Ordinance 2002-26 ORDINANCE NUMBER
AN ORDINANCE of the United City of Yorkville, Kendall County,
Illinois, authorizing and providing for an Installment Purchase
Agreement for the purpose of paying a portion of the cost to
construct an elevated water storage tank and the Route 47 water
main, and authorizing and providing for the issue of$2,899,364.85
Debt Certificates (Capital Appreciation), Series 2002, evidencing
the rights to payment under such Agreement, prescribing the
details of the Agreement and Certificates, and providing for the
security for and means of payment under the Agreement of the
Certificates.
Adopted by the City Council
of Said City on the 13th day
of August, 2002
1385934.01.05
2100089•KK•8/13/02
TABLE OF CONTENTS
SECTION HEADING PAGE
Preambles................................................................................................1
Section1. Definitions...........................................................................4
Section 2. Incorporation of Preambles .......................................................6
Section 3. Determination to Authorize and Enter into Agreement and to
IssueCertificates...............................................................6
Section 4. Agreement is a General Obligation; Annual Appropriation..................7
Section 5. Execution and Filing of the Agreement. ........................................7
Section 6. Certificate Details. .................................................................8
Section 7. Book Entry Provisions, Execution; Authentication............................9
Section 8. Optional Redemption ............................................................ 12
Section 9. Redemption Procedures ......................................................... 13
Section 10. Registration of Certificates; Persons Treated as Owners ................... 16
Section 11. Form of Certificate............................................................... 18
Section 12. Sale of Certificates; Official Statement ....................................... 23
Section 13. Creation of Funds and Appropriations......................................... 24
Section 14. Non-Arbitrage and Tax-Exemption. ........................................... 26
Section 15. Pertaining to the Certificate Registrar.........................................44
Section 16. Defeasance.........................................................................46
Section 17. Continuing Disclosure Undertaking............................................47
Section 18. Superseder and Effective Date..................................................48
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ORDINANCE NUMBER 9,000A-01(0
AN ORDINANCE of the United City of Yorkville, Kendall County,
Illinois, authorizing and providing for an Installment Purchase
Agreement for the purpose of paying a portion of the cost to
construct an elevated water storage tank and the Route 47 water
main, and authorizing and providing for the issue of$2,899,364.85
Debt Certificates (Capital Appreciation), Series 2002, evidencing
the rights to payment under such Agreement, prescribing the
details of the Agreement and Certificates, and providing for the
security for and means of payment under the Agreement of the
Certificates.
PREAMBLES
WHEREAS
A. The United City of Yorkville, Kendall County, Illinois (the "City"), is a
municipality and unit of local government of the State of Illinois (the "State") operating, inter
alia, under and pursuant to the following laws:
1. the Illinois Municipal Code (the "Municipal Code");
2. the Local Government Debt Reform Act of the State of Illinois (the "Debt
Reform Act"), and in particular, the provisions of Section 17 of the Debt Reform Act (the
"Installment Purchase Provisions of the Debt Reform Act"); and
3. all other Omnibus Bond Acts of the State;
in each case, as supplemented and amended (collectively, "Applicable Law").
B. The City Council (the "Corporate Authorities") has considered the needs of the
City and, in so doing, the Corporate Authorities have deemed and do now deem it advisable,
necessary, and for the best interests of the City in order to promote and protect the public health,
welfare, safety, and convenience of the residents of the City to construct an elevated water
storage tank and the Route 47 water main, in connection with said construction, acquisition of all
land or rights in land, mechanical, electrical, and other services necessary, useful, or advisable
thereto (the "Project"), all as shown on preliminary plans and cost estimates as prepared by
Illinois, and on file with and approved by the
Corporate Authorities.
C. The Corporate Authorities have determined the total cost of the Project and
expenses incidental thereto, including financial, legal, architectural, and engineering services
related to such work and to the Agreement hereinafter provided for in this Ordinance
(collectively "Related Expenses") to be not less than $2,899,364.85 plus estimated investment
earnings which may be received on said sum prior to disbursement.
D. Sufficient funds of the City are not available to pay the costs of the Project and
Related Expenses, and it will, therefore, be necessary to borrow money in the amount of
$2,899,364.85 for the purpose of paying such costs.
E. Pursuant to the Installment Purchase Provisions of the Debt Reform Act, as
amended by Public Act 91-868 of the 91st General Assembly of the State of Illinois, the City has
the powers as follows:
The governing body of each governmental unit may purchase or
lease either real or personal property, including investments,
investment agreements, or investment services, through
agreements that provide that the consideration for the purchase or
lease may be paid through installments made at stated intervals for
a period of no more than 20 years or another period of time
authorized by law, whichever is greater. Each governmental unit
may issue certificates evidencing the indebtedness incurred under
the lease or agreement. The governing body may provide for the
treasurer, comptroller, finance officer, or other officer of the
governing body charged with financial administration to act as
counter-party to any such lease or agreement, as nominee lessor or
seller. When the lease or agreement is executed by the officer of
the governmental unit authorized by the governing body to bind
the governmental unit thereon by the execution thereof and is filed
with and executed by the nominee lessor or seller, the lease or
agreement shall be sufficiently executed so as to permit the
governmental unit to issue certificates evidencing the indebtedness
incurred under the lease or agreement. The certificates shall be
valid whether or not an appropriation with respect thereto is
included in any annual or supplemental budget adopted by the
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governmental unit. From time to time, as the governing body
executes contracts for the purpose of acquiring and constructing
the services or real or personal property that is a part of the subject
of the lease or agreement, including financial, legal, architectural,
and engineering services related to the lease or agreement, the
governing body shall order the contracts filed with its nominee
officer, and that officer shall identify the contracts to the lease or
agreement; that identification shall permit the payment of the
contract from the proceeds of the certificates; and the nominee
officer shall duly apply or cause to be applied proceeds of the
certificates to the payment of the contracts. The governing body of
each governmental unit may sell, lease, convey, and reacquire
either real or personal property, or any interest in real or personal
property, upon any terms and conditions and in any manner, as the
governing body shall determine, if the governmental unit will
lease, acquire by purchase agreement, or otherwise reacquire the
property, as authorized by this subsection or any other applicable
law.
All indebtedness incurred under this subsection, when
aggregated with the existing indebtedness of the governmental
unit, may not exceed the debt limits provided by applicable law.
F. The Corporate Authorities find that it is desirable and in the best interests of the
City to avail of the provisions of the Installment Purchase Provisions of the Debt Reform Act, as
quoted, as follows:
1. To authorize an Installment Purchase Agreement (the "Agreement") more
particularly as described and provided below in the text of this Ordinance;
2. To name as counter-party to the Agreement the City Treasurer (the
"Treasurer"), as nominee-seller;
3. To authorize the Mayor of the City (the "Mayor") and the City Clerk (the
"Clerk") to execute and attest, respectively, the Agreement on behalf of the City and to
file same with the Clerk in his or her capacity as keeper of the records and files of the
City; and
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4. To issue certificates evidencing the indebtedness incurred under the
Agreement in the amount of $2,899,364.85, in form and having such details as set forth
below in the text of this Ordinance.
Now THEREFORE Be It Ordained by the City Council of the United City of Yorkville,
Kendall County, Illinois, as follows:
Section 1. Definitions. Words and terms used in this Ordinance shall have the
meanings given them unless the context or use clearly indicates another or different meaning is
intended. Words and terms defined in the singular may be used in the plural and vice-versa.
Reference to any gender shall be deemed to include the other and also inanimate persons such as
corporations, where applicable.
A. The following words and terms are as defined in the preambles hereto.
Applicable Law
City
Clerk
Corporate Authorities
Debt Reform Act
Installment Purchase Provisions of the Debt Reform Act
Mayor
Municipal Code
Project
Related Expenses
State
Treasurer
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B. The following words and terms are defined as set forth.
"Agreement" means the Installment Purchase Agreement, as referred to in the
preambles of this Ordinance, for the purpose of purchasing and financing the Project and
Related Expenses.
"Certificates" means the $2,899,364.85 Debt Certificates (Capital Appreciation),
Series 2002, authorized to be issued by this Ordinance.
"Certificate Fund" means the fund established and defined in Section 13 of this
Ordinance.
"Certificate Moneys" means moneys on deposit in the Certificate Fund.
"Certificate Register" means the books of the City kept by the Certificate
Registrar to evidence the registration and transfer of the Certificates.
"Certificate Registrar" means BNY Midwest Trust Company, Chicago, Illinois,
in its respective capacities as bond registrar and paying agent hereunder, or a successor
thereto or a successor designated as Certificate Registrar hereunder.
"Code" means the Internal Revenue Code of 1986, as amended.
"Ordinance" means this Ordinance, numbered as set forth on the title page
hereof, and passed by the Corporate Authorities on the 13th day of August, 2002.
"Project Fund" means the Project Fund established and defined in Section 13 of
this Ordinance.
"Purchase Contract" is defined in Section 12.
"Purchase Price" means the price to be paid by the Purchaser pursuant to the
Purchase Contract for the Certificates, to-wit, $2,780,556.42.
"Purchaser" means the purchaser of the Certificates, namely, Griffin, Kubik,
Stephens & Thompson, Inc., Chicago, Illinois.
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"Record Date" means the 15th day of the month preceding any regular or other
interest payment date occurring on the first day of any month and 15 days preceding any
interest payment date occasioned by the redemption of Certificates on other than the first
day of a month.
"Tax-exempt" means, with respect to the Certificates, the status of interest paid
and received thereon as not includible in the gross income of the owners thereof under
the Code for federal income tax purposes except to the extent that such interest is taken
into account in computing an adjustment used in determining the alternative minimum
tax for certain corporations.
C. Definitions also appear in the preambles hereto or in specific sections, as appear
below. The headings in this Ordinance are for the convenience of the reader and are not a part of
this Ordinance.
Section 2. Incorporation of Preambles. The Corporate Authorities hereby find that the
recitals contained in the preambles to this Ordinance are true, correct, and complete and do
incorporate them into this Ordinance by this reference.
Section 3. Determination to Authorize and Enter into Agreement and to Issue
Certificates. It is necessary and advisable for the public health, safety, welfare, and convenience
of residents of the City to pay the costs of acquisition and construction of the Project, including
all Related Expenses and to borrow money and, in evidence thereof and for the purpose of
financing same, enter into the Agreement and, further, to provide for the issuance and delivery of
the Certificates evidencing the indebtedness incurred under the Agreement.
Section 4. Agreement is a General Obligation; Annual Appropriation. The City
hereby represents, warrants, and agrees that the obligation to make the payments due under the
Agreement shall be a lawful direct general obligation of the City payable from the corporate
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funds of the City and such other sources of payment as are otherwise lawfully available. The
City represents and warrants that the total amount due the Seller under the Agreement, together
with all other indebtedness of the City, is within all statutory and constitutional debt limitations.
The City agrees to appropriate funds of the City annually and in a timely manner so as to provide
for the making of all payments when due under the terms of the Agreement.
Section S. Execution and Filing of the Agreement. From and after the effective date of
this Ordinance, the Mayor and Clerk be and they are hereby authorized and directed to execute
and attest, respectively, the Agreement, in substantially the form thereof set forth below in the
text of this Ordinance, and to do all things necessary and essential to effectuate the provisions of
the Agreement, including the execution of any documents and certificates incidental thereto or
necessary to carry out the provisions thereof. Further, as nominee-seller, the Treasurer is hereby
authorized and directed to execute the Agreement. Upon full execution, the original of the
Agreement shall be filed with the Clerk and retained in the City records and constitute authority
for issuance of the Certificates. Subject to such discretion of the officers signatory to the
document as described in the foregoing text, the Installment Purchase Agreement shall be in
substantially the form as follows:
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INSTALLMENT PURCHASE AGREEMENT for purchase of real or
personal property, or both, for the elevated water storage tank and
Route 47 water main construction project, dated the 29th day of
August, 2002, in and for the United City of Yorkville, Kendall
County, Illinois.
THIS INSTALLMENT PURCHASE AGREEMENT (this "Agreement") made as of the 29th day
of August, 2002 by and between the Treasurer of the City, as Nominee-Seller (the "Seller"), and
the United City of Yorkville, Kendall, Illinois, a municipality and unit of local government of the
State of Illinois (the "City"):
WITNESSETH
A. The City Council (the "Corporate Authorities") of the City has determined to
acquire real or personal property, or both, for the elevated water storage tank and Route 47 water
main construction project (the "Project"), all as previously approved by the Corporate
Authorities and on file with the City Clerk (the "Clerk").
