NEW ISSUE BOOK-ENTRY ONLY Rating: Standard & Poor s AA+ See RATING herein. In the opinion of Spencer Fane Britt & Browne LLP, Special Tax Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended, the interest component of the Series 2009A Certificates (including any original issue discount properly allocable to an owner thereof) is excludable from gross income for federal and Missouri income tax purposes, except as described herein, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The Series 2009A Certificates have been designated as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. Special Tax Counsel does not express any opinion regarding the tax treatment of the Interest Component of Base Rentals paid by the City to owners of the Series 2009B Certificates. See "TAX MATTERS" herein. $1,460,000 CITY OF FRONTENAC, MISSOURI TAX EXEMPT CERTIFICATES OF PARTICIPATION (FRONTENAC CITY HALL PROJECT) SERIES 2009A Dated: Date of Delivery $3,060,000 CITY OF FRONTENAC, MISSOURI TAXABLE CERTIFICATES OF PARTICIPATION (FRONTENAC CITY HALL PROJECT) BUILD AMERICA BONDS DIRECT PAYMENT TO THE CITY SERIES 2009B Due: March 1, as shown on inside cover The City of Frontenac, Missouri Tax Exempt Certificates of Participation, Series 2009A and the City of Frontenac, Missouri Taxable Certificates of Participation, Series 2009B (collectively the "Series 2009 Certificates") will be sold for the benefit of the City of Frontenac, Missouri, for the purpose of providing funds to pay the costs of constructing, equipping and furnishing of a new City government center, including, without limitation, administration areas, courtroom, aldermanic chamber, a fire station and a police station (the "Project"). The Series 2009 Certificates will be sold only in fully registered form, without coupons, in the denomination of $5,000 or integral multiples thereof, and, will be registered in the name of Cede & Co., as owner and nominee for The Depository Trust Company ("DTC"). DTC will act as securities depository for the Series 2009 Certificates. Purchasers will not receive Series 2009 Certificates representing their interest in the Series 2009 Certificates purchased. Rather, so long as Cede & Co. is the registered owner of the Series 2009 Certificates, as nominee of DTC, references herein to the Certificate owners or registered owners shall mean Cede & Co. and shall not mean the Beneficial Owners (herein defined) of the Series 2009 Certificates. The Principal component of the Series 2009 Certificates will be payable annually on March 1 at the principal corporate trust office of UMB Bank, N.A., St. Louis, Missouri (the Trustee ). Interest will be payable semiannually on March 1 and September 1 by check or draft mailed by the Trustee to the person in whose name the Series 2009 Certificates are registered on the 15th day of the month next preceding each interest payment date. The Series 2009 Certificates evidence certain proportionate ownership interests in the right to receive rental payments from the City of Frontenac, Missouri (the "City"), under an annually renewable Project Lease Agreement dated as of October 1, 2009 (the "Lease") between UMB Bank, N.A. (the "Lessor"), and the City. The net proceeds from the issuance and sale of the Series 2009 Certificates will be used pay the costs of the Project and to pay the cost of issuance, thereof. THE SERIES 2009 CERTIFICATES SHALL NOT CONSTITUTE A DEBT OR LIABILITY OF THE CITY BEYOND THE INITIAL TERM OF THE LEASE OR THE RENEWAL TERM IN EFFECT AT ANY TIME, SHALL NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF MISSOURI OR OF ANY OTHER POLITICAL SUBDIVISION THEREOF AND SHALL NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE ISSUANCE OF THE SERIES 2009 CERTIFICATES SHALL NOT OBLIGATE THE CITY TO LEVY ANY FORM OF TAXATION THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT IN ANY FISCAL YEAR SUBSEQUENT TO THE FISCAL YEAR IN WHICH THE LEASE IS IN EFFECT. THE LEASE IS SUBJECT TO ANNUAL RENEWAL BY THE CITY. UPON NONRENEWAL, NONAPPROPRIATION OR ANY OTHER TERMINATION OF THE LEASE, THERE WILL BE NO FURTHER FINANCIAL OBLIGATION OF THE CITY CONCERNING THE LEASE. MATURITY SCHEDULE ON THE INSIDE COVER The Series 2009 Certificates maturing on and after March 1, 2020, shall be subject to prepayment prior to maturity on and after March 1, 2019 as described herein under the heading THE SERIES 2009 CERTIFICATES Prepayment in whole at any time or in part on any Prepayment Date, at a prepayment price of 100% of the principal component thereof, plus accrued interest thereon to the prepayment date. The Series 2009 Certificates are also subject to prepayment prior to maturity under certain conditions described herein under the heading THE SERIES 2009 CERTIFICATES - Extraordinary Optional Prepayment and THE SERIES 2009 CERTIFICATES Optional Prepayment upon the Occurrence of a Tax Credit Event and THE SERIES 2009 CERTIFICATES Mandatory Sinking fund Prepayment. The Series 2009 Certificates are offered when, as, and if received and accepted by the Underwriter subject to receipt of an approving legal opinion of Spencer Fane Britt & Browne LLP, St. Louis, Missouri, Special Tax Counsel. It is expected that the Series 2009 Certificates will be available for delivery in St. Louis, Missouri on or about October 26, 2009. The date of this Official Statement is October 13, 2009.
