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2191ORDINANCE NO. 11 q 1 AN ORDINANCE AUTHORIZING THE ISSUANCE OF WATER SYSTEM REVENUE BONDS, SERIES 2010B OF THE CITY OF BLAIR, NEBRASKA, IN THE AGGREGATE PRINCIPAL AMOUNT OF SIX MILLION FIVE HUNDRED THOUSAND DOLLARS ($6,500,000) AND WATER SYSTEM REVENUE BONDS, SERIES 2010C (TAXABLE INTEREST) IN THE AGGREGATE PRINCIPAL AMOUNT OF SEVEN HUNDRED SEVENTY THOUSAND DOLLARS ($770,000) FOR THE PURPOSE OF PAYING THE COSTS OF IMPROVEMENTS TO THE CITY'S WATERWORKS PLANT AND WATER SYSTEM AND PROVIDING FOR THE PAYMENT AND REDEMPTION OF CERTAIN OF THE CITY'S OUTSTANDING WATER SYSTEM REVENUE BOND ANTICIPATION NOTES, SERIES 2007A; DIRECTING THE APPLICATION OF THE PROCEEDS OF SAID BONDS; PRESCRIBING THE FORM, TERMS AND DETAILS OF SAID BONDS; PLEDGING AND HYPOTHECATING THE REVENUE AND EARNINGS OF THE WATERWORKS PLANT AND WATER SYSTEM OF SAID CITY FOR THE PAYMENT OF SAID BONDS AND INTEREST THEREON; PROVIDING FOR THE COLLECTION, SEGREGATION AND APPLICATION OF THE REVENUES OF SAID WATERWORKS PLANT AND WATER SYSTEM; ENTERING INTO A CONTRACT ON BEHALF OF THE CITY WITH THE HOLDERS OF SAID BONDS; PROVIDING THAT INTEREST ON THE SERIES 2010C BONDS SHALL NOT BE EXCLUDABLE FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES; PROVIDING FOR NOTICE AND HEARING; AND PROVIDING FOR PUBLICATION OF THIS ORDINANCE IN PAMPHLET FORM. BE IT ORDAINED BY THE MAYOR AND THE CITY COUNCIL OF THE CITY OF BLAIR, NEBRASKA: Section 1. The Mayor and Council of the City of Blair hereby find and determine: (a) The City owns and operates a waterworks plant and system (which plant and system, together with any additions, extensions and improvements thereto hereafter made are hereinafter referred to as the "Water System ") which represents a revenue - producing undertaking of the City. (b) The City has issued and outstanding the following bonds which are a lien upon and secured by a pledge of the revenue and earnings of the Water System (collectively, the "Outstanding Bonds "): (i) Water System Revenue Refunding Bonds, Series 2000, Date of Original Issue — September 22, 2000, issued pursuant to Ordinance No. 1909 of the City (the "Series 2000 Ordinance "), in the original principal amount of $3,395,000 (the "Series 2000 Bonds "), of which bonds in the principal amount of $555,000 presently remain outstanding and unpaid; (ii) Water System Revenue Bond, Series 2000B, dated September 8, 2000, issued pursuant to Ordinance No. 1907 of the City (the "Series 2000B Ordinance "), in the original principal amount of $6,815,700 (the "Series 2000B Bond "), issued to evidence a loan from the Nebraska Department of Environmental Quality ( "NDEQ ") of which the remaining balance for principal is $4,374,135.49 (as of June 15, 2010 and based upon the original amortization schedule); (iii) Water System Revenue Bond, Series 2006, dated May 26, 2006, issued pursuant to Ordinance No. 2065 of the City (the "Series 2006 Ordinance "), in the original principal amount of $2,700,000 (the "Series 2006 Bond "), issued to support payments on bonded indebtedness incurred by the Papio- Missouri River Natural Resources District, of which the remaining principal balance outstanding is $1,500,000; and (iv) Water System Revenue Bond, Series 2010, dated August 12, 2010, issued pursuant to Ordinance No. 2187 of the City (the "Series 2010 Ordinance "), in the original drawable principal amount of $2,341,400 (the "Series 2010 Bond "), issued to evidence a loan from the Nebraska Department of Environmental Quality ( "NDEQ ") as to which funds have not yet been drawn as of the time of passage and approval of this Ordinance. The Series 2000 Ordinance, the Series 2000B Ordinance, the Series 2006 Ordinance and the Series 2010 Ordinance are referred to in this Ordinance collectively as the "Outstanding Parity Bonds Ordinances ". In addition to the Outstanding Bonds, the City has issued and outstanding, as indebtedness constituting a junior lien pledge to the Outstanding Bonds, the following water revenue bond anticipation note indebtedness (the "Outstanding Notes "): (i) Water System Revenue Bond Anticipation Notes, Series 2007A, dated May 3, 2007, issued pursuant to Ordinance No. 2102 of the City, as amended by Ordinance No. 2109 of the City, and a Designation of Series, Initial Interest Payment Date, Date of Redemption, Final Interest Rate, Pricing and Maturity Schedule dated April 16, 2007, (collectively, the "Series 2007A Ordinance ") in the original amount of $6,500,000 (the "Series 2007A Notes "), issued to pay a portion of the cost of certain enlargements, expansions and improvements to the existing waterworks plant and system of the City, of which the remaining principal balance outstanding is $6,500,000; and (ii) Water System Revenue Bond Anticipation Notes, Series 2007B, dated August 15, 2007, issued pursuant to Ordinance No. 2102 of the City, as amended by Ordinance No. 2109 of the City, and a Designation of Series, Initial Interest Payment Date, Date of Redemption, Final Interest Rate, Pricing and Maturity Schedule dated July 23, 2007, (collectively, the "Series 2007B Ordinance ") in the original amount of $8,000,000 (the "Series 2007B Notes "), issued to pay a portion of the cost of certain enlargements, expansions and improvements to the existing waterworks plant and system of the City, of which the remaining principal balance outstanding is $8,000,000. The Outstanding Bonds and the Outstanding Notes constitute the only presently outstanding indebtedness of the City payable from the revenues of the Water System and for which the revenues of the Water System have been pledged. (c) As of the present time, it is necessary and advisable for the City to obtain permanent financing for the $6,500,000 principal amount of Series 2007A Notes, the 2 proceeds of which have been applied to payment of costs of improvements to the Water System, and to provide for the payment of issuance expenses and the funding of reserves. (d) Section 13 of the Series 2000 Ordinance, Section 6 of the Series 2000B Ordinance, Section 13 of the Series 2006 Ordinance and Section 6 of the Series 2010 Ordinance permit the issuance of "Additional Bonds" which are payable on a parity with the Outstanding Bonds and equally and ratably secured therewith under the terms of the Outstanding Parity Bonds Ordinances provided that the "Net Revenues" (as defined in each of such ordinances and as defined in this Ordinance) have been at least equal to 1.30 times the "Average Annual Debt Service Requirements" (as defined in each of such ordinances and as defined in this Ordinance) of the Outstanding Bonds and the Additional Bonds proposed to be issued and provided further that such Additional Bonds shall be issued pursuant to an ordinance which shall provide for an increase in the monthly credits to Bond Payment Account sufficient to pay, when due, the principal of and interest on the Outstanding Bonds and the proposed Additional Bonds; with respect to such requirements the following determinations are hereby made: (i) this Ordinance provides for an increase in the monthly credits to Bond Payment Account sufficient to pay, when due, the principal of and interest on the Outstanding Bonds and the Series 2010B /C Bonds (as defined below and as the proposed Additional Bonds to be issued): (ii) the "Net Revenues" (as defined in the Outstanding Parity Bonds Ordinances and in this Ordinance) of the Water System for the fiscal year ended September 30, 2009 were not less than $2,619,874; and (iii) the "Average Annual Debt Service Requirements" (as defined in the Outstanding Parity Bonds Ordinances and in this Ordinance) of the Outstanding Bonds and the Series 2010B /C Bonds (as the proposed Additional Bonds) to be issued are not more than $2,000,000. (e) The Series 2007A Ordinance and the Series 2007B Ordinance both provide that the Outstanding Notes are payable only and solely from the Retained Revenues Account (as defined and described in the Outstanding Parity Bonds Ordinances and this Ordinance) and are subject to the prior payment of operation and maintenance expenses and all payments with respect to the Outstanding Bonds and any Additional Bonds which may from time to time be issued and outstanding (all as described in the Outstanding Parity Bonds Ordinances); the Series 2007A Ordinance and the Series 2007B Ordinance further provide for a lien in favor of the Outstanding Notes upon the revenue and earnings of the Water System which shall be in all respects junior to the lien in favor of the Outstanding Bonds and any Additional Bonds from time to time issued and outstanding. (f) All conditions, acts and things required by law to exist or to be done precedent to the issuance of the Series 2010B /C Bonds as Additional Bonds of equal lien and standing with the Outstanding Bonds and as provided for in the Outstanding Parity Bonds Ordinances do exist and have been done in regular and due form and time as required by law. 3 Section 2. In addition to the definitions provided in parentheses elsewhere in this Ordinance, the following definitions of terms shall apply, unless the context shall clearly indicate otherwise: "Additional Bonds" shall mean any and all bonds hereafter issued by the City pursuant to the terms of this Ordinance which are equal in lien to the Outstanding Bonds and the Series 2010B/C Bonds, including any such bonds issued pursuant to Section 13 of this Ordinance and refunding bonds issued pursuant to Section 14 of this Ordinance, as and when such bonds become equal in lien to the Outstanding Bonds and the Series 2010B /C Bonds, according to their terms and the terms of said Sections 13 and 14. "Average Annual Debt Service Requirements" shall mean that number computed by adding all of the principal and interest due when computed to the absolute maturity of the bonds for which such computation is required and dividing by the number of years remaining that the longest bond of any issue for which such computation is required has to run to maturity. In making such computation, the principal of any bonds for which mandatory redemptions are scheduled shall be treated as maturing in accordance with such schedule of mandatory redemptions. "Cargill Contract" shall mean that Water Service Agreement dated June 27, 2000, between the City and Cargill, Incorporated (a Delaware Corporation), as supplemented by the First Addendum to Water Service Agreement dated as of February 27, 2001, and as amended by the First Amendment to Water Service Agreement dated March 9, 2007. "Deposit Securities" shall mean direct obligations of or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. "Net Revenues" shall mean the gross revenues derived by the City from the ownership or operation of the Water System, including investment income, but not including any income from sale or disposition of any property belonging to or forming a part of the Water System, less the ordinary expenses to the City of operating and maintaining the Water System payable from the Operation and Maintenance Account described in Section 11 of this Ordinance. Operation and maintenance expenses for purposes of determining "Net Revenues" shall not include depreciation, amortization (of financing expenses) or interest on any bonds or other indebtedness. Net Revenues for all purposes of this Ordinance shall be shown by an audit for the fiscal year in question as conducted by independent certified public accountants. For purposes of this ordinance, whether or not in accordance with applicable accounting principles, there shall not be included in revenues or expenses, for purposes of determining Net Revenues, gain or loss from the early extinguishment of indebtedness, investment income from any securities deposited in escrow for the defeasance of bonds or unrealized gain or loss on securities held by the City's Water System. 