20937 1 ORDINANCE NO. 20,937
2 AN ORDINANCE TO AUTHORIZE THE ISSUANCE AND SALE OF
3 SEWER REFUNDING REVENUE BONDS; TO PROVIDE FOR THE
4 PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BONDS;
5 TO DECLARE AN EMERGENCY; AND FOR OTHER MATTERS.
6
7 WHEREAS, the City of Little Rock, Arkansas (the "City") owns a sewer system (the "System"),
8 which is operated by the Sanitary Sewer Committee of the City(the "Committee"); and
9 WHEREAS, the City has outstanding (i) its Sewer Revenue Bond, Series 1999 (the "Series 1999
10 Bond"), authorized by Ordinance No. 18,067 adopted July 20, 1999 (the "1999 Ordinance"); and (ii) its
11 S ewer Refunding and Construction Revenue Bonds, Series 2005 (the "Series 2005 Bonds"), authorized by
12 Ordinance 19,307,adopted April 19, 2005 (the "2005 Ordinance"); and
13 WHEREAS, in order to achieve debt service savings, the Committee and the Board of Directors of
14 the City have determined that it is in the best interest of the City to (i) current refund the Series 1999
15 Fond and(ii)advance refund the Series 2005 Bonds(collectively,the "Bonds Refunded"); and
16 WHEREAS, the City can obtain the necessary funds to accomplish the refunding of the Bonds
17 Refunded (the "Refunding"), pay a premium for a debt service reserve insurance policy and pay costs of
18 issuing bonds by issuing its Sewer Refunding Revenue Bonds, Series 2014 (the "bonds"), and by
19 appropriating funds of the System held pursuant to the 1999 Ordinance and the 2005 Ordinance;and
20 WHEREAS,the City and the Committee have made arrangements for the sale of the bonds to Crews
21 , Associates, Inc. (the "Purchaser"), at a price of$12,359,010.85 (equal to the principal amount thereof
22 1us original issue premium of$480,840.85 and less underwriter's discount of$101,830) (the "Purchase
23 rice"), pursuant to a Bond Purchase Agreement between the City and the Purchaser (the "Agreement")
24 which has been presented to and is before this meeting; and
25 WHEREAS, the Preliminary Official Statement dated September 10, 2014, offering the bonds for
26 si.le(the "Preliminary Official Statement")has been presented to and is before this meeting; and
27 WHEREAS, the Continuing Disclosure Agreement between the City and Regions Bank, Little Rock,
28 Arkansas, as Dissemination Agent (the "Disclosure Agreement"), providing for the ongoing disclosure
29 obligations of the City with respect to the bonds has been presented to and is before this meeting; and
30 WHEREAS, Municipal Assurance Corp. (the "Reserve Insurer") will be issuing a municipal
31 bond debt service reserve insurance policy (the "Reserve Policy") in order to provide a debt
32 service reserve for the bonds; and
1 WHEREAS, the Insurance Agreement between the City and the Reserve Insurer (the "Reserve
2 Agreement")has been presented to and is before this meeting; and
3 WHEREAS, in addition to the Bonds Refunded, the City has outstanding (a) its Sewer Revenue
4 Eond, Series 1996 (the "Series 1996 Bond"), authorized by Ordinance No. 17,097, adopted January 16,
5 1996 (the "1996 Ordinance"); (b) its Sewer Revenue Bond, Series 2004A (the "Series 2004A Bond"),
6 authorized by Ordinance No. 19,006, adopted December 16, 2003 (the "2004A Ordinance"); (c) its Sewer
7 Revenue Bond, Series 2004B (the "Series 2004B Bond"), authorized by Ordinance 19,007, adopted
8 December 16, 2003 (the "2004B Ordinance"); (d) its Sewer Revenue Bond, Series 2004C (the "Series
9 2004C Bond"), authorized by Ordinance No. 19,229, adopted November 1, 2004 (the "2004C
10 Ordinance"); (e) its Sewer Construction Revenue Bonds, Series 2007A (the "Series 2007A Bonds")
11 authorized by Ordinance No. 19,746, adopted May 15, 2007 (the "2007A Ordinance"); (f) its Sewer
12 Revenue Bond, Series 2007B (the "Series 2007B Bond"), authorized by Ordinance No. 19,769, adopted
13 June 19, 2007 (the "2007B Ordinance"); (g) its Sewer Construction Revenue Bonds, Series 2007C (the
14 "Series 2007C Bonds"), authorized by Ordinance No. 19,814, adopted September 18, 2007 (the "2007C
15 Ordinance"); (h) its Sewer Revenue Bonds, Series 2008 (the "Series 2008 Bonds"), authorized by
16 Ordinance No. 20,046, adopted November 18, 2008 (the "2008 Ordinance"); (i) its Sewer Revenue Bond,
17 Series 2009A (the "Series 2009A Bond"), authorized by Ordinance No. 20,074, adopted March 10, 2009
18 (i he "2009A Ordinance"); (j) its Sewer Revenue Bonds, Series 2009B (the "Series 2009B Bonds")
19 authorized by Ordinance No. 20,186, adopted November 3, 2009 (the "2009B Ordinance"); (k) its Sewer
20 Refunding Revenue Bonds, Series 2011 (the "Series 2011 Bonds") authorized by Ordinance No. 20,440,
21 adopted June 7,2011 (the "2011 Ordinance"); (1) its Sewer Revenue Bonds, Series 2012 (the "Series 2012
22 Londs") authorized by Ordinance No. 20,604, adopted on July 17, 2012; and (m) its Sewer Revenue
23 Eonds, Series 2013 (the "Series 2013 Bonds"), authorized by Ordinance No. 20,711, adopted April 2,
24 2013 (the "2013 Ordinance"); and
25 WHEREAS, the coverage tests in the 1996 Ordinance, the 2007A Ordinance, the 2007C Ordinance,
26 the 2008 Ordinance, the 2009B Ordinance, the 2011 Ordinance and the 2012 Ordinance for securing the
27 bonds with a lien on the net revenues of the System on a parity of security with the Series 2007A Bonds,
28 the Series 2007C Bonds, the Series 2008 Bonds, the Series 2009B Bonds, the Series 2011 Bonds and the
29 Series 2012 Bonds(collectively, the "Parity Bonds")have been or will be satisfied; and
30 WHEREAS, the coverage tests in the 1996 Ordinance, the 2004A Ordinance, the 2004B Ordinance,
31 the 2004C Ordinance, the 2007B Ordinance, the 2009A Ordinance and the 2013 Ordinance for securing
32 the bonds with a lien on the net revenues of the System prior to the lien on System revenues in favor of
33 tile Series 1996 Bond,the Series 2004A Bond,the Series 2004B Bond, the Series 2004C Bond,the Series
1
[PAGE 2 OF 28]
1 2007B Bond, the Series 2009A Bond and the Series 2013 Bonds (collectively, the "Subordinate Bonds")
2 h ave been or will be satisfied;
3 NOW,THEREFORE, BE IT ORDAINED BY THE BOARD OF DIRECTORS OF THE CITY
4 OF LITTLE ROCK,ARKANSAS:
5 Section 1. The Refunding is hereby authorized. The Mayor and other officials of the City are
6 hereby authorized to take, or cause to be taken, all action necessary to accomplish the Refunding and to
7 execute all required contracts. The Series 2005 Bonds maturing on and after May 1, 2017 shall be called
8 fir redemption on May 1, 2015. The Series 1999 Bond shall be called for redemption on the date the
9 ponds are issued or the earliest practical date thereafter.
10 Section 2. All moneys in the bond funds established by the ordinances authorizing the Bonds
11 Refunded are hereby appropriated and shall be used as necessary for the accomplishment of the
12 Refunding, with any balance to be deposited into the 2014 Bond Fund(hereinafter identified).
13 Section 3. The offer of the Purchaser for the purchase of the bonds from the City at the Purchase
14 F'rice for bonds bearing interest at the rates per annum, maturing and otherwise subject to the terms and
15 provisions hereafter in this Ordinance set forth in detail is hereby accepted, and the Agreement, in
16 substantially the form submitted to this meeting, is approved and the bonds are hereby sold to the
17 Purchaser. The Mayor is hereby authorized and directed to execute and deliver the Agreement on behalf
18 of the City and to take all action required on the part of the City to fulfill its obligations under the
19 Agreement.
20 Section 4. The Preliminary Official Statement is hereby approved and the previous use of the
21 Preliminary Official Statement by the Purchasers in connection with the offer and sale of the bonds is
22 ereby in all respects authorized and approved, and the Mayor be, and he is hereby authorized and
23 irected, for and on behalf of the City,to execute the Preliminary Official Statement and the final Official
24 tatement as set forth in the Agreement.