B. Pursuant to the provisions of the Illinois Municipal Code (the "Municipal Code");
the Local Government Debt Reform Act of the State of Illinois (the "Debt Reform Act"), and, in
particular, the provisions of Section 17 of the Debt Reform Act (the "Installment Purchase
Provisions of the Debt Reform Act"); and all other Omnibus Bond Acts of the State of Illinois; in
each case, as supplemented and amended (collectively "Applicable Law"); the City has the
power to purchase real or personal property through agreements that provide that the
consideration for the purchase may be paid through installments made at stated intervals for a
period of no more than 20 years and has the power to issue certificates evidencing indebtedness
incurred under such agreements.
C. On the 13th day of August, 2002, the Corporate Authorities, pursuant to Applicable
Law and the need to provide for the Project, adopted an ordinance (the "Ordinance"), numbered
authorizing the borrowing of money for the Project, the execution and delivery of this
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Agreement to finance same, and the issuance of certificates evidencing the indebtedness so
incurred.
D. The Ordinance is
(a) incorporated herein by reference; and
(b) made a part hereof as if set out at this place in full;
and each of the terms as defined in the Ordinance is also incorporated by reference for use in this
Agreement.
E. The Seller, as nominee as expressly permitted by the Installment Purchase
Provisions of the Debt Reform Act, has agreed to make, construct, and acquire the Project on the
terms as hereinafter provided.
Now THEREFORE in consideration of the mutual covenants and agreements hereinafter
contained and other valuable consideration, it is mutually agreed between the Seller and the City
as follows:
1. MAKE AND ACQUIRE PROJECT
The Seller agrees to make, construct, and acquire the Project upon real estate owned or to
be owned by or upon which valid easements have been obtained in favor of the City.
2. CONVEYANCE
The Seller agrees to convey each part of the Project to the City and to perform all
necessary work and convey all necessary equipment; and the City agrees to purchase the Project
from the Seller and pay for the Project the purchase price of not to exceed $2,899,364.85; plus
the amount of investment earnings which are earned on the amount deposited with the Treasurer
from the sale of the Certificates and in no event shall the total aggregate principal purchase price
to be paid pursuant to this Agreement exceed the sum of $2,899,364.85, plus the amount of
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investment earnings which are earned on the amount deposited with the Treasurer from the sale
of the Certificates.
3. PAYMENTS
The payment of the entire sum of$2,899,364.85 of said purchase price shall:
(a) be payable in installments due on the dates and in the amounts;
(b) bear interest at the rates percent per annum which interest shall also be
payable on the dates and in the amounts;
(c) be payable at the place or places of payment, in the medium of payment, and
upon such other terms, including prepayment (redemption);
all as provided for payment of the Certificates in the Ordinance.
4. ASSIGNMENT
Rights to payment of the Seller as provided in this Agreement are assigned as a matter of
law, under the Installment Purchase Provisions of the Debt Reform Act, to the owners of the
Certificates. This Agreement and any right, title, or interest herein, shall not be further
assignable. The Certificates, evidencing the indebtedness incurred hereby, are assignable
(registrable) as provided in the Ordinance.
5. TAX COVENANTS
The covenants relating to the Tax-exempt status of the Certificates, as set forth in the
Ordinance, insofar as may be applicable, apply to the work to be performed and the payments
made under this Agreement.
6. TITLE
(a) Vesting of Title. Title in and to any part of the Project, upon delivery or as made,
during all stages of the making or acquisition thereof, shall and does vest immediately in the
City.
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(b) Damage, Destruction, and Condemnation. If, during the term of this Agreement,
(1) all or any part of the Project shall be destroyed, in whole or in part, or damaged by fire or
other casualty or event; or (ii) title to, or the temporary or permanent use of, all or any part of the
Project shall be taken under the exercise of the power of eminent domain by any governmental
body or by any person, firm, or corporation acting under governmental authority; or (iii) a
material defect in construction of all or any part of the Project shall become apparent; or (iv) title
to or the use of all or any part of the Project shall be lost by reason of a defect in title; then the
City shall continue to make payments as promised herein and in the Certificates and to take such
action as it shall deem necessary or appropriate to repair and replace the Project.
7. LAWFUL CORPORATE OBLIGATION
The City hereby represents, warrants, and agrees that the obligation to make the
payments due hereunder shall be a lawful direct general obligation of the City payable from the
corporate funds of the City and such other sources of payment as are otherwise lawfully
available. The City represents and warrants that the total amount due the Seller hereunder,
together with all other indebtedness of the City, is within all statutory and constitutional debt
limitations. The City agrees to appropriate funds of the City annually and in a timely manner so
as to provide for the making of all payments when due under the terms of this Agreement.
8. GENERAL COVENANT AND RECITAL
It is hereby certified and recited by the Seller and the City, respectively, that as to each,
respectively, for itself, all conditions, acts, and things required by law to exist or to be done
precedent to and in the execution of this Agreement did exist, have happened, been done and
performed in regular and due form and time as required by law.
9. NO SEPARATE TAX
THE SELLER AND THE CITY RECOGNIZE THAT THERE IS NO STATUTORY
AUTHORITY FOR THE LEVY OF A SEPARATE TAX IN ADDITION TO OTHER TAXES OF THE
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CITY OR THE LEVY OF A SPECIAL TAX UNLIMITED AS TO RATE OR AMOUNT TO PAY ANY OF
THE AMOUNTS DUE HEREUNDER.
10. DEFAULT
In the event of a default in payment hereunder by the City, the Seller or any
Certificateholder may pursue any available remedy by suit at law or equity to enforce the
payment of all amounts due or to become due under this Agreement, including, without
limitation, an action for specific performance.
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IN WITNESS WHEREOF the Seller has caused this Installment Purchase Agreement to be
executed and attested, and his or her signature to be attested by the Clerk, and the City has
caused this Installment Purchase Agreement to be executed by its Mayor, and also attested by the
Clerk, and the official seal of the City to be hereunto affixed, all as of the day and year first
above written.
SELLER: Signature:
[Here type name]:
as Nominee-Seller and the Treasurer
ATTEST:
City Jerk
[SEAT.]
UNTIED CITY OF YORKVILLE, KENDALL
COUNTY, ILLINOIS 7
Mayor
ATTEST:
`-��:, ,�•.- fir,-.._�.����s_.���Z.{
y Cler
[SEAL]
I-6
STATE OF ILLINOIS )
) SS
COUNTY OF KENDALL )
CERTIFICATE OF INSTALLMENT PURCHASE AGREEMENT FILING
I, the undersigned, do hereby certify that I am the duly qualified and acting City Clerk of
the United City of Yorkville, Kendall County, Illinois (the "City"), and as such officer I do
hereby certify that on the 29th day of August, 2002 there was filed in my office a properly
certified copy of that certain document, executed by the Mayor of the City, attested by me in my
capacity as City Clerk, and further executed, as Nominee-Seller, by the City Treasurer of the
City, also attested by me, dated the 29th day of August, 2002, and entitled "INSTALLMENT
PURCHASE AGREEMENT for Purchase of real or personal property, or both, for the elevated water
storage tank and Route 47 water main construction project improvements, dated the 29th day of
August, 2002, in and for the United City of Yorkville, Kendall County, Illinois"; and supporting
the issuance of certain Debt Certificates (Capital Appreciation), Series 2002, of the City; that
attached hereto is a true and complete copy of said Agreement as so filed; and that the same has
been deposited in the official files and records of my office.
IN WITNESS WHEREOF I have hereunto affixed my official signature and the seal of the
United City of Yorkville, Kendall County,Illinois at City,Illinois, this 29th day of August, 2002.
ity berk
[SEAL]
Section 6. Certificate Details. For the purpose of providing for acquisition and
construction of the Project and Related Expenses, there shall be issued and sold the Certificates
in the original principal amount of $2,899,364.85. The Certificates shall each be designated
"Debt Certificate (Capital Appreciation), Series 2002"; be dated the date of issuance thereof,
and shall also bear the date of authentication, shall be in fully registered form, shall be in
denominations of Original Principal Amounts (as defined in the following table) or any integral
multiple thereof, each representing Compound Accreted Value (as hereinafter defined) at
maturity of $5,000 or any integral multiple thereof (but no single Certificate shall represent
Compound Accreted Value maturing on more than one date) and shall be numbered 1 and
upward. As used herein, the "Compound Accreted Value" of a Certificate on any date of
determination shall be an amount equal to the Original Principal Amount (or integral multiple
thereof) plus an investment return accrued to the date of such determination at a semi-annual
compounding rate which is necessary to produce the original yield to maturity for such
Certificate as set forth in the Certificate Notification from the date of such Certificate. The
Compound Accreted Value of a Certificate on any May 1 or November 1, commencing on the
first May 1 or November 1 following the issuance of the Certificates. The Compound Accreted
Value of any Certificate on a date other than a May 1 or November 1 shall be determined
conclusively by the Certificate Registrar or a certified public accountant selected by the
Certificate Registrar by interpolating such Compound Accreted Value, using the straight line
method, by reference to the Compound Accreted Values on the respective May 1 or November 1
immediately prior to and immediately subsequent to the date for which such determination is
being made and the number of days elapsed since the respective May 1 or November 1
immediately prior to the date for which such determination is being made, calculated on the basis
of a 360 day year consisting of twelve 30-day months. The Certificates shall become due (subject
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to prior redemption as hereinafter described) serially on May I of the years and in the original
principal amounts and bearing interest at original yields to maturity as follows:
YEAR TOTAL AGGREGATE ORIGINAL
OF ORIGINAL YIELD TO
MATURITY PRINCIPAL AMOUNT MATURITY
2004 $ 23,982.50 2.500%
2005 23,087.75 3.000%
2006 22,168.50 3.300%
2007 29,625.75 3.600%
2008 48,195.00 3.900%
2009 110,964.15 4.050%
2010 156,294.25 4.200%
2011 196,228.20 4.350%
2012 237,333.95 4.500%
2013 269,398.80 4.650%
2014 274,611.75 4.750%
2015 258,794.25 4.850%
2016 243,413.75 4.950%
2017 228,503.50 5.050%
2018 214,092.00 5.150%
2019 200,198.25 5.250%
2020 186,841.25 5.350%
2021 175,631.25 5.400%
Interest on the Certificates shall be payable only at the respective maturity or redemption
dates thereof.
The Compound Accreted Value of and premium, if any, on the Certificates shall be
payable in lawful money of the United States of America upon presentation and surrender of the
Certificates at the principal corporate trust office of the Certificate Registrar.
Section 7. Book Entry Provisions, Execution; Authentication. The Certificates shall
be initially issued in the form of a separate single fully registered Certificate for each of the
maturities of the Certificates. Upon initial issuance, the ownership of each such Certificate shall
be registered in the Certificate Register in the name of the Depository or a designee or nominee
of the Depository (such depository or nominee being the "Book Entry Owner"). Except as
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otherwise expressly provided, all of the outstanding Certificates from time to time shall be
registered in the Certificate Register in the name of the Book Entry Owner (and accordingly in
Book Entry Form as such term is used in this Ordinance). Any City officer, as representative of
the City, is hereby authorized, empowered, and directed to execute and deliver or to utilize a
previously executed and delivered Letter of Representations or Blanket Letter of Representations
(either being the "Letter of Representations") substantially in the form common in the industry,
or with such changes therein as any officer executing the Letter of Representations on behalf of
the City shall approve, his or her execution thereof to constitute conclusive evidence of approval
of such changes, as shall be necessary to effectuate Book Entry Form. Without limiting the
generality of the authority given with respect to entering into such Letter of Representations, it
may contain provisions relating to (a) payment procedures, (b) transfers of the Certificates or of
beneficial interests therein, (c) redemption notices and procedures unique to the Depository,
(d) additional notices or communications, and (e) amendment from time to time to conform with
changing customs and practices with respect to securities industry transfer and payment
practices. With respect to Certificates registered in the Certificate Register in the name of the
Book Entry Owner, none of the City, any of its financial officers, or the Certificate Registrar
shall have any responsibility or obligation to any broker-dealer, bank, or other financial
institution for which the Depository holds Certificates from time to time as securities depository
(each such broker-dealer, bank, or other financial institution being referred to herein as a
"Depository Participant') or to any person on behalf of whom such a Depository Participant
holds an interest in the Certificates. Without limiting the meaning of the immediately preceding
sentence, the City, any of its financial officers, and the Certificate Registrar shall have no
responsibility or obligation with respect to (a) the accuracy of the records of the Depository, the
Book Entry Owner, or any Depository Participant with respect to any ownership interest in the
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Certificates, (b) the delivery to any Depository Participant or any other person, other than a
registered owner of a Certificate as shown in the Certificate Register or as otherwise expressly
provided in the Letter of Representations, of any notice with respect to the Certificates, including
any notice of redemption, or (c) the payment to any Depository Participant or any other person,
other than a registered owner of a Certificate as shown in the Certificate Register, of any amount
with respect to principal of or interest on the Certificates. No person other than a registered
owner of a Certificate as shown in the Certificate Register shall receive a certificate with respect
to any Certificate. In the event that (a) the City determines that the Depository is incapable of
discharging its responsibilities described herein and in the Letter of Representations, (b) the
agreement among the City, the Certificate Registrar, and the Depository evidenced by the Letter
of Representations shall be terminated for any reason, or (c) the City determines that it is in the
best interests of the City or of the beneficial owners of the Certificates either that they be able to
obtain certificated Certificates or that another depository is preferable, the City shall notify the
Depository, and the Depository shall notify the Depository Participants, of the availability of
physical Certificates; and the Certificates shall no longer be restricted to being registered in the
Certificate Register in the name of the Book Entry Owner. Alternatively, at such time, the City
may determine that the Certificates shall be registered in the name of and deposited with a
successor depository operating a system accommodating Book Entry Form, as may be acceptable
to the City, or such depository's agent or designee, but if the City does not select such alternate
book entry system, then the Certificates shall be registered in whatever name or names registered
owners of Certificates transferring or exchanging Certificates shall designate, in accordance with
the provisions of this Ordinance.