4 "Paying Agent and Registrar" shall mean the City Treasurer of the City of Blair, Nebraska, as appointed to act as the combined paying agent and bond registrar for the Series 2010B /C Bonds pursuant to Section 4 hereof or any duly appointed successor thereto. "Series 2010B Bonds" shall mean the $6,500,000 in aggregate principal amount of Water System Revenue Bonds, Series 2010B, authorized to be issued pursuant to Section 3 of this Ordinance. "Series 2010B /C Bonds" shall mean the Series 2010B Bonds and the Series 2010C Bonds taken together and each and all thereof. "Series 2010C Bonds" shall mean the $770,000 in aggregate principal amount of Water System Revenue Bonds, Series 2010C (Taxable Interest), authorized to be issued pursuant to Section 3 of this Ordinance. Section 3. For the purposes described in Section 1 hereof relating to the redemption of Series 2007A Notes, there shall be and there are hereby ordered issued the negotiable bonds of the City of Blair, Nebraska, to be known as "Water System Revenue Bonds, Series 2010B," in the aggregate principal amount of Six Million Five Hundred Thousand Dollars ($6,500,000), with such Series 2010B Bonds bearing interest at the rates per annum and maturing on December 15 of the years shown in the principal amounts as follows: Date of Maturity Principal Amount Interest Rate December 15, 2018 $ 405,000 2.75% December 15, 2019 415,000 3.00 December 15, 2020 430,000 3.20 December 15, 2021 440,000 3.35 December 15, 2022 455,000 3.50 December 15, 2023 475,000 3.65 December 15, 2024 490,000 3.80 December 15, 2025 510,000 3.90 December 15, 2030 2,880,000 4.35 The Series 2010B Bonds maturing on December 15, 2030 are subject to mandatory redemption under the provisions of Section 7 of this Ordinance and are herein referred to as the "Series 2010B Term Bonds ". For the purposes described in Section 1 hereof relating to the funding of reserves and payment of issuance costs, there shall be and there are hereby ordered issued the negotiable bonds of the City of Blair, Nebraska, to be known as "Water System Revenue Bonds, Series 2010C (Taxable Interest)" in the 5 aggregate principal amount of Seven Hundred Seventy Thousand Dollars ($770,000), with such Series 2010C Bonds bearing interest at the rates per annum and maturing on December 15 of the years shown in the principal amounts as follows: Date of Maturity Principal Amount Interest Rate December 15, 2016 $ 380,000 3.25% December 15, 2017 390,000 3.50 The Series 2010B /C Bonds shall be issued in fully registered form in the denomination of $5,000 or any integral multiple thereof. The date of original issue for the Series 2010B /C Bonds shall be the date of delivery thereof. Interest on the Series 2010B /C Bonds, at the respective rates for each maturity, shall be payable semiannually on June 15 and December 15 of each year, commencing June 15, 2011 (each of said dates an "Interest Payment Date ") and the Series 2010B /C Bonds shall bear such interest from the date of original issue or the most recent Interest Payment Date, whichever is later. Interest shall be computed on the basis of a 360 -day year consisting of twelve 30 -day months. The interest due on each Interest Payment Date shall be payable to the registered owners of record as of the close of business on the last business day of the month immediately preceding the month in which each Interest Payment Date occurs (the "Record Date "), subject to the provisions of Section 5 hereof. The Series 2010B /C Bonds shall be numbered from 1 upwards in the order of their issuance as to each series thereof. No Series 2010B /C Bond shall be issued originally or upon transfer or partial redemption (if applicable) having more than one principal maturity. The initial bond numbering and principal amounts for each of the Series 2010B /C Bonds issued shall be designated by the City's Treasurer as directed by the initial purchaser thereof. Payments of interest due prior to maturity or earlier redemption (if applicable) on the Series 2010B /C Bonds shall be made by the Paying Agent and Registrar, as designated pursuant to Section 4 hereof, by mailing a check or draft in the amount due for such interest on each Interest Payment Date to the registered owner of each Series 2010B /C Bond, as of the Record Date for such Interest Payment Date, to such owner's registered address as shown on the books of registration as required to be 6 maintained in Section 4 hereof. Payments of principal and unpaid accrued interest thereon due at maturity or at any date fixed for redemption prior to maturity (if applicable) shall be made by said Paying Agent and Registrar to the registered owners upon presentation and surrender of the Series 2010B /C Bonds to said Paying Agent and Registrar. The City and said Paying Agent and Registrar may treat the registered owner of any Series 2010B /C Bond as the absolute owner of such bond for the purpose of making payments thereon and for all other purposes and neither the City nor the Paying Agent and Registrar shall be affected by any notice or knowledge to the contrary, whether such bond or any installment of interest due thereon shall be overdue or not. All payments on account of interest or principal made to the registered owner of any Series 2010B /C Bond in accordance with the terms of this Ordinance shall be valid and effectual and shall be a discharge of the City and said Paying Agent and Registrar, in respect of the liability upon the Series 2010B /C Bonds or claims for interest to the extent of the sum or sums so paid. Section 4. The City Treasurer is hereby designated as the Paying Agent and Registrar for the Series 2010B /C Bonds, provided that the Mayor and Council shall have the right to designate a bank or trust company as successor paying agent and registrar to serve under the terms of any such agreement as the Mayor and Council shall determine to be appropriate. The Paying Agent and Registrar shall keep and maintain for the City books for the registration and transfer of the Series 2010B /C Bonds at the City's Offices, in Blair, Nebraska. The names and registered addresses of the registered owner or owners of the Series 2010B /C Bonds shall at all times be recorded in such books. Any Series 2010B /C Bond may be transferred pursuant to its provisions at the office of said Paying Agent and Registrar by surrender of such bond for cancellation, accompanied by a written instrument of transfer, in form satisfactory to said Paying Agent and Registrar, duly executed by the registered owner in person or by such owner's duly authorized agent, and thereupon the Paying Agent and Registrar on behalf of the City will deliver at the Paying Agent and Registrar's office (or send by registered mail to the transferee owner or owners thereof at such 7 transferee owner's or owners' risk and expense), registered in the name of such transferee owner or owners, a new Series 2010B /C Bond or Series 2010B /C Bonds of the same series, interest rate, aggregate principal amount and maturity. To the extent of the denominations authorized for the Series 2010B /C Bonds by this Ordinance, one such bond may be transferred for several such bonds of the same series, interest rate and maturity, and for a like aggregate principal amount, and several such bonds may be transferred for one or several such bonds, respectively, of the same series, interest rate and maturity and for a like aggregate principal amount. In every case of transfer of a Series 2010B /C Bond, the surrendered Series 2010B /C Bond or Bonds shall be canceled and destroyed. All Series 2010B /C Bonds issued upon transfer of the Series 2010B /C Bonds so surrendered shall be valid obligations of the City evidencing the same obligations as the Series 2010B /C Bonds surrendered and shall be entitled to all the benefits and protection of this Ordinance to the same extent as the Series 2010B /C Bonds upon transfer of which they were delivered. The City and said Paying Agent and Registrar shall not be required to transfer any Series 2010B /C Bond during any period from any Record Date until its immediately following Interest Payment Date or to transfer any Series 2010B /C Bond called for redemption (if applicable) for a period of 30 days next preceding the date fixed for redemption. Section 5. In the event that payments of interest due on the Series 2010B /C Bonds on an Interest Payment Date are not timely made, such interest shall cease to be payable to the registered owners as of the Record Date for such Interest Payment Date and shall be payable to the registered owners of the Series 2010B /C Bonds as of a special date of record for payment of such defaulted interest as shall be designated by the Paying Agent and Registrar whenever monies for the purpose of paying such defaulted interest become available. Section 6. If the date for payment of the principal of or interest on the Series 2010B /C Bonds shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the City of Blair, Nebraska, are authorized by law or executive order to close, then the date for such payment shall be 8 the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized to close, and payment on such day shall have the same force and effect as if made on the nominal date of payment. Section 7. The Series 2010B Bonds shall be subject to redemption, in whole or in part, prior to maturity at any time on or after the fifth anniversary of the date of original issue, at par plus accrued interest on the principal amount redeemed to the date fixed for redemption. The City may select the Series 2010B Bonds to be redeemed for optional redemptions in its sole discretion. The Series 2010B Term Bonds are required to be redeemed prior to their stated maturity, commencing on December 15, 2026, and continuing on December 15 of each year thereafter, which redemptions shall be in the years and for the principal amounts set forth below: Year of Redemption Amount Required to Be Redeemed 2026 $ 530,000 2027 550,000 2028 575,000 2029 600,000 2030 (final maturity) 625,000 Such scheduled mandatory redemptions shall be at a price equal to 100% of the principal amount redeemed plus interest accrued on the principal amount being redeemed to the date fixed for redemption. The Paying Agent and Registrar shall select the Series 2010B Term Bonds for mandatory redemption using any random method of selection deemed appropriate by the Paying Agent and Registrar. The Series 2010B Bonds shall be redeemed only in amounts of $5,000 or integral multiples thereof. Any Series 2010B Bond redeemed in part only shall be surrendered to said Paying Agent and Registrar in exchange for a new Series 2010B Bond evidencing the unredeemed principal thereof. Notice of redemption of any Series 2010B Bond called for redemption shall be given at the direction of the City, in the case of optional redemptions and without further direction in the case of mandatory redemptions, by said Paying Agent and Registrar by mail not less than 30 days prior to the date fixed for redemption, first class, postage prepaid, sent to the registered owner of such Series 2010B Bond at said owner's registered address. Such notice shall designate the Series 2010B Bond or Bonds to be redeemed by maturity or otherwise, the date of original issue and the date fixed for redemption and shall state that such bond or bonds are to be 9 presented for prepayment at the office of said Paying Agent and Registrar. In case of any Series 2010B Bond partially redeemed, such notice shall specify the portion of the principal amount of such bond to be redeemed. No defect in the mailing of notice for any Series 2010B Bond shall affect the sufficiency of the proceedings of the City designating the Series 2010B Bonds called for redemption or the effectiveness of such call for Series 2010B Bonds for which notice by mail has been properly given and the City shall have the right to further direct notice of redemption for any such bond for which defective notice has been given. The Series 2010C Bonds are not subject to redemption prior to maturity. Section 8. The Series 2010B Bonds shall be in substantially the following form: 10 Interest