Gilmore & Bell, P.C.

Draft – January 18, 2001

K105000.02/Ordinance v2

BILL NO. 101

ORDINANCE NO. 1120

OF THE

BOARD OF ALDERMEN

OF THE

CITY OF RICH HILL, MISSOURI

ADOPTED JANUARY 23, 2001

________________

AUTHORIZING:

$900,000

COMBINED WATERWORKS AND SEWERAGE SYSTEM REVENUE BONDS

(STATE REVOLVING FUND – LEVERAGED LOAN PROGRAM)

SERIES 2001

ORDINANCE

TABLE OF CONTENTS

Page

Title…………………………………………………………………………………………………….. 1

Recitals………………………………………………………………………………………………… 1

article I

DEFINITIONS

Section 101. Definitions of Words and Terms…………………………………………………………………. 5

ARTICLE II

AUTHORIZATION OF BONDS

Section 201. Authorization of Bonds…………………………………………………………………………… 10

Section 202. Security for Bonds…………………………………………………………………………………. 10

Section 203. Description of Bonds……………………………………………………………………………… 10

Section 204. Designation of Paying Agent…………………………………………………………………….. 11

Section 205. Method and Place of Payment of Bonds……………………………………………………… 11

Section 206. Registration, Transfer and Exchange of Bonds……………………………………………… 11

Section 207. Execution, Authentication and Delivery of Bonds…………………………………………. 12

Section 208. Mutilated, Destroyed, Lost and Stolen Bonds……………………………………………….. 12

Section 209. Cancellation and Destruction of Bonds Upon Payment…………………………………… 12

Section 210. Sale of the Bonds; Authorization and Execution of Documents…………………………. 13

Section 211. Administrative Fee and Paying Agent’s Fee………………………………………………….. 13

ARTICLE III

REDEMPTION OF BONDS

Section 301. Optional Redemption……………………………………………………………………………… 13

Section 302. Mandatory Redemption and Tender Provisions…………………………………………….. 13

Section 303. Selection of Bonds to Be Redeemed…………………………………………………………… 14

Section 304. Notice and Effect of Call for Redemption……………………………………………………. 14

ARTICLE IV

RATIFICATION OF FUNDS

Section 401. Ratification of Funds………………………………………………………………………………. 15

Section 402. Administration of Funds and Accounts……………………………………………………….. 15

Section 403. Deposit of Bond Proceeds……………………………………………………………………….. 16

ARTICLE V

APPLICATION OF REVENUES

Section 501. Revenue Fund………………………………………………………………………………………. 16

Section 502. Application of Moneys in Funds and Accounts……………………………………………… 16

Section 503. Deficiency of Payments into Funds and Accounts…………………………………………. 18

Section 504. Transfer of Funds to Paying Agent…………………………………………………………….. 18

ARTICLE VI

DEPOSIT AND INVESTMENT OF MONEYS

Section 601. Investment of Moneys……………………………………………………………………………. 18

ARTICLE VII

PARTICULAR COVENANTS OF THE CITY

Section 701. Efficient and Economical Operation; User Charge Ordinance and

……….. Sewer Use Ordinance………………………………………………………………….. 19

Section 702. Rate Covenant……………………………………………………………………………………… 19

Section 703. Reasonable Charges for all Services…………………………………………………………… 19

Section 704. Annual Budget……………………………………………………………………………………… 20

Section 705. Annual Audit………………………………………………………………………………………… 20

Section 706. Performance of Duties……………………………………………………………………………. 20

ARTICLE VIII

ADDITIONAL BONDS

Section 801. Prior Lien Bonds…………………………………………………………………………………… 21

Section 802. Parity Bonds or Obligations……………………………………………………………………… 21

Section 803. Junior Lien Bonds…………………………………………………………………………………. 22

Section 804. Refunding Bonds…………………………………………………………………………………… 22

ARTICLE IX

DEFAULT AND REMEDIES

Section 901. Acceleration of Maturity in Event of Default………………………………………………… 22

Section 902. Remedies…………………………………………………………………………………………….. 23

Section 903. Limitation on Rights of Bondowners………………………………………………………….. 23

Section 904. Remedies Cumulative…………………………………………………………………………….. 23

Section 905. No Obligation to Levy Taxes……………………………………………………………………. 24

ARTICLE X

DEFEASANCE

Section 1001. Defeasance………………………………………………………………………………………….. 24

ARTICLE XI

AMENDMENTS

Section 1101. Amendments………………………………………………………………………………………… 24

ARTICLE XII

MISCELLANEOUS PROVISIONS

Section 1201. Further Authority…………………………………………………………………………………… 25

Section 1202. Severability………………………………………………………………………………………….. 25

Section 1203. Governing Law…………………………………………………………………………………….. 25

Section 1204. Effective Date………………………………………………………………………………………. 26

Passage ………………………………………………………………………………………………. 26

BILL NO. 101 ORDINANCE NO. 1120

AN ORDINANCE AUTHORIZING THE ISSUANCE OF $900,000 PRINCIPAL AMOUNT OF COMBINED WATERWORKS AND SEWERAGE SYSTEM REVENUE BONDS (STATE REVOLVING FUND – LEVERAGED LOAN PROGRAM) SERIES 2001, OF THE CITY OF RICH HILL, MISSOURI, FOR THE PURPOSE OF EXTENDING AND IMPROVING THE CITY’S COMBINED WATERWORKS AND SEWERAGE SYSTEM; PRESCRIBING THE FORM AND DETAILS OF THE BONDS AND THE AGREEMENTS MADE BY THE CITY TO FACILITATE AND PROTECT THEIR PAYMENT AND PRESCRIBING OTHER RELATED MATTERS

WHEREAS, the City of Rich Hill, Missouri (the “City”), is a city of the fourth class organized and existing under the constitution and laws of the State of Missouri; and

WHEREAS, the City now owns and operates a revenue producing combined waterworks and sewerage system, serving the City, its inhabitants and others within its service area, including connected and related appurtenances and facilities and extensions, improvements, additions and enlargements made or acquired by the City after the date of this Ordinance (the “System”); and

WHEREAS, the City desires to extend and improve its System, such extensions and improvements to be financed in whole or in part by the issuance by the City pursuant to this Ordinance of its Combined Waterworks and Sewerage System Revenue Bonds (State Revolving Fund – Leveraged Loan Program) Series 2001 (the “Bonds”) in the original principal amount of $900,000; and

WHEREAS, to provide for the most cost-effective financing of the extensions and improvements of the System the City desires to participate in the Missouri Leveraged State Water Pollution Control Revolving Fund Program (the “SRF Program”) of the Missouri Department of Natural Resources (“DNR”) and the Clean Water Commission of the State of Missouri (the “Commission”); and

WHEREAS, the City is authorized under the provisions of Chapter 250 of the Revised Statutes of Missouri (the “Act”) to issue and sell revenue bonds for the purpose of paying all or part of the cost of extending and improving the System, with the cost of operation and maintenance of the System and the principal of and interest on revenue bonds payable solely from the Net Revenues (as defined below); and

WHEREAS, pursuant to the Act, a special bond election was duly held in the City on February 3, 1998 on the following question:

QUESTION

Shall Rich Hill, Missouri, issue its combined waterworks and sewerage system revenue bonds in the amount of $900,000 for the purpose of repairing sewer collection lines and making sewerage treatment plant improvements, the cost of operation and maintenance of said combined waterworks and sewerage system and the principal of and interest on said revenue bonds to be payable solely from the revenues derived by the City from the operation of its combined waterworks and sewerage system, including all future improvements and extensions thereto?

and it was found and determined that more than a simple majority of the qualified electors of the City voting on the question had voted in favor of the question, the vote having been 166 votes for the question and 66 votes against the question; and

WHEREAS, the Board of Aldermen (the “Governing Body”) of the City has caused plans and specifications for extensions and improvements to the System and a cost estimate to be made by the Consulting Engineer (as defined below); and

WHEREAS, the plans and specifications and the cost estimate are accepted and approved and are on file in the office of the City Clerk, the amount of the estimated cost being not less than the Original Principal Amount; and

WHEREAS, none of the bonds so authorized have been issued and the City finds and determines it is necessary and advisable and in the best interest of the City and of its inhabitants to issue the Bonds in the Original Principal Amount; and

WHEREAS, by Ordinance No. 1015 passed on June 23, 1992 (the “Outstanding Senior Bond Ordinance”), the City has issued its Combined Waterworks and Sewerage System Revenue Improvement and Refunding Bonds, Series 1992 (the “Outstanding Senior Bonds”), dated July 1, 1992, in the original principal amount of $725,000, of which $570,000 remains outstanding as of the date of adoption of this Ordinance; and

WHEREAS, the City, upon the issuance of the Bonds, will not have outstanding any other bonds or other obligations payable from the Net Revenues other than the Outstanding Senior Bonds and the Bonds; and

WHEREAS, under the provisions of the Outstanding Senior Bond Ordinance, the City may issue additional bonds payable out of the Net Revenues that are junior and subordinate to the Outstanding Senior Bonds, only if certain conditions are met; and

WHEREAS, it is hereby found and determined that it is necessary and advisable and in the best interest of the City and its inhabitants that revenue bonds be issued and secured in the form and manner provided in this Ordinance and be sold to DNR under the SRF Program, subject to the conditions of the Outstanding Senior Bond Ordinance;

NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF ALDERMEN OF THE CITY OF RICH HILL, MISSOURI AS FOLLOWS:

ARTICLE I

DEFINITIONS

Section 101. Definition of Words and Terms. Capitalized words and terms not otherwise defined in this Ordinance have the meanings set forth in the Purchase Agreement and Escrow Agreement (each as identified below). In addition to the foregoing and words and terms defined in the Recitals and elsewhere in this Ordinance, capitalized words and terms have the following meanings in this Ordinance:

“Account” means any of the funds or accounts established by Section 4 of the Escrow Agreement.

