending at least one such notice by certified or registered mail not less than 30 and not more than 60
days prior to the date fixed for redemption to the registered owner of each Current Bond to be
redeemed in whole or in part at the address shown on the Bond Register as of the date of mailing of
such notice. The Bond Registrar may furnish one other form of such notice more than 60 days prior
to the date fixed for redemption, provided at least one such notice shall be sent not less than 30 nor
more than 60 days prior to such date. Such notice shall state the redemption date, the Redemption
Price, the amount (or number of months) of accrued interest payable on the redemption date, the
place at which the Bonds are to be surrendered for payment, and, if less than all of the Bonds
outstanding are to be redeemed, an identification of the Bonds or portions thereof to be redeemed.
Any notary mailed as provided in this Section shall be conclusively presumed to have been duly
given, whether or not the Bondowner receives such notice. Prior to each redemption date, the Bond
-Registrar shall make provision, to the extent funds are then available therefor for the payment of the
Redemption Price of the Bonds to be redeemed on such date by setting aside and holding in trust an
amount sufficient to pay such Redemption Price. Upon presentation and surrender of any such Bond
at the principal corporate trust office of the Bond Registrar on or after the date fixed for redemption,
the Bond Registrar shall pay the Redemption Price of such Bond (including accrued interest) from
the funds set aside for such purpose.
All of said Bonds as to which the City reserves and exercises the right of redemption and as
to which notice as aforesaid shall have been given, and for the retirement of which, upon the terms
aforesaid, funds are duly provided, shall cease to bear interest on the redemption date. ,
The required notice shall be deemed to have been given upon the City furnishing notice of
redemption to the Bond Registrar and upon the Bond Registrar acknowledging that it has
instructions to send such notice and that it will do so at the proper time, even if the time for
furnishing such notice has not yet arrived.
- Section 6. Refinancing in the Public Interest. In accordance with the provisions of
Section 58.440 of the Kentucky Revised Statutes, it is hereby determined that :in the refunding of
said Refunded Bonds, it is to the best interest of the City that same be accomplished.
Section 7. Mutilated, Lost, Stolen, or Destroyed Bonds. If any Current Bond. shall be
mutilated, lost, stolen or destroyed, the City may execute, authenticate and deliver a new Bond of
like maturity and tenor in lieu of and in substitution for the Bond mutilated, lost, stolen, or
destroyed; provided that, in the case of any mutilated Bond, such mutilated Bond shall first be
surrendered to the City, and in the case of any lost, stolen or destroyed Bond, there shall be first
furnished to the City satisfactory evidence of the ownership of such Bond and of such loss, theft or
destruction, together with indemnity satisfactory to the Bond Registrar. If any such Bond shall have
matured, the City (through the Bond Registrar) may pay the same instead of issuing a new Bond.
The City and/or the Bond Registrar may charge the owner of such Bond its, reasonable fees and
expenses in thin connection.
Section 8. Authentication of Bonds. The Bonds, after execution by the City, shall be
delivered to the Bond Registrar. No Bond shall be valid or obligatory for any purpose or be entitled
to any security or benefit of this Ordinance unless and until such Bond has been duly authenticated
by the Bond Registrar by the execution of the Authentication Certificate of Bond Registrar appearing
7
on such Bond. Such Certificate appearing on any Bond shall be deemed to have been duly executed
by the Bond Registrar if manually signed by an authorized officer of the Bond Registrar. It shall not
be required that the same officer of the Bond Registrar sign such Certificate on all of the Bonds.
Section 9. Current Bonds Secured by and Payable From First Lien on Revenues of
System. 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 this Current Bond Ordinance, are
to be issued in anticipation of the revenues to be derived from the operation of the System, all as
hereinafter more specifically provided, shall be payable on a first lien basis out of the "City of
Paducah, Kentucky Water Works Sinking Fund" (the "Sinking Fund"), created by the 1991 Bond
Ordinance, as hereinafter specifically provided, and shall be a valid first lien of the owners thereof
against said Sinking Fund and against a sufficient portion of the gross revenues of the System
pledged to said Sinking Fund.
Section 10. Bond Form. The aforesaid authorized issue of Current Bonds shall be in
substantially the following form set forth in Exhibit B attached hereto.
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 Statement, containing the Official Terms and Conditions of Sale
of Bonds, setting out the following specific terms and conditions:
(a) Bids shall be required to be submitted upon a standard official 'Bid Form" in order to
provide for the uniformity in submission of bids and ready determination of the best bid.
(b) Bidders shall be required to bid for the entire issue a minimum price of not less than
$5,841,050 (98.5% ofpar) for the $5,930,000 of Current Bonds, plus accrued interest from the date
of the Current Bonds.
(c) The determination of the best bid will be made on the basis of all bids submitted for
exactly $5,930,000 of Current Bonds as offered for sale under the terms and conditions herein
specified. The City will, at the meeting of the Governing Body which will be held to act upon the
receipt of bids for the Current Bonds, accept or reject such best bid, provided, however, the City
reserves the right to increase or decrease the total amount of Current Bonds sold to such best bidder
in the amount of up to $590,000 (in $5,000 denominations), so that the total amount of bonds
awarded to such best bidder will be a minimum of $5,340,000 or a maximum of $6,520,000. In the
event of any such adjustment, no rebidding or recalculation of the bids submitted will be required.
The price at which such adjusted amount of bonds will be sold will be at the same price per $1,000
of bonds as the price bid in the successful bid per $1,000 for the $5,930,000 of Current Bonds
initially offered for sale.
(d) The successful bidder shall be required to deposit with the City immediately available
funds in the amount of $118,600. Such good faith deposit shall be received by the City by the close
of business on the day immediately succeeding the award of the bid, pursuant to funds being wire
transferred to the City to its account at the Payee Bank.
(e) Bidders must state an interest rate or rates in a multiple of 1/8, 1/10, or 1/20 of 1%.
(f) There shall be no limit on the number of different rates which may be specified in any
bid and there shall be no maximum differential between the highest and lowest interest rates
stipulated in any bid. D
(g) All Current Bonds of the same maturity shall bear the same and a single interest rate
from the date thereof to maturity.
(h) Interest rates must be on an ascending scale, in that the interest rate for Current Bonds
of any maturity may not be less than the interest rate stipulated for any preceding maturity.
E:;
(i) The right to reject bids for any reason deemed advisable by the Governing Body, and the
right to waive any possible informalities, irregularities or defects in any bid which, in the judgment
of the Governing Body, with the advice of the Fiscal Agent, shall be minor or immaterial, is
expressly reserved.���
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Y
(j) 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. Bids must be enclosed in sealed
envelopes marked "Proposal for City of Paducah, Kentucky Water Works Revenue Refunding
Bonds, Series 1997', and bids must be received by the City Clerk prior to the date and hour set for
the sale.
(k) The Original Purchasers of the Current Bonds will pay the CUSIP Service Bureau charge
for the assignment of CUSIP numbers, which numbers will be printed on the Current Bonds at no
expense or cost to the Purchasers. Neither the failure to print a CUSIP number on any Bond nor any
error with respect thereto shall constitute cause for a failure or refusal by the Purchasers thereto to
accept delivery of and pay for the Bonds in accordance with the terms of the purchase agreement.
(1) Delivery will be made at the office of Rubin & Hays, 200 South Fifth Street, Louisville,
Kentucky 40202 on the closing date, provided, however, the Purchasers shall bear any bank service
charge, if any, for processing the delivery of the Current Bonds and closing the transaction. Deposit
shall be forfeited by the successful bidder, and such amount shall be deemed liquidated damages for
such default, provided, however, if said Current Bonds are not ready for delivery and payment within
forty-five (45) days from the date of sale herein provided for, said successful bidder shall be relieved
of any liability to accept the Current Bonds hereunder.
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 ofpublishing notice of the sale of the Current Bonds. Copies
of said documents shall be furnished to a list of known interested bidders and to any interested
parties who may request same.
If, for any reason, it is determined that no bids should be accepted when the Current Bonds
are first offered for public sale, then, upon recommendations of the Fiscal Agent, the Mayor shall
be authorized to approve a change in the required minimum bid price, and also to change the date
and hour of the sale (upon observing all notice requirements of Kentucky law), and the Mayor and/or
the City Clerk are further authorized to readvertise such Current Bonds for public sale and to
approve a revised Notice of Bond Sale, Bid. Form and Official Terms and Conditions of Bond Sale,
and to distribute same to prospective bidders, without the necessity of the Governing Body taking
any further action or granting any further authority for such proceedings, except that no bid may be
accepted for the sale of such Current Bonds without the specific approval of the Governing Body.
Section 12. Acceptance of Bid for Purchase of Bonds; Determination of Amount of
Bonds to be Issued and Sold. 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 Governing Body 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. At that time, the Governing Body may accept the successful bid for the, principal
E
amount of Current Bonds, which amount may be increased or reduced by up to $590,000 (in $5,000
denomination). Also, at that time, the Governing Body may determine whether to provide for the
redemption of part of the Refunding Bonds in advance of maturity and if so, which of such
Refunding Bonds shall be redeemed and on what date.
If upon the basis of the foregoing, the Governing Body shall accept a purchase bid for the
Current Bonds, the Governing Body shall adopt a Municipal Order to that effect, supply proper
evidence of such acceptance to the bidder submitting the accepted purchase bid, and thereupon
arrangement shall be made for the Bonds to be printed in accordance therewith.
Section 13. Determination that Refunding is a Public Purpose. It is hereby determined
that the Current Bonds shall be issued for the public purpose of providing for the refunding of the
Refunded Bonds through the escrow of a sufficient portion of the Current Bonds, for the purpose of
providing for the payment of the principal of and interest on the Refunded Bonds as same mature
and/or as same are redeemed according to their terms and that the City shall receive substantial debt
service savings through the refunding.
