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0135 Sewer Revenue Bond 1974 10-1-72 BOND ORDINANCE NO. !~.~ "AN ORDINANCE CONCERNING THE SEWER SYSTEM OF THE CITY OF CHUBBUCK, IDAHO; DECLARING THE RESULTS OF THE VOTE ON THE SEWER REVENUE BOND QUESTION SUBMITTED AT A SPECIAL, MUNICIPAL, BOND ELECTION HELD ON TUESDAY, MARCH 8, 1972; AUTHORIZING THE ISSUANCE OF THE SEWER REVENUE BONDS OF THE CITY, IN THE AGGREGATE PRINCIPAL AMOUNT OF $1,000,000.00, PAYABLE SOLELY FROM THE RATES AND CHARGES FOR THE USE OF, AND THE SERVICE RENDERED BY, THE MUNICIPAL SEWER SYSTEM, FOR THE PURPOSE OF DEFRAY- ING WHOLLY OR IN PART THE COST OF CONSTRUCTING AND ACQUIRING THE CITY'S SEWERAGE SYSTEM; PROVIDING THE FORM, TERMS AND CONDITIONS OF SUCH BONDS, THE MANNER AND TERMS OF THEIR ISSUANCE, THE MANNER OF THE EXECU- TION THEREOF, THE METHOD OF PAYING THE BONDS, AND THE SECURITY THEREFOR; PROVIDING FOR THE COLLECTION AND DISPOSITION OF THE REVENUES DERIVED FROM SUCH SEWERAGE SYSTEM; PRESCRIBING OTHER DETAILS CONCERNING THE BONDS AND THE SYSTEM, INCLUDING, WITHOUT LIMITATION, COVENANTS AND AGREEMENTS IN CONNECTION THEREWITH; RATIFYING ACTION HERETOFORE TAKEN TOWARD SUCH SEW- ERAGE PROJECT, TOWARD THE ISSUANCE OF THE CITY'S SEWER REVENUE BONDS THEREFOR, AND TOWARD HOLDING THE ELECTION; REPEALING ALL ORDINANCES IN CONFLICT HERE- WITH; AND PROVIDING THE EFFECTIVE DATE OF THIS ORDIN- ANCE." WHEREAS, the City of Chubbuck, (herein "City") in the County of Bannock and State of Idaho, is a municipal corporation duly organized and eXisting as a City under the general laws of the State of Idaho; and WHEREAS, the City is presently without proper sewerage collection and treatment facilities; and WHEREAS, the City Council (herein"Council") has determined and does hereby determine that the interest of the community and the public interest and necessity require the construction and acquisition of a municipal sewerage sys- tem (herein the "Project"); and WHEREAS, for the purpose of defraying a part of the cost of acquiring the sewer Project, the Council further deems it necessary to issue its sewer revenue bonds in the aggregate principal amount of $1,000,000.00, or so much thereof as may be necessary, payable solely from the revenues of said sewerage system as so constructed pursuant to the Revenue Bond Act cited as Sections 50~1027 through 50-1042, Idaho Code, and all laws thereunto enabling; and WHEREAS, the City has never pledged the revenues derived from the operation of the municipal sewerage system (herein the "system") for the redemption of revenue bonds pay- able from such revenues, or otherwise, with the result that the net revenues to be derived from the operation of the system may be pledged lawfully and irrevocably to secure the repayment of said revenue bonds herein authorized pursuant to the Revenue Bond Act; and WHEREAS, pursuant to an election for consolidation held in each of the cities of Alameda, Pocatello and Chubbuck, on the 20th day of March, 1962, and pursuant to proceedings taken pursuant to an act then cited as Chapter 23, Title 50, Idaho Code, the cities of Alameda and Pocatello were consoli- dated in the year 1962 into a city known as the City of Pocatello and the City of Chubbuck was not so consolidated; and WHEREAS, such revenue bonds shall not be a debt of the City and it shall not be liable thereon, nor shall the bonds be payable out of any funds other than the revenue from the system pledged to the payment thereof; and WHEREAS, the revenue bonds cannot be issued without the assent of a two-thirds majority of the qualified ~lectors of the City voting at an election held for the purpose of author- izing or refusing to authorize the issuance of such sewer revenue bonds; and WHEREAS, at a special municipal bond election, duly held in the City of Chubbuck (herein the "City"), County of Bannock, State of Idaho (herein the "State"), on Tuesday, the 7th day of March, 1972 (herein the "Election") there was sub- mitted to the qualified electors of the City the following question (herein the "Question"): "Shall the City of Chubbuck, Idaho, issue and sell its sewer revenue bonds in the aggregate principal amount of $1,000,000.00, or so much thereof as may be necessary, for the purpose or providing funds with which to construct and ~acquire a sewerage system, said bonds to mature serially commencing 1 year and ending 40 years from the January 1 following delivery and to bear interest at a rate or rates not to exceed 6% per annum, as more fully provided in Ordin- ance No. 104, signed and approved the 12th day of February, 1972, the principal of and the interest on said bonds to b~ payable solely from the net revenues to be derived from the operation of the -2- municipal sewerage system? and WHEREAS, the Question upon the issuance of the City's sewer revenue bonds so voted at the Election duly carried by more than a majority vote of two-thirds (2/3rds) of the regis- tered qualified electors in the City voting at the election (i.e. by a majority of 81%); and WHEREAS, the result of the Election has heretofore been duly canvassed and declared on the 8th day of March, 1972; and WHEREAS, the Council has entered into a loan agreement dated the 12th day of May, 1972, together with several amend- ments, with the United States of America, Department of Housing and Urban Development (herein "HUD") pursuant to which the government has agreed to submit its bid for the Series October 1, 1972 sewer revenue bonds when offered for public sale at the rate of six per cent (6%) per annum; and WHEREAS, it is advisable and in the best interests of the City to make appropriate provisions herein for the future issuance of additional bonds or other securities payable from the system revenues, which additional bonds or other securities, if and when authorized in accordance with law, will, subject to designated conditions, occupy a position of parity and enjoy an equality of lien on the system revenues with the bonds herein authorized, and further to prescribe the restrictions, covenants and limitations which shall govern the issuance of any additional bonds or any other securities payable from the system revenues; and WHEREAS, the gross revenues of the system may lawfully be pledged to secure the redemption of the 1972 bonds. NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF CHUBBUCK, IDAHO: Section 1. Short Title. This ordinance shall be known as and may be cited by the short title "10-1-72 Bond Ordinance". Section 2. Definitions. The terms in this section defined for all purposes of this ordinance and of any ordinance amendatory hereof or supplemental hereto, or relating hereto, and of any other ordinance or document pertaining hereto, ex- cept where the context by clear implication herein otherwise requires, shall have the following meanings: A. "Acquisition Fund" means the special account desig- -3- nated as the "City of Chubbuck, Idaho, Sewer Revenue Bonds, Series October 1, 1972, Construction and Other Acquisition Account" . B. "Act" means the act designated by the short title "Revenue Bond Act," enacted as Chapter 47, Session Laws of Idaho 1957, codified by ~ 187 through 202, Chapter 429, Session Laws of Idaho 1967, and also cited as ~ 50-1027 through 50-1042, Idaho Code, as from time to time amended. C. ".Average Annual Debt Service" (or "Average Annual Principal and Interest Requirements") mean for each series of bonds or other obligations payable from net revenues derived from the operation of the system (and constituting a lien on such revenues on a parity with the lien of the 1972 bonds), the aggre- gate of all future principal and interest requirements to become due on such bonds, in all remaining years in which principal is to mature in accordance with the schedule of maturities thereof, divided by the number of such years to the final date of maturity of each series (excluding any years in which principal is not to become due). The average annual debt service for each separ- ate series is to be computed separately. D. "Bond Fund" or "1972 Bond Fund" means the special account designated as the "City of Chubbuck, Idaho, Sewer Revenu~ Bonds, Series October 1, 1972, Interest and Bond Retirement Fund" (also designated in Exhibit B of the Loan Agreement as "Bond and Interest Sinking Fund Account"). E. "Bond Requirements" means the principal of, any prior redemption premiums due in connection with, and the interest on the 1972 bonds and any additional bonds or other additional securities payable from the '!net revenues, as herein defined, and hereafter issued, if any, or such part of such securities as may be designated. F. The term "bonds" or "1972 bonds" means the securi- ties issued hereunder and designated as the "city of Chubbuck, Idaho, Sewer Revenue Bonds, Series October 1, 1972," including, without limitation any "single bond," as herein defined. G. "City" means the City of Chubbuck, a municipal corporation located in the County of Bannock, and State of Idaho, and being a political subdivision thereof, or any successor muni- cipal corporation; and where the context so indicates, such term means the geographical area comprising such municipal corporation. H. "Combined AVerage Annual Debt Service" means the aggregate or total of the "average annual debt service" for each separate series of outstanding parity lien bonds, i.e., all of the "average annual debt services" combined. -4- I. "Council" or "Governing Body" means the City COuncil of the City, or such Council's successor in functions, i f any. J. "Facilities" or "system" means the municipal~ sanitary sewer system of the ~City and the terms "Facilities" and "system" shall be construed to mean all properties, real, personal, mixed, or otherwise, now owned or hereafter acquired by the City through purchase, construction, or otherwise, and used in-connection with the municipal sewer system of the City, and in anywise pertaining thereto, whether situated within or without the limits of the City. K. "HUD" means the United States of America, Department of Housing and Urban Development, or any successor agency of the government. L. "Federal SecUrities" means bills, certificates of indebtedness, notes, bonds or similar securities whi~.h are direct obligations of, or the principal and interest of which securities are unconditionally guaranteed by, the United States of America. M. The term "gross income" or "gross revenues" means all the "income" and "revenues" derived directly or indirectly by the City from the operation and use of the system, and shall include all income and revenue derived by the City from the operation and use of the Facilities, or system, or any part thereof, whether resulting from betterments, extensions, other improvements, or repairs to the system, or any combination there- of, or otherwise, and shall include all revenues received by the City, or any municipal corporation succeeding to the rights of the City, from the system and from the sale of sewer service, facilities, or commodities, or any combination thereof, to the inhabitants of what is now the City (including all territorial annexations which may be made while the 1972 bonds or any part thereof are outstanding), or from the sale of sewer service, facilities or commodities, or any combination thereof, by means of the system owned and operated by the City as the same may at any time exist to serve customers outside the City's limits as well as customers within the City's limits. N. The term "holder," or any similar term, when used in conjunction with any coupons, any bonds, or any other desig- nated securities means the person in possession and the apparent owner of the designated item if such obligation is registered to bearer or is not registered, or the term means the registered owner of any bond or other security which is registerable for payment if at the time it is registered for payment otherwise than to bearer. O'. The term "income" or "revenues" means "gross in- come,"as hereinabove defined. p. "Income Fund" means the special account designated as the "City of Chubbuck Gross Income Sewer System Fund" (also designated in Exhibit B of the Loan Agreement as "Sewer System Revenue Fund Account") · Q. "Independent Accountant" means any certified public accountant, or any firm of certified public accountants, at from time to time determined by the City Council, duly licensed to practice and practicing as such under the laws of the State, appointed and compensated by the City, on the behalf and in the name of the City: (1) Who is, in fact, independent and not under the domination of the City, (2) Who does not have any substantial interest, direct or indirect, with the City, and (3) Who is not connected with the City as an officer or employee thereof, but who may be regularly retained to make annual or similar audits of any books or records of the City. R. "Insured Bank" means a commercial bank which is a member of the Federal Reserve System and the Federal Deposit Insurance Corporation. S. "Loan Agreement" means the contract dated May 12, 1972, including all amendments thereto, between the govern- ment and the City, acting by and through the HUD and the City Council, respectively. T. "Minimum Reserve" or "1972 Minimum Reserve" means the amount of not less than $67,320.00 to be deposited, accumu- lated and maintained in the 1972 Reserve Fund (also designated in Exhibit B to the Loan Agreement as "Debt Service Reserve"). U. The term "net income," "net revenues" or "net pledged revenues" means the "gross income," as herein defined, and remaining after the deduction of the "operation and mainten- ance expenses" of the system, as herein defined. V. The term "1972 Reserve Fund" 'or the "Reserve Fund" means the special account designated as the "City of Chubbuck, Idaho, Sewer Revenue Bonds, Series October 1, 1972, Reserve Fund". W. The term "operation and maintenance expenses" (or a phrase of similar import such as "Current Expenses" in Exhibit --6-- "B" of the Loan Agreement) means all reasonable and necessary cur- rent expenses of the City, paid or accrued, of operating, maintain- ing and repairing the system, and includes, without limitation, legal and overhead expense of the various departments of the City directly related and reasonably allocable to the administration of the system, insurance premiums, the reasonable charges of depositary banks and paying agents, contractual services, pro- fessional services required by this ordinance, salaries and administrative expenses, labor, and the cost of materials and supplies used for current operation, but does not include any allowance for depreciation, liabilities incurred by the City as the result of its negligence in the operation of the system, general administrative expenses of the City not attributable to the system, betterments, extensions, other improvements, or any charges for the accumulation of reserves for capital replacements, contained in the Repair and Replacement Reserve Account. X. "Parit. y Bonds," or "Parity Lien Bonds" means one or more additional series of bonds or other obligations payable from any net revenues derived from the operation of the sewer system and constituting a lien upon such net revenues on a parity with (but not prior or superior to) the lien on such net revenues of the 1972 bonds. Y. "Paying Agent" means The Idaho First National Bank (Pocatello Office), in Pocatello, Idaho, or The Morgan Guaranty and Trust Company, New York, New York. Z. "Pro~ect" means the ~ndertaking to construct and otherwise acquire the municipal sanitary sewerage system as delineated in the preambles hereof. AA. "Pro~eqt Engineer" means any registered or licensed professional engineer, or firm of such engineers, as from time to time determined by the City Council: (1) Who has a wide and favorable repute for skill and experience in the field of designing, preparing plans and specifications for, and supervising the construction of sewerage facilities; (2) Who is entitled to practice and is practicing under the laws of the State; and (3) Who is selected, retained and compensated by the City Council, in the name and on behalf of the City, but who may be in the regular employ or control of the City. At present Forsgren, Perkins and Associates, consulting engineers, of Rexburg, Idaho, are retained by the City as the Project Engineer. -7- BB. "Purchaser" means HUD, -and any investment banking firm or other person purchasing the 1972 bonds, or any block thereof, or any other securities of the City in connec- tion with which such term is used; or if the 1972 bonds, or any block thereof, or any such securities of any other series, as the case may be, are purchased by more than one person, "Purchaser" means the manager of the account purchasing the securities; and "Purchaser" includes any successor thereof. CC. "Re~istr~ar'' means the Treasurer in his capacity as agent of the City for the registration for payment, assignment, conversion and discharge from registration of bonds and who is required to keep books therefor, and includes any successor of the Treasurer. DD.. "Repair and Replacement Reserve Account" means the special account designated as the "City of Chubbuck Sewer System Repair and Replacement Reserve Account." BB. The term "Single bond" means the bond evidencing more than one installment of principal and the loan to the City by the HUD. EE. "Tax Code" means the U. S. Internal Revenue Code of 1954, as from time to time amended. Section 3. Ownership and Operation. The City shall continue to own and operate its sewerage facilities as a single operation. Section 4. ~ife of the Facilities. The City Council, on behalf of the City, has determined and does hereby declare: A. Estimated Life. The estimated life or estimated period of usefulness of the system acquired by the Project is not less than 40 years from the date of the bonds; and B. Bond Term. The bonds shall mature at times not exceeding such estimated life or estimated period of usefulness. Section 5. Construction Authorized. The City's Facilities shall be constructed and acquired, and they are hereby ordered to be constructed and acquired by the immediate acquisition of the Project, and the Project is hereby so auth- orized at a total cost not exceeding $1,000,000.00 (excluding any cost defrayed with moneys other than the principal amount of the 1972 bonds). Section 6. Description of Project. The Project, as delineated in the preambles hereof, is more specifically shown -8- and described in the preliminary report, maps, plans, and speci- fications prepared therefor by the Project Engineer; and reference for further details is hereby made to such preliminary report, maps, plans and specifications now on file and available for inspection in the office of the Clerk of the City. Section 7. .Necessity of Bonds. For the purpose of providing funds to defray the cost of the Project, it is hereby declared necessary that the City issue its "City of Chubbuck, Idaho, Sewer Revenue Bonds, Series October 1, 