“Additional Interest” means additional interest on the Bonds prior to the Completion of Disbursements, equal to the actual investment earnings on the Construction Fund less an amount equal to investment earnings on the Construction Fund calculated at the interest rate on the Bonds, computed by the Paying Agent on each Interest Payment Date. All references in this Ordinance to the payment of interest on the Bonds includes the Additional Interest.

“Administrative Expense Fund” means the fund designated as such and established by Section 4 of the Escrow Agreement. The Administrative Expense Fund does not constitute part of the SRF Program.

“Administrative Fee” means the annual administrative fee of DNR equal to 0.50% of the aggregate amount of the Bonds Outstanding as of each Administrative Fee Calculation Date (including the final maturity date of the Bonds), payable to the Paying Agent within 30 days after the City’s receipt of a statement from the Paying Agent for deposit to the Administrative Expense Fund and subsequent transfers to DNR as described in Section 9 of the Escrow Agreement.

“Administrative Fee Calculation Date” means the Business Day preceding each Principal Payment Date.

“Authority” means the State Environmental Improvement and Energy Resources Authority, a body corporate and politic and a governmental instrumentality of the State.

“Authority Program Bonds” means any bonds of the Authority issued under the SRF Program, all or a portion of the proceeds of which are loaned to the City pursuant to the SRF Program.

“Authorized Representative” means the representative of the City designated as such by the City in accordance with the Regulations.

“Bond Debt Service” means the amount of the principal of and interest due on the Bonds on the date of calculation required in this Ordinance.

“Bondowner” means DNR.

“Bond Register” means the books for the registration, transfer and exchange of Bonds kept at the office of the Paying Agent.

“Bonds” means the Combined Waterworks and Sewerage System Revenue Bonds (State Revolving Fund – Leveraged Loan Program) Series 2001 in the original principal amount of $900,000 authorized herein and issued hereunder.

“Construction Fund” means the Construction Fund established by Section 4 of the Escrow Agreement.

“Consultant” means the Consulting Engineer or an independent certified public accountant or firm of independent certified public accountants.

“Consulting Engineer” means each independent engineer or engineering firm with experience in designing and constructing wastewater treatment, sanitary sewerage or water pollution control facilities, or, if applicable, water production and transmission facilities, and retained by the City.

“Costs of Issuance” means the costs of issuance of the Bonds as certified by the City on the date of issuance of the Bonds.

“Current Expenses” means all reasonable and necessary expenses of ownership, operation, maintenance and repair of the System and keeping the System in good repair and working order, determined in accordance with generally accepted accounting principles, including current maintenance charges, expenses of reasonable upkeep and repairs, salaries, wages, costs of materials and supplies, Paying Agent fees and expenses, annual audits, periodic Consultant’s reports, properly allocated share of charges for insurance, the cost of purchased water, gas and power, obligations (other than for borrowed money or for rents payable under capital leases) incurred in the ordinary course of business, liabilities incurred by endorsement for collection or deposit of checks or drafts received in the ordinary course of business, short-term obligations incurred and payable within a particular Fiscal Year, obligations incurred for the purpose of leasing (pursuant to a true or operating lease) equipment, fixtures, inventory or other personal property, and all other expenses incident to the ownership and operation of the System, but excluding interest paid on System Revenue Bonds, depreciation and amortization charges (including payments into the Depreciation and Replacement Account), and all general administrative expenses of the City not related to the operation of the System.

“Debt Service Fund” means the Debt Service Fund established by Section 4 of the Escrow Agreement.

“Defeasance Securities” means:

(a) Federal Securities;

(b) obligations of the Resolution Funding Corporation or any successor, but only if the use of the obligations to pay and discharge Bonds pursuant to Article X will cause the discharged Bonds to be rated in the highest long-term category by the Rating Agency; or

(c) obligations of any state of the United States of America or of any agency, instrumentality or local government unit of any state that:

(i) are not callable at the option of the obligor prior to maturity or for which irrevocable instructions have been given by the obligor to call on the date specified in the instructions, and

(ii) are fully secured as to principal, redemption premium and interest by a fund, consisting of cash or Federal Securities, that:

(A) may be applied only to the payment of principal, redemption premium and interest on the obligations, and

(B) is sufficient, as verified by a nationally recognized independent certified public accountant, to pay the principal, redemption premium and interest on the obligations.

“Depreciation and Replacement Account” means the fund or account designated as such and created or ratified and confirmed by Section 401.

“Escrow Agreement” means the Escrow Agreement dated as of January 1, 2001, by and between the City and the Paying Agent, as supplemented, modified or amended in accordance with its terms, related to the Bonds.

“Federal Securities” means any direct obligation of, or obligation the timely payment of the principal of and interest on which is unconditionally guaranteed by, the United States of America and backed by its full faith and credit.

“Interest Payment Date” means each April 1 and October 1, commencing April 1, 2001.

“Investment Securities” means any of the following securities legal for the investment of funds of the City at the time of purchase:

(a) United States Government Obligations;

(b) bonds, notes or other obligations of the State of Missouri, or any political subdivision of the State of Missouri, that at the time of their purchase are rated in either of the two highest rating categories by a nationally recognized rating service;

(c) repurchase agreements with any bank, bank holding company, savings and loan association, trust company, or other financial institution organized under the laws of the United States or any state, that are continuously and fully secured by any one or more of the securities described in clause (a) or (b) above and that have a market value, exclusive of accrued interest, at all times at least equal to the principal amount of such repurchase agreement and are held in a custodial or trust account for the benefit of the City;

(d) obligations of Federal National Mortgage Association, the Government National Mortgage Association, the Federal Financing Bank, the Federal Intermediate Credit Corporation, Federal Banks for Cooperatives, the Federal Land Banks, the Federal Home Loan Banks, Farmers Home Administration and Federal Home Loan Mortgage Corporation; and

(e) certificates of deposit or time deposits, whether negotiable or nonnegotiable, issued by any bank or trust company organized under the laws of the United States of America or any state, provided that such certificates of deposit or time deposits shall be either (1) continuously and fully insured by the Federal Deposit Insurance Corporation, or (2) continuously and fully secured by such securities as are described above in clauses (a) through (c), inclusive, which shall have a market value, exclusive of accrued interest, at all times at least equal to the principal amount of such certificates of deposit or time deposits.

“Net Revenues” means Revenues less Current Expenses.

“Operation and Maintenance Account” means the fund or account designated as such and created or ratified and confirmed by Section 401.

“Ordinance” means this ordinance as from time to time amended in accordance with its terms.

“Outstanding” means, as of the date of determination, all Bonds issued and delivered under this Ordinance, except:

(1) Bonds canceled by the Paying Agent or delivered to the Paying Agent for cancellation;

(2) Bonds for the payment of the principal or redemption price of and interest on which money or Defeasance Securities are held under Section 1001;

(3) Bonds in exchange for which, or in lieu of which, other Bonds have been registered and delivered pursuant to this Ordinance; and

(4) Bonds allegedly mutilated, destroyed, lost, or stolen and paid under Section 208.

“Owner” means the Bondowner.

“Parity Bonds” means the Bonds and any other parity bonds issued under Section 802 payable from the Revenues on a parity basis with the Bonds.

“Parity Ordinances” means this Ordinance and the ordinance under which any other Parity Bonds are issued.

“Paying Agent” means State Street Bank and Trust Company of Missouri, N.A., the paying agent and escrow agent, and its successors and assigns acting at any time as Paying Agent and Escrow Agent under this Ordinance and the Escrow Agreement.

“Principal Payment Date” means each October 1, commencing October 1, 2002, and any date on which the Bonds are tendered for purchase in accordance with Section 302(c) or the Bonds are optionally redeemed in accordance with Section 301.

“Purchase Agreement” means the Purchase Agreement dated as of January 1, 2001, by and between the City and DNR, related to the Bonds.

“Record Date” for the interest payable on any Interest Payment Date means the 15th day (whether or not a Business Day) of the calendar month next preceding such Interest Payment Date.

“Repayment Fund” means the fund designated as such and established by Section 4 of the Escrow Agreement. The Repayment Fund shall not constitute part of the SRF Program.

“Revenue Fund” means the fund created or ratified by Section 401.