Rate UNITED STATES OF AMERICA STATE OF NEBRASKA COUNTY OF WASHINGTON CITY OF BLAIR WATER SYSTEM REVENUE BOND, SERIES 2010B Maturity Date December 15, 20 Date of Original Issue CUSIP No. September , 2010 Registered Owner: Principal Amount: Thousand Dollars ($ ) KNOW ALL PERSONS BY THESE PRESENTS: That the City of Blair, in the County of Washington, in the State of Nebraska, hereby acknowledges itself to owe and for value received promises to pay, but only from the special sources hereinafter described, to the registered owner specified above, or registered assigns, the principal amount specified above in lawful money of the United States of America on the date of maturity specified above with interest thereon to maturity (or earlier redemption) from the date of original issue or most recent Interest Payment Date, whichever is later, at the rate per annum specified above (said interest to be computed on the basis of a 360 -day year consisting of twelve 30 -day months), payable semiannually on June 15 and December 15 of each year commencing June 15, 2011 (each of said dates an "Interest Payment Date "). The principal hereof and unpaid accrued interest hereon due at maturity or upon earlier redemption are payable upon presentation and surrender of this bond at the office of City Treasurer of the City of Blair, Nebraska, the Paying Agent and Registrar, in Blair, Nebraska. Interest on this bond due prior to maturity or earlier redemption will be paid on each Interest Payment Date by a check or draft mailed by the Paying Agent and Registrar to the registered owner of this bond, as shown on the books of record maintained by the Paying Agent and Registrar, at the close of business on the last business day of the month immediately preceding the month in which the Interest Payment Date occurs, to such owner's address as shown on such books and records. Any interest not so timely paid shall cease to be payable to the person entitled thereto as of the record date such interest was payable, and shall be payable to the person who is the registered owner of this bond (or of one or more predecessor bonds hereto) on such special record date for payment of such defaulted interest as shall be fixed by the Paying Agent and Registrar whenever monies for such purpose become available. This bond is one of a series of fully registered bonds of the total principal amount of Six Million Five Hundred Thousand Dollars ($6,500,000), of even date and like tenor except as to date of maturity, rate of interest and denomination which were issued by the City for providing for the payment of costs of additions and improvements to the City's waterworks plant and water system, including the payment and redemption of $6,500,000 of the City's Water System Revenue Bond Anticipation Notes, Series 2007A, proceeds of which have been applied to such costs, in pursuance of Sections 18 -1803 to 18 -1805, R.R.S. Neb. 2007, and has been duly authorized by ordinance (the "Ordinance ") legally passed, approved and published and by proceedings duly had by the Mayor and Council of said City. 11 Any or all of the bonds of said series and issue are subject to redemption at the option of the City, in whole or in part, at any time on or after the fifth anniversary of the date of original issue shown above, at par plus interest accrued on the principal amount redeemed to the date fixed for redemption. The Series 2010 Bonds due as term bonds in the year 2030 (the "Series 2010B Term Bonds ") are required to be redeemed prior to their stated maturity, commencing on December 15, 2026, and continuing on December 15 of each year thereafter, in part, which redemptions shall be in the years and for the principal amounts set forth below: Year of Redemption Amount Required to Be Redeemed 2026 $ 530,000 2027 550,000 2028 575,000 2029 600,000 2030 (final maturity) 625,000 Such mandatory redemptions shall be at a price equal to 100% of the principal amount redeemed plus interest accrued on the principal amount being redeemed to the date fixed for redemption. The Paying Agent and Registrar shall select the Series 2010B Term Bonds for mandatory redemption using any random method of selection deemed appropriate by the Paying Agent and Registrar. Notice of redemption shall be given by mail to the registered owner of any bond to be redeemed at said registered owner's address in the manner specified in the ordinance authorizing said issue of bonds. Individual bonds may be redeemed in part but only in $5,000 amounts or integral multiples thereof. This bond is transferable by the registered owner or such owner's attorney duly authorized in writing at the office of the Paying Agent and Registrar upon surrender and cancellation of this bond, and thereupon a new bond or bonds of the same series, aggregate principal amount, interest rate and maturity will be issued to the transferee as provided in the Ordinance authorizing said issue of bonds, subject to the limitations therein prescribed. The City, the Paying Agent and Registrar and any other person may treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment due hereunder and for all purposes and shall not be affected by any notice to the contrary, whether this bond be overdue or not. If the date for payment of the principal of or interest on this bond shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the City of Blair, Nebraska, are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized to close, and payment on such day shall have the same force and effect as if made on the nominal date of payment. The revenue and earnings of the waterworks plant and water system of the City of Blair (as now owned or hereafter acquired, the "Water System ") are pledged and hypothecated, equally and ratably for the payment of this bond and the other bonds of this series and issue and the City's Water System Revenue Refunding Bonds, Series 2000, date of original issue — September 22, 2000; the City's Water System Revenue Bond, Series 2000B, dated September 8, 2000 issued to evidence a loan from the Nebraska Department of Environmental Quality; the City's Water System Revenue Bond, Series 2006, dated May 26, 2006, issued to support the payment of certain bonds issued by the Papio - Missouri River Natural Resources District; the City's Water System Revenue Bond, Series 2010, dated August 12, 2010 issued to evidence a loan from the Nebraska Department of Environmental Quality; the City's Water 12 System Revenue Bonds, Series 2010C, bearing the same date of original issue as the date of original issue for this bond (collectively, the "Outstanding Bonds "); and any additional bonds of equal priority to the bonds of this issue and the Outstanding Bonds issued in accordance with the Ordinance authorizing the bonds of this issue. The bonds of this issue are a lien only upon said revenue and earnings of the Water System and are not general obligations of the City of Blair, Nebraska. The Ordinance authorizing the issuance of this bond and the other bonds of this series and issue sets forth the covenants and obligations of the City with respect to the Water System and the application of the revenues to be derived therefrom, which revenues are by the terms of said Ordinance to be deposited into the "Blair Water System Fund" and disbursed to make payments of principal and interest on the bonds of this issue and the Outstanding Bonds, to pay costs of operation and maintenance, and make other payments as specified in said Ordinance. Said Ordinance also designates the terms and conditions on which additional bonds of equal lien to the bonds of this series and issue and the Outstanding Bonds may be issued. The City also reserves the right to issue bonds junior in lien to the bonds of this series and issue, the principal and interest of which are payable from moneys in the "Retained Revenues Account" of the Blair Water System Fund as described in the Ordinance. Said Ordinance also designates the terms and conditions on which this bond shall cease to be entitled to any lien, benefit or security under such Ordinance and all covenants, agreements and obligations of the City under such Ordinance may be discharged and satisfied at or prior to the maturity or redemption of this bond if monies or certain specified securities shall have been deposited with a designated fiduciary. AS PROVIDED IN THE ORDINANCE REFERRED TO HEREIN, UNTIL THE TERMINATION OF THE SYSTEM OF BOOK - ENTRY -ONLY TRANSFERS THROUGH THE DEPOSITORY TRUST COMPANY, NEW YORK, NEW YORK, (TOGETHER WITH ANY SUCCESSOR SECURITIES DEPOSITORY APPOINTED PURSUANT TO THE ORDINANCE, "DTC "), AND NOTWITHSTANDING ANY OTHER PROVISIONS OF THE ORDINANCE TO THE CONTRARY, A PORTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE PAID OR REDEEMED WITHOUT SURRENDER HEREOF TO THE PAYING AGENT AND REGISTRAR. DTC OR A NOMINEE, TRANSFEREE OR ASSIGNEE OF DTC OF THIS BOND MAY NOT RELY UPON THE PRINCIPAL AMOUNT INDICATED HEREON AS THE PRINCIPAL AMOUNT HEREOF OUTSTANDING AND UNPAID. THE PRINCIPAL AMOUNT HEREOF OUTSTANDING AND UNPAID SHALL FOR ALL PURPOSES BE THE AMOUNT DETERMINED IN THE MANNER PROVIDED IN THE ORDINANCE. UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED OFFICER OF DTC (A) TO THE PAYING AGENT AND REGISTRAR FOR REGISTRATION OF TRANSFER OR EXCHANGE OR (B) TO THE PAYING AGENT AND REGISTRAR FOR PAYMENT OF PRINCIPAL, AND ANY BOND ISSUED IN REPLACEMENT HEREOF OR SUBSTITUTION HEREOF IS REGISTERED IN THE NAME OF DTC AND ANY PAYMENT IS MADE TO DTC OR ITS NOMINEE, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSONS IS WRONGFUL BECAUSE ONLY THE REGISTERED OWNER HEREOF, DTC OR ITS NOMINEE, HAS AN INTEREST HEREIN. This bond shall not be valid and binding on the City until authenticated by the Paying Agent and Registrar. IT IS HEREBY CERTIFIED AND WARRANTED that all conditions, acts and things required by law to exist or to be done precedent to and in the issuance of this bond did exist, did happen and were done and performed in regular and due form and time as required by law. 13 IN WITNESS WHEREOF, the Mayor and Council of the City of Blair, Nebraska, have caused this bond to be executed on behalf of the City with the facsimile signatures of the Mayor and the City Clerk and by causing the official seal of the City to be imprinted hereon, all as of the date of original issue specified above. ATTEST: (facsimile signature) City Clerk (SEAL) 14 CITY OF BLAIR, NEBRASKA (facsimile signature) Mayor Date: Registered Owner Signature Guaranteed By: Authorized Officer CERTIFICATE OF AUTHENTICATION AND REGISTRATION This bond is one of the series designated therein and has been registered to the owner named in said bond and the name of such owner has been recorded in the books of record maintained by the undersigned as Paying Agent and Registrar for said issue of bonds. (FORM OF ASSIGNMENT) City Treasurer, Paying Agent and Registrar for the City of Blair, Nebraska For value received hereby sells, assigns, and transfers unto the within bond and hereby irrevocably constitutes and appoints Attorney, to transfer the same on the books of registration in the office of the within mentioned Paying Agent and Registrar with full power of substitution in the premises. Note: The signature(s) on this assignment MUST CORRESPOND with the name(s) as written on the face of the within bond in every particular, without alteration, enlargement or any change whatsoever, and must be guaranteed by a commercial bank or a trust company or by a firm having membership on the New York, Midwest or other stock exchange. 