25 Section 5. The Disclosure Agreement, in substantially the form submitted to this meeting, is hereby
26 approved, and the Mayor is hereby authorized and directed to execute and deliver the Disclosure
27 Agreement on behalf of the City. The Mayor and the officers of the Little Rock Wastewater Utility (the
28 "Utility") are each authorized and directed to take all action required on the part of the City to fulfill the
29 City's obligations under the Disclosure Agreement.
30 Section 6. Under the authority of the Constitution and laws of the State of Arkansas (the "State"),
31 including particularly Title 14, Chapter 164, Subchapter 4, and Title 14, Chapter 235, Subchapter 2 of the
32 Arkansas Code of 1987 Annotated, City of Little Rock, Arkansas Sewer Refunding Revenue Bonds,
33 Sleries 2014, are hereby authorized and ordered issued in the principal amount of $11,980,000 for the
34 purpose of accomplishing the Refunding, paying a premium for the Reserve Policy and paying expenses
PAGE 3 OF 28
1
1 cf issuing the bonds. The bonds shall bear interest at the rates and shall mature on May 1 and November
2 1 in the years and in the amounts as follows:
3
Maturity Date Principal Amount Interest Rate
May 1, 2015 $ 605,000 1.000%
November 1, 2015 610,000 1.000
May 1, 2016 615,000 1.000
November 1, 2016 615,000 1.000
May 1, 2017 620,000 2.000
November 1, 2017 625,000 3.000
May 1, 2018 635,000 2.000
November 1, 2018 640,000 2.000
May 1, 2019 650,000 2.000
November 1, 2019 650,000 2.000
May 1, 2020 650,000 3.000
November 1, 2020 670,000 2.000
May 1, 2021 675,000 2.500
November 1, 2021 685,000 3.000
May 1, 2022 695,000 3.500
November 1, 2022 705,000 3.500
May 1, 2023 315,000 3.000
November 1, 2023 320,000 4.000
May 1, 2025* 1,000,000 4.000
4
5 *Term Bonds
6
7 The bonds shall be dated the date of their delivery to the Purchaser and shall be issuable only as
8 filly registered bonds, without coupons, in the denomination of$5,000 or any integral multiple thereof.
9 Unless the City shall otherwise direct, the bonds shall be numbered from R-1 upward in order of issuance.
10 Each bond shall be assigned a CUSIP number.
11 The bonds shall be registered initially in the name of Cede & Co., as nominee for the Depository
12 Trust Company ("DTC"), which shall be considered to be the registered owner of the bonds for all
13 purposes under this Ordinance, including, without limitation, payment by the City of the principal of,
14 redemption price, premium, if any,and interest on the bonds,and the receipt of notices and the exercise of
15 rights of registered owners. There shall be one certificated,typewritten bond for each stated maturity date
16 which shall be immobilized in the custody of DTC with the beneficial owners having no right to receive
17 the bonds in the form of physical securities or certificates. DTC and its participants shall be responsible
18 for maintenance of records of the ownership of beneficial interests in the bonds by book-entry on the
19 s' stem maintained and operated by DTC and its participants, and transfers of ownership of beneficial
20 interests shall be made only by DTC and its participants, by book-entry, the City having no responsibility
[PAGE 4 OF 28]
1 tierefor. DTC is expected to maintain records of the positions of participants in the bonds, and the
2 rarticipants and persons acting through participants are expected to maintain records of the purchasers of
3 beneficial interests in the bonds. The bonds as such shall not be transferable or exchangeable, except for
4 transfer to another securities depository or to another nominee of a securities depository, without further
5 action by the City.
6 If any securities depository determines not to continue to act as a securities depository for the
7 bonds for use in a book-entry system, the City may establish a securities depository/book-entry system
8 relationship with another securities depository. If the City does not or is unable to do so, or upon request
9 of the beneficial owners of all outstanding bonds, the City and the Trustee (hereinafter identified), after
10 the Trustee has made provision for notification of the beneficial owners by the then securities depository,
11 shall permit withdrawal of the bonds from the securities depository, and shall authenticate and deliver
12 bond certificates in fully registered form (in denominations of$5,000 or integral multiples thereof) to the
13 assigns of the securities depository or its nominee, all at the cost and expense (including costs of printing
14 definitive bonds) of the City, if the City fails to maintain a securities depository/book-entry system, or of
15 t e beneficial owners, if they request termination of the system.
16 Prior to issuance of the bonds, the City shall have executed and delivered to DTC a written
17 agreement (the "Representation Letter") setting forth (or incorporating therein by reference) certain
18 undertakings and responsibilities of the City with respect to the bonds so long as the bonds or any portion
19 thereof are registered in the name of Cede & Co. (or a substitute nominee) and held by DTC.
20 Notwithstanding such execution and delivery of the Representation Letter, the terms thereof shall not in
21 any way limit the provisions of this Section or in any other way impose upon the City any obligation
22 whatsoever with respect to persons having interests in the bonds other than the registered owners, as
23 shown on the registration books kept by the Trustee. The Trustee shall take all action necessary for all
24 representations of the City in the Representation Letter with respect to the Trustee to at all times be
25 complied with.
26 The authorized officers of the Trustee and the City shall do or perform such acts and execute all
27 such certificates, documents and other instruments as they or any of them deem necessary or advisable to
28 facilitate the efficient use of a securities depository for all or any portion of the bonds; provided that
29 neither the Trustee nor the City may assume any obligations to such securities depository or beneficial
30 owners of the bonds that are inconsistent with their obligations to any registered owner under this
31 Ordinance.
32 Interest on the bonds shall be payable on May 1, 2015, and semiannually thereafter on May 1 and
33 November 1 of each year. Payment of each installment of interest shall be made to the person in whose
34 n me the bond is registered on the registration books of the City maintained by Regions Bank, Little
[PAGE 5 OF 28]
1 Rock, Arkansas, as trustee and paying agent (the "Trustee"), at the close of business on the fifteenth day
2 cf the month (whether or not a business day) next preceding each interest payment date (the "Record
3 Date"), irrespective of any transfer or exchange of any such bond subsequent to such Record Date and
4 I rior to such interest payment date.
5 Each bond shall bear interest from the payment date next preceding the date on which it is
6 authenticated unless it is authenticated on an interest payment date,in which event it shall bear interest from
7 such date, or unless it is authenticated prior to the first interest payment date, in which event it shall bear
8 interest from their dated date,or unless it is authenticated during the period from the Record Date to the next
9 i;lterest payment date, in which case it shall bear interest from such interest payment date, or unless at the
10 t me of authentication thereof interest is in default thereon, in which event it shall bear interest from the date
11 t o which interest h a s been p a i d .
12 Only such bonds as shall have endorsed thereon a Certificate of Authentication substantially in
13 t ie form set forth in Section 8 hereof(the "Certificate") duly executed by the Trustee shall be entitled to
14 any right or benefit under this Ordinance. No bond shall be valid and obligatory for any purpose unless
15 and until the Certificate shall have been duly executed by the Trustee, and the Certificate upon any such
16 bond shall be conclusive evidence that such bond has been authenticated and delivered under this
17 Ordinance. The Certificate on any bond shall be deemed to have been executed if signed by an
18 authorized officer of the Trustee, but it shall not be necessary that the same officer sign the Certificate on
19 all of the bonds.
20 In case any bond shall become mutilated or be destroyed or lost, the City shall, if not then
21 rohibited by law, cause to be executed and the Trustee may authenticate and deliver a new bond of like
22 ate,number, maturity and tenor in exchange and substitution for and upon cancellation of such mutilated
23 ond, or in lieu of and in substitution for such bond destroyed or lost, upon the owner paying the
24 r asonable expenses and charges of the City and Trustee in connection therewith, and, in the case of a
25 ond destroyed or lost, his filing with the Trustee evidence satisfactory to it that such bond was destroyed
26 cr lost, and of his ownership thereof, and furnishing the City and Trustee with indemnity satisfactory to
27 t iem. The Trustee is hereby authorized to authenticate any such new bond. In the event any such bond
28 shall have matured, instead of issuing a new bond, the City may pay the same without the surrender
29 thereof. Upon the issuance of a new bond under this Section, the City may require the payment of a sum
30 sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any
31 other expenses(including the fees and expenses of the Trustee)connected therewith.
32 The City shall maintain, or cause to be maintained, books for the registration and for the transfer
33 of the bonds, as provided herein and in the bonds. The Trustee shall act as the bond registrar. Each bond
34 i$ transferable by the registered owner thereof or by his attorney duly authorized in writing at the
[PAGE 6 OF 28]
1
1 principal office of the Trustee. Upon such transfer, a new fully registered bond or bonds of the same
2 maturity, of authorized denomination or denominations, for the same aggregate principal amount will be
3 issued to the transferee in exchange therefor.
4 No charge shall be made to any owner of any bond for the privilege of transfer or exchange, but
i5 any owner of any bond requesting any such transfer or exchange shall pay any tax or other governmental
6 charge required to be paid with respect thereto. Except as otherwise provided in the immediately
i
7 preceding sentence, the cost of preparing each new bond upon each exchange or transfer and any other
8 expenses of the City or the Trustee incurred in connection therewith shall be paid by the City. The City
9 shall not be required to transfer or exchange any bonds selected for redemption in whole or in part.
10 The person in whose name any bond shall be registered shall be deemed and regarded as the
11 absolute owner thereof for all purposes, and payment of or on account of the principal or premium, if any,
12 or interest on any bond shall be made only to or upon the order of the registered owner thereof or his legal
13 representative, but such registration may be changed as hereinabove provided. All such payments shall
14 be valid and effectual to satisfy and discharge the liability upon such bond to the extent of the sum or
15 sums so paid.