“Revenues” means all income and revenues derived by the City from the ownership and operation of the System, including investment and rental income, net proceeds from business interruption insurance, sales tax revenues which have been annually appropriated by the City or which are limited solely to the payment of improvements to or expenses of the System and any amounts deposited in escrow in connection with the acquisition, construction, remodeling, renovation and equipping of facilities to be applied during the period of determination to pay interest on System Revenue Bonds, but excluding any profits or losses on the early extinguishment of debt or on the sale or other disposition of investments or fixed or capital assets not in the ordinary course of business.

“SRF Program” means the Missouri Leveraged State Water Pollution Control Revolving Fund Program.

“SRF Program Bonds” means the Bonds and any other Parity Bonds of the City purchased by DNR in connection with the City’s participation in the SRF Program.

“SRF Program Subsidy Bonds” means any bonds of the City purchased by the Authority in connection with the City’s participation in the SRF Program.

“SRF Subsidy” means the amount of investment earnings which will accrue on the Reserve Account during each Fiscal Year (taking into account scheduled transfers from the Reserve Account which will occur upon the payment of principal on the Authority Program Bonds and assuming that the construction for the applicable project has been completed), if the Reserve Security is equal to the Reserve Percentage of the principal amount of the SRF Program Subsidy Bonds outstanding, the Reserve Account is invested in an investment agreement at a fixed rate during the calculation period and investment earnings are reduced by the Administrative Fee payable to DNR. Administrative Fee, Reserve Account and Reserve Percentage as used in this definition have the respective meaning set forth in the bond indentures for the applicable Authority Program Bonds.

“State” means the State of Missouri.

“Surplus Account” means the fund or account created or ratified and confirmed in Section 401 hereof.

“System Revenue Bonds” means, collectively, the Bonds, the Outstanding Senior Bonds, the Parity Bonds and all other revenue bonds which are payable from the Revenues.

ARTICLE II

AUTHORIZATION OF BONDS

Section 201. Authorization of Bonds. The Bonds are authorized and directed to be issued in the principal amount of $900,000 for the purposes of this Ordinance.

Section 202. Security for Bonds.

(a) The Bonds are special, limited obligations of the City payable solely from, and secured by a pledge of, the Net Revenues. The taxing power of the City is not pledged to the payment of the Bonds. The Bonds do not constitute a general obligation of the City or an indebtedness of the City within the meaning of any constitutional, statutory or charter provision, limitation or restriction.

(b) The Bonds are junior and subordinate to the Outstanding Senior Bonds with respect to payment of principal and interest from the Revenues. In the event of any default in the payment of the Outstanding Senior Bonds, the Revenues will be applied solely to the payment of the principal of and interest on the Outstanding Senior Bonds until the default is cured.

Section 203. Description of Bonds. The Bonds consist of fully registered bonds without coupons, numbered from R-1 consecutively upward, in the denomination of $100 or any integral multiple thereof. The Bonds will be issued in substantially the form of Exhibit A and will be registered, transferred and exchanged as provided in Section 206. The Bonds are dated the date of original delivery as set forth on the Bonds. The Bonds shall mature and become due on October 1, 2005 (subject to optional and mandatory redemption and tender prior to maturity as provided in Article III) and shall bear interest at an annual rate equal to 30% of the Twenty-Five Revenue Bond Index as published in The Bond Buyer most recently prior to the issuance and delivery of the Bonds, rounded to the nearest 0.1% (computed on the basis of a 360-day year of twelve 30-day months) from the Dated Date or from the most recent Interest Payment Date to which interest has been paid or provided for, plus Additional Interest. Interest is payable on each Interest Payment Date.

Section 204. Designation of Paying Agent. The City has designated the Paying Agent as the City’s paying agent for the payment of the principal of and interest on the Bonds, bond registrar with respect to the registration, transfer and exchange of Bonds and escrow agent with respect to the funds established with the Paying Agent under the Escrow Agreement.

Section 205. Method and Place of Payment of Bonds.

(a) Payment of the Bonds will be made with any coin or currency that is legal tender for the payment of debts due the United States of America on the payment date.

(b) The principal of and redemption premium, if any, payable on each Bond will be made at maturity or upon earlier redemption to the Owner shown in the Bond Register at the maturity or optional redemption date of each Bond, upon presentation and surrender of the Bond at the principal corporate trust office of the Paying Agent. The interest payable on each Bond on any Interest Payment Date will be made by check or draft mailed by the Paying Agent to the address of the Owner shown in the Bond Register. The principal of and redemption premium, if any, and interest on the Bonds is payable by electronic transfer in immediately available federal funds to a bank in the continental United States of America pursuant to the written instructions from any Owner received by the Paying Agent not less than 15 days prior to the Record Date, which instructions shall include the name and ABA routing number of the bank, the account number and an acknowledgment that a transfer fee will be payable by the Owner.

(c) The Paying Agent will keep a record of payment of principal of, redemption premium, if any, and interest on all Bonds and, at least annually at the request of the City, will forward a copy or summary of the record of payments to the City.

Section 206. Registration, Transfer and Exchange of Bonds.

(a) The City will cause the Paying Agent to keep the Bond Register. Each Bond when issued will be registered in the name of the Owner on the Bond Register. Bonds will be transferred and exchanged only upon the Bond Register.

(b) Upon surrender of any Bond at the principal corporate trust office of the Paying Agent, the Paying Agent will transfer or exchange the Bond for a new Bond or Bonds in any authorized denomination of the same maturity and in the same aggregate principal amount as the Bond which was presented for transfer or exchange. All Bonds presented for transfer or exchange must be accompanied by a written instrument of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Paying Agent, duly executed by the Owner or by the Owner’s authorized agent. All Bonds presented for transfer or exchange must be surrendered to the Paying Agent for cancellation.

(c) For every exchange or transfer of Bonds the City or the Paying Agent may levy a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid for the exchange or transfer. The charge must be paid by the person requesting the exchange or transfer. Payment of the charge is a condition precedent to the exchange or transfer. If any Owner fails to provide a certified taxpayer identification number to the Paying Agent, the Paying Agent may make a charge against the Owner sufficient to pay any governmental charge required to be paid as a result of such failure. In compliance with Section 3406 of the Code, this amount may be deducted by the Paying Agent from amounts payable to the Owner under the Ordinance and the Bonds.

(d) The City and the Paying Agent will treat the person in whose name any Bond is registered as the absolute owner of the Bond, whether or not payment of the Bond is overdue, for the purpose of receiving payment of the principal of, redemption premium, if any, and interest on the Bond and for all other purposes. All payments made to any Owner or upon the Owner’s order will be valid and effectual to satisfy and discharge the City’s liability for payment of the Bond to the extent of the sum or sums paid. Neither the City nor the Paying Agent will be affected by any notice to the contrary.

(e) At reasonable times and under reasonable rules established by the Paying Agent, the Owners of 25% or more in principal amount of the Outstanding Bonds, or their representative designated in a manner satisfactory to the Paying Agent, may inspect and copy the Bond Register.

(f) Notwithstanding anything herein contained to the contrary, without the prior consent of City, Bonds shall be transferable only to any successor to DNR or its assigns.

Section 207. Execution, Authentication and Delivery of Bonds.

(a) Each Bond must be signed by the manual or facsimile signature of the Mayor and attested by the manual or facsimile signature of the City Clerk, and have the official seal of the City affixed or imprinted. If any officer whose manual or facsimile signature appears on any Bond ceases to be an officer before the delivery of any Bond signed by the officer, the manual or facsimile signature on the Bond will be valid and sufficient for all purposes of this Ordinance.

(b) The Mayor and the City Clerk are directed to prepare and execute the Bonds as specified in this Article, and when executed, to deliver the Bonds to the Paying Agent for authentication. Upon authentication, the Paying Agent will deliver the Bonds to the Bondowner, upon payment of the purchase price for the Bonds.

(c) Each Bond will be authenticated by any authorized officer or employee of the Paying Agent. No Bond is entitled to any security or benefit under this Ordinance or be valid or obligatory for any purpose until authenticated by the Paying Agent.

Section 208. Mutilated, Destroyed, Lost and Stolen Bonds.

(a) If (i) any mutilated Bond is surrendered to the Paying Agent or the Paying Agent receives evidence to its satisfaction of the mutilation, destruction, loss or theft of any Bond, and (ii) there is delivered to the City and the Paying Agent security or indemnity as required by them, in the absence of notice to the City or the Paying Agent that the Bond has been acquired by a bona fide purchaser, the City will execute and the Paying Agent will register and deliver, in exchange for or in lieu of any mutilated, destroyed, lost or stolen Bond, a new Bond of the same maturity and of like tenor and principal amount. If the Bond has become or is about to become due, the City may pay the Bond instead of issuing a new Bond.

(b) Upon the issuance of any new Bond under this Section, the City may require the payment by the Owner of a sum sufficient to cover any tax or other governmental charge imposed and any other expenses (including the fees and expenses of the Paying Agent) connected with the issuance of the Bond.

(c) Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Bond will constitute a replacement of the prior obligation of the City, whether or not the mutilated, destroyed, lost or stolen Bond is enforceable by anyone at any time, and will be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Bonds.