$1,460,000 CITY OF FRONTENAC, MISSOURI TAX EXEMPT CERTIFICATES OF PARTICIPATION (FRONTENAC CITY HALL PROJECT) SERIES 2009A $3,060,000 CITY OF FRONTENAC, MISSOURI TAXABLE CERTIFICATES OF PARTICIPATION (FRONTENAC CITY HALL PROJECT) BUILD AMERICA BONDS DIRECT PAYMENT TO THE CITY SERIES 2009B Payment Date (March 1) Principal Component MATURITY SCHEDULE Base CUSIP: 359041 2009A SERIAL CERTIFICATES Interest Rate Yield Price CUSIP 2010 $165,000 3.000% 0.950% 100.707% AC4 2011 170,000 3.000 1.370 102.167 AD2 2012 175,000 3.000 1.720 102.930 AE0 2013 180,000 3.000 2.090 102.925 AF7 2014 185,000 3.000 2.460 102.211 AG5 2015 190,000 3.000 2.770 101.133 AH3 2016 195,000 3.500 3.030 102.692 AJ9 2017 200,000 3.125 3.250 99.186 AK6 2009B TERM CERTIFICATES Payment Date (March 1) Principal Component Interest Rate Yield Price CUSIP 2024 1,625,000 5.48% 5.48 100.000 AA8 2029 1,435,000 6.03 6.03 100.000 AB6
REGARDING USE OF THIS OFFICIAL STATEMENT THE SERIES 2009 CERTIFICATES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON THE EXEMPTION CONTAINED IN SECTION 3(a)(2) OF SUCH ACT. No dealer, broker, salesman or other person has been authorized by the City or the Underwriter to give any information or representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any offer, solicitation, or sale of the Series 2009 Certificates by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder at any time shall under any circumstances create an implication that there has been no change in the affairs of the City as of any time subsequent to the date hereof. IN CONNECTION WITH THE OFFERING OF THE SERIES 2009 CERTIFICATES, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2009 CERTIFICATES AT A LEVEL ABOVE THAT WHICH MAY OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 3 424928.5
TABLE OF CONTENTS Page INTRODUCTORY STATEMENT...1 Limited Obligations...1 Definitions and Descriptions; Inspection of Documents...2 THE SERIES 2009 CERTIFICATES...2 Authorization...2 Description...3 General...3 The Series 2009B Certificates...3 Book-Entry Only System...3 DTC and its Participants...4 Purchases of Ownership Interests...4 Transfers...5 Notices...5 Voting...5 Payments of Principal, Prepayment Price and Interest...5 Discontinuation of Book-Entry System...6 Exchange, Transfer and Registration of Series 2009 Certificates...6 Optional Prepayment...6 Extraordinary Optional Prepayment...7 Optional Prepayment upon the Occurrence of a Tax Credit Event...7 Mandatory Sinking Fund Prepayment...8 Selection of Series 2009 Certificates to be Prepaid...8 Trustee's Duty to Prepay Series 2009 Certificates...8 Notice of Prepayment...9 Effect of Call for Prepayment...9 SECURITY FOR THE SERIES 2009 CERTIFICATES...9 Nature of Series 2009 Certificates; Limited Obligations; Sources of Payment...9 Base Lease...10 ANNUAL PAYMENT SCHEDULE ON THE SERIES 2009 CERTIFICATES...10 RISK FACTORS...13 Unilateral Right to Terminate Lease...13 Result of Termination of Lease...13 Inability to Liquidate, or Delay in Liquidating, the Project...14 Secondary Market for the Series 2009 Certificates...14 Bond Insurance...14 Security for the Series 2009 Certificates and Certain Market Risks...14 Effect on Tax Exemption of Termination of the Lease...15 THE PROJECT...15 General Description...15 THE CITY...15 Government and Organization of the City...15 Largest Employers...16 Major Property Taxpayers...16 INDEBTEDNESS OF THE CITY...17 Current General Obligation Indebtedness of the City...17 FINANCIAL INFORMATION CONCERNING THE CITY...17 Accounting, Budgeting and Auditing Procedures17 Basis of Accounting...17 Fund Accounting... 17 Governmental Fund Types... 18 Sales Taxes... 20 Property Taxes... 21 Utility Gross Receipts Taxes... 21 Property Tax Levies and Collections... 22 Property Tax Collection Record:... 22 DEBT STRUCTURE OF THE CITY... 22 Debt Ratios and Related Information... 22 Overlapping General Obligation Indebtedness 23 FINANCIAL STATEMENTS... 23 LEGAL PROCEEDINGS... 23 TAX EXEMPTION... 23 DESIGNATION OF SECURITIES AS BANK QUALIFIED; COVENANT OF CITY TO COMPLY WITH TAX LAW REQUIREMENTS... 24 LITIGATION... 24 THE TRUSTEE... 25 UNDERWRITING... 25 RATING... 25 CONTINUING DISCLOSURE... 26 MISCELLANEOUS... 27 APPENDIX A... A-1 SUMMARY OF CERTAIN PROVISIONS OF THE BASE LEASE... A-6 Base Lease... A-6 SUMMARY OF CERTAIN PROVISIONS IN THE LEASE... A-6 Lease Term... A-6 Rental Payments... A-6 Additional Payments... A-6 Obligations of the City Absolute and Unconditional... A-7 Maintenance, Repair, Utilities and Taxes... A-7 Insurance... A-8 Additions, Modifications and Improvements A-9 Conveyance of the Project to the City... A-9 Damage, Destruction and Condemnation... A-10 Events of Default and Remedies... A-10 Restriction on Mortgage or Sale of Project by the City... A-12 SUMMARY OF CERTAIN PROVISIONS OF THE DECLARATION... A-12 Construction Fund... A-12 Certificate Fund:... A-13 Rebate Fund... A-14 Costs of Issuance Fund... A-14 Investments:... A-14 Discharge of the Declaration of Trust... A-15 Events of Default and Remedies... A-15 Right of Certificate Owners to Direct Proceedings... A-17 Limitation on Exercise of Remedies by Certificate Owners... A-17 Remedies Cumulative... A-17 Supplemental Declarations of Trust... A-17 APPENDIX B Financial Statements of the City