16 In any case where the date of maturity of interest on or principal of the bonds or the date fixed for
}
17 redemption of any bonds shall be a Saturday or Sunday or shall be in the State a legal holiday or a day on
18 which banking institutions are authorized by law to close, then payment of interest or principal (and
19 premium, if any) need not be made on such date but may be made on the next succeeding business day
20 with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no
21 interest shall accrue for the period after the date of maturity or date fixed for redemption.
22 Section 7. The bonds shall be executed on behalf of the City by the manual or facsimile signatures
23 of the Mayor and City Clerk, and shall have impressed or imprinted thereon the seal of the City. The
24 bonds,together with interest thereon, are secured by and are payable solely from the net revenues derived
25 from the System (the "Net Revenues")which are hereby pledged and mortgaged for the equal and ratable
26 payment of the bonds. The pledge of Net Revenues in favor of the bonds shall be (i) on a parity with the
27 pledge in favor of the Parity Bonds, and (ii) prior to the pledge in favor of the Subordinate Bonds. The
28 bonds and the interest thereon shall not constitute an indebtedness of the City within the meaning of any
29 constitutional or statutory limitation.
30 Section 8. The bonds and the Certificate shall be in substantially the following form, and the Mayor
31 and City Clerk are hereby expressly authorized and directed to make all recitals contained therein:
32
33
34
35
[PAGE 7 OF 28]
1 (Form of bond)
2
REGISTERED REGISTERED
No. R-
3
4 UNITED STATES OF AMERICA
5 STATE OF ARKANSAS
6 COUNTY OF PULASKI
7 CITY OF LITTLE ROCK
8 SEWER REFUNDING REVENUE BOND
9 SERIES 2014
10
Maturity Date: , 20_ Interest Rate:
Dated Date: , 2014 CUSIP No.:
11
12 Registered Owner: CEDE&CO.
13
14 Principal Amount: DOLLARS
15
16
[PAGE 8 OF 28]
1 KNOW ALL MEN BY THESE PRESENTS:
2
3 That the City of Little Rock, County of Pulaski, State of Arkansas (the "City"), for value
4 received, hereby promises to pay, but solely from the source as hereinafter provided and not otherwise,to
5 the Registered Owner shown above upon the presentation and surrender hereof at the principal corporate
6 cffice of Regions Bank, Little Rock,Arkansas, or its successor or successors, as trustee and paying agent
7 (the "Trustee"), on the Maturity Date shown above, the Principal Amount shown above, in such coin or
8 currency of the United States of America as at the time of payment shall be legal tender for the payment
9 c f public and private debts and to pay by check or draft interest thereon, but solely from the source as
10 hereinafter provided and not otherwise, in like coin or currency from the interest commencement date
11 specified below at the Interest Rate per annum shown above, payable May 1, 2015 and semiannually
12 t iereafter on the first days of May and November of each year, until payment of such principal sum or, if
13 tris bond or a portion thereof shall be duly called for redemption, until the date fixed for redemption, and
14 to pay interest on overdue principal and interest(to the extent legally enforceable)at the rate borne by this
15 bond. Payment of each installment of interest shall be made to the person in whose name this bond is
16 re,gistered on the registration books of the City maintained by the Trustee at the close of business on the
17 fifteenth day of the month(whether or not a business day)next preceding each interest payment date(the
18 "Record Date"), irrespective of any transfer or exchange of this bond subsequent to such Record Date and
19 p rior to such interest payment date.
20
21 Unless this bond is presented by an authorized representative of The Depository Trust Company,
22 a New York corporation ("DTC"), to the Trustee for registration of transfer, exchange or payment, and
23 any certificate issued is registered in the name of Cede&Co. or in such other name as is requested by an
24 authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is
25 required by an authorized representative of DTC), any transfer, pledge or other use hereof for value or
26 otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an
27 ihterest herein.
28
29 This bond shall bear interest from the payment date next preceding the date on which it is
30 authenticated unless it is authenticated on an interest payment date, in which event it shall bear interest
31 from such date, or unless it is authenticated prior to the first interest payment date, in which event it shall
32 bear interest from the Dated Date shown above, or unless it is authenticated during the period from the
33 Record Date to the next interest payment date, in which case it shall bear interest from such interest
34 payment date,or unless at the time of authentication hereof interest is in default hereon, in which event it
35 s hall bear interest from the date to which interest has been paid.
36
37 This bond is one of an issue of City of Little Rock, Arkansas Sewer Refunding Revenue Bonds,
38 Series 2014, aggregating Eleven Million Nine Hundred Eighty Thousand Dollars ($11,980,000) in
39 principal amount (the "bonds"), and is issued for the purposes of refunding the City's Sewer Revenue
40 Fond, Series 1999 and Sewer Refunding and Construction Revenue Bonds, Series 2005, paying the
41 premium for a debt service reserve insurance policy and paying expenses incidental thereto and to the
42 authorization and issuance of the bonds.
43
44 The bonds are issued pursuant to and in full compliance with the Constitution and laws of the
45 State of Arkansas (the "State"), including particularly Title 14, Chapter 164, Subchapter 4 and Title 14,
46 Chapter 235, Subchapter 2 of the Arkansas Code of 1987 Annotated, and pursuant to Ordinance No.
47 duly adopted on , 2014 (the "Authorizing Ordinance"), and do not constitute an
48 indebtedness of the City within the meaning of any constitutional or statutory limitation. The bonds are
49 not general obligations of the City, but are special obligations payable solely from the net revenues (the
50 Vet Revenues") derived from the operation of the City's sewer system (the "System") on a parity of
51 s,curity with the City's outstanding Sewer Construction Revenue Bonds, Series 2007A and Series 2007C,
[PAGE 9 OF 28]
1 Sewer Revenue Bonds, Series 2008 and Series 2009B, Sewer Refunding Revenue Bonds, Series 2011 and
2 Sewer Revenue Bonds, Series 2012, and prior to the pledge of Net Revenues in favor of the City's Sewer
3 Revenue Bonds, Series 1996, Series 2004A, Series 2004B, Series 2004C, Series 2007B, Series 2009A
4 and Series 2013. An amount of Net Revenues sufficient to pay the principal of and interest on the bonds
5 as been duly pledged and set aside into the 2014 Sewer Revenue Bond Fund created by the Authorizing
6 dinance. Reference is hereby made to the Authorizing Ordinance for a detailed statement of the terms
7 d conditions upon which the bonds are issued, of the nature and extent of the security for the bonds,and
8 e rights and obligations of the City, the Trustee and the registered owners of the bonds. The City has
9 ed and has covenanted and agreed to maintain rates for the services of the System which shall be
10 s fficient at all times to provide for the proper and reasonable expenses of operation and maintenance of
11 a System and for the payment of the principal of and interest on the bonds, including Trustee's fees, as
12 a same become due and payable, to establish and maintain a debt service reserve and to make the
13 required deposit for the depreciation of the System.
14
15 The bonds shall be subject to optional and mandatory sinking fund redemption as follows:
16
17 (1) The bonds are subject to redemption prior to maturity, at the option of the City, from
18 funds from any source, on and after November 1, 2022, at par, in whole at any time or in part on any
19 interest payment date, at a redemption price equal to the principal amount of the bonds being redeemed,
20 plus accrued interest to the redemption date. If fewer than all of the bonds shall be called for redemption,
21 the particular maturities of the bonds to be redeemed shall be selected by the City in its discretion.
22
23 (2) To the extent not previously redeemed,the bonds maturing on May 1,2025 are subject to
24 mandatory sinking fund redemption by lot in such manner as the Trustee shall determine, on May 1 and
25 November 1 in the years and in the amounts set forth below, at a redemption price equal to the principal
26 amount being redeemed plus accrued interest to the date of redemption:
27
Bonds Due May 1, 2025
Date Amount
May 1, 2024 $325,000
November 1, 2024 335,000
May 1, 2025 (maturity) 340,000
28
29 In case any outstanding bond is in a denomination greater than $5,000, each $5,000 of face value
30 of such bond shall be treated as a separate bond of the denomination of$5,000.
31
32 Notice of redemption identifying the bonds or portions thereof (which shall be $5,000 or a
33 multiple thereof) to be redeemed shall be given by the Trustee, not less than thirty (30) nor more than
34 sixty(60) days prior to the date fixed for redemption, by mailing a copy of the redemption notice by first
35 class mail, postage prepaid, or sending a copy of the redemption notice via other standard means,
36 including electric or facsimile communication, to all registered owners of bonds to be redeemed. Failure
37 to mail or send an appropriate notice or any such notice to one or more registered owners of bonds to be
38 redeemed shall not affect the validity of the proceedings for redemption of other bonds as to which notice
39 of redemption is duly given in proper and timely fashion. All such bonds or portions thereof thus called
40 fix. redemption and for the retirement of which funds are duly provided in accordance with the
41 Authorizing Ordinance prior to the date fixed for redemption will cease to bear interest on such
42 redemption date.
43
[PAGE 10 OF 28]
1 IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things
2 required to exist, happen and be performed precedent to and in the issuance of the bonds do exist, have
3 l appened and have been performed in due time, form and manner as required by law; that the
4 indebtedness represented by the bonds, together with all obligations of the City, does not exceed any
5 constitutional or statutory limitation; and that the above referred to Net Revenues pledged to the payment
6 of the principal of and premium, if any, and interest on the bonds as the same become due and payable
7 will be sufficient in amount for that purpose.