Section 209. Cancellation and Destruction of Bonds Upon Payment. All Bonds which have been paid or redeemed or which have otherwise been surrendered to the Paying Agent, either at or before maturity, will be canceled immediately upon the payment or redemption and the Paying Agent’s receipt of the Bonds. Canceled Bonds will be periodically destroyed by the Paying Agent. The Paying Agent will execute a certificate in duplicate describing the destroyed Bonds and file an executed counterpart of the certificate with the City.

Section 210. Sale of the Bonds; Authorization and Execution of Documents.

(a) The Bonds will be sold to the Bondowner at the purchase price of 100% of the principal amount of the Bonds, without accrued interest.

(b) The City is authorized to enter into the Purchase Agreement and the Escrow Agreement, in substantially the forms presented to the Board of Aldermen. The Mayor is authorized to execute the Purchase Agreement and the Escrow Agreement for and on behalf of and as the act and deed of the City, with changes approved by the Mayor, which approval will be conclusively evidenced by the Mayor’s signature. The Mayor is further authorized and directed to execute other documents, certificates and instruments that are necessary or desirable to carry out the intent of this Ordinance. The City Clerk is authorized and directed to attest the execution of the Purchase Agreement and the Escrow Agreement and any other documents, certificates and instruments that are necessary or desirable to carry out the intent of this Ordinance.

Section 211. Administrative Fee and Paying Agent’s Fee. Subject to Section 502, the City will pay to the Paying Agent for deposit in the Administrative Expense Fund, within 30 days after receipt of a statement from the Paying Agent, (i) the Administrative Fee, and (ii) an amount equal to the Paying Agent’s fees and expenses as provided in the Escrow Agreement. If the Bonds are tendered for purchase by the Bondowner and purchased by the City prior to the first Administrative Fee Calculation Date, no Administrative Fee is payable.

ARTICLE III

REDEMPTION AND TENDER OF BONDS

Section 301. Optional Redemption. At the option of the City, Bonds may be called for redemption and payment prior to maturity in whole or in part on any date at the redemption price of 100% of the principal amount thereof plus accrued interest thereon to the date of redemption.

Section 302. Mandatory Redemption and Tender Provisions.

(a) The Bonds are subject to mandatory redemption in part, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date, on the Principal Payment Dates and in the principal amounts as set forth on the following schedule:

Principal Payment Date	Principal Amount

October 1, 2002	$ 37,900
October 1, 2003	38,700
October 1, 2004	39,600
October 1, 2005^†	783,800

________

^† Maturity

If Bonds are redeemed in part other than pursuant to the sinking fund requirements of this paragraph (a), the foregoing principal installments will be reduced on a proportionate basis. The City must designate the amount of the reduction of each principal installment by written notice to the Paying Agent and the Bondowner. The amount of the reduction is subject to verification by the Bondowner and other verification requirements as may be reasonably established by the Paying Agent.

(b) The Bonds are subject to mandatory redemption in part, in an amount equal to the sum of the amount remaining on deposit in the Construction Fund upon the Completion of Disbursements, on the earliest practicable date for which notice may be given, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date.

(c) The Bonds are subject to tender by the Bondowner for purchase by the City, and the City shall be obligated to purchase all of the Outstanding Bonds from the Bondowner, upon not less than 10 days prior written notice to the City, on any date, solely from proceeds of SRF Program Subsidy Bonds issued to refund the Bonds.

Section 303. Selection of Bonds to Be Redeemed. If all Outstanding Bonds are held by the Bondowner, the redemption of the Bonds in part will be reflected in the records maintained by the Paying Agent. If the Bonds are held by any Owner other than the Bondowner, the City, with the prior written consent of the Paying Agent and the Owners, will establish procedures for the selection Bonds upon partial redemption.

Section 304. Notice and Effect of Call for Redemption.

(a) If all Outstanding Bonds are held by the Bondowner, no notice of the mandatory sinking fund redemption of Bonds is required to be given. If the Bonds are held by any Owner other than the Bondowner or if Bonds are being optionally redeemed, notice of redemption will be given in the manner described below. Unless waived by any Owner of Bonds to be redeemed, the Paying Agent, on behalf of the City, will give notice by mailing a redemption notice by registered or certified mail, at least 10 days prior to the date fixed for redemption, to the Owner of Bonds to be redeemed at the address shown on the Bond Register.

(b) All redemption notices will be dated and include the following information:

(i) the redemption date;

(ii) the redemption price, consisting of the principal amount, redemption premium, if any, and interest to the redemption date;

(iii) if less than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed;

(iv) a statement that on the redemption date the redemption price will become due and payable upon each Bond or portion of a Bond called for redemption, and that interest ceases to accrue on the redeemed amount from and after the redemption date; and

(v) the address of the office of the Paying Agent where the Bonds must be surrendered for payment of the redemption price.

(c) If notice of redemption has been given or waived, the Bonds or portions to be redeemed will become due and payable on the redemption date at the redemption price specified in the notice. From and after the redemption date (unless the City defaults in the payment of the redemption price), the called Bonds will cease to bear interest. Upon the surrender of Bonds for payment of the redemption price in accordance with the notice, the Paying Agent will pay the redemption price to the applicable Owners. Upon the Paying Agent’s receipt of any Bond being partially redeemed, the Paying Agent will prepare a new Bond or Bonds of the same maturity in the amount of the unpaid principal.

ARTICLE IV

RATIFICATION OF FUNDS

Section 401. Ratification of Funds.

(a) The separate funds and accounts created in, or ratified and confirmed by, the Outstanding Senior Bond Ordinance known respectively as the:

(1) Combined Waterworks and Sewerage System Revenue Fund (the “Revenue Fund”);

(2) Combined Waterworks and Sewerage System Operation and Maintenance Account (the “Operation and Maintenance Account”);

(3) Debt Service Account for Combined Waterworks and Sewerage System Revenue Bonds, Series 1992 (the “Outstanding Senior Bond Debt Service Account”);

(4) Debt Service Reserve Account for Combined Waterworks and Sewerage System Revenue Bonds, Series 1992 (the “Outstanding Senior Bond Debt Service Reserve Account”);

(5) Combined Waterworks and Sewerage System Depreciation Account (the “Depreciation and Replacement Account”); and

(6) Combined Waterworks and Sewerage System Surplus Account (the “Surplus Account”)

are hereby ratified and confirmed.

(b) The City hereby establishes the following special funds and accounts with the Paying Agent under the Escrow Agreement:

(1) Debt Service Fund;

(2) Construction Fund;

(3) Repayment Fund, consisting of a Principal Account and an Interest Account; and

(4) Administrative Expense Fund.

Section 402. Administration of Funds and Accounts. The funds and accounts described in Section 401(a)(1), (2), (5) and (6) will be maintained and administered by the City under this Ordinance and the Outstanding Senior Bond Ordinance while any of the Bonds and the Outstanding Senior Bonds are outstanding. The funds or accounts described in Section 401(a)(3) and (4) will be maintained and administered by the City while the Outstanding Senior Bonds are outstanding. The funds and accounts described in Section 401(b) will be maintained and administered by the Paying Agent pursuant to the Escrow Agreement while the Bonds remain Outstanding.

Section 403. Deposit of Bond Proceeds; Assignment. The proceeds received from the sale of the Bonds will be deposited simultaneously with the delivery of the Bonds into the Construction Fund. By this Ordinance, the City assigns the moneys and Investment Securities held in the Funds described in Section 402(b) and held by the Paying Agent under the Escrow Agreement to the Bondowner to secure (i) the payment of the principal of and interest on the Bonds when due, (ii) the payment of all sums due under this Ordinance, the Escrow Agreement and the Purchase Agreement in the manner herein and therein described, and (iii) the punctual performance by the City of all of its obligations under the terms and provisions of this Ordinance, the Escrow Agreement and the Purchase Agreement.

article v

APPLICATION OF REVENUES

Section 501. Revenue Fund. The City covenants and agrees that from and after the delivery of the Bonds and so long as any of the Bonds remain outstanding and unpaid, all Revenues derived and collected by the City will be deposited into the Revenue Fund when received. The Revenues will be segregated from all other moneys, revenues, funds and accounts of the City. The Revenue Fund will be administered and applied solely for the purposes and in the manner provided in this Ordinance and any Parity Ordinance.

Section 502. Application of Moneys in Funds and Accounts.