1972" in the ag- gregate principal amount of $1,000,000.00, the bonds being pay- able, as to all Bond Requirements, solely from the net revenues derived from rates and charges for the use of, and the service rendered by, the sewerage system, being the gross revenues after the deduction only for all operation and maintenance expenses, and that the City pledge irrevocably and exclusively (except as hereinafter otherwise provided) such net revenues to the payment of the Bond Requirements of the bonds, the proceeds thereof to be used solely for the Project, pursuant to the Act and all laws thereunto enabling. Section 8. Authorization of Bonds. In order to pro- vide funds to defray the cost of the Project, the 1972 bonds, constituting revenue bonds of the City, are hereby authorized to be issued in the aggregate principal amount of $1,000,000.00. Section 9. Bond Details. The 1972 bonds shall be dated as of the first day of October, 1972, consisting of 200 bonds in the denomination of $5,000.00 each, numbered consecu- tively from 1 through 200, bearing interest at a rate or rates not exceeding six per centum (6%) per annum, evidenced by in- terest coupons attached to the bonds, payable semiannually on the first days of April and October in each year, commencing on the first day of October, 1974, (interest normally payable and represented by coupons from October 1, 1972 to April 1, 1974 are not included and will not be printed; coupon number 1, on all bonds, will represent interest only for the period from April 1, 1974 to October 1, 1974), and such bonds being numbered and maturing serially in regular numerical order on the first day of October in each of the designated amounts and designated years, as follows: Bond Numbers (All IncluSive) 1 2 - 3 4 - 5 6 - 7 8 - 9 Principal Years Maturing Maturing $ 5,000 1975 10,000 1976 10,000 1977 10,000 1978 10,000 1979 -9- Bond Numbers (All Inclusive) Principal Years Maturing Maturing 10 - 11 $ 10,000 1980 12 - 13 10,000 1981 14 - 15 10,000 1982 16 - 17 10,000 1983 18 - 19 10,000 1984 20 - 22 15,000 1985 23 - 25 15,000 1986 26 - 28 15,000 1987 29 - 31 15,000 1988 32 - 34 15,000 1989 35 - 38 20,000 1990 39 - 42 20,000 1991 43 - 46 20,000 1992 47 - 50 20,000 1993 51 - 54 20,000 1994 55 - 59 25,000 1995 60 - 64 25,000 1996 65 - 69 25,000 1997 70 - 75 30,000 1998 76 - 81 30,000 1999 82 - 87 30,000 2000 88 - 94 35,000 2001 95 - 101 35,000 2002 102 - 109 40,000 2003 110 - 117 40,000 2004 118 - 125 40,000 2005 126 - 134 45,000 2006 135 - 143 45,000 2007 144 - 153 50,000 2008 154 - 164 55,000 2009 165 - 175 55,000 2010 176 - 187 60,000 2011 188 - 200 65,000 2012 The Bond Requirements of the bonds shall be payable in lawful money of the United States of America, without deduction for exchange or collection charges, at the Paying Agent. If any of the bonds shall not be paid upon its presentation at maturity, it shall continue to draw interest at the rate of 6% per annum until the principal thereof is paid in full. Any registered single bond issued as hereinafter provided shall mature in install- ments in the designated amounts on the designated dates set forth above, except for any such amounts purchased by other than the HUD and not evidenced by the single bond. Section 10. Prior Redemption. The bonds numbered 1 through 15, maturing on and before the first day of October, 1982, shall not be subject to redemption prior to their respec- tive maturities (except as herein otherwise provided). The bonds numbered 16 through 200, maturing on and after the first day of October, 1983, shall be subject to redemption prior to their -10- respective maturities, in whole, or in part in inverse numerical order, at the option of the City, on the first day of April, 1983, or on any interest payment date thereafter prior to matur- ity, at a price equal to the principal amount of each bond so redeemed, accrued interest thereon to the redemption date, and a premium computed in accordance with the following schedule: 3% if redeemed April 1 1983 through October 1, 1987, inclusive; 2-1/2% if redeemed April 1, 1988 through October 1, 1992, inclusive; 2% if redeemed April 1, 1993 through October 1, 1997; 1-1/2% if redeemed April 1, 1998 through October 1, 2002; 1% if redeemed April 1, 2003 through October 1, 2005, inclusive; and 0% if redeemed April 1, 2006, or thereafter; notwithstanding the foregoing, the City reserves the right, at its option, to redeem the 1972 bonds prior to their respective maturities, in whole, or in part in inverse numerical order, at any time after the Project is completed, if there then are bond proceeds unused, unencumbered and available for such prior re- demption, including, without limitation, any grants-in-aid from the government or the State resulting in surplus bond proceeds whether or not they are fully expended prior to the receipt of such grants by the City, as to all or a part of the 1972 bonds but only to the extent of such surplus proceeds; and at any time as to all or a part of the 1972 bonds held by the federal government, which may be called without notice by publication and without any prior redemption premium. In the case of any regis- tered single bond then owned or held by the federal government, installments of principal in the amount of $5,000.00 or an even multiple thereof, shall be subject to prepayment at the option of the City, in whole, or in part in inverse chronological order, at any time, as if such installments of principal are respectively evidenced by the above-designated bonds in the denomination of $5,000.00 each. Section 11. Prior Redemption Notice. Notice of any prior redemption shall be given by the Treasurer of the City, in its name: A. Published Notice. By publication of such notice at least once, not less than 30 days nor more than 45 days prior to the redemption date, in a news- paper of general circulation in the City, as the Council -11- may otherwise determine, and B. Mailed Notice. By mailing a copy of such notice by first-class mail, postage prepaid, at least 30 days but not more than 45 days prior to the redemption date, to each of the following: (1) To the Purchaser (other than the government) of the bonds or any block thereof; (2) If any of the bonds to be redeemed are then registered for payment as to principal to each person whose name or address appears on the registration book of the City as a registered owner of any bonds; and (3) As to any bond then owned by the United States of A~erica or any department, agency, in- strumentality or corporation thereof (herein the "government"), acting by and through the Department of Housing and Urban Development, or otherwise, to the HUD, Regional Office, Seattle, Washington, or to such other address as the government shall designate. Such notice shall specify the number or numbers of the bonds to be so redeemed (if less than all are to be redeemed) and the date fixed for redemption; and such notice shall further state that on such redemption date there shall become and be due and pay- able upon each bond so to be redeemed at the Paying Agent, the principal amount thereof and accrued interest thereon to the redemption date, and the stipulated premium, if any, and that from and after such date interest shall cease to accrue. Notice having been given in the manner hereinbefore provided, the bond or bonds so called for redemption shall become due and payable on the redemption date so designated; and upon presentation thereof at such place, together with all appur- tenant coupons maturing subsequent to the redemption date, if any, the City will pay the bond or bonds so called for redemp- tion. If the government owns all of the bonds and any coupons then outstanding, any published notice of redemption is unneces- sary. Section 12. Certification of Notice Given. A certi- ficate by the Treasurer that notice of call and redemption has been given to each of the following: A. Purchaser. The Purchaser other than the government, if any, B. Registered Owners. Each holder of a regis- tered bond, if any, and C. Government. The government, if any bond is owned or insured thereby, -12- shall be conclusive as against all parties; and no holder whose registered bond is called for redemption or any other holder of any bond may object thereto or may object to the cessation of interest on the redemption date on the ground that he failed actually to receive such notice of call and redemption. Section 13. Negotiability. The 1972 bonds (other than any single bond) shall be fully negotiable in form and payable to bearer or if registered, to the registered holder or holders thereof, and, subject to the provisions expressly made or necessarily implied herein, shall have all the quali- ties of negotiable paper; and the holder or holders thereof shall possess all rights enjoyed by the holders of negotiable instruments under the provisions of the Uniform Commercial Code-- Investment Securities. Title to any such bond shall pass by delivery in the same manner as a negotiable instrument payable to bearer, unless such bond is registered in the manner herein provided. Title to any coupon shall pass by delivery in the same manner as any negotiable instrument payable to bearer. Section 14. Registration for Payment. Any bond (other than any single bond) may be registered for payment only as to principal. The Treasurer of the City is appointed registrar (herein the "Registrar") and shall maintain books for the regis- tration, transfer and conversion of bonds. The Registrar shall register or permit to be transferred or discharged from regis- tration any bond presented for such purpose, subject to such reasonable regulations as the Registrar may prescribe and after the City is reimbursed for any tax or governmental charge payable in connection therewith. Section 15. Registration Procedure. Any bond (other than any single bond) may be registered at the holder's option only as to principal upon presentation to the Registrar, accom- panied by all unmatured coupons. The Registrar shall note such registration on the registration books and on the registration panel on the back of the bond. Any registered bond may be trans- ferred only upon a duly executed assignment by the registered owner or his legal representative in form satisfactory to the Registrar. Such transfer shall be noted on the registration books and on the bond. The principal of any registered bond shall be payable only to, or upon the order of, the registered owner or his legal representative. Any registered bond may be reconverted into a bond payable to bearer upon presentation to the Registrar accompanied by an authorization in form satisfac- tory to the Registrar. The Registrar shall note on the bond that it is payable to bearer. Upon reconversion of bonds, the -13- Registrar shall require the payment of all expenses incurred by the City in connection with the registration. Section 16. Ownership of Bonds. The City and the Registrar may treat the bearer of any unregistered bond or bond registered to bearer, or coupons appurtenant thereto, as the absolute owner thereof, whether or not such bond or coupon shall be overdue. The City and the Registrar may treat the person in whose name any bond is registered as the absolute owner thereof, whether or not such bond shall be overdue. All payments made as provided in this ordinance shall be valid and effectual to dis- charge the liability upon any bonds to the extent of the amount paid. Section 17. Filing Signatures. Prior to the execu- tion of any bond (other than any single bond), pursuant to the Uniform Facsimile Signature of Public Officials Act, adopted as Chapter 11, Session Laws of Idaho 1959, also cited as Sections 59-1018 through 59-1023, Idaho Code, the Mayor, the Treasurer, and the Clerk shall each forthwith file with the Secretary of State his manual signature certified by him under oath. Section 18. Execution of Bonds. The bonds (other than any single bond) shall be executed and signed in the name of and on behalf of the City with the engraved, imprinted, stamped or otherwise reproduced facsimile of the signature of the Mayor of the City, shall be manually subscribed and counter- signed by its Treasurer, and shall be signed, executed and at- tested with such a facsimile signature of its Clerk under a printed, engraved, stamped, or otherwise placed thereon fac- simile of the official seal of the City. Any single bond shall be executed in a like manner but with manual signatures of such officials and with the official seal of the City manually affixed thereon. Section 19. Form and Execution of Coupons. There shall be attached to each bond (other than any single bond) an appro- priate number of interest coupons payable to bearer consecutively numbered from one upwards, commencing with that coupon first maturing (i.e. the coupon for the October 1, 1974 interest payment). All such interest coupons shall state on the face thereof the amount thereof, the name of the City, the identifying series, and the issue and number of the bond to which it is attached; and each such coupon shall provide for the payment of the interest accruing thereon semiannually and at the same place of payment as fixed in such bond, and shall be signed by the Treasurer by his fac- simile signature which officer by the execution of the bonds and a signature certificate pertaining thereto shall adopt as and for his signature the facsimile thereof appearing on the coupons. -14- Section 20. Predecessors' Signatures. The bonds (including any single bond) and coupons bearing the signature of the officers in office at the time of the signing thereof shall be the valid and binding obligations of the City, notwith- standing that before the delivery thereof and payment therefor, any or all of the persons whose signatures appear thereon shall have ceased to fill their respective offices. Section 21. Incontestable Recital and Tax Exemption. Pursuant to Section 50-1038 of the Act, the 1972 bonds shall recite that they are issued pursuant to the Act, which recital shall be conclusive evidence of their validity and of the regu- larity of their issuance. Pursuant to Section 50-1042 of the Act, the 1972 bonds and the income therefrom shall be exempt from taxation, except transfer and estate taxes. Section 22. Registration of Bonds. Before any bonds are delivered, they shall be registered by the Clerk and the Treasurer in permanent public record books kept in their offices for that purpose, in full conpliance with the law. The register shall show the number of each bond, its date and amount, rate of interest, date and amount of sale, when and where payable, and the names and addresses of the purchasers, and the number and denomination of the coupons attached to the bond. Section 23. Bond Delivery. After the bonds have been duly-executed and sold and after such registration by the Clerk and the Treasurer, the Treasurer shall cause the bonds to be delivered to each Purchaser thereof, upon payment being made therefor on the terms of the sale of the bonds. Section 24. Bond coupon Form. Subject to the pro- visions of this ordinance and any instrument supplemental there- to, each bond and the coupons to be attached thereto shall be, respectively, in substantially the following form, with such omissions, insertions, endorsements and variations as to any recitals of fact or other provisions as may be required by the circumstances, or be required or permitted by this ordinance: (Form of Bond) STATE OF IDAHO UNITED STATES OF AMERICA COUNTY OF BANNOCK CITY OF CHUBBUCK SEWER REVENUE BOND SERIES OCTOBER 1, 1972 NO. $5,000.00 The City of Chubbuck (herein the "City"), in the County of Bannock and State of Idaho (herein the "State"), for value received, hereby promises to pay the bearer hereof, sole- ly from the special funds provided therefor, as hereinafter set forth, on the first day of October, 19 , the principal sum of FIVE THOUSAND DOLLARS and to pay from such special funds interest hereon from April 1, 1974, until maturity of the rate of % per annum, according to the interest coupons hereto attached, on the first day of October, 1974, and semiannually thereafter on the first day of April ~nd October in each year, upon presentation and surrender of this bond and the annexed interest coupons as they severally become due. If, upon presentation at maturity, payment of this bond is not made as herein provided, interest hereon shall con- tinue at the rate of 6% per annum until the principal hereof is paid in full. The principal, any prior redemption premium due, and the interest (herein the "Bond Requirements") are payable in lawful money of the United States of America, without deduction for exchange or collection charges, at The Idaho First National Bank (Pocatello Office), in Pocatello, Idaho, or, at the option of the holder, at the Morgan Guaranty and Trust Company, New York, New York. Bonds of the series of which this bond is one (herein the "1972 bonds" and merely the "bonds"), maturing on and after the first day of October, 1983, are s~bjeCt to redemption prior to their respective maturities, in whole, or in part in inverse numerical order, at the option of the City, on the first day of April, 1983, or on any interest payment date thereafter, at a price equal to the principal amount of each bond so redeemed, accrued interest thereon to the redemption date, and a premium computed in accordance with the following schedule: 3% if redeemed April 1, 1983 through October 1, 1987, inclusive; 2-1/2% if redeemed April 1, 1988 through October 1, 1992, inclusive: 2% if redeemed April 1, 1993 through October 1, 1997; -16- 1-1/2% if redeemed April 1, 1998 through October 1, 2002; 1% if redeemed April 1, 2003 through October 1, 2005, inclusive; and 0% if redeemed April 1, 2006, or thereafter.) The City also reserves the right, at its option, to redeem the bonds of the series of which this bond is one prior to their respective maturities, in whole, or in part in inverse numerical order at any time after the Project is completed, if there then are bond proceeds unused, unencumbered and available for such prior redemption, including, without limitation, any grants-in-aid from the United States of America, or any depart- ment, agency, instrumentality or corporation thereof (herein "government") or the State resulting in surplus bond proceeds whether or not they are fully expended prior to the receipt of such grants by the City, as to all or a part of the 1972 bonds but only to the extent of such surplus proceeds; or at any time as to all or a part of the 1972 bonds held by the govern- ment. Redemption shall be made upon not less than 30 days' nor more than 45 days' prior notice by publication in a newspaper of general circulation in the City and by mail, in the manner and upon the conditions provided in the ordinance authorizing the issuance of the bonds, designated in Section 1 thereof by the short title "10-1-72 Bond Ordinance" (herein the "ordinance"). A copy of the ordinance is on file in