CITY OF FRONTENAC, MISSOURI 10555 Clayton Road Frontenac, Missouri 63131 BOARD OF ALDERMAN Susan Durbin Alderman Ward I John Wynne Alderman Ward I Jon Serkes Alderman Ward II Margot Martin Alderman Ward II Tom Hizar Alderman Ward III John Levis Alderman Ward III ADMINISTRATION Keith Krieg Mayor Bob Shelton City Administrator Leesa Ross City Clerk Julie O'Guinn Finance Officer Shari Cooper Administrative Clerk COUNSEL TO THE CITY Kevin M. O Keefe, Esq. St. Louis, Missouri SPECIAL TAX COUNSEL Spencer Fane Britt & Browne LLP St. Louis, Missouri CERTIFIED PUBLIC ACCOUNTANT Schmersahl Treloar & Co. St. Louis, Missouri UNDERWRITER Piper Jaffray & Co. St. Louis, Missouri PAYING AGENT / REGISTRAR / TRUSTEE BANK UMB Bank, N.A. St. Louis, Missouri
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OFFICIAL STATEMENT $1,460,000 CITY OF FRONTENAC, MISSOURI TAX EXEMPT CERTIFICATES OF PARTICIPATION (FRONTENAC CITY HALL PROJECT) SERIES 2009A $3,060,000 CITY OF FRONTENAC, MISSOURI TAXABLE CERTIFICATES OF PARTICIPATION (FRONTENAC CITY HALL PROJECT) BUILD AMERICA BONDS DIRECT PAYMENT TO THE CITY SERIES 2009B INTRODUCTORY STATEMENT This Preliminary Official Statement, including the cover page and the appendices hereto, is provided to furnish information in connection with the sale of $1,460,000 aggregate stated principal amount of the City of Frontenac, Missouri Tax Exempt Certificates of Participation, Series 2009A and $3,060,000 aggregate stated principal amount of the City of Frontenac, Missouri Taxable Certificates of Participation, Series 2009B Build America Bonds Direct Payment to the City (collectively, the Series 2009 Certificates ), evidencing proportionate ownership interests in the right to receive Base Rentals under a Project Lease Agreement, dated as of October 1, 2009 (the Lease ), between the City of Frontenac, Missouri (the City ) and UMB Bank, N.A. (the Lessor ). The proceeds from the sale of the Series 2009 Certificates will be used to pay the costs of the Project, as described below, and to pay the cost of issuance thereof. The City will lease the Project, or so much of it as is then completed, to the Lessor under a Base Lease Agreement, dated as of October 1, 2009 (the Base Lease ) for a term ending June 30, 2050, and the Lessor will lease the Project back to the City under the Lease for an initial term ending June 30, 2010 (the Initial Term ), with 19 successive one-year renewal options (the Renewal Terms ), solely at the option of the City, and the final Renewal Term shall terminate not later than June 30, 2030. The Series 2009 Certificates shall be payable solely from the Base Rentals and such other payments, revenues, and receipts derived under the Lease, including, in certain circumstances, proceeds of the Series 2009 Certificates and income from the temporary investment thereof and proceeds from insurance and condemnations awards. Pursuant to the Declaration of Trust, executed by UMB Bank, N.A., as Trustee (the Trustee ), the Trustee has pledged such rents, revenues, receipts, and other monies to pay the aggregate stated principal amount of the Series 2009 Certificates and amounts representing premium, if any, and interest with respect thereto. Payments under the Lease are designed to be sufficient, together with other funds available for such purpose, to pay when due all amounts representing principal components, premium, if any, and interest components with respect to the Series 2009 Certificates. Limited Obligations Payments made by the City under the Lease are payable solely from (1) amounts which may, but are not required to be, appropriated annually by the City, and (ii) other payments, revenues and receipts derived under the Lease (including, in certain circumstances, Certificate proceeds and income from the temporary investment thereof, and proceeds from insurance and condemnation awards). Neither the Series 2009 Certificates, the Lease nor any payments required under the Lease shall constitute a mandatory payment obligation of the City in any Fiscal Year beyond the Fiscal Year during which the City is a lessee under the Lease, or constitute or give rise to a general
obligation or other indebtedness of the City. The City's Fiscal Year as of the date of this Official Statement commences on July 1 of each year and ends on June 30 of the following year. The City is not legally obligated to budget or appropriate money for any Fiscal Year beyond the current Fiscal Year or any subsequent Fiscal Year in which the Lease is in effect, and there can be no assurance that the City will appropriate funds to pay Base Rentals or renew the Lease upon the expiration of the Initial Term or any Renewal Term. The City may terminate its obligations under the Lease on an annual basis. The City will have the option to purchase the Lessor's leasehold interest in the Project at any time by payment of amounts sufficient to prepay all of the Outstanding Series 2009 Certificates as provided in the Lease. See THE SERIES 2009 CERTIFICATES-Optional Prepayment. THE SERIES 2009 CERTIFICATES SHALL NOT CONSTITUTE A DEBT OR LIABILITY OF THE CITY BEYOND THE INITIAL TERM OF THE LEASE OR THE RENEWAL TERM IN EFFECT AT ANY TIME, SHALL NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF MISSOURI OR OF ANY OTHER POLITICAL SUBDIVISION THEREOF AND SHALL NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE ISSUANCE OF THE SERIES 2009 CERTIFICATES SHALL NOT OBLIGATE THE CITY TO LEVY ANY FORM OF TAXATION THEREFORE OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT IN ANY FISCAL YEAR SUBSEQUENT TO A FISCAL YEAR IN WHICH THE LEASE IS IN EFFECT. THE LEASE IS SUBJECT TO ANNUAL RENEWAL BY THE CITY. UPON NONRENEWAL, NONAPPROPRIATION OR ANY OTHER TERMINATION OF THE LEASE, THERE WILL BE NO FURTHER FINANCIAL OBLIGATION OF THE CITY CONCERNING THE LEASE. Definitions and Descriptions; Inspection of Documents Capitalized terms used in this Official Statement, not defined in the text hereof, are defined under the caption