(a) The City will apply moneys in the Revenue Fund on the dates, in the amounts and in the order as follows:

(1) on the first day of each month to the Operation and Maintenance Account an amount sufficient to pay the estimated cost of operating and maintaining the System during the ensuing 30-day period;

(2) on the dates required under the Outstanding Senior Bond Ordinance, to the Outstanding Senior Bond Debt Service Account and the Outstanding Senior Bond Debt Service Reserve Account, the amounts required under the Outstanding Senior Bond Ordinance for the following month;

(3) on the 20^th day of each month, the following amounts to the Paying Agent for credit to the Interest Account and the Principal Account in the Repayment Fund:

(A) on February 20, 2001, to and including March 20, 2001 to the Interest Account 1/2 of the amount of interest on the Bonds due on April 1, 2001, and on April 20, 2001, and thereafter 1/6 of the amount of interest due on the Bonds on the next Interest Payment Date, with these monthly payments to be reduced as follows:

(i) the balance in the Debt Service Fund on an Interest Payment Date after the payment of the principal of and interest due on the Bonds on the Interest Payment Date will be credited against the next succeeding monthly payment or payments;

(ii) the investment earnings on the Construction Fund (other than the amount of Additional Interest) for the preceding Interest Period, as set forth in the Paying Agent’s semiannual notice to the City, will be credited in equal installments against the monthly payments due prior to the next Interest Payment Date; and

(iii) the investment earnings on the Construction Fund equal to Additional Interest will be credited on an Interest Payment Date to the payment of Additional Interest due on the Interest Payment Date; and

(B) except as provided in the next sentence, on the 20^th day of each month, commencing October 20, 2001, to the Principal Account 1/12 of the principal due on the Bonds on the next succeeding Principal Payment Date, whether at maturity or upon mandatory sinking fund redemption. The monthly deposits on October 20, 2004 through August 20, 2005 will be in the amount of $3,333 and the monthly deposit on September 20, 2005 will be in the amount of $747,137. If the Initiation of Operation specified in the certificate delivered by the City under Section 3.4 of the Purchase Agreement is earlier than the expected Initiation of Operation, (i) the first monthly installment of principal will be paid no later than the monthly payment date which is not more than 12 months after the Initiation of Operation, and (ii) on the monthly payment date which is not more than 20 years after the Initiation of Operation, all remaining unpaid principal installments will be paid;

(4) monthly, to the Depreciation and Replacement Account, (i) the amount required to be deposited pursuant to the Outstanding Senior Bond Ordinance, plus (ii) $1,667 commencing April 1, 2002, if the balance in the Depreciation and Replacement Account is less than $50,000; and

(5) on the dates required by Section 211, to the Paying Agent, for deposit to the Administrative Expense Fund, the amount required to pay the Administrative Fee and the Paying Agent’s fees and expenses;

(6) on the first day of each month the remaining balance to the Surplus Account.

(b) Except as provided in Section 503, moneys in the Depreciation and Replacement Account will be used by the City for the purpose of making replacements and repairs to the System in order to keep the System in good repair and working order and to assure the continued effective and efficient operation of the System. This provision will not be construed to modify any more restrictive provision of the Outstanding Senior Bond Ordinance for the use of moneys in the Depreciation and Replacement Account.

(1) paying the cost of the operation, maintenance and repair of the System to the extent necessary after the application of the moneys held in the Operation and Maintenance Account;

(2) paying the cost of extending, enlarging or improving the System;

(3) preventing default in, anticipating payments into or increasing the amounts in the accounts established in Section 401, the Principal Account or the Interest Account or establishing or increasing the amount of any principal and interest account or debt service reserve account created by the City for the payment of any System Revenue Bonds subsequently issued; or

(4) redeeming and paying prior to maturity, or, at the option of the City, purchasing in the open market at the best price obtainable not exceeding the call price (if any bonds are callable), the Bonds or any other System Revenue Bonds of the City hereafter issued under the conditions hereinafter specified and superior to or standing on a parity with the Bonds, including principal, redemption premium, if any, and interest.

(d) All amounts paid and credited to the Operation and Maintenance Account will be expended solely for the purpose of paying the Current Expenses of the System.

(e) No moneys derived by the City from the System will be diverted to the general governmental or municipal functions of the City.

Section 503. Deficiency of Payments into Funds and Accounts.

(a) If the Revenues are insufficient to make any payment specified in this Article and by any Parity Ordinance when such payment shall be due to be made, the City will apply available Revenues pro rata among the Bonds and any additional Parity Bonds on the basis of the principal amount thereof then outstanding and will make good the amount of the deficiency by making additional payments out of the first available Revenues for application in the order specified in Section 502.

(b) If the moneys in the Outstanding Senior Bond Debt Service Account, the Outstanding Senior Bond Debt Service Reserve Account, the Principal Account or the Interest Account are not sufficient to pay the principal of and interest on the Outstanding Senior Bonds and the Bonds as and when the same become due, the City will apply moneys in the Surplus Account and the Depreciation and Replacement Account first to the Outstanding Senior Bond Debt Service Account and the balance to the Principal Account and the Interest Account to prevent any default in the payment of the principal of and interest on the Outstanding Senior Bonds and the Bonds.

Section 504. Transfer of Funds to Paying Agent. The Mayor or the City Clerk are authorized and directed to make the payments to the Principal Account and the Interest Account as provided in Section 502, and, to the extent necessary to prevent a default in the payment of any System Revenue Bonds, and from the Surplus Account as provided in Sections 502 and 503, sums sufficient to pay the System Revenue Bonds when due, and to forward amounts to the Paying Agent in a manner which ensures the Paying Agent will have sufficient available funds on or before the second Business Day immediately preceding the dates when payments on the Bonds are due. Upon the payment of all principal and interest on the Bonds, the Paying Agent will return any excess funds to the City. Except as otherwise provided in the Escrow Agreement, all moneys deposited by the City with the Paying Agent are subject to the provisions of this Ordinance.

ARTICLE VI

DEPOSIT AND INVESTMENT OF MONEYS

Section 601. Investment of Moneys.

(a) Moneys held in any fund or account referred to in this Ordinance may be invested in Investment Securities; provided, however, that any Fund held by the Paying Agent shall be invested upon the Paying Agent’s receipt of written directions from the Authorized Representative. No such investment shall be made for a period extended longer than the date when the money invested may be needed for the purpose for which such fund or account was created. All investment earnings on any fund or account shall accrue to and become a part of such fund or account. In determining the amount held in any fund or account under any of the provisions of this Ordinance, obligations shall be valued at the lower of the cost or the market value thereof. If and when the amount held in any fund or account held within the Treasury of the City shall be in excess of the amount required by the provisions of this Ordinance, the City shall direct that such excess be paid and credited to the Revenue Fund.

(b) If the Outstanding Senior Bonds are outstanding, any investments made pursuant to this Section are subject to the applicable restrictions in the Outstanding Senior Bond Ordinance.

ARTICLE VII

PARTICULAR COVENANTS OF THE City

The City covenants and agrees with each of the Owners of the Bonds that so long as any of the Bonds remain Outstanding and unpaid:

Section 701. Efficient and Economical Operation; User Charge Ordinance and Sewer Use Ordinance. The City will continuously own and will operate the System in an efficient and economical manner and will keep and maintain the same in good repair and working order. The City has duly approved the User Charge Ordinance and the Sewer Use Ordinance and will enforce the provisions thereof. The City will not amend, modify, supplement or restate the User Charge Ordinance or the Sewer Use Ordinance unless the City shall have received the prior written consent of DNR.

Section 702. Rate Covenant. The City will fix, establish, maintain and collect such rates and charges for the use and services furnished by or through the System, including all extensions and improvements thereto hereafter constructed or acquired by the City, as will produce revenues sufficient to (a) pay the costs of the operation and maintenance of the System; (b) pay the principal of and interest on the Bonds as and when the same become due; (c) enable the City to have in each Fiscal Year Net Revenues in an amount not less than 110% of the amount required to be paid by the City in such Fiscal Year on account of both principal of and interest on all System Revenue Bonds at the time outstanding, provided that (i) interest on the Bonds will be reduced by the investment earnings on the Construction Fund, and (ii) interest on any SRF Program Subsidy Bonds shall be reduced by the SRF Subsidy, if any; and (d) provide reasonable and adequate reserves for the payment of the Bonds and the interest thereon and for the protection and benefit of the System as provided in this Ordinance. The City will require the prompt payment of accounts for service rendered by or through the System and will promptly take whatever action is legally permissible to enforce and collect delinquent charges.

Section 703. Reasonable Charges for all Services. None of the facilities or services provided by the System will be furnished to any user (excepting the City itself) without a reasonable charge being made therefor. In the event that the revenues derived by the City from the System shall at any time be insufficient to pay the reasonable expenses of operation and maintenance of the System and also to pay all interest on and principal of the Bonds as and when the same become due, then the City will thereafter pay into the Revenue Fund a fair and reasonable payment in accordance with effective applicable rates and charges for all services or other facilities furnished to the City or any of its departments by the System, and such payments will continue so long as the same may be necessary in order to prevent or reduce the amount of any default in the payment of the interest on or principal of the Bonds.

Section 704. Annual Budget. Prior to the commencement of each Fiscal Year, the chief financial officer of the City or other representative of the City designated by the Board of Aldermen of the City will cause to be prepared and filed with the City Clerk a budget setting forth the estimated receipts and expenditures of the System for the next succeeding Fiscal Year. The City Clerk, within 30 days after the end of the current Fiscal Year, will mail a copy of said budget to the Bondowner. Said annual budget shall be prepared in accordance with the requirements of the laws of the State and shall contain all information as shall be required by such laws.

Section 705. Annual Audit; Interim Financial Statements.

(a) Annually, promptly after the end of the Fiscal Year, the City will cause an audit to be made of the System for the preceding Fiscal Year by a certified public accountant or firm of certified public accountants to be employed for that purpose and paid from the revenues of the System. The annual audit must cover in reasonable detail the operation of the System during the Fiscal Year and be conducted in accordance with the provisions of the User Charge Ordinance and Sewer Use Ordinance.

(b) Within 120 days after the end of the City’s Fiscal Year, a copy of the annual audit will be filed in the office of the City Clerk, and a duplicate copy of the audit will be mailed to the Bondowner. The audits must at all times during the usual business hours be open to the examination and inspection by any taxpayer, any user of the services of the System, the Bondowner or by anyone acting for or on behalf of any taxpayer or user or the Bondowner.

(c) As soon as possible after the completion of such annual audit, the governing body of the City shall review such audit, and if any audit shall disclose that proper provision has not been made for all of the requirements of this Ordinance and the law under which the Bonds are issued, the City covenants and agrees that it will promptly cure such deficiency and will promptly proceed to increase the rates and charges to be charged for the use and services furnished by the System as may be necessary to adequately provide for such requirements.

(d) Except as otherwise provided in this paragraph, no later than the 45^th day following the end of each quarter of each Fiscal Year, the City will provide to the Bondowner a compilation of all funds and accounts of the System (other than the Funds and Accounts held by the Paying Agent), certified by the City’s Consultant (which is not the Consulting Engineer) as fairly representing the operation of the System for the applicable period. When the Bondowner determines, in its sole discretion, that the quarterly compilations for four consecutive quarterly periods demonstrate compliance by the City with the requirements of this Ordinance and the Outstanding Parity Ordinance, the Bondowner will notify the City in writing that the City is required to provide the compilations only on a semiannual basis. When the Bondowner determines, in its sole discretion, that the semiannual compilations for two consecutive semiannual periods demonstrate compliance by the City with the requirements of this Ordinance and the Outstanding Parity Ordinance, the Bondowner will notify the City in writing that the requirements of this paragraph are terminated.

Section 706. Performance of Duties. The City will faithfully and punctually perform all duties and obligations with respect to the operation of the System, including all extensions and improvements thereto, now or hereafter imposed upon the City by the constitution and laws of the State of Missouri and by the provisions of this Ordinance.

ARTICLE VIII

ADDITIONAL BONDS

Section 801. Prior Lien Bonds. Except as provided in Section 804(b), the City covenants and agrees that from and after the issuance of the Bonds and so long as any of the Bonds remain Outstanding, the City will not issue any debt obligations payable out of the revenues of the System or any part thereof which are superior in lien, security or otherwise to the Bonds.

Section 802. Parity Bonds or Obligations. The City covenants and agrees that so long as any of the Bonds remain Outstanding, the City will not issue any additional bonds or other long-term obligations payable out of the net income and revenues of the System or any part thereof which stand on a parity or equality with the Bonds unless the following conditions are met:

(a) The City shall not be in default in the payment of principal of or interest on any Bonds or making any payment at the time required to be made into the respective funds and accounts created by and referred to in this Ordinance or any Parity Ordinance; and

(b) The City shall obtain a certificate showing either of the following:

(i) The average annual Net Revenues derived by the City from the operation of the System as set forth in the last available audit, for the two Fiscal Years immediately preceding the issuance of additional bonds, shall have been equal to at least 110% of the average annual amount required to be paid out of the Net Revenues in succeeding Fiscal Years on account of both principal (at maturity or upon mandatory redemption) and interest becoming due with respect to all System Revenue Bonds of the City, including the additional bonds proposed to be issued, provided that (i) interest on the Bonds will be reduced by the investment earnings on the Construction Fund, and (ii) interest on any SRF Program Subsidy Bonds shall be reduced by the SRF Subsidy, if any. In determining the Net Revenues for the purpose of this subsection, the City may adjust the Net Revenues by adding thereto, if the City has made any increase in rates for the use and services of the System and such increase has not been in effect during all of the two Fiscal Years immediately preceding the issuance of additional bonds, the amount of the additional Net Revenues which would have resulted from the operation of the System during the two preceding Fiscal Years had the rate increase been in effect for the entire period, as certified by the Consultant; or

(ii) The estimated average annual Net Revenues derived by the City from the operation of the System for the two Fiscal Years immediately following the Fiscal Year in which the improvements to the System, the cost of which is being financed by such additional bonds, are to be in commercial operation, as certified by the Consultant, shall be equal to at least 110% of the average annual amount required to be paid out of said revenues in succeeding Fiscal Years following such commercial operation on account of both principal (at maturity or upon mandatory redemption) and interest becoming due with respect to all System Revenue Bonds of the City, including the additional bonds proposed to be issued, provided that (i) interest on the Bonds will be reduced by the investment earnings on the Construction Fund, and (ii) interest on any SRF Program Subsidy Bonds shall be reduced by the SRF Subsidy, if any. In determining the amount of estimated Net Revenues for the purpose of this subsection, the Consultant may adjust said estimated net revenues by adding thereto any estimated increase in Net Revenues resulting from any increase in rates for the use and services of the System which have been approved by the City.

Additional revenue bonds or other obligations of the City issued under the conditions set forth in this Section shall stand on a parity with the Bonds and shall enjoy complete equality of lien on and claim against the Net Revenues with the Bonds, and the City may make equal provision for paying said bonds and the interest thereon out of the Revenue Fund and may likewise provide for the creation of reasonable system debt service funds and system debt service reserve funds for the payment of such additional bonds and the interest thereon out of moneys in the Revenue Fund.

Section 803. Junior Lien Bonds. Nothing contained in this Article shall prohibit or restrict the right of the City to issue additional revenue bonds or other revenue obligations for the purpose of extending, improving, enlarging, repairing or altering the System and to provide that the principal of and interest on said revenue bonds or obligations shall be payable out of the revenues of the System, provided at the time of the issuance of such additional revenue bonds or obligations the City shall not be in default in the performance of any covenant or agreement contained in this Ordinance, and provided further that such additional revenue bonds or obligations shall be junior and subordinate to the Bonds so that if at any time the City shall be in default in paying either interest on or principal of the Bonds, or if the City shall be in default in making any payments required to be made by it under the provisions of paragraphs (a)(1), (2), (3), (4) and (5) of Section 502 of this Ordinance, the City shall make no payments of either principal of or interest on said junior and subordinate revenue bonds or obligations until said default or defaults be cured. In the event of the issuance of any such junior and subordinate revenue bonds or obligations, the City, subject to the provisions aforesaid, may make provision for paying the principal of and interest on said revenue bonds or obligations out of moneys in the Revenue Fund.

Section 804. Refunding Bonds.

(a) The City may, without complying with the provisions of Section 802, refund any of the Bonds in a manner which provides debt service savings to the City, and the refunding bonds so issued will be on a parity with any of the Bonds that are not refunded. If the Bonds are refunded in part and the refunding bonds bear a higher average rate of interest or become due on a date earlier than that of the Bonds which are refunded, the City must obtain the prior written consent of the Bondowner to the issuance of the refunding bonds.

(b) The City may refund any of the Outstanding Senior Bonds in a manner which provides debt service savings to the City in each subsequent Fiscal Year, and the refunding bonds so issued may have a priority lien on the Revenues of the System.

ARTICLE IX

DEFAULT AND REMEDIES

Section 901. Acceleration of Maturity in Event of Default.

(a) The City covenants and agrees that if (i) it shall default in the payment of the principal of or interest on any of the Bonds as the same shall become due, or (ii) if the City or its governing body or any of the officers, agents or employees thereof shall fail or refuse to comply with any of the provisions of this Ordinance, the constitution or statutes of the State of Missouri or the Purchase Agreement and such default shall continue for a period of 60 days after written notice specifying such default shall have been given to the City by the Paying Agent, DNR or the Owner of any Bond then Outstanding, then, at any time thereafter and while such default shall continue, the Owners of 25% in principal amount of the Bonds then Outstanding may, by written notice to the City filed in the office of the City Clerk or delivered in person to said City Clerk, declare the principal of all Bonds then Outstanding to be due and payable immediately, and upon any such declaration given as aforesaid, all of said Bonds shall become and be immediately due and payable, anything in this Ordinance or in the Bonds contained to the contrary notwithstanding. This provision, however, is subject to the condition that if at any time after the principal of said Outstanding Bonds shall have been so declared to be due and payable, all arrears of interest upon all of said Bonds, except interest accrued but not yet due on such Bonds, and all arrears of principal upon all of said Bonds and penalties (as provided in paragraph (b) of this Section) shall have been paid in full and all other defaults, if any, by the City under the provisions of this Ordinance, the constitution and statutes of the State of Missouri, and the Purchase Agreement shall have been cured, then and in every such case the Owners of a majority in principal amount of the Bonds then Outstanding, by written notice to the City given as hereinbefore specified, may rescind and annul such declaration and its consequences, but no such rescission or annulment shall extend to or affect any subsequent default or impair any rights consequent thereon.