Section 14. Reaffirmation of Special Funds. From and after the delivery of the Current
Bonds, the System shall continue to be operated as a water works system for the security and source
of payment of the Bonds and any Parity Bonds, on a fiscal year .basis from July 1 of each year to
June 30 of each ensuing year, or on such other fiscal year basis as shall be adopted for the operation
of the System:
There are hereby reaffirmed the following funds or accounts which were created and
established in the 1991 Bond Ordinance:
(1) City of Paducah Water Works General Fund (the "General Fund").
(2) City of Paducah Water Works Bond Sinking Fund (the "Sinking Fund"), consisting of
the Interest Account, Principal Account and the Debt Service Reserve Account as set forth in Section
20 of the 1991 Bond Ordinance.
(3) City of Paducah Water Works Depreciation Fund (the "Depreciation Fund").
(4) City of Paducah Water Works System Operation and Maintenance Fund (the "Operation
and Maintenance Fund").
Moneys deposited into such respective Funds shall be maintained, invested and applied by
the respective banks acting as depositories in the manner prescribed hereinafter in Section 20.
Section 15. Disposition of Proceeds of Current Bonds; Escrow Fund; Investment
Provisions; Arbitrage Limitations. (a) Disposition ofProceeds. Upon the sale and delivery ofthe
Current Bonds and upon receipt by the City of the purchase price thereof, it is hereby acknowledged
and ordered that:
(1) Payment of Fees and Expenses. There shall first be paid therefrom the fee of the Fiscal
Agent, the fee of the attorney for the Commission, the initial fee of the Escrow Bank, to the extent
not otherwise provided herein, any applicable rating agency fee, and any other pertinent expenses
of the issuance of the Current Bonds.
(2) Deposit of Collected Accrued Interest. An amount equal to the accrued interest collected
from the Original Purchasers of the Current Bonds for the period from the date of the Current Bonds
to the date of delivery, shall be deposited into the Sinking Fund.
(3) Deposit into Escrow Fund; Approval of Escrow Agreement. There shall next be
deposited in the Escrow Bank in a certain Escrow Fund created in the Escrow Agreement, between
the City and the Escrow Bank, which Agreement is hereby authorized to be executed by the Mayor
following the acceptance by the City of the successful bid for the purchase of the Current Bonds, and
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which Escrow Agreement and Escrow Fund, a portion of the proceeds of the Current Bonds, which,
when added to whatever sum is otherwise transferred into such Escrow Fund at that time, together
with the contractual investment income to be realized from such total amount, will be sufficient, to
provide for the payment of the principal of and interest on the Refunded Bonds at maturity and/or
with partial redemption in advance of maturity, and to pay the annual fees of the Escrow Bank in
connection with such escrow. It is acknowledged that Section 19 of this Ordinance provides for
certain transfers of funds which may have an effect on the provisions of this paragraph.
(b) Escrow Fund. A special Escrow Fund shall be created in the Escrow Agreement, and
said Escrow Fund shall be maintained on deposit at the Escrow Bank, which Escrow Fund shall be
designated and known as the City of Paducah, Kentucky Water Works Revenue Bond Escrow Fund
(the "Escrow Fund"), and it is provided in Section 15(b)(2) below that there shall be deposited into
said Escrow Fund whatever portion of the proceeds of the Current Bonds shall be sufficient, when
added to any other funds, if any, made available by the City and deposited in said Escrow Fund
(hereinafter collectively referred to as the "Escrowed Funds") together with the contractual
investment income to be realized from such Escrowed Funds, to provide for the payment of the
principal of and interest on the Refunded Bonds at maturity and/or with partial redemption in
advance of maturity, and to pay the annual fee of the Escrow Bank.
Simultaneously with the delivery of the Current Bonds on behalf of the City, the City shall
obtain a commitment or commitments for the investment of such Escrowed Funds in U. S.
Obligations, (such investments and any uninvested cash in the Escrow Fund being hereinafter
collectively referred to as the "Escrow Investments"). Escrow Investments so invested shall be
scheduled to mature at such time and in such amounts as are necessary to pay such requirements of
the Refunded Bonds and such fees of the Escrow Bank. The Mayor, City Clerk and/or Chairman
of the Commission are hereby authorized to act on behalf of the City in obtaining such a
commitment or commitments directly or through the designee of either of them. If, and to any extent
that the Escrowed Funds shall be inadequate or in excess of the amount necessary to accomplish the
required objective, the City covenants as follows:
' (1) Excess or Inadequate Amount in Escrow Fund. (i) If and to the extent that the Escrowed
Funds are inadequate, the City will transfer or cause to be transferred sufficient funds from the
existing surplus funds of the System and/or from other available funds, to accomplish the purpose
hereinafter specified in Subsection 15(b)(2).
(ii) If and to the extent that the Escrowed Funds are in excess of the amount required,
after the final maturity date and/or applicable redemption date of the Refunded Bonds, for
the retirement and/or redemption of the Refunded Bonds, including those matured and/or
called Refunded Bonds not yet presented for payment, as provided in the Escrow Agreement,
such excess amount shall be transferred immediately to the Revenue Fund and treated as a
part of the amount transferred pursuant to Section 20(b) hereof.
(iii) The City certifies that the purpose of providing in Section 12 for the possible
increase or reduction in the amount of the Current Bonds to be sold is to eliminate or reduce
the possibility of there being an overissuance or underissuance of the amount of Current
Bonds necessary to accomplish the required objectives..
(2) Escrow Fund Earmarked and Pledged to Pay Refunded Bonds. Amounts on deposit in
the Escrow Fund shall be earmarked, pledged and held for credit to the account of the Escrow Fund
created in the Escrow Agreement and shall be applied in accordance therewith.
Section 16. Federal: Limitations on Investment of Funds. The .City covenants and
certifies, in compliance with Federal arbitrage regulations, on the basis of known facts and
circumstances in existence on the date of enactment of this Current Bond Ordinance, that it is not
expected that the proceeds of the Current Bonds or the revenues of the System will be used in a
manner which would cause such Bonds to be "arbitrage bonds", within.the meaning of Section 148
of the Code and the applicable regulations. The City covenants to the purchasers and/or holders of
the Current Bonds that (1) the City will make no use of the proceeds of said Bonds, or the revenues
1l1
of the System, which, if such use had been reasonably expected on the date of issue of such Bonds,
would have caused such Bonds to be "arbitrage bonds", and (2) that the City will comply with (i) all
of the requirements of Section 148 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 the
Current Bonds shall not be treated as "arbitrage bonds".
The City acknowledges that the Code and the applicable regulations thereunder require that
the portion of the Current Bonds deposited in the Escrow Fund be invested at a yield no greater than
the actuarial yield applicable to the Current Bonds.
The City reserves the right to make any investment permitted by State Law if, whenever, and
to the extent that Section 148 or regulations promulgated thereunder shall be repealed, amended or
relaxed, or shall be held void by a final decision of a court of competent jurisdiction, but only if any
investment made by virtue of such repeal, or relaxation, amendment or decision would not, in the
opinion of recognized Bond Counsel, result in making the interest on the Bonds or any Parity Bonds
subject to Federal income taxation.
Prior to or at the time of delivery of the Current Bonds, the Mayor and the City's 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 expenditures and investments, including the execution of
necessary and/or desirable certifications of the type contemplated by the "Arbitrage Regulations",
as amended, in order to assure that interest on the Current Bonds will be exempt from all Federal
income taxes and that such Current Bonds will not be treated as "arbitrage bonds".
Section 17. Defeasance of Bonds. The City reserves the right, at any time, to cause the
pledge of the revenues securing the Bonds and all Parity Bonds, to be defeased and released by
paying an amount into an irrevocable escrow sufficient, when invested (or sufficient without such
investment, as the case may be) in cash and/or U.S. Obligations (the "Future Escrow"), to assure the
availability in such Future Escrow 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 interest, on any 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 (other than by scheduled mandatory redemption) the determination of whether to defease
under (a) or (b) or both to be made by the Governing Body of the City. Such Future Escrow shall
have such maturities as to assure that there will be sufficient funds for such purpose. If such
defeasance is to be accomplished pursuant to (a) the City shall take all steps necessary to publish
appropriate notice of the redemption of such Outstanding Bonds on whatever redemption date is
determined. Upon the proper amount of such investments being placed in escrow and so secured,
such revenue pledge shall be automatically fully defeased and released without any further action
being necessary. Provided (1) no such defeasement shall be accomplished through the use of
amounts on deposit in the Debt Service Reserve Account 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, and (2) no such defeasement
shall require that any Bonds be redeemed in advance of maturity if a right to defease the Bonds
without redemption in advance of maturity shall have become vested.
Section 18. Refunded Bonds will be Fully Provided for through Escrow of the Proceeds
of!the Current Bonds. Provisions thus having been made for the orderly payment until final
maturity and/or redemption of all of the principal of and interest on the Refunded Bonds, as same
are scheduled to mature and/or are called for prior redemption according to their terms, it is hereby
recognized and acknowledged that as of the date of delivery of the Current Bonds, provision will
have been made for the performance of all covenants and agreements of the City incident to the
issuance of the Refunded Bonds, and that accordingly, and in compliance with all that has been
heretofore provided, the City will have no further obligation with reference to the Refunded Bonds,
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except to assure that the Refunded Bonds"are paid from the funds so escrowed in accordance with
the provisions of the Escrow Agreement.