Definitions in Appendix A of this Official Statement. Appendix A also contains summaries of certain provisions of the Lease, the Base Lease and the Declaration of Trust (the Declaration ). Such descriptions do not purport to be comprehensive or definitive. All references herein to the Lease, the Base Lease and the Declaration of Trust are qualified in their entirety by reference to such documents, copies of which may be viewed at the offices of Piper Jaffray & Co (the Underwriter ), or will be provided to any prospective purchaser requesting the same, upon payment by such prospective purchaser of the cost of complying with such request. All references herein to the Series 2009 Certificates are qualified in their entirety by the definitive terms thereof and the information with respect thereto included in the Lease and the Declaration of Trust. THE SERIES 2009 CERTIFICATES Authorization The Series 2009 Certificates are being issued pursuant to and in full compliance with the Constitution and statutes of the State of Missouri and pursuant to proceedings duly had by the City. 2
Description General The Series 2009 Certificates are being sold in the aggregate stated principal amount of $4,520,000 are dated, as originally sold, as of October 26, 2009, and represent proportionate interests in the Base Rentals to be paid by the City under the Lease. Such payments include an interest component calculated at the rates per annum set forth on the cover page hereof and payable semiannually on March 1 and September 1 (beginning on March 1, 2010) and a principal component (beginning on March 1, 2010). The Series 2009 Certificates mature on the dates and in the stated principal amounts set forth on the inside cover page hereof. The Series 2009 Certificates are issuable as fully registered Series 2009 Certificates without coupons in the denomination of $5,000 or any integral multiple thereof. Amounts representing principal of and premium, if any, on the Series 2009 Certificates are payable at the principal corporate trust office of the Lessor in St. Louis, Missouri. Amounts representing interest will be payable by check or draft mailed by the Trustee to the persons who are the registered owner of the Series 2009 Certificates as of the close of business on the 15th day of the month immediately preceding the interest payment, at such owner's address as it appears on the registration books kept by the trustee pursuant to the Declaration. The Series 2009B Certificates The Series 2009B Bonds are issued pursuant to the American Recovery and Reinvestment Act of 2009 (the ARRA ) which authorizes the City to issue taxable obligations known as Build America Bonds to finance capital expenditures for which it could otherwise issue tax-exempt obligations and to elect to receive a subsidy payment from the federal government (known as a refundable tax-credit ) equal to 35% of the amount of each interest payment on such taxable obligations. The Series 2009B Certificates are being issued as Build America Bonds under the Internal Revenue Code of 1986, as amended (the Code ). The available subsidy for the Series 2009B Certificates will be paid to the City, and no holders of Series 2009B Certificates will receive a tax credit. The receipt of the refundable tax credits by the City is subject to certain requirements, including the filing of a form with the Internal Revenue Service before each date for the payment of Base Rentals under the Lease. The refundable tax credits are not full faith and credit obligations of the United States of America. The City is obligated to make all payments of Base Rentals related to the Series 2009B Certificates regardless of whether it receives payments of the refundable tax credit pursuant to ARRA. The City has not pledged the payments of the refundable tax credits as security for the payment of the Certificates. Book-Entry Only System The Series 2009 Certificates are available in book-entry only form and beneficial ownership interests therein may be purchased in the principal amount of $5,000 or any integral multiple thereof. Purchasers of the Series 2009 Certificates will not receive Series 2009 Certificates representing their interests in the Series 2009 Certificates. The following information concerning DTC and DTC's book-entry system has been obtained from sources the City believes to be reliable. However, the City takes no responsibility as to the accuracy or completeness thereof and neither the Indirect Participants nor the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the Direct Participants as the case may be. There can be no assurance that DTC 3
will abide by its procedures of that such procedures will not be changed from time to time. DTC will act as securities depository for the Series 2009 Certificates. The Series 2009 Certificates will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Series 2009 Certificates, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC and its Participants DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities Series 2009 Certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of the Depository Trust and Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Ownership Interests Purchases of the Series 2009 Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2009 Certificates on DTC's records. The ownership interest of each actual purchaser of each certificate (the Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2009 Certificates are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Series 2009 Certificates representing their ownership interests in the Series 2009 Certificates, except in the event that use of the book-entry system for the Series 2009 Certificates is discontinued. 4