15 The Series 2010C Bonds shall be in substantially the following form: UNITED STATES OF AMERICA STATE OF NEBRASKA COUNTY OF WASHINGTON CITY OF BLAIR WATER SYSTEM REVENUE BOND, SERIES 2010C (TAXABLE INTEREST) No. $ Interest Rate Maturity Date Date of Original Issue CUSIP No. December 15, 20 September _, 2010 Registered Owner: Principal Amount: Thousand Dollars ($ ) KNOW ALL PERSONS BY THESE PRESENTS: That the City of Blair, in the County of Washington, in the State of Nebraska, hereby acknowledges itself to owe and for value received promises to pay, but only from the special sources hereinafter described, to the registered owner specified above, or registered assigns, the principal amount specified above in lawful money of the United States of America on the date of maturity specified above with interest thereon to maturity from the date of original issue or most recent Interest Payment Date, whichever is later, at the rate per annum specified above (said interest to be computed on the basis of a 360 -day year consisting of twelve 30 -day months), payable semiannually on June 15 and December 15 of each year commencing June 15, 2011 (each of said dates an "Interest Payment Date "). The principal hereof and unpaid accrued interest hereon due at maturity are payable upon presentation and surrender of this bond at the office of City Treasurer of the City of Blair, Nebraska, the Paying Agent and Registrar, in Blair, Nebraska. Interest on this bond due prior to maturity will be paid on each Interest Payment Date by a check or draft mailed by the Paying Agent and Registrar to the registered owner of this bond, as shown on the books of record maintained by the Paying Agent and Registrar, at the close of business on the last business day of the month immediately preceding the month in which the Interest Payment Date occurs, to such owner's address as shown on such books and records. Any interest not so timely paid shall cease to be payable to the person entitled thereto as of the record date such interest was payable, and shall be payable to the person who is the registered owner of this bond (or of one or more predecessor bonds hereto) on such special record date for payment of such defaulted interest as shall be fixed by the Paying Agent and Registrar whenever monies for such purpose become available. This bond is one of a series of fully registered bonds of the total principal amount of Seven Hundred Seventy Thousand Dollars ($770,000), of even date and like tenor except as to date of maturity, rate of interest and denomination which were issued by the City for providing for the funding of reserves and payment of issuance expenses relating to the City's Water System Revenue Bonds, Series 2010B which are being concurrently issued to provide for payment of costs of additions and improvements to the City's waterworks plant and water system, including the payment and redemption of the City's Water System Revenue Bond Anticipation Notes, Series 2007A, proceeds of which have been applied to such costs. This bond is being issued in pursuance of Sections 18 -1803 to 18 -1805, R.R.S. Neb. 2007, and has been duly authorized by ordinance (the "Ordinance ") legally passed, approved and published and by proceedings duly had by the Mayor and Council of said City. 16 The bonds of this series are being issued with interest which is includable in gross income for federal income tax purposes under the terms of the Internal Revenue Code of 1986, as amended. The bonds of this series are not subject to redemption prior to maturity. This bond is transferable by the registered owner or such owner's attorney duly authorized in writing at the office of the Paying Agent and Registrar upon surrender and cancellation of this bond, and thereupon a new bond or bonds of the same series, aggregate principal amount, interest rate and maturity will be issued to the transferee as provided in the Ordinance authorizing said issue of bonds, subject to the limitations therein prescribed. The City, the Paying Agent and Registrar and any other person may treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment due hereunder and for all purposes and shall not be affected by any notice to the contrary, whether this bond be overdue or not. If the date for payment of the principal of or interest on this bond shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the City of Blair, Nebraska, are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized to close, and payment on such day shall have the same force and effect as if made on the nominal date of payment. The revenue and earnings of the waterworks plant and water system of the City of Blair (as now owned or hereafter acquired, the "Water System ") are pledged and hypothecated, equally and ratably for the payment of this bond and the other bonds of this series and issue and the City's Water System Revenue Refunding Bonds, Series 2000, date of original issue — September 22, 2000; the City's Water System Revenue Bond, Series 2000B, dated September 8, 2000 issued to evidence a loan from the Nebraska Department of Environmental Quality; the City's Water System Revenue Bond, Series 2006, dated May 26, 2006, issued to support the payment of certain bonds issued by the Papio - Missouri River Natural Resources District; the City's Water System Revenue Bond, Series 2010, dated August 12, 2010 issued to evidence a loan from the Nebraska Department of Environmental Quality; the City's Water System Revenue Bonds, Series 2010B, bearing the same date of original issue as the date of original issue for this bond (collectively, the "Outstanding Bonds "); and any additional bonds of equal priority to the bonds of this issue and the Outstanding Bonds issued in accordance with the Ordinance authorizing the bonds of this issue. The bonds of this issue are a lien only upon said revenue and earnings of the Water System and are not general obligations of the City of Blair, Nebraska. The Ordinance authorizing the issuance of this bond and the other bonds of this series and issue sets forth the covenants and obligations of the City with respect to the Water System and the application of the revenues to be derived therefrom, which revenues are by the terms of said Ordinance to be deposited into the "Blair Water System Fund" and disbursed to make payments of principal and interest on the bonds of this issue and the Outstanding Bonds, to pay costs of operation and maintenance, and make other payments as specified in said Ordinance. Said Ordinance also designates the terms and conditions on which additional bonds of equal lien to the bonds of this series and issue and the Outstanding Bonds may be issued. The City also reserves the right to issue bonds junior in lien to the bonds of this series and issue, the principal and interest of which are payable from moneys in the "Retained Revenues Account" of the Blair Water System Fund as described in the Ordinance. Said Ordinance also designates the terms and conditions on which this bond shall cease to be entitled to any lien, benefit or security under such Ordinance and all covenants, agreements and obligations of the City 17 under such Ordinance may be discharged and satisfied at or prior to the maturity of this bond if monies or certain specified securities shall have been deposited with a designated fiduciary. AS PROVIDED IN THE ORDINANCE REFERRED TO HEREIN, UNTIL THE TERMINATION OF THE SYSTEM OF BOOK - ENTRY -ONLY TRANSFERS THROUGH THE DEPOSITORY TRUST COMPANY, NEW YORK, NEW YORK, (TOGETHER WITH ANY SUCCESSOR SECURITIES DEPOSITORY APPOINTED PURSUANT TO THE ORDINANCE, "DTC"), AND NOTWITHSTANDING ANY OTHER PROVISIONS OF THE ORDINANCE TO THE CONTRARY, A PORTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE PAID OR REDEEMED WITHOUT SURRENDER HEREOF TO THE PAYING AGENT AND REGISTRAR. DTC OR A NOMINEE, TRANSFEREE OR ASSIGNEE OF DTC OF THIS BOND MAY NOT RELY UPON THE PRINCIPAL AMOUNT INDICATED HEREON AS THE PRINCIPAL AMOUNT HEREOF OUTSTANDING AND UNPAID. THE PRINCIPAL AMOUNT HEREOF OUTSTANDING AND UNPAID SHALL FOR ALL PURPOSES BE THE AMOUNT DETERMINED IN THE MANNER PROVIDED IN THE ORDINANCE. UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED OFFICER OF DTC (A) TO THE PAYING AGENT AND REGISTRAR FOR REGISTRATION OF TRANSFER OR EXCHANGE OR (B) TO THE PAYING AGENT AND REGISTRAR FOR PAYMENT OF PRINCIPAL, AND ANY BOND ISSUED IN REPLACEMENT HEREOF OR SUBSTITUTION HEREOF IS REGISTERED IN THE NAME OF DTC AND ANY PAYMENT IS MADE TO DTC OR ITS NOMINEE, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSONS IS WRONGFUL BECAUSE ONLY THE REGISTERED OWNER HEREOF, DTC OR ITS NOMINEE, HAS AN INTEREST HEREIN. This bond shall not be valid and binding on the City until authenticated by the Paying Agent and Registrar. IT IS HEREBY CERTIFIED AND WARRANTED that all conditions, acts and things required by law to exist or to be done precedent to and in the issuance of this bond did exist, did happen and were done and performed in regular and due form and time as required by law. IN WITNESS WHEREOF, the Mayor and Council of the City of Blair, Nebraska, have caused this bond to be executed on behalf of the City with the facsimile signatures of the Mayor and the City Clerk and by causing the official seal of the City to be imprinted hereon, all as of the date of original issue specified above. ATTEST: (facsimile signature) City Clerk (SEAL) 18 CITY OF BLAIR, NEBRASKA (facsimile signature) Mayor Date: Registered Owner Signature Guaranteed By: Authorized Officer CERTIFICATE OF AUTHENTICATION AND REGISTRATION This bond is one of the series designated therein and has been registered to the owner named in said bond and the name of such owner has been recorded in the books of record maintained by the undersigned as Paying Agent and Registrar for said issue of bonds. (FORM OF ASSIGNMENT) City Treasurer, Paying Agent and Registrar for the City of Blair, Nebraska For value received hereby sells, assigns, and transfers unto the within bond and hereby irrevocably constitutes and appoints Attorney, to transfer the same on the books of registration in the office of the within mentioned Paying Agent and Registrar with full power of substitution in the premises. Note: The signature(s) on this assignment MUST CORRESPOND with the name(s) as written on the face of the within bond in every particular, without alteration, enlargement or any change whatsoever, and must be guaranteed by a commercial bank or a trust company or by a firm having membership on the New York, Midwest or other stock exchange. 19 Section 9. Each of the Series 2010B /C Bonds shall be executed on behalf of the City with the facsimile signatures of the Mayor and the City Clerk and shall have imprinted thereon the City's seal. The Series 2010B /C Bonds shall be issued initially as "book- entry- only" bonds under the services of The Depository Trust Company (the "Depository "), with one typewritten bond per maturity being issued to the Depository. In such connection said officers are authorized to execute and deliver a Letter of Representations (the "Letter of Representations ") in the form required by the Depository (which may be in the form of one or more instruments or may be a blanket letter previously or contemporaneously executed), for and on behalf of the City, which shall thereafter govern matters with respect to registration, transfer, payment and redemption (if applicable) of the Series 2010B /C Bonds. In the event of issuance of the Series 2010B /C Bonds as "book- entry- only" bonds, the following provisions shall apply: (a) The City and the Paying Agent and Registrar shall have no responsibility or obligation to any broker - dealer, bank or other financial institution for which the Depository holds Series 2010B /C Bonds as securities depository (each, a "Bond Participant ") or to any person who is an actual purchaser of a Series 2010B/C Bond from a Bond Participant while the Series 2010B /C Bonds are in book -entry form (each, a `Beneficial Owner ") with respect to the following: (i) the accuracy of the records of the Depository, any nominees of the Depository or any Bond Participant with respect to any ownership interest in the Series 2010E /C Bonds, (ii) the delivery to any Bond Participant, any Beneficial Owner or any other person, other than the Depository, of any notice with respect to the Series 2010B /C Bonds, including any notice of redemption (if applicable), or (iii) the payment to any Bond Participant, any Beneficial Owner or any other person, other than the Depository, of any amount with respect to the Series 2010B /C Bonds. The Paying Agent and Registrar shall make payments with respect to the Series 2010B /C Bonds only to or upon the order of the Depository or its nominee, and all such payments shall be valid and effective fully to satisfy and discharge the obligations with respect to such Series 2010B /C Bonds to the extent of the sum or sums so paid. No person other than the Depository shall receive an authenticated Bond, except as provided in (e) below. 