It is expressly provided and covenanted that all of the provisions for the payment of the
principal of and interest on the Refunded Bonds from the Escrow Fund, shall be strictly observed
and followed in all respects, and the income from the Escrow Fund shall not be applied for any
purpose other than the payment of principal of and interest on the Refunded Bonds at maturity and/or
with partial redemption in advance of maturity according to their terms until the date of scheduled
final payment of the Refunded Bonds which have matured and/or have been called for prior
redemption, after which time any surplus then remaining in the Escrow Fund in access of the amount
earmarked for matured and/or called Refunded Bonds not yet presented for payment, shall be treated
as current revenues of the System and so applied.
Section 19. Existing Funds and Deposits. Simultaneously with the delivery of the Current
Bonds, the City covenants that all amounts remaining, in the funds, accounts and reserves created
and maintained in connection with the 1991 Bond Ordinance will be continued to be maintained in
said funds, accounts and reserves in accordance with the 1991 Bond Ordinance and this Current
Bond Ordinance.
Section 20. Flow of Funds. (a) General Fund. From and after the delivery of the Current
Bonds, the System shall continue to be operated as a revenue producing public project or system and
shall be operated for the purpose of this Ordinance on a Sinking Fund Year basis commencing on
July 1 of each calendar year and ending on the next succeeding June 30, (the "Sinking Fund Year")
or such other appropriate fiscal year as shall be designated by the Governing Body, and all of the
gross income and revenues of the .System shall be set aside into the separate and special fund
designated as the "City of Paducah Water Works General Fund (the "General Fund") from which
fund sums deposited therein shall be apportioned to the various funds and accounts as set out in the
ensuing subsections of this Section 20.
"F'1, (b) Sinking Fund. There was created in the 1991 Bond Ordinance a special fund to be
" known as the City of Paducah Water Works Bond Sinking Fund" (the "Sinking Fund"), which
Sinking Fund shall consist of three separate accounts, viz. an Interest Account, a Principal Account
and a Debt Service Reserve Account (which latter account shall be known as the "'Sinking Fund
Reserve" or as the "Debt Service Reserve"). Hereinafter said three accounts will sometimes be
referred to as (the "Three Sinking Fund Accounts").
There shall be transferred on or before the 25th day of each month from the General Fund
and deposited into the Sinking Fund, to be apportioned as hereinafter set out, an amount sufficient
to satisfy the amounts required to be deposited from the General Fund into the Three Sinking Fund
Accounts. The amounts to be so set aside and paid into the Sinking Fund in each month, in equal
installments shall be amounts to pay the annual debt service requirements of the Bonds as same fall
due, which amounts are more specifically determined to be as follows:
(1) Interest Account: Amounts sufficient in the aggregate, to pay the interest on the Bonds
and on any outstanding Parity Bonds (if any) falling due on the next succeeding Interest
Payment Date. Amounts on deposit in the Interest Account shall be used solely for the
payment of interest currently falling due on the Bonds and on any additional Parity Bonds.
(2) Principal Account: Amounts sufficient in the aggregate, to pay the principal of the
Current Bonds and any outstanding Parity Bonds maturing, or falling due by reason of the
mandatory redemption, on the next succeeding July 1 (the "Principal Payment. Date").
Amounts on deposit in the Principal Account shall be used solely for the purpose of paying
the principal of the Bonds and any additional Parity Bonds when due at maturity or pursuant
to any mandatory call for redemption.
(3) Debt Service Reserve Account: This account shall beheld for the benefit of the holders
of the Bonds and any additional Parity Bonds and shall be used solely for the purpose of paying
principal of or interest on such Bonds or Parity Bonds as to which there would otherwise be a
13
default. There shall be deposited into the Debt Service Reserve Account in each month an amount
equal to at least 1/12 of the required Maximum Annual Debt Service until such Maximum Annual
Debt Service shall have been accumulated; provided, however, that the foregoing requirement for
monthly deposits into this account shall be considered satisfied so that no deposit shall be required
to be made into that account so long as the amount on deposit therein (including the maximum
amount then payable under all Reserve Account Insurance Policies) shall equal the Maximum
Annual Debt Service.
Provided, that in the event that any funds shall be paid by any Reserve Account Insurance
Policy or funds then on deposit shall be withdrawn from the Debt Service Reserve Account, the City
shall be obligated to transfer funds from the General Fund to the Debt Service Reserve Account in
each month in an amount equal to at least 1/12 of the Maximum Annual Debt Service until such
Maximum Annual Debt Service has been restored or until the face amount of the Reserve Account
Insurance Policy (together with the amount then on deposit in the Debt Service Reserve Account)
shall equal the Maximum Annual Debt Service.
Provided, however, that no further payments need be made into the Sinking Fund after and
so long as such amount of the Bonds shall have been retired that the amount then held in the Sinking
Fund, including the Debt Service Reserve Account, shall be equal to the entire amount required to
retire and/or redeem all Bonds and any Parity Bonds then outstanding and paying all interest that will
accrue to or at the time of such retirement and/or redemption.
If for any reason the City shall fail to pay into the Sinking Fund the amount required to be
paid into such Sinking Fund in any month, then an amount equal to such deficiency shall be set apart
from the gross revenues of the System and paid into the Sinking Fund from the first available income
and revenues.
All amounts on deposit in the Sinking Fund, including all Three Sinking Fund Accounts,
shall constitute a trust fund and shall be and are hereby earmarked and pledged for the security and
source of payment for the Bonds and any Parity Bonds.
l ��1
Amounts on deposit in the Debt Service Reserve Account, including amounts available under
the Reserve Account Insurance Policy, may be withdrawn and used by the City, when necessary, and
shall be so withdrawn and used if and to the extent necessary to prevent the occurrence of an Event
of Default, for the purpose of making payments of principal of and interest on the Bonds (including
both principal maturities and mandatory redemptions) if the amounts on deposit in the Sinking Fund
are not sufficient to make such payments.
On or before the 26th days of December and June in each year, the Sinking Fund Depository
shall transfer from the Sinking Fund (and from the Debt Service Reserve Account therein if
necessary) a sum equal to the interest or a sum equal to the principal and interest, as the case may
be, becoming due on the next following respective January 1 or July 1, and deposit the same in an
account hereby created and identified as "City of Paducah Water Works Revenue Bond and Interest
Payment Account" and shall notify the Payee Bank that the same is held as a trust fund to be drawn
upon by the Payee Bank to pay maturing interest installments, and/or principal and interest
installments, as the case may be, in accordance with the terms of the Bonds. The Sinking Fund
Depository, the Payee Bank and the City Clerk shall keep appropriate records as to payment of
principal and interest installments.
In the event that the Sinking Fund Depository does not have sufficient funds to transfer the
required amounts to the Payee Bank as specified in the foregoing, the Sinking Fund Depository shall
advise the Payee Bank of the amount of any deficiency in the amount so transferred so that the Payee
Bank may give appropriate notice required to provide for the payment of such deficiency from any
Reserve Account Insurance Policy on deposit in the Debt Service Reserve Account.
No distinction or preference shall exist in the use of moneys on deposit in the General Fund
for payment into the Interest Account and the Principal Account, such accounts being on a parity
with each other.
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As and when additional-' Parity Bonds are issued, provision' shall be made similarly for
increasing the Debt Service Reserve Account, if necessary and to the extent not fully funded
concurrently with the issuance of such Parity Bonds, to not less than the Debt Service Reserve
applicable to all bonds then scheduled to be outstanding (including the Prior Bonds, the Current
Bonds and such additional Parity Bonds) falling due in any 12 month period thereafter, by deposit
of monthly amounts equal to at least 1/12 of the amount necessary to accumulate such additional
Debt Service Reserve within a period of two years.
Income from any investment of the proceeds of any Parity Bonds deposited in the Debt
Service Reserve maybe credited to the then current construction account until completion ofthe then
current construction project, and after such completion, as certified by the Engineers, such income
shall be credited to the Interest Account in the Sinking Fund; interest received from any investment
of collected accrued interest and the proceeds of such Parity Bonds representing interest during
construction deposited in the Interest Account may also be credited to the then current construction
Account pending disbursement of such sums and proceeds to pay the investment income shall be so
credited to the then current construction account unless all payments otherwise required to be made
into the particular accounts in the Sinking Fund are current and there are no deficiencies in any of
such Accounts.
. (c) Depreciation Fund. Whenever the balance on deposit in the Depreciation Fund created
in the 1991 Bond Ordinance shall be less than $500,000; or such greater amount as may be
determined by the City (the "Required Depreciation Balance"), there shall be transferred from the
General Fund and deposited into the Depreciation Fund, on or before the 25th day of each month,
an amount equal to ten percent (10%) of the balance on deposit in the General Fund, which deposits
shall continue until there has been accumulated not less than the sum of $500,000.
Provided that so long as the Required Depreciation Balance shall be maintained in such
Depreciation Fund, no further deposits shall be required to be made therein. Moneys in the
Depreciation Fund may be withdrawn and used upon appropriate certification by whatever City
official of the City is duly authorized by the Governing Body of the City to make such certification,
for the purpose of paying the costs of making unusual or extraordinary maintenance, repairs,
renewals and/or replacements to the System, not included in the Annual Budget of CurrentExpenses,
which would be necessary to keep the System -in good operating condition, only when there is not
sufficient money for such purpose included in- the Annual Budget, or for paying the costs of
constructing extensions, additions and/or improvements to the System which will either enhance the
revenue producing capacity of the System or provide a higher degree of service; provided, however,
that if the available balance in the Sinking Fund and the Debt Service Reserve Account on June 15
or December 15 shall be insufficient to pay the next maturing installment of interest and/or principal
(including mandatory redemption payments) falling due on the Bonds, the City shall withdraw and
transfer from the Depreciation Fund such amounts as may be required to eliminate the deficiency
in the Sinking Fund and to avoid a default. Provided, further, that any such withdrawal shall be
promptly restored to the Depreciation Fund from the first revenues of the System available (1) in the
event that other legally available moneys of the System, including the proceeds of Reserve Account
Insurance Policy, if any, shall be available, (2) if any surplus funds are available after meeting all
current requirements of the Sinking Fund; including the Debt Service Reserve Account, or (3) as
shall be determined by the Board. However, it is not anticipated that any sums in the Depreciation
Fund will be used to meet requirements of the Sinking Fund.