Transfers To facilitate subsequent transfers, all Series 2009 Certificates deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of the Series 2009 Certificates with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2009 Certificates; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2009 Certificates are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Notices Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2009 Certificates may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2009 Certificates, such as prepayments, tenders, defaults, and proposed amendments to Certificate documents. For example, Beneficial Owners of the Series 2009 Certificates may wish to ascertain that the nominee holding the Series 2009 Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Prepayment notices shall be sent to DTC. If less than all of the Series 2009 Certificates within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Voting Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2009 Certificates unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2009 Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of Principal, Prepayment Price and Interest Payment of principal or prepayment price of and interest on the Series 2009 Certificates will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the City or the Paying Agent, on the payment date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, its nominee, the Paying Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. 5
Payment of principal or prepayment price of and interest on the Series 2009 Certificates to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent. Disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. Discontinuation of Book-Entry System DTC may discontinue providing services as securities depository with respect to the Series 2009 Certificates at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2009 Certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Series 2009 Certificates will be printed, registered in the name of the Beneficial Owner and delivered to the Beneficial Owner. Exchange, Transfer and Registration of Series 2009 Certificates The Series 2009 Certificates are transferable only upon the books of the Trustee upon presentation and surrender of the Series 2009 Certificates, together with instructions for transfer. Series 2009 Certificates may be exchanged for other Series 2009 Certificates of any denomination authorized by the Declaration in the same aggregate stated principal amount, series and maturity, upon presentation to the Trustee, subject to the terms, conditions and limitations set forth in the Declaration, including payment of any tax, fee or other governmental charge required to be paid with respect to any such registration, exchange or transfer. Optional Prepayment The Series 2009 Certificates maturing on March 1, 2020, and thereafter shall be subject to prepayment prior to maturity, upon instructions from the City, on and after March 1, 2019, in whole at any time, or in part on any Interest Payment Date at the price of 100% of the stated principal of the Series 2009 Certificates to be prepaid plus the interest thereon to the prepayment date, without penalty. Under the Lease, the City may elect to purchase all or a portion of the Project or to surrender possession of all or a portion of the Project to the Trustee and direct the Trustee to sell or dispose of the same. The proceeds from such sale or disposition shall be deposited with the Trustee and shall be used to redeem Series 2009 Certificates in accordance with the optional prepayment provisions described above. 6
Extraordinary Optional Prepayment The Series 2009 Certificates shall be subject to prepayment prior to the stated maturity thereof, upon instructions from the city, only as a whole on any date, at a prepayment price of 100% of the stated principal amount of the Series 2009 Certificates to be prepaid, plus accrued interest thereon to the prepayment date, without premium, upon the occurrence of any of the following conditions or events: 1. if title to, or the use for a limited period of, all or any portion of the Project is condemned by any authority having the power of eminent domain; 2. if title to all or any portion of the Project is found to be deficient or nonexistent to the extent that the efficient utilization of the Project by the City is impaired; 3. if substantially all of the Project is damaged or destroyed by fire or other casualty; or 4. if as a result of changes in the Constitution of the State of Missouri or the United States, or of legislative or administrative action by the State of Missouri or any political subdivision thereof, or by the United States, or by reason of any action instituted in any court, the Lease shall become void, unenforceable, impossible of performance without unreasonable delay, or unreasonable burdens or excessive liabilities are imposed on the City or the lessor with respect to the Lease. Optional Prepayment upon the Occurrence of a Tax Credit Event The Series 2009B Certificates are subject to prepayment at the option of the City, in whole or in part, on or before March 1, 2020 upon the occurrence of a Tax Credit Event as described below at a redemption price equal to the greater of: a. the issue price set forth on the inside cover page hereof (but not less than 100% of the principal amount of the Certificates to be redeemed); or b. The sum of the present value of the remaining scheduled payments of the Principal Components and the