20 (b) Upon receipt by the Paying Agent and Registrar of written notice from the Depository to the effect that the Depository is unable or unwilling to discharge its responsibilities, the Paying Agent and Registrar shall issue, transfer and exchange Series 2010B /C Bonds requested by the Depository in appropriate amounts. Whenever the Depository requests the Paying Agent and Registrar to do so, the Paying Agent and Registrar will cooperate with the Depository in taking appropriate action after reasonable notice (i) to arrange, with the prior written consent of the City, for a substitute depository willing and able upon reasonable and customary terms to maintain custody of the Series 2010B /C Bonds or (ii) to make available Series 2010B /C Bonds registered in whatever name or names as the Beneficial Owners transferring or exchanging such Series 2010B /C Bonds shall designate. (c) If the City determines that it is desirable that certificates representing the Series 2010B /C Bonds be delivered to the ultimate beneficial owners of the Series 2010B /C Bonds and so notifies the Paying Agent and Registrar in writing, the Paying Agent and Registrar shall so notify the Depository, whereupon the Depository will notify the Bond Participants of the availability through the Depository of bond certificates representing the Series 2010B /C Bonds. In such event, the Paying Agent and Registrar shall issue, transfer and exchange bond certificates representing the Series 2010B /C Bonds as requested by the Depository in appropriate amounts and in authorized denominations. (d) Notwithstanding any other provision of this Ordinance to the contrary, so long as any Series 2010B /C Bond is registered in the name of the Depository or any nominee thereof, all payments with respect to such Series 2010B /C Bond and all notices with respect to such Series 2010B /C Bond shall be made and given, respectively, to the Depository as provided in the Letter of Representations. (e) Registered ownership of the Series 2010B /C Bonds may be transferred on the books of registration maintained by the Paying Agent and Registrar, and the Series 2010B /C Bonds may be delivered in physical form to the following: (i) any successor securities depository or its / nominee; (ii) any person, upon (A) the resignation of the Depository from its functions as depository or (B) termination of the use of the Depository pursuant to this Section. (f) In the event of any partial redemption of a Series 2010B Bond unless and until such partially redeemed bond has been replaced in accordance with the provisions of this Ordinance, the books and records of the Paying Agent and Registrar shall govern and establish the principal amount of such bond as is then outstanding and all of the Series 2010B Bonds issued to the Depository or its nominee shall contain a legend to such effect. If for any reason the Depository resigns and is not replaced, the City shall immediately provide a supply of printed bond certificates, duly executed by manual or facsimile signatures of the Mayor and City Clerk 21 and sealed with the City's seal, for issuance upon the transfers from the Depository and subsequent transfers or in the event of partial redemption (if applicable). In the event that such supply of certificates shall be insufficient to meet the requirements of the Paying Agent and Registrar for issuance of replacement certificates upon transfer or partial redemption (if applicable), the City agrees to order printed an additional supply of such certificates and to direct their execution by manual or facsimile signatures of its then duly qualified and acting Mayor and City Clerk and by imprinting thereon or affixing thereto the City's seal. In case any officer whose signature or facsimile thereof shall appear on any Series 2010B /C Bond shall cease to be such officer before the delivery of such bond (including such certificates delivered to the Paying Agent and Registrar for issuance upon transfer or partial redemption (if applicable), such signature or such facsimile signature shall nevertheless be valid and sufficient for all purposes the same as if such officer or officers had remained in office until the delivery of such bond. The Series 2010B /C Bonds shall not be valid and binding on the City until authenticated by the Paying Agent and Registrar. Thereafter the Series 2010B /C Bonds shall be delivered to the Paying Agent and Registrar for registration and authentication. Upon execution, registration, and authentication of the Series 2010B /C Bonds, they shall be delivered to the City Treasurer, who is authorized to deliver them to Ameritas Investment Corp. (the "Underwriter "), as initial purchaser thereof. The Series 2010B Bonds are hereby sold to the Underwriter for 100% of the principal amount thereof plus accrued interest, if any, thereon to date of payment and delivery. The Series 2010C Bonds are hereby sold to said purchaser for 100% of the principal amount thereof plus accrued interest, if any, thereon to date of payment and delivery. In connection with the purchase of the Series 2010B /C Bonds, the City shall pay the Underwriter its underwriting fee in the amount of $101,780.00 (the "Underwriting Fee "), which fee shall be payable from the proceeds of the Series 2010C Bonds. The Underwriter shall have the right to direct the registration of the Series 2010B /C Bonds and the denominations thereof within each maturity, subject to the restrictions of this Ordinance. The officers of the City (or any one of them) are hereby authorized 22 to execute and deliver the separate Bond Purchase Agreements for each such series for and on behalf of the City. The City Clerk shall make and certify a transcript of the proceedings of the Mayor and Council with respect to the Series 2010B /C Bonds which shall be delivered to said purchaser. The Underwriter and its agents, representatives and the City's bond counsel are hereby authorized to take such actions on behalf of the City as are necessary to effectuate the closing of the issuance and sale of the Series 2010B /C Bonds, including without limitation, authorizing the release of the Series 2010B /C Bonds by the Depository at closing. Section 10. The proceeds of the Series 2010B Bonds, including accrued interest (if any), shall be applied concurrently with the delivery of such bonds as follows: (a) Any accrued interest received upon the issuance of the Series 2010B Bonds shall be deposited into the Bond Payment Account established under Section 11 of this Ordinance for credit to the Debt Service Sub - account therein to be applied to make payment next falling due for interest on the Series 2010B Bonds. (b) The principal proceeds of the Series 2010B Bonds shall be applied upon receipt to redeem a like principal amount of the Series 2007A Notes as called for redemption. The City hereby covenants and agrees to provide all amounts in addition to the principal proceeds of the Series 2010B Bonds necessary to effect the payment in full of such like principal amount of the Series 2007A Notes. The proceeds of the Series 2010C Bonds, including accrued interest (if any), shall be applied concurrently with the delivery of such bonds as follows: (a) Any accrued interest received upon the issuance of the Series 2010C Bonds shall be deposited into the Bond Payment Account established under Section 11 of this Ordinance for credit to the Debt Service Sub - account therein to be applied to make payment next falling due for interest on the Series 2010C Bonds. (b) $648,672.50 shall be applied to make a deposit into the sub - account for the Series 2010B /C Bonds in the Debt Service Reserve Account as required under the terms of Section 11 of this Ordinance. (c) The balance of the proceeds of the Series 2010C Bonds shall be held and applied to payment of costs of issuing the Series 2010B /C Bonds, including but not limited to the Underwriting Fee. Any amounts remaining from such proceeds after all issuance costs have been paid in full shall be deposited to the Bond Payment Account and applied to make the next payments falling due with respect to the Series 2010C Bonds. Section 11. The revenues and earnings of the Water System are hereby pledged and hypothecated for the payment of the Series 2010B /C Bonds, the Outstanding Bonds and any Additional 23 Bonds and interest on such Series 2010B /C Bonds, such Outstanding Bonds and any such Additional Bonds, and the City does hereby agree with the holders of said Series 2010B /C Bonds and Additional Bonds as follows: (a) BLAIR WATER SYSTEM FUND - The entire gross revenues and income derived from the operation of the Water System, including pledges and appropriations from other sources, shall be set aside as collected and deposited in a separate fund designated as the "Blair Water System Fund." For purposes of allocating the monies in the Blair Water System Fund, the City shall maintain the following accounts: (1) Bond Payment Account; (2) Operation and Maintenance Account; (3) Debt Service Reserve Account (with sub - accounts therein); and (4) Retained Revenues Account. (b) BOND PAYMENT ACCOUNT - Out of the Blair Water System Fund there shall be credited monthly on or before the first day of each month to the Bond Payment Account (for credit to the sub - account for the Series 2010B /C Bonds), starting with the month of October, 2010, the following amounts: 1) during the period from and including October 1, 2010 to and including June 1, 2011, an amount equal to 1 /9th of the interest payment due on the Series 2010B /C Bonds on June 15, 2011; 2) during the period from and including July 1, 2011 until the Series 2010B /C Bonds have been paid in full, an amount equal to 1 /6th of the next maturing semiannual interest payment due on the Series 2010B /C Bonds; 3) during the period from and including January 1, 2015 until the Series 2010B /C Bonds have been paid in full, an amount equal to 1 /12th of the next maturing principal payment (including mandatory redemption amounts as and when applicable for purposes of retiring principal) for the Series 2010B /C Bonds; and (4) during such periods and in such amounts, all such payments are as required under the terms of the Outstanding Parity Bonds Ordinances with respect to the Outstanding Bonds. The City Treasurer is hereby authorized and directed, without further authorization, to withdraw monies credited to the Bond Payment Account, or if the monies in such Account are insufficient, then from the Debt Service Reserve Account (as and to the extent that amounts are available in a sub - account therein designated in the authorizing ordinance for each issue) and next from the Retained Revenues Account, an amount sufficient to pay, when due, the principal of and interest on the Series 2010B /C Bonds, the Outstanding Bonds and any Additional Bonds and to transfer the appropriate amounts due to the respective direct payees and the respective paying agent (as the case 24 may be) for each issue of the Series 2010B /C Bonds, the Outstanding Bonds and any issues of Additional Bonds on or before each principal and interest payment date. Upon the issuance of any Additional Bonds pursuant to this Ordinance, appropriate additional credits to the Bond Payment Account shall be provided for sufficient to pay principal and interest on said Additional Bonds. (c) OPERATION AND MAINTENANCE ACCOUNT - After any credits required to be made by the foregoing subparagraph (b) have been made in