There shall also be deposited in said Depreciation Fund the proceeds of any property damage
insurance not immediately used to replace the damaged or destroyed property of the System. Such
deposits shall not reduce or serve as a credit against the amount of the Required Depreciation
Balance otherwise required or any other amounts required to be deposited into the Depreciation
Fund.
As and when additional Parity Bonds are issued, provision shall be made for additional
payments into the .Depreciation Fund (thus- increasing -the Required Depreciation Balance) in
whatever amount shall be recommended by the Engineers and/or determined by the Governing Body
of the City, provided such additional amounts shall be accumulated therein as provided above.
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All funds on deposit in the Depreciation Fund shall be kept separate and apart from all other
municipal funds and shall be deposited, secured and/or invested in the manner provided in Section
20(f) hereof.
(d) Operation and Maintenance Fund. After the requirements of the preceding two funds
described above have been satisfied, there shall be transferred from the balance of the income and
revenues remaining in the Revenue Fund on or before the 25th day of each month, into the Operation
and Maintenance Fund, such amount as shall be determined by the Governing Body to be necessary
and sufficient to pay the reasonable and current expenses of operating, maintaining and insuring the
System for the two months following such 25th day. After the 25th day of each month, further
transfers may be made in like manner only if and to the extent that it shall become necessary to pay
such expenses actually accrued and payable.
All costs of operating, maintaining and insuring the System, shall be paid from the Operation
and Maintenance Fund.
All funds in the Operation and Maintenance Fund shall be maintained separate and apart
from all other municipal funds and shall be deposited, secured and/or invested in the manner
provided hereinafter in Section 20(f).
(e) Surplus Balances in the General Fund. If and whenever, on July 1 of any year, all
specified and required transfers and payments into the special funds provided have been made and
there is a balance on deposit in the General Fund in excess of the amount required to be transferred
during the ensuing three months of the ensuing Sinking Fund Year into said special funds, all or any
part of such excess may, within 60 days after such July 1, be used as follows:
(1) To retire or redeem outstanding Bonds in inverse order of maturities in accordance with
the terms thereof;
(2) To purchase Bonds or Parity Bonds, at the sole option and discretion of the City, at a
price not to exceed the then applicable or next applicable redemption price of such respective
series of Bonds;
(3) To transfer additional amounts to the Debt Service Reserve Account, the Operation and
Maintenance Fund or the Depreciation Fund;
(4) To repay any amounts, if any, drawn under the Reserve Account Insurance Policy,
including interest thereon;
(5) To pay the debt service requirements of any outstanding subordinate obligations payable
from the income and revenues of the System; or
(6) For any other lawful corporate purpose of the City related solely to the System.
Except as otherwise provided expressly herein, the determination of what and how funds are
to be invested, and without limiting the generality of the foregoing, how any excess or surplus funds
shall be invested, shall be as directed by the Commission, unless there is a question as to whether
such action might cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the
Code, as amended, in which event such action shall not be taken without first obtaining the opinion
of recognized Bond Counsel to the effect that such action will not cause the Bonds to become
"arbitrage bonds".
69 Security for and Investment of Deposits. The City covenants and agrees to establish and
maintain the respective Funds as provided herein and all funds so deposited, to the extent that same
shall cause deposits of the City in the Depository Bank to exceed the amount insured by the FDIC
shall be continuously secured by a valid pledge of bonds or notes of the United States of America
having an equivalent market value; or same shall be secured by a surety bond or bonds furnished by
a surety company or companies qualified or authorized to do business in Kentucky; or such portion
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of such Funds as shall be designated.bythe Commission shall be invested in Investments as defined
herein, maturing as needed under this Ordinance; provided no investment' shall be made in any
obligations maturing later than five years from the date of investment. All such Investments shall
be valued for the purposes hereof in terms of their market value on the then next preceding January
1 or July 1, whichever is later.
Said Depository Bank shall be obligated to send written notice to the City of the need for
investment directions if and whenever funds in excess of $10,000 shall remain uninvested for a
period of more than 5 days.
Section 21. Determination by City that Proportions of Revenues to be Deposited are
Correct. The Governing Body of the City hereby finds and determines that, exclusive of the
payment its required to be made into the Sinking Fund, the amounts which are provided to be paid
into the Depreciation Fund and into the Operation and Maintenance Fund are proper and sufficient
for the purposes thereof.
Section 22. City Officials to be Bonded. The City will cause each municipal officer or
other person having custody of any moneys administered under the provisions of this Ordinance to
be bonded at all times in an amount equal to the maximum amount of such moneys in his custody
at any time. The City will segregate and earmark such funds, consistent with this Ordinance in such
manner to enable the City to obtain the benefit of the lowest possible surety premium: rates on such
surety bond or bonds. Each such surety bond shall have a surety given by a surety corporation
qualified or authorized to do business in Kentucky, and approved by the Governing Body of the City,
and the premium of such surety bond shall constitute a proper expense of operating and maintaining
the System, and may be paid from amounts available in the Operation. and Maintenance Fund.
Section 23. Adoption of Budget of Current Expenses; Fiscal Year. The City covenants
and agrees that prior to the delivery of the Current Bonds, the Governing Body of the City or the
Commission will adopt a Budget of Current Expenses for the operation of the System for the
remainder of the then fiscal year, and thereafter on or before the first day of September of each year
prior to the year of final maturity of the Bonds or of any Parity Bonds, the Governing Body of the
City or the Commission will adopt an Annual Budget of Current Expenses for the ensuing fiscal
year, and will furnish a copy of such Budget or amendment thereto, upon request, to any
Bondowners. Current Expenses shall include all reasonable and necessary costs of operating,
repairing, maintaining and insuring the System, but shall exclude payments into the Current Sinking
Fund. The City further covenants that the Current Expenses incurred in any year shall not exceed
the necessary and reasonable amounts required therefore, and that the City will not expend any
amount or incur any obligation for operation, maintenance and repair in excess of the amounts
provided for Current Expenses in the current Annual Budget, accept on proper justification and
resolution (or ordinance) by the Governing Body of the City, as such expenditures are necessary to
operate and maintain the System. The City further covenants that at the same time and in like
manner, the Governing Body of the City or the Commission shall prepare an estimate of Gross
Revenues to be derived from the operation of the System for said fiscal year and that sufficient Gross
Revenues shall be provided, through the maintenance of proper rates and charges (and through the
increase thereof if necessary) to satisfy the requirements of all of the provisions contained in this
Ordinance, including the accumulation and maintenance of all required reserves specified herein.
Section 24. Rates and Charges for Services of the System. While the Bonds or any Parity
Bonds remain outstanding and unpaid, the rates for all services and facilities rendered by the System
to the City and to its citizens, corporations or others requiring the same, shall be reasonable and just
taking into account and consideration the cost and value of the System, the cost of maintaining an
operating the same, and proper and necessary allowances for depreciation thereof, and the amounts
necessary for the retirement of all Bonds and the accruing interest on all such Bonds as may be
outstanding under the provisions of the 1991 Bond Ordinance and this Current Bond Ordinance, and
there shall be charged such rates and amounts as shall be adequate to meet all requirements of the
provisions of such 1991 Bond Ordinance and this Current Bond Ordinance.
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The City covenants that it will not reduce the rates and charges for services rendered by the
System without first filing with the City Clerk a Certification of an Independent Consulting Engineer
to the effect that the annual net revenues (defined as gross revenues less essential operation and
maintenance expenses) of the then existing System for the fiscal year preceding the date on which
such reduction is proposed, as such annual revenues are adjusted, after taking into account the
projected reduction in revenues anticipated to result from such proposed rate decrease, are equal to
not less than 130% of the required Maximum Annual Debt Service thereafter on all of the then
outstanding bonds payable from the revenues of the System.
The City also covenants to cause a report to be filed with the Governing Body within 90 days
after the end of each fiscal year by Certified Public Accountants and/or Independent Consulting
Engineers, setting forth what was the precise percentage of the required Maximum Annual Debt
Service falling due in any fiscal year 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; and the City covenants that if and whenever such report
so filed shall establish that such coverage of net revenues for such year was less than 130% of the
required Maximum Annual Debt Service thereafter, the City shall increase the rates to be effective
not later than six months from the end of such fiscal year, by an amount sufficient, in the opinion
of such Independent Consulting Engineers and/or Certified Public Accountants, to establish the
existence of or immediate projection of, such minimum 130% coverage.
Such coverage report and rate increase shall take into account estimates and projections of
such Certified Public Accountants and/or Independent Consulting Engineers relating to income and
expenses for the System for the current fiscal year then in effect. In any event, such rate increases
will not be less than five percent (5%) higher than the rates previously in effect.
Section 25. Provision Permitting Additional Parity Bonds. The 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 Bonds, regardless of the fact that they may be actually issued and delivered at different 1
times, and provided further that the lien and security of and for any bonds or obligations hereafter j J
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 Bonds and any Parity Bonds as may from time to time be
outstanding; provided the City hereby reserves 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
Bonds, for the purpose of financing the cost, not otherwise provided, of new waterworks facilities,
and/or -related auxiliary facilities, and/or to finance future extensions, additions, and/or
improvements to the System, or any part thereof, 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 then Outstanding Bonds.