the office of the Clerk of the City for public inspection. Payment of the Bond Requirements of the 1972 bonds shall be made solely from, and as security for such payment there are pledged, pursuant to the ordinance, two special accounts iden- tified as the "City of Chubbuck, Idaho, Sewer Revenue Bonds, Ser- ies October 1, 1972, Interest and Bond Retirement Fund," and as the "City of Chubbuck, Idaho, Sewer Revenue Bonds, Series Octo- ber 1, 1972, Reserve Fund," into which the City covenants to pay respectively from the revenues derived from the operation of its municipal sewer system (herein the "system"), after provision only for all necessary and reasonable expenses of the operation and maintenance of the system, sums sufficient to pay when due the Bond Requirements of the bonds and to create and maintain a reasonable and specified reserve for such purpose. For a des- cription of such funds and the nature and extent of the security afforded thereby for the payment of the Bond Requirements of the bonds, reference is made to the ordinance. -17- The City covenants and agrees with the holder of this bond and with each and every person who may become the holder thereof that it will keep and perform all the covenants of the ordinance, including, without limitation, its covenant against the sale or mortgage of the system or any part thereof unless provision shall have been made for the payment of the Bond Re- quirements of the bonds, its covenant that it will prescribe and collect rates, fees and charges, including the levy or assess- ment or such rates, fees and charges against governmental units or departments or agencies, including the State and its subdivi- sions, for the services and facilities furnished by the system, and its covenant that it will provide methods of collections and penalties, including denial of service for non-payment of such rates, fees and charges, and to produce revenues or earnings annually to pay the operation and maintenance expenses and to produce net revenues in each year equal to at least 140% of the combined average annual principal and interest requirements on all outstanding 1972 bonds and any other bonds or obligations payable from the revenues of the system, the lien of which is on a parity with the lien on the revenues of the system of the 1972 bonds and including its covenant to maintain necessary reserves therefor, in accordance with~the provisions of the ordinance The 1972 bonds are equally and ratably secured by, without priority by reason of number, date of bonds, date of sale, date of execution, or date of delivery, and the bonds constitute, an irrevocable first lien (but not necessarily an exclusively first lien) on the net revenues derived from the sewerage system. Bonds in addition to the 1972 bonds may be issued payable from such net revenues and having a lien thereon subordinate and junior to the lien, or subject to designated conditions having a lien thereon on a parity with the lien of the 1972 bonds, in accordance with the provisions of the ordinance. This bond is one of a duly authorized issue of 200 bonds known as the "City of Chubbuck, Idaho, Sewer Revenue Bonds, Series October 1, 1972," of like tenor and date, except as to number, prior redemption option and price, maturity, and possibly interest rate, in an aggregate principal amount of not exceeding $1,000,000.00, for the purpose of providing funds with which to construct and acquire a municipal sanitary sewerage system (herein the "Project"), under the authority of and in full conformity with the Constitution and laws of the State of Idaho and pursuant to such ordinance of the City adopted, published and made a law thereof prior to the issuance of this bond. The issuance of this bond was authorized by the affirmative vote of a two-thirds major- -18- ity of the qualified electors of the City voting at an election therein on the 7th day of March, 1972. To the extent and in the respects permitted by the ordinance, the provisions of the ordinance or any ordinance amen- datory thereof or supplemental thereto may be modified or amended by action of the City taken in the manner and subject to the conditions and exceptions prescribed in the ordinance. The pledge of revenues and other securities of the City under the ordinance may be discharged at or prior to the respective ma- turities or the prior redemption of the 1972 bonds upon the making of provision for the payment thereof on the terms and conditions set forth in the ordinance. This bond may be registered for payment only as to principal in the name and address of the holder subject to the terms and 'conditions set forth hereon and in the ordinance, and unless so registered, this bond shall be transferable by deli- very. If this bond is registered, it may be reconverted into a coupon bond payable to bearer as provided in the ordinance. Subject to the provisions for registration for payment endorsed hereon and stated in the ordinance, this bond is subject to the conditions, and every holder hereof by accept- ing the same agrees with the obligor and every subsequent holder hereof, that (a) the delivery of this bond to any transferee shall vest title in this bond and in the interest coupons attached hereto in such transferee to the same extent for all purposes as would the delivery under like circumstances of any negotiable instrument payable to bearer; (b) the obligor and any agent of the obligor may treat the bearer of this bond as the absolute owner hereof for all purposes, and shall not be affected by any notice to the contrary; (c) the Bond Requirements of this bond shall be paid and this bond and each of the coupons pertaining thereto are transferable, free from and without regard to any equities between the obligor and the original or any intermediate holder hereof or any set-offs or crossclaims; and (d) the surren- der to the obligor or any agent of the obligor of this bond and of each of the coupons, if any, shall be a good discharge to the obligor for the same. It is hereby recited that this bond and the series of which it is ~one are issued pursuant to the Revenue Bond Act, now cited as sections 50m1027 through 50m1042, Idaho Code, as amended from time to time, and all other laws thereunto enabling, and this recital shall be conclusive evidence of the validity of the bonds and the regularity of their issuance. -19- This bond and the series of which it is one, including interest thereon, do not constitute a debt of the City within the meaning of any constitutional or statutory limitations or restrictions, and the City shall not be liable thereon, nor is this bond payable out of the City's general fund or any other fund other than the revenues pledged for the payment thereof, but is payable solely from the revenues so pledged. This bond and the issue of which it is one, together with the interest thereon, are exempt from taxation under the laws of the State of Idaho, except transfer and estate taxes. It is further certified, recited and warranted that all requirements of law have been fully complied with by the proper officers of the City in th, e issue of this bond. IN TESTIMONY WHEREOF, the City of Chubbuck has caused this bond to be executed and signed in the corporate name of the City with the facsimile signature of its Mayor, to be man- ually subscribed and countersigned by the City Treasurer, and to be signed, executed and attested with the facsimile signature of the City Clerk under a facsimile of the official seal of the City, and has caused the attached coupons to be signed with the facsimile signature of the City Treasurer, who, by the execution of this bond, does adopt as and for his own proper signature his facsimile signature on each of such coupons, all as of the first day of October, 1972. CITY OF CHUBBUCK By: (For Facsimile Signature) Mayor Countersigned: (Forl Manual Signature) City Treasurer (FACSIMILE SEAL) Attest: (For Facsimile Signature) City Clerk (End of Form of Bond) -20- (Form of Registration Panel on Back of Bonds) PROVISIONS FOR REGISTRATION This bond may be registered for payment in the name of the holder, only as to principal, on the books of the City in the office of its Treasurer as Registrar. Upon presentation hereof to the Registrar, at his office in Chubbuck, Idaho, together with the unmatured coupons, he shall note the existence of the coupons and shall make the principal payable only to or upon the order of, the registered owner or his legal repre- sentative upon making a notation of such registration in the registration blank below. After registration no transfer shall be valid unless made on such books by the registered owner or his legal representative duly authorized in writing and similarly noted in the registration blank below. At the request of the registered owner or his legal representative duly authorized in writing, this bond, whenever registered, may be converted into a coupon bond payable to bearer at the expense of the registered owner upon presentation hereof to the Registrar with a written instrument of transfer to bearer satisfactory to the Registrar duly executed by such registered owner or his legal representative. Such coupon bond may again be registered as to principal as hereinabove provided. Upon any such conversion of this bond, coupons for every unpaid installment of interest on this bond due at or prior to its maturity shall be noted as being attached hereto by the Registrar, and the Registrar shall note in the registration blank below that this bond is transferred and registered to bearer. Any registration, transfer or discharge from registra- tion is subject to such reasonable rules and regulations as the City or the Registrar may prescribe. Except as otherwise pro- vided herein and in the ordinance authorizing the issuance of the bonds of the series of which this is one, no charge shall be made to the holder hereof for the privilege of registration, transfer or discharge from registration. Every privilege of registration, transfer, discharge from registration, or conver- sion hereinabove provided shall be exercised only in accordance with and subject to the terms and provisions of such ordinance. During the 15 days next preceding any date for payment of interest on this bond, neither the City nor the Registrar shall be required to make any registration, transfer, discharge or conversion. Each such registration, transfer or discharge from registration is subject to the payment of a charge sufficient to reimburse the City and the Registrar for any tax or other governmental charge not fixed by the City and paid or to be paid by either or both of them in connection therewith. Date of Name of Address Signature Registration Owner of Owner of Regis trar (End of Form of Registration Panel on Back of Bond) -22- (Form of Coupon) Coupon No. *$ April, On the first day of October 19 , the City of Chubbuck, in the County of Bannock and State of Idaho, upon the surrender of this coupon, unless prior to the maturity of this coupon, the bond to which this coupon is attached, if callable, has been called for prior redemption, will pay to bearer the amount herein stated in lawful money of the United States of America, without deduction for exchange or collec- tion charges, at The Idaho First National Bank (Pocatello Office), in Pocatello, Idaho, as Paying Ag,ent, or at the option of the holder at The Morgan Guaranty and Trust Company, New York, New York, as Co-Paying Agent, solely from and secured by a pledge of two special accounts created from the net revenues derived from the operation of the municipal sewer system of the City, and being interest then due on its City of Chubbuck, Idaho, Sewer Revenue Bond, Series October 1, 1972, and bearing Bond No. (For Facsimile Signature) City Treasurer (Coupon No. 1 attached to each bond and becoming due on October 1, 1974, evidences six months' interest. Each other coupon evidences six months' interest.) (End of Form of Coupon) -23- (Form of Registration Certificate) We, the undersigned, the duly appointed, qualified and acting City Clerk and City Treasurer, respectively, of the City of Chubbuck, Bannock County, Idaho, do hereby certify that the within bond has been duly registered in permanent pub- lic record books kept in our offices for that purpose in full compliance with law, showing the number of the bond, its date and amount, rate of interest, date and amount of sale, when and where payable, and the names and addresses of the purchasers, and the n~mber and denomination of the coupons attached to the bond. IN WITNESS WHEREOF, we have hereunto set our hands and the seal of the City of Chubbuck, Idaho, as of the first day of October, 1972. (For Manual Signature) City Clerk (For Manual Signature) City Treasurer (End of Form of Certificate) -24- Section 25. Use of Single Bond. Notwithstanding the foregoing provisions hereof, if HUD is the purchaser of the entire issue of bonds, money borrowed from the HUD shall be evidenced by a non-negotiable single bond in the principal amount and denom- ination of $1,000,000 (or such lesser amount as is actually loaned to the City by the HUD under the Loan Agreement) numbered R-l, which single bond shall be executed in the name of and on the behalf or the City and manually signed by the Mayor, manually countersigned by the Treasurer, ~nd manually signed, executed and attested by the Clerk, with the seal of the City manually affixed thereto. The single bond shall bear no interest coupons and shall be payable in lawful money of the United States of America, without deduction for exchange or collection charges, during the time the HUD is the registered owner of the single bond, or at such address as the HUD may designate, and so pay- able during the time any registered assignee of the HUD is the registered owner of the single bond, at the address shown on the registration book of the City. The single bond shall mature in installments of principal, substantially as provided in Sec- tions 9 through 11 hereof. The single bond shall be registered by any holder, and may be assigned in the manner and with the effect set forth in the provisions for registration contained in the form of single bond hereinafter set forth, and as herein further provided. Upon request of the holder of the single bond, the City shall issue, at the holder's expense and within 90 days from the date of such request, negotiable, bearer, coupon bonds or serial registered bonds with coupons, in the denomina- tion of $5,000.00 each, to the extent practicable, as requested by the holder, in an aggregate principal amount equal to the amount of the unpaid principal of the outstanding single bond of like tenor and date, in the form prescribed by, and subject to, the provisions of this ordinance, and the City Council hereby so covenants. Section 26. Form of Single Bond. The single bond, the form of assignment therefor, and the payment records to be attached thereto, shall be in substantially the following form: -25- (Form of Single Bond) UNITED STATES OF AMERICA STATE OF IDAHO COUNTY OF BANNOCK CITY OF CHUBBUCK SEWER SYSTEM SINGLE REGISTERED SEWER REVENUE BOND SERIES OCTOBER 1, 1972 No. R-1 *$1,000,000.00 The City of Chubbuck (herein the "City"), in the County of Bannock and State of Idaho (herein the "State"), for value received prOmises to pay to the registered owner hereof, solely from the special funds provided therefor, the principal sum above stated representing the aggregate advances made to the City by the United States Department of Housing and Urban Development (herein the "HUD"), as set forth in the schedule on the reverse side hereof, on the first day of October in each of the designated years and designated installments of principal, as follows: Years Maturing (All IncluSive) Principal Years Maturing Principal Amounts (Ail InclusiVe) Amounts '1975 $ 5,000.00 2008 1976 - 1984 10,000.00 2009 - 2010 1985 - 1989 15,000.00 2011 1990 - 1994 20,000.00 2012 1995 - 1997 25,000.00 1998 - 2000 2001 - 2002 2003 - 2005 2006 - 2007 $ 50,000.00 55,000.00 60,000.00 65,000.00 30,000.00 35,000.00 40,000.00 45,000.00 and to pay to the registered owner hereof from such special funds interest on the unpaid balance of such advances of principal from April 1, 1974 to the respective above-designated principal install- ment payment dates at the rate of 6% per annum, on the first day of October, 1974, and semiannually thereafter on the first days of April and October in each year. If payment of any installment of principal is not made as herein provided, interest thereon shall continue at the rate of 6% per annum until such installment of principal is paid in full. The principal and interest (herein the "Bond Requirements") are payable in lawful money of the United States of America, without deduction for exchange or collec- * (Make appropriate modifications if the aggregate advances by the HUD total .less than $1,000,000.00) -26- tion charges,, during the period the HUD is the registered owner of this single bond at such place as HUD may from time to time designate, and are payable during any period the HUD is not the registered owner hereof at the address shown on the registration book of the City. The final installment of principal and interest due on this single bond is payable only upon the bond's surrender to the City. Installments of principal of this bond coming due on and after the first day of October, 1983, are subject to redemp- tion in installments of principal in the amount of $5,000.00 or an even multiple thereof, prior to their respective payment dates in whole, or in part in inverse chronological order of pay- ment at the option of the City, on the first day of April, 1983, or on any interest payment date thereafter, at a price equal to the principal amount of each installment so paid, accrued interest thereon to the redemption date, and a premium computed in accordance with the following schedule: 3% if redeemed April 1, 1983 through October 1, 1987, inclusive; 2-1/2% if redeemed April 1, 1988 through October 1, 1992, inclusive; 2% if redeemed April 1, 1993 through October 1, 1997; 1-1/2% if redeemed April 1, 1998 through October 1, 2002; 1% if redeemed April 1, 2003 th.rough October 1, 2005, inclusive; and 0% if redeemed April 1, 2006, or thereafter. ) The City also reserves the right, at its option, to redeem the installments of this bond prior to their respective payment dates, in whole, or in .part in inverse chronological order at any time after the Project is completed, if there then are bond proceeds unused, unencumbered and available for such prior redemption, including, without limitation, any grants-in- aid from the United States of America, or any department, agency, instrumentality or corporation thereof~(herein "government") or the State resulting in surplus bond proceeds whether or not they are fully eXpended prior to the receipt of such grants by the City, as to all or a part of the 1972 bonds but only to the extent of such surplus proceeds; or