Interest Components to the maturity of the Certificates to be redeemed, not including any portion of those payments of the Interest Component accrued and unpaid as of the date on which such Certificates are to be redeemed, discounted to the date on which such Certificates are to be redeemed on a semiannual basis, assuming a 360 day year consisting of twelve 30-day months, at the Treasury Rate plus 100 basis points; plus, in each case accrued interest on such Certificates to the redemption date. A Tax Credit Event is a material adverse change to Section 54AA or Section 6431 of the Code pursuant to which the City s 35% cash subsidy payment from the United States is reduced or eliminated. Treasury Rate means the yield to maturity as of a redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the redemption date (excluding inflation-indexed securities); or if such Statistical Release is 7
no longer published, any publicly available source of similar market data, most nearly equal to the period from the redemption date to the maturity date of the Series 2009B Certificates to be redeemed; provided, however, if the period from the redemption date to the maturity date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity for one year shall be used. Mandatory Sinking Fund Prepayment The Series 2009 Certificates in the amounts listed below are subject to mandatory sinking fund prepayment on March 1, of the years listed below pursuant to the mandatory sinking fund provisions of the Declaration of Trust: *Final Maturity Date Series 2009B Certificates Due March 1, 2024 Series 2009 B Certificates Due March 1, 2029 Year Amount Year Amount 2018 $210,000 2025 $265,000 2019 215,000 2026 275,000 2020 225,000 2027 285,000 2021 230,000 2028 300,000 2022 240,000 2029* 310,000 2023 250,000 2024* 255,000 Selection of Series 2009 Certificates to be Prepaid Series 2009 Certificates shall be redeemed only in the stated principal amount of $5,000 or any integral multiple thereof. When less than all of the Outstanding Series 2009 Certificates of any series are to be prepaid prior to maturity, such Series 2009 Certificates shall be prepaid in such order of maturity as the City determines, and within each maturity by such equitable manner as the Trustee determines. Series 2009 Certificates of less than a full maturity will be selected by the Trustee in $5,000 units of stated principal amount by lot or other manner deemed fair by the Trustee. Trustee's Duty to Prepay Series 2009 Certificates The Trustee shall call Series 2009 Certificates for prepayment as provided in the Declaration and shall give notice of prepayment as provided therein upon receipt by the Trustee at least 45 days prior to the prepayment date of a written request and written consent of the City. Such request shall specify the stated principal amount of the Series 2009 Certificates of each maturity to be called for prepayment, the applicable prepayment price or prices and the above mentioned provision or provisions pursuant to which such Series 2009 Certificates are to be called for prepayment. Pursuant to Section 5.4 of the Lease, the City is given the right to direct the Trustee to redeem Series 2009 Certificates under certain circumstances, to the extent there are Series 2009 Certificates subject to prepayment at the option of the City under the above provisions. 8
Notice of Prepayment Notice of the call for prepayment identifying the Series 2009 Certificates or portions thereof to be prepaid shall be given by the Trustee by mailing a copy of the prepayment notice by certified or registered mail, postage prepaid, at least 30 days prior to the prepayment date to the Original Purchaser and Owner of each Certificate to be prepaid at the address shown on the registration books maintained by the Trustee; provided that no defect or failure in giving such mailed notice shall affect the validity of proceedings for prepayment of any Certificate not affected thereby. Effect of Call for Prepayment Prior to the date the Trustee calls any Certificate for prepayment and prior to the date for prepayment, cash or Government Securities shall be deposited with the Trustee which are sufficient to pay the prepayment price for Series 2009 Certificates called for prepayment and accrued interest thereon to the prepayment date and the prepayment premium, if any. Upon the happening of the above conditions, and notice having been given as described above, the Series 2009 Certificates or the portions thereof thus called for prepayment will cease to bear interest on the specified prepayment date, will no longer be entitled to the protection, benefit or security of the Declaration, and shall not be deemed to be Outstanding under the provisions of the Declaration. To the extent sufficient money is not available to prepay the Series 2009 Certificates called for prepayment, the call for prepayment will be nullified and of no effect. SECURITY FOR THE SERIES 2009 CERTIFICATES Nature of Series 2009 Certificates; Limited Obligations; Sources of Payment Each Certificate evidences the proportionate interest of the Owner thereof in the right to receive Base Rentals from the City derived from revenues of the operations of the City under the Lease. The Series 2009 Certificates and all interest with respect thereto are special limited obligations, payable solely from (i) the Base Rentals derived by the Lessor from the lease of the Project pursuant to the Lease, which may be, but are not required to be, appropriated annually by the City, and (ii) to the extent received by the Lessor, interest earnings, proceeds of insurance and condemnation awards. Under the Declaration, the Trustee will hold in Trust the Base Rentals paid under the Lease to the Lessor for the benefit of the Certificate Owners, as security for the payment of the Series 2009 Certificates and amounts representing interest with respect thereto. The Series 2009 Certificates shall not constitute a debt or liability of the City beyond the Initial Term or the Renewal Term in effect from time to time or of the State of Missouri or of any other political subdivision thereof, and shall not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. The issuance of the Series 2009 Certificates shall not obligate the City to levy any form of taxation therefor or to make any appropriation for their payment in any Fiscal Year subsequent to a Fiscal Year in which the Lease is in effect. Under the terms of the Lease, if the City elects to renew the Lease at the end of the Initial Term or any Renewal Term, it is obligated to budget, appropriate and set aside a portion of its general revenues, which appropriation shall be sufficient to pay the Lease Payments coming due during the ensuing Fiscal Year. The City is obligated to make Lease Payments to the Lessor on May 14 and November 15 of each Renewal Term, which payments shall be sufficient to enable the Lessor to meet its obligation to pay the amounts representing principal of, premium, if any, and interest on 9
the Series 2009 Certificates becoming due during such Fiscal Year (but only if the City elects to renew the Lease for such Renewal Term). THERE CAN BE NO ASSURANCE THAT THE CITY WILL APPROPRIATE FUNDS FOR LEASE PAYMENTS OR RENEW THE LEASE AFTER THE INITIAL TERM OF THE LEASE. NEITHER THE SERIES 2009 CERTIFICATES NOR THE LEASE CONSTITUTE A GENERAL OBLIGATION OR OTHER INDEBTEDNESS OF THE CITY, NOR A MANDATORY PAYMENT OBLIGATION IN ANY FISCAL YEAR SUBSEQUENT TO A FISCAL YEAR IN WHICH THE LEASE IS IN EFFECT. THE CITY IS NOT LEGALLY REQUIRED TO BUDGET OR APPROPRIATE MONEY FOR ANY SUBSEQUENT FISCAL YEAR BEYOND THE CURRENT FISCAL YEAR. SEE RISK FACTORS HEREIN. Base Lease The City has leased all of its interest in the Leased Property to the Trustee, as lessee, pursuant to the Base Lease. The term of the Base Lease ends June 30, 2050 which is ten years after the latest scheduled maturity date of the Series 2009 Certificates. The City may terminate the Base Lease before June 30, 2050, by making all payments it is required to make under the Lease. If an Event of Default occurs under the Declaration of Trust or the Lease, the Trustee has the right to possess and use the Leased Property for the remainder of the term of the Base lease, and has the right to sublease or assign its interests under the Base Lease under such terms as it deems appropriate. ANNUAL PAYMENT SCHEDULE ON THE SERIES 2009 CERTIFICATES The following table sets forth the annual payment schedule for the Series 2009A Certificates. DEBT SERVICE SCHEDULE Date Principal Interest Total Debt Service 3/1/2010 $165,000 $15,633.68 $180,633.68 9/1/2010 20,037.50 20,037.50 3/1/2011 170,000 20,037.50 190,037.50 9/1/2011 17,487.50 17,487.50 3/1/2012 175,000 17,487.50 192,487.50 9/1/2012 14,862.50 14,862.50 3/1/2013 180,000 17,862.50 194,862.50 9/1/2013 12,162.50 12,162.50 3/1/2014 185,000 12,162.50 197,162.50 9/1/2014 9,387.50 9,387.50 3/1/2015 190,000 9,397.50 199,387.50 9/1/2015 6,537.50 6,537.50 3/1/2016 195,000 6,537.50 201,537.50 9/1/2016 3,125.00 3,125.00 3/01/2017 200,000 3,125.00 203,125.00 10
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The following table sets forth the annual payment schedule for the Series 2009B Certificates. The table does not take into account the federal Build America Bond payments to be received by the City. DEBT SERVICE SCHEDULE Date Principal Interest Total Debt Service 3/1/2010 $60,968.54 $60,968.54 9/1/2010 87,790.25 87,790.25 3/1/2011 87,790.25 87,790.25 9/1/2011 87,790.25 87,790.25 3/1/2012 87,790.25 87,790.25 9/1/2012 87,790.25 87,790.25 3/1/2013 87,790.25 87,790.25 9/1/2013 87,790.25 87,790.25 3/1/2014 87,790.25 87,790.25 9/1/2014 87,790.25 87,790.25 3/1/2015 87,790.25 87,790.25 9/1/2015 87,790.25 87,790.25 3/1/2016 87,790.25 87,790.25 9/1/2016 87,790.25 87,790.25 3/1/2017 87,790.25 87,790.25 9/1/2017 87,790.25 87,790.25 3/1/2018 $210,000 87,790.25 297,790.25 9/1/2018 82,036.25 82,036.25 3/1/2019 215,000 82,036.25 297,036.25 9/1/2019 76,145.25 76,145.25 3/1/2020 225,000 76,145.25 301,145.25 9/1/2020 69,980.25 69,980.25 3/1/2021 230,000 69,980.25 299,980.25 9/1/2021 63,678.25 63,678.25 3/1/2022 240,000 63,678.25 303,678.25 9/1/2022 57,102.25 57,102.25 3/1/2023 250,000 57,102.25 307,102.25 9/1/2023 50,252.25 50,252.25 3/1/2024 255,000 50,252.25 305,252.25 9/1/2024 43,265.25 43,265.25 3/1/2025 265,000 43,265.25 308,265.25 9/1/2025 35,275.50 35,275.50 3/1/2026 275,000 35,275.50 310,275.50 9/1/2026 26,984.25 26,984.25 3/1/2027 285,000 26,984.25 311,984.25 9/1/2027 18,391.50 18,391.50 3/1/2028 300,000 18,391.50 318,391.50 9/1/2028 9,346.50 9,346.50 3/1/2029 310,000 9,346.50 319,346.50 12