(b) There shall have been procured and filed with the City Clerk a statement by a Certified
Public Accountant reciting the opinion that the "net income and revenues" (as defined below) of the
System for 12 consecutive months of the 18 months preceding the issuance of said additional Parity
Bonds (with adjustments as hereinafter provided) were equal to at least one hundred and thirty
percent (130%) of the Maximum Annual Debt Service requirements for all then Outstanding Bonds
plus the Parity Bonds then proposed to be issued. The calculation of Maximum Annual Debt Service
requirements of the additional Parity Bonds then proposed to be issued shall be determined on the
basis of the principal of, and interest on, such Parity Bonds being payable in approximately equal
annual installments, with the amounts of the respective mandatory redemption installments of any
then proposed term bonds which are to be part of such additional Parity Bonds, being treated as
principal maturities of such Parity Bonds for the purpose of calculating Maximum Annual Debt
Service Requirements.
"Net income and revenues" as herein used are defined as gross income and revenues less
operating expenses, which shall include salaries, wages, cost of maintenance and operation, cost of
water purchased, if any, materials and supplies, pumping costs, insurance, and all other costs that
are normally and -regularly so included undef ,;rbeo9'"fized accounting practices,- exclusive of
allowances for depreciation.
"Gross income and revenues" shall include investment income, disconnection fees, and all
other items of income which have been established as "reasonably anticipated annual income of the
System" (except for connection fees), based upon a certification of Independent Consulting
Engineers and/or Certified Public Accountants, as defined herein; provided (1) all "investment
income" shall be adjusted in any such calculation or projection to reflect the market rate currently
available from such investments, and (2) there shall be excluded any unusual items of income and
revenues which are of a generally non-recurring nature, according to the certification of Independent
Consulting Engineers and/or Certified Public Accountants. m
"Operating expenses" shall include only those items of costs of maintenance and operation
which are "reasonably anticipated annual operation and maintenance expenses 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 ofIndependent Consulting Engineers and/or Certified
Public Accountants. Such "net revenues" may be adjusted for the purpose of the foregoing
computations to reflect (i) any revisions in the schedule of rates and charges being imposed for the
services of the System at the time of issuance of any such additional Parity Bonds, including any
revised schedule of rates established by the City providing for rate increases to "be phased in" over
a two or three year period, and also to reflect (ii) any increase in such net revenues projected to be
produced in any Sinking Fund Year within three years after the issuance of such proposed Parity
Bonds by reason of the revenues anticipated to be derived from the extensions, additions and/or
improvements to the System being financed (in whole or in part) by such additional Parity Bonds,
provided (A) no projection for such latter adjustment shall be made as to any customers other than
structures, dwellings, businesses -and/or manufacturing establishments located on or which will abut
on extensions, additions and/or improvements to the System in existence at the time of the.issuance
of such Parity Bonds and/or being financed (in whole or in part) by such additional Parity Bonds;
rr and (B) such latter adjustment shall be made only if contracts for the immediate acquisition and/or
construction of such extensions, additions and/or improvements have been or will have been entered
into (secured by 100% performance bond) prior to the issuance of such additional Parity Bonds. All
adjustments provided for in this paragraph shall be based upon the written certification of an
Independent Consulting Engineer.
- (c) The payments required to be made into the various Funds and accounts created under, the
1991 Bond Ordinance must be certified as current by the General Manager of the System.
(d) The face amount of the Reserve Account Insurance Policy will be increased and/or an
additional guaranty agreement, surety bond or insurance policy will be obtained from an insurance
company or surety company having an insurance rating at least as high as the rating of MBIA at that
time, in a face amount such that the aggregate of the maximum amount payable by the issuers.of all
such instruments is equal to not less than the Maximum Annual Debt Service for all bonds which
are scheduled to be outstanding under the terms of the bond ordinance then contemplated to be
enacted to authorize the issuance of such then proposed Parity Bonds; or the aggregate value of the
maximum amounts payable by the issuers of the Reserve Account Insurance Policy and all similar
instruments then in effect and on deposit in the Debt Service Reserve Account plus the amount of
money which is required to be deposited in the Debt Service Reserve Account immediately upon the
issuance of the Parity Bonds then proposed to be issued must be equal to at least the Maximum Debt
Service Requirements for all bonds then scheduled to be outstanding under the terms of the then
proposed Parity Bond Ordinance immediately following the issuance of suchproposed Parity Bonds.
(e) If City cannot obtain a Reserve Account Insurance Policy or elects not to obtain a Reserve
Account Insurance Policy, the requirement as to funding of the Debt Service Reserve Account shall
be satisfied if a cash (and/or Investments) amount equal to not less than the Maximum Annual Debt
Service of all Outstanding Bonds, including the proposed Parity Bonds, shall be deposited or be on
deposit in the, Debt Service. Reserve Account. -
1,9
(f) The amount available to be paid by MBIA to the Transfer Agent under the terms of the
Reserve Account Insurance Policy issued by MBIA or to be paid by the issuer of any other similar
guaranty agreement, surety bond or insurance policy under the respective terms thereof, shall be
equal to the maximum limit specified in such Reserve Account Insurance Policy or such other
guaranty agreement, surety bond or insurance policy which is then in effect.
The City further reserves the right to issue one or more additional series of bonds to be
secured by a parity lien on and ratably payable from the revenues of the System for the purpose of
refunding or refinancing the Outstanding Bonds or any portion thereof, and/or any then previously
issued Parity Bonds, provided that prior to the issuance of such additional Parity Bonds for that
purpose, there shall have been procured and filed with the City Clerk a statement by a Certified
Public Accountant reciting the opinion based upon necessary investigation that:
(1) after the issuance of such Parity Bonds, the annual net revenues, as adjusted and defined
above, of the then existing System for the fiscal year preceding the date of issuance of such
Parity Bonds, after taking into account the revised debt service requirements resulting from
the issuance of such Parity Bonds and from the elimination of the bonds being refunded or
refinanced thereby, are equal to not less than 130% of the Maximum Annual Debt Service
then scheduled to fall due in any fiscal year thereafter for principal of and interest on all of
the then Outstanding Bonds payable from the revenues of the System, calculated in the
manner specified above; or
(2) in the alternative, that the debt service requirements for the Bonds, any then previously
issued Parity Bonds and the proposed parity refunding bonds, in any year of maturities
thereof after the redemption of the Bonds scheduled to be refunded through the issuance of
such proposed parity refimding bonds, shall not exceed the debt service requirements
applicable to the then Outstanding Bonds and any then previously issued Parity Bonds for
such year prior to the issuance of such proposed Parity Bonds and the redemption, retirement
or defeasement of the Bonds to be refunded, and without extending the maturities of such
parity refunding bonds beyond the maturities of the bonds being refunded.
The City further reserves the right, following receipt of the written recommendations of the
Commission, as follows:
(a) to combine and consolidate its existing water works System with its existing sewer system,
into a single, combined and consolidated, revenue producing project or system (the "Consolidated
System"), after which, the Bonds and any additional Parity Bonds would be secured by and payable
from the revenues of the Consolidated System. In order to accomplish such combining and
consolidating, the City further reserves the right to issue one or more additional series of bonds to
be secured by a parity lien on and ratably payable from the revenues of the Consolidated System,
for the purpose of refunding or refinancing certain outstanding bonds constituting a charge against
the existing sewer system (the "Prior Sewer Bonds"), provided that prior to the issuance of such
parity bonds for that purpose, there shall have been procured and filed with the City Clerk a
statement by a Certified Public Accountant reciting the opinion based upon necessary investigation
that:
(i) after the issuance of such parity bonds, the annual net revenues, as adjusted and
defined above, of the then existing water works system and the then existing sewer system
for the fiscal year preceding the date of issuance of such parity bonds, after taking into
account the revised Maximum Annual Debt Service resulting from the issuance of such
parity bonds and from the elimination of the bonds being refunded or refinanced thereby, are
equal to not less than 130% of the Maximum Annual Debt Service thereafter on all of the
then outstanding bonds payable from the combined revenues of the Consolidated System,
calculated in the manner specified above; or
(ii) in the alternative, that the Maximum Annual Debt Service for the Bonds, any
then previously issued Parity Bonds and the proposed parity refunding bonds, in any year of
maturities thereof after the redemption of the Prior Sewer Bonds to be refunded through the
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issuance of such proposed parity ref lAamg onds, shall not exceed the scheduled Maximum
Annual Debt Service applicable to the then Outstanding Bonds and any then previously
issued Parity Bonds, plus the Prior Sewer Bonds, for any corresponding year prior to the
issuance of such proposed parity refunding bonds.
The additional parity bonds, the issuance of which is restricted and conditioned by this
Ordinance, shall be understood to mean bonds payable from the income and revenues of the
Consolidated System on a parity with the Bonds and any Parity Bonds and shall not be deemed to
include nor to prohibit the issuance of any other obligations, the security and source of payment of
which is subordinate and subj ect to the priority of the payments into the Sinking Fund for the Bonds.
(b) After the creation of such Consolidated System, the City further reserves the right,
following receipt of written recommendations of the Commission, to add new water and/or sewer
facilities, and/or related auxiliary facilities, and/or to finance future extensions, additions and/or
improvements to the Consolidated System by the issuance of Bonds or more additional series of
bonds to be secured by a parity lien on and ratably payable from the revenues of the Consolidated
System, provided that:
(i) the facility or facilities to be constructed from the proceeds of the additional
parity bonds issued for that purpose is or are made a part of the Consolidated System and its
or their revenues are pledged as additional security for the additional parity bonds and the
Outstanding Bonds; and
(ii) 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 Consolidated System for 12 consecutive months out
of the preceding 18 months {with adjustments as provided above) are equal to at least 1.30
times the Maximum Annual Debt Service on the Bonds then outstanding and any Parity
Bonds including the Bonds then proposed to be issued.