at any time as to all or a Dart of such installments of principal of this single bond and without the payment of any "prepayment of installment" or "prior redemp- tion'' premium, while it is held by the government. ~27- Each such prepayment of an installment of principal shall be made upon not less than 30 days' nor more than 45 days' prior mailed notice in the manner and upon the conditions provided in the ordinance authorizing the issuance of this single bond and any other bonds of the same series in the denomination of $5,000.00 each (herein collectively the "1972 bonds" and merely the "bonds"), designated in Section 1 thereof by the short title "10-1-72 Bond Ordinance" (herein the "ordinance"). A copy of the ordinance is on file in the office of the Clerk of the City for public inspection. Payment of the Bond Requirements of this single 1972 bond shall be made solely from, and as security for such payment there are pledged, pursuant to the ordinance, two special accounts identified as the "City of Chubbuck, Idaho, Sewer Revenue Bonds, Series October 1, 1972, Interest and Bond Retirement Fund," and as the "City of Chubbuck, Idaho, Sewer Revenue Bonds, Series October '1, 1972, Reserve Fund," into which the City covenants to pay respectively from the revenues derived from the operation of its municipal sewer system (herein the "system"), after provision only for all necessary and reasonable expenses of the operation and maintenance of the system, sums sufficient to pay when due the Bond Requirements of this single bond and to crea~e and main- tain a reasonable and specified reserve for such purpose. For a description of such funds and the nature and extent of the security afforded thereby for the payment of the Bond Requirements of the bonds, reference is made to the ordinance. The City covenants and agrees with the holder of this bond and with each and every person who may become the holder thereof that it will keep and perform all the covenants of the ordinance, including, without limitation, its covenant against the sale or mortgage of the system or any part thereof unless provision shall have been made for the payment of the Bond Re- quirements of the bonds, its covenant that it will prescribe and collect rates, fees and charges, including the levy or assess- ment or such rates, fees and charges against governmental units or departments or agencies, including the State and its subdivi- sions, for the services and facilities furnished by the system, and its covenant that it will provide methods of collections and penalties, including denial of service for non-payment of such rates, fees and charges, to produce revenues or earnings annually to pay the operation and maintenance expenses and to produce net revenues in each year equal to at least 140% of the combined average annual principal and interest requirements on all out- standing 1972 bonds and any other bonds or obligations payable from the revenues of the system, the lien of which is on a par- -28- ity with the lien on the revenues of the system of the 1972 bonds and including its covenant to maintain necessary reserves there- for ,in accOrdance with the provisions of the ordinance. The 1972 bonds are equally and ratably secured by, without priority by reason of number, date of bonds, date of sale, date of execution, or date of delivery, and the bonds constitute, an irrevocable first lien (but not necessarily an exclusively first lien) on the net revenues derived from the sewerage system. Bonds in addition to the 1972 bonds may be issued payable from such net revenues and having a lien thereon subordinate and junior to the lien, or subject to designated conditions having a lien thereon on a parity with the lien of the 1972 bonds, in accordance with the provisions of the ordinance. This bond is one of a duly authorized issue of 200 bonds known as the "City of Chubbuck, Idaho, Sewer Revenue Bonds, Series October 1, 1972," of like tenor and date, except as to number, prior redemption option and price, maturity, and possibly interest rate, in an aggregate principal amount of not exceeding, $1,000,000.00, for the purpose of providing funds with which to constr~ct and acquire a municipal sanitary sewerage system (herein the "Project"), under the authority of and in full conformity with the Constitution and laws of the State of Idaho and pursuant to such ordinance of the City adopted, published and made a law thereof prior to the issuance of this bond. The issuance of this bond was authorized by the affirmative vote of a two-thirds major- ity of the qualified electors of the City voting at an election therein on the 7th day of March, 1972. To the extent and in the respects permitted by the ordinance, the provisions of the ordinance or any ordinance amen- datory thereof or supplemental thereto may be modified or amended by action of the City taken in the manner and subject to the conditions and exceptions prescribed in the ordinance. The pledge of revenues and other securities of the City under the ordinance may be discharged at or prior to the respective ma- turities or the prior redemption of the 1972 bonds upon the making of provision for the payment thereof on the terms and conditions set forth in the ordinance. This bond is transferable only upon books kept by the Treasurer of the City as bond registrar by the registered owner hereof in person or by his duly authorized attorney, and simi- larly noted hereon, or it may be surrendered in exchange for new serial bonds of the same aggregate principal amount in coupon form or in registered form, in the denomination of $5,000.00 each, to the extent practicable and consistent with the maturity schedule provided in, and s~bject to, the conditions set forth in the ordinance. -29 - It is hereby recited that this single registered bond and the series of which it is one are issued pursuant to the Revenue Bond Act, now cited as Sections 50-1027 through 50- 1042, Idaho Code, as amended from time to time, and all other laws thereunto enabling, and this recital shall be conclusive evidence of the validity of the bonds and the regularity of their issuance. This bond and the series of which it is one, including interest thereon, do not constitute a debt of the City within the meaning of any constitutional or statutory limitations or restrictions, and the City shall not be liable thereon, nor is this bond payable out of the City's general fund or any other fund other than the revenues pledged for the payment thereof, but is payable solely from the revenues so pledged. This bond and the issue of which it is one, together with the interest thereon, are exempt from taxation under the laws of the State of Idaho, except transfer and estate taxes. It is f. urther certified, recited and wart.anted that all requirements of law have been fully complied with by the proper officers of the City in the issue of this bond. IN TESTIMONY WHEREOF, the City of Chubbuck has caused this bond to be executed and signed in the corporate name of the City with the manual signature of its Mayor, to be manually subscribed and countersigned by the City Treasurer, and to be manually signed, executed and attested by the City Clerk, with the official seal of the City manually affixed hereto, all as of the first day of October, 1972. CITY OF CHUBBUCK By: (For Manual Signature) Mayor Countersigned: (For Manual Signature) City Treasurer (SEAL) Attest: (For Manual Signature) City Clerk (End of Form of Single Bond) -30- (Form of Installment Loan Panel on Back of Single Bond) INSTALLMENT LOAN ADVANCES BY GOVERNMENT The HUD on behalf of the United States of America loaned to the City the respective amounts of principal on the respective dates hereinafter designated, the sum of which amounts constitutes the aggregate principal amount of the within single bond, as follows: Date o~ ..... Loan if after Amount of Signature of April 1, 1974 ... Loan City's Treasurer April 1, 1974 (End of Form of Installment Loan Panel) (Form of Registration Panel on Back of Single Bond) MANDATORY REGISTRATION FOR PAYMENT AS TO PRINCIPAL AND INTEREST The within single bond is registered in the office of the Treasurer of the City of Chubbuck, Idaho, as Registrar, in the name of the last owner listed below; and the principal amount of the bond and interest thereon shall be payable only to such owner, all in accordance with the ordinance authorizing the bond's issue. Date o'f 'Name of Address of Signature of Re gi s tr at.i0n Owner Owner ..Re gi.s tra r United stat'eS" of America, Depart- ment of Housing and Urban Develop- ment (End of Form of Registration Panel) (Form of Assignment Panel on Back of Single Bond) ASSIGNMENT PROVISION For Value Received, hereby assign and transfer unto the within bond, together with accrued interest thereon, hereby irrevocably constituting and appointing attorney to transfer this bond on the books of the City of Chubbuck, Idaho at the office of the Treasurer of the City, with full power of substitution in the premises. Dated: (End of Form of Assignment Panel) -32- Section 27. Disposition of Bond Proceeds. The bond proceeds shall be disposed of as follows: A. Accrued Interest and Premium. Any moneys received as accrued interest at the time of delivery of the bonds from the sale thereof and any premium therefor shall be deposited into the Bond Fund hereinafter created, to apply on the payment of interest next due on the 1972 bonds. B. A..c~uisition Fund. Except as hereinabove otherwise provided, the proceeds derived from the sale of the 1972 bonds shall be deposited promptly upon the receipt thereof in a separate account in an Insured Bank designated by the City Council, which account shall be known as the "City of Chubbuck, Idaho, Sewer Revenue Bonds, Series October 1, 1972, Construction and Other Acquisition Account" (herein the "Acquisition Fund"). The moneys in the Acquisition Fund, except as herein otherwise spe- cifically provided, shall be used and paid out solely for the Project. Moneys shall be withdrawn from the Acquisition Fund for the Project only upon warrants or checks drawn and signed by the Mayor of the City and its Clerk. C. Construction Work. ~No such warrant for any sum for construction work shall be issued until the City Council has received engineering approval certifying that such sum is due and owing for work for the system, nor shall such warrant be issued until the City Council has adopted a resolution accepting such certificate and directing the drawing of such warrant or check. The designated approval shall be by a representative of the Project Engineer Which engineer's approval must be in the form of a written certificate stating that the payment therein approved is being made to pay for materials supplied or work satisfactorily completed in substantiall accordance with the plans and specifications for the work involved. Such certificate of approval shall be in appropriate form, shall be signed by the Project Engineer or its duly accredited representative, and by the City's representative, and shall be filed with the City Clerk prior to the time such payment or payments are authorized by reso- lution. D. ~Co'mple~tion ~of Work. When such work shall have been completed in accordance with such plans and specifications and all amounts due therefor, including all proper incidental expen- ses, shall have been paid, the Project Engineer shall file with the depositary bank a certificate so stating, and thereupon, if any money remains in the ~Acquisition Fund, the City shall call bonds for prior redemption as herein provided, shall transfer from the account such remaining moneys for such purpose, and -33- shall transfer to the Income Fund any amount not sufficient to redeem a $5,000 bond or an installment of principal in a like amount. E. Purchasers Not Responsible. The purchasers of the bonds and any subsequent holder thereof, however, shall in no manner be responsible for the application or disposal of the moneys derived from the sale thereof. Section 28. Moneys for Project. All moneys received and held by the City for the Project from all sources, except ~ as herein otherwise provided, shall be deposited in the Acquisi- tion Fund, including, without limitation, any grants-in-aid from the government allocated to the City for that purpose, the City's share of any liquidated damages and other moneys paid by default- ing contractors or their sureties, and the bond proceeds. Section 29. Lien on Bond Proceeds. Until the proceeds of the 1972 bonds are applied as hereinabove provided and used to defray the cost of the Project from time to time, the bond proceeds shall be subject to a lien thereon and pledge thereof for the benefit of the holders of the bonds from time to time. Section 30. Pledge Securin9 Bonds. Subject only to the right of the City to cause amounts to be withdrawn to pay the cost of the Project as provided herein, the net revenues and all moneys and securities paid or to be paid to or held or to be held in any account under this ordinance are hereby pledged to secure the payment of the Bond Requirements of the 1972 bonds; and this pledge shall be valid and binding from and after the date of the first delivery of any bonds, and the moneys, as received by the City and hereby pledged, shall immediately be subject to the lien of this pledge and the obligation to perform the contractual provisions hereby made shall have priority over any or all other obligations and liabilities of the City, except for any other outstanding securities hereafter authorized, the liens of which on the pledged revenues shall be on a parity with the lien there- on of the 1972 bonds; and the lien of this pledge shall be valid and binding as against all persons having claims of any kind in tort, contract or otherwise against the City (except as herein otherwise provided) irrespective of whether such persons having claims of any kind in tort, contract or otherwise against the City (except as herein otherwise provided) irrespective of whether .such persons have notice thereof, but in no event shall such lien and pledge or any other provision herein prejudicially impair in a substantial manner any obligation of contract under the Loan Agreement or any federal law pertaining thereto. ~34- Section 31. Period of Project's Usefulness. It is hereby determined and recited that the period of usefulness of the system to be acquired with the proceeds of the bonds is not less than forty-one years from the date of the bonds. Section 32. Fiscal Year. For the purpose of this ordinance the system shall be operated upon a fiscal year basis, commencing on the first day of January in each calendar year and ending on the last day of December of the same calendar year. Section 33. Income Fund. A special fund and bank account shall be created and maintained and be known as the "City of Chubbuck Gross Income Sewer System Fund," herein some- times designated as the "Income Fund". So long as any 1972 bonds shall be outstanding all income and revenues derived from the operation of the sewer system shall be deposited into the Income Fund. Section 34. Administration of Income Fund. So long as any of the 1972 bonds are outstanding, as to any Bond Require- ments, the following payments shall be made from the Income Fund: A. Operation and Maintenance Expenses. Firstly, as a first charge thereon, there shall be set aside each month as an operation and maintenance account, such a sum equal to the reas- onable percentage of the Income Fund as the City Council shall determine to be reasonable and necessary for the proper operation and maintenance of the system, and such moneys shall be used solely therefor, including, without limitation, the cost of all salaries, necessary repairs, labor, materials, adequate insurance, and bank collection and other proper charges concerning the ac- counts and revenue bonds, and other obligations in connection with the system. Any surplus remaining at the end of the fiscal year and not needed for operation and maintenance purposes, shall be transferred to the Income Fund and be used for the purposes thereof, (the Council may provide, however, for an amount to be held as a reserve for operation and maintenance purposes not in excess of twenty per cent (20%) of the estimated operation and maintenance expenses of the then current fiscal year) as herein provided. B. ~ B~ond Fund. Payments. Secondly, from any moneys remaining in the Income F~nd there shall be deposited into a separate fund hereby created to be known as the "City of Chubbuck, Idaho, Sewer Revenue Bonds, Series October 1, 1972, Interest and Bond Retirement Fund" (herein the "1972 Bond Fund" and merely the "Bond Fund"), the following: (a) Monthly, commencing on the fifteenth day of the month immediately succeeding the delivery of any 1972 bonds, an amount in s~bstantially equal monthly in- stallments necessary to pay the next maturing install- ment of interest on the 1972 bonds, except to the ex- tent any other moneys are available therefor, and monthly thereafter, commencing on the fifteenth day of the month preceeding each interest payment date of the 1972 bonds, an amount in 6 substantially equal monthly installments of interest on the outstanding 1972 bonds, except to the extent any other moneys are available therefor so that by each March 15, and September 15, a sum shall have been deposited which shall be sufficient to pay each April 1 and October 1 interest payments, respectively; and (b) Monthly, commencing on the fifteenth day of the month next succeeding the delivery of any 1972 bonds, or commencing on the fifteenth day of March, 1975, which ever date is later, an amount in six (or less) substan- tially equal monthly installments necessary to pay the next maturing installment of principal of the 1972 bonds, except to the extent any other moneys are available therefor, and monthly thereafter, commenc- ing on the September 15 prior to each principal pay- ment date of the 1972 bonds, an amount in 12 substan- tially equal monthly installments necessary to pay the next maturing installment of principal of the outstand- ing 1972 bonds, except to the extent any other moneys are available therefor, so that by each September 15 a sum shall have been deposited which shall be sufficient to pay each October 1 principal payment. If the City at any time shall call any 1972 bonds for prior redemption, the City shall cause to be deposited in due season in the Bond Fund additional moneys sufficient to pay on the due date the 1972 bonds so called for prior redemption and then due, except to the extent any other moneys are available therefor. C. Reserve Funds. Deposits. Thirdly, and concurrently, with the payments required by the next preceding paragraph (b) from any moneys remaining in the Income Fund, i.e., from the net income, commencing on the fifteenth day of September, 1974, at least One Thousand Four Hundred Two and 50/100 Dollars ($1,402.50) per month, or so much thereof as is available from the