The Certificates shall be executed on behalf of the City by the manual or duly authorized
facsimile signature of its Mayor and attested by the manual or duly authorized facsimile
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signature of its Clerk, as they may determine, and shall have impressed or imprinted thereon the
corporate seal or facsimile thereof of the City. In case any such officer whose signature shall
appear on any Certificate shall cease to be such officer before the delivery of such Certificate,
such signature shall nevertheless be valid and sufficient for all purposes, the same as if such
officer had remained in office until delivery. All Certificates shall have thereon a certificate of
authentication, substantially in the form hereinafter set forth, duly executed by the Certificate
Registrar as authenticating agent of the City and showing the date of authentication. No
Certificate shall be valid or obligatory for any purpose or be entitled to any security or benefit
under this Ordinance unless and until such certificate of authentication shall have been duly
executed by the Certificate Registrar by manual signature, and such certificate of authentication
upon any such Certificate shall be conclusive evidence that such Certificate has been
authenticated and delivered under this Ordinance. The certificate of authentication on any
Certificate shall be deemed to have been executed by it if signed by an authorized officer of the
Certificate Registrar, but it shall not be necessary that the same officer sign the certificate of
authentication on all of the Certificates issued hereunder.
Section 8. Optional Redemption. The Certificates due on and after May 1, 2013, shall
be subject to redemption at the option of the City, as a whole or in part, and if in part in integral
multiples of $5,000 of the Compound Accreted Value at maturity (the "Maturity Amount") in
any order of maturity as determined by the City (less than all of the Certificates of a single
maturity to be selected by the Bond Registrar), on May 1, 2012, and on any May 1 or
November 1 thereafter, at the redemption price of the compound accreted value on the
redemption date, as provided in the Proceedings.
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Section 9. Redemption Procedures. The Certificates subject to redemption shall be
identified, notice given, and paid and redeemed pursuant to the procedures as follows:
A. Optional Redemption. The City shall, at least 30 days prior to a
redemption date (unless a shorter time period shall be satisfactory to the Certificate
Registrar), notify the Certificate Registrar of such redemption date of the Certificates to
be redeemed.
B. Selection of Certificates within a Maturity. The Certificates shall be
redeemed only in the Maturity Amount of $5,000 and integral multiples thereof. The
City shall, at least forty-five (45) days prior b the redemption date (unless a shorter time
period shall be satisfactory to the Certificate Registrar) notify the Certificate Registrar of
such redemption date and of the principal amount and maturity or maturities of
Certificates to be redeemed. For purposes of any redemption of less than all of the
outstanding Certificates of a single maturity, the particular Certificates or portions of
Certificates to be redeemed shall be selected by lot not more than sixty days prior to the
redemption date by the Certificate Registrar for the Certificates, by such method of
lottery as the Certificate Registrar shall deem fair and appropriate; provided, that such
lottery shall provide for the selection for redemption of Certificates or portions of
Certificates in Maturity Amounts of$5,000 and integral multiples thereof.
C. Official Notice of Redemption. The Certificate Registrar shall promptly
notify the City in writing of the Certificates or portions of Certificates selected for
redemption and, in the case of any Certificate selected for partial redemption, the
principal amount thereof to be redeemed. Unless waived by the registered owner of
Certificates to be redeemed, official notice of any such redemption shall be given by the
Certificate Registrar on behalf of the City by mailing the redemption notice by first class
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U.S. mail not less than 30 days and not more than 60 days prior to the date fixed for
redemption to each registered owner of the Certificate or Certificates to be redeemed at
the address shown on the Certificate Register or at such other address as is furnished in
writing by such registered owner to the Certificate Registrar. All official notices of
redemption shall include the name of the Certificates and at least the information as
follows:
(1) the redemption date;
(2) the redemption price;
(3) if less than all of the outstanding Certificates are to be redeemed, the
identification (and, in the case of partial redemption of Certificates within such
maturity, the respective principal amounts) of the Certificates to be redeemed;
(4) a statement that on the redemption date the redemption price will
become due and payable upon each such Certificate or portion thereof called for
redemption and that interest thereon shall cease to accrue from and after said date;
(5) the place where such Certificates are to be surrendered for payment of
the redemption price, which place of payment shall be the office maintained for
the purpose by the Certificate Registrar; and
(6) such other information then required by custom, practice or industry
standard.
D. Certificates Shall Become Due. Official notice of redemption having been
given as described, the Certificates or portions of Certificates 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 not make full payment of the
redemption price) such Certificates or portions of Certificates shall cease to bear interest.
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Upon surrender of such Certificates for redemption in accordance with said notice, such
Certificates shall be paid by the Certificate Registrar at the redemption price. The
procedure for the payment of interest due as part of the redemption price shall be as
herein provided for payment of interest otherwise due.
E. Insufficiency in Notice Not Affecting Other Certificates; Failure to Receive
Notice; Waiver. Neither the failure to mail such redemption notice, nor any defect in any
notice so mailed, to any particular registered owner of a Certificate, shall affect the
sufficiency of such notice with respect to other registered owners. Notice having been
properly given, failure of a registered owner of a Certificate to receive such notice shall
not be deemed to invalidate, limit or delay the effect of the notice or redemption action
described in the notice. Such notice may be waived in writing by a registered owner of a
Certificate entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by registered owners
shall be filed with the Certificate Registrar, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
F. New Certificate in Amount Not Redeemed. Upon surrender for any partial
redemption of any Certificate, there shall be prepared for the registered owner a new
Certificate or Certificates of like tenor, of authorized denominations, and bearing the
same rate of interest in the amount of the unpaid principal.
G. Effect of Nonpayment upon Redemption. If any Certificate or portion of
Certificate called for redemption shall not be so paid upon surrender thereof for
redemption, the principal shall, until paid or duly provided for, bear interest from the
redemption date at the rate borne by the Certificate or portion of Certificate so called for
redemption.
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H. Certificates to be Cancelled; Payment to Identify Certificates. All
Certificates which have been redeemed shall be cancelled and destroyed by the
Certificate Registrar and shall not be reissued. Upon the payment of the redemption price
of Certificates being redeemed, each check or other transfer of funds issued for such
purpose shall bear the CUSIP number identifying, by issue and maturity, the Certificates
being redeemed with the proceeds of such check or other transfer.
I. Additional Notice. The City agrees to provide such additional notice of
redemption as it may deem advisable at such time as it determines to redeem Certificates,
taking into account any requirements or guidance of the Securities and Exchange
Commission, the Municipal Securities Rulemaking Board, the Government Accounting
Standards Board, or any other federal or state agency having jurisdiction or authority in
such matters; provided, however, that such additional notice shall be (1) advisory in
nature, (2) solely in the discretion of the City, (3) not be a condition precedent of a valid
redemption or a part of the Certificate contract, and (4) any failure or defect in such
notice shall not delay or invalidate the redemption of Certificates for which proper
official notice shall have been given.
J. Certificate Registrar to Advise City. As part of its duties hereunder, the
Certificate Registrar shall prepare and forward to the City a statement as to notices given
with respect to each redemption together with copies of the notices as mailed.
Section 10. Registration of Certificates; Persons Treated as Owners. The City shall
cause books (the "Certificate Register" as herein defined) for the registration and for the transfer
of the Certificates as provided in this Ordinance to be kept at the office maintained for such
purpose by the Certificate Registrar, which is hereby constituted and appointed the registrar of
the City for the Certificates. The City is authorized to prepare, and the Certificate Registrar or
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such other agent as the City may designate shall keep custody of, multiple Certificate blanks
executed by the City for use in the transfer and exchange of Certificates. Any Certificate may be
transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of
the charges as set forth in this Ordinance. Upon surrender for transfer or exchange of any
Certificate at the office of the Certificate Registrar maintained for the purpose, duly endorsed by
or accompanied by a written instrument or instruments of transfer or exchange in form
satisfactory to the Certificate Registrar and duly executed by the registered owner or an attorney
for such owner duly authorized in writing, the City shall execute and the Certificate Registrar
shall authenticate, date, and deliver in the name of the transferee or transferees or, in the case of
an exchange, the registered owner, a new fully registered Certificate or Certificates of like tenor,
of the same maturity, bearing the same interest rate, of authorized denominations, for a like
aggregate principal amount. The Certificate Registrar shall not be required to transfer or
exchange any Certificate during the period from the close of business on the Record Date for an
interest payment to the opening of business on such interest payment date or during the period of
15 days preceding the giving of notice of redemption of Certificates or to transfer or exchange
any Certificate all or a portion of which has been called for redemption. The execution by the
United City of any fully registered Certificate shall constitute full and due authorization of such
Certificate; and the Certificate Registrar shall thereby be authorized to authenticate, date, and
deliver such Certificate;provided, however, the principal amount of Certificates of each maturity
authenticated by the Certificate Registrar shall not at any one time exceed the authorized
principal amount of Certificates for such maturity less the amount of such Certificates which
have been paid. The person in whose name any Certificate shall be registered shall be deemed
and regarded as the absolute owner thereof for all purposes, and payment of the principal of or
interest on any Certificate shall be made only to or upon the order of the registered owner thereof
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or his legal representative. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Certificate to the extent of the sum or sums so paid. No service
charge shall be made to any registered owner of Certificates for any transfer or exchange of
Certificates, but the City or the Certificate Registrar may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection with any transfer
or exchange of Certificates.
Section 11. Form of Certificate. The Certificates shall be in substantially the form
hereinafter set forth;provided, however, that if the text of the Certificates is to be printed in its
entirety on the front side of the Certificates, then the second paragraph on the front side and the
legend "See Reverse Side for Additional Provisions" shall be omitted and the text of paragraphs
set forth for the reverse side shall be inserted immediately after the first paragraph.
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[FORM OF CERTIFICATE - FRONT SIDE]
REGISTERED REGISTERED
No. $
COMPOUND ACCRETED
VALUE AT MATURITY
("MATURITYAMOUNT")
UNITED STATES OF AMERICA
STATE OF ILLINOIS
COUNTY OF KENDALL
UNITED CITY OF YORKVILLE
DEBT CERTIFICATE(CAPITAL APPRECIATION), SERIES 2002
See Reverse Side for
Additional Provisions.
ORIGINAL ORIGINAL
YIELD TO MATURITY DATED PRINCIPAL CUSIP
MATURITY DATE DATE AMOUNT
% May 1, 20_ August 29, 2002 $
Registered Owner: CEDE & CO.