The interest payment dates for all such additional Parity Bonds shall be semi-annually on
January 1 and July 1 of each year, and the principal maturities thereof shall be on July 1 of
the year in which any such principal is scheduled to become due.
(c) Also, after the creation of the Consolidated System, the City .further reserves the right,
following receipt of written recommendations of the Commission, to combine Parity Bonds, issued
to refund outstanding Prior Sewer Bonds, pursuant to the provisions of this Section, with parity
bonds issued to finance future extensions, additions and/or improvements to the Consolidated
System, and/or to accomplish the purposes set out above,. through the issuance of a single series of
parity refunding and improvement bonds.
The additional parity bonds, the issuance of which is restricted and conditioned by this
Section, shall be understood to mean bonds payable from, the income and revenues of the System
on a parity with the Bonds and any Parity. Bonds and shall not be deemed to include nor to prohibit
the issuance of any other obligations, the security and source ofpayment ofwhich is subordinate and
subject to the priority of the payments into the Sinking Fund for the Bonds. Interest payments for
all such additional Parity Bonds shall be semiannually on January 1 and July 1 of each year, and the
principal maturities thereof shall be on July 1 of the year in which .any such principal is scheduled
to become due.
Section 26. General Covenants of the City with Regard to the Operation -of the System.
So long as any of the Bonds and any Parity Bonds are outstanding, the City covenants with respect
to the System as follows: .
(a) Service to the City. The reasonable cost and value of any service rendered by the System,
to the City for any purpose shall be charged against: the City and paid thereby (from any legal
sources or funds available other than funds derived from the revenues of the System) as the service
21
accrues and the proceeds thereof shall be deposited in the general Fund the same as all other
revenues of the System.
(b) Disposal of Property. The City will not sell or otherwise dispose of any of the facilities
of the System, or any part thereof, and, except as provided for above, it will not create or permit to
be created any charge or lien on the revenues thereof ranking equal or prior to the charge or lien of
the Bonds. Notwithstanding the foregoing, the City may at any time permanently abandon the use
of, or sell at the fair market value, any part of the facilities of the System, provided that:
(1) It is in compliance with all covenants and undertakings in connection with all of the
Bonds then outstanding and payable from the revenues of the System and the Debt Service
Reserve Account for such Bonds is being maintained therein at the stipulated level;
(2) It will, in the event of any such sale, apply the proceeds to either (i) redemption of
Outstanding Bonds in accordance with the provisions governing prepayment of Bonds in
advance of maturity or purchase of Bonds in the open market at not exceeding the next
applicable redemption price, or (ii) replacement of the facility so disposed of by another
facility, the revenues of which shall be incorporated into the System as hereinbefore
provided;
(3) Certifies, in good faith, prior to any abandonment of use, that the facility or facilities to
be abandoned is or are no longer economically feasible of producing substantial net
revenues;
(4) It certifies, in good faith, that the estimated net revenues of the remaining facilities of the
System for the then next succeeding fiscal year, plus the estimated net revenues of the
facility or facilities, if any, to be added to the System, comply with the earnings requirements
hereinbefore provided in the provisions and conditions governing the issuance of additional
Parity Bonds;
(5) Such sale or disposition will not have the effect of causing the Bonds or any Parity
Bonds to become "arbitrage bonds" or of otherwise causing the interest on such Bonds or any
Parity Bonds to become taxable; and
(6) The proceeds of any such sale or disposition shall be paid into the Depreciation Fund and
shall not be permitted to reduce the amount otherwise required to be paid into said
Depreciation Fund.
(c) General Operation. The City shall operate and maintain the System in good condition,
shall faithfully and punctually perform all duties with reference to the System, required by the
Constitution and Statutes of the Commonwealth of Kentucky, shall charge and collect lawfully
established rates and charges for services rendered by the System, and will properly adopt and
enforce increased rates for the services of the System whenever such increase shall be necessary to
comply with any covenant of this Ordinance, or to make any payment required by this Ordinance,
including amounts payable to the City of any Reserve Account Insurance Policy.
(d) Records and Audits. Insofar as consistent with the laws ofKentucky, the City agrees that
so long as any of the Bonds remain outstanding, it will keep or cause the Commission to keep proper
books of records and accounts showing complete and correct entry of all transactions relating to the
System in accordance with generally accepted accounting principles (for facilities of like type and
size), in which complete and correct entries shall be made of all pertinent transactions. All such
records and books of account shall at all times during normal business hours be subject to inspection
by the owners of 10% or more of the principal amount of the Bonds then outstanding, or by their
duly authorized representatives.
The City further covenants that as soon as may be feasible after the close of each fiscal year,
and in any event not later than ninety (90) days thereafter, - the ,City will cause an audit of the
financial affairs of the System to be prepared by a Certified Public Accountant, covering the
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operation of the System for the preceding fiscal year,•and that within four months after the close of
each fiscal year the City will furnish to any owner of the Outstanding Bonds who shall request same
in writing, a copy of such annual audit report.
A copy of said audit report shall be kept on file in the office of the City Clerk and at the
office of the Commission, where such report will be subject to inspection at any reasonable time by
or on behalf of any owner of Outstanding Bonds. A condensation of the important facts shown by
such report will be mailed to any Bondowner upon request.
The City covenants and agrees that if and whenever it is in default as to any of the provisions
herein, it will furnish monthly operating reports to the Fiscal Agent, identified in Section 1 hereof,
if requested by the Fiscal Agent, in .such form as shall be satisfactory to such Fiscal Agent, and to
furnish such operating reports to any Bondowner requesting same.
Section- 27. Insurance. (a) Fire and Extended Coverage. If and to the extent that the
System includes structures above ground level, the City shall, upon receipt of the proceeds of the
sale of the Bonds, if such insurance is not already in force, procure fire and extended coverage
insurance on the insurable portion of all of the facilities of the System, of a kind and in such amounts
as would ordinarily be carried by private companies or public bodies engaged in operating a similar
utility.
The foregoing fire and extended coverage insurance shall be maintained so long as any of
the Bonds are outstanding and shall be in amounts sufficient to provide for not less than full recovery
whenever a loss from perils insured against does not exceed eighty percent (80%) of the full
insurable value of the damaged facility. , - _ . I -
In the event of any damage to or destruction of any part of the System, the City shall
promptly arrange for the application of the insurance proceeds for the repair or reconstruction of the
damaged or destroyed portion thereof.
(b) Liability Insurance on Facilities. Upon receipt of the proceeds of the sale of the Bonds,
the City shall, if such insurance is not already in force, procure and maintain, so long as any of the
Bonds are outstanding, public liability insurance relating ,to the operation of the facilities of the
System, with a $1,000,000 combined single limit for bodily injury and property damage to others
which may arise from the City's operations of the System and any other facilities constituting a
portion of the System.
(c) Vehicle Liability Insurance. If and to the extent that the City owns or operates vehicles
in the operation of the System, upon receipt of the proceeds of the Bonds, the City shall, if such
insurance is not already in force, procure and maintain, so long as any of the Bonds are outstanding,
vehicular public liability insurance with a $1,000,000 combined single limit for bodily injury and
property damage to others which may arise from the operation of such vehicles by the City.
Section 28. Additional Covenants Respecting the System. The City covenants that so
long as any of the Bonds and/or any Parity Bonds, are outstanding, as follows:
.. I (a) It will at all times own and operate the System, to the fullest extent permitted by law as
a public project on a revenue-producing basis, and will permit no services to be rendered free of
charge or without full compensation.
(b) It will at all times maintain the System in good condition through application of revenues
accumulated and set aside for operation and maintenance as herein provided, and will make renewals
and replacements, as the same may be required, through application of revenues accumulated and
set aside into the Depreciation Fund.
(c) It will not permit any competing water works system, public or private, to sell or serve
water services to customers within the corporate limits of the City and its outside service area, to the
extent that the City is legally able to prevent same..
23
.,.,,....., 1.1---, , , r II VIII -.,...,. ._ , .�ter,,.,.,,..," _ I,,. _... -L, I _�I- . __ _ _ .
(d) It will perform all duties with reference to the System required by the Statutes and
Constitution of Kentucky and will not sell, lease, mortgage or in any manner dispose of the System,
or any part thereof except as authorized herein.
(e) Pursuant to KRS 96.934 and other applicable legal provisions, the City will provide that
water services will be discontinued to any premises where there is a failure to pay any part of the
water charges, so billed, including such penalties and fees for disconnection and/or reconnection as
may be prescribed from time to time, to the greatest extent permitted by law.
(f) The City agrees that during the time that any of the Bonds and/or any Parity Bonds are
outstanding, it will take all steps as may be necessary to cause the owners of all properties abutting
upon any water lines of the City, to connect thereto and to keep connected thereto all such lines on
such properties, and the City will prohibit all such properties from obtaining water utilities services
from any source other than the System. This covenant shall be in favor of and enforceable by the
owners of the Bonds and all Parity Bonds in accordance with the provisions herein contained. If the
City fails to take such steps, such obligation of the City may be enforced by any one or more of the
Bondowners.
Section 29. Commissioners of the Water Works; Existence and Continuance
Contractual with Bondholders. Pursuant to an Ordinance heretofore enacted, the supervision,
management and conduct of the System is vested in a municipal commission, designated as the
"Commissioners of Water Works", which Ordinance shall constitute a contract between the City and
the holders of the Bonds, and any additional Parity Bonds issued pursuant to the Current Bond
Ordinance; and said Ordinance may not be amended or repealed so long as any of the 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.