income fund (but not to exceed Sixteen Thousand Eight Hundred Thirty and no/100 Dollars [$16,830.00]) in each year into a separate fund hereby cre- ated and to be known as the "City of Chubbuck, Idaho, Sewer Revenue -36- Bonds, Series October 1, 1972, Reserve Fund" (herein the "1972 Reserve Fund" and merely the "Reserve Fund"), until a reserve ha~ been accumulated in an amount equal to not less than $67,320.00, (herein the "1972 Minimum Reserve" and merely the "Minimum Reserve"), and thereafter such amount or amounts, if any, shall be deposited monthly from any moneys remaining in the Income Fund necessary to maintain the Reserve Fund as a continuing reserve in an amount not less than the Minimum Reserve. No payment need be made into the 1972 Reserve Fund so long as the moneys therein shall equal not less than the 1972 Minimum Reserve. The moneys in the Reserve Fund shall be accumulated and main- tained as a continuing reserve to be used, except as hereinafter provided in paragraphs D and E of this section, only to prevent deficiencies in the payment of the Bond Requirements of the 1972 bonds resulting from the failure to dePosit into the 1972 Bond Fund sufficient funds to pay such Bond Requirements as the same become due, except to the extent other moneys are available therefor. D. Deposits to Maturities. No payment need be made into the 1972 Bond Fund, the 1972 Reserve Fund, or both, if the amount in the Bond Fund and the amount in the Reserve Fund total a sum at least equal to the entire amount of the outstanding 1972 bonds, as to all Bond Requirements to their respective due dates, and both accrued and not accrued, in which case moneys in those two accounts in an amount at least equal to such Bond Re- quirements shall be used solely to pay such as the same accrue, and any moneys in excess thereof in those two accounts and any other moneys derived from the operation of the system may be used in any lawful manner determined by the City Council. E. Defraying Delinquencies. If, in any month, the City shall, for any reason, fail to pay into the Bond Fund the full amount above stipulated from the net income of the system, then an amount shall be paid into the Bond Fund in such month from the Reserve F~nd equal to the difference between that paid from such net income and the full amount so stipulated. The money so used shall be replaced in the Reserve Fund from the first revenues thereafter received from the operation of the system not required to be otherwise applied. If, in any month, the City shall, for any reason, fail to pay into the Reserve Fund the full amount above stipulated from the net income of the system the difference between the amount paid and the amount so stipulated shall in a like manner be paid therein from the first revenues thereafter received from the operation of the system not required to be otherwise applied. The moneys in the -37- Bond Fund and the Reserve Fund shall be used solely and only for the purpose of paying the Bond Requirements of the 1972 bonds; any moneys at any time in excess of the Minimum Reserve in the Reserve Fund may be withdrawn therefrom and deposited into the Bond Fund; and any moneys in the Bond Fund and the Re- serve Fund in excess of accrued and unaccrued Bond Requirements to the respective due dates of the outstanding 1972 bonds may be used as hereinabove provided in paragraph D of this section. F. Paying Additional Bonds. Fourthly, any balance remaining in the Income Fund after making the payments herein- above provided, shall be used by the City for the payment of the Bond Requirements of additional bonds or other obligations here- after authorized to be issued and payable from the revenues of the system, including reasonable reserves therefor, as the same accrue; but the lien of such additional bonds or other obliga- tions on the net income of the system and the pledge for the pay- ment thereof shall be on a parity with, or subordinate to, the lien and pledge of the bonds herein ~authorized, as hereinafter provided. G. Accumulation of Repair and Replacement Reserve Account. Fifthly, and subject to the aforesaid provisions, from any moneys remaining in the Income Fund there shall be set aside and deposited annually $10,305.00 (or such portion of any moneys remaining in the Income Fund and available annually) within thirty days after the close of each fiscal year, commen- cing on or before the end of the fiscal year during which the required minimum reserve of Sixty-Seven Thousand Three Hundred ~ Twenty and no/100 Dollars ($67,3~20.00) has actually been accumu- lated and is being maintained as the minimum reserve in the reserve fund, but commencing no later than the fiscal year ending December 31, 1979, in an Insured Bank into a separate account hereby created and to be known as the "City of Chubbuck, Idaho, . Sewer System Repair and Replacement Reserve Account" (herein the "Repair and Replacement Reserve Account"), until the aggregate amount of the deposits into the Repair and Replacement Reserve Account shall equal at least $103,050.00 (regardless of any with- drawals therefrom), such amount to be accumulated in the Repair and Replacement Reserve Account, if moneys are available, within the first fifteen (15) full fiscal years of operation of the system. Moneys in the Repair and Replacement Account may be withdrawn at any time to pay the costs of improvements, extensions, and better- ments to the system, or in the event moneys are not sufficient in the Bond Fund or the Reserve Fund, moneys in the Repair and Re- placement Account shall be withdrawn to pay the requirements of paragraphs B and C of this Section 34. -38- H. Use of Surplus Revenues. After the payments required by paragraphs A through G of this section are made, the remaining revenues derived from the operation and use of the system, if any, shall be applied for any one, or all of a combination of the following purposes: (1) The purchase in the open market or the prior redemption of any securities payable from net revenues at the best reasonable price obtainable, but no securities shall be so purchased or called for prior redemption unless the amount in the 1972 Reserve Fund at least equals the 1972 Minimum Reserve, nor shall any securities be so purchased or called for prior redemption unless the funds in any other reserve funds established for any outstanding parity lien bonds have also been accumulated and maintained in the amount equal to at least the minimum reserve required for such other reserve funds, as the case may be. (2) The payment of the principal and interest, or debt service requirements of any bonds or other obli- gation payable from the revenues and having a lien thereon subordinate inferior and junior to the lien of the 1972 bonds; (3) The extension, betterment or other im- provement of the system; (4) The payment of deb. t service of general obligation bonds, if any, incurred in the construc- tion, other acquisition or improvement of the system; or (5) Any other lawful purpose authorized by the Constitution and laws of the State, as the City Council may direct including, without limita- tion, Section 50-1033, of the Act, as from time to time amended. Section 35. Administration of Accounts. Each of the funds and accounts designated herein shall be administered as follows: A. Places and Times of Deposits. The above funds and book accounts shall be separately maintained from all other funds and book accounts not pertaining to the system and shall be deposited in one or more bank accounts in an Insured Bank or Banks. Each such bank account shall be continuously secured to the extent required by law and shall be irrevocable and not withdrawable by anyone for any other purpose. Each monthly -39 - payment shall be made into the proper account on the fifteenth day of the month, except when the fifteenth day shall be a Sunday or legal holiday, then such payment shall be made on the next preceding secular day. At least fifteen days prior to any inter- est payment date, moneys sufficient to pay the Bond Requirements then due shall be credited at the Paying Agent. Nothing herein prevents the Council from establishing one bank account for any of the funds and book accounts required hereby. B. Investment of Money.s. Any moneys in any account designated in Sections 27 through 34 hereof not needed to defray any costs of the Project for a material period of time, nor to defray operation and maintenance expenses of the system for the current fiscal year nor to defray Bond Requirements of bonds payable from the system revenues for the current and next succeed- ing fiscal year, including, without limitation, the 1972 bonds, as the Treasurer may from time to time determine, may be invested or reinvested by the Treasurer in Federal Securities, which shall be subject to redemption at face value by the holder thereof at the option of such holder, or which shall mature not later than 18 months from the date of such investment. The obligations so purchased as an investment of moneys in any such account shall be deemed at all times to be a part of the account, and the interest accruing thereon and any other profit realized therefrom shall be credited to the account, and any loss result- ing from such investment shall be charged to the account. The Treasurer shall present for redemption or sale on the prevailing market any obligations so purchased as an investment of moneys in the account whenever it shall be necessary to do so in order to provide money to meet any payment or transfer from such account. The value of any investments of moneys or funds in the 1972 Reserve Fund or in the Repair and Replacement Reserve Account shall be determined and valued in terms of current market value as of June 30 and December 31 of each year. Section 36. First Lien Bonds. The 1972 bonds, sub- ject to the payment of all necessary and reasonable expenses of the operation and maintenance of the system, constitute an irre- vocable and first (but not necessarily an exclusively first) lien upon the revenues derived from the operation of the system. Section '37. Equality. of Bonds. All the 1972 bonds and all the parity securities hereafter issued and payable from system revenues, if any, from time to time outstanding shall not be entitled to any priority one over the other in the applica- tion of the revenues of the system, and such securities shall be equally and ratably secured, without priority by reason of -40- number, date of the bonds, date of their sale, date of their execution, or date of their delivery, by a lien on such revenues in accordance with the provisions of the Act and this ordinance. Section ~38. Additional Obligations. Additional bonds and other obligations may be issued, as follows: A. Limitations upon Issuance of Parity Obligations. Nothing herein prevents the issuance by the City of additional bonds or other obligations payable from any net revenues derived from the operation of the system and constituting a lien upon such revenues on a parity with, but not prior or superior to, the lien of the 1972 bonds, nor to prevent the issuance of bonds or other obligations refunding all or a part Of the 1972 bonds, subject to the provisions of Section 39 hereof. Before any such additional parity bonds or other parity obligations are authorized or actually issued, other than refund- ing bonds or other refunding obligations (unless any lien on any revenues of the system of the bonds refunded is subordinate to the lien Of the 1972 bonds and the lien on revenues of the system of the refunding bonds is on a parity with the lien thereon of the 1972 bonds) it must be determined that: (1) The City is not, and has not been in default as to any payments required to be made in Section 34 hereof during the fiscal year immediately preceding the issuance of such additional bonds, or if none of the 1972 bonds have been outstanding for a full fiscal year, then for the longest period of time the 1972 bonds have been outstanding; and (2) The gross revenues derived from the operation of the system for the fiscal year next preceding the date of the issuance of such additional parity bonds or other parity obligations shall have been sufficient to pay the operation and maintenance expenses (current expenses) for such fiscal year, and, in addition, sufficient to pay (and have been equal to) an amount representing 140% of the combined average annual principal and interest require- ments to be paid in such fiscal year, of the outstanding 1972 bonds and any outstanding parity lien revenue bonds and any other outstanding parity lien obligations of the City payable from the revenues of the system (exclud- ing any reserves therefor), except as hereinafter other- wise expressly provided therefor; and (3) The estimated net revenues of the facility or facilities to be constructed or acquired with the proceeds of such additional parity lien bonds when -41- added to the estimated future net revenues of the then existing system shall be sufficient to pay and be equal to at least an amount representing 140% of the combined average annual principal and interest requirements to be paid in each year on the outstanding 1972 bonds and any other outstanding parity lien bonds and any other outstanding parity lien obligations of the City payable from the revenues of the system and the average annual principal and interest requirements to be paid in each fiscal year for the parity lien bonds or other parity lien obligations proposed to be issued (exclud- ing any reserves therefor); and (4) For purposes of the tests set forth above, if there has been adopted a schedule of rate increases during the twel've months immediately prior to the issuance of the proposed bonds, and if any revenues colleCted pur. suant to such schedule are not part of the revenues of the fiscal year used for the test hereinabove set forth, there may be added to the actual revenues for said fiscal year an estimated sum equal to the estimated increase in revenues which would have been realized during said fiscal year had such sate increase governed the revenues received during said entire fiscal year. Such estimates under paragraphs (3) and (4) of this section shall be made in writing by an Independent Consulting Engineer acceptable to and approved by the City Council, and if used in connection with the Independent Accountant's opinion hereinafter provided for, such estimate shall be conclusive in determining the right of the.City to authorize, issue, sell and deliver said additional bonds or other additional ob- ligations on a parity with the bonds herein authorized. B. Certification of Revenues. A written opinion by an Independent Accountant (including the estimate of the Consulting Engineer) that such annual revenues when adjusted as hereinabove provided are sufficient to pay such amounts, shall be conclusively presumed to be accurate in determining the right of the City to authorize, issue, sell and deliver such additional bonds or other additional obligations on a parity with the 1972 bonds; provided, however, that the written opinion and the estimates are formally approved by the Mayor and approved by a resolution or ordinance of the governing body. -42- C. Consideration of Additional Expenses. In any determination of whether additional parity bonds or other addi- tional parity obligations may be issued as aforesaid, con- sideration shall be given to any probable increase (but not reduction) in operation and maintenance expenses that will result from the expenditure of the funds proposed to be derived from the issuance and sale of such bonds or other obligations. D. Sub'ordinate Obligations. Nothing herein, except as herein otherwise specifically stated, prevents the City from issuing bonds or other obligations payable from the reve- nues of the system and having a lien thereon subordinate, in- ferior and junior to the lien of the 1972 bonds. E. SuPerior Obli~at,ions. Nothing herein permits the City to issue bonds or other obligations payable from the revenues of the system and having a lien thereon prior and superior to the 1972 bonds. F. Payment Dates. Any additional parity or subordinate lien bonds or other parity or subordinate lien obligations issued in compliance with the terms hereof shall bear interest payable semiannually on the first days of April and October in each year, except that the first installment of interest on any bond may represent interest accruing for any period not in excess of one year, and such obligations shall mature on the first day of October in the years designated by the City Council during the term of such bonds or other obligations. G. A. dditional Requirements for Parity Bonds. The ordinance or other instrument authorizing any additional parity lien bonds, or other parity obligations issued in compliance with the terms hereof, shall in addition require semiannual accumula- tion of deposits into any bond fund or bond fund account estab- lished for the payment of such parity lien bonds or other parity obligations on the same basis and in the same manner as such deposits are required for the 1972 bonds and shall in addition require the establishment of a reserve fund for the payment of such additional parity lien bonds or other parity obligations in a sum at least equal to not less than the average annual princi- pal and interest requirements on such parity lien bonds or other parity obligations and, in addition, shall require an amount to be deposited annually into a Repair and Replacement Reserve Fund in an amount at least equal to one-half of one percent of the estimated cost of the facilities to be added to the system and will require such amount to be deposited annually until the ag- gregate amounts of the deposit into such fund shall have been accumulated and shall thereafter be maintained in an amount -43- equal to five percent (5%) of the estimated cost of the facili- ties to be added to the system. Section 39.1 Refunding Bonds. The provisions of Section 38 hereof, other than paragraphs F and G thereof, are subject to the following exceptions: A. Privilege of Issuance. At any time after the bonds heretofore, herein or hereafter authorized, or any part thereof, shall have been issued and remain outstanding, if the City Council shall find it desirable to refund any outstanding bonds or other outstanding obligations payable from any revenues of the system, such bonds or other obligations, or any part thereof, may be refunded (but only with the consent of the holder or holders thereof, unless the bonds or other obligations, at the time of their required surrender for payment, shall then mature, or shall then be callable for prior redemption at the City's option and shall have then been properly called), re- gardless of whether the priority of the lien for the payment of the refunding obligations on the revenues of the system is changed (except as provided in paragraphs E and F of Section 38 hereof and in paragraphs B and C of this