KNOW ALL PERSONS BY THESE PRESENTS that the United City of Yorkville, Kendall
County, Illinois, a municipality and political subdivision of the State of Illinois (the "City"),
hereby acknowledges itself to owe and for value received promises to pay from the source and as
hereinafter provided to the Registered Owner identified above, or registered assigns, on the
Maturity Date identified above (subject to right of prior redemption), the Maturity Amount
identified above. The amount of interest payable on this Certificate on the Maturity Date hereof
is the amount of interest accrued from the Dated Date hereof at a semi-annual compounding rate
necessary to produce the Original Yield to Maturity set forth above, compounded semi-annually
on each May 1 and November 1, commencing November 1, 2002. The Maturity Amount or
redemption price of this Certificate is payable in lawful money of the United States of America
upon presentation and surrender hereof at the principal corporate trust office of BNY Midwest
Trust Company, Chicago, Illinois, as certificate registrar and paying agent (the "Certificate
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Registrar"). The Compound Accreted Value of this Certificate on May 1 and November 1 of
each year, commencing November 1, 2002, determined by the semi-annual compounding
described in this paragraph, shall be as set forth in the table of Compound Accreted Values
attached to the ordinance of the City Council of the City providing for the issuance hereof.
Reference is hereby made to the further provisions of this Certificate set forth on the
reverse hereof, and such further provisions shall for all purposes have the same effect as if set
forth at this place.
It is hereby certified and recited that all conditions, acts, and things required by the
Constitution and Laws of the State of Illinois to exist or to be done precedent to and in the
issuance of this Certificate, including Applicable Law as defined herein, have existed and have
been properly done, happened, and been performed in regular and due form and time as required
by law; that the obligation to make payments due hereon are a lawful direct general obligation of
the City payable from the corporate funds of the City and such other sources of payment as are
otherwise lawfully available; that the total amount due under the Agreement, represented by the
Certificates, together with all other indebtedness of the City, is within all statutory and
constitutional debt limitations; and that the City shall appropriate funds annually and in a timely
manner so as to provide for the making of all payments hereon when due. THE OWNER OF THIS
CERTIFICATE ACKNOWLEDGES THAT THERE IS NO STATUTORY AUTHORITY FOR THE LEVY OF A
SEPARATE TAX IN ADDITION TO OTHER TAXES OF THE CITY OR THE LEVY OF A SPECIAL TAX
UNLIMITED AS TO RATE OR AMOUNT TO PAY ANY OF THE AMOUNTS DUE HEREUNDER.
This Certificate shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Certificate Registrar.
IN WITNESS WHEREOF the United City of Yorkville, Kendall County, Illinois, by its City
Council, has caused this Certificate to be executed by the manual or duly authorized facsimile
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signature of its Mayor and attested by the manual or duly authorized facsimile signature of its
City Clerk and its corporate seal or a facsimile thereof to be impressed or reproduced hereon, all
as appearing hereon and as of the Dated Date identified above.
�
Mayor, United City of Yorkvill
Kendall County, Illinois
ATTEST:
Cite Jerk, ' nited dty of Yorkville
Kendall County, Illinois
[SEAL]
Date of Authentication: ,
CERTIFICATE Certificate Registrar and Paying Agent:
OF BNY Midwest Trust Company,
AUTHENTICATION Chicago, Illinois
This Certificate is one of the Certificates
described in the within-mentioned Ordinance
and is one of the Debt Certificates (Capital
Appreciation), Series 2002, of the United
City of Yorkville, Kendall County, Illinois.
BNY MIDWEST TRUST COMPANY,
Yorkville, Illinois, as Certificate Registrar
By
Authorized Officer
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[FORM OF CERTIFICATE- REVERSE SIDE]
UNITED CITY OF YORKVILLE
KENDALL COUNTY, ILLINOIS
DEBT CERTIFICATE(CAPITAL APPRECIATION), SERIES 2002
This Certificate is one of a series (the "Certificates") in the aggregate principal amount
of $2,899,364.85 issued by the City for the purpose of providing funds to pay the cost of the
Project and Related Expenses, all as described and defined in the ordinance authorizing the
Certificates (the "Ordinance"), pursuant to and in all respects in compliance with the applicable
provisions of the Illinois Municipal Code, as supplemented and amended, and in particular as
supplemented by the Local Government Debt Reform Act of the State of Illinois, as amended,
and the other Omnibus Bond Acts of the State of Illinois ("Applicable Law"), and with the
Ordinance, which has been duly passed by the City Council of the City on the 13th day of
August, 2002, and approved by the Mayor, in all respects as by law required. The Certificates
issued by the City in connection with the Project have been issued in evidence of the
indebtedness incurred pursuant to a certain Installment Purchase Agreement (the "Agreement"),
dated as of the 29th day of August, 2002, entered into by and between the City and its City
Treasurer, as Seller-Nominee, to which reference is hereby expressly made for further definitions
and terms and to all the provisions of which the holder by the acceptance of this certificate
assents.
This Certificate is subject to provisions relating to registration, transfer, and exchange;
redemption and notice and procedure for redemption; and such other terms and provisions
relating to security and payment as are set forth in the Ordinance; to which reference is hereby
expressly made; and to all the terms of which the registered owner hereof is hereby notified and
shall be subject.
The City and the Certificate Registrar may deem and treat the Registered Owner hereof
as the absolute owner hereof for the purpose of receiving payment of or on account of principal
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hereof and interest due hereon and for all other purposes, and neither the City nor the Certificate
Registrar shall be affected by any notice to the contrary.
The City has designated this Certificate as a "qualified tax-exempt obligation" pursuant
to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto
[Here insert identifying number such as
TID, SSN, or other]
(Name and Address of Assignee)
the within Certificate and does hereby irrevocably constitute and appoint
as attorney to transfer the said Certificate on the books kept for registration thereof with full
power of substitution in the premises.
Dated:
Signature guaranteed:
NOTICE: The signature to this assignment must correspond with the name of the Registered
Owner as it appears upon the face of the within Certificate in every particular,
without alteration or enlargement or any change whatever.
Section 12. Sale of Certificates; Official Statement. The Certificates shall be executed
as in this Ordinance provided as soon after the passage hereof as may be, shall be deposited with
Treasurer of the City, and shall thereupon be delivered to the Purchaser upon payment of the
Purchase Price, plus accrued interest to date of delivery. The contract for the sale of the
Certificates to the Purchaser (the "Purchase Contract'), and as executed by the Purchaser, is
hereby in all respects approved and confirmed, it being hereby declared that, to the best of the
knowledge and belief of the members of the Corporate Authorities, after due inquiry, no person
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holding any office of the City, either by election or appointment, is in any manner financially
interested, either directly in his or her own name or indirectly in the name of any other person,
association, trust or corporation, in the Purchase Contract for the sale of the Certificates to the
Purchaser.
Section 13. Creation of Funds and Appropriations.
A. There is hereby created the "Debt Certificates (Capital Appreciation), Series 2002,
Certificate Fund" (the "Certificate Fund"), which shall be the fund for the payment of the
principal of and interest on the Certificates. Accrued interest and premium, if any, received upon
delivery of the Certificates shall be deposited into the Certificate Fund and be applied to pay the
first interest coming due on the Certificates. Funds lawfully available for the purpose shall be
deposited into the Certificate Fund and used solely and only for the purpose of paying the
principal of and interest on the Certificates. Interest income or investment profit earned in the
Certificate Fund shall be retained in the Certificate Fund for payment of the principal of or
interest on the Certificates on the interest payment date next after such interest or profit is
received or, to the extent lawful and as determined by the Corporate Authorities, transferred to
such other fund as may be determined. Moneys in the Certificate Fund shall be applied to pay
principal of and interest on the Certificates.
B. The amount necessary from the proceeds of the Certificates shall be used either to
pay expenses directly at the time of issuance of the Certificates or be deposited into a separate
fund, hereby created, designated the "Expense Fund," to be used to pay expenses of issuance of
the Certificates. Disbursements from such fund shall be made from time to time as necessary.
Moneys not disbursed from the Expense Fund within six (6) months shall be transferred by the
appropriate financial officers for deposit into the Project Fund, and any deficiencies in the
Expense Fund shall be paid by disbursement from the Project Fund.
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C. The remaining proceeds of the Certificates shall be deposited into the Project Fund
(the "Project Fund"), hereby created. Moneys in the Project Fund shall be used to pay costs of
the Project in accordance with the following procedures:
1. Contracts ("Work Contracts") have been or shall be awarded, from time to
time, by the Corporate Authorities for the work on the Project; and the Corporate
Authorities represent and covenant that each Work Contract has been or will be let in
strict accordance with Applicable Law and the rules and procedures of the City for same.
2. Pursuant to ordinance or resolution to be duly adopted, the Corporate
Authorities shall identify all or a designated portion of each Work Contract to the
Agreement. This Ordinance and any such further ordinance or resolution shall be filed of
record with the Clerk and the Treasurer. The adoption and filing of any such ordinance
or resolution and the Work Contracts with such officers shall constitute authority for the
officer or officers of the City to make disbursements from the Project Fund to pay
amounts due under such Work Contracts from time to time, upon such further
resolutions, orders, vouchers, warrants, or other proceedings as are required under
Applicable Law and the rules and procedures of the City for same. No action need be
taken by or with respect to the contractors under the Work Contracts as, pursuant to the
Installment Purchase Provisions of the Debt Reform Act, the Treasurer acts as Nominee-
Seller of the Project for all purposes, enabling the issuance of the Certificates. Funds on
deposit in the Project Fund shall be invested by the appropriate officers of the City in any
lawful manner. Investment earnings shall first be reserved and transferred to such other
account as and to the extent necessary to pay any "excess arbitrage profits" or "penalty in
lieu of rebate" under Code Section 148 to maintain the Tax-exempt status of the
Certificates, and the remainder shall be retained in the fund for costs of the Project.
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Within sixty (60) days after full depletion of the Project Fund, the appropriate offices of
the City shall certify to the Corporate Authorities the fact of such depletion; and, upon
approval of such certification by the Corporate Authorities, the Project Fund shall be
closed.
D. Alternatively to the creation of the funds described above, the appropriate officers
may allocate the Certificate Moneys or proceeds of the Certificates to one or more related funds
of the City already in existence and in accordance with good accounting practice; provided,
however, that this shall not relieve such officers of the duty to account and invest the Certificate
Moneys and the proceeds of the Certificates, as herein provided, as if such funds had in fact been
created.
Section 14. Non-Arbitrage and Tax-Exemption. One purpose of this Section is to set
forth various facts regarding the Certificates and to establish the expectations of the Corporate
Authorities and the City as to future events regarding the Certificates and the use of Bond
proceeds. The certifications, covenants and representations contained herein and at the time of
the Closing are made on behalf of the City for the benefit of the owners from time to time of the
Certificates. In addition to providing the certifications, covenants and representations contained
herein, the City hereby covenants that it will not take any action, omit to take any action or
permit the taking or omission of any action within its control (including, without limitation,
making or permitting any use of the proceeds of the Certificates) if taking, permitting or omitting
to take such action would cause any of the Certificates to be an arbitrage bond or a private
activity bond within the meaning of the Code or would otherwise cause the interest on the
Certificates to be included in the gross income of the recipients thereof for federal income tax
purposes. The City acknowledges that, in the event of an examination by the Internal Revenue
Service of the exemption from federal income taxation for interest paid on the Certificates, under
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present rules, the City is treated as the "taxpayer" in such examination and agrees that it will
respond in a commercially reasonable manner to any inquiries from the Internal Revenue Service
in connection with such an examination. The Corporate Authorities and the City certify,
covenant and represent as follows:
LL Definitions. In addition to such other words and terms used and defined in
this Ordinance, the following words and terms used in this Section shall have the
following meanings unless, in either case, the context or use clearly indicates another or
different meaning is intended:
"Bond Counsel" means Chapman and Cutler or any other nationally recognized
firm of attorneys experienced in the field of municipal bonds whose opinions are
generally accepted by purchasers of municipal bonds.
"Capital Expenditures" means costs of a type that would be properly chargeable
to a capital account under the Code (or would be so chargeable with a proper election)
under federal income tax principles if the City were treated as a corporation subject to
federal income taxation, taking into account the definition of Placed-in-Service set forth
herein.
"Closing" means the first date on which the City is receiving the purchase price
for the Certificates.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commingled Fund" means any fund or account containing both Gross Proceeds
and an amount in excess of $25,000 that are not Gross Proceeds if the amounts in the
fund or account are invested and accounted for, collectively, without regard to the source
of funds deposited in the fund or account. An open-ended regulated investment company
under Section 851 of the Code is not a Commingled Fund.