full, out of the Blair Water System Fund there shall be monthly credited into the Operation and Maintenance Account such amounts as the City shall from time to time determine to be necessary to pay the reasonable and necessary expenses of operating and maintaining the Water System, and the City may withdraw funds credited to the Operation and Maintenance Account as necessary from time to time to pay such expenses. As an operational expense the City shall pay any and all administrative fees required to be paid to NDEQ in connection with those of the Outstanding Bonds which have been issued to NDEQ. (d) DEBT SERVICE RESERVE ACCOUNT - Within the Debt Service Reserve Account there shall be established separate sub - accounts for each series of bonds payable on a parity from the revenues of the Water System including the Series 2010B /C Bonds and the Outstanding Bonds and any Additional Bonds, as shall have been or shall be deemed appropriate by the Mayor and Council in connection with each such issue. No sub - account for the Series 2000B Bond or the Series 2010 Bond (both issued to NDEQ) has been or is to be established under the terms of the Outstanding Parity Bonds Ordinances based upon determinations of the Mayor and Council. For the Series 2000 Bonds a sub - account has been established and is required to be maintained under the terms of the Series 2000 Ordinance. For the Series 2010B /C Bonds there is hereby ordered established the Series 2010B /C Debt Service Reserve Sub - account into which there shall be deposited, from proceeds of the Series 2010C Bonds, the sum of $648,672.50 which shall be maintained as the required balance so long as any of the Series 2010B /C Bonds remain outstanding. Monies credited to the Series 2010B /C Debt Service Reserve Sub - account may be withdrawn, as needed, to provide funds to pay when due the principal of and interest on the Series 2010B /C Bonds, if the Bond Payment Account contains insufficient funds for such purpose, and the City Treasurer is hereby authorized and directed to make such withdrawal if and when needed. The Series 2010B /C Debt Service Reserve Sub - account has been established with respect to and shall be maintained for the security of the Series 2010B /C Bonds only. In the event of any withdrawal from the Series 2010B /C Debt Service Reserve Sub - account but subject to allocation among other sub - accounts in the Debt Service Reserve Account as described below, there shall be credited to the Series 2010B /C Debt Service Reserve Sub - account in the month following such withdrawal all monies in the Blair Water System Fund remaining after making the payments required to be made in such month to the Bond Payment Account and the Operation and Maintenance Account and each month thereafter all such remaining monies shall be credited to the Series 2010B /C Debt Service Reserve Sub - account until such sub - account has been restored to the required balance. In issuing any series of Additional Bonds a separate sub - account in the Debt Service Reserve Account may be established for such series of Additional Bonds but is not required under the terms of this Ordinance. The balance in any such 25 additional sub - account may be funded from monies on hand or from periodic deposits from revenues in the Blair Water System Fund or from the proceeds of such Additional Bonds. Each sub - account in the Debt Service Reserve Account shall be of equal standing with each other sub - account in the Debt Service Reserve Account and available monies from the Blair Water System Fund required to be credited to each such sub - account at any time shall be allocated on a pro rata basis between sub - accounts then requiring credits in accordance with the respective unpaid principal amounts then outstanding for each such issue for which there is a sub - account requiring credits. Each sub - account in the Debt Service Reserve Account shall constitute a separate fund held in trust by the City Treasurer for the separate benefit of the issue of bonds for which it is established. Anything in this Subsection 11(d) to the contrary notwithstanding, the amount required to be maintained in the Debt Service Reserve Account or any sub - account therein shall not at any time exceed the maximum amount permitted to be invested without yield restriction under Section 148 of the Code or any successor provision or related statutory limitation and applicable regulations of the United States Treasury Department. (e) RETAINED REVENUES ACCOUNT Monies in the Blair Water System Fund remaining after the credits required in the foregoing Subsections (b), (c) and (d) shall be credited to the Retained Revenues Account. Monies in the Retained Revenues Account may be used to make up any deficiencies in any of the preceding Accounts, to retire any of the Series 2010B/C Bonds, the Outstanding Bonds or any Additional Bonds prior to their maturity, to pay principal of and interest on any junior lien water system revenue bonds or notes (including the Outstanding Notes) or to provide for any other lawful purpose of the City as directed by the Mayor and City Council. The provisions of this Section 11 shall require the City to maintain a set of books and records in accordance with such accounting methods and procedures as are generally applicable to municipal utility enterprises, which books and records shall show credits to and expenditures from the several Accounts required by this Section. Except as specified below for the Debt Service Reserve Account, the City shall not be required to establish separate bank or investment accounts for said Accounts. Monies credited to the Debt Service Reserve Account or any sub - account therein shall, if maintained in a demand or time deposit account, be kept in a separate account and not commingled with other City or Water System funds. If invested, monies credited to the Debt Service Reserve Account or any sub - account therein may be commingled with other City funds, including Water System funds, so long as the City maintains books and records clearly identifying the specific investments, or portions thereof, which belong to the Debt Service Reserve Account and specific sub - account therein. Monies in any of said Accounts except the Debt Service Reserve Account may be invested in permissible investments for a City of the class to which 26 the City of Blair belongs as of the time of such investment. Monies in the Debt Service Reserve Account or any sub - account therein may be invested in Deposit Securities or in certificates of deposit, savings accounts or other interest bearing accounts in banks which are members of the Federal Deposit Insurance Corporation, except that whenever the amount so deposited exceeds the amount of the F.D.I.C. insurance available thereon, the excess shall be secured in the manner required by Section 16 -715 R.R.S. Neb. 2007. Investments made from or attributable, in whole or in part, to the Debt Service Reserve Account shall mature or be redeemable at the option of the holder, without penalty, in not more than ten years. Investments made from or attributable to the Bond Payment Account shall mature or be redeemable at the option of the holder by no later than the time monies are required for payments due from such account. Income from or profit realized from investment for any Account shall be credited to such Account until such Account contains any amount then required to be therein, and thereafter such income or profit shall be transferred to the Blair Water System Fund and treated as other revenues from the operation of the Water System. The pledge of the revenues and earnings of the Water System provided for in this Ordinance for the Series 2010B /C Bonds, the Outstanding Bonds and any Additional Bonds, subject to the right of the City to issue Additional Bonds as provided in this Ordinance and the Outstanding Parity Bonds Ordinances, is intended as a first and prior pledge of, lien on and security interest in such revenues and earnings for the payment of principal of and interest on the Series 2010B /C Bonds, the Outstanding Bonds and any Additional Bonds, superior to any pledge or promise made with respect to any other indebtedness of the City as to its Water System, and is intended to be a full exercise of the powers of the City provided for in Sections 18 -1803 to 18 -1805, R.R.S. Neb. 2007, as amended, with respect to its Water System. Section 12. So long as any of the Series 2010B /C Bonds, the Outstanding Bonds and any Additional Bonds issued pursuant to this Ordinance shall remain outstanding and unpaid, the City 27 covenants and agrees to establish, revise, from time to time as necessary, and collect such rates and charges for the water and water service furnished from the Water System adequate to produce revenues and earnings sufficient at all times: (a) To provide funds to pay, when due, the principal of and interest on the Series 2010B /C Bonds, the Outstanding Bonds and any Additional Bonds issued pursuant to this Ordinance. (b) To pay all proper and necessary costs of operation and maintenance of the Water System and to pay for the necessary and proper repairs, replacements, enlargements, extensions and improvements to the Water System, including payment as the same fall due of any administrative fees related to the Series 2000B Bond and the Series 2010 Bond. (c) To provide funds sufficient to make the credits into the Accounts and at the times and in the amounts required by Section 11 of this Ordinance. (d) To maintain Net Revenues in each fiscal year adopted by the City for the Water System in an amount not less than 1.25 times the total amount of principal paid or payable (exclusive of any principal redeemed prior to maturity other than principal redeemed pursuant to a schedule of mandatory redemptions) and interest falling due during such fiscal year on the Series 2010B /C Bonds, the Outstanding Bonds and any Additional Bonds issued pursuant to this Ordinance. Section 13. To provide funds for any purpose related to the Water System, the City may issue Additional Bonds (other than Additional Bonds issued for refunding purposes which are governed by Section 14 of this Ordinance) payable from the revenues of the Water System having equal priority and on a parity with the Series 2010B /C Bonds, the Outstanding Bonds and any Additional Bonds then outstanding, only upon compliance with the following conditions: (a) Such Additional Bonds shall be issued only pursuant to an ordinance which shall provide for an increase in the monthly credits into the Bond Payment Account in amounts sufficient to pay, when due, the principal of and interest on the Series 2010B /C Bonds, the Outstanding Bonds and any Additional Bonds then outstanding and the proposed Additional Bonds. (b) The City shall have complied with one or the other of the two following requirements: 1) The Net Revenues derived by the City from its Water System for the fiscal year next preceding the issuance of the Additional 28 Bonds shall have been at least equal to 1.30 times the Average Annual Debt Service Requirements of the Series 2010B /C Bonds, the Outstanding Bonds and any Additional Bonds, all as then outstanding, and of the proposed Additional Bonds; or 2) The City shall have received a projection made by a consulting engineer or firm of consulting engineers, or by a certified public account or firm of certified public accounts (either one of which shall be recognized as having experience and expertise in municipal utility systems) projecting that the Net Revenues of the Water System in each of the three full fiscal years after the issuance of such Additional Bonds will be at least equal to 1.35 times the Average Annual Debt Service Requirements of the Series 2010B /C Bonds, the Outstanding Bonds and any Additional Bonds, all as then outstanding, and of the proposed Additional Bonds. In making such projection, the consulting engineer or accountant shall use as a basis the Net Revenues of the Water