section). B. Limitations u~on Issuance. No refunding bonds or other refunding obligations payable from any revenues of the system shall be issued on a parity with the 1972 bonds: (1) Unless the lien on any revenues of the system of the outstanding obligations so refunded is on a parity with the lien thereon of the 1972 bonds, or (2) Unless the refunding bonds or other refund- ing obligations are issued in compliance with paragraphs A and B of Section 38 hereof. C. Refunding Part of an Issue. The refunding bonds or other refunding obligations so issued shall enjoy complete equality of lien with the portion of any bonds or other obli- gations of the same issue which is not refunded, if there are any; and the holder ~or holders of such refunding bonds or such other refunding obligations shall be subrogated to all of the rights and privileges enjoyed by the holder or holders of the bonds or other obligations of the same issue refunded thereby. D. Other Limitations u~on Issuance. Any refunding bonds or other refunding obligations payable from any revenues of the system 'shall be issued with such details as the City Council may by ordinance provide, subject to the inclusion of any such rights and privileges designated in paragraph C of this section, and subject to the provisions of paragraphs E and F, Section 38 hereof, but without any impairment of any contractual obligations imposed upon the City by any proceedings authorizing -44- the issuance of any unrefunded portion of such outstanding obli- gations of any one or more issues (including, without limita- tion, the issue herein authorized). If only a part of the out- standing bonds and any other outstanding obligations of any issue payable from the revenues of the system is refunded, then such obligations may not be refunded without the consent of the holder or holders of the unrefunded portion of such issue: (1) Unless the refunding bonds or other refund- ing obligations do not increase any aggregate annual principal and interest requirements evidenced by such refunding obligations and by the outstanding obligations not refunded on and prior to the last maturity date of such unrefunded obligations, or (2) Unless the lien on revenues of the system for the payment of the refunding obligations is sub- ordinate to each such lien for the payment of any ob- ligations not refunded. E. Co'n~sideratio'n ~f'or Issuance. The refunding bonds or other obligations shall either be sold for cash at not less than the par value and accrued interest, and the proceeds thereDf shall be used to pay the bonds refunded, or if so permitted by law and then only with the consent of the holder or holders of the bonds or other obligations refunded, the refunding bonds or other obligations shall be delivered dollar for dollar in ex- change for the bonds 'or other obligations refunded. Section 40. P?ior Charge .~pon Lo..wer Rates. If it should be legally determined that any legislative or other body, commission or authority has power lawfully to prescribe a lower schedule of rates than that contemplated by this ordinance or other instruments and if such lower rate shall be prescribed, then the payment of the Bond Requirements of the 1972 bonds shall consti- tute a first and prior charge on the revenues received from the system, together with the bonds and other obligations the lien or liens of which is or are on a parity on such revenues with the lien thereon of the 1.972 bonds, anything herein to the con- trary notwithstanding. Section 41. Com~ulsor~ Sewer Connections. The city Council has determined, and does hereby determine, that it is for the best interest of the City and the inhabitants thereof for health and sanitary purposes that all residential or inhabited property be connected to the sewer facilitieS of the system; and the City Council orders that the owners of all residential or inhabited property within .the City having any boundary of such property within 200 feet of a sewer collection service line shall -45- connect such property to such line without expense to the City within 60 days from the date of notice that such line is avail- able or within 60 days from the date such a line is extended to such a distance of a boundary line of the tract or parcel of land, as stated hereinabove in this section and as provided in Section 3 of Ordinance No. 128 duly adopted by the Mayor and Council of the City of Chubbuck, Idaho, on the llth day of December, 1973. The City shall enforce and compel such connec- tions in the case of a failure so to connect within the time herein prescribed by suit, action, or special proceedings in equity or at law; and the City may prescribe rules and regula- tions to govern, regulate and enforce such connections, includ- ing, without limitation, the fixing of penalties for the failure so to connect, and the entering into agreements with any other public corporation or political subdivision of the State, or any agency or instrumentality thereof, e.g. the County or its health department, if any, necessary or desirable to effect the provisions hereof. Section 42. Protective Covenants. The City hereby covenants and agrees with each and every holder of the 1972 bonds: A. Payment of Bonds. The City will promptly pay the Bond Requirements of each 1972 bond at the place, on the dates and in the manner specified herein and in the bonds and in the coupons thereto pertaining according to the true intent and meaning hereof. Such Bond Requirements are payable solely from the net income to be derived from the operation of and the resultant rates and charges for the use of, and the products and service rendered by, the system; and nothing in the bonds or coupons or in this ordinance obligates the City to redeem any of the bonds, as to any Bond Requirements, from, and the holder or holders thereof may not look to, any general or other fund except the income which is so pledged under the provisions of this ~ordinance o B. ' Use~ Charges. While the 1972 bonds or any of them remain outstanding and ~npaid, the rates for all services ren- dered by the system to the City and to its inhabitants and to all consumers within or without the boundaries of the City, shall be reasonable and just, taking into account and consider- ation the cost and value of the system and the operation and maintenance expenses of the system, and the proper and necessary allowances for the depreciation thereof and the amounts necessary for the retirement of all bonds and other securities payable from the revenues of the system, as to all Bond Requirements, and reserves therefor; and there shall be charged against all purchasers -46~ of service, including the City, such rates and amounts as shall be adequate to meet the requirements of this and the preceding sections hereof, and which shall be sufficient to produce revenues or earnings annually to pay the operation and maintenance expenses, and to produce net revenues in each year equal to at least 140% of the combined average annual principal and interest require- ments on all outstanding 1972 bonds and on any other bonds or obli- gations payable from the revenues of the system, the lien on the revenues of which is on a parity with the lien of the revenues of the system of the 1972 bonds, and including the reserves therefor, all of which revenues, including those received from the City, shall be subject to distribution to the payment of the op- eration and maintenance expenses of the system and the payment of the Bond Requirements of all securities payable from the reve- nues of the system, including reasonable reserves therefor. No free service, facilities nor commodities shall be furnished by the system. Should the City elect to use for municipal purposes any of the facilities of the system, or in any other manner use the system, or any part thereof, any use of the system or of the services rendered thereby by the City, or any department, board or agency thereof, shall be paid for from the City's general fund or other available revenues at the reasonable value of the use so made, or service, facility or commodity so rendered; and all the income so derived from the City shall be deemed to be income derived from the operation of the system, to be used and accounted for in the same manner as any other income de- rived from the operation of the system. C. Levy of Charges. The City shall forthwith and in any event prior to the delivery of any of the 1972 bonds, fix, establish and levy the rates and charges which are required by paragraph B of this section, if such action in addition to Or- dinance No. 129 is necessary therefor. No reduction in any rate schedule for the system may be made: (1) Unless the City has fully complied with the provisions of Section 34 hereof for at least the full two fiscal years immediately preceding such reduction of the rate schedule; and (2) Unless the audits required by an Indepen- dent Accountant by paragraph G of this section for the full two fiscal years immediately preceding such re- duction discloses that the estimated revenues resulting from the proposed rate schedule, after its proposed reduction, shall be sufficient to pay an amount at least equal to the annual operation and maintenance -47- expenses for such period, and, in addition, estimated net revenues shall be equal to at least 140% of the combined average annual principal and interest require- ments on the 1972 bonds and any other parity lien bonds or any other parity lien obligations payable from the revenues of the system, including reasonable reserves therefor. D. Efficient O~eration. The City shall operate the system so long as any of the 1972 bonds are outstanding, to maintain the system in efficient operating condition and to make such betterments, extensions, other improvements, or re- pairs thereto, or any combination thereof, as may be necessary or advisable to insure its economical and efficient operation at all times and to an extent sufficient to supply public or private demands for service within the City and the territory adjacen% thereto. E. Records. So long as any of the bonds remain outstanding, proper books of record and account shall be kept by the City, separate and apart from all other records and accounts, showing complete and correct entries of all transac- tions relating to the system. Such books shall include (but not necessarily be limited to) monthly records showing: (1) The number of sewer customers, (2) The revenues received from sewer charges by classes of customers, and (3) A detailed statement of the expenses of the system. Before each fiscal year the City Council shall cause an operat- ing budget to be prepared therefor. F. Inspection Rights. Any Purchaser, any holder of any of the bonds, or any duly authorized agent or agents of such a Purchaser or such a holder, shall have the right at all reasonable times to inspect all records, accounts and data relating thereto and to inspect the system and all properties comprising the system. G. Audits, Budgets and Periodic Operating Statements. The City agrees that within 90 days following the close of each fiscal year the City shall furnish to the HUD, if it is a Pur- chaser of any of the 1972 bonds, (i) an audit report made by an Independent Public Accountant, (ii) an operating budget showing the planned budget for the fiscal year, the actual income and expenses for the fiscal year, and the estimated budget for the current fiscal year, and (iii) a current financial statement (unless included in the audit report). Each such audit report, -48- in addition to matters thought proper by the accountant, shall include: (1) An evaluation of the manner in which the City has complied with the covenants of this ordinance and the Loan Agreement with the government. (2) Statement of Operating Income and Expense. (3) Statement showing analysis of each fund includ- ing deposits, withdrawals and beginning and ending balances. (4) General Balance Sheet. (5) A statement showing the schedule of rates charged for each class of service as of the close of the fiscal yea~, the gross revenues received and the number of connections. (6) Schedule of insurance policies and fidelity bonds in force showing with respect to each policy and bond the nature and amount of risk covered, the expiration date and the name of the insurer. (7) Names and titles of principal officers. (8) A statement of current assessed property valu- ation, tax rates, levies and collections of the City. (9) A general statement concerning any events or cir- cumstances which possibly might affect the financial status of the system. (10) A statement for the fiscal year just closed, of the income and expenditures of the system, including gross revenues, the net revenues, the amount of any capital expen- ditures and profit or loss; (11) The accountant's comment regarding the City's methods of operation and accounting practice; (12) The number of any metered sewer connections, and any unmetered sewer connections at the beginning and at the end of the fiscal year; (13) The' number of customers per class of customers, if there are classes of customers and the revenues per class of customers. (14) The annual report shall include a statement of the extent the City has complied with the covenant of paragraph B of Section 42 of this ordinance which relates to the use charges and maintaining annual net revenues of the system at least equal to 140% of the combined average annual principal and interest requirements on the 1972 bonds and on any other parity lien bonds or parity lien obligations payable from the revenues of the system. All expenses incurred in the making of the audits and reports required by this paragraph shall be regarded and paid as oper- -49- ation and maintenance expenses. The City shall furnish a copy of each audit report to any holder of any 1972 bond at his re- quest and without request to each purchaser thereof other than3 the HUD, if any, and to the Paying Agent within 90 days following the end of the fiscal year. Any holder shall have the right to dis- cuss the contents with any individual making the audit. H. Billing Procedure. All bills for sewer service or facilities, furnished or serviced by or through the system shall be rendered to customers on a regularly established day of each and every month either monthly in advance or in the month next succeeding the month in which the service was rendered and shall be due within 20 days from the date rendered; and if such bills are not paid within 90 days after the date when rendered, the rates and charges due shall be collected in a lawful manner. I. Use of Bond and Reserve Funds. The 1972 Bond Fund, and the 1972 Reserve Fund shall be used solely and only, and such accounts are hereby pledged, for the purpose of paying the Bond Requirements of the 1972 bonds, except any moneys in the Bond Fund and in the Reserve Fund as are in excess of the Bond Requi_~e- ments of the bonds, both accrued and not accrued, to their respec- tive due dates, as hereinabove provided. J. Charges and Liens uponl Facilities. From the reve- nues of the system the City shall pay all taxes and assessments or other municipal or governmental charges, if any, lawfully levied, assessed upon or in respect of the system, or any part thereof, when the same shall become due, and the City shall duly observe and comply with all valid requirements of any muni- cipal or governmental authority relative to any part of the sys- tem and shall not create or suffer to be created any lien or charge upon the system or upon the revenues therefrom except as permitted by this ordinance, or the City shall make adequate provision to satisfy and discharge within 60 days after the same shall accrue all lawful claims and demands for labor, materials, supplies or other objects, which, if unpaid, might by law become a lien upon the system or upon the revenues therefrom; but nothing herein requires the City to pay or cause to be discharged, or make provision for any such tax, assess- ment, lien or charge before the time when payment thereof shall be due or so long as the validity thereof shall be contested in good faith by appropriate legal proceedings. K. Insurance. The City in its operation of the system shall carry fire and extended coverage insurance, workmen's com- pensation insurance, public liability insurance, and all such -50- other insurance as is customarily maintained with respect to facilities of like character against loss of or damage to the sys- tem and against public and other liability at least to the extent reasonably necessary to protect the interests of the City and of each holder of a bond or any other security payable from the sys tem revenues, except as herein otherwise provided. All buildings, tanks, motors, pumps and other equipment shall be insured against the usual hazards normally'covered by insurance. The Issuer shall carry workmen's compensation insurance on any individuals that it employs for the maintenance and operation of the system. Unless public liability insurance is not authorized by State law as interpreted by the City's attorney, such insurance shall be main- tained in reasonable amounts, but in no event less than $100,000.00 for any one person and $300,~000.00 for any one occurrence or more than one person against claims for bodily injury and death or either, and not less than $10,000.00 for damage to any property of others, suffered or alleged to have been suffered by others arising from the City's operations, including, without limitation, any use and occupancy of its grounds, structures and vehicles. In the event of property loss or damage, insurance proceeds (except any proceeds from a public liability policy) shall be used first for the purpose of restoring or replacing the property lost or damaged, any remainder shall be treated as net revenues, and shall be subject to distribution in the manner provided hereinabove, for net revenues derived from the operation of the system. L. Com~etin~ Facilities. As long as any of the 1972 bonds are outstanding, the City shall not grant any franchise or license to a competing system, nor shall it permit, during such period, any person to sell sewer service or facilities, or any combination thereof, to any consumer, public or private, with- in the City. M. Alienation of ~stem. The City shall not sell, lease, mortgage, pledge, or otherwise encumber, or in any man- ner dispose of, or otherwise alienate, the system, or any part thereof, including any and all extensions and additions that may be made thereto, until all the outstanding 1972 bonds are paid in full, as to all Bond Requirements, except that the City may sell any portion of such property which shall have been replaced by other property of at least equal value, or which shall cease to be necessary for the efficient operation of the system, but in no manner nor to such extent as might prejudice the security for the payment of the 1972 bonds, and in the event of any sale as aforesaid, the proceeds of such sale shall