Section 30. Signatures of Officers. If any of the officers whose signatures or facsimile
signatures appear on the Bonds 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 KRS 61.390.1
Section 31. Appointment and Duties of Bond Registrar, Transfer Agent and Payee
Bank; Duties of Escrow Bank. , Paducah, Kentucky, is hereby
.designated as the Bond Registrar, Transfer Agent and Payee Bank herein.
(a) Duties as Bond Registrar and Transfer Agent. Its duties as Bond Registrar and Transfer
Agent shall be as follows:
(1) To authenticate the Bonds authorized herein;
(2) To register all of the Bonds including those issued in exchange for any Bond in the names
of the respective owners thereof;
(3) Upon being supplied with a properly authenticated assignment satisfactory to the Bond
Registrar (in the sole discretion of such Bond Registrar), to transfer the ownership of Bonds from
one registered Bondowner to another within three (3) business days of the receipt of such proper
assignment by the Bond Registrar; and
(4) To cancel and destroy (or remit to the City for destruction, if so requested by the City)
all exchanged, matured, retired and redeemed Bonds, and to maintain adequate records relevant j
thereto. J
(b) Duties as Payee Bank. Its duties as Payee Bank shall be as follows:
(1) To make payment of principal of and interest on the Bonds from funds provided to the
Payee Bank in accordance with the provisions of Section 4 hereof;
24
(2) To remit, but only to the extent that all required funds are made available to the Payee
Bank by the City, semiannual interest paymentsrdirectly to the registered owner of each
Bond by regular United States mail. Said mteres�ayments shall be deposited in the United
States mail no later than each interest due date. Matured or redeemed Bonds shall be payable
upon presentation to the Payee Bank. For interest payment purposes, the Payee Bank shall
be entitled to rely on its records as Bond Registrar as to the ownership of each Bond as of
the 15th day of the month preceding an interest due date, and the Payee Bank's check shall
be drawn and mailed accordingly;
!' (3) To send appropriate written notice to the owner of each Bond to be redeemed and to
redeem Bonds prior to their stated maturity upon their presentation in accordance with the
provisions of Section 5 of this Ordinance upon receiving sufficient funds; and
(4) To supply the City with a written accounting evidencing the payment of interest on and
principal of the Bonds within 30 days following each respective due date.
(c) Duties of Escrow Bank The duties of the Escrow Bank will be to perform all duties of
the Escrow Bank specified herein and in the separate Escrow Agreement between the City and the
Escrow Bank with respect to the Refunded Bonds.
(d) General Provisions as to Registrar, Transfer Agent and Payee Bank. The Registrar,
Transfer Agent and Payee Bank (collectively the "Bank") shall be entitled to the advice of Counsel
and shall be protected for any acts taken by it in good faith in reliance upon such advice. It shall not
be liable for any actions taken in good faith and believed by it to be within its discretion or the power
conferred upon it by this Ordinance or the responsibility for the consequences of an oversight or
error in judgment.
The Bank may at any time resign from any or all of its capacities and duties set forth in this
Ordinance as to any or all of the foregoing by filing its resignation with the City Clerk and notifying
the original purchaser or purchasers of the Bonds. Thereupon, the City shall designate a successor
Bank as to such capacities and duties, which shall be an incorporated bank or trust company
authorized to transact business in the United States of America. Notwithstanding the foregoing, in
the event of such resignation provision shall be made for the orderly transition of the books, records
and accounts relating to the Bonds as to such resigned capacity or capacities to the successor Bank
in order that there will be no delinquencies in the payment of interest or principal due on the Bonds.
The Registrar shall indicate its acceptance of its duties as Registrar, Transfer Agent and
Payee Bank, by signing its Acceptance at the conclusion of this Ordinance.
(e) Replacement by City of Registrar, Transfer Agent and Payee Bank. The City shall have
the right at any time to replace the Registrar, Transfer Agent and Payee Bank, by observing the
following procedure:
(1) It must first enact an Ordinance to that effect.
(2) It must provide 90 days notice to such party in that capacity by certified or registered
mail.
(3) It must designate a replacement institution, which must be an institution insured by the
FDIC having assets of not less than $1,000,000.
(4) It must obtain a written acceptance from such successor, to assume the applicable duties,
at least 60 days in advance of the date of such association.
(5) It must notify Bondowners by sending written notice by regular U.S. mail of the
intended change at least 75. days in advance of the intended change.
(6) All of the foregoing must occur more than 60 days prior to an Interest Payment Date.
25
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(7) It must arrange with the existing institution to transfer all funds, records and/or other
necessary documents over to the successor, not less than 30 days prior to the succession date.
Section 32. Supplemental Ordinances not Requiring Consent of Bondowners, or MBIA.
The City may, without the consent of, or notice to, any of the owners of the Bonds, or to MBIA,
enact one or more Supplemental Ordinances as shall not be inconsistent with the terms and
provisions hereof for any one or more of the following purposes:
(a) to cure any ambiguity or formal defect or omission in this Ordinance;
(b) to grant to or confer upon the Registrar for the benefit of the Bondowners any additional
rights, remedies, powers or authorities that should lawfully be granted to or conferred upon
the Bondowners or the Registrar or either of them;
(c) to subject to the lien and pledge of this Ordinance additional revenues, properties or
collateral which may legally be subjected;
(d) to add to the conditions, limitations and restrictions on the issuance of the Bonds or any
Parity Bonds, other conditions, limitations and restrictions thereafter to be observed;
(e) to add to the covenants and agreements of the City in this Ordinance, other covenants
and agreements thereafter to be incurred by the City or to surrender any right or power herein
reserved to or conferred upon the City; or
(f) to effect the issuance of additional Parity Bonds pursuant to Section 25 hereof.
Section 33. Supplemental Ordinances Requiring Consent of Bondowners and MBIA.
Exclusive of Supplemental Ordinances covered by Section 33 hereof and subject to the terms and
conditions contained in this Section and not otherwise, the owners of not less than two-thirds in
aggregate principal amount of the Bonds and any Parity Bonds then outstanding, together with
MBIA (so long as it is the insurer of any insurance policy referred to herein, relative to the Debt
Service Reserve Account or to the Bonds) shall have the right, from time to time, anything contained
in this Ordinance to the contrary notwithstanding, to consent to and approve the enactment by the
City of such other Supplemental Ordinance as shall be deemed necessary and desirable by the City
for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any
terms or provisions contained in this Ordinance or in any Supplemental Ordinance; provided,
however, that nothing in this Section shall permit, or be construed without consent of the owner of
any Bonds then outstanding as permitting (a) an extension of the maturity date on which the
principal of, premium, if any, or interest on such Bond is or is to become, due and payable, (b) a
reduction in the principal amount of such Bond, the rate of interest thereon, or any redemption
premium, (c) a privilege or priority of any other Bond or Bonds over such Bond, (d) reduction in the
principal amount of the Bonds required for consent to such Supplemental Ordinance, or (e) the
creation of a lien upon or pledge of revenues, receipts, or other income from, or in connection with
the System ranking prior to or (except in connection with the issuance of Parity Bonds pursuant to
Section 25 of this Ordinance) on a parity with the lien or pledge by this Ordinance.
No Supplemental Ordinance shall be enacted for any of the purposes of this Section without
notice being furnished by the Registrar to each Bondowner in the same manner as the furnishing of
a Notice of Redemption of Bonds, and no such Ordinance shall be effective until at least 60 days
subsequent to the furnishing of such notice.
Section 34. 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 25 hereof, any proceedings heretofore taken for the issuance 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.
26
Section 35. 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 36. Effective Date of Ordinance. This Ordinance shall be in full force and effect
immediately following publication of Title and Summary of such Ordinance.
Introduced and Given First Reading, October 28, 1997. Given Second Reading and Final
Enactment, November 11, 1997.
Attest:
City Clerk
27
CITY OF PADUCAH, KENTUCKY
Mayor
-- - - - -. r
CERTIFICATE OF CITY CLERK
I, Lenita Smith, the City Clerk of the City of Paducah, Kentucky, certify that the foregoing
is a true copy of an Ordinance authorizing the issuance of City of Paducah, Kentucky Water Works
Revenue Refunding Bonds, Series 1997, that said Ordinance was introduced and given first reading
by the Board of Commissioners of said City of the 28th day of October, 1997, and that it was placed
and remained on file in my office for public inspection in that identical completed form until
November 11, 1997, on which date it was given its second reading and was enacted by said Board,
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
meetings, that said Ordinance has been ordered to be published by title and summary contained in
a Notice of Enactment and Summary of Ordinance, in the form attached hereto, and 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 , 1997.
(Seal of City)
W
City Clerk
0
ACCEPTANCE BY THE
BOND REGISTRAR, TRANSFER AGENT AND PAYEE BANK
The undersigned, hereby agrees to the provisions of the foregoing Ordinance to the extent
there are contained therein provisions as tothe rights and duties of it as Bond Registrar, Transfer
Agent and Payee Bank.