"Control" means the possession, directly or indirectly through others, of either of
the following discretionary and non-ministerial rights or powers over another entity:
(a) to approve and to remove without cause a controlling portion of the
governing body of a Controlled Entity; or
(b) to require the use of funds or assets of a Controlled Entity for any
purpose.
"Controlled Entity" means any entity or one of a group of entities that is subject
to Control by a Controlling Entity or group of Controlling Entities.
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"Controlling Entity" means any entity or one of a group of entities directly or
indirectly having Control of any entities or group of entities.
"Controlled Group" means a group of entities directly or indirectly subject to
Control by the same entity or group of entities, including the entity that has Control of the
other entities.
"Costs of Issuance" means the costs of issuing the Certificates, including
underwriters' discount and legal fees, but not including the fees for the Credit Facility
described in paragraph 5.6 hereof.
"Credit Facility" means the municipal bond insurance policy issued by the Credit
Facility Provider.
"Credit Facility Provider" means Radian Asset Assurance Inc., New York, New
York.
"De minimis Amount of Original Issue Discount or Premium" means with respect
to an obligation (a) any original issue discount or premium that does not exceed two
percent of the stated redemption price at maturity of the Certificates plus (b) any original
issue premium that is attributable exclusively to reasonable underwriter's compensation.
"External Commingled Fund" means a Commingled Fund in which the City and
all members of the same Controlled Group as the City own, in the aggregate, not more
than ten percent of the beneficial interests.
"GIC" means (a) any investment that has specifically negotiated withdrawal or
reinvestment provisions and a specifically negotiated interest rate and (b) any agreement
to supply investments on two or more future dates (e.g., a forward supply contract).
"Gross Proceeds" means amounts in the Bond Fund and the Project Fund.
"Net Sale Proceeds" means amounts actually or constructively received from the
sale of the Certificates reduced by any such amounts that are deposited in a reasonably
required reserve or replacement fund for the Certificates.
"Person" means any entity with standing to be sued or to sue, including any
natural person, corporation, body politic, governmental unit, agency, authority,
partnership, trust, estate, association, company, or group of any of the above.
"Placed-in-Service" means the date on which, based on all facts and
circumstances (a) a facility has reached a degree of completion that would permit its
operation at substantially its design level and (b) the facility is, in fact, in operation at
such level.
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"Private Business Use" means any use of the Project by any Person other than a
state or local government unit, including as a result of (i) ownership, (ii) actual or
beneficial use pursuant to a lease or a management, service, incentive payment, research
or output contract or (iii) any other similar arrangement, agreement or understanding,
whether written or oral, except for use of the Project on the same basis as the general
public. Private Business Use includes any formal or informal arrangement with any
person other than a state or local governmental unit that conveys special legal
entitlements to any portion of the Project that is available for use by the general public or
that conveys to any person other than a state or local governmental unit any special
economic benefit with respect to any portion of the Project that is not available for use by
the general public.
"Qualified Administrative Costs of Investments" means (a) reasonable, direct
administrative costs (other than carrying costs) such as separately stated brokerage or
selling commissions (other than a broker's commission paid on behalf of either the City
or the provider of a GIC to the extent such commission exceeds the lesser of a reasonable
amount or the present value of annual payments equal to 0.05 percent of the weighted
average amount reasonably expected to be invested each year of the term of the GIC (for
this purpose, present value is computed using the yield on the GIC), but not legal and
accounting fees, recordkeeping, custody and similar costs; or (b) all reasonable
administrative costs, direct or indirect, incurred by a publicly offered regulated
investment company or an External Commingled Fund.
"Qualified Tax Exempt Obligations" means (a) any obligation described in
Section 103(a) of the Code, the interest on which is excludable from gross income of the
owner thereof for federal income tax purposes and is not an item of tax preference for
purposes of the alternative minimum tax imposed by Section 55 of the Code; (b) an
interest in a regulated investment company to the extent that at least ninety-five percent
of the income to the holder of the interest is interest which is excludable from gross
income under Section 103 of the Code of any owner thereof for federal income tax
purposes and is not an item of tax preference for purposes of the alternative minimum tax
imposed by Section 55 of the Code; and (c) certificates of indebtedness issued by the
United States Treasury pursuant to the Demand Deposit State and Local Government
Series program described in 31 C.F.R. part 344.
"Rebate Fund" means the fund, if any, identified and defined in paragraph 4.2
herein.
"Rebate Provisions" means the rebate requirements contained in Section 148(f)
of the Code and in the Regulations.
"Regulations" means United States Treasury Regulations dealing with the tax-
exempt bond provisions of the Code.
"Reimbursed Expenditures" means expenditures of the City paid prior to Closing
to which Sale Proceeds or investment earnings thereon are or will be allocated.
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"Sale Proceeds" means amounts actually or constructively received from the sale
of the Certificates, including (a) amounts used to pay underwriters' discount or
compensation and accrued interest, other than accrued interest for a period not greater
than one year before Closing but only if it is to be paid within one year after Closing and
(b) amounts derived from the sale of any right that is part of the terms of a Bond or is
otherwise associated with a Bond (e.g., a redemption right).
"Yield" means that discount rate which when used in computing the present value
of all payments of principal and interest paid and to be paid on an obligation (using
semiannual compounding on the basis of a 360-day year) produces an amount equal to
the obligation's purchase price (or in the case of the Certificates, the issue price as
established in paragraph 5.1 hereof), including accrued interest.
"Yield Reduction Payment" means a rebate payment or any other amount paid to
the United States in the same manner as rebate amounts are required to be paid or at such
other time or in such manner as the Internal Revenue Service may prescribe that will be
treated as a reduction in Yield of an investment under the Regulations.
2.1. Purpose of the Certificates. The Certificates are being issued to finance the
Project in a prudent manner consistent with the revenue needs of the City. A breakdown
of the sources and uses of funds is set forth in the preceding Section of this Ordinance.
At least 75% of the sum of (1) Sale Proceeds plus (ii) investment earnings thereon, less
(iii) Costs of Issuance paid from Sale Proceeds or investment earnings thereon, less
(iv) Sale Proceeds or investment earnings thereon deposited in a reasonably required
reserve or replacement fund, are expected to be used for construction purposes with
respect to property owned by a governmental unit or a Section 501(c)(3) organization.
Except for any accrued interest on the Certificates used to pay first interest due on the
Certificates, no proceeds of the Certificates will be used more than 30 days after the date
of issue of the Certificates 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 City or for the purpose of replacing any funds of the City used for such purpose.
2.2. The Project — Binding Commitment and Timing. The City has incurred or
will, within six months of the Closing, incur a substantial binding obligation (not subject
to contingencies within the control of the City or any member of the same Controlled
Group as the City) to a third party to expend at least five percent of the Net Sale Proceeds
on the Project. It is expected that the work of acquiring and constructing the Project and
the expenditure of amounts deposited into the Project Fund will continue to proceed with
due diligence through August 29, 2005, at which time it is anticipated that all Sale
Proceeds and investment earnings thereon will have been spent.
2.3. Reimbursement. None of the Sale Proceeds or investment earnings thereon
will be used for Reimbursed Expenditures.
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2.4. Working Capital. All Sale Proceeds and investment earnings thereon will be
used, directly or indirectly, to finance Capital Expenditures other than the following:
(a) an amount not to exceed five percent of the Sale Proceeds for working
capital expenditures directly related to Capital Expenditures financed by the
Certificates;
(b) payments of interest on the Certificates for a period commencing at
Closing and ending on the later of the date three years after Closing or one year
after the date on which the Project is Placed-in-Service;
(c) Costs of Issuance and Qualified Administrative Costs of Investments;
(d) payments of rebate or Yield Reduction Payments made to the United
States under the Regulations;
(e) principal of or interest on the Certificates paid from unexpected
excess Sale Proceeds and investment earnings thereon;
(f) fees for a qualified guarantee within the meaning of Treas. Reg.
Section 1.148-4(f); and
(g) investment earnings that are commingled with substantial other
revenues and are expected to be allocated to expenditures within six months.
No Gross Proceeds may be spent for non-capital purposes pursuant to Section 2.4
hereof if the expenditure merely substitutes Gross Proceeds for other amounts that would
have been used to make expenditures in a manner that gives rise to Replacement
Proceeds.
2.5. Consequences of Contrary Expenditure. The City acknowledges that if Sale
Proceeds and investment earnings thereon are spent for non-Capital Expenditures other
than as permitted by paragraph 2.4 hereof, a like amount of then available funds of the
City will be treated as unspent Sale Proceeds.
2.6. Investment of Bond Proceeds. Not more than 50% of the Sale Proceeds and
investment earnings thereon are or will be invested in investments (other than Qualified
Tax Exempt Obligations) having a Yield that is substantially guaranteed for four years or
more. No portion of the Certificates is being issued solely for the purpose of investing a
portion of Sale Proceeds or investment earnings thereon at a Yield higher than the Yield
on the Certificates.
It is expected that the Sale Proceeds deposited into the Project Fund, including
investment earnings on the Project Fund, will be spent to pay costs of the Project and
interest on the Certificates not later than the date set forth in the preceding paragraph, the
investment earnings on the Bond Fund will be spent to pay interest on the Certificates, or
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to the extent permitted by law, investment earnings on amounts in the Project Fund and
the Bond Fund will be commingled with substantial revenues from the governmental
operations of the City, and the earnings are reasonably expected to be spent for
governmental purposes within six months of the date earned.
2.7. No Grants. None of the Sale Proceeds or investment earnings thereon will
be used to make grants to any person.
2.8. Hedges. Neither the City nor any member of the same Controlled Group as
the City has entered into or expects to enter into any hedge (e.g., an interest rate swap,
interest rate cap, futures contract, forward contract or an option) with respect to the
Certificates. The City acknowledges that any such hedge could affect, among other
things, the calculation of Bond Yield under the Regulations. The Internal Revenue
Service could recalculate Bond Yield if the failure to account for the hedge fails to
clearly reflect the economic substance of the transaction.
2.9. Internal Revenue Service Audits. The City represents that the Internal
Revenue Service has not contacted the City regarding any obligations issued by or on
behalf of the City.
3.1. Use of Proceeds. (a) The use of the Sale Proceeds and investment earnings
thereon and the funds held under this Ordinance at the time of Closing are described in
the preceding Section of this Ordinance. No Sale Proceeds will be used to pre-pay for
services or goods prior to the date such services or goods are to be received, except for
any payment to the Credit Facility Provider.
(b) Only the funds and accounts described in said Section will be funded at
Closing. There are no other funds or accounts created under this Ordinance, other than
the Rebate Fund if it is created as provided in paragraph 4.2 hereof.
(c) Principal of and interest on the Certificates will be paid from the Bond Fund.
(d) Any Costs of Issuance incurred in connection with the issuance of the
Certificates to be paid by the City will be paid from the Project Fund.
(e) The costs of the Project will be paid from the Project Fund and no other
moneys (except for investment earnings on amounts in the Project Fund) are expected to
be deposited therein.
3.2. Purpose of Bond Fund. The Bond Fund will be used primarily to achieve a
proper matching of revenues and earnings with principal and interest payments on the
Certificates in each bond year. It is expected that the Bond Fund will be depleted at least
once a year, except for a reasonable carry over amount not to exceed the greater of(a) the
earnings on the investment of moneys in the Bond Fund for the immediately preceding
bond year or (b) 1/12th of the principal and interest payments on the Certificates for the
immediately preceding bond year.
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3.3. No Other Gross Proceeds. (a) Except for the Bond Fund and the Project
Fund, and except for investment earnings that have been commingled as described in
paragraph 2.2 and any credit enhancement or liquidity device related to the Certificates,
after the issuance of the Certificates, neither the City nor any member of the same
Controlled Group as the City has or will have any property, including cash, securities or
will have any property, including cash, securities or any other property held as a passive
vehicle for the production of income or for investment purposes, that constitutes:
(1) Sale Proceeds;
(ii) amounts in any fund and account with respect to the Certificates
(other than the Rebate Fund);
(iii) amounts that have a sufficiently direct nexus to the Certificates or to
the governmental purpose of the Certificates to conclude that the amounts would
have been used for that governmental purpose if the Certificates were not used or
to be used for that governmental purpose (the mere availability or preliminary
earmarking of such amounts for a governmental purpose, however, does not itself
establish such a sufficient nexus);
(iv) amounts in a debt service fund, redemption fund, reserve fund,
replacement fund or any similar fund to the extent reasonably expected to be used
directly or indirectly to pay principal of or interest on the Certificates or any
amounts for which there is provided, directly or indirectly, a reasonable assurance
that the amount will be available to pay principal of or interest on the Certificates
or any obligations under any credit enhancement or liquidity device with respect
to the Certificates, even if the City encounters financial difficulties;
(v) any amounts held pursuant to any agreement (such as an agreement to
maintain certain levels of types of assets) made for the benefit of the Bondholders
or any credit enhancement provider, including any liquidity device or negative
pledge (e.g., any amount pledged to pay principal of or interest on an issue held
under an agreement to maintain the amount at a particular level for the direct or
indirect benefit of holders of the Certificates or a guarantor of the bonds); or
(vi) amounts actually or constructively received from the investment and
reinvestment of the amounts described in (i) or(ii) above.
(b) No compensating balance, liquidity account, negative pledge of property
held for investment purposes required to be maintained at least at a particular level or
similar arrangement exists with respect to, in any way, the Certificates or any credit
enhancement or liquidity device related to the Certificates.
(c) The term of the Certificates is not longer than is reasonably necessary for the
governmental purposes of the Certificates. The average reasonably expected economic
life of the Project is at least 20 years. The weighted average maturity of the Certificates
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does not exceed 13 years and does not exceed 120 percent of the average reasonably
expected economic life of the Project. The maturity schedule of the Certificates (the
"Principal Payment Schedule") is based on an analysis of revenues expected to be
available to pay debt service on the Certificates. The Principal Payment Schedule is not
more rapid (i.e., having a lower average maturity) because a more rapid schedule would
place an undue burden on tax rates and cause such rates to be increased beyond prudent
levels, and would be inconsistent with the governmental purpose of the Certificates as set
forth in paragraph 2.1 hereof.
4.1. Compliance with Rebate Provisions. The City covenants to take such
actions and make, or cause to be made, all calculations, transfers and payments that may
be necessary to comply with the Rebate Provisions applicable to the Certificates. The
City will make, or cause to be made, rebate payments with respect to the Certificates in
accordance with law.
4.2. Rebate Fund. The City is hereby authorized to create and establish a special
fund to be known as the Rebate Fund (the "Rebate Fund"), which, if created, shall be
continuously held, invested, expended and accounted for in accordance with this
Ordinance. Moneys in the Rebate Fund shall not be considered moneys held for the
benefit of the owners of the Certificates. Except as provided in the Regulations, moneys
in the Rebate Fund (including earnings and deposits therein) shall be held in trust for
payment to the United States as required by the Rebate Provisions and by the Regulations
and as contemplated under the provisions of this Ordinance.
4.3. Records. The City agrees to keep and retain or cause to be kept and retained
until six years (three years for the records required by paragraph 4.4(c) hereof) after the
Certificates are paid in full adequate records with respect to the investment of all Gross
Proceeds and amounts in the Rebate Fund. Such records shall include: (a) purchase
price; (b) purchase date; (c) type of investment; (d) accrued interest paid; (e) interest rate;
(f) principal amount; (g) maturity date; (h) interest payment date; (i) date of liquidation;
and 0) receipt upon liquidation.
If any investment becomes Gross Proceeds on a date other than the date such
investment is purchased, the records required to be kept shall include the fair market
value of such investment on the date it becomes Gross Proceeds. If any investment is
retained after the date the last Bond is retired, the records required to be kept shall
include the fair market value of such investment on the date the last Bond is retired.
Amounts or investments will be segregated whenever necessary to maintain these
records.
4.4. Fair Market Value; Certificates of Deposit and Investment Agreements. The
City will continuously invest all amounts on deposit in the Rebate Fund,together with the
amounts, if any, to be transferred to the Rebate Fund, in any investment permitted under
this Ordinance. The City shall take into account prudent investment standards and the
date on which such moneys may be needed. Except as provided in the next sentence, all
amounts that constitute Gross Proceeds and all amounts in the Rebate Fund shall be
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invested at all times to the greatest extent practicable, and no amounts may be held as
cash or be invested in zero yield investments other than obligations of the United States
purchased directly from the United States. In the event moneys cannot be invested, other
than as provided in this sentence due to the denomination, price or availability of
investments, the amounts shall be invested in an interest bearing deposit of a bank with a
yield not less than that paid to the general public or held uninvested to the minimum
extent necessary.
Gross Proceeds and any amounts in the Rebate Fund that are invested in
certificates of deposit or in guaranteed investment contracts ("GICs") shall be invested
only in accordance with the following provisions:
(a) Investments in certificates of deposit of banks or savings and loan
associations that have a fixed interest rate, fixed payment schedules and
substantial penalties for early withdrawal shall be made only if either (i) the Yield
on the certificate of deposit (A) is not less than the Yield on reasonably
comparable direct obligations of the United States and (B) is not less than the
highest Yield that is published or posted by the provider to be currently available
from the provider on reasonably comparable certificates of deposit offered to the
public or (ii) the investment is an investment in a GIC and qualifies under
paragraph (b) below.
(b) Investments in GICs shall be made only if
(i) the bid specifications are in writing, include all material terms
of the bid and are timely forwarded to potential providers (a term is
material if it may directly or indirectly affect the yield on the GIC);
(ii) the terms of the bid specifications are commercially reasonable
(a term is commercially reasonable if there is a legitimate business
purpose for the term other than to reduce the yield on the GIC);
(iii) all bidders for the GIC have equal opportunity to bid so that,
for example, no bidder is given the opportunity to review others bids (a
last look) before bidding;
(iv) any agent used to conduct the bidding for the GIC does not bid
to provide the GIC;
(v) at least three of the providers solicited for bids for the GIC are
reasonably competitive providers of investments of the type purchased
(i.e., providers that have established industry reputations as competitive
providers of the type of investments being purchased);
(vi) at least three of the entities that submit a bid do not have a
financial interest in the Certificates;
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(vii) at least one of the entities that provided a bid is a reasonably
competitive provider that does not have a financial interest in the
Certificates; .
(viii) the bid specifications include a statement notifying potential
providers that submission of a bid is a representation that the potential
provider did not consult with any other provider about its bid, that the bid
was determined without regard to any other formal or informal agreement
that the potential provider has with the City or any other person (whether
or not in connection with the Certificates) and that the bid is not being
submitted solely as a courtesy to the City or any other person for purposes
of satisfying the federal income tax requirements relating to the bidding
for the GIC;
(ix) the determination of the terms of the GIC takes into account the
reasonably expected deposit and drawdown schedule for the amounts to be
invested;
(x) the highest-yielding GIC for which a qualifying bid is made
(determined net of broker's fees) is in fact purchased; and
(xi) the obligor on the GIC certifies the administrative costs that it
is paying or expects to pay to third parties in connection with the GIC.
(c) If a GIC is purchased, the City will retain the following records with
its bond documents until three years after the Certificates are redeemed in their
entirety:
(1) a copy of the GIC;
(ii) the receipt or other record of the amount actually paid for the
GIC, including a record of any administrative costs paid, and the
certification under subparagraph (b)(m) of this paragraph;
(iii) for each bid that is submitted, the name of the person and entity
submitting the bid, the time and date of the bid, and the bid results; and
(iv) the bid solicitation form and, if the terms of the GIC deviated
from the bid solicitation form or a submitted bid is modified, a brief
statement explaining the deviation and stating the purpose for the
deviation.
Moneys to be rebated to the United States shall be invested to mature on or prior
to the anticipated rebate payment date. All investments made with Gross Proceeds or
amounts in the Rebate Fund shall be bought and sold at fair market value. The fair
market value of an investment is the price at which a willing buyer would purchase the
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investment from a willing seller in a bona fide, arm's length transaction. Except for
investments specifically described in this Section and United States Treasury obligations
that are purchased directly from the United States Treasury, only investments that are
traded on an established securities market, within the meaning of regulations promulgated
under Section 1273 of the Code, will be purchased with Gross Proceeds. In general, an
"established securities market" includes: (i) property that is listed on a national securities
exchange, an interdealer quotation system or certain foreign exchanges; (ii) property that
is traded on a Commodities Futures Trading Commission designated Corporate
Authorities of trade or an interbank market; (iii) property that appears on a quotation
medium; and (iv) property for which price quotations are readily available from dealers
and brokers. A debt instrument is not treated as traded on an established market solely
because it is convertible into property which is so traded.
An investment of Gross Proceeds in an External Commingled Fund shall be made
only to the extent that such investment is made without an intent to reduce the amount to
be rebated to the United States Government or to create a smaller profit or a larger loss
than would have resulted if the transaction had been at arm's length and had the rebate or
Yield restriction requirements not been relevant to the City. An investment of Gross
Proceeds shall be made in a Commingled Fund other than an External Commingled Fund
only if the investments made by such Commingled Fund satisfy the provisions of this
paragraph.
A single investment, or multiple investments awarded to a provider based on a
single bid may not be used for funds subject to different rules relating to rebate or yield
restriction.
The foregoing provisions of this paragraph satisfy various safe harbors set forth in
the Regulations relating to the valuation of certain types of investments. The safe harbor
provisions of this paragraph are contained herein for the protection of the City, who has
covenanted not to take any action to adversely affect the tax-exempt status of the interest
on the Certificates. The City will contact Bond Counsel if it does not wish to comply with
the provisions of this paragraph and forego the protection provided by the safe harbors
provided herein.
4.5. Arbitrage Elections. The Mayor, Clerk and Treasurer of the City are hereby
authorized to execute one or more elections regarding certain matters with respect to
arbitrage.
4.6. Small Issuer Exception. The City is a governmental unit that has the power
to impose a tax or to cause another entity to impose a tax of general applicability that,
when collected, may be used for the governmental purposes of the City. The power to
impose such tax is not contingent on approval by another governmental unit; a tax of
general applicability is one that is not limited to a small number of persons. The City is
not subject to Control by any other governmental unit or political subdivision. None of
the Certificates is or will be a "private activity bond" (as defined in Section 141 of the
Code). Ninety-five percent or more of the Sale Proceeds will be used for local
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governmental activities of the City. Neither the City, any entity that issues tax-exempt
bonds on behalf of the City nor any entity subject to Control by the City will issue, during
the calendar year 2002, any tax-exempt bonds in an aggregate face amount in excess of
the maximum aggregate face amount (as hereinafter defined). As used herein, (a) "tax-
exempt bonds" means obligations of any kind, the interest on which is excludable from
gross income of the holders or owners thereof for federal income tax purposes pursuant to
Section 103 of the Code but not including "private activity bonds" (as defined in
Section 141 of the Code), (b) "aggregate face amount" means, if an issue has more than
a De mimmis Amount of Original Issue Discount or Premium, the issue price of the issue
and otherwise means the face amount of the issue and (c) "maximum aggregate face
amount" means, the sum of (1) $5,000,000 and (ii) the aggregate face amount of bonds
issued during the calendar year that are allocable to financing construction expenditures
for public school facilities, but in no event can the maximum aggregate face amount
exceed $15,000,000. As of the date hereof, no tax-exempt bonds or other obligations
(other than the Certificates and the $625,000 General Obligation Bonds (Alternate
Revenue Source), Series 2002 (the "Series 2002 Bonds")) have been issued by the City,
any entity that issues tax-exempt bonds on behalf of the City or any entity subject to
Control by the City during the calendar year 2002. The City does not reasonably expect
that it, any entity that issues tax-exempt bonds on behalf of the City or any entity subject
to Control by the City (including but not limited to the City) will issue any such tax-
exempt bonds or other obligations within calendar year 2002. Therefore, subject to
compliance with all the terms and provisions hereof, the City is excepted from the
required rebate of arbitrage profits on the Certificates under Section 148(f)(4)(D) of the
Code and from the terms and provisions of this Ordinance that need only be complied
with if the City is subject to the arbitrage rebate requirement.
5.1. Issue Price. For purposes of determining the Yield on the Certificates, the
purchase price of the Certificates is equal to the first offering price (including accrued
interest) at which the Purchaser sold at least ten percent of the principal amount of each
maturity of the Certificates to the public (excluding bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement agents or
wholesalers). All of the Certificates have been the subject of a bona fide initial offering
to the public (excluding bond houses, brokers, or similar persons or organizations acting
in the capacity of underwriters, placement agents or wholesalers) at prices equal to those
set forth in the Official Statement. Based upon prevailing market conditions, such prices
are not less than the fair market value of each Bond as of the sale date for the Certificates.
5.2. Yield Limits. (a) Except as provided in paragraph (b) or (c), all Gross
Proceeds shall be invested at market prices and at a Yield (after taking into account any
Yield Reduction Payments) not in excess of the Yield on the Certificates plus, if only for
amounts in the Project Fund are subject to this yield limitation, 1/8th of one percent.
The following may be invested without Yield restriction:
(b)(i) amounts on deposit in the Bond Fund (except for capitalized interest)
that have not been on deposit under the Ordinance for more than 13 months, so
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long as the Bond Fund continues to qualify as a bona fide debt service fund as
described in paragraph 3.2 hereof;
(ii) amounts on deposit in the Project Fund that are reasonably expected
to pay for the costs of the Project, costs of issuance of the Certificates, or interest
on the Certificates during the three year period beginning on the date of issue of
the Certificates prior to three years after Closing;
(iii) amounts in the Bond Fund to be used to pay capitalized interest on the
Certificates prior to the earlier of three years after Closing or the payment of all
capitalized interest;
(c)(i) An amount not to exceed the lesser of$100,000 or five percent of the
Sale Proceeds;
(ii) amounts invested in Qualified Tax Exempt Obligations (to the extent
permitted by law and this Ordinance);
(iii) amounts in the Rebate Fund;
(iv) all amounts other than Sale Proceeds for the first 30 days after they
become Gross Proceeds; and
(v) all amounts derived from the investment of Sale Proceeds or
investment earnings thereon for a period of one year from the date received.
5.3. Continuing Nature of Yield Limits. Except as provided in paragraph 7.9
hereof, once moneys are subject to the Yield limits of paragraph 5.2 hereof, such moneys
remain Yield restricted until they cease to be Gross Proceeds.
5.4. Federal Guarantees. Except for investments meeting the requirements of
paragraph 5.2(b) hereof, investments of Gross Proceeds shall not be made in
(a) investments constituting obligations of or guaranteed, directly or indirectly, by the
United States (except obligations of the United States Treasury, or investments in
obligations issued pursuant to Section 21B(d)(3) of the Federal Home Loan Bank, as
amended (e.g., Refcorp Strips)); or (b) federally insured deposits or accounts (as defined
in Section 149(b)(4)(B) of the Code). Except as otherwise permitted in the immediately
prior sentence and in the Regulations, no portion of the payment of principal or interest
on the Certificates or any credit enhancement or liquidity device relating to the foregoing
is or will be guaranteed, directly or indirectly (in whole or in part), by the United States
(or any agency or instrumentality thereof), including a lease, incentive payment, research
or output contract or any similar arrangement, agreement or understanding with the
United States or any agency or instrumentality thereof. No portion of the Gross Proceeds
has been or will be used to make loans the payment of principal or interest with respect to
which is or will be guaranteed (in whole or in part) by the United States (or any agency or
instrumentality thereof). Neither this paragraph nor paragraph 5.5 hereof applies to any
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guarantee by the Federal Housing Administration, the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation, the Government National
Mortgage Association, the Student Loan Marketing Association or the Bonneville Power
Administration pursuant to the Northwest Power Act (16 U.S.C. 839d) as in effect on the
date of enactment of the Tax Reform Act of 1984.
5.5. Investments After the Expiration of Temporary Periods, Etc. After the
expiration of the temporary period set forth in paragraph 5.2(b)(ii) hereof, amounts in the
Project Fund may not be invested in (i) federally insured deposits or accounts (as defined
in Section 149(b)(4)(B) of the Code) or (ii) investments constituting obligations of or
guaranteed, directly or indirectly, by the United States (except obligations of the United
States Treasury or investments in obligations issued pursuant to Section 21B(d)(3) of the
Federal Home Loan Bank Act, as amended (e.g., Refcorp Strips). Any other amounts
that are subject to the yield limitation in paragraph 5.2(a) hereof because paragraph 5.2(b)
hereof is not applicable and amounts not subject to yield restriction only because they are
described in paragraph 5.2(c) hereof, are also subject to the limitation set forth in the
preceding sentence.
5.6. Treatment of Certain Credit Facility Fees. The fee paid to the Credit
Facility Provider with respect to the Credit Facility may be treated as interest in
computing Bond Yield.
Neither the District nor any member of the same Controlled Group as the District
is a Related Person as defined in Section 144(a)(3) of the Code to the Credit Facility
Provider. The fee paid to the Credit Facility Provider does not exceed ten percent of the
Sale Proceeds. Other than the fee paid to the Credit Facility Provider, neither the Credit
Facility Provider nor any person who is a Related Person to the Credit Facility Provider
within the meaning of Section 144(a)(3) of the Code will use any Sale Proceeds or
investment earnings thereon. The fee paid for the Credit Facility does not exceed a
reasonable, arm's length charge for the transfer of credit risk. The fee does not include
any payment for any direct or indirect services other than the transfer of credit risk.
6.1. Payment and Use Tests. (a) No more than five percent of the Sale Proceeds
plus investment earnings thereon will be used, directly or indirectly, in whole or in part,
in any Private Business Use. The City acknowledges that, for purposes of the preceding
sentence, Gross Proceeds used to pay costs of issuance and other common costs (such as
capitalized interest and fees paid for a qualified guarantee or qualified hedge) or invested
in a reserve or replacement fund must be ratably allocated among all the purposes for
which Gross Proceeds are being used.
(b) The payment of more than five percent of the principal of or the interest on
the Certificates will not be, directly or indirectly (i) secured by any interest in
(A) property used or to be used in any Private Business Use or (B) payments in respect of
such property or (ii) on a present value basis, derived from payments (whether or not to
the City or a member of the same Controlled Group as the City) in respect of property, or
borrowed money, used or to be used in any Private Business Use.
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(c) No more than the lesser of five percent of the sum of the Sale Proceeds and
investment earnings thereon or $5,000,000 will be used, directly or indirectly, to make or
finance loans to any persons. The City acknowledges that, for purposes of the preceding .
sentence, Gross Proceeds used to pay costs of issuance and other common costs (such as
capitalized interest and fees paid for a qualified guarantee or qualified hedge) or invested
in a reserve or replacement fund must be ratably allocated among all the purposes for
which Gross Proceeds are being used.
(d) No user of the Project other than a state or local governmental unit will use
more than five percent of the Project, in the aggregate, on any basis other than the same
basis as the general public.
(e) No more than the lesser of five percent of the proceeds of the Certificates or
$5,000,000 have been or will be used to provide professional sports facilities. For
purposes of this paragraph, the term "professional sports facilities" (1) means real
property or related improvements used for professional sports exhibitions, games or
training, regardless of whether the admission of the public or press is allowed or paid and
(ii) includes any use of a facility that generates a direct or indirect monetary benefit
(other than reimbursement for out-of-pocket expenses) for a person who uses such
facilities for professional sport exhibitions, games or training.
6.2. I.R.S. Form 8038-G. The information contained in the Information Return
for Tax-Exempt Governmental Obligations, Form 8038-G, is true and complete. The
City will file Form 8038-G (and all other required information reporting forms) in a
timely manner.
6.3. Bank Qualification. (a) The City hereby designates each of the Certificates
as a "qualified tax-exempt obligation" for the purposes and within the meaning of
Section 265(b)(3) of the Code. In support of such designation, the City hereby certifies
that (i) none of the Certificates will be at anytime a "private activity bond" (as defined in
Section 141 of the Code) other than a "qualified 501(c)(3) bond" (as defined in
Section 145 of the Code), (ii) as of the date hereof in calendar year 2002, the City has not
issued any tax-exempt obligations of any kind other than the Certificates and the
Series 2002 Bonds nor have any tax-exempt obligations of any kind been issued on
behalf of the City and (iii) not more than $10,000,000 of obligations of any kind
(including the Certificates and the Series 2002 Bonds) issued by or on behalf of the City
during calendar year 2002 will be designated for purposes of Section 265(b)(3) of the
Code.
(b) The City is not subject to Control by any entity, and there are no entities
subject to Control by the City.
(c) On the date hereof, the City does not reasonably anticipate that for calendar
year 2002 it will issue any Section 265 Tax-Exempt Obligations (other than the
Certificates and the Series 2002 Bonds), or that any Section 265 Tax-Exempt Obligations
will be issued on behalf of it. "Section 265 Tax-Exempt Obligations" are obligations the
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interest on which is excludable from gross income of the owners thereof under
Section 103 of the Code, except for private activity bonds other than qualified 501(c)(3)
bonds, both as defined in Section 141 of the Code. The City will not issue or permit the
issuance on behalf of it or by any entity subject to Control by the City (which may
hereafter come into existence) of Section 265 Tax-Exempt Obligations (including the
Certificates and the Series 2002 Bonds) that exceed the aggregate amount of$10,000,000
during calendar year 2002 unless it first obtains an opinion of Bond Counsel to the effect
that such issuance will not adversely affect the treatment of the Certificates as "qualified
tax-exempt obligations" for the purposes and within the meaning of Section 265(b)(3) of
the Code.
7.1. Termination; Interest of City in Rebate Fund. The terms and provisions set
forth in this Section shall terminate at the later of (a) 75 days after the Certificates have
been fully paid and retired or (b) the date on which all amounts remaining on deposit in
the Rebate Fund, if any, shall have been paid to or upon the order of the United States
and any other payments required to satisfy the Rebate Provisions of the Code have been
made to the United States. Notwithstanding the foregoing, the provisions of
paragraph 4.3 hereof shall not terminate until the sixth anniversary of the date the
Certificates are fully paid and retired, and the provisions of paragraph 4.4(c) hereof shall
not terminate until the third anniversary of the date the Certificates are fully paid and
retired.
7.2. No Common Plan of Financing. Since a date that is 15 days prior to the date
of sale of the Certificates by the City to the Purchaser, neither the City nor any member
of the same Controlled Group as the City has sold or delivered any obligations other than
the Certificates that are reasonably expected to be paid out of substantially the same
source of funds as the Certificates. Neither the City nor any member of the same
Controlled Group as the City will sell or deliver within 15 days after the date hereof any
obligations other than the Certificates that are reasonably expected to be paid out of
substantially the same source of funds as the Certificates.
7.3. No Sale of the Project. (a) Other than as provided in the next sentence,
neither the Project nor any portion thereof has been, is expected to be, or will be sold or
otherwise disposed of, in whole or in part, prior to the earlier of (i) the last date of the
reasonably expected economic life to the City of the property (determined on the date of
issuance of the Certificates) or (ii) the last maturity date of the Certificates. The City
may dispose of personal property in the ordinary course of an established government
program prior to the earlier of(i) the last date of the reasonably expected economic life to
the City of the property (determined on the date of issuance of the Certificates) or (ii) the
last maturity of the Certificates, provided: (A) the weighted average maturity of the
Certificates financing the personal property is not greater than 120 percent of the
reasonably expected actual use of that property for governmental purposes; (B) the City
reasonably expects on the issue date that the fair market value of that property on the date
of disposition will be not greater than 25 percent of its cost; (C) the property is no longer
suitable for its governmental purposes on the date of disposition; and (D) the City
deposits amounts received from the disposition in a commingled fund with substantial tax
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or other governmental revenues and the City reasonably expects to spend the amounts on
governmental programs within six months from the date of the commingling.
(b) The City acknowledges that if Bond-financed property is sold or otherwise
disposed of in a manner contrary to (a) above, such sale or disposition may constitute a
"deliberate action" within the meaning of the Regulations that may require remedial
actions to prevent the Certificates from becoming private activity bonds. The City shall
promptly contact Bond Counsel if a sale or other disposition of bond-financed property is
considered by the City.
7.4. Purchase of Certificates by City. The City will not purchase any of the
Certificates except to cancel such Certificates.
7.5. First Call Date Limitation. The period between the date of Closing and the
first call date, if any, of the Certificates is not more than 10-1/2 years.
7.6. Registered Form. The City recognizes that Section 149(a) of the Code
requires the Certificates to be issued and to remain in fully registered form in order that
interest thereon be exempt from federal income taxation under laws in force at the time
the Certificates are delivered. In this connection, the City agrees that it will not take any
action to permit the Certificates to be issued in, or converted into, bearer or coupon form.
7.7. First Amendment. The City acknowledges and agrees that it will not use, or
allow the Project to be used, in a manner which is prohibited by the Establishment of
Religion Clause of the First Amendment to the Constitution of the United States of
America or by any comparable provisions of the Constitution of the State of Illinois.