be dis- tributed as net revenues of the system. -51- N. Extension of Interest Payments. In order to pre- vent any accumulation of coupons or claims for interest after maturity, the City shall not directly or indirectly, extend or assent to the extension of the time for the payment of any coupon or claim for interest on any of the 1972 bonds and the City shall not directly or indirectly be a party to or approve any arrange- ment for any such extension or for the purpose of keeping alive any of such coupons; and if the time for payment of any such coupons is extended, such coupon or installment or installments of interest after such extension or arrangement shall not be entitled in case of default hereunder to the benefit or security of this ordinance except subject to the prior payment in full of the Bond Requirements of the bonds the payment of interest on which has not been extended. O. Management of System. The City shall appoint a manager of the system with suitable experience in the operation of similar systems. In the event of default on the part of the City in the payment of the Bond Requirements of the bonds promptly as the same fall due, or in the keeping of any covenants herein contained, and if such defaUlt shall continue for a period of 60 days, or if the net revenues of the system in any two consecu- tive fiscal years should fail to equal at least the amount of one hundred twenty per cent (120%) of the combined average annual principal and interest requirements of the 1972 bonds and the principal of and interest on any other revenue bonds and other obligations (including all reserves therefor specified in the authorizing proceedings, including, without limitation, this ordinance) payable from such net revenues in each such fis- cal year, the City shall retain a firm of competent management engineers skilled in the operation of sewer systems to assist the manager of the system so long as such default continues or the net revenues are less than the amount hereinabove designated. The manager shall have full control over the system and shall operate the system for the City and shall enforce such reasonable rates and charges as shall be sufficient to make the payments re- quired by this ordinance, and shall in all things so operate the system as to comply fully with all of the requirements and pro- visions of this ordinance. The right of the holder or holders of the 1972 bonds to require the appointment of such a manager and their conditional right to require the retention of such management engineers shall not be exclusive, and in the event of default as herein outlined, such holder or holders shall have the right to proceed in law or equity to require the performance of the covenants herein contained in any action which to them shall seem appropriate, as hereinafter provided in Sections 48, 49 and 50 hereof. -52- P. Fidelit~ Bonds. The Treasurer, being responsible for receiving system revenues and maintaining the accounts of the system, shall be bonded in an amount of at least $~-~!06606o, or an amount at least equal to the total funds in his custody at any one time. Each other official or other individual having custody of any moneys derived from the operation of the system or otherwise pertaining thereto shall be bonded in at least such amount. If the HUD. is a purchaser, each such fidelity bond shall show as co-obligee the United States of America, Department of Housing and Urban Development. The cost of each such bond shall be considered one of the operation and maintenance expenses of the system. Q. Performance of Duties. The City shall faithfully and punctually perform all duties with respect to the system required by the Constitution and laws of the State and the ordinances and resolutions of the City, including, without~ limitation, the making and collecting of reasonable and suffi- cient rates and charges for service rendered or furnished by the system as hereinbefore provided, and the proper segregation of the revenues of the system and their application to the res- pective accounts. R. Other Liens. Other than as provided by this ordinance, there are not liens or encumbrances of any nature, whatsoever on or against the system or the revenues derived or to be derived from the operation of the same. S. City's Existence. The City of Chubbuck shall continue to maintain its corporate identity and existence so long as any of the 1972 bonds remain outstanding, unless another political subdivision by operation of law succeeds to the powers, privileges, rights, liabilities, disabilities, duties and immun- ities of the City and is obligated by law to operate and main- tain the system and to fix and collect the system revenues as herein provided, in place of the City, without adversely and materially affecting at any time~ the privileges and rights of any holder of any outstanding bond. T. Performance Bonds. The City shall require each person with whom it may contract for labor or materials of construction to furnish a performance bond in the full amount required by the Loan Agreement, or in lieu thereof to deposit with the Treasurer, to insure completion and performance, marketable securities having a market value equal to the amount of such contract, eligible as security for the deposit of trust funds under the regulations of the BOard of Governors of the Federal Reserve System. In the event of default under such contract and upon being notified in writing of such default by -53- the Mayor, the Treasurer shall sell any securities so deposited at the prevailing market to the extent requested by the Mayor and shall apply the proceeds to the removal of such default as directed by the Mayor. Any such contract for labor or materials of construction shall provide that payment thereunder shall not be made by the City in excess of 90% of the current estimates un- til the completion of the Project and its acceptance by the City. U. Completion of Project. The City, with the proceeds derived from the sale of the 1972 bonds, shall proceed to cause the Project to be completed without delay and with due diligence to the best of the City's ability, as herein provided. A contract or contracts for the construction and other acquisition of the Pro- ject shall be let by the City as soon as practicable after the delivery of any 1972 bonds, except to the extent theretofore let. Each such contract shall meet the reasonable requirements of the HUD, if it is a purchaser, as are not inconsistent with State law. V. Arbitrage Bond Investments Prohibited. The City hereby further covenants for the benefit of each holder of the 1972 bonds that: (1) Sums credited to the various accounts per- taining to the system, the Project or the 1972 bonds shall not be invested in such a manner as to result in the loss of eXemption from federal income taxation of interest on any such bond or on any bond subsequently issued by the City; (2) The City shall make no use of the proceeds of the 1972 bonds which will cause them to be "arbitrage bonds" under the U. S. Internal Revenue Code of 1954, as amended (herein the "Tax Code") and the applicable regulations thereunder promulgated by the Internal Reve- nue Service; and the City and its officers, employees and other agents shall take appropriate action so that on the basis of the facts, estimates and circum- stances in existence on the date of issue of the 1972 bonds it is reasonably expected that the proceeds of the 1972 bonds will be used in a manner that will not cause the bonds to be taxable "arbitrage bonds" under Section 103(d), Tax Code, and the applicable income tax regulations thereunder; (3) Such sums constituting in the aggregage a major portion or more of the proceeds of the 1972 bonds shall not be invested directly~or indirectly in taxable obligations so as to produce an adjusted yield (including permissible adjustments for any premiums, -54- discounts and costs ), i.e., an adjusted effective inter- est rate, which is materially higher than the adjusted yield (adjusted effective interest rate) of the bonds and which results in the bonds of such issue or of any subsequent issue constituting taxable "arbitrage bonds" within the meaning of subsection (d), Section 103, Tax Code, as amended by Section 601(a), Tax Reform Act of 1969 (83 Stat. 656), by any subsequent amendments, and by the applicable income tax regulations thereunder, except for any such investments permitted by the "special rules" pertaining to "temporary periods" and to "reason- ably required reserve or replacement funds" and except as may be otherwise permitted by law; (4) The covenant in this paragraph imposes an obligation on the City to comply with the requirements of subsection (d), Section 103, Tax Code, and such in- come tax regulations; but (5) Such sums may be otherwise invested if and when such act and regulations permit the investment to be made in the manner made without causing the bonds of such issue or of any subsequent issue to become taxable "arbitrage bonds". W. Bonds Are Not IDBs. The City hereby also covenants for the benefit of each holder of any 1972 bonds that they are not obligations: (1) Which are issued as part of an issue all or a major portion of the proceeds of which are to be used directly or indirectly in any trade or business carried on by any person who is not an exempt person, and (2) The payment of the principal or interest on which (under the terms of such obligations or any under- lying arrangement) is, in whole or in major part (i) secured by any interest in property used or to be used in a trade or business or in payments in respect of such property, or (ii) to be derived from payments in respect of property, or borrowed money, used or to be used in a trade or business, as such provisions are used in subsection ic), Section 103, Tax Code, as amended by Section 107, Revenue and EXpenditure Control Act of 1968, by Section 401, Renegotiation Amendments Act of 1968, by Section 315, Revenue Act of 1971, by any subse- quent amendments, and by the applicable income tax regulations thereunder. Thus the bonds are not "industrial development bonds" within the meaning of Section 103 (c), Tax Code, and the applicable income tax regulations thereunder. -55- X. Immunities of Purchaser. Each purchaser and any associate thereof are under no obligation to any holder of the bonds for any action that they may or may not take or in res- pect of anything that they may or may not do by reason of any information contained in any reports or other documents received by them under the provisions of this ordinance. The immunities and exemptions from liability of each purchaser and any associate thereof hereunder extend to their partners, directors, successors, employees and agents. Y. Prior Contracts. If any provision herein is in- consistent with any provision in any existing contract pertain- ing to the City so as to affect prejudicially and materially the rights and privileges thereunder so long as such contract shall remain viable and in effect such provision therein shall control such inconsistent provision herein and the latter and later provision shall be subject and subordinate to such pro- vision in such existing contract. Z. Police Power. Nothing herein prohibits or other- wise limits or inhibits the exercise by the government, the State, any agency thereof or any political subdivision thereof, includ- ing, without limitation, the City of Chubbuck, of the police power, i.e., essential governmental powers for the public wel- fare. The provisions hereof are subject to any proper exercise hereafter of the police power thereby. The City cannot contract away the police power thereof nor limit or inhibit by contract the proper exercise of the police power thereby, and this or- dinance does not purport to do so. Section 43. Defeasance. When all Bond Requirements of the 1972 bonds have been duly paid, the pledge and lien and all obligations hereunder shall thereby be discharged and the bonds shall no longer be deemed to be outstanding within the meaning of this ordinance. There shall be deemed to be such full payment when the City has placed in escrow or in trust with an Insured Bank located within or without the State and exercising trust powers, an amount sufficient (including the known minimum yield available for such purpose from Federal Securities in which such amount wholly or in part may be ini- tially invested) to meet all Bond Requirementsof the 1972 bonds, as the same become due to the final maturities of the bonds or upon any redemption date as of which the City shall have exercised or shall have obligated itself to exercise its prior redemption option by a call of bonds for payment then. The Federal Securities shall become due prior to the respective times on which the proceeds thereof shall be needed, in accor- -56 - dance with a schedule established and agreed upon between the City and such bank at the time of the creation of the escrow or trust or the Federal Securities shall be subject to redemp- tion at the option of the holders thereof to assure such avail- ability as so needed to meet such schedule. Section 44. ~Delegated Powers. The officers of the City be, and they hereby are, authorized and directed to take all action necessary or appropriate to effectuate the provisions of this ordinance, including, without limitation: A. Printing Bonds. The printing of the bonds, in- cluding, without limitation, the printing on each bond of a certified true copy of bond counsel's approving opinion; B. Final Certificates. The execution of such certi- ficates as may be reasonably required by the purchaser, relating, inter alia, to: (1) The signing of the bonds, (2) The tenure and identity of the officials of the City Council and of the City. (3) The delivery of the bonds and the receipt of the bond purchase price, (4) The presence or absence of factors which may effect the exemption of interest on the bonds from Federal income taxation, and (5) If it is in accordance with fact, the absence of litigation, pending or threatened, affecting the validity thereof. C. Information. The assembly and dissemination of financial and other information concerning the City and the bonds; D. Official Statement. The preparation of a bond offering brochure or official statement for use for prospective buyers of the bonds, including, without limitation, such use by the purchaser and its associates, if any, and E. Bond Sale. The sale and issuance of the bonds pursuant to the provisions of this ordinance, and to the 10-1-72 Public Sale Resolution and to any other ordinance supplemental thereto. Section 45. Statute of Limitations. No action or suit based upon any bond, coupon or other obligation of the city shall be commenced after it is barred by any statute of limitations pertaining thereto. Any trust or fiduciary re- lationship between the City and the holder of any bond or coupon or other obligee regarding any such obligation shall -57- be conclusively presumed to have been repudiated on the maturity date or other due date thereof unless the bond or coupon is pre- sented for payment or demand for payment of any such other obli- gation is otherwise made before the expiration of the applicable limitation period. Any moneys from whatever source derived remaining in any account reserved, pledged or otherwise held for the payment of any such obligation, action or suit for the collection of which has been barred, shall revert to the Income Fund, unless the City Council shall otherwise provide by instrument of the City. Nothing herein prevents the payment of any such obligation after any action or suit for its collec- tion has been barred if the City Council deems it in the best interests of the public so to do and orders such payment to be made. Section 46. Ratification. All action heretofore taken (not inconsistent with the provisions of this ordinance) by the Council and the officers of the City, directed toward: A. Pro~ect. The Project. B. Bonds. The issuance of the City's sewer reve- nue bonds therefor, and C. Election. The calling and holding of the elec- tion for the authorization of such bonds, be, and the same hereby is, ratified, approved and confirmed, including, without limitation, the giving of notice of the elec- tion for the submission of the Bond Question. Section 47. Evidence of Bondholders. A. Procedure. Any request, consent or other instru- ment which this ordinance may require or may permit to be signed and to be executed by the holder of any bonds or other securities may be in one or more instruments of similar tenor and shall be signed or shall be executed by each such holder in person or by his attorney appointed in writing. Proof of the execution of any such instrument or of an instrument appointing any such attorney, or the holding by any person of the securities or coupons pertaining thereto, shall be sufficient for any purpose of this ordinance (except as otherwise herein expressly pro- vided) if made in the following manner; (1) The fact and the date of the execution by any holder of any bonds or other securities or his attorney of such instrument may be provided by the certificate, which need not be acknowledged or verified, or an offi- cer of a bank or trust company satisfactory to the Clerk or to any notary public or other officer authorized to -58- take acknowledgments of deeds to be recorded in the state in which he purports to act, that the individual sign- ing such request or other instrument acknowledged to him the execution thereof, or by an affidavit of a wit- ness of such execution, duly sworn to before such notary public or other officer; the authority of the individual or individuals executing any such instrument on behalf of a corporate holder of any securities may be established without further proof if such instrument is signed by an individual purporting to be the president or vice president of such corporation with a corporate seal af- fixed and attested by an individual purporting to be its secretary or an assistant secretary; and the author- ity of any ~person or persons executing any such instru- ment in any fiduciary or representative capacity may be established without further proof if such instrument is signed by a Person or Persons purporting to act in such fiduciary or representative capacity; and (2) The amount of bonds or other securities trans- ferable by delivery held by any Person executing any instru- ment as a holder of securities, and the numbers, date and other identification thereof, together with the date of his holding the securities, may be provied by a certificate which need not be acknowledged or verified, in form satis- factory to the Clerk, executed by a member of.a financial firm or by an officer of a bank or trust company, insurance company or financial corporation or other depositary satis- factory to the Clerk, or by any notary public or other officer authorized to take acknowledgments of deeds to be recorded in which he purports to act, showing at