Loading...
HomeMy WebLinkAboutOrdinance #1264ORDINANCE N0. i~b~ AN ORDINANCE AUTHORIZING THE ISSUANCE OF UP TO $300,000 GENERAL OBLIGATION BONDS (ALTERNATE REVENUE SOURCE), SERIES 1989, OF THE CITY OF CANTON, FULTON COUNTY, ILLINOIS, PROVIDING THE DETAILS OF SUCH BONDS AND FOR AN ALTERNATE REVENUE SOURCE AND THE LEVY OF A DIRECT ANNUAL TAX SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON SUCH BONDS, AND RELATED MATTERS WHEREAS, the City of Canton, Fulton County, Illinois (the "Issuer"), operates its municipally-owned combined waterworks and sewerage system (the "System") in accordance with the provisions of Division 139 of Article 11 of the Illinois Municipal Code (Section 11-139-1 et seg. of Chapter 24 of the Illinois Revised Statutes, as supplemented and amended, the "System Act"); and WHEREAS, the City Council of the Issuer (including the Mayor, the "Corporate Authorities") has determined that it is advisable, necessary and in the best interests of the Issuer's public health, safety and welfare to undertake a project providing for major improvements and extensions to the waterworks facilities of the System, such improvements to include the acquisition, construction and installation of City of Canton Well No. 1 (1989), and related facilities, together with all required structures, equipment, appurtenances and fixtures, all electrical, mechanical or other work and the acquisition of land or rights in land necessary, useful or advisable in connection with such work (including as such work may progress in one or more phases, the "Project"), all in accordance with the plans, specifications and estimate therefor prepared by the Issuer's duly appointed and acting City Engineer (the "City Engineer"), which are now on file in the office of the City Clerk for public inspection; and WHEREAS, the estimated cost of acquiring, constructing, and installing the Project, including necessary interest during such acquisition, construction and installation, engineering, legal, financial, bond discount, printing and publication costs, and other expenses preliminary to and in connection with the Project is anticipated not to exceed the City Engineer's estimate therefor, $327,000, of which $300,000 is presently anticipated and planned to be paid from the hereinafter described Bonds; and WHEREAS, the Issuer has insufficient funds to pay certain costs of the Project and, therefore, must borrow money and issue general obligation bonds (alternate revenue source) under this ordinance in evidence thereof up to the aggregate principal amount of 5300,000 for such purposes; and WHEREAS, pursuant to and in accordance with the provisions of Section 15 of the Local Government Debt Reform Act (Section 6915 of Chapter 17 of the Illinois Revised Statutes), as supplemented and amended, and this ordinance, the Issuer is authorized to issue its General Obligation Bonds (Alternate Revenue Source), Series 1989, up to the aggregate principal amount of $300,000 (the "Bonds"), for the purpose of providing funds to pay or reimburse the Issuer for certain costs of the Project; and WHEREAS, in connection with Section 2 of Ordinance No. 1242, AN ORDINANCE authorizing the issuance of up to $300,000 waterworks alternate revenue source bonds of the City of Canton, Fulton County, Illinois, for the purpose of defraying the costs -2- of improving and extending its existing waterworks facilities (the "Preliminary Ordinance"), passed and approved May 16 and 17, 1989, the Issuer has received no petition in connection with the Bonds or the Project, a form of petition therefor being at all relevant times available in the office of the City Clerk; and WI~REAS, for convenience of reference only this ordinance is divided into numbered sections with headings, which shall not define or limit the provisions hereof, as follows: Page Preambles 1 Section 1. Definitions. 4 Section 2. Authority and Purpose. 8 Section 3. Authorization and Terms of Bonds 8 Section 4. Bond Purchase Agreement. 11 Section 5. Execution and Authentication 11 Section 6. Transfer, Exchange and Registration. 13 Section 7. Bond Registrar and Paying Agent. 14 Section 8. Alternate Bonds; General Obligations 16 Section 9. Form of Bonds. 19 Section 10. Levy and Extension of Taxes. 25 Section 11. Debt Service Account 27 Section 12. Bond Proceeds Account. 38 Section 13. Depreciation Account 30 Section 14. Operation and Maintenance Account. 32 Section 15. Exception from Arbitrage Rebate. 32 Section 16. Investment Regulations 33 Section 17. Further Assurances and Actions 33 Section 18. Non-Arbitrage and Tax-Exemption 38 -3- Section 19. Section 20. Section 21. Section 22. Section 23. Section 24. General Covenants. 39 Bank Qualified Bonds 45 Ordinance to Constitute a Contract 46 Severability and No Contest. 47 Repe a 1 47 Effective Date 47 NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CANTON, FULTON COUNTY ILLINOIS, as follows: Section 1. Definitions. Certain words and terms used in this ordinance shall have the meanings given them above in the preambles hereto and the meanings given them in this Section 1, unless the context or use clearly indicates another or different meaning is intended. Certain definitions are as follows: (1) "Act" means, collectively, Section 6901 et se of Chapter 17 (and particularly Section 6915 thereof) and Section 11-139-1 et seq. of Chapter 24 of the Illinois Revised Statutes, as supplemented and amended, including, without limitation, by the Registered Bond Act, the Bond Replacement Act, the Municipal Bond Reform Act and the Bond Authorization Act. (2) "Alternate Bonds" means alternate bonds as described in Section 15 of the Local Government Debt Reform Act (Section 6915 of Chapter 17 of the Illinois Revised Statutes). (3) "Bond" or "Bonds" means the Issuer's 5300,000 General Obligation Bonds (Alternate Revenue Source), Series 1989, authorized to be issued by this ordinance. -4- (4) "Code" means the Internal Revenue Code of 1986, as amended, and includes related and applicable regulations promulgated by the Treasury Department. (5) "Corporate Authorities" means the City Council of the Issuer. (6) "Current Annual Debt Service" means an amount of money equal to the principal and interest requirement of all Outstanding Bonds in any Fiscal Year, including and the next subsequent to the Fiscal Year in which the computation is made. Any Outstanding Bonds required to be redeemed pursuant to mandatory redemption, as the case may be, shall be treated as falling due on the date required to be redeemed (except in the case of failure to make any such mandatory redemption) and not on the stated maturity date of such Outstanding Bonds. (7) "Enterprise Revenues" means Gross Revenues and includes all other revenue and income, from whatever source, derived from the System. (8) "Fiscal Year" means the twelve-month period beginning May 1 of the calendar year and ending on the next succeeding April 30. (9) "Gross Revenues" means all income from whatever source derived from the System, including: (i) investment income; (ii) connection, permit and inspection fees and the like; and (iii) penalties and delinquency charges, but excluding expressly (a) nonrecurring income from the sale of real estate; (b) governmental or other grants; (c) advances from or grants made to the Issuer; (d) capital development, reimbursement, or recovery charges and the like; (e) annexation or preannexation charges; -5- and (f) as otherwise determined in accordance with generally accepted accounting principles for local government enterprise funds. (10) "Issuer" means the City of Canton, Fulton County, Illinois. (11) "Net Revenues" means Gross Revenues minus Operation and Maintenance Expenses. (12) "Operation and Maintenance Expenses" means. all expenses of operating, maintaining and routine repair of the System, including wages, salaries, costs of materials and supplies, power, fuel, insurance, purchase of water or sewerage treatment services; but excluding debt service, depreciation, or any reserve requirements in connection with revenue bond obligations, and otherwise as determined in accordance with generally accepted accounting principles for local government enterprise funds. (13) "Outstanding Bonds" means the Bonds, other Alternate Bonds, Prior Bonds and Parity Bonds which are outstanding and unpaid; provided, however, such term shall not include the Bonds, Parity Bonds, other Alternate Bonds or, to the extent lawful, Prior Bonds: (i) which have matured and for which moneys are on deposit with proper paying agents, or are otherwise properly available, sufficient to pay all principal and interest thereof, or (ii) the provision for payment of which has been made by the Issuer by the deposit in an irrevocable trust or escrow~of funds or direct, full faith and credit obligations of the United States of America, the principal and interest of which will be sufficient to pay at maturity or as called for redemption all the -6- principal of and applicable premium on such Bonds, and will not result in the loss of the exclusion from gross income of the interest thereon under Section 103 of the Code. (14) "Parity Bonds" means bonds or any other obligations to be issued subsequent in time to the Bonds and which will share ratably and equally in the earnings of the System with the Bonds, other Alternate Bonds and Prior Bonds. (15) "Prior Bond Ordinance" means Ordinance No. 580, An Ordinance authorizing and providing for the issuance of $900,000 principal amount of Waterworks and Sewerage Revenue Refunding Bonds, Series 1977, of the City of Canton, Fulton County, Illinois; prescribing the form and other details and confirming the sale of said bonds; providing for the collection and disposition of the revenues to be derived from the municipal waterworks and sewerage system of said City; making other provisions with respect to the operation of said system and the issance of said bonds; providing for the security and payment of said bonds; providing for the payment of certia outstanding bonds; and prescribing other matters pertaining thereto, passed April 12, 1977, and approved April 13, 1977, with respect to which there are outstanding approximately $270,000 Waterworks and Sewerage Revenue Refunding Bonds (the "Prior Bonds"), to which are pledged revenues of the System. (16) "Project" means the improvements and extensions to the System set forth in the preambles to this ordinance, to be acquired, constructed and installed in whole or in part from proceeds of the Bonds. (17) "System" refers to all property, real, personal or -7- otherwise owned or to be owned by the Issuer or under the control of the Issuer, and used for waterworks and sewerage treatment, collection, supply and distribution, as the case may be, including the Project and any and all further extensions, improvements and additions to the System or the Project. (18) "Waterworks and Sewerage Fund" or "Fund" means the Issuer's "Waterworks and Sewerage Fund" created and established, or continued, as the case may be, by this ordinance. (16) "Underwriter" means Blunt, Ellis & Loewi, Chicago, Illinois, the underwriter in connection with the Bonds. Section 2. Authority and Purpose. This ordinance is adopted pursuant to the Constitution and laws of the State of Illinois, including the Local Government Debt Reform Act (Section 6901 et se of Chapter 17 of the Illinois Revised Statutes (and particularly Section 6915 thereof), as supplemented and amended, including by Division 139 of Article 11 of the Illinois Municipal Code, the Registered Bond Act, the Bond Replacement Act, the Municipal Bond Reform Act and the Bond Authorization Act), for the purpose of financing a part of the acquisition, construction and installation of the Project, to be made or undertaken by the City of Canton, Illinois. The Bonds and this ordinance are second, junior and subordinate to the Prior Bonds and the terms and provisions of the Prior Bond Ordinance, and Enterprise Revenues shall mean Enterprise Revenues derived from the Surplus Account under the Prior Bond Ordinance while any Prior Bonds are outstanding and unpaid. Section 3. Authorization and Terms of Bonds. To meet part of the estimated cost of the Project, there is hereby -8- appropriated the sum of $300,000, to be derived from the proceeds of the Bonds. For the purpose of financing such appropriation, Bonds of the Issuer shall be issued and sold in an aggregate principal amount of not to exceed $300,000, shall each be designated "General Obligation Bond (Alternate Revenue Source), Series 1989", and shall be issuable in the denomination of $5,000 or any authorized integral multiple thereof. The Bonds shall be numbered consecutively from 1 upwards in order of their issuance and may bear such identifying numbers or letters as shall be useful to facilitate the registration, transfer and exchange of the Bonds. Unless otherwise determined in an order to authenticate the Bonds (in any event to be as of or after November 1, 1989, and as of or before the date or dates of the issuance and sale thereof) and acceptable to the Underwriter, for the purchaser or purchasers thereof, each Bond shall be dated November 1, 1989. The Bonds shall bear interest at the rates per annum and shall mature on May 1 of the years and in the principal amounts, as follows: Principal Interest Year Amount Rate 1992 $50,000 6.6% 1993 55,000 6.7 1994 60,000 6.8 1995 65,000 6.9 1996 70,000 7.0 -9- Each Bond shall bear interest from its date, or from the most recent interest payment date to which interest has been paid, computed on the basis of a 360-day year consisting of twelve 30-day months, and payable in lawful money of the United States of America semiannually on each May 1 and November 1, commencing May 1, 1990, at the rates per annum herein set forth. The principal of and premium, if any, on the Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof at the principal corporate trust office of LaSalle National Bank, Chicago, Illinois, the Paying Agent for the Bonds (including its successors, the "Paying Agent"). Interest on the Bonds shall be payable on each interest payment date to the registered owners of record appearing on the registration books maintained by LaSalle National Bank, Chicago, Illinois, the Bond Registrar on behalf of the Issuer for such purpose (including its successors, the "Bond Registrar"), at the principal office of the Bond Registrar as of the close of business on the fifteenth (15th) day of the calendar month next preceding the applicable interest payment date. Interest on the Bonds shall be paid by check or draft mailed to such registered owners at their addresses appearing on the registration books. The Bond Registrar shall not be required to transfer or exchange any Bond during a period commencing the fifteenth (15th) day of the month next preceding each interest payment date and ending on such interest date or during a period of fifteen (15) days next preceding the mailing of a notice of redemption of any Bond which -10- could designate all or a part of such Bond for redemption. The Bonds shall not be subject to redemption prior to their stated maturities. Section 4. Bond Purchase Agreement. The Bond Purchase Agreement (the "Bond Purchase Agreement") by and between the Issuer and Blunt, Ellis & Loewi, Chicago, Illinois (the "Underwriter"), in substantially the form thereof presented before this meeting of the Corporate Authorities shall be and is hereby approved. The Official Statement (the "Official Statement") prepared by the Underwriter in connection with the Bonds in substantially the form thereof presented before this meeting of the Corporate Authorities shall be and is hereby approved. All things done by the Issuer's Mayor, Clerk, Treasurer and City Attorney in connection with the issuance and sale of the Bonds shall be and are hereby ratified, confirmed and approved. The Mayor, Clerk, Treasurer, City Attorney and other officials of the Issuer are hereby authorized and directed to do and perform, or cause to be done or performed for or on behalf of the Issuer, each and every thing necessary for the issuance of the Bonds, including the proper execution, delivery and performance of the Bond Purchase Agreement and related instruments and certificates by the Issuer, the proper execution of the Official Statement and the purchase by and delivery of the Bonds to or at the direction of the Underwriter. Section 5. Execution and Authentication. Each Bond shall be executed in the name of the Issuer by the manual or authorized facsimile signature of its Mayor and the corporate -11- seal of the Issuer, or a facsimile thereof, shall be thereunto affixed, impressed or otherwise reproduced or placed thereon and attested by the manual or authorized facsimile signature of its City Clerk. In case any officer whose signature, or a facsimile of whose signature, shall appear on any Bond shall cease to hold such office before the issuance of such Bond, such Bond shall nevertheless be valid and sufficient for all purposes, the same as if the person whose signature, or a facsimile thereof, appears on such Bond had not ceased to hold such office. Any Bond may be signed, sealed or attested on behalf of the Issuer by any person who, on the date of such act, shall hold the proper office, notwithstanding that at the date of such Bond such person may not hold such office. No recourse shall be had for the payment of any Bonds against the Mayor or any member of the City Council or any officer or employee of the Issuer (past, present or future) who executes the Bonds, or on any other basis. Each Bond shall bear thereon a certificate of authentication executed manually by the Bond Registrar. No Bond shall be entitled to any right or benefit under this ordinance or shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Bond Registrar. Such certificate of authentication shall have been duly executed by the Bond Registrar by manual signature, and such certificate of authentication upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this ordinance. The -12- certificate of authentication on any Bond shall be deemed to have been executed by the Bond Registrar if signed by an authorized officer of the Bond Registrar, but it shall not be necessary that the same officer sign the certificate of authentication on all of the Bonds issued hereunder. Section 6. Transfer, Exchange and Registration. The Bonds shall be negotiable, subject to the provisions for registration of transfer contained herein. Each Bond shall be transferable only upon the registration books maintained by the Bond Registrar on behalf of the Issuer for that purpose at the principal office of the Bond Registrar by the registered owner thereof in person or by such registered owner's attorney duly authorized in writing upon surrender thereof together with a written instrument of transfer satisfactory to the Bond Registrar and duly executed by the registered owner or such registered owner's duly authorized attorney. Upon the surrender for transfer of any such Bond, the Issuer shall execute and the Bond Registrar shall authenticate and deliver a new Bond or Bonds registered in the name of the transferee of the same aggregate principal amount, maturity and interest rate as the surrendered Bond. Bonds, upon surrender thereof at the principal office of the Bond Registrar, with a written instrument satisfactory to the Bond Registrar, duly executed by the registered owner or such registered owner's attorney duly authorized in writing, may be exchanged for an equal aggregate principal amount of Bonds of the same maturity and interest rate and of the denomination of 55,000 or any authorized integral multiple thereof, less previous -13- retirements. For every such exchange or registration of transfer of Bonds, the Issuer or the Bond Registrar may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer, which sum or sums shall be paid by the person requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making such exchange or transfer. No other charge shall be made for the privilege of making such transfer or exchange. The provisions of the Illinois Bond Replacement Act shall govern the replacement of lost, destroyed or defaced Bonds. The Issuer, the Paying Agent and the Bond Registrar may deem and treat the person in whose name any Bond shall be registered upon the registration books as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of, premium, if any, or interest thereon and for all other purposes whatsoever, and all such payments so made to any such registered owner or upon such registered owner's order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the Issuer nor the Paying Agent or the Bond Registrar shall be affected by any notice to the contrary. Section 7. Bond Registrar and Paying Agent. The Issuer covenants that it shall at all times retain a Bond Registrar and Paying Agent with respect to the Bonds and shall -14- cause to be maintained at the office of such Bond Registrar a place where Bonds may be presented for registration of transfer or exchange, that it will maintain at the designated office of the Paying Agent a place where Bonds may be presented for payment, that it shall require that the Bond Registrar maintain proper registration books and that it shall require the Bond Registrar and Paying Agent to perform the other duties and obligations imposed upon each of them by this ordinance in a manner consistent with the standards, customs and practices concerning municipal securities. The Issuer may enter into appropriate agreements with the Bond Registrar and Paying Agent in connection with the foregoing, including as follows: (a) to act as Bond Registrar, authenticating agent, Paying Agent and transfer agent as provided herein; (b) to maintain a list of the registered owners of the Bonds as set forth herein and to furnish such list to the Issuer upon request, but otherwise to keep such list confidential; (c) to cancel and/or destroy Bonds which have been paid at maturity or submitted for exchange or transfer; (d) to furnish the Issuer at least annually a certificate with respect to Bonds cancelled and/or destroyed; and (e) to furnish the Issuer at least annually an audit confirmation of Bonds paid, Bonds outstanding and payments made with respect to interest on the Bonds. The Bond Registrar and Paying Agent shall signify their acceptances of the duties and obligations imposed upon them by this ordinance. The Bond Registrar by executing the certificate of authentication on any Bond shall be deemed to have certified to the Issuer that it has all requisite power to accept, and has accepted, such duties and obligations not only with respect to -15- the Bond so authenticated but with respect to all of the Bonds. The Bond Registrar and Paying Agent are the agents of the Issuer for such purposes and shall not be liable in connection with the performance of their respective duties except for their own negligence or default. The Bond Registrar shall, however, be responsible for any representation in its certificate of authentication on the Bonds. The Issuer may remove the Bond Registrar or Paying Agent at any time. In case at any time the Bond Registrar or Paying Agent shall resign (such resignation to not be effective until a successor has accepted such role) or shall be removed or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a receiver, liquidator or conservator of the Bond Registrar or Paying Agent, or of its property, shall be appointed, or if any public officer shall take charge or control of the Bond Registrar or Paying Agent or of their respective properties or affairs, the Issuer covenants and agrees that it will thereupon appoint a successor Bond Registrar or Paying Agent, as the case may be. The Issuer shall mail or cause to be mailed notice of any such appointment made by it to each registered owner of Bonds within twenty (20) days after such appointment. Any Bond Registrar or Paying Agent appointed under the provisions of this Section 7 shall be a bank, trust company or other qualified professional with respect to such matters, maintaining its principal office in the State of Illinois. Section 8. Alternate Bonds; General Obligations. The Bonds are and constitute Alternate Bonds under the Local -16- Government Debt Reform Act, anticipated to be payable from Enterprise Revenues. Under and pursuant to Section 15 of the Local Government Debt Reform Act, the full faith and credit of the Issuer are hereby irrevocably pledged to the punctual payment of the principal of and interest on the Bonds; the Bonds shall be direct and general obligations of the Issuer;. and the Issuer shall be obligated to levy ad valorem taxes upon all the taxable property in the City of Canton, Illinois, for the payment of the Bonds and the interest thereon, without limitation as to rate or amount. Enterprise Revenues are hereby determined by the Corporate Authorities to be sufficient to provide for or pay in each year to final maturity of the Bonds all of the following: (1) costs of operation and maintenance of the System (but not including depreciation), (2) debt service (as defined in Section 2 of the Local Government Debt Reform Act) on all outstanding revenue bonds payable from such Enterprise Revenues, (3) all amounts required to meet any fund or account requirements with respect to such outstanding revenue bonds, including the Prior Bonds, (4) other contractual or tort liability obligations, if any, payable from such Enterprise Revenues, and (5) in each year, an amount not less than 1.25 times debt service (as defined in Section 2 of the Local Government Debt Reform Act) of all (i) Alternate Bonds payable from such Enterprise Revenues previously issued and outstanding and (ii) Alternate Bonds proposed to be issued, including the Bonds. To the extent payable from one or more revenue sources (as defined in Section 2 of the Local -17- Government Debt Reform Act) such sources shall have been determined by the Corporate Authorities to provide in each year an amount not less than 1.25 times debt service (as defined in Section 2 of the Local Government Debt Reform Act) of all Alternate Bonds payable from such revenue sources previously issued and outstanding and Alternate Bonds proposed to be issued. The determination of the sufficiency of Enterprise Revenues or a revenue source (as defined in Section 2 of the Local Government Debt Reform Act), as applicable, shall be supported by reference to the most recent audit of the Issuer, which shall be for a Fiscal Year ending not earlier than 18 months previous to the time of issuance of the applicable Alternate Bonds. If such audit does not adequately show such Enterprise Revenues or revenue source (as defined in Section 2 of the Local Government Debt Reform Act), as applicable, of if such Enterprise Revenues or revenue source (as defined in Section 2 of the Local Government Debt Reform Act), as applicable, are shown to be insufficient, then the determination of sufficiency shall be supported by the report of an independent accountant or feasibility analyst having a national reputation for expertise in such matters demonstrating the sufficiency of such revenues and explaining, if appropriate, by what means the revenues will be greater than as shown in the audit. Whenever such sufficiency is demonstrated by reference to a schedule of higher rates or charges for Enterprise Revenues or a higher tax imposition for a revenue source (as defined in Section 2 of the Local Government Debt Reform Act), such higher rates, charges or taxes shall have -18- been properly imposed by an ordinance adopted prior to the time of delivery of the applicable Alternate Bonds. Section 9. Form of Bonds. The Bonds shall be issued as fully registered Bonds conforming to the industry customs and practices of printing, including part on the front and part on the reverse of the certificates, as appropriate, the blanks [CUSIPs optional] to be appropriately completed when the Bonds are printed. The Bonds shall be prepared in compliance