System during the last fiscal year for which an independent audit has been prepared and shall adjust such Net Revenues as follows: (A) to reflect changes in rates which have gone into effect since the beginning of the fiscal year for which the audit was made, (B) to reflect such engineer's or accountant's estimate of the net increase over or net decrease under the Net Revenues of the Water System for the fiscal year for which the audit was made by reason of: (i) changes of amounts payable under existing contracts for services; (ii) additional general income from sales to customers under existing rate schedules for various classes of customers or as such schedules may be revised under a program of changes which has been adopted by the Mayor and Council of the City; (iii) projected revisions in costs for labor, wages, salaries, machinery, equipment, supplies and other operational items; (iv) revisions in the amount of service to be supplied and any related administrative or other costs associated with such increases due to increased supply from the acquisition of any new facility; (v) anticipated receipts from service to any additional customer or customers for the Water System; and (vi) such other factors affecting the projections of revenues and expenses as the consulting engineer or accountant deems reasonable and proper. Annual debt service on any proposed Additional Bonds to be issued, may be estimated by the consulting engineer or certified public accountant in projecting Average Annual Debt Service Requirements, but no Additional Bonds shall be issued requiring any annual debt service payment in excess of the amount so estimated by the consulting engineer or certified public accountant in any final projections furnished to the City. 29 If the City shall find it desirable it shall also have the right when issuing Additional Bonds to combine with its Water System any other utilities of the City authorized to be combined under Sections 19 -1305 through 19 -1308 or 18 -1803 through 18 -1805 R.R.S. Neb. 2007, and to cause all of the revenues of such combined utilities systems to be paid into the Blair Water System Fund, which fund may be appropriately redesignated, and to provide that all of the Series 2010B /C Bonds, Outstanding Bonds and any Additional Bonds previously issued, all as then outstanding, and the proposed issue of Additional Bonds shall be payable from the revenues of such combined utilities and shall stand on a parity and in equality as to security and payment, provided, however, no utility shall be combined with the Water System as contemplated in this paragraph unless the conditions of subsection 13(a) shall have been satisfied and the Net Revenues of the combined utilities systems shall satisfy one or the other of the requirements for Additional Bonds provided in subsection 13(b) above. For purposes of meeting such requirements, the definition of Net Revenues shall be altered to include the gross revenues of the additional utility or utilities and to take into consideration ordinary expenses of operating and maintaining the additional utility or utilities. In making any projections the consulting engineer or certified public accountant shall take into consideration the factors described in 13(b)(2) above with respect to such additional utility or utilities. Net Revenues of the additional utility or utilities shall be based upon the report or reports of independent certified public accountants in the same manner as is required under subsection 13(b) above. Section 14. The City may issue refunding bonds, which shall qualify as Additional Bonds under this Section 14, to refund any Series 2010B /C Bonds, the Outstanding Bonds or Additional Bonds without compliance with the provisions of subsection 13(b) above, provided that, if any such Series 2010B /C Bonds, Outstanding Bonds or Additional Bonds are to remain outstanding after the issuance of such refunding bonds, the principal payments due in any calendar year in which those bonds which are to remain outstanding mature, or in any calendar year prior thereto, shall not be increased over the amount of such principal payments due in such calendar years immediately prior to such refunding. 30 The City may also issue refunding bonds which shall qualify as Additional Bonds of equal lien to refund any Series 2010B /C Bonds, any Outstanding Bonds or Additional Bonds then outstanding, provided, that if any such Series 2010B /C Bonds, Outstanding Bonds or Additional Bonds then outstanding are to remain outstanding after the application of the proceeds of the refunding bonds to the payment of the bonds which are to be refunded, such issuance must comply with the Net Revenues test set forth in Subsection 13(b)(1) of this ordinance and, if the proceeds of such refunding bonds are not to be applied immediately to the satisfaction of the bonds which are to be refunded, then such refunding bonds must provide by their terms that they shall be junior in lien to all Series 2010B /C Bonds, Outstanding Bonds and any Additional Bonds outstanding at the time of issuance of such refunding bonds until the time of application of their proceeds to the satisfaction of the bonds which are to be refunded. In computing Average Annual Debt Service Requirements to show compliance with said Net Revenues test for such refunding bonds, all payments of principal and interest due on such refunding bonds from the time of their issuance to the time of application of the proceeds of such refunding bonds to the satisfaction of the bonds which are to be refunded shall be excluded from such computation to the extent that such principal and interest are payable from sources other than the revenues of the Water System, such as bond proceeds or investment earnings on bond proceeds, or from monies in the Retained Revenues Account, and all payments of principal and interest due on the bonds which are to be refunded from and after the time of such application shall also be excluded. For purposes of this paragraph of this Section 14, the time of application of the proceeds of the refunding bonds to the satisfaction of the bonds which are to be refunded shall be the time of deposit with the paying agent for such bonds which are to be refunded pursuant to Section 10 -126 R.R.S. Neb. 2007 (or any successor statutory provision thereto) or the time when such bonds which are to be refunded under the terms of their authorizing ordinance or ordinances are no longer deemed to be outstanding, whichever occurs sooner. 31 Section 15. The City hereby covenants and agrees that so long as any of the Series 2010B /C Bonds, the Outstanding Bonds and any Additional Bonds are outstanding, it will not issue any bonds or notes payable from the revenues of the Water System except in accordance with the provisions of this Ordinance, provided, however, the City reserves the right to issue bonds or notes which are junior in lien to the Series 2010B /C Bonds, the Outstanding Bonds and any such Additional Bonds with the principal and interest of such bonds or notes to be payable from monies credited to the Retained Revenues Account as provided in Subsection 11(f). The term "Additional Bonds" as used in this ordinance refers only to such bonds as are payable from the revenues of the Water System on a parity with the Series 2010B /C Bonds and the Outstanding Bonds and are issued in accordance with the terms of said Sections 13 and 14. Section 16. So long as any of the Series 2010B/C Bonds, the Outstanding Bonds or Additional Bonds are outstanding, the City hereby covenants and agrees as follows: (a) The City will maintain the Water System in good condition and will continuously operate the same in a reasonable and efficient manner, and the City will punctually perform all the duties with reference to said system required by the Constitution and statutes of the State of Nebraska, but this covenant shall not prevent the City from discontinuing the use and operation of all or any portion of the Water System so long as the revenues derived from the City's ownership of the properties constituting the Water System shall be sufficient to fulfill this City's obligations under Section 12 of this Ordinance. (b) The City will not grant any franchise or right to any person, firm or corporation to own or operate a water system in competition with that owned by the City. (c) The City will maintain insurance on the property constituting the Water System (other than such portions of the system as are not normally insured against loss by casualty) in the amounts and against the risks customarily carried by similar utilities, but including fire and extended coverage insurance in an amount which would enable the City to repair, restore or replace the property damaged to the extent necessary to make the Water System operable in an efficient and proper manner to carry out the City's obligations under this Ordinance. The Mayor and Council shall annually, within one month after the end of each fiscal year adopted by the City for the Water System examine the amount of insurance carried with respect to the Water System and shall evidence approval of such insurance by resolution. The proceeds of any such insurance received by the City shall be used to repair, replace or restore the property damaged or destroyed to the extent necessary to make the Water System operable in an efficient and proper manner, and any amount of insurance proceeds not 32 so used shall be credited to the Retained Revenues Account. In the event of any such insured casualty loss, the City may advance funds to make temporary repairs or provide for an advance on costs of the permanent repair, restoration or replacement from the Operation and Maintenance Account and any such advances shall be repaid from insurance proceeds received. The City agrees to obtain and maintain so long as any of the Series 2010B /C Bonds are outstanding, as and to the extent available from insurance carriers authorized to provide insurance in the State of Nebraska, business interruption insurance or loss of earnings insurance providing a monthly coverage amount of not less than $123,500 for a covered period of not less than six months (subject to actual loss experience). (d) The City will keep proper books, records and accounts separate from all other records and accounts in which complete and correct entries will be made of all transactions relating to the Water System. The City will have its operating and financial statements relating to the Water System audited annually by a certified public accountant or firm of certified public accountants. The City will furnish to the original purchaser of the Series 2010B /C Bonds and to the original purchaser or purchasers of each series of Additional Bonds issued hereunder, within six months after the end of each fiscal year of the Water System, a copy of the financial statements of the Water System and the report thereon of the certified public accountants. (e) The City shall cause each person handling any of the monies in the Blair Water System Fund to be bonded by an insurance company licensed to do business in Nebraska in an amount or amounts deemed sufficient to cover at all times the maximum amount of money belonging to the Water System in the possession or control of any such person. The amount of such bond or bonds shall be fixed by the Mayor and Council and the costs thereof shall be paid as an operating and maintenance expense from the Operation and Maintenance Account. (f) So long as the City is current with all payments or credits required to be made under Section 11 hereof and is also in compliance with the covenants of Section 12 hereof, the City may pay for water service used by it at such rate or rates as shall be determined by the Mayor and Council. In the event that the City is not in compliance with the provisions of said Sections 11 and 12 hereof, the City shall be required to pay for water service used by it at the rate or rates applicable to such usage as fixed by the City's water rate ordinances then in effect. (g) The City covenants and agrees for the benefit of the registered owners of the Series 2010B /C Bonds that it will observe all contractual obligations provided for in the Outstanding Parity Bonds Ordinances and any agreement or agreements relating to the loans from NDEQ evidenced by the Series 2000B Bond and the Series 2010 Bond. (h) The City agrees that so long as the Series 2010B /C Bonds are outstanding and unpaid it will keep in force and effect the Cargill Contract and will not amend the provisions thereof in any manner which reduces amounts payable thereunder to any level which would cause the City to be in violation of the provisions of Section 12 of this Ordinance. 