7.8. Future Events. The City 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. The City shall promptly contact Bond Counsel
if such changes do occur.
7.9. Permitted Changes; Opinion of Bond Counsel. The Yield restrictions
contained in paragraph 5.2 hereof or any other restriction or covenant contained herein
need not be observed or may be changed if such nonobservance or change will not result
in the loss of any exemption for the purpose of federal income taxation to which interest
on the Certificates is otherwise entitled and the City receives an opinion of Bond Counsel
to such effect.
7.10. Successors and Assigns. The terms, provisions, covenants and conditions of
this Section shall bind and inure to the benefit of the respective successors and assigns of
the Corporate Authorities and the City.
7.11. Expectations. The Corporate Authorities has reviewed the facts, estimates
and circumstances in existence on the date of issuance of the Certificates. Such facts,
estimates and circumstances, together with the expectations of the City as to future
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events, are set forth in summary form in this Section. Such facts and estimates are true
and are not incomplete in any material respect. On the basis of the facts and estimates
contained herein, the City has adopted the expectations contained herein. On the basis of
such facts, estimates, circumstances and expectations, it is not expected that Sale
Proceeds, investment earnings thereon or any other moneys or property will be used in a
manner that will cause the Certificates to be arbitrage bonds within the meaning of the
Rebate Provisions and the Regulations. Such expectations are reasonable and there are no
other facts, estimates and circumstances that would materially change such expectations.
The City also agrees and covenants with the purchasers and holders of the Certificates
from time to time outstanding that, to the extent possible under Illinois law, it will comply with
whatever federal tax law is adopted in the future which applies to the Certificates and affects the
tax-exempt status of the Certificates.
The Corporate Authorities hereby authorizes the officials of the City responsible for
issuing the Certificates, the same being the Mayor, Clerk and Treasurer of the Corporate
Authorities, to make such further covenants and certifications as may be necessary to assure that
the use thereof will not cause the Certificates to be arbitrage bonds and to assure that the interest
on the Certificates will be exempt from federal income taxation. In connection therewith, the City
and the Corporate Authorities further agree: (a) through their officers, to make such further
specific covenants, representations as shall be truthful, and assurances as may be necessary or
advisable; (b) to consult with counsel approving the Certificates 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 Certificates; (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 by their officers, to employ and pay fiscal agents, financial
advisors, attorneys, and other persons to assist the City in such compliance.
Section 15. Pertaining to the Certificate Registrar. If requested by the Certificate
Registrar, any officer of the City is authorized to execute a standard form of agreement between
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the City and the Certificate Registrar with respect to the obligations and duties of the Certificate
Registrar under this Ordinance. In addition to the terms of such agreement and subject to
modification thereby, the Certificate Registrar by acceptance of duties under this Ordinance
agrees (a) to act as registrar, paying agent, authenticating agent, and transfer agent as provided
herein; (b) to maintain a list of Certificateholders as set forth herein and to furnish such list to the
City upon request, but otherwise to keep such list confidential to the extent permitted by law;
(c) to cancel and/or destroy Certificates which have been paid at maturity or upon redemption or
submitted for exchange or transfer; (d) to furnish the City at least annually a certificate with
respect to Certificates cancelled and/or destroyed; and (e) to furnish the City at least annually an
audit confirmation of Certificates paid, Certificates outstanding and payments made with respect
to interest on the Certificates. The City covenants with respect to the Certificate Registrar, and
the Certificate Registrar further covenants and agrees as follows:
A. The City shall at all times retain a Certificate Registrar with respect to the
Certificates; it will maintain at the designated office(s) of such Certificate Registrar a place or
places where Certificates may be presented for payment, registration, transfer, or exchange; and
it will require that the Certificate Registrar properly maintain the Certificate Register and
perform the other duties and obligations imposed upon it by this Ordinance in a manner
consistent with the standards, customs, and practices of the municipal securities industry.
B. The Certificate Registrar shall signify its acceptance of the duties and obligations
imposed upon it by this Ordinance by executing the certificate of authentication on any
Certificate, and by such execution the Certificate Registrar shall be deemed to have certified to
the City that it has all requisite power to accept and has accepted such duties and obligations not
only with respect to the Certificate so authenticated but with respect to all the Certificates. Any
Certificate Registrar shall be the agent of the City and shall not be liable in connection with the
performance of its duties except for its own negligence or willful wrongdoing. Any Certificate
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Registrar shall, however, be responsible for any representation in its certificate of authentication
on Certificates.
C. The City may remove the Certificate Registrar at any time. In case at any time the
Certificate Registrar shall resign, shall be removed, shall become incapable of acting, or shall be
adjudicated a bankrupt or insolvent, or if a receiver, liquidator, or conservator of the Certificate
Registrar or of the property thereof shall be appointed, or if any public officer shall take charge
or control of the Certificate Registrar or of the property or affairs thereof, the City covenants and
agrees that it will thereupon appoint a successor Certificate Registrar. The City shall give notice
of any such appointment made by it to each registered owner of any Certificate within twenty
days after such appointment in the same manner, or as nearly the same as may be practicable, as
for a redemption of Certificates. Any Certificate Registrar appointed under the provisions of this
Section shall be a bank, trust company, or national banking association maintaining its principal
corporate trust office in Illinois and having capital and surplus and undivided profits in excess of
$50,000,000. The City Clerk is hereby directed to file a certified copy of this Ordinance with the
Certificate Registrar and the Certificate Registrar.
Section 16. Defeasance. Any Certificate or Certificates which (a) are paid and
cancelled, (b) which have matured and for which sufficient sums been deposited with the
Certificate Registrar to pay all principal and interest due thereon, or (c) for which sufficient
United States of America dollars and direct United States Treasury obligations have been
deposited with the Certificate Registrar or similar institution to pay, taking into account
investment earnings on such obligations, all principal of and interest on (and redemption
premium, if any, on) such Certificate or Certificates when due at maturity or as called for
redemption, pursuant to an irrevocable escrow or trust agreement, shall cease to have any lien on
or right to receive or be paid from the Certificate Moneys hereunder and shall no longer have the
benefits of any covenant for the registered owners of outstanding Certificates as set forth herein
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as such relates to lien and security of the outstanding Certificates. All covenants relative to the
Tax-exempt status of the Certificates; and payment, registration, transfer, and exchange; are
expressly continued for all Certificates whether outstanding Certificates or not.
Section 17. Continuing Disclosure Undertaking . The Mayor is hereby authorized,
empowered and directed to execute and deliver a Continuing Disclosure Undertaking under
Section (b)(5) of Rule 15c2-12 adopted by the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, as amended (the "Continuing Disclosure Undertaking").
When the Continuing Disclosure Undertaking is executed and delivered on behalf of the City as
herein provided, the Continuing Disclosure Undertaking will be binding on the City and the
officers, employees and agents of the City, and the officers, employees and agents of the City are
hereby authorized, empowered and directed to do all such acts and things and to execute all such
documents as may be necessary to carry out and comply with the provisions of the Continuing
Disclosure Undertaking as executed. Notwithstanding any other provision of this Ordinance, the
sole remedy for failure to comply with the Continuing Disclosure Undertaking shall be the
ability of the beneficial owner of any Certificate to seek mandamus or specific performance by
court order to cause the City to comply with its obligations under the Continuing Disclosure
Undertaking.
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Section 18. Superseder and Effective Date. All ordinances, resolutions, and orders, or
parts thereof, in conflict herewith, are to the extent of such conflict hereby superseded; and this
Ordinance shall be in full force and effect immediately upon its passage and approval.
ADOPTED by the Corporate Authorities on the 13th day of August, 2002, pursuant to a
roll call vote as follows:
PAUL JAMES MARTY MUNNS
RICHARD STICKA MIKE ANDERSON
VALERIE BURD T t ROSE SPEARS
LARRY KOT JOSEPH BESCO
APPROVED by me, as Mayor of the United City of Yorkville, Kendall County, Illinois,
the 13th day of August, 2002.
MAYOR
PASSED by the City Council of the United City of Yorkville, Kendall County, Illinois, the
13th day of August, 2002.
At
` CIT CLERK
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EXTRACT OF MINUTES of the regular public meeting of the City
Council of the United City of Yorkville, Kendall County, Illinois,
held in the City Council Chambers of the City Hall, located at
800 Game Farm Road, in said City, at 7:00 p.m., on Tuesday, the
13th day of August, 2002.
The Mayor called the meeting to order and directed the City Clerk to call the roll.
Upon the roll being called, the Mayor, and the following
Aldermen at said location answered present:
s
The following were absent:
The Corporate Authorities then discussed the proposed financing of the elevated water
storage tank and Route 47 water main construction project.
Thereupon, AldermanC presented, and there was placed before each
Alderman in full the following ordinance:
AN ORDINANCE of the United City of Yorkville, Kendall County,
Illinois, authorizing and providing for an Installment Purchase
Agreement for the purpose of paying a portion of the cost to
construct an elevated water storage tank and the Route 47 water
main, and authorizing and providing for the issue of$2,899,364.85
Debt Certificates (Capital Appreciation), Series 2002, evidencing
the rights to payment under such Agreement, prescribing the
details of the Agreement and Certificates, and providing for the
security for and means of payment under the Agreement of the
Certificates.
(the "Certificate Ordinance").
Alderman r moved and Alderman ',--,--,.,-� seconded the
motion that the Certificate Ordinance as presented be adopted.
A City Council discussion of the matter followed. During the City Council discussion,
gave a public recital of the nature of the matter, which included a
complete reading of the title of the Certificate Ordinance, a complete reading of the table of
contents contained therein, and a brief commentary on each entry in the table of contents.
The Mayor directed that the roll be called for a vote upon the motion to adopt the
Certificate Ordinance.
Upon the roll being called,the following Aldermen voted AYES---
and the following Aldermen voted NAY:
WHEREUPON the Mayor declared the motion carried and the Certificate Ordinance
adopted and did direct the City Clerk to record the same in full in the records of the City Council
of the United City of Yorkville, Kendall County, Illinois.
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Other business was duly transacted at said meeting.
Upon motion duly made and carried, the meeting adjourned.
City 6erk
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STATE OF ILLINOIS )
) SS
COUNTY OF KENDALL )
CERTIFICATION OF MINUTES AND ORDINANCE
I, the undersigned, do hereby certify that I am the duly qualified and acting City Clerk of
the United City of Yorkville, Kendall County, Illinois (the "City"), and as such official I am the
keeper of the official journal of proceedings, books, records, minutes, and files of the City and of
the City Council (the "Corporate Authorities") thereof.
I do further certify that the foregoing is a full, true, and complete transcript of that portion
of the minutes of the meeting (the "Meeting") of the Corporate Authorities held on the 13th day
of August, 2002 insofar as the same relates to the adoption of an ordinance, numbered �
and entitled:
AN ORDINANCE of the United City of Yorkville, Kendall County,
Illinois, authorizing and providing for an Installment Purchase
Agreement for the purpose of paying a portion of the cost to
construct an elevated water storage tank and the Route 47 water
main, and authorizing and providing for the issue of$2,899,364.85
Debt Certificates (Capital Appreciation), Series 2002, evidencing
the rights to payment under such Agreement, prescribing the
details of the Agreement and Certificates, and providing for the
security for and means of payment under the Agreement of the
Certificates.
(the "Ordinance") a true,correct, and complete copy of which Ordinance as adopted at the
Meeting appears in the foregoing transcript of the minutes of the meeting.
I do further certify that the deliberations of the Corporate Authorities on the adoption of
the Ordinance were taken openly; that the vote on the adoption of the Ordinance was taken
openly; that the Meeting was held at a specified time and place convenient to the public; that
notice of the Meeting was duly given to all newspapers, radio or television stations, and other
news media requesting such notice; that an agenda for the Meeting was posted at the location
where the Meeting was held and at the principal office of the Corporate Authorities at least 48
hours in advance of the holding of the Meeting; that said agenda contained a separate specific
item concerning the proposed adoption of said ordinance; and that the Meeting was called and
held in strict compliance with the provisions of the Open Meetings Act of the State of Illinois, as
amended, and the Illinois Municipal Code, as amended, and that the Corporate Authorities have
complied with all of the provisions of said Act and said Code and with all of the procedural rules
of the Corporate Authorities in the adoption of the Ordinance.
IN WITNESS WHEREOF I hereunto affix my official signature and the seal of the City this
13th day of August, 2002.
- City Jerk
[SEAL]
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i