with the National Standard Specifications for Fully Registered Municipal Securities prepared by the American National Standards Institute and shall be in substantially the form, as follows: -19- UNITID STATES OF AMERICA STATE OF ILLINOIS COUNTY OF FULTON CITY OF CANTON GENERAL OBLIGATION BOND (ALTERNATE REVENUE SOURCE) SERIES 1989 REGISTERED NO. REGISTERED ~ INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: Registered Owner: Principal Amount: KNOW ALL BY TAESE PRESENTS that the City of Canton, a municipal corporation and non-home rule unit of local government, situated in the County of Fulton, in the State of Illinois (the "Issuer"), acknowledges itself indebted and for value received hereby promises to pay to the Registered Owner identified above, or registered assigns, the Principal Amount set forth above on the Maturity Date specified above, and to pay interest on such Principal Amount from the Dated Date hereof, or from the most recent interest payment date to which interest has been paid, at the Interest Rate per annum set forth above, computed on the basis of a 360-day year consisting of twelve 30-day months and payable in lawful money of the United States of America semiannually on the first days of May and November in each year, commencing May 1, 1990, until the Principal Amount hereof shall have been paid, by check or draft mailed to the Registered Owner of record hereof as of the fifteenth (15th) day of the calendar month next preceding such interest payment date, at the address of such Registered Owner appearing on the registration books maintained for such purpose at the principal corporate trust office of LaSalle National Bank, Chicago, Illinois, as Bond -20- Registrar (including its successors, the "Bond Registrar"). This Bond, as to principal and premium, if any, when due, will be payable in lawful money of the United States of America upon presentation and surrender of this Bond at the principal corporate trust office of LaSalle National Bank, Chicago, Illinois, as Paying Agent (including its successors, the "Paying Agent"). Although it is expected, and has been certified by Blunt, Ellis & Loewi, Chicago, Illinois, that the Bonds are to be paid from net revenues of the Issuer's combined waterworks and sewerage system, which revenues are pledged to the payment thereof, the full faith and credit of the Issuer, including the power to levy taxes without limit as to rate or amount, are irrevocably pledged for the punctual payment of the principal of and interest on this Bond according to its terms. This Bond is one of a series of Bonds issued in the aggregate principal amount of up to 5300,000, which are all of like tenor, except as to maturity, interest rate and right of redemption, and which are authorized and issued under and pursuant to the Constitution and laws of the State of Illinois, including Section 15 of the Local Government Debt Reform Act (Section 6915 of Chapter 17 of the Illinois Revised Statutes, in connection with "alternate bonds", as supplemented and amended, including by Division 139 of Article 11 of the Illinois Municipal Code, the Registered Bond Act, the Bond Replacement Act, the Municipal Bond Reform Act, the Local Government Debt Reform Act and the Bond Authorization Act), and pursuant to and in accordance with Ordinance No. adopted by the City Council of -21- the Issuer on 1989, and entitled: "An Ordinance Authorizing the Issuance of up to $300,000 General Obligation Bonds (Alternate Revenue Source), Series 1989, of the City of Canton, Fulton County, Illinois, Providing the Details of Such Bonds and For an Alternate Revenue Source and the Levy of a Direct Annual Tax Sufficient to Pay the Principal of and Interest on such Bonds, and Related Matters." The Bonds are not subject to call for redemption prior to their stated maturities. This Bond is transferable only upon the registration books therefor by the Registered Owner hereof in person, or by such Registered Owner's attorney duly authorized in writing, upon surrender hereof at the principal office of the Bond Registrar together with a written instrument of transfer satisfactory to the Bond Registrar duly executed by the Registered Owner or by such Registered Owner's duly authorized attorney, and thereupon a new registered Bond or Bonds, in the authorized denominations of $5,000 or any authorized integral multiple thereof and of the same aggregate principal amount as this Bond shall be issued to the transferee in exchange therefor. In like manner, this Bond may be exchanged for an equal aggregate principal amount of Bonds of any authorized denomination. The Bond Registrar shall not be required to exchange or transfer any Bond during the period from the fifteenth (15th) day of the month preceding any interest payment date to such interest payment date or during a period of fifteen (15) days next preceding the mailing of a notice of redemption which could designate all or a part of such Bond for redemption. The Issuer or the Bond Registrar may make a charge -22- sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to the transfer or exchange of this Bond. No other charge shall be made for the privilege of making such transfer or exchange. The Issuer, the Paying Agent and the Bond Registrar may treat and consider 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, premium, if any, and interest due hereon and for all other purposes whatsoever, and all such payments so made to such Registered Owner or upon such registered owner's order shall be valid and effectual to satisfy and discharge the liability upon this Bond to the extent of the sum or sums so paid, and neither the Issuer nor the Paying Agent or the Bond Registrar shall be affected by any notice to the contrary. No recourse shall be had for the payment of any Bonds against the Mayor, any member of the City Council or any other officer or employee of the Issuer (past, present or future) who executes any Bonds, or on any other basis. The Issuer may remove the Bond Registrar or Paying Agent at any time and for any reason and appoint a successor. This Bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been duly executed by the Bond Registrar. The Issuer has designated the Bonds as "qualified tax-exempt obligations" under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. -23- It is hereby certified, recited and declared that all acts, conditions and things required to be done, exist and be performed precedent to and in the issuance of this Bond in order to make it a legal, valid and binding obligation of the Issuer have been done, exist and have been performed in regular and due time, form and manner as required by law, and that the series of Bonds of which this Bond is one, together with all other indebtedness of the Issuer is within every debt or other limit prescribed by law. IN WITNESS WfiEREOF, the City of Canton, Fulton County, Illinois, has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of its Mayor, and its corporate seal, or a facsimile thereof, to be hereunto affixed or otherwise reproduced hereon and attested by the manual or facsimile signature of its City Clerk, all as of the Dated Date set forth above. (SEAL) Attest: CITY OF CANTON, ILLINOIS Mayor City Clerk Dated: 19 CERTIFICATE OF AUTf~NTICATION This Bond is one of the General Obligation Bonds (Alternate Revenue Source), Series 1989, described in the within mentioned ordinance. LaSalle National Bank, Chicago, Illinois, as Bond Registrar By Authorized Officer Bond Registrar and Paying Agent: LaSalle National Bank, Chicago, Illinois -24- [Printer's legend for ownership abbreviations may be placed here.] ASS IGNNIENT For value received the undersigned sells, assigns and transfers unto [Name, Address and Social Security Number or FEIN of Assignee] the within Bond and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated Signature Guarantee: Signature Notice: The signature of this assignment must correspond with the name of the Registered Owner as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever. Section 10. Levy and Extension of Taxes. For the purpose of providing the money required to pay the interest on the Bonds when and as the same falls due and to pay and discharge the principal thereof as the same shall mature, there shall be levied upon all the taxable property in the City of Canton, Illinois, in each year while any of the Bonds shall be outstanding, a direct annual tax in each of the years 1989 to 1994, inclusive, sufficient for that purpose, in addition to all other taxes, and in the amounts for each year, as follows: -25- For Each Year 1989 1990 1991 1992 1993 1994 A Tax Sufficient to Produce the Sum of: $30,675 for interest 70,450 for interest and principal 72,150 for interest and principal 73,465 for interest and principal 74,385 for interest and principal 74,900 for interest and principal Interest or principal coming due at any time when there shall be insufficient funds on hand to pay the same shall be paid promptly when due from current funds on hand in advance of the collection of the taxes herein levied; and when such taxes shall have been collected, reimbursement shall be made to such fund or funds from which such advance was made in the amounts thus advanced. As soon as this ordinance becomes effective, a copy hereof certified by the City Clerk, which certificate shall recite that this ordinance has been duly adopted, shall be filed with the County Clerk of Fulton County, Illinois, who is hereby directed to ascertain the rate percent required to produce the aggregate tax hereinabove provided to be levied in the years 1989 to 1994, inclusive, and to extend the same for collection on the tax books in connection with other taxes levied in each of such -26- years, in and by the Issuer for general corporate purposes of the Issuer, and in each of such years such annual tax shall be levied and collected in like manner as taxes for general corporate purposes for each of such years are levied and collected and, when collected, such taxes shall be used solely for the purpose of paying the principal of and interest on the Bonds herein authorized as the same become due and payable. The Issuer covenants and agrees with the registered owners of the Bonds that so long as any of the Bonds remain outstanding, unless or to the extent Enterprise Revenues or other duly appropriated moneys shall be then on deposit in the Debt Service Account of 1989 established in Section 11 below, the Issuer will take no action or fail to take any action which in any way would adversely affect the ability of the Issuer to levy and cc1lE~ct the foregoing taxes, and the Issuer and its officers will comply with all present and future applicable laws in order to assure that the foregoing taxes will be levied, extended and collected as provided herein and deposited in the Debt Service Account of 1989 established in Section 11 below to pay the principal of and interest on the Bonds. Section 11. Debt Service Account_ Net Revenues and moneys de:°ived from taxes herein levied are appropriated and set aside for the sole purpose of paying principal of and interest on the Bonds when and as the same come due. All of such moneys, and all other r~toneys to be used for the payment of the principal of and interest on the Bonds, including Enterprise Revenues available for such payment, shall be deposited in the "Debt -27- Service Account of 1989" which is hereby established as a special account of the Issuer and shall be administered as a bona fide debt service fund under the Internal Revenue Code of 1986, as amended. All accrued interest received upon the issuance of the Bonds, and an amount of Bond proceeds to pay interest to and including the May 1, 1990, interest payment date on the Bonds, shall be deposited in the Debt Service Account of 1989 and applied to pay interest on the Bonds. Section 12. Bond Proceeds Account. All of the proceeds derived from the sale of the Bonds (exclusive of accrued interest) shall be deposited in the "Bond Proceeds Account of 1989", which is hereby established as a special account of the Issuer. Moneys in the Bond Proceeds Account of 1989 shall be used for the purposes specified in Section 1 of this ordinance (that is, the costs of the Project) and for the payment of costs of issuance of the Bonds, but may hereafter be reappropriated and used for other lawful System purposes. Before any such reappropriation shall be made, there shall be filed with the City Clerk an opinion of Evans & Froehlich, Champaign, Illinois, or other nationally recognized Bond counsel ("Bond Counsel") to the effect that such reappropriation is authorized and will not adversely affect the tax-exempt status of the Bonds under Section 103 of the Internal Revenue Code of 1986, as amended. Moneys in the Bond Proceeds Account of 1989 shall be withdrawn from time to time as needed for the payment of costs and expenses incurred or advanced by the Issuer in connection with the Project and for the acquisition, construction and installation of the Project and -28- paying the fees and expenses incidental thereto. Moneys shall be withdrawn from the depositary in connection with such funds from time to time by the Treasurer or other appropriate financial officer of the Issuer only upon submission by such officer to such depository of the following: (i) If such withdrawal of funds is for payment to a supplier, materialman, or contractor for work done in connection with the Project, a certificate executed by the engineer in charge of the acquisition, construction and installation of the Project stating the amount of materials supplied or the nature of the work completed, that such materials have been properly accepted or such work approved by such engineer, the amount due and payable thereon, and the amount remaining to be paid in connection with the Project; and (ii) A duplicate copy of the order signed by the Mayor and the City Clerk, or such other officer(s) as may from time to time be by law authorized to sign and countersign orders of the Issuer, stating specifically the purpose for which the order is issued and indicating that the payment for which the order is issued has been approved by the Corporate Authorities. Within sixty (60) days after completion of the Project in accordance with the plans and specifications therefor, as herein referred to, and as heretofore approved by the Corporate Authorities, and after all costs leave been paid in connection -?.9- with the acquisition and construction thereof, the engineer in responsible charge of the Project shall certify to the Corporate Authorities the fact that the work has been completed according to such plans and specifications, and upon approval of the completion of the work based upon such certificate by the Corporate Authorities, and after all costs have been paid, the Mayor, City Clerk and such engineer shall execute a certificate and file it with the depositary in which the Bond Proceeds Account of 1989 is on deposit and in the records of the Issuer certifying that the work has been completed in accordance with the plans and specifications therefor and that all costs have been paid; and, if at that time any funds remain in the Bond Proceeds Account of 1989, the same shall be transmitted by the depositary to the Treasurer or other appropriate financial officer of the Issuer, and such officer shall credit such funds to the Depreciation Account of 1989, or, if such account is fully funded, to the Debt Service Account of 1989. Section 13. Depreciation Account. In addition to the Depreciation Account created and established under the Prior Bond Ordinance, there shall be and is hereby created and established a Depreciation Account of 1989. There shall be deposited in and credited to the Depreciation Account of 1989 such amounts as the Corporate Authorities may from time to time provide. Amounts to the credit of such Depreciation Account of 1989 shall be used for (i) the payment of the costs of extraordinary maintenance, necessary repairs and replacements, or contingencies, the payment for which no other funds are -30- available, in order that the System may at all times be able to render efficient service and (ii) the payment of principal of or interest and applicable premium on any Outstanding Bonds at any time when there are no other funds available for that purpose in order to prevent a default and shall be transferred to the appropriate fund or account for such purpose. Each expenditure to be made from the Depreciation Account of 1989 for the purpose stated in clause (i) of the preceding paragraph shall be made only after a consulting engineer has certified or a 4/5th's approving vote of the Corporate Authorities has determined that such expenditure is necessary to the continued effective and efficient operation of the System. Moneys in the Depreciation Account of 1989 are to be used to pay the cost of repairs or replacements to the System as may be necessary from time to time for the continued efficient operation of the System. Although amounts in the Depreciation Account of 1989 may be required to be used to pay principal and interest on the Bonds to prevent or remedy a default, such amounts are not expected to be used to pay principal and interest on the Bonds to prevent or remedy a default, and there is no assurance (due to the necessity of making reasonable repairs or replacements to the System, from time to time, as discussed above) that such amounts will be available to pay principal and interest on the Bonds even if all other sources of payment are exhausted. When the Prior Bonds are no longer outstanding under -31- the Prior Bond Ordinance the amount on deposit in the Depreciation Account under the Prior Bond Ordinance, upon resolution of the Corporate Authorities, may be transferred to the Depreciation Account of 1989 under this ordinance. Section 14. Operation and Maintenance Account. There shall be and is hereby created (or continued hereunder, as the case may be, from the Prior Bond Ordinance in the event no Prior Bonds are outstanding under the Prior Bond Ordinance) an Operation and Maintenance Account. On or before the first day of each month, there shall be deposited and credited to the Operation and Maintenance Account an amount sufficient, when added to the amount then on deposit in such Operation and Maintenance Account, to establish a balance equal to an amount not less than the amount necessary to pay Operation and Maintenance Expenses for the then current and the next succeeding month. Section 15. Exception from Arbitrage Rebate. The Issuer does not reasonably expect to issue more than $5,000,000 of tax-exempt obligations in the year of the issuance of the Bonds within the meaning of the small issuer exception under Section 148(f)(4)(C) of the Internal Revenue Code of 1986, as amended. However, the Issuer shall comply with the provisions of Section 148(f) of the Internal Revenue Code of 1986, as amended, relating to the rebate of certain investment earnings at periodic intervals to the United States of America to the extent that there shall have been filed with the City Clerk an opinion of Bond Counsel to the effect that such compliance is necessary to -32- preserve the exclusion from gross income for federal income tax purposes of interest on the Bonds under Section 103 of the Internal Revenue Code of 1986, as amended. Section 16. Investment Regulations. No investment shall be made of any moneys in the Debt Service Account of 1989 or the Bond Proceeds Account of 1989 except in accordance with the tax covenants and other covenants set forth in Section 17 of this ordinance. All income derived from such investments in respect of moneys or securities in any fund or account shall be credited in each case to the fund or account in which such moneys or securities are held. Any moneys in any fund or account that are subject to investment yield restrictions may be invested in United States Treasury Securities, State and Local Government Series, pursuant to the regulations of the United States Treasury Department, Bureau of Public Debt. The Issuer's Treasurer and agents designated by such officer are hereby authorized to submit on behalf of the Issuer subscriptions for such United States Treasury Securities and to request redemption of such United States Treasury Securities. Section 17. Non-Arbitrage__ and Tax-Exemption. One purpose of this Section 17 is to set forth various facts regarding the Bonds and to establish the expectations of the Corporate Authorities and the Issuer as to future events regarding the Bonds and the use of Bond proceeds. The certifications and representations made herein and at the time of the issuance of the Bonds are intended, and may be relied upon, -33- as certifications and expectations described in Sections 1.103-13(a)(2)(ii) and 1.148-OT et se of the U.S. Treasury Regulations dealing with arbitrage and rebate (the "Regulations"). The covenants and agreements contained herein and at the time of the issuance of the Bonds are made for the benefit of the registered owners from time to time of the Bonds. The Corporate Authorities and the Issuer agree, certify, covenant and represent as follows: (a) The Bonds are being issued to pay the costs of the Project, and all of the amounts received upon the sale of the Bonds, plus all investment earnings thereon (the "Proceeds") are needed for the purpose for which the Bonds are being issued. (b) The Issuer has entered into, or will within six months from the date of issue of the Bonds enter into, binding contracts or commitments obligating it to spend at least 2.5% of the proceeds of the Bonds for constructing, acquiring and equipping the Project. It is expected that the work of acquiring, constructing and equipping the Project will continue to proceed with due diligence to completion reasonably expected to be on or about August 1, 1990, at which time all of the Proceeds will have been spent. (c) The Issuer has on hand no funds which could legally and practically be used for the Project which are not pledged, budgeted, earmarked or otherwise necessary to be used for other purposes. Accordingly, no portion of the Proceeds will be used (i) directly or indirectly to replace funds of the Issuer or any agency, department or division thereof that could be used for the Project, or (ii) to replace any proceeds of any prior issuance of obligations by the Issuer. No portion of the Bonds is being issued solely for the purpose of investing the Proceeds at a Yield higher than the Yield on the Bonds. For purposes of this Section, "Yield" means that yield (that is, the discount rate) which when used in computing the present worth of all payments of principal and interest to be paid on an obligation (using semi-annual compounding on the basis of a 360-day year) produces an amount equal to the purchase price of the Bonds, including accrued interest, and the purchase price of the Bonds is equal to the first offering price at which more than 10% of the principal amount of each maturity of the Bonds is sold to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers). -34- (d) All principal proceeds of the Bonds will be deposited in the Bond Proceeds Account of 1989 Fund and used to pay costs of the Project and costs of issuance of the Bonds, and any accrued interest and premium received on the delivery of the Bonds will be deposited in the Debt Service Account of 1989 and used to pay the first interest due on the Bonds. Earnings on investment of moneys in any fund or account will be credited to that fund or account. Project costs, including issuance costs of the Bonds, will be paid from the Bond Proceeds Account of 1989 Fund, and no other moneys are expected to be deposited therein. Interest on and principal of the Bonds will be paid from the Debt Service Account of 1989. No Proceeds will be used more than 30 days after the date of issue of the Bonds for the purpose of paying any principal or interest on any issue of bonds, notes, certificates or warrants or on any installment contract or other obligation of the Issuer or for the purpose of replacing any funds of the Issuer used for such purpose. (e) The Debt Service Account of 1989 is established to achieve a proper matching of revenues and earnings with debt service in each bond year. Other than any amounts held to pay principal of matured Bonds that have not been presented for payment, it is expected that any moneys deposited in the Debt Service Account of 1989 will be spent within the 12-month period beginning on the date of deposit therein. Any earnings from the investment of amounts in the Debt Service Account of 1989 will be spent within a one-year period beginning on the date of receipt of such investment earnings. Other than any amounts held to pay principal of matured Bonds that have not been presented for payment, it is expected that the Debt Service Account of 1989 will be depleted at least once a year, except for a reasonable carryover amount not to exceed the greater of (i) one-year's earnings on the investment of moneys in the Debt Service Account of 1989, or (ii) in the aggregate one-twelfth (1/12th) of the annual debt service on the Bonds. (f) Other than the Debt Service Account of 1989, no funds or accounts have been or are expected to be established, and no moneys or property have been or are expected to be pledged (no matter where held or the source thereof) which will be available to pay, directly or indirectly, the Bonds or restricted so as to give reasonable assurance of their availability for such purposes. No property of any kind is pledged to secure, or is available to pay, obligations of the Issuer to any credit enhancer or liquidity provider. (g) (i) All amounts on deposit in the Bond Proceeds Account of 1989 Fund or the Debt Service Account of 1989 and all Proceeds, no matter in what funds or accounts deposited ("Gross Proceeds"), to the extent not exempted in (ii) -35- below, and all amounts in any fund or account pledged directly or indirectly to the payment of the Bonds which will be available to pay, directly or indirectly, the Bonds or restricted so as to give reasonable assurance of their availability for such purpose contrary to the expectations set forth in (f) above, shall be invested at market prices and at a Yield not in excess of the Yield on the Bonds plus, for amounts in the Bond Proceeds of 1989 Fund only, 1/8 of 0 o. (ii) The following may be invested without Yield restriction: (A) amounts invested in obligations described in Section 103(a) of the Internal Revenue Code of 1986, as amended (but not specified private activity bonds as defined in Section 57(a)(5)(C) of the Code), the interest on which is not includable in the gross income of any registered owner thereof for federal income tax purposes ("Tax-Exempt Obligations"); (B) amounts deposited in the Debt Service Account of 1989 that are reasonably expected to be expended within 13 months from the deposit date and have not been on deposit therein for more than 13 months; (C) amounts in the Bond Proceeds Account of 1989 prior to the earlier of completion (or abandonment) of the Project or three years from the date of issue of the Bonds; (D) an amount not to exceed 5% of Bond proceeds; (E) all amounts for the first 30 days after they become Gross Proceeds (e.g., date of deposit in any fund or account securing the Bonds); and (F) all amounts derived from the investment of the Proceeds for a period of one year from the date received. (h) Subject to (q) below, once moneys are subject to the Yield limits of (g)(i) above, such moneys remain Yield restricted until they cease to be Gross Proceeds. (i) As set forth in Section 148(f)(4)(C) of the Internal Revenue Code of 1986, as amended, the Issuer is excepted from the required rebate of arbitrage profits on the Bonds because the Issuer is a governmental unit with general taxing powers, none of the Bonds is a "private -36- activity bond" as defined in Section 141(a) of the Internal Revenue Code of 1986, as amended, all the net proceeds of the Bonds are to be used for the local government activities of the Issuer, and the aggregate face amount of all tax-exempt obligations (other than "private activity bonds" as defined in Internal Revenue Code of 1986, as amended) issued by the Issuer and all subordinate entities thereof during the calendar year 1989, including the Bonds, is not reasonably expected to exceed $5,000,000. (j) None of the Proceeds will be used, directly or indirectly, to replace funds which were used in any business carried on by any person other than a state or local governmental unit. (k) The payment of the principal of or the interest on the Bonds will not be, directly or indirectly (A) secured by any interest in (i) property used or to be used for a private business use by any person other than a state or local governmental unit, or (ii) payments in respect of such property, or (B) derived from payments (whether or not by or to the Issuer), in respect of property, or borrowed money, used or to be used for a private business use by any person other than a state or local governmental unit. (1) None of the Proceeds will be used, directly or indirectly, to make or finance loans to persons other than a state or local governmental unit. (m) No user of the Project other than a state or local government unit will use the Project on any basis other than the same basis as the general public, and no person other than a state or local governmental unit will be a user of the Project as a result of (i) ownership, or (ii) actual or beneficial use pursuant to a lease or a management or incentive payment contract, or (iii) any other similar arrangement. (n) Beginning on the 31st day prior to the Bond sale date, the Issuer has not sold or delivered, and will not sell or deliver, (nor will it deliver within 31 days after the date of issuance of the Bonds) any other obligations pursuant to a common plan of financing, which will be paid out of substantially the same source of funds (or which will have substantially the same claim to be paid out of substantially the same source of funds) as the Bonds or will be paid directly or indirectly from Proceeds. (o) No portion of the Project is expected to be sold or otherwise disposed of prior to the last maturity of the Bonds. (p) The Issuer has not been notified of any disqualification or proposed disqualification of it by the -37- Internal Revenue Service as a bond issuer which may certify bond issues under Section 1.103-13(a)(2)(ii) of the Regulations. (q) The Yield restrictions contained in (g) above or any other restriction or covenant contained herein need not be observed and may be changed if the Issuer receives an opinion of Bond Counsel to the effect that such non-observance or change will not adversely affect the tax-exempt status of interest on the Bonds to which the Bonds otherwise are entitled. (r) The Issuer acknowledges that any changes in facts or expectations from those set forth herein may result in different Yield restrictions or rebate requirements from those set forth herein and that Bond Counsel should be contacted if such changes do occur. (s) The Corporate Authorities have no reason to believe the facts, estimates, circumstances and expectations set forth herein are untrue or incomplete in any material respect. On the basis of such facts, estimates, circumstances and expectations, it is not expected that the Proceeds or any other moneys or property will be used in a manner that will cause the Bonds to be arbitrage bonds or private activity bonds within the meaning of Sections 148 or 141 of the Internal Revenue Code of 1986, as amended, and of applicable regulations. To the best of the knowledge and belief of the City Council, such expectations are reasonable, and there are no other facts, estimates and circumstances that would materially change such expectations. The Issuer also agrees and covenants with the registered owners of the Bonds from time to time outstanding that, to the extent possible under. Illinois law, it will comply with all present federal tax law and related regulations and with whatever federal tax law is adopted and regulations promulgated in the future which apply to the Bonds and affect the tax-exempt status of the Bonds. Section 18. ~rther Assurances and Actions. The Corporate Authorities hereby authorize the officials of the Issuer responsible for issuing the Bonds, the same being the Mayor, Clerk and Treasurer of the Issuer, to make such further -38- filings, covenants, certifications and supplemental agreements as may be necessary to assure that the use of the Project and Bond and related proceeds will not cause the Bonds to be arbitrage bonds or private activity bonds and to assure that the interest in the Bonds will be excluded from gross income for federal income tax purposes. In connection therewith, the Issuer and the Corporate Authorities further agree: (a) through the officers of the Issuer, to make such further specific covenants, representations as shall be truthful, and assurances as may be necessary or advisable; (b) to consult with Bond Counsel approving the Bonds and to comply with such advice as may be given; (c) to pay to the United States, as necessary, such sums of money representing required rebates of excess arbitrage profits relating to the Bonds; (d) to file such forms, statements, and supporting documents as may be required and in a timely manner; and (e) if deemed necessary or advisable, to employ and pay fiscal agents, financial advisors, attorneys, and other persons to assist the Issuer in such compliance. Section 19. General Covenants. The Issuer covenants and agrees with the registered owners of the Outstanding Bonds, so long as there are any Outstanding Bonds (as defined herein), as follows: (a) The Issuer will maintain the System in good repair and working order, will operate the same efficiently and faithfully, will promptly construct and acquire any extensions, improvements, replacements or repairs thereto, and will punctually perform all duties with respect thereto -39- required by the Constitution and laws of the State of Illinois and of the United States. (b) The Issuer will establish and maintain at all times reasonable fees, charges, and rates for the use and service of the System and will provide for the collection thereof and the segregation and application of the revenues of the System in the manner provided by this ordinance, sufficient at all times to pay Operation and Maintenance Expenses, to provide adequate depreciation funds, to generate Net Revenues of at least 125% of Current Annual Debt Service on all revenue bonds of the Issuer which by their terms are payable solely from the revenues of the System, and otherwise to at all times maintain the Bonds as Alternate Bonds, and to provide for the creation and maintenance of the respective accounts as provided in this ordinance. The Issuer will defend its right to receive and apply the revenues pledged to pay the Bonds. (c) There shall be charged against all users of the System, including the Issuer, such rates and amounts for waterworks and sewerage treatment, distribution, collection and other related services, as the case may be, as shall be adequate to meet the requirements of this Section 19. Charges for services rendered the Issuer shall be made against the Issuer, and payment for the same shall be made monthly from corporate funds into the Fund as revenues derived from the .operation of the System. (d) Whenever the 125% coverage in subsection (b) above -40- is not effected or the Bonds at any time fail to qualify as Alternate Bonds not subject to any applicable debt limit under Section 15 of the Local Government Debt Reform Act or taxes are levied and extended and collected as in Section 9 hereof, the Issuer covenants to promptly have prepared a rate and management study for the System by an independent consulting engineer or accountant (experienced with respect to waterworks and sewerage systems) employed for that purpose, and further, to send a copy of such study, when completed, to the Underwriter of the Bonds along with a letter indicating what action the Issuer has taken responsive to such study and to comply with Section 15 of the Local Government Debt Reform Act. (e) The Issuer from time to time will make all needful and proper repairs, replacements, additions, and betterments to the System so that the System may at all times be operated properly and advantageously; and when any necessary equipment or facility shall have been worn out, destroyed, or otherwise is insufficient for proper use, it shall be promptly replaced so that the value and efficiency of the System shall be at all times fully maintained. (f) The Issuer will establish such rules and regulations for the control and operation of the System necessary for the safe, lawful, efficient and economical operation thereof. (g) The Issuer will make and keep proper books and accounts (separate and apart from all other records and -41.- accounts of the Issuer), in which complete entries shall be made of all transactions relating to the System, and hereby covenants that within ninety (90) days following the close of each Fiscal Year, it will cause the books and accounts of the System to be audited by independent certified public accountants. Such audit will be available for inspection by the registered owners of any of the Bonds. Upon availability, the Issuer will send the Underwriter a copy of such audit in each year. Each such audit, in addition to whatever matters may be thought proper by the accountants to be included therein, shall, without limiting the generality of the foregoing, include the following: (i) A statement in detail of income and expenditures of the System for such Fiscal Year. (ii ) A balance sheet as of the end of such Fiscal Year, including a statement of the amount held in each of the accounts of the Fund. (iii) A list of all insurance policies in force at the end of the Fiscal Year, setting out as to each policy the amount of the policy, the risks covered, the name of the insurer, and the expiration date of the policy. (iv) The number of waterworks and sewerage customers and users served by the System at the end of the year, the quantity of water supplied and sewerage collected and water and sewerage treated by the System and a summary of rates in effect from time to time for services of the System. -42- (v) The amount and details of all Outstanding Bonds. (vi) The accountant's comments regarding the manner in which the Issuer has carried out the accounting requirements of this ordinance and has complied with Section 15 of the Local Government Debt Reform Act, and the accountant's recommendations for any changes or improvements in the operation of the System. All expenses of the audit required by this Section 19 shall be regarded and paid as an Operation and Maintenance Expense. It is further covenanted and agreed that a copy of each such audit shall be furnished upon completion to the Underwriter, and a summary thereof shall be furnished to the registered owner of any Bond upon request. (h) The Issuer will keep the books and accounts for the System in accordance with generally accepted fund reporting practices for local government enterprise funds; provided, however, that the monthly credits to the Debt Service Account of 1989 and the Depreciation Account of 1989 shall be in cash, and such funds shall be held separate and apart in cash and investments. For the purpose of determining whether sufficient cash and investments are on deposit in such accounts under the terms and requirements of this ordinance, investments shall be valued at the lower of the cost or market price on the valuation date thereof, which valuation date. shall be not less frequently than annually. -43- (i) The Issuer will take no action in relation to the System which would unfavorably affect the security of the Outstanding Bonds or the prompt payment of the principal and interest thereon. (j) The registered owner of any Bond may proceed by civil action to compel performance of all duties required by law and this ordinance, including the making and collecting of sufficient charges and rates for the service supplied by the System and the application of the income and revenue therefrom. (k) The Issuer will carry insurance on the System of the kinds and in the amounts which are usually carried by private parties operating similar properties, covering such risks as shall be recommended by a competent consulting engineer or insurance consultant employed by the Issuer for the purpose of making such recommendations. All moneys received for loss under such insurance policies shall be deposited in the Depreciation Account of 1989 and used in making good the loss or damage in respect of which they were paid, either by repairing the property damaged or making replacement of the property destroyed, and provision for making good such loss or damage shall be made within ninety (90) days from the date of the loss. The payment of premiums for all insurance policies required under the provisions of this covenant in connection with the System shall be considered an Operation and Maintenance Expense. The proceeds derived from any and all policies for workers' -44- compensation or public liability shall be paid into the Operation and Maintenance Account and used in paying the claims on account of which they were received. (1) The Issuer covenants not to provide any free service of the System, and, to the extent permitted by law, the Issuer will not grant a franchise or other rights for the operation of any competing waterworks or sewerage system or systems within the Issuer or the area served by the System. (m) The Issuer will adopt a budget and approve appropriations for the Fund prior to the beginning of each Fiscal Year, subject to all applicable state laws, providing for payment of all sums to be due in the Fiscal Year so as to comply with the terms of this ordinance. The budget may include in its estimate of income the use of available surplus moneys or other funds of the Issuer appropriated for such purposes. If during the Fiscal Year there are extraordinary receipts or payments of unusual cost, the Issuer will adopt an amended budget for the remainder of the Fiscal Year, providing for receipts or payments pursuant to this ordinance. (n) The Issuer will comply with the special covenants concerning Alternate Bonds as required by Section 15 of the Local Government Debt Reform Act and Section 7 of this ordinance. Section 20. Bank Qualified Bonds. Pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, the -45- Issuer hereby designates the Bonds as "qualified tax-exempt obligations" as defined in Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. The Issuer represents that the reasonably anticipated amount of tax-exempt obligations that will be issued by the Issuer and all subordinate entities of the Issuer during the calendar year in which the Bonds are issued will not exceed $10,000,000 (and reasonably expects not to exceed $5,000,000) within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. The Issuer covenants that it will not so designate and issue more than $10,000,000 (and reasonably expects not to exceed $5,000,000) aggregate principal amount of tax-exempt obligations in such calendar year. For purposes of this Section 15, the term "tax-exempt obligations" includes "qualified 501(c)(3) Bonds" (as defined in the Section 145 of the Internal Revenue Code of 1986, as amended) but does not include other "private activity bonds" (as defined in Section 141 of the Internal Revenue Code of 1986, as amended). Section 21. Ordinance to Constitute a Contract. The provisions of this ordinance shall constitute a contract between the Issuer and the registered owners of the Bonds. Any pledge made in this ordinance and the provisions, covenants and agreements herein set forth to be performed by or on behalf of the Issuer shall be for the equal benefit, protection and security of the registered owners of any and all of the Bonds. All of the Bonds, regardless of the time or times of their issuance, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof except as -46- expressly provided in or pursuant to this ordinance. This ordinance shall constitute full authority for the issuance of the Bonds, and to the extent that the provisions of this ordinance conflict with the provisions of any other ordinance or resolution of the Issuer, the provisions of this ordinance shall control. Section 22. Severability and No Contest. If any section, paragraph or provision of this ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this ordinance. Upon the issuance of the Bonds, neither the Bonds nor this ordinance shall be subject to contest by or in respect of the Issuer. Section 23. Repeal. All ordinances, resolutions or parts thereof in conflict herewith be and the same are hereby repealed to the extent of such conflict and this ordinance shall be in full force and effect forthwith upon its adoption. Section 24. Effective Date. This ordinance shall become effective immediately upon its passage and approval in the manner provided by law, and upon its becoming effective and prior to the issuance of the Bonds a certified copy of this ordinance shall be filed with the County Clerk of Fulton County, Illinois. Adopted this gbh day of November, 1989, by not less than ~~~ (~) affirmative votes, by roll call vote as follows: -47- Ayes (Names) : Q1 rlprmAn ('.hanman T~~~~-~9~~~2~', feu-Q~-$^"~_; Nays (Names): ~~_ Absent, Abstain & other (Names): Absent Aldermen Zilly, Kovachevich. PASSED: November $_, 1989 (SEAL) Approved: November _, 1989 Mayor Attest: City Clerk -48- N CERTIFICATE STA1E CF II.I.IAAIS, ) SS. OC~TIY C~ FIA.T~I. ) I, Nancy Whites, City Clerk of the City of Canton, in the Canty.of Fulton and State of Illirnis, do hereby certif~i that as the City Clerk of the City of Canton, I am the keeper of records; minutes, ardinanoea aced other booica, records and papers of said City, and that the ib-re~oiig is a true and correct copy of : . ORDINANCE N0. 1264 AN ORDINANCE AUTHORIZING THE ISSUANCE OF UP TO $300,000 GENERAL OBLIGATION BONDS (ALTERNATE REVENUE SOURCE), SERIES 1989, OF THE CITY OF CA_VTON, FULTOV COUNTY, ILLINOIS, PROVIDING THE DETAILS OF SUCH BONDS AND FOR AN ALTERNATE REVENUE SOURCE AND THE LEVY OF A DIRECT A'VNUAL TAX SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON SUCH BONDS, AND RFLA_TED T~4ATTERS . adopted by the City Cancil of said City and approved by the Mayoac tt~reof OA thr ~.~~ dsy Of NnvPmher - - - -- -~ 19 ~c~• WI'II~SS try hand and the Corporate Seal of the City of Canton, Illinois this 21st day of November l9 ~9_• tee ty (SEAL)