33 Section 17. The City's obligations under this Ordinance and the liens, pledges, covenants, and agreements of the City herein made or provided for, shall be fully discharged and satisfied as to the Series 2010B/C Bonds issued pursuant to this Ordinance and any such bonds shall no longer be deemed outstanding hereunder if such bonds shall have been purchased and canceled by the City, or when payment of the principal of and interest thereon to the respective date of maturity or redemption (a) shall have been made or caused to be made in accordance with the terms thereof; or (b) shall have been provided for by depositing with a national or state bank having trust powers, or trust company, in trust solely for such payment (1) sufficient money to make such payment or (2) Deposit Securities in such amount and bearing interest at such rates and payable at such time or times and maturing or redeemable at stated fixed prices at the option of the holder as to principal at such time or times as will ensure the availability of sufficient money to make such payment; provided, however, that with respect to any bond to be paid prior to maturity, the City shall have duly given notice of redemption of such bonds as provided by law or made irrevocable provisions for the giving of such notice. Any such money so deposited with a bank or trust company may be invested and reinvested in Deposit Securities at the direction of the City, and all interest and income from such Deposit Securities in the hands of such bank or trust company in excess of the amount required to pay principal of and interest on the bonds for which such monies were deposited, shall be paid over to the City as and when collected. For purposes of this Section 17, any Deposit Securities shall be non - callable or callable only at the option of the holder. Section 18. The terms and provisions of this Ordinance do and shall constitute a contract between the City of Blair and the registered owners of the Series 2010B /C Bonds and no changes, variations or alterations of any kind, except for changes necessary to cure any ambiguity, formal defect or omission, shall be made to this Ordinance without the written consent of the registered owners of two - thirds (2 /3rds) in principal amount of the Series 2010B /C Bonds then outstanding, provided, however, that neither the principal and interest to be paid upon any bond or the maturity date of any bond shall be changed without the written consent of all registered owners of the Series 2010B /C Bonds then outstanding affected thereby. The registered owner of any Series 2010B /C Bond or Bonds may, either in law or in equity, by suit, action, mandamus or other proceeding, enforce or compel performance of any 34 and all of the acts and duties required by this Ordinance, and any court of competent jurisdiction may, after default in payment of principal or interest or performance of any other obligations under this Ordinance, on application of any such holder, appoint a receiver to take charge of the Water System and operate the same and apply the earnings thereof to the payment of the principal of and interest on bonds issued pursuant to this Ordinance in accordance with the provisions hereof, the provisions of the Outstanding Parity Bonds Ordinances and any ordinance authorizing Additional Bonds. Section 19. The Mayor and City Clerk of the City are hereby authorized to do all things and execute all such documents as may by them be deemed necessary and proper to complete the issuance and sale of the Series 2010B /C Bonds as contemplated by this Ordinance. Section 20. The City hereby covenants to the purchasers and holders of the Series 2010B /C Bonds hereby authorized that it will make no use of the proceeds of said bond issue, including monies held in any sinking fund for the Series 2010B /C Bonds, which would cause the Series 2010B Bonds to be arbitrage bonds within the meaning of Sections 103(b) and 148 of the Internal Revenue Code of 1986, as amended (the "Code "), and further covenants to comply with said Sections 103(b) and 148 and all applicable regulations thereunder throughout the term of said bond issue. The City hereby covenants and agrees to take all actions necessary under the Code to maintain the tax exempt status (as to taxpayers generally but not with respect to any "substantial user" or "related person" as defined in Section 147 of the Code) of interest payable on the Series 2010B Bonds, including payment of any rebate amount required under Section 148 of the Code. The officers of the City (or any one or more of them) are hereby authorized to make, execute and deliver (as appropriate) any allocations, certifications (including the Tax Compliance Certificate in the form presented, the provisions of which shall be deemed representations and warranties of the City fully as if set forth in this Ordinance), elections and filings deemed necessary in connection with the maintaining the status of interest on the Series 2010B Bonds as excludable from gross income under the Code. Section 21. In accordance with the requirements of Rule 15c2 -12 (as now existing or as subsequently amended, the "Rule ") promulgated by the Securities and Exchange Commission, the City hereby undertakes that it will provide the following continuing disclosure information: 35 (a) to the Municipal Securities Rulemaking Board (the "MSRB ") and to the Underwriter, the City shall provide information generally consistent with the information set forth in the Management's Discussion and Analysis contained in its audited financial statements, and its audited financial statements; such information is expected to be available not later than seven months after the end of each fiscal year for the City. Governmental and business -type activities in the government -wide financial statements and the proprietary and fiduciary fund financial statements are to be presented on the accrual basis of accounting and the governmental funds financial statements are presented on the modified accrual basis of accounting in conformity with generally accepted accounting principles, subject to the City's discretion to change accounting methods as and to the extent that it deems appropriate from time to time. (b) in a timely manner to the MSRB (as and to the extent required by the Rule), notice of the occurrence of any of the following events with respect to the Series 2010B /C Bonds, if in the judgment of the City, such event is material: (1) principal and interest payment delinquencies, (2) non - payment related defaults, (3) unscheduled draws on debt service reserves reflecting financial difficulties, (4) (5) unscheduled draws on credit enhancements reflecting financial difficulties (there is no credit enhancement on the Series 2010B /C Bonds), substitution of credit or liquidity providers, or their failure to perform (not applicable to the Series 2010B /C Bonds), (6) adverse tax opinions or events affecting the tax - exempt status of the Series 2010B Bonds, (7) modifications to rights of the holders of the Series 2010B /C Bonds, (8) bond calls, (9) defeasances, (10) release, substitution, or sale of property securing repayment of the Series 2010B Bonds, and (11) rating changes (the Series 2010B /C Bonds are not rated and no rating for the Series 2010B /C Bonds is expected to be requested). The City has not undertaken to provide notice of the occurrence of any other material event, except the events listed above. (c) in a timely manner to the MSRB (as and to the extent required by the Rule) notice of any failure on the part of the City to provide required annual financial information not later than seven months from the close of the City's fiscal year. The City hereby agrees that all information required to be filed with the MSRB under the terms of this continuing disclosure undertaking shall be provided for filing in such format and accompanied by such 36 identifying information as shall be prescribed by the MSRB. The City hereby reserves the right to modify from time to time the specific types of information provided or the format of the presentation of such information, to the extent necessary or appropriate in the judgment of the City, consistent with the Rule. The City hereby agrees that the covenants set forth in this Section 21 are for the benefit of the registered owners of the Series 2010B /C Bonds (including Beneficial Owners) and that such covenants may be enforced by any registered owner or Beneficial Owner, provided that any such right to enforcement shall be limited to specific enforcement of such undertaking and any failure shall not constitute a default or an event of default under this Ordinance. The continuing disclosure obligations of the City under this Ordinance, as described in this Section 21, shall cease when none of the Series 2010B /C Bonds remain outstanding. Section 22. If any section, paragraph, clause or provision of this Ordinance shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this Ordinance. Section 23. The Preliminary Official Statement is hereby approved and the Mayor and City Clerk are hereby authorized to approve on behalf of the City a final Official Statement with any changes deemed appropriate by them. Section 24. The City Clerk is hereby directed to set the time and place for a hearing on the issuance of the Series 2010B Bonds and to publish notice of such hearing for purposes of complying with the requirements of Section 147(f) of the Code. 37 Section 25. This Ordinance shall be published in pamphlet form. This Ordinance is hereby determined to be a measure necessary to carry out the City's contractual obligations as provided for in the Series 2007A Notes and shall be in force and take effect from and after its passage and approval according to law. PASSED AND APPROVED this 24th day of August, 2010. ATTEST: pit Clerk (SEAL) i) w itAL 38 (: °°::a 4 ayor the Mayor. Motion for adjournment was duly made, seconded and on roll call vote was declared duly adopted by I the undersigned City Clerk for the City of Blair, Nebraska, hereby certify that the foregoing is a true and correct copy of the proceedings had and done by the Mayor and Council on August 24, 2010; that all of the subjects included in the foregoing proceedings were contained in the agenda for the meeting, kept continually current and readily available for public inspection at the office of the City Clerk; that such subjects were contained in said agenda for at least twenty -four hours prior to said meeting; that a current copy of the Nebraska Open Meetings Act was available and accessible to members of the public, publicly announced and posted during such meeting in the room in which such meeting was held; that at least one copy of all reproducible material discussed at the meeting was available at the meeting for examination and copying by members of the public; that the said minutes from which the foregoing proceedings have been extracted were in written form and available for public inspection within ten working days and prior to the next convened meeting of said body; that all news media requesting notification concerning meetings of said body were provided advance notification of the time and place of said meeting and the subjects to be discussed at said meeting.