(b) In the event of a default as described in paragraph (a) of this Section, the City shall pay to DNR such penalties as are assessed by DNR in accordance with its Regulations.

Section 902. Remedies. The provisions of this Ordinance, including the covenants and agreements herein contained, shall constitute a contract between the City and the Owners of the Bonds, and the Owner or Owners of not less than 10% in principal amount of the Bonds at the time Outstanding shall have the right for the equal benefit and protection of all Owners of Bonds similarly situated:

(a) by mandamus or other suit, action or proceedings at law or in equity to enforce the rights of such Owner or Owners against the City and its officers, agents and employees, and to require and compel duties and obligations required by the provisions of this Ordinance or by the constitution and laws of the State of Missouri, including, without limitation, Section 644.125, RSMo.;

(b) by suit, action or other proceedings in equity or at law to require the City, its officers, agents and employees to account as if they were the trustees of an express trust; and

(c) by suit, action or other proceedings in equity or at law to enjoin any acts or things which may be unlawful or in violation of the rights of the Owners of the Bonds.

Any amounts paid on the Bonds to the Owners thereof shall be applied first to interest and second to principal, to the extent due and payable.

Section 903. Limitation on Rights of Bondowners. No one or more Bondowners secured hereby shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security granted and provided for herein, or to enforce any right hereunder, except in the manner herein provided, and all proceedings at law or in equity shall be instituted, had and maintained for the equal benefit of all Owners of such Outstanding Bonds.

Section 904. Remedies Cumulative. No remedy conferred herein upon the Bondowners is intended to be exclusive of any other remedy, but each such remedy shall be cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred herein. No waiver of any default or breach of duty or contract by the Owner of any Bond shall extent to or affect any subsequent default or breach of duty or contract or shall impair any rights or remedies thereon. No delay or omission of any Bondowner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein. Every substantive right and every remedy conferred upon the Owners of the Bonds by this Ordinance may be enforced and exercised from time to time and as often as may be deemed expedient. In case any suit, action or proceedings taken by any Bondowner on account of any default or to enforce any right to exercise any remedy shall have been discontinued or abandoned for any reason, or shall have been determined adversely to such Bondowner, then, and in every such case, the City and the Owners of the Bonds shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies, powers and duties of the Bondowners shall continue as if no such suit, action or other proceedings had been brought or taken.

Section 905. No Obligation to Levy Taxes. Nothing contained in this Ordinance shall be construed as imposing on the City any duty or obligation to levy any taxes either to meet any obligation incurred herein or to pay the principal of or interest on the Bonds.

ARTICLE X

DEFEASANCE

Section 1001. Defeasance. When all of the Bonds shall have been paid and discharged, then the requirements contained in this Ordinance and the pledge of revenues made hereunder and all other rights granted hereby shall terminate. Bonds shall be deemed to have been paid and discharged within the meaning of this Ordinance if there shall have been deposited with the Paying Agent, or other bank or trust company located in the State of Missouri, having full trust powers and meeting the requirements of a successor Paying Agent impressed with a first lien to the Paying Agent for the benefit of the Bondowners, at or prior to the maturity or redemption date of said Bonds, in trust for and irrevocably appropriated thereto, moneys and/or non-callable Defeasance Securities which, together with the interest to be earned on any such obligations, as evidenced by the written report of an independent certified public accountant, will be sufficient for the payment of the principal of said Bonds and interest to accrue to the date of maturity or redemption, as the case may be, or if default in such payment shall have occurred on such date, then to the date of the tender of such payments, provided, however, that if any such Bonds shall be redeemed prior to the maturity thereof, (i) the City shall have elected to redeem such Bonds, and (ii) either notice of such redemption shall have been given or the City shall have given irrevocable instructions to the Paying Agent to redeem such Bonds; and provided further, however, there shall be filed with the City and the Paying Agent an opinion of recognized bond counsel to the effect that the conditions for the defeasance of the Bonds pursuant to this Section 1001 have been complied with. Any moneys and obligations which at any time shall be deposited with the Paying Agent, or other bank by or on behalf of the City, for the purpose of paying and discharging any of the Bonds shall be and are hereby assigned, transferred and set over to the Paying Agent or other bank in trust for the respective Owners of the Bonds, and such moneys shall be and are hereby irrevocably appropriated to the payment and discharge hereof. All moneys deposited with the Paying Agent or other bank shall be deemed to be deposited in accordance with and subject to all of the provisions contained in this Ordinance.

ARTICLE XI

AMENDMENTS

Section 1101. Amendments. The rights and duties of the City and the Bondowner, and the terms and provisions of the Bonds or of this Ordinance, may be amended or modified at any time in any respect by Ordinance of the City with the prior written consent of the Bondowner, DNR and the Paying Agent (if such amendment or modification would amend, modify or otherwise affect the rights or duties of the Paying Agent), such consent to be evidenced by an instrument or instruments executed by such parties and duly acknowledged or proved in the manner of a deed to be recorded, and such instrument or instruments shall be filed with the City Clerk, provided that no amendment or modification shall:

(a) extend the maturity of any payment of principal or interest due upon any Bond;

(b) effect a reduction in the amount which the City is required to pay by way of principal of or interest on any Bond;

(c) permit the creation of a lien on the revenues of the System prior or equal to the lien of the Bonds or additional bonds hereafter issued on a parity with the Bonds as hereinbefore provided;

(d) permit preference or priority of any Bonds over any other Bonds; or

(e) reduce the percentage in principal amount of Bonds required for the written consent to any modification or alteration of the provisions of this Ordinance;

unless the City shall have first submitted such amendment or modification to the Commission and the Commission shall have made a recommendation to DNR.

Notwithstanding anything to the contrary in this Section, before the City enters into any amendment or modification of this Ordinance, there shall have been delivered to the Bondowner, the Paying Agent, DNR and the City an opinion of Bond Counsel stating that such amendment of or modification of this Ordinance is authorized or permitted by this Ordinance and the Act, complies with their respective terms, and will, upon the execution and delivery thereof, be valid and binding upon the City in accordance with its terms.

Any and all modifications made in the manner hereinabove provided shall not become effective until there has been filed with the City Clerk a copy of the Ordinance of the City hereinabove provided for, duly certified, as well as proof of any required consent to such modification by the Bondowner. It shall not be necessary to note on any of the Outstanding Bonds any reference to such amendment or modification.

ARTICLE XII

MISCELLANEOUS PROVISIONS

Section 1201. Further Authority. The officers of the City, including the Mayor and in his absence each of the members of the Board of Aldermen and the City Clerk, shall be, and they hereby are, authorized and directed to execute the Escrow Agreement and all documents and take such actions as they may deem necessary or advisable in order to carry out and perform the purposes of this Ordinance and to make ministerial alterations, changes or additions in the foregoing agreements, statements, instruments and other documents herein approved, authorized and confirmed which they may approve and the execution or taking of such action shall be conclusive evidence of such necessity or advisability.

Section 1202. Severability. If any section or other part of this Ordinance, whether large or small, shall for any reason be held invalid, the invalidity thereof shall not affect the validity of the other provisions of this Ordinance.

Section 1203. Governing Law. This Ordinance shall be governed exclusively by and constructed in accordance with the applicable laws of the State.

Section 1204. Effective Date. This Ordinance shall take effect and be in full force from and after its passage by the Board of Aldermen of the City.

PASSED by the Board of Aldermen of the City of Rich Hill, Missouri, AND APPROVED by the Mayor this 23^rd day of January, 2001.

Mayor

(SEAL)

ATTEST:

City Clerk

EXHIBIT A

FORM OF BOND

[THIS BOND IS TRANSFERABLE ONLY TO ANY SUCCESSOR TO THE

MISSOURI DEPARTMENT OF NATURAL RESOURCES OR ITS ASSIGNS]

Registered Registered

No. R-_______ $900,000

UNITED STATES OF AMERICA

STATE OF MISSOURI

CITY OF RICH HILL, MISSOURI

COMBINED WATERWORKS AND SEWERAGE SYSTEM REVENUE BOND

(STATE REVOLVING FUND – LEVERAGED LOAN PROGRAM)

SERIES 2001

Dated Date	Interest Rate	Maturity Date

	______%	October 1, 2005

REGISTERED OWNER: MISSOURI DEPARTMENT OF NATURAL RESOURCES

PRINCIPAL AMOUNT: NINE HUNDRED THOUSAND DOLLARS

The CITY OF RICH HILL, MISSOURI, a city of the fourth class and political subdivision of the State of Missouri (the “City”), for value received, hereby promises to pay to the Registered Owner shown above, or registered assigns, the Principal Amount shown above on the Maturity Date shown above, and to pay interest thereon at the Interest Rate per annum shown above plus Additional Interest as described in the herein defined Ordinance (computed on the basis of a 360-day year of twelve 30-day months) from the Dated Date shown above or from the most recent interest payment date to which interest has been paid or duly provided for, payable semiannually on April 1 and October 1 in each year (except as otherwise provided in Section 203 of the hereinafter described Ordinance), commencing April 1, 2001, until said Principal Amount shall have been paid.