THE PADUCAH BANK AND
TRUST COMPANY
Dated:
Title
29
EXHIBIT A
Maturity Schedule
Payment Due
Principal
Payment Due
Principal
Janusry 1•
Payment
Janpm 1,
Payment
1998
$50,000
2004
$ 830,000
1999
75,000
2005
865,000
2000
80,000
2006
905,000
2001
85,000
2007
950,000
2002
85,000
2008
990,000
2003
795,000
2009
1,035,000
EXHIBIT B
UNITED STATES OF AMERICA
COMMONWEALTH OF KENTUCKY
COUNTY OF McCRACKEN
CITY;.OF .PADUCAH
WATER WORKS REVENUE
REFUNDING BOND
SERIES 1997
No. R CUSIP:
ORIGINAL ISSUE DATE $
INTEREST RATE: MATURITY DATE:
KNOW ALL MEN BY THESE PRESENTS: That the City of Paducah (the "City") in the
Commonwealth of Kentucky, for value received, hereby promises to pay, solely from the special
fund hereinafter identified, to the Registered Owner, or his or its registered assigns,
as hereinafter identified, upon presentation and surrender of this Bond, the principal sum of
DOLLARS,
on the Maturity Date specified above, and to pay interest on said sum at the per annum Interest Rate
specified above, semiannually from the Original Issue Date or from the most recent Interest Payment
Date preceding the date of or on which this Bond was authenticated, unless this Bond is
authenticated on an Interest Payment Date to which interest has been paid, in which event it shall
bear interest from that date, on January 1 and July 1 of each year (the "Interest Payment Date"),
unless redeemed prior thereto as hereinafter provided. The principal of and premium, if any, on this
Bond are payable upon surrender of this Bond, at maturity or at earlier redemption prior to maturity,
in lawful money of the United States of America at the principal corporate trust office of
, Paducah, Kentucky (the "Payee Bank" and the "Bond Registrar").
Interest due on this Bond shall be paid by check or draft mailed by regular United States mail
postmarked no later than the due date thereof by the Payee Bank to the registered owner hereof at
the address shown as of the 15th day of the month preceding each Interest Payment Date on the
Bond Register kept by the Bond Registrar.
This Bond is part of a duly authorized issue Dollars
($ ) principal amount of bonds (the "Current Bonds") authorized to be issued by the
City pursuant to an Ordinance duly enacted (the "Current Bond Ordinance" or the "Bond
Ordinance") under and in full appliance with the Constitution and Statutes of the Commonwealth
of Kentucky, and more specifically Sections 82.082, 58.010 through 58.140 and 58.440 of the
Kentucky Revised Statutes, and within the meaning of the decision of the Supreme Court of
Kentucky in the case of Hemlepp v. Aronberg, Ky., 369 S.W. 2d 121, for the purpose of refunding
a portion of the outstanding City of Paducah Water Works Revenue Refunding Bonds, Series 1991,
dated April 1,1991(the "Refunded Bonds"), secured by a pledge of the revenues of the water works
system of the City (the "System").
Through appropriate escrow arrangements the City has deposited into an escrow fund
T sufficient proceeds of these Current Bonds, together with any other necessary and available funds
(hereinafter collectively referred to as the "Escrowed Funds"), which Escrowed Funds, together with
the contractual income therefrom, shall be sufficient in amount to pay the principal of and interest
on all of the Refunded Bonds, either at maturity or with partial redemption in advance of maturity,
thereby defeasing the respective pledges of the income and revenues of the System securing said
Refunded Bonds.
These Current Bonds which rank in a parity with the unrefunded City of Paducah Water
Works Revenue Refunding Bonds, Series 1991, dated April 1, 1991 (the "Prior Bonds") do not
constitute an indebtedness of the City within the meaning of any constitutional or statutory
provisions or limitations, but are payable as to both principal and interest solely out of the gross
revenues of the System, a sufficient portion of which gross revenues, to pay the principal of and
interest on all of the Prior Bonds and these Current Bonds, as and when the same become due and
payable, shall be set aside and deposited into the "City of Paducah, Kentucky Water Works Sinking
Fund" (the "Sinking Fund").
It is provided in and by the Current Bond Ordinance that additional bonds ranking on a parity
with the Prior Bonds and the Current Bonds may be issued and outstanding upon the conditions and
restrictions provided in the Current Bond Ordinance; and these Current Bonds, together with the
Prior Bonds and such additional bonds ranking on a parity therewith as may be hereafter issued and
outstanding from time to time under the parity conditions and restrictions of the Current Bond
Ordinance, are and will continue to be payable from and secured by a first pledge of the gross
income and revenues to be derived from the operation of the System.
The City covenants that so long as any of the Prior Bonds, the Current Bonds and/or any
additional parity bonds are outstanding, the System will be continuously 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 provide for the depreciation
thereof, and to pay the cost of operation and maintenance of the System, as set out in the Current
Bond Ordinance.
These Current Bonds are issuable as fully registered bonds in the denomination of $5,000
and any authorized multiple thereof within a single maturity. This Current Bond is transferable by
the registered owner hereof in person or by his attorney duly authorized in writing at the principal
corporate trust office of the Bond Registrar, but only in the manner and subject to the limitations
provided in the Current Bond Ordinance, and upon surrender and cancellation of this Current Bond,
duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner
or his authorized representative. Upon such transfer being made, a new fully registered bond or
bonds of the same series and the same maturity of authorized denomination, for the same aggregate
principal amount will be issued to the transferee in exchange for this Current Bond.
The City and the Bond Registrar may deem and treat the registered owner hereof as the
absolute owner hereof for the purpose ofreceiving payment ofprincipal hereof, premium, if any, and
interest due hereon and for all other purposes, and neither the City nor the Bond Registrar shall be
affected by any notary to the contrary.
The Current Bonds maturing on and after July 1, 2008, 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 the Bond Registrar by lot in such manner as may be determined by
the Bond Registrar) on any Interest Payment Date falling on or after July 1, 2008, upon payment of
face amount plus a redemption premium constituting the total redemption price, expressed in terms
of a percentage of the face amount of the Bonds so called for redemption, plus all accrued interest
maturing on and prior to the redemption date, as follows:
Redemption Date Redemption Price
September 1, 2007 through and
including December 31, 2007 102%
January 1, 2008 through and
including June 30, 2008 101%
July 1, 2008 and thereafter 100%
The City has entered into an agreement with MBIA to the effect that the City shall not
exercise its option to redeemed any of the Current Bonds without the consent of MBIA if and
whenever the Debt Service Reserve Fund is not fully insured, or if any amount is owed to MBIA
with respect to the Reserve Account Insurance Policy.
oft
In the event that a Bond subject to redemption is in a denomination larger than $5,000, a
portion of such Bond may be redeemed, but only in a principal amount equal to $5,000 or any
integral multiple thereof, if the Bond is one of the maturities or amounts or part of the maturities or
amounts called for redemption. Upon surrender of any Bond for redemption in part, the Bond
Registrar shall authenticate and deliver an exchangae�Bond or Bonds in an aggregate principal amount
equal to the unredeemed portion of the Boyd 9&§ ''&red.
The Bond Registrar shall give notice of any redemption by sending such notice by certified
� or registered mail not less than 30 and not more than 60 days prior to the date fixed for redemption
to the registered owner of each Bond to be redeemed in whole or in part at the address shown on the
Bond Register as of the date of mailing of such notice the Bond Registrar may furnish one other
form of such notice more than 60 days prior to the date fixed for redemption, provided at least one
such notice shall be sent not less than 30 nor more than 60 days prior to such date. Such notice shall
state the redemption date, the redemption price, the amount (or number of months) of accrued
interest payable on the redemption date, the place at which the Bonds are to be surrendered for
payment, and, if less than all of the Bonds outstanding are to be redeemed, an identification of the
Bonds or portions thereof to be redeemed. Any notice mailed as provided shall be conclusively
presumed to have been duly given, whether or not the Bondowner receives such notice. Prior to each
redemption date, the Bond Registrar shall make provision, to the extent funds are then available
therefor, for the payment of the redemption price of the Bonds to be redeemed on such date by
setting aside and holding in trust an amount sufficient to pay such redemption price. Upon
presentation and surrender of any such Bond at the principal corporate trust office of the Bond
Registrar on or after the date fixed for redemption, the Bond Registrar shall pay the redemption price
of such Bond (including accrued interest) from the funds set aside for such purpose.
All of said Bonds as to which the City reserves and exercises the right of redemption and as
to which notice as aforesaid shall have been given, and for the retirement of which, upon the terms
aforesaid, funds are duly provided, will cease to bear interest on the redemption date. The required
notice shall be deemed to have been given upon the City furnishing Notice of Redemption to the
Bond Registrar and upon the Bond Registrar acknowledging that it has instructions to send such
notice and that it will do so at the proper time, even if the time for furnishing such notice has not yet
arrived.
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
prescribed 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, the Prior Bonds and all other bonds ranking on a parity therewith,
including those which may be issued hereafter.
IN WITNESS WHEREOF, said City of Paducah, in the Commonwealth of Kentucky, has
caused this Bond to be executed on its behalf with the duly authorized or reproduced facsimile
signature of the Mayor of said City, and the reproduced facsimile of its Corporate Seal to be
imprinted hereon and attested by the reproduced facsimile signature of its City Clerk, dated as of the
first day of December, 1997; provided, however, that this Bond shall not be valid or become
obligatory for any purpose, or be entitled to any security or benefit under the Current Bond
Ordinance pursuant to which it was authorized until the Authentication Certificate of Registrar
printed hereon shall have been executed by the manual signature of a duly authorized representative
of the Bond Registrar.
CITY OF PADUCAH, KENTUCKY
By (Facsimile Si ng_ature)
Mayor
Attest:
(Facsimile Signature)
City Clerk
(Facsimile Seal)
The Authentication Date of this Bond is:
(FORM OF AUTHENTICATION CERTIFICATE OF REGISTRAR)
AUTHENTICATION CERTIFICATE OF REGISTRAR
This is to certify that this Bond is one of the Bonds referred to in the within Bond and in the
Bond Ordinance authorizing same.
THE FIFTH THIRD BANK
Cincinnati, Ohio,
Bond Registrar
LOW
Authorized Officer
(FORM OF ASSIGNMENT)
Assignment
For value received, the undersigned hereby sells, assigns and transfers unto
the within
Bond and hereby irrevocably constitutes and appoints
attorney to transfer said Bond on the books kept for registration and transfer of this Bond, with full
power of substitution in the premises.
Dated:
In the presence of:
0