SOURCES AND USES OF FUNDS The estimated sources and uses of funds in connection with the Series 2009 Certificates are as follows: Sources of Funds Par Amount of Series 2009 Certificates $4,520,000.00 Plus: Net Reoffering Premium 25,107.40 TOTAL $4,545,107.40 Uses of Funds Deposit to Construction Fund $4,500,000.00 Costs of Issuance (including underwriter s 45,107.40 discount) TOTAL $4,545,107.40 RISK FACTORS The payment of the Series 2009 Certificates is subject to certain risks. The City is not obligated to renew the Lease beyond the initial term or any, then current, renewal term. Neither the payment of the Base Rentals by the City under the Lease nor any payment on the Series 2009 Certificates constitutes a general obligation or other indebtedness of the City or a mandatory payment obligation of the City in any fiscal year subsequent to the fiscal year in which the Lease is in effect. Unilateral Right to Terminate Lease The obligation of the City to pay Base Rentals and Additional Payments is limited to those City funds which are specifically budgeted and appropriated annually by the City for such purpose The City s obligations under the Lease may be terminated on an annual basis by the City without any pecuniary penalty, and there is no assurance that the City will renew the Lease. Accordingly, the likelihood that the City will renew the Lease throughout the term of the Series 2009 Certificates is dependent upon certain factors which are beyond the control of the Certificate Owners, including (i) the continued need of the City for the Project and (ii) the ability of the City to generate sufficient funds from sales taxes and other sources to pay its obligations under the Lease and the other obligations of the City. Result of Termination of Lease In the event that the City does not budget and appropriate, specifically with respect to the Lease, moneys sufficient to pay all Base Rentals coming due for the fiscal year following the Initial Term or the then current Renewal Term, the Lease can be terminated by the Lessor. Upon a termination of the Lease by reason of an event of non-appropriation, the occurrence of certain events of condemnation, damage or destruction of all or a portion of the Project (if the City does not repair or replace the Project) or an Event of Default, the Trustee may terminate the Lease Term and give the City notice to vacate the Project. Thereafter, the Trustee may sell the leasehold interest in the Project, subject to Permitted Encumbrances. Because of the nature of the Project, and the fact that the Trustee holds only a leasehold interest in the Project as security, the sale of the 13
leasehold interest in the Project may not be practicable, and a potential purchaser of Series 2009 Certificates should not assume that the amount of money that may be realized by the Trustee upon the exercise of its rights under the Declaration of Trust and the Lease after a termination of the Lease Term would be sufficient to pay the aggregate principal amount of the Series 2009 Certificates then outstanding plus accrued interest thereon. The Project consists of a building specially designed and built to serve as a city hall and facilities to serve the City s police department and fire department. A potential purchaser of the Series 2009 Certificates should not assume that it will be possible to sell the leasehold interest in the Project upon a termination of the Lease Term (i) for an amount equal to the aggregate stated principal amount of the Series 2009 Certificates then outstanding plus accrued interest thereon or (ii) within a time period which would prevent a default in the timely payment of amounts payable with respect to the Series 2009 Certificates. Inability to Liquidate, or Delay in Liquidating, the Project Termination of the Lease Term gives the Trustee the right to possession of, and the right to sell the leasehold interest in the Project, subject to Permitted Encumbrances, including the Lease and the Base Lease. The enforceability of the Series 2009 Certificates, the Lease, the Declaration, and the Base Lease is subject to applicable bankruptcy laws, equitable principles affecting the enforcement of creditor s rights and liens securing such rights, and the police powers of the State of Missouri and its political subdivisions. The Project is intended to be used solely for public purposes. Because of such use, and the delays inherent in selling a leasehold interest in the Project, a potential purchaser of the Series 2009 Certificates should not assume that a sale could be accomplished promptly, if at all. Secondary Market for the Series 2009 Certificates It is expected that the Underwriter will engage in secondary market transactions with respect to the Series 2009 Certificates. However, the Underwriter is not obligated to repurchase Series 2009 Certificates from any Owner thereof. There is no assurance that a secondary market for the Series 2009 Certificates will develop or that Owners who wish to sell Series 2009 Certificates prior to their stated maturity will be able to do so. Bond Insurance No municipal bond insurance policy will be issued to insure the Series 2009 Certificates. Accordingly, the potential purchaser of the Series 2009 Certificates should consider the financial ability of the City to make the Base Rental payments required under the Lease. Security for the Series 2009 Certificates and Certain Market Risks Changes in interest rates generally might affect the market value of the Series 2009 Certificates prior to their maturity or the date, if any, that they are called for prepayment prior to maturity. For example, as interest rates rise, the price a Certificate's owner would receive upon the sale of a Certificate will decline, and it is possible that the amount a Certificate's owner would receive upon the sale of a Certificate would be less than the amount the Certificate owner paid for the Series 2009 Certificates. Typically, this risk increases with the length of maturity of the Series 2009 Certificates. In addition, a Certificate's owner is subject to the risk that the rate of inflation for the period of the investment will exceed the yield on the Series 2009 Certificates to the date, if any, 14