The principal of this Bond shall be paid at maturity or upon earlier redemption to the person in whose name this Bond is registered at the maturity or redemption date thereof, upon presentation and surrender of this Bond at the principal corporate trust office of STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A. in St. Louis, Missouri (the “Paying Agent”). The interest payable on this Bond of any interest payment date shall be paid by check or draft mailed by the Paying Agent to the person in whose name this Bond is registered on the registration books maintained by the Paying Agent at the close of business on the Record Date for such interest, which shall be the fifteenth day (whether or not a business day) of the calendar month next preceding such interest payment date. The principal of and interest on this Bond shall be payable in lawful money of the United States of America.

This Bond is one of a duly authorized series of bonds of the City designated “Combined Waterworks and Sewerage System Revenue Bonds (State Revolving Fund – Leveraged Loan Program) Series 2001” aggregating the principal amount of $900,000 (the “Bonds”), issued by the City for the purpose of extending and improving the combined waterworks and sewerage system owned and operated by the City (said combined waterworks and sewerage system, together with all future improvements and extensions thereto hereafter constructed or acquired by the City, being herein called the “System”), under the authority of and in full compliance with Chapter 250 of the Revised Statutes of Missouri, as amended, and pursuant to an election duly held in the City and an Ordinance duly adopted by the governing body of the City (herein called the “Ordinance”).

At the option of the City, the Bonds may be called for redemption and payment prior to maturity in whole or in part at any time, at a redemption price of 100% of the principal amount thereof plus accrued interest therein to the date of redemption.

The Bonds are subject to mandatory redemption and payment prior to maturity pursuant to the mandatory redemption requirements of this paragraph at a redemption price equal to 100% of the principal amount plus accrued interest to the redemption date. The principal payments specified in the Ordinance shall be sufficient to redeem, and the City shall redeem on the Principal Payment Dates the principal amounts of the Bonds as follows:

Principal Payment Date	Principal Amount

October 1, 2002	$ 37,900
October 1, 2003	38,700
October 1, 2004	39,600
October 1, 2005^†	783,800

________

^† Maturity

If the redemption of the Bonds in part other than pursuant to the sinking fund requirements of this paragraph, the foregoing principal installments shall be reduced on a proportionate basis. In such event, the City shall designate the amount of the reduction of each principal installment in writing to the Paying Agent and the Owner, which reduction is subject to verification by the Owner and such other verification requirements as may be reasonably requested by the Paying Agent.

The Bonds shall be subject to mandatory redemption in part, in an amount equal to the sum of the amount remaining on deposit in the Construction Fund upon the Completion of Disbursements, on the earliest practicable date for which notice may be given, at the redemption price of 100% of the principal amount thereof plus accrued interest thereon to the date of redemption.

Notice of redemption, unless waived, is to be given by the Paying Agent by mailing an official redemption notice by registered or certified mail at least 15 days prior to the date fixed for redemption, to the Registered Owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such Registered Owner to the Paying Agent. Notice of redemption having been given or waived as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest.

The Bonds are subject to tender by the Bondowner for purchase by the City, and the City shall be obligated to purchase all of the Outstanding Bonds from the Bondowner, upon not less than 10 days prior written notice to the City, on any date, solely from proceeds of SRF Program Subsidy Bonds issued to refund the Bonds.

The Bonds are limited obligations of the City payable solely from, and secured as to the payment of principal and interest by a pledge of, the net revenues derived by the City from the operation of the System after providing for the costs of operation and maintenance of the System, and the taxing power of the City is not pledged to the payment of the Bonds either as to principal or interest. The Bonds shall not be or constitute a general obligation of the City, nor shall they constitute an indebtedness of the City within the meaning of any constitutional, statutory or charter provision, limited or restriction.

The Bonds are subordinate with respect to payment of principal and interest from the Net Revenues (as defined in the Ordinance) and in all other respects with the Outstanding Senior Bonds (as defined in the Ordinance). In the event of any default in the payment of either principal of or interest on any of the Outstanding Senior Bonds, the Net Revenues will be applied solely to the payment of the principal of and interest on the Outstanding Senior Bonds until the default is cured.

Under the conditions set forth in the Ordinance, the City has the right to issue parity bonds payable from the same source and secured by the same revenues as the Bonds; provided, however, that such additional bonds may be so issued only in accordance with and subject to the covenants, conditions and restrictions relating thereto set forth in the Ordinance.

The City hereby covenants with the Owner of this Bond to keep and perform all covenants and agreements contained in the Ordinance, and the City will fix, establish, maintain and collect such rates, fees and charges for the use and services furnished by or through the System, as will produce revenues sufficient to pay the costs of operation and maintenance of the System, pay the principal of and interest on the Bonds as and when the same become due, and provide reasonable and adequate reserve funds. Reference is made to the Ordinance for a description of the covenants and agreements made by the City with respect to the collection, segregation and application of the revenues of the System, the nature and extent of the security of the Bonds, the rights, duties and obligations of the City with respect thereto, and the rights of the Owners thereof.

The Bonds are issuable in the form of fully registered Bonds without coupons in the denomination of $1,000 or any integral multiple thereof.

This Bond may be transferred or exchanged, as provided in the Ordinance, only upon the registration books kept for that purpose at the above-mentioned office of the Paying Agent, upon surrender of this Bond together with a written instrument of transfer or exchange satisfactory to the Paying Agent duly executed by the Registered Owner or the Registered Owner’s duly authorized agent, and thereupon a new Bond or Bonds in any authorized denomination of the same maturity and in the same aggregate principal amount shall be issued to the transferee in exchange therefor as provided in the Ordinance, and upon payment of the charges therein prescribed. The City and the Paying Agent may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the principal or redemption price hereof and interest due hereon and for all other purposes.

This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Ordinance until the Certificate of Authentication hereon shall have been executed by the Paying Agent.

IT IS HEREBY CERTIFIED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Bonds have existed, happened and been performed in due time, form and manner as required by law, and that before the issuance of the Bonds, provision has been duly made for the collection and segregation of the Revenues of the System and for the application of the same as hereinbefore provided.

IN WITNESS WHEREOF, the City of Rich Hill, Missouri, has executed this Bond by causing it to be signed by the manual or facsimile signature of the Mayor and attested by the manual or facsimile signature of its City Clerk, with its official seal affixed or imprinted.

CERTIFICATE OF AUTHENTICATION CITY OF RICH HILL, MISSOURI

This Bond is one of the Bonds of the issue

described in the within-mentioned Ordinance.

Mayor

Registration Date: _________________

STATE STREET BANK AND TRUST

COMPANY OF MISSOURI, N.A.,

Paying Agent (SEAL)

ATTEST:

By ____________________________ _______________________________ Authorized Signatory City Clerk

RECORD OF PRINCIPAL PAYMENTS AND PREPAYMENTS

Under the provisions of the Ordinance, payments of the principal installments of this Bond and partial prepayments of the principal of this Bond may be made directly to the Bondowner without surrender of this Bond to the Paying Agent. Accordingly, any purchaser or other transferee of this Bond should verify with the Paying Agent the principal of this Bond outstanding prior to such purchase or transfer, and the records of the Paying Agent shall be conclusive for such purposes.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

______________________________________________________________________________

Print or type Name, Address and Social Security Number

or other Taxpayer Identification Number of Transferee

the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints _________________________ agent to transfer the within Bond on the books kept by the Paying Agent for the registration thereof, with full power of substitution in the premises.

Dated:

NOTICE: The signature to this assignment must correspond with the name of the Registered Owner as it appears upon the face of the within Bond in every particular.

Signature Guaranteed By:

NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution as defined by SEC Rule 17Ad-15 (17 CFR 240.17Ad-15).

CERTIFICATE

I, the undersigned, City Clerk of the City of Rich Hill, Missouri, hereby certify that the above and foregoing constitutes a fully, true and correct copy of Ordinance No. 1120 duly adopted by the Board of Aldermen of the City at a meeting duly and specially held, after proper notice thereof, on January 23, 2001; that said Ordinance has not been modified, amended or repealed, and is in fully force and effect as of the date hereof; and that the same is one file in my office.

WITNESS my hand and official seal this 23^rd day of January, 2001.

City Clerk

(Seal)

1120 – Bill No. 101 Wastewater Bond

ARTICLE I

ARTICLE III

REDEMPTION AND TENDER OF BONDS

ARTICLE IV

RATIFICATION OF FUNDS

article v

APPLICATION OF REVENUES

ARTICLE VI

DEPOSIT AND INVESTMENT OF MONEYS

ARTICLE VII

PARTICULAR COVENANTS OF THE City

The City covenants and agrees with each of the Owners of the Bonds that so long as any of the Bonds remain Outstanding and unpaid:

ARTICLE VIII

ADDITIONAL BONDS

ARTICLE IX

DEFAULT AND REMEDIES

ARTICLE X

DEFEASANCE

ARTICLE XI

AMENDMENTS

ARTICLE XII

MISCELLANEOUS PROVISIONS

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