8
9 This bond shall not be valid or become obligatory for any purpose or be entitled to any security or
10 b enefit under the Authorizing Ordinance until the Certificate of Authentication hereon shall have been
11 signed by the Trustee.
12
13 IN WITNESS WHEREOF,the City of Little Rock,Arkansas has caused this bond to be executed
14 by its Mayor and City Clerk and its corporate seal to be impressed or imprinted on this
15 bond,all as of the Dated Date shown above.
16
CITY OF LITTLE ROCK, ARKANSAS
ATTEST: By:
Mayor
1
City Clerk
(SEAL)
17
18 (Form of Trustee's Certificate)
19
20
[PAGE 11 OF 28]
1 TRUSTEE'S CERTIFICATE OF AUTHENTICATION
2
3 This bond is one of the bonds designated Series 2014 in and issued under the provisions of the
4 within mentioned Authorizing Ordinance.
5
6 Date of Authentication:
7
REGIONS BANK
Little Rock,Arkansas,Trustee
By:
Authorized Signature
8
9
10 [A Form of Assignment will be attached to the bonds.]
11
12 Section 9. The rates charged for services of the System heretofore fixed by Ordinance No. 20,594 of
13 t e City, adopted June 12, 2012, and the conditions, rights and obligations pertaining thereto, as set out in
14 t ose ordinances, are hereby ratified, confirmed and continued. None of the facilities or services afforded
15 y the System shall be furnished without a charge being made therefor. In the event that the City or any
16 epartment, agency or instrumentality thereof shall avail itself of the facilities and services afforded by
17 t e System, the reasonable value of the services or facilities so afforded shall be charged against the City
18 or such department, agency or instrumentality and shall be paid for as the charges accrue. The revenues
19 S3 received shall be deemed to be revenues derived from the operation of the System and shall be used
20 and accounted for in the same manner as the other revenues derived from the operation of the System.
21 The City covenants and agrees that System rates shall never be reduced while any of the bonds are
22 outstanding unless there is obtained from an independent certified public accountant ("Accountant") a
23 certificate that the Net Revenues of the System ("Net Revenues" being defined as gross revenues of the
24 System less the expenses of operation and maintenance of the System, including all expense items
25 properly attributable to the operation and maintenance of the System under generally accepted accounting
I '
26 principles applicable to municipal sewer facilities, excluding depreciation, interest and amortization of
27 deferred bond discount expenses), with the reduced rates, will always be equal to the amount required to
28 be set aside for the Depreciation Fund (hereinafter identified), and leave a balance equal to at least 130%
29 of the average annual principal and interest requirements on all outstanding bonds payable from System
30 rovenues ("System Bonds"). The City further covenants and agrees that the rates shall, if and when
31 necessary, from time to time, be increased in such manner as will produce revenues at least sufficient to
32 pay the principal and interest on all System Bonds when due, to pay the operation and maintenance
[PAGE 12 OF 28]
1 expenses of the System, to deposit the amounts required to be paid into the Depreciation Fund and any
2 c ebt service reserves and to reimburse the Reserve Insurer for any amounts owing with respect to the
3 Reserve Policy in accordance with this Ordinance.
4 The City covenants and agrees that the existing rates will produce total System revenues at least
5 sufficient to pay the operation and maintenance expenses of the System, to pay the principal of and
6 Premium, if any, and interest on all outstanding System Bonds and trustee fees in connection therewith,
7 and to make the required deposits into the debt service reserves and the Depreciation Fund.
8 This Section 9 shall not apply to the type of sewer charges fixed by Ordinance No. 20,590, adopted
9 June 5,2012.
10 Section 10. The System shall be continuously operated as a revenue producing undertaking and all
11 S ystem revenues shall be paid into a special fund heretofore created and designated "Sewer Fund" (the
12 "Revenue Fund"). The System revenues so deposited in the Revenue Fund are hereby pledged and shall
13 be applied to the payment of the reasonable and necessary expenses of operation, repair and maintenance
14 of the System, to the payment of the principal of and premium, if any, and interest on System Bonds, to
15 the establishment and maintenance of debt service reserves, to the providing of a Depreciation Fund and
16 to reimburse the Reserve Insurer for any amounts owing with respect to the Reserve Policy as hereinafter
17 set forth. The Revenue Fund, and the other special funds hereinafter in this Ordinance provided for or
18 referred to, shall be maintained in such depositories of the City as shall from time to time be designated
19 by the Committee, with all such depositories to hold membership in the Federal Deposit Insurance
20 Corporation (the "FDIC"), to be located in Little Rock, Arkansas, and to have a capital and surplus of not
21 loss than $15,000,000, and with all deposits in any depository in excess of the amount insured by the
22 F DIC to be secured by bonds or other direct or fully guaranteed obligations of the United States of
23 America unless invested in accordance with Section 29 hereof.
24 Section 11. There shall be paid from the Revenue Fund into a fund heretofore created and designated
25 "Sewer Operation and Maintenance Fund" (the "Operation and Maintenance Fund")on or before the tenth
26 day of each month while any bonds are outstanding, an amount sufficient to pay the reasonable and
27 necessary monthly expenses of operation, repair and maintenance of the System for such month and from
28 which disbursements shall be made only for those purposes. Fixed annual charges such as insurance
29 premiums and the cost of major repair and maintenance expenses may be computed and set up on an
30 annual basis, and one-twelfth (1/12) of the amount thereof may be paid into the Operation and
31 Maintenance Fund each month.
32 If in any month for any reason there shall be a failure to transfer and pay the required amount into
33 Operation and Maintenance Fund, the amount of any deficiency shall be added to the amount otherwise
34 required to be transferred and paid into such fund in the next succeeding month. If in any fiscal year a
[PAGE 13 OF 28]
ii
it
1 surplus shall be accumulated in the Operation and Maintenance Fund over and above the amount which
2 shall be necessary to defray the reasonable and necessary costs of operation, repair and maintenance of
3 the System during the remainder of the then current fiscal year and the next ensuing fiscal year, such
4 surplus may be transferred and deposited in the Revenue Fund.
5 Section 12. After making the required monthly deposits into the Operation and Maintenance Fund,
6 t ere shall be paid from the Revenue Fund, pro rata, the required monthly deposits into the bond funds
7 ( nd debt service reserves therein) for the Parity Bonds and any additional bonds issued on a parity with
8 t e bonds pursuant to Section 18 hereof(the "Parity Bond Funds")and into a special fund in the name of
9 t e City which is hereby created and designated the "2014 Sewer Revenue Bond Fund" (the "2014 Bond
10 Fund" and collectively with the Parity Bond Funds, the "Senior Bond Funds"). Payments into the 2014
11 Fond Fund shall be made on or before the fifteenth day of each month, commencing in November 2014,
12 until all outstanding bonds, with interest thereon, have been paid in full or provision made for such
13 payment, a sum equal to 1/6 of the next installment of interest due on the bonds plus 1/6 of the next
14 installment of principal due on the bonds.
15 The City shall also pay into the 2014 Bond Fund such additional sums as necessary to provide for the
16 Trustee's fees and expenses, any fees or other amounts due the Reserve Insurer and any arbitrage rebate
17 due the United States Treasury under Section 148(f) of the Internal Revenue Code of 1986, as amended
18 (i;he "Code"). The City shall realize a credit against monthly deposits into the 2014 Bond Fund from bond
19 proceeds deposited therein, all interest earnings on moneys in the 2014 Bond Fund, for transfers into the
20 2014 Bond Fund from funds held in connection with the Bonds Refunded, and for transfers from the Cost
21 of Issuance Fund pursuant to Section 25 hereof.
22 If Net Revenues are insufficient to make the required payment on the first business day of the
23 fallowing month into the 2014 Bond Fund, the amount of any such deficiency in the payment made shall
24 be added to the amount otherwise required to be paid into the 2014 Bond Fund on the first business day of
25 the next month.
26 When the moneys held in the 2014 Bond Fund shall be and remain sufficient to pay the principal of
27 and interest on all of the bonds then outstanding plus Trustee's fees, fees or other amounts due the
28 Reserve Insurer and any arbitrage rebate due as provided above, the City shall not be obligated to make
29 any further payments into the 2014 Bond Fund.
30 It shall be the duty of the City to cause to be withdrawn from the 2014 Bond Fund and deposited with
31 the Trustee at least five(5)business days before the due date of any principal and/or interest on any bond,
32 al maturity or redemption prior to maturity,and deposited with the Trustee an amount equal to the amount
33 of such bond and interest due thereon for the sole purpose of paying the same,together with the Trustee's
34 five and any fees or other amounts due the Reserve Insurer. There shall also be withdrawn and paid to the
[PAGE 14 OF 28]
1 United States Treasury any arbitrage rebate due at the times and in the amounts required by Section
2 148(f) of the Code. No withdrawal of funds from the 2014 Bond Fund shall be made for any other
3 p urpose except as otherwise authorized in this Ordinance.
4 The bonds shall be specifically secured by a pledge of all Net Revenues remaining after the deposits
5 have been made to the Operation and Maintenance Fund. This pledge in favor of the bonds is hereby
6 irrevocably made according to the terms of this Ordinance, and the City and its officers and employees
7 shall execute, perform and carry out the terms thereof in strict conformity with the provisions of this
8 Ordinance.
9 Section 13. There is hereby created, as part of the 2014 Bond Fund, a debt service reserve (the "Debt
10 Service Reserve") which shall be maintained by the City. There shall be deposited into the Debt Service
11 Reserve the Reserve Policy issued by the Reserve Insurer, which shall be in an amount equal to the lesser
12 of(i) the maximum annual principal and interest requirement on the bonds or (ii) 10% of the principal
13 amount of the bonds (the "Required Level"). If for any reason the City should fail at any time to make
14 any of the required payments into the 2014 Bond Fund, the Debt Service Reserve shall be used to the
15 e tent necessary for the payment of principal of and interest on the bonds.
16 Section 14. Notwithstanding any provision of this Ordinance to the contrary:
17 (a) In the event that payment is required under the Reserve Policy, the Trustee shall ascertain
18 t e necessity for a claim under the Reserve Policy in accordance with subsection (b) below and provide
19 otice to the Reserve Insurer in accordance with the terms of the Reserve Policy at least five (5) business
20 days prior to each date upon which principal and interest is due on the bonds. The Trustee shall also give
21 notice to the Reserve Insurer of a failure to make a timely payment into the 2014 Bond Fund within two
22 days of the date such payment was due.
23 (b) The City shall repay any draws under the Reserve Policy and pay all related reasonable
24 eacpenses incurred by the Reserve Insurer and shall pay interest thereon from the date of payment by the
25 Reserve Insurer at the Late Payment Rate. "Late Payment Rate" means the lesser of(x)the greater of(i)
26 the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its
27 principal office in the City of New York, as its prime or base lending rate ("Prime Rate") (any change in
28 such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus
29 5%, and (ii) the then applicable highest rate of interest on the bonds and (y) the maximum rate
30 permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be
31 cnmputed on the basis of the actual number of days elapsed over a year of 360 days. In the event
32 J?Morgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly
33 announced prime or base lending rate of such national bank as the Reserve Insurer shall specify. If the
34 interest provision of this subsection (b) shall result in an effective rate of interest which, for any period,
[PAGE 15 OF 28]
g�g
I i F
1 exceeds the limit of the usury or any other laws applicable to the indebtedness created herein, then all
2 sums in excess of those lawfully collectible as interest for the period in question shall, without further
3 eement or notice between or by the City and the Reserve Insurer, be applied as additional interest for
4 .1 y later periods of time when amounts are outstanding hereunder to the extent that interest otherwise due
5 ereunder for such periods plus such additional interest would not exceed the limit of the usury or such
6 ether laws, and any excess shall be applied upon principal immediately upon receipt of such moneys by
7 t e Reserve Insurer, with the same force and effect as if the City had specifically designated such extra
8 s ms to be so applied and the Reserve Insurer had agreed to accept such extra payment(s) as additional
9 i terest for such later periods. In no event shall any agreed-to or actual exaction as consideration for the
10 i debtedness created herein exceed the limits imposed or provided by the law applicable to this
11 t ansaction for the use or detention of money or for forbearance in seeking its collection.
12 Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate
13 (collectively, "Policy Costs") shall commence in the first month following each draw, and each such
14 monthly payment shall be in an amount at least equal to 1/12 of the aggregate of Policy Costs related to
15 such draw.
16 Amounts in respect of Policy Costs paid to the Reserve Insurer shall be credited first to interest due,
17 t en to the expenses due and then to principal due. As and to the extent that payments are made to the
18 eserve Insurer on account of principal due, the coverage under the Reserve Policy will be increased by a
19 1 ke amount, subject to the terms of the Reserve Policy.
20 All cash and investments in the Debt Service Reserve shall be transferred to the 2014 Bond Fund for
21 ayment of debt service on the bonds before any drawing may be made on the Reserve Policy. Payment
22 of any Policy Costs shall be made prior to replenishment of any cash drawn from the Debt Service
23 F.eserve.
24 (c) Upon a failure of the City to pay Policy Costs when due in accordance with the requirements
25 above or any other breach of the terms of this Ordinance, the Reserve Insurer shall be entitled to exercise
26 any and all legal and equitable remedies available to it, including those provided under this Ordinance
27 other than (i) acceleration of the maturity of the bonds or (ii) remedies which would adversely affect
28 owners of the bonds. Notwithstanding any provision of this Ordinance to the contrary, this Ordinance
29 shall not be discharged until all Policy Costs owing to the Reserve Insurer shall have been paid in full.
30 The City's obligation to pay such amounts shall expressly survive payment in full of the bonds. In order
31 to secure the City's payment obligations with respect to the Policy Costs, there is hereby granted in favor
32 of the Reserve Insurer a security interest in Net Revenues and other collateral pledged as security for the
33 bonds, Parity Bonds and any other additional parity bonds issued under Section 18 hereof (excluding
34 from such collateral any debt service reserves for the Parity Bonds or additional parity bonds issued under
[PAGE 16 OF 28]
1 Section 18 hereof and excluding any collateral specific to each issue of Parity Bonds or additional parity
2 bonds issued under Section 18 hereof), which payment obligations are subordinate in priority of payment
3 to the payment of debt service due on the bonds, Parity Bonds, and any other additional parity bonds
4 issued under Section 18 hereof. The City shall include any Policy Costs then due and owing the Reserve
5 I usurer in the calculations set forth in Section 9 and Section 18 hereof.
6 (d) The City shall pay or reimburse the Reserve Insurer any and all charges, fees, costs,
7 losses, liabilities and expenses which the Reserve Insurer may reasonably pay or incur including, but not
8 limited to, fees and expenses of attorneys, accountants, consultants and auditors and reasonable costs of
9 investigations, in connection with (i) any accounts established to facilitate payments under the Reserve
10 Policy, (ii) the administration, enforcement, defense or preservation of any rights in respect to this
11 Ordinance or any document executed in connection with the bonds (the "Related Documents"), including
12 defending, monitoring or participating in any litigation or proceeding (including any bankruptcy
13 proceeding in respect to the City) relating to this Ordinance or any other Related Document, any party to
14 any Related Document or the transactions contemplated by the Related Documents, (iii) the foreclosure
15 against, sale or other disposition of any collateral securing any obligations under this Ordinance or any
16 other Related Document, if any, or the pursuit of any remedies under this Ordinance or any other Related
17 Documents, to the extent such costs and expenses are not recovered from such foreclosure, sale or other
18 disposition, (iv) any amendment, waiver or other action with respect to, or related to this Ordinance, the
19 F.eserve Policy or any other Related Document whether or not executed or completed, or (v) any action
20 taken by the Reserve Insurer to cure a default or termination or similar event (or to mitigate the effect
21 t ereof) under this Ordinance or any other Related Document; costs and expenses shall include a
22 r asonable allocation of compensation and overhead attributable to time of employees of the Reserve
23 I surer spent in connection with the actions described in clauses (ii) through (v) above. The Reserve
24 I surer reserves the right to charge a reasonable fee as a condition to executing any amendment, wavier or
25 consent proposed in respect of this Ordinance or any other Related Document. Amounts payable by the
26 City under this Section shall bear interest at the Late Payment Rate from the date such amount is paid or
27 incurred by the Reserve Insurer until the date the Reserve Insurer is paid in full.
28 (e) The obligation of the City to pay all amounts due to the Reserve Insurer shall be an absolute
29 and unconditional obligation of the City and will be paid or performed strictly in accordance with the
30 provisions of this Ordinance irrespective of: (i)any lack of validity or enforceability of or any amendment
31 or other modifications of, or waiver with respect to the bonds, this Ordinance or any other Related
32 Document; (ii) any amendment or other modification of, or waiver with respect to the Reserve Policy;
33 ( ii) any exchange, release or non-perfection of any security interest in property securing the bonds, this
34 rdinance or any other Related Documents; (iv) whether or not such bonds are contingent or matured,
[PAGE]7 OF 28]
1 disputed or undisputed, liquidated or unliquidated; (v) any amendment, modification or waiver of or any
2 consent to departure from the Reserve Policy, this Ordinance or all or any of the other Related
3 I>ocuments; (vi) the existence of any claim, setoff, defense (other than the defense of payment in full)
4 reduction, abatement or other right which the City may have at any time against the Trustee or any other
5 Terson or entity other than the Reserve Insurer, whether in connection with the transactions contemplated
6 herein or in any other Related Documents or any unrelated transactions; (vii) any statement or any other
7 document presented under or in connection with the Reserve Policy proving in any and all respects
8 invalid, inaccurate, insufficient, fraudulent or forged or any statement therein being untrue or inaccurate
9 in any respect; or(viii)any payment by the Reserve Insurer under the Reserve Policy against presentation
10 cf a certificate or other document which does not strictly comply with the terms of the Reserve Policy.
11 (f) The City shall fully observe, perform and fulfill each of the provisions (as each of those
12 provisions may be amended, supplemented, modified or waived with the prior written consent of the
13 F eserve Insurer) of this Ordinance applicable to it, each of the provisions thereof being expressly
14 i corporated into this Ordinance by reference solely for the benefit of the Reserve Insurer as if set forth
15 irectly herein. No provision of this Ordinance or any other Related Document shall be amended,
16 supplemented, modified or waived, without the prior written consent of the Reserve Insurer, in any
17 material respect or otherwise in a manner that could adversely affect the payment obligations of the City
18 hereunder or the priority accorded to the reimbursement of Policy Costs under this Ordinance. The
19 Reserve Insurer is hereby expressly made a third party beneficiary of this Ordinance and each other
20 Related Document.
21 (g) The City covenants to provide to the Reserve Insurer, promptly upon request, any
22 i]lformation regarding the bonds or the financial condition and operations of the City as reasonably
23 requested by the Reserve Insurer. The City will permit the Reserve Insurer to discuss the affairs, finances
24 and accounts of the City or any information the Reserve Insurer may reasonably request regarding the
25 security for the bonds with appropriate officers of the City and will use commercially reasonable efforts
26 to enable the Reserve Insurer to have access to the facilities, books and records of the City on any
27 business day upon reasonable prior notice.
28 (h) Notices and other information to the Reserve Insurer shall be sent to the following
29 address (or such other address as the Reserve Insurer may designate in writing): Municipal Assurance
30 Corp., 31 West 52nd Street, New York, New York 10019, Attention: Managing Director- Surveillance,
31 RE: Policy No.
32 Section 15. After making the deposits into the Operation and Maintenance Fund and the Senior
33 E'ond Funds, there shall be transferred from the Revenue Fund into the bond funds for the Subordinate
34 Eonds (the "Subordinate Bond Funds"), the amounts required by the ordinances authorizing the
[PAGE 18 OF 28]
'I i
1 Subordinate Bonds, and the administration and servicing fees due in connection with the Subordinate
2 bonds.
3 Section 16. After making the required payments into the Operation and Maintenance Fund, the
4 Senior Bond Funds and the Subordinate Bond Funds, there shall be paid from the Revenue Fund into a
5 find heretofore created and designated the "Sewer Depreciation Fund" (the "Depreciation Fund") on, or
6 before the 15th day of each month while any bonds are outstanding, three percent (3%) of the System
7 n:venues which remain after the required payment into the Operation and Maintenance Fund has been
8 made. The moneys in the Depreciation Fund shall be used solely for the purpose of paying the cost of
9 replacements made necessary by the depreciation of the System. If in any fiscal year a surplus shall be
10 accumulated in the Depreciation Fund over and above the amount necessary to defray the cost of the
11 probable replacements during the then current fiscal year and the next ensuing fiscal year, such surplus
12 may be transferred and paid into the Revenue Fund.
13 Section 17. Any surplus in the Revenue Fund, after making the required monthly deposits into all of
14 the funds as set forth above may be used, at the option of the City, for any lawful purpose of the System,
15 as approved by the Committee.
16 Section 18. So long as any of the bonds are outstanding, the City shall not issue or attempt to issue
17 any bonds claimed to be entitled to a priority of lien on Net Revenues over the lien securing the bonds and
18 the Parity Bonds, except as hereinafter provided. The City reserves the right to issue additional bonds to
19 finance or pay the cost of making any future extensions, betterments or improvements to the System,or to
20 refund bonds issued for such purposes, but the City shall not authorize or issue any such additional bonds
21 ranking on a parity with the bonds and the Parity Bonds unless and until there have been procured and
22 fled with the City Clerk and the Trustee a statement by an Accountant reciting the opinion, based upon
23 necessary investigation,that the Net Revenues of the System for the fiscal year immediately preceding the
24 f scal year in which it is proposed to issue such additional bonds shall equal not less than 120% of the
25 average annual principal and interest requirements on all the then outstanding System Bonds and the
26 additional bonds then proposed to be issued. The term "Net Revenues" means gross System revenues less
27 operation and maintenance expenses other than depreciation, interest and amortization of deferred bond
28 discount expenses, determined in accordance with generally accepted accounting principles. In making
29 the computation set forth above, the City, and the Accountant on behalf of the City, may, based upon the
30 opinion or report of a registered professional engineer not in the regular employ of the City, treat any
31 increase in rates for the System enacted subsequent to the first day of such preceding fiscal year as having
32 been in effect during or throughout such fiscal year and may include in gross System revenues for such
33 f scal year the amount that would have been received, based on such opinion or report, had the increase
34 been in effect during or throughout such fiscal year.
[PAGE 19 OF 28
1 Section 19. The City covenants and agrees that it will maintain the System in good condition and
2 c perate the same in an efficient manner and at reasonable cost. While any of the bonds are outstanding,
3 t e City agrees that it will insure and at all times keep insured, in the amount of the full insurable value
4 t ereof, in a responsible insurance company or companies selected by the Committee and authorized and
5 ualified under the laws of the State to assume the risk thereof, all aboveground structures of the System,
6 t the extent that such structures would be covered by insurance by private companies engaged in similar
7 types of businesses, against loss or damage thereto from fire, lightning, tornados, winds, riot, strike, civil
8 commotion, malicious damage, explosion and against any other loss or damage from any other causes
9 customarily insured against by private companies engaged in similar types of business. The insurance
10 policies are to carry a clause making them payable to the Committee and the Trustee as their interests may
11 appear,and satisfactory evidence of said insurance shall be filed with the Trustee. In the event of loss,the
12 proceeds of such insurance shall be applied solely toward the reconstruction, replacement or repair of the
13 System, and in such event the City will, with reasonable promptness, cause to be commenced and
14 completed the reconstruction, replacement and repair work. If such proceeds are more than sufficient for
15 such purposes, the balance remaining shall be deposited to the credit of the Revenue Fund, and if such
16 proceeds shall be insufficient for such purposes, the deficiency shall be supplied first from moneys in the
17 Depreciation Fund, second from moneys in the Operation and Maintenance Fund, and third from surplus
18 moneys in the Revenue Fund. Nothing shall be construed as requiring the City to expend any moneys for
19 operation and maintenance of the System or for premiums on its insurance which are derived from
20 s Durces other than the operation of the System, but nothing shall be construed as preventing the City from
21 doing so.
22 Section 20. The bonds shall be subject to redemption prior to maturity in accordance with the terms
23 s:,t out in the bond form.
24 Section 21. The Committee will keep proper books of accounts and records (separate from all other
25 records and accounts of the City) in which complete and correct entries shall be made of all transactions
26 ri,lating to the operation of the System, and such books shall be available for inspection by the Trustee
27 and any registered owner of any of the bonds at reasonable times and under reasonable circumstances.
28 The City and the Committee agree to have these records audited by an Accountant at least once each year,
29 and a copy of the audit shall be delivered to the Trustee and made available to interested registered
30 owners requesting the same in writing. In the event that the City or the Committee fail or refuse to make
31 the audit,the Trustee, or any registered owner of the bonds, may have the audit made, and the cost thereof
32 s hall be charged against the Operation and Maintenance Fund.
33 Section 22. Any bond shall be deemed to be paid within the meaning of this Ordinance when
34 payment of the principal of and interest on such bond (whether at maturity or upon redemption as
[PAGE 20 OF 28]
1 provided herein, or otherwise), either (i) shall have been made or caused to be made in accordance with
2 tie terms thereof, or(ii) shall have been provided for by irrevocably depositing with the Trustee, in trust
3 and irrevocably set aside exclusively for such payment (1) cash sufficient to make such payment and/or
4 (2) direct obligations of(including obligations issued or held in book entry form on the books of) the
5 Department of the Treasury of the United States of America ("Government Securities") (provided that
6 such deposit will not affect the tax exempt status of the interest on any of the bonds or cause any of the
7 bonds to be classified as "arbitrage bonds" within the meaning of Section 148 of the Code), maturing as to
8 principal and interest in such amounts and at such times as will provide sufficient moneys to make such
9 payment, and all necessary and proper fees, compensation and expenses of the Trustee pertaining to the
10 bonds with respect to which such deposit is made shall have been paid or the payment thereof provided
11 131.to the satisfaction of the Trustee.
12 On the payment of any such bonds within the meaning of this Ordinance, the Trustee shall hold in
13 trust, for the benefit of the owners of such bonds,all such moneys and/or Government Securities.
14 When all the bonds shall have been paid within the meaning of this Ordinance, if the Trustee has been
15 paid its fees and expenses and if any arbitrage rebate due the United States Treasury has been paid or
16 provided for to the satisfaction of the Trustee, and if there are not amounts due the Reserve Insurer with
17 respect to the Reserve Policy, the Trustee shall take all appropriate action to cause (i) the pledge and lien
18 cf this Ordinance to be discharged and cancelled, and(ii)all moneys held by it pursuant to this Ordinance
19 and which are not required for the payment of such bonds to be paid over or delivered to or at the
20 irection of the City. In determining the sufficiency of the deposit of Government Securities, there shall
21 e considered the principal amount of such Government Securities and interest to be earned thereon until
22 t e maturity of such Government Securities.
23 Section 23. If there be any default in the payment of the principal of or interest on any of the bonds,
24 r if the City defaults in any 2014 Bond Fund requirement or in the performance of any of the other
25 covenants contained in this Ordinance and such failure continues unremedied for thirty (30) days, the
26 Trustee may, and upon the written request of the registered owners of not less than 10% in principal
27 amount of the then outstanding bonds, shall, by proper suit, compel the performance of the duties of the
28 officials of the City under the laws of Arkansas. And in the case of a default in the payment of the
29 principal of and interest on any of the bonds, the Trustee may and upon written request of the registered
30 owners of not less than 10% in principal amount of the then outstanding bonds, shall apply in a proper
31 action to a court of competent jurisdiction for the appointment of a receiver to administer the System on
32 half of the City and the registered owners of the bonds with power to charge and collect (or by
33 andatory injunction or otherwise to cause to be charged and collected)rates sufficient to provide for the
34 ayment of the expenses of operation, maintenance and repair and to pay any bonds and interest
PAGE 21 OF 28
1 .utstanding and to apply the System revenues in conformity with the laws of Arkansas and with this
2 Ordinance. When all defaults in principal and interest payments have been cured, the custody and
3 operation of the System shall revert to the City.
4 No registered owner of any of the outstanding bonds shall have any right to institute any suit, action,
5 andamus or other proceeding in equity or at law for the protection or enforcement of any power or right
6 nless such owner previously shall have given to the Trustee written notice of the default on account of
7 hich such suit, action or proceeding is to be taken, and unless the registered owners of not less than 10%
8 i principal amount of the bonds then outstanding shall have made written request of the Trustee after the
9 right to exercise such power or right of action, as the case may be, shall have accrued, and shall have
10 afforded the Trustee a reasonable opportunity either to proceed to exercise the powers granted to the
11 Trustee, or to institute such action, suit or proceeding in its name, and unless, also, there shall have been
12 offered to the Trustee reasonable security and indemnity against the costs, expenses and liabilities to be
13 incurred therein or thereby and the Trustee shall have refused or neglected to comply with such request
14 within a reasonable time. Such notification, request and offer of indemnity are, at the option of the
15 Trustee, conditions precedent to the execution of any remedy. No one or more registered owners of the
16 bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the
17 security of this Ordinance, or to enforce any right hereunder except in the manner herein described. All
18 proceedings at law or in equity shall be instituted, had and maintained in the manner herein described and
19 f r the benefit of all registered owners of the outstanding bonds.
20 No remedy conferred upon or reserved to the Trustee or to the registered owners of the bonds is
21 i tended to be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and
22 s hall be in addition to every other remedy given under this Ordinance or by law.
23 The Trustee may, and upon the written request of the registered owners of not less than 50% in
24 principal amount of the bonds then outstanding shall, waive any default which shall have been remedied
25 before the entry of final judgment or decree in any suit, action or proceeding instituted under the
26 provisions of this Ordinance or before the completion of the enforcement of any other remedy, but no
27 such waiver shall extend to or affect any other existing or any subsequent default or defaults or impair any
28 rights or remedies consequent thereon.
29 All rights of action under this Ordinance or under any of the bonds, enforceable by the Trustee, may
30 be enforced by it without the possession of any of the bonds, and any such suit, action or proceeding
31 instituted by the Trustee shall be brought in its name for the benefit of all the registered owners of such
32 bonds, subject to the provisions of this Ordinance.
33 No delay or omission of the Trustee or of any registered owners of the bonds to exercise any right or
34 power accrued upon any default shall impair any such right or power or shall be construed to be a waiver
! I
[PAGE 22 OF 28]
1 of any such default or an acquiescence therein; and every power and remedy given by this ordinance to
2 the Trustee and to the registered owners of the bonds, respectively, may be exercised from time to time
3 and as often as may be deemed expedient.
4 In any proceeding in which any plaintiff bondholder prevails to enforce the provisions of this
5 Ordinance, such plaintiff bondholder shall be entitled to recover from the City all costs of such
6 proceeding, including reasonable attorneys' fees.
7 Section 24. (a) The terms of this Ordinance shall constitute a contract between the City and the
8 registered owners of the bonds and no variation or change in the undertaking herein set forth shall be
9 made while any of the bonds are outstanding, except as hereinafter set forth in subsections(b)and(c).
10 The Trustee may consent to any variation or change in this Ordinance without the consent of the
11 owners of the outstanding bonds (a) in connection with the issuance of additional parity bonds under this
12 Ordinance, (b) in order to cure any ambiguity, defect or omission herein or to correct or supplement any
13 defective or inconsistent provisions contained herein as the City may deem necessary or desirable and not
14 inconsistent herewith, or(c) in order to make any other variation or change which the Trustee determines
15 s hall not adversely affect the interests of the owners of the bonds.
16 (e) The owners of not less than 75% in aggregate principal amount of the bonds then
17 outstanding shall have the right, from time to time, anything contained in this Ordinance to the contrary
18 notwithstanding, to consent to and approve the adoption by the City of such ordinance supplemental
19 hereto as shall be necessary or desirable for the purpose of modifying, altering, amending, adding to or
20 rescinding, in any particular, any of the terms or provisions contained in this Ordinance or in any
21 supplemental ordinance; provided, however, that nothing contained in this Section shall permit or be
22 construed as permitting (a) an extension of the maturity of the principal of or the interest on any bond,
23 or(b) a reduction in the principal amount of any bond or the rate of interest thereon, or(c)the creation
24 of a lien or pledge superior to the lien and pledge created by this Ordinance, or (d) a privilege or
25 priority of any bond or bonds over any other bond or bonds, or(e)a reduction in the aggregate principal
26 amount of the bonds required for consent to such supplemental ordinance.
27 Section 25. When the bonds have been executed and sealed as herein provided, they shall be
28 authenticated by the Trustee, and the Trustee shall deliver the bonds to or at the direction of the Purchaser
29 upon payment in cash of the Purchase Price. Unless paid by the Purchaser as part of the Purchase Price,
30 the amount necessary to pay the premium for the Reserve Policy shall be paid to the Reserve Insurer.
31 As set forth in the delivery instructions to the Trustee signed by the Mayor and City Clerk (the
32 "Delivery Instructions"), the amount of the Purchase Price necessary to accomplish the Refunding, along
33 with other funds of the System appropriated hereby, shall be deposited with the trustee of the Series 2005
34 E onds and with the owner of the Series 1999 Bond. The expenses of issuing the bonds and
[PAGE 23 OF 28]
1 accomplishing the Refunding shall be paid to the persons and in the amounts set forth in the Delivery
2 Instructions. The remainder of the Purchase Price, if any, shall be deposited into a special account of the
3 City in the Trustee designated "Sewer Refunding Revenue Bond Cost of Issuance Fund, Series 2014" (the
4 "Cost of Issuance Fund"). The moneys in the Cost of Issuance Fund shall be disbursed solely in payment
5f the costs of accomplishing the Refunding, paying necessary expenses incidental thereto, and paying
6 'lc penses of issuing the bonds. Disbursements shall be based on the Delivery Instructions or on
7 r,quisitions which shall contain at least the following information: the person to whom payment is being
8 made; the amount of the payment; and the purpose by general classification of the payment. Each
9 requisition must be signed by the Director of Finance of the Utility. The Trustee shall keep a record of all
10 requisitions.
11 When all expenses have been paid for and in connection with the accomplishment of the Refunding
12 and the issuance of the bonds,this fact shall, if moneys remain in the Cost of Issuance Fund, be evidenced
13 by a certificate signed by the Director of Finance of the Utility, which certificate shall state, among other
14 things, that all obligations payable from the Cost of Issuance Fund have been discharged. A copy of the
15 certificate shall be filed with the Trustee, and upon receipt thereof the Trustee shall deposit any remaining
16 balance into the 2014 Bond Fund.
17 Section 26. In the event any of the offices of Mayor, City Clerk, Committee or Board of Directors
18 s hall be abolished, or any two or more of such offices shall be merged or consolidated, or in the event the
19 duties of a particular office shall be transferred to another office or officer, or in the event of a vacancy in
20 any such office by reason of death, resignation, removal from office or otherwise,or in the event any such
21 officer shall become incapable of performing the duties of his office by reason of sickness, absence from
22 the City or otherwise, all powers conferred and all obligations and duties imposed upon such office or
23 officer shall be performed by the office or officer succeeding to the principal functions thereof, or by the
24 office or officer upon whom such powers, obligations and duties shall be imposed by law.
25 So long as the System is under the control of the Committee, performance by the Committee of any
26 obligation of the City hereunder shall be deemed performance by the City. The Committee presently
27 consists of Marilyn Perryman, Richard L. Mays, Pat Miller, Jean Block, Pete Hornibrook, Maurice
28 Rigsby and Ken Griffey.
29 Section 27. (a) The City covenants that it shall not take any action or suffer or permit any action to
30 be taken or conditions to exist which causes or may cause the interest payable on the bonds to be included
31 in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the
32 City covenants that the proceeds of the sale of the bonds and System revenues will not be used directly or
33 indirectly in such manner as to cause the bonds to be treated as "arbitrage bonds" within the meaning of
34 Section 148 of the Code.
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1 (b) The City shall assure that(i)not in excess of 10%of the Net Proceeds of the bonds is
2 used for Private Business Use if, in addition, the payment of more than 10% of the principal or 10% of
3 the interest due on the bonds during the term thereof is, under the terms of the bonds or any underlying
4 arrangement, directly or indirectly secured by any interest in property used or to be used for a Private
5 Business Use or in payments in respect of, property used or to be used for a Private Business Use or is
6 to be derived from payments, whether or not to the City, in respect of property or borrowed moneys
7 used or to be used for a Private Business Use; and(ii)that, in the event that both (A) in excess of 5%of
8 the Net Proceeds of the bonds are used for a Private Business Use, and (B) an amount in excess of 5%
9 of the principal or 5% of the interest due on the bonds during the term thereof is, under the terms of the
10 bonds or any underlying arrangement, directly or indirectly, secured by any interest in property used or
11 to be used for said Private Business Use or in payments in respect of property used or to be used for
12 said Private Business Use or is to be derived from payments, whether or not to the City, in respect of
13 property or borrowed money used or to be used for said Private Business Use, then said excess over
14 said 5% of Net Proceeds of the bonds used for a Private Business Use shall be used for a Private
15 Business Use related to the governmental use of the System.
16 The City shall assure that not in excess of 5% of the Net Proceeds of the bonds are used, directly or
17 indirectly,to make or finance a loan to persons other than state or local governmental units.
18 As used in this subsection(b),the following terms shall have the following meanings:
19 "Net Proceeds" means the face amount of the bonds, plus accrued interest and premium, if any,
20 less original issue discount, if any, less any amounts deposited into the Debt Service Reserve from bond
21 proceeds.
22 "Private Business Use" means use directly or indirectly in a trade or business carried on by a
23 natural person or in any activity carried on by a person other than a natural person, excluding, however,
24 use by a state or local governmental unit and use as a member of the general public.
25 (c) The City covenants that it will take no action which would cause the bonds to be
26 "federally guaranteed" within the meaning of Section 149(b)of the Code. Nothing in this Section shall
27 prohibit investments in bonds issued by the United States Treasury.
28 (d) The City covenants that it will submit to the Secretary of the Treasury of the United
29 States, not later than the 15th day of the second calendar month after the close of the calendar quarter in
30 which the bonds are issued,the statement required by Section 149(e)of the Code.
31 (e) The City covenants that it will, in compliance with the requirements of Section 148(f)
32 of the Code, pay with moneys in the 2014 Bond Fund to the United States Government in accordance
33 with the requirements of Section 148(f) of the Code, from time to time, an amount equal to the sum of
34 (1) the excess of (A) the amount earned on all Non-purpose Investments (as therein defined)
[PAGE 25 OF 28]
1 attributable to the bonds, other than investments attributable to such excess, over(B)the amount which
2 would have been earned if such Non-purpose Investments attributable to the bonds were invested at a
3 rate equal to the Yield (as defined in the Code) on the bonds, plus (2) any income attributable to the
4 excess described in (1), subject to the exceptions set forth in Section 148 of the Code. The City further
5 covenants that in order to assure compliance with its covenants herein, it will employ a qualified
6 consultant to advise the City in making the determination required to comply with this subsection (e).
7 Anything herein to the contrary notwithstanding, this provision may be modified or rescinded if in the
8 opinion of Bond Counsel such modification or rescission will not affect the tax-exempt status of the
9 bonds for federal income tax purposes.
10 Section 28. The Trustee shall only be responsible for the exercise of good faith and reasonable
11 rudence in the execution of its trust. The recitals in this Ordinance and on the face of the bonds are the
12 r citals of the City and not of the Trustee. The Trustee shall not be required to take any action as Trustee
13 nless it shall have been requested to do so in writing by the owners of not less than 10% in principal
14 amount of the bonds then outstanding and shall have been offered reasonable security and indemnity
15 against the costs, expenses and liabilities to be incurred therein or thereby. The Trustee may resign at any
16 tme by giving sixty (60) days' notice in writing to the City Clerk and to the registered owners of the
17 onds and the majority in value of the registered owners of the outstanding bonds or the City, if it is not
18 i default under this Ordinance, at any time, with or without cause, may remove the Trustee. In the event
19 of a vacancy in the office of Trustee, either by resignation or by removal, the City shall appoint a new
20 Trustee, such appointment to be evidenced by a written instrument or instruments filed with the City
� I
21 Clerk. Every successor Trustee appointed pursuant to this Section shall be a trust company or bank in
22 good standing, duly authorized to exercise trust powers and subject to examination by federal or state
23 authority. The original Trustee and any successor Trustee shall file a written acceptance and agreement to
24 execute the trust imposed upon it or them by this Ordinance, but only upon the terms and conditions set
25 forth in this Ordinance and subject to the provisions of this Ordinance, to all of which the respective
26 owners of the bonds agree. Such written acceptance shall be filed with the City Clerk and a copy thereof
27 shall be placed in the bond transcript. Any successor Trustee shall have all the powers herein granted to
28 the original Trustee. The Trustee's resignation shall become effective upon the acceptance of the trusts
29 by the successor Trustee.
30 Section 29. (a) Moneys held for the credit of the 2014 Bond Fund shall be continuously invested
31 and reinvested pursuant to the direction of the Committee in Eligible Investments, all of which shall
32 mature, or which shall be subject to redemption by the holder thereof, at the option of such holder, not
33 later than the payment date for interest or principal and interest on the bonds.
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1 (b) Moneys held for the credit of any other fund shall be continuously invested and
2 reinvested pursuant to the direction of the Committee in Eligible Investments, which shall mature, or
3 which shall be subject to redemption by the holder thereof, at the option of such holder, not later than
4 the date or dates when the moneys held for the credit of the particular fund will be required for purposes
5 intended.
6 (c) "Eligible Investments" means any of the securities that are at the time legal for
7 investment of City funds pursuant to Resolution No. 12,520 of the City.
8 (d) Obligations so purchased as an investment of moneys in any fund shall be deemed at
9 all times to be a part of such fund and the interest accruing thereon and any profit realized from such
10 investments shall be credited to such fund, and any loss resulting from such investment shall be charged
11 to such fund.
12 (e) Moneys so invested in Government Securities or in certificates of deposit of banks to
13 the extent insured by FDIC, need not be secured by the depository bank or banks.
14 (f) All investments and deposits shall have a par value (or market value when less than
15 par), exclusive of accrued interest, at all times at least equal to the amount of money credited to such
16 funds and shall be made in such a manner that the money required to be expended from any fund will
17 be available at the proper time or times.
18 (g) Investments of moneys in all funds shall be valued in terms of current market value as
19 of the last day of each year, except that direct obligations of the United States (State and Local
20 Government Series)in book-entry form shall be continuously valued at par or face principal amount.
21 (h) The City covenants that it will make all arbitrage rebate payments to the United States
22 in accordance with Section 148(f)of the Code.
23 Section 30. It is covenanted and agreed by the City with the registered owners of the bonds, or any
24 of them, that the City and the Committee will faithfully and punctually perform all duties with reference
25 to the System required by the Constitution and laws of the State, including the charging and collecting of
26 reasonable and sufficient rates lawfully established for services rendered by the System, the segregating
27 of System revenues as herein required, and the applying of System revenues to the respective funds herein
28 created or referred to.
29 Section 31. The City covenants that it will not sell or lease the System, or any substantial portion
30 thereof; provided, however, that nothing herein shall be construed to prohibit the City from making such
31 dispositions of properties of the System and such replacements and substitutions for properties of the
32 System as shall be necessary or incidental to the efficient operation of the System as a revenue-producing
33 undertaking. All revenues derived from such dispositions shall be deposited into the Revenue Fund.
[PAGE 27 OF 28]
1 Section 32. The requirements of Ordinance No. 15,249, as they may relate to the authorization and
2 sale of the Bonds,are hereby waived.
3 Section 33. The Reserve Agreement, in substantially the form submitted to this meeting is hereby
4 approved, and the Mayor and the City Clerk are hereby authorized and directed to execute and deliver the
5 Reserve Agreement on behalf of the City, and the Mayor and other officers of the City are authorized to
6 execute and deliver such undertakings as may be appropriate to the securing of the Reserve Policy.
7 Section 34. The provisions of this Ordinance are hereby declared to be separable and if any
8 provision shall for any reason be held illegal or invalid, such holding shall not affect the validity of the
9 remainder of this Ordinance.
10 Section 35. All ordinances and resolutions or parts thereof, in conflict herewith are hereby repealed
11 to the extent of such conflict.
12 Section 36. It is hereby ascertained and declared that the Refunding must be accomplished as soon as
13 possible in order to take advantage of low interest rates for tax-exempt bonds, such as the bonds,that will
14 enable the City to reduce future rate increases as much as reasonably feasible. It is, therefore, declared
15 t at an emergency exists and this Ordinance being necessary for the immediate preservation of the public
16 eace,health and safety shall take effect and be in force from and after its passage.
17 ASSED: September 16,2014
18 TTEST: APPROVED:
19
20 \Dam P
21 oya Iot�inson,Assi�{ta t City Clerk Mark Stodola,Mayor
22APPROVED AS TO LE AL FORM:
23
24 G l�l/1
25 Phomas M. Carpenter,(City A ¢rney
hl/
26
27 /i
28 /i
29 1/
30 /i
31 /i
32 /i
33 /i
34 //
35 //
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