the date therein mentiOned that such Person exhibited to such mem- ber, officer, notary public or other officer so authorized to take acknowledgments of deeds or had on deposit with such depositary the securities described in such certifi- cate; and such certificate may be given by a member of a financial firm or by an officer of any bank, trust company, insurance company or financial Corporation or depositary satisfactory to the Clerk or by a notary public or other officer so authorized to take acknowledgments of deeds with respect to securities owned by such holder, if acceptable to the Clerk;. but the Clerk may nevertheless in his discretion require further or other proof in cases where he deems the same advisable. Section 48. Events of Default. Each of the following events is hereby declared an "event of default," that is to say: -59- A. Nonpayment of Principal. Payment of the princi- pal of any of the 1972 bonds shall not be made when the same shall become due and payable, either at maturity, or by proceed- ings for prior redemption, or otherwise. B. Nonpayment of Interest. Payment of any install- ment of interest shall not be" made 30 days after the same becomes due and payable. C. Incapable to Perform. The City of Chubbuck shall for any reason be rendered incapable of fulfilling its obliga- tions hereunder. D. Default of any Provision. The City shall make default in the due and punctual performance of its covenants or conditions, agreements and provisions contained in the bonds or in this ordinance on its part to be performed, and if such default shall continue for 60 days after written notice speci- fying such default and requiring the same to be remedied shall have been given to the City by the holders of 25% in principal amount of the bonds then outstanding. Section 49. Remedies for Defaults. Upon the happening and continuance of any of the events of default as provided in Section 48 hereof, then and in every case the holder cr holders of not less than 25% in principal amount of the bonds then out- standing, including but not limited to a trustee or trustees therefor, may proceed against the City, its City Council, and its agents, officers and employees to protect and enforce the rights of any holder of bonds or coupons hereunder by mandamus or other suit, action or special proceedings in equity or at law, in any court of competent jurisdiction, either for the appointment of a receiver or for the s~pecific performance of any covenant or agreement, contained herein or in an award of execu- tion of any power herein granted for the enforcement of any power, legal or equitable remedy as such holder or holders may deem most effectual to protect and enforce the rights aforesaid, or thereby to enjoin any act or thing which may be unlawful or in violation of any right of any bondholder, or to require the City Council to act as if it were the trustee of an expressed trust, or any con~ination of such remedies. All such proceed- ings at law or in equity shall be instituted, had and maintained for the equal benefit of all holders of the bonds and coupons then outstanding. Any receiver appointed in any proceedings to protect the rights of such holders hereunder, the consent to any such appointment being h.ereby .expressly granted, may enter and take possession of the system, operate and maintain the -60- same, prescribe rates, fees or charges and collect, receive, and apply all revenues in the same manner as the City itself might do. The failure of any such holder so to proceed shall not relieve the City or any of its officers, agents or employees of any liability for failure to perform any duty. Each right or privi- lege of any such holder (or trustee thereof) is in addition and cumulative to any other right or privilege and the exercise of any right or privilege by or on behalf of any holder shall not be deemed a waiver of any other right or privilege thereof. Section 50. Duties upon Defaults. Upon the happen- ing of any of the events of default as provided in Section 48 hereof, the City, in addition, shall do and perform all proper acts on behalf of and for the holders of bonds and coupons to protect and preserve the security created for the payment of their bonds and coupons and to insure the payment of the Bond Requirements of the bonds promptly as the same become due. All proceeds derived therefrom so long as any of the 1972 bonds, as to any Bond Requirements, are outstanding and unpaid, shall be paid into the Bond Fund, and in the event of obligations here- tofore and hereafter issued and outstanding during such period of time on a parity with the 1972 bonds, into such bond funds for all "parity" obligations on an equitable and prorated basis, and used for the purposes therein provided. If the City fails or refuses to proceed as in this section provided, the holder or holders of not less than 25% in principal amount of the bonds then outstanding, after demand in writing, may proceed to protect and enforce the rights of the bondholders as herein- above provided. Section 51. Amendment of Ordinance. This ordinance may be amended or supplemented as follows: A. Limitations upon Amendments. This ordinance may be amended or supplemented by ordinances adopted by the City Council in accordance with the laws of the State, without receipt by the City of any additional consideration, but with the written consent of the holders of 66% of the 1972 bonds outstanding at the time of the adoption of such amendatory or supplemental instrument (not including in any case any bonds which may then be held or owned for the account of the City); but no such Ordinance shall have the effect of permitting (1) An extension of the maturity of any bond authorized by this ordinance; or (2) A reduction in the principal amount of any bond, or the rate of interest thereon, without consent of the holder of the bond; or (3) The creation of a lien upon or a pledge of -61- revenues ranking prior to the lien or pledge created by this ordinance; or (4) A reduction of the principal amount of bonds or percentages required for the consent to such amenda- tory or supplemental ordinance; or (5) The establishment of priorities as between bonds issued and outstanding under the provisions of this ordinance; or (6) The material and prejudicial modification of or otherwise affecting the rights of the holders of less than all of the bonds then outstanding. B. Notice of Amendment. Whenever the City shall propose to amend or modify this ordinance under the provisions of this section, it shall cause notice of the proposed amend- ment to be p~blished one time in a financial newspaper or jour- nal published in Boise, Idaho. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy of the proposed amendatory ordinance is on file in the office of the Clerk for public inspection. C. Time for Amendment. Whenever at any time within one year from the date of the publication of such notice there shall be filed in the office of the Clerk an instrument or instruments executed by the holders of at least 66% in aggre- gate principal amount of the bonds then outstanding as in this section defined, which ordinance or ordinances shall refer to the proposed amendatory ordinance described in such notice and shall specifically consent to and approve the adoption thereof, thereupon, but not otherwise, the City Council may adopt such amendatory ordinance and such ordinance shall become effective. D. Binding ~Cons'ent to Amendment. If the holders of at least 66% in aggregate principal amount of the bonds outstand- ing as in this section defined, at the time of the adoption of such amendatory ordinance, or the predecessors in title of such holders, shall have consented to and approved the adoption thereof as herein provided, no holder of any bond whether or not such holder shall have consented to or shall have revoked any consent as in this section provided, shall have any right or interest to object to the adoption of such amendatory ordin- ance or to object to any of the terms or provisions therein contained or to the operation thereof or to enjoin or restrain the City from taking any action pursuant to the provisions thereof. E. Time Consent Binding. Any consent given by the holder of a bond pursuant to the provisions of this section shall be irrevocable for a period of 6 months from the date of the publication of such notice by the holder who gave such consent -62- or by a successor in title by filing notice of such revocation with the Clerk but such revocation shall not be effective if the holders of 66% in aggregate principal amount of the bonds out- standing as in this section defined have, prior to the attempted revocation, consented to and approved the amendatory ordinance referred to in such revocation. F. Unanimous Consent. Notwithstanding anything in the foregoing provisions of this section, the terms and the provisions of this ordinance or of any ordinance amendatory thereof or supplemental thereto and the rights and the obliga- tions of the City and of the holders of the bonds and coupons thereunder may be modified or amended in any respect upon the adoption by the City and upon the filing with the Clerk of an instrument to that effect and with the consent of the holders of all the then outstanding bonds, such consent to be given as provided in section 47 hereof; and no notice to holders of bonds by publication shall be required as provided in paragraph B of this section, nor shall the time of consent be limited except as may be provided in such consent. Section 52. S~cial Obligations. All of the 1972 bonds, as to all Bond Requirements, shall be payable and col- lectible (except as herein otherwise provided) solely out of the net revenues, which revenues are so pledged; the holder or holders thereof may not look to any general or other fund for the payment of such Bond Requirements, except the hereinabove designated special funds pledged therefor; the bonds shall not constitute an indebtedness or a debt within the meaning of any constitutional or statutory provision or limitation; and the bonds shall not be considered or held to be general obligations of the City but shall constitute its special obligations. The City does not pledge its full faith and credit for the payment of the bonds. Section 53. Character of Agreement and Limitations upon Security. None of the covenants, agreements, representa- tions and warranties contained herein or in the 1972 bonds, in the absence of any breach thereof, shall ever impose or shall be construed as imposing any liability, obligation or charge against the City (except the special funds pledged therefor) or its general credit, payable out of its general fund or out of any funds derived from taxation. The payment of the bonds is not secured by an encumbrance, mortgage or other pledge of property of the City, except the net pledged revenues and any other moneys pledged for the payment of the bonds. No property of the City, subject to such exception, shall be liable to be -63- forfeited or taken in payment of the bonds. Section 54. Ordinance Irrepealable. After any of the 1972 bonds are issued, this ordinance shall be and remain irrepealable until the bonds, as to all Bond Requirements, shall be fully paid, cancelled and discharged, as herein pro- vided. Section SS. Repealer Clause. Ail bylaws, orders, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent only of such incon- sistency. This repealer shall not be construed to revive any bylaw, order, resolution or ordinance, or part thereof, here- tofore repealed. Section S6. Severability Clause. If any section, paragraph, clause or provision of this ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this ordinance. Section S7. Emergency Clause. By reason of the fact that the City needs the immediate use of the sanitary sewerage system, it is hereby declared that an emergency exists threatening "riot, infectious disease, or other impending danger" to the public; and this ordinance is necessary to the immediate preservation of the public peace, health and safety. Section S8. Publication and Effective Date. This ordinance shall be published once in one issue of the Idaho State Journal, the official newspaper of the City; and this ordinance shall be in full force and effect from and after its passage, approval and publication, the Council dispensing with the rule providing that ordinances must be read on three different days, all as provided by law. PASSED AND APPROVED by the City Council of the City of Chubbuck, Idaho, this 9th day of July, 1974. SIGNED by the Mayor of the City of Chubbuck, Idaho, on the same date. Mayor -64- STATE OF IDAHO COUNTY OF BANNOCK CITY OF CHUBBUCK I, Vera C. Armstrong, the duly chosen, qualified and acting Clerk of the City of Chubbuck, in the County of Bannock and State of Idaho, do hereby certify: 1. That the foregoing pages numbered from (1) through {3), including the 10-1-72 bond ordinance, pages numbered -1- through -64- inclusive, are true, perfect and complete copies of the record of proceedings of the City Council of the City had and taken at the lawful meeting of said Council held at S160 Yellowstone Avenue, in said City, on Tuesday, the 9th day of July, 1974, at the hour of 8:00 P.M., as recorded in the regular official book of records of the proceedings of said Council kept in my office. 2. That said proceedings were duly had and taken as therein shown, that the meeting therein shown was duly held, that the persons therein named as present at said meeting were present as shown by said minutes, and that all members of the City Council were duly notified of said meeting. WITNESS my hand and the seal of the City of Chubbuck, this 9th day of July, 1974. City Clerk (4) STATE OF IDAHO COUNTY OF BANNOCK CITY OF CHUBBUCK A regular meeting of the City Council (herein "Council"), of the City of Chubbuck (herein "City") in the County of Bannock and State of Idaho, was held on Tuesday, the 9th day of July, 1974, at the hour of eight o'clock P.M., at the Chubbuck City Offices, 5160 Yellowstone Avenue, in the City, being the regular meeting place of ~he Council, at which meeting there were present and answering the roll call the following, who constitute a quorum: John O. Cot~nt_. Jr. r~!~ _~_~ Ki~gbor~ Earl L. Romriell Mayor: Councilmen: Jack J. Menard Absent:._ Wayne G. Taylor These persons constitute all the members thereof. There were also present Vera C. Armstrong, the City Clerk, and Donald Burnett, the City Attorney. Thereupon, the following proceedings, among others, were duly had and taken. Councilman .Me,~d introduced and moved the adoption of the following ordinance, entitled: "AN ORDINANCE CONCERNING THE SEWER SYSTEM OF THE CITY OF CHUBBUCK, IDAHO; DECLARING THE RESULTS OF THE VOTE ON THE SEWER REVENUE BOND QUESTION SUBMITTED AT A SPECIAL, MUNICIPAL, BOND ELECTION HELD ON TUESDAY, MARCH 8, 1972; AUTHORIZING THE ISSUANCE OF THE SEWER REVENUE BONDS OF THE CITY, IN THE AGGREGATE PRINCIPAL AMOUNT OF $1,000,000.00, PAYABLE SOLELY FROM THE RATES AND CHARGES FOR THE USE OF, AND THE SERVICE RENDERED BY, THE MUNICIPAL SEWER SYSTEM, FOR THE PURPOSE OF DEFRAYING WHOLLY OR IN PART THE COST OF CONSTRUCTING AND ACQUIRING THE CITY'S SEWERAGE SYSTEM; PROVIDING THE FORM, TERMS AND CONDITIONS OF SUCH BONDS, THE MANNER AND TERMS OF THEIR ISSUANCE, THE MANNER OF THE EXECU- TION THEREOF, THE METHOD OF PAYING THE BONDS, AND THE SECURITY THEREFOR; PROVIDING FOR THE COLLECTION AND DISPOSITION OF THE REVENUES DERIVED FROM SUCH SEWERAGE (1) SYSTEM; PRESCRIBING OTHER DETAILS CONCERNING THE BONDS AND THE SYSTEM, INCLUDING, WITHOUT LIMITATION, COVENANTS AND AGREEMENTS IN CONNECTION THEREWITH; RATIFYING ACTION HERETOFORE TAKEN TOWARD SUCH SEW- ERAGE PROJECT, TOWARD THE ISSUANCE OF THE CITY'S SEWER REVENUE BONDS THEREFOR, AND TOWARD HOLDING THE ELECTION; REPEALINC'' ALL ORDINANCES IN CONFLICT HERE- WITH; AND PROVIDING THE EFFECTIVE DATE OF THIS ORDIN- ANCE." The motion was made by Councilman ]~n,~,-~.ll and seconded by Councilman ~gh_-~n that the rules requiring ordinances of a general and permanent nature to be fully and distinctly read on three different days be dispensed with and that the ordinance be read in full and at length and placed upon its final passage. Thereupon, the Clerk was ordered to call the roll on such motion, and the roll call upon such motion was as follows: Those Voting Aye: Those Voting Nay: Those Absent: None ~ Wayne G. Taylor The Mayor thereupon declared that the motion, having been duly passed by not less than one'half plus one of the mem- bers of the full City Council, had been duly carried. The ordinance was then read by the Clerk in full and at length as follows: (The 10-1-72 Bond Ordinance, consisting of pages -1- through -64-, follows.) (2) Councilman .... ~4nEhorn seconded the motion for the adoption of said ordinance. The Clerk was then'instructed to call the roll on the passage of the ordinance an~ the roll call on said pas- sage of said ordinance resulted as follows: Those Voting Aye: Dwain A, Kin~orn Earl L, R~mrie]~ Jack J, Menard Those Voting Nay: Ne.ne The ordinance was thereupon, by the Mayor, declared to have' been duly passed. It was moved by Councilman K~-~.crn and seconded by Councilman ..Menard that the Clerk of the City be ordered to publish said ordinance in full immediately and in at least one issue of the Idaho State Journal , the official newspaper of the City. Thereupon, the Clerk was ordered to call the roll on said motion and the roll call upon said motion was as fol- lows: Those Voting Aye: Ec~-i L, JaCk J. Menard Those Voting Nay: None The Mayor thereupon declared that the motion was duly carried. There being no further business to come before the meeting, the meeting was, on motion duly made, seconded, and carried, adjourned. CitY Clerk Mayor (3) NOTICE AND CALL OF REGULAR MEETING TO THE CITY COUNCIL OF THE CITY OF CHUBBUCK, BANNOCK COUNTY, STATE OF IDAHO: NOTICE IS GIVEN that the regular meeting of the City Council (herein "Council") of the City of Chubbuck, Idaho (herein "City"), will be held at the Chubbuck City Offices, 5160 Yellowstone Avenue, in the City, at 8:00 p.m., on Tuesday, the 9th day of July, 1974. The object of said meeting, among the regular agenda items, is to consider the adoption of an ordinance authorizing the issuance of the City's sewer revenue bonds in the Principal amount of $1,000,000.00, and for the transaction of such other business incidental to the foregoing as may come before said meeting. Mayor ACKNOWLEDGMENT OF NOTICE AND CONSENT TO THE REGULAR MEETING We, the undersigned Mayor and members of the Council, acknowledge receipt of the foregoing notice of the regular meeting, and we hereby waive any irregularities, if any, in such notice and in the manner of service thereof upon us, and con- sent and agree to the holding of such regular meeting at the time and place specified in such notice, and to the transaction of all business which may come before such meeting. Mayor: ~~/O, ~/~'~~ Councilmen: