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11329RESOLUTION NO. 11,329 0 A RESOLUTION IMPLEMENTING THE TERMS OF ORDINANCE NO. 18,714, ADOPTED JULY 2, 2002, BEING AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF CAPITAL IMPROVEMENT REVENUE BONDS, AND FOR RELATED PURPOSES. WHEREAS, the Board of Directors of the City has, on July 2, 2002, adopted Ordinance No. 18,714 (the "Basic Ordinance ") , for the purpose of authorizing and securing the payment of the City's Capital Improvement Junior Lien Revenue Bonds, Series 2002, in the principal amount of $3,630,000 (the "Series 2002 Bonds "), and WHEREAS, as provided in the Basic Ordinance, the Series 2002 Bonds have been offered for sale and the details of the Series 2002 Bonds are now available and have been presented to the City; and WHEREAS, the details and terms of the Series 2002 Bonds, based upon the offering of the Series 2002 Bonds, are in the interest of the City; and WHEREAS, this Resolution implements the Basic Ordinance and the term "Authorizing Ordinance" herein refers to the Basic Ordinance, together with this Resolution; and WHEREAS, capitalized terms in this Resolution, unless otherwise defined, have the meanings assigned in the Basic Ordinance; NOW THEREFORE, BE IT RESOLVED by the Board of Directors of the City of Little Rock, Arkansas. Section 1. As provided in the Basic Ordinance, particularly Section 5 thereof, the Series 2002 Bonds shall mature, on October 1 of each year, and bear interest, payable on each April 1 and October 1, commencing April 1, 2003, as follows: u Year (October 1) Principal Amount Interest Rate 2003 $140,000 3.50 2004 180,000 3.50 2005 185,000 3.50 2006 190,000 3.50 2007 195,000 3.50 2008 200,000 3.50 2009 210,000 4.00 2010 215,000 4.00 2011 225,000 4.00 2012 235,000 4.00 2013 245,000 4.15 2014 255,000 4.25 2015 270,000 4.35 2016 280,000 4.45 2017 295,000 4.55 2018 310,000 4.65 The Series 2002 Bonds shall be subject to redemption prior to maturity at a price equal to the principal amount being redeemed plus accrued interest (a) from surplus proceeds as set forth in the Basic Ordinance and (b) at the option of the City, as set forth in the Basic Ordinance, in whole at any time and in part (in inverse order of maturity and by lot within a maturity) on any interest payment date on and after October 1, 2012, The Trustee for the Series 2002 Bonds, which shall also be the paying agent and registrar, shall be Metropolitan National Bank, Little Rock, Arkansas. Section 2. In accordance with Section 11 of the Basic Ordinance, there shall be established, from the proceeds of the Series 2002 Bonds, a Debt Service Reserve in an amount equal to $363,000, which is hereby found to be the "Required Level" provided for in the Basic Ordinance. The Debt Service Reserve will be constituted of a Surety Bond issued by Ambac Assurance Corporation ( "Ambac Assurance" or "Ambac "). Section 3. For the purpose of Section 19(f) of the Basic Ordinance, the "Bond Year" is determined to be the twelve -month period ending on April 30. Section 4. For the purpose of Section 4 of the Basic Ordinance, the "Bond Insurer" for the Series 2002 Bonds is Ambac Assurance, the "Bond Insurance Policy" is the Financial Guaranty Insurance Policy of Ambac Assurance; and, in accordance with Section 5 of the Basic Ordinance, the Bond Insurer is accorded, and is recognized to have the rights set forth as follows: 2 • • A. Consent of Ambac Assurance. Any provision of the Authorizing Ordinance expressly recognizing or granting rights in or to Ambac Assurance may not be amended in any manner which affects the rights of Ambac Assurance hereunder without the prior written consent of Ambac Assurance. B. Consent of Ambac Assurance in Addition to Holder Consent. Unless otherwise provided in this Section, Ambac Assurance's consent shall be required in addition to Bondholder consent, when required, for the following purposes: (i) execution and delivery of any amendment, supplement or change to or modification of the Authorizing Ordinance; (ii) removal of the Trustee or Paying Agent and selection and appointment of any successor trustee or payment agent; and (iii) initiation or approval of any action not described in (i) or (ii) above which requires Holder consent. C. Consent of Ambac Assurance in the Event of Insolvency. Any reorganization or liquidation plan with respect to the City must be acceptable to Ambac Assurance. In the event of any reorganization or liquidation, Ambac Assurance shall have the right to vote on behalf of all Holders who hold Ambac Assurance - insured Bonds absent a default by Ambac Assurance under the applicable Bond Insurance Policy insuring such Bonds. D. Consent of Ambac Assurance Upon Default. Any in the Authorizing Ordinance to the contrary notwithstanding, upon the occurrence and continuance of an event of default as defined herein, Ambac Assurance shall be entitled to control and direct the enforcement of all rights and remedies granted to the Holders or the Trustee for the benefit of the Holders under the Authorizing Ordinance. E. Notices to be Sent to the Attention of the Surveillance Department: 1. While the Bond Insurance Policy is in effect, the Trustee shall furnish to Ambac Assurance (to the attention of the Surveillance Department, unless otherwise indicated): (a) as soon as practicable after the filing thereof, a copy of any financial statement of the City and a copy of any audit and annual report of the City; (b) such additional information it may reasonably request. 2. A copy of any notice to be given to the registered owners of the Bonds, including, without limitation, notice of any redemption of or defeasance of 3 Bonds, and any certificate rendered pursuant to the Authorizing Ordinance relating to the securing for the Bonds. 3. To the extent that the City has entered into a continuing disclosure agreement with respect to the Bonds, Ambac Assurance shall be included as a party to be notified. F. Notices to be Sent to the Attention of the General Counsel Office: 1. The Trustee shall notify Ambac Assurance of any failure of the City to provide relevant notices, certificates, etc. 2. Notwithstanding any other provision of the Authorizing Ordinance, the City shall immediately notify Ambac Assurance if at any time there are insufficient moneys to make any payments of principal and /or interest as required and immediately upon the occurrence of any event of default under the Authorizing Ordinance. G. Other Information to be Given to Ambac Assurance. The City will permit Ambac Assurance to discuss the affairs, finances and accounts of the City or any information Ambac Assurance may reasonably request regarding the security for the Bonds with appropriate officers of the City. The City will permit Ambac Assurance to have access to the Improvements and have access to and to make copies of all books and records relating to the Bonds at any reasonable time. H. Defeasance. Notwithstanding anything in Section 15 of the Basic Ordinance to the Contrary, in the event that the principal and /or interest due on the Series 2002 Bonds shall be paid by Ambac Assurance pursuant to its Financial Guaranty Insurance Policy, the Series 2002 Bonds shall remain outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the City, and the assignment and pledge of the Pledged Revenues and all covenants, agreements and other obligations of the City to the registered owners shall continue to exist and shall run to the benefit of Ambac Assurance, and Ambac Assurance shall be subrogated to the rights of such registered owners. I. Payment Procedure Pursuant to the Financial Guaranty Insurance Policy. As long as the Bon Insurance shall be in full force and effect, the City, the Trustee and any Paying Agent agree to comply with the following provisions: (1) At least one (1) day prior to all interest payment dates the Trustee will determine whether there 0 0 0 will be sufficient funds in the Bond Fund to pay the principal of or interest on the Series 2002 Bonds on such interest payment date. If the Trustee or Paying Agent, if any, determines that there will be insufficient funds in such Funds or Accounts, the Trustee or Payment Agent, if any, shall so notify Ambac Assurance. Such notice shall specify the amount of the anticipated deficiency, the Series 2002 Bonds to which such deficiency is applicable and whether such Series 2002 Bonds will be deficiency as to principal or interest, or both. If the Trustee or Paying Agent, if any, has not so notified Ambac Assurance at lease one (1) day prior to an interest payment date, Ambac Assurance will make payments of principal or interest due on the Series 2002 Bonds on or before the first (1st) day next following the date on which Ambac Assurance shall have received notice of nonpayment from the Trustee or Paying Agent, if any. (2) The Trustee or Paying Agent, if any, shall, after giving notice to Ambac Assurance as provided in (1) above, make available to Ambac Assurance and, at Ambac Assurance's direction, to The Bank of New York, in New York, New York, as insurance trustee for Ambac Assurance or any successor insurance trustee (the "Insurance Trustee "), the registration books of the City maintained by the Trustee or Paying Agent, if any, and all records relating to the Funds and Accounts maintained under the Authorizing Ordinance. (3) The Trustee or Paying Agent, if any, shall provide Ambac Assurance and the Insurance Trustee with a list of registered owners of Series 2002 Bonds entitled to receive principal or interest payments from Ambac Assurance under the terms of the Financial Guaranty Insurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail checks or drafts to the registered owners of Series 2002 Bonds entitled to receive full or partial interest payments from Ambac Assurance and (ii) to pay principal upon Series 2002 Bonds surrendered to the Insurance Trustee by the registered owners of Series 2002 Bonds entitled to receive full or partial principal payments from Ambac Assurance. (4) The Trustee or Paying Agent, if any, shall, at the time it provides notice to Ambac Assurance pursuant to (1) above, notify registered owners of Series 2002 Bonds entitled to receive the payment of principal or interest thereon from Ambac Assurance (i) as to the fact of such entitlement, (ii) that Ambac Assurance will remit to them all or a part of the interest payments next coming due upon proof of Holder entitlement to interest 5 0 0 payments and delivery to the Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate assignment of the registered owner's right to payment, (iii) that should they be entitled to receive full payment of principal from Ambac Assurance, they must surrender their Series 2002 Bonds (along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to permit ownership of such Series 2002 Bonds to be registered in the name of Ambac Assurance) for payment to the Insurance Trustee, and not the Trustee or Paying Agent, if any, who shall note on such Series 2002 Bonds the portion of the principal paid by the Trustee or Paying Agent, if any, and then, along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid portion of principal. (5) In the event that the Trustee or Paying Agent, if any, has notice that any payment of principal of or interest on a Series 2002 Bond which has become Due for Payment and which is made to a Holder by or on behalf of the City has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee or Paying Agent, if any, shall, at the time Ambac Assurance is notified pursuant to (1) above, notify all registered owners that in the event that any registered owner's payment is so recovered, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available, and the Trustee or Paying Agent, if any, shall furnish to Ambac Assurance its records evidencing the payments of principal of and interest on the Series 2002 Bonds which have been made by the Trustee or Paying Agent, if any, and subsequently recovered from registered owners and the dates on which such payments were made. (6) In addition to those rights granted Ambac Assurance under the Authorizing Ordinance, Ambac Assurance shall, to the extent it makes payment of principal of or interest on Series 2002 Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Financial Guaranty Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as to claims for past due interest, the Trustee or Paying Agent, if any, shall note Ambac Assurance's rights as subrogee on the registration books of the City maintained by the 2 Trustee or Paying Agent, if any, upon receipt from Ambac Assurance of proof of the payment of interest thereon to the registered owners of the Series 2002 Bonds, and (ii) in the case of subrogation as to claims for past due principal, the Trustee or Paying Agent, if any, shall note Ambac Assurance's rights as subrogee on the registration books of the City maintained by the Trustee or Paying Agent, if any, upon surrender of the Series 2002 Bonds by the registered owners thereof together with proof of the payment of principal thereof. J. Trustee. (1) The Trustee (or Paying Agent) may be removed at any time, at the request of Ambac Assurance, for any breach of the trust set forth in the Authorizing Ordinance. (2) Ambac Assurance shall receive prior written notice of any Trustee (or Paying Agent) resignation. (3) Every successor Trustee appointed pursuant to this Section shall be a trust company or bank in good standing located in or incorporated under the laws of the State of Arkansas, duly authorized to exercise trust powers and subject to examination by federal or state authority, having a reported capital and surplus of not less than $75,000,000 and acceptable to Ambac Assurance. Any successor Paying Agent, if applicable, shall not be appointed unless Ambac approves such successor in writing. (4) Notwithstanding any other provision of the Authorizing Ordinance, in determining whether the rights of the Holders will be adversely affected by any action taken pursuant to the terms and provisions of the Authorizing Ordinance, the Trustee (or Paying Agent) shall consider the effect on the Holders as if there were no Financial Guaranty Insurance Policy. (5) Notwithstanding any other provision of the Authorizing Ordinance, no removal, resignation or termination of the Trustee (or Paying Agent) shall take effect until a successor, acceptable to Ambac, shall be appointed. K. Interested Parties. To the extent the Authorizing Ordinance confers upon or gives or grants to Ambac any right, remedy or claim under or by reason of the Authorizing Ordinance, Ambac is hereby explicitly recognized as being a third -party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder and thereunder. 7 • • Nothing in the Authorizing Ordinance expressed or implied is intended or shall be construed to confer upon, or to give or grant to, any person or entity, other than the City, the Trustee, Ambac Assurance, the Paying Agent, if any, and the registered owners of the City, any right, remedy or claim under or by reason of the Authorizing Ordinance or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in the Authorizing Ordinance contained by and on behalf of the City shall be for the sole and exclusive benefit of the City, the Trustee, Ambac Assurance, the Paying Agent, if any, and the registered owners of the Series 2002 Bonds. L. Bond Legend. Each Series 2002 Bond shall contain a legend substantially as follows: "Financial Guaranty Insurance Policy No. (the "Policy ") with respect to payments due for principal of and interest on this Series 2002 Bond has been issued by Ambac Assurance Corporation ( "Ambac Assurance "). The Policy has been delivered to The Bank of New York, New York, New York, as the Insurance Trustee under said Policy and will be held by such Insurance Trustee or any successor insurance trustee. The Policy is on file and available for inspection at the principal office of the Insurance Trustee and a copy thereof may be secured from Ambac Assurance or the Insurance Trustee. All payments required to be made under the Policy shall be made in accordance with the provisions thereof. The owner of this Series 2002 Bond acknowledges and consents to the subrogation rights of Ambac assurance as more fully set forth in the Policy." M. Surety Bond. As long as the Surety Bond shall be in full force and effect, the City, Trustee and Paying Agent, if appropriate, agree to comply with the following provisions: (1) In the event and to the extent that moneys on deposit in the Bond Fund, plus all amounts on deposit in and credited to the Debt Service Reserve in excess of the amount of the Surety Bond, are insufficient to pay the amount of principal and interest coming due, then upon the later of: (i) one (1) day after receipt by the General Counsel of Ambac of a demand for payment in the form attached to the Surety Bond as Attachment 1 (the "Demand for Payment "), duly executed by the Trustee certifying that payment due has not been made to the Trustee; or (ii) the payment date of the Series 2002 Bonds as specified in the Demand for Payment presented to 0 0 0 the Trustee to the General Counsel of Ambac, Ambac will make a deposit of funds in an account with the Trustee or its successor, in New York, New York, sufficient for the payment to the Trustee, of amounts which are then due to the Trustee under the Authorizing Ordinance (as specified in the Demand for Payment) up to but not in excess of the Surety Bond Coverage, as defined in the Surety Bond; provided, however, that in the event that the amount on deposit in, or credited to, the Debt Service Reserve, in addition to the amount available under the Surety Bond, includes amounts available under a letter of credit, insurance policy, Surety Bond or other such funding instrument (the "Additional Funding Instrument "), draws on the Surety Bond and the Additional Funding Instrument shall be made on a pro rata basis to fund the insufficiency. (2) The Trustee, or Paying Agent, if appropriate, shall, after submitting to Ambac the Demand for Payment as provided in (1) above, make available to Ambac all records relating to the Funds and Accounts maintained under the Authorizing Ordinance. (3) The Trustee, or Paying Agent, if appropriate, shall, upon receipt of moneys received from the draw on the Surety Bond, as specified in the Demand for Payment, credit the Debt Service Reserve to the extent of moneys received pursuant to such Demand. (4) The Debt Service Reserve shall be replenished in the following priority: (i) principal and interest on the Surety Bond shall be paid from first available Pledged Revenues; (ii) after all such amounts are paid in full, amounts necessary to fund the Debt Service Reserve to the required level, after taking into account the amounts available under the Surety Bond shall be deposited from next available Pledged Revenues. N. Pledge of Pledged Revenues. The City represents, warrants and covenants as follows: (1) The Authorizing Ordinance creates a valid and binding Pledge of the Pledged Revenues in favor of the Trustee as security for payment of the Series 2002 Bonds, enforceable by the Trustee in accordance with the terms hereof and thereof. (2) Under the laws of the State of Arkansas, such pledge and each pledge, assignment, lien or other security interest made to secure any Prior Bonds is and shall be prior to any judicial lien hereafter imposed on such collateral to enforce a judgment against the City on E 0 0 a simple contract. The pledge of Pledged Revenues is exempt from the filing requirement of the Arkansas Uniform Commercial Code for perfection against third parties. (3) Except as set forth in the Authorizing Ordinance, the City has not heretofore made a pledge of, granted a lien on or security interest in, or made an assignment or sale of such collateral that ranks on a parity with or prior to the pledge effected by the Authorizing Ordinance. Except as set forth in the Authorizing Ordinance, the City shall not hereafter make or suffer to exist any pledge or assignment of, lien on, or security interest in such collateral that ranks prior to or on a parity with the pledge effected by the Authorizing Ordinance, or file any financing statement describing any such pledge, assignment, lien or security interest, except as expressly permitted hereby. Section 5. The Mayor of the City, the City Manager and the officers of the City are authorized to execute and delivery an agreement in favor of Ambac Assurance with respect to reimbursement for draws on the Surety Bond and otherwise to carry out the terms hereof, in accordance with their respective offices and responsibilities. Section 6. The provisions of this Resolution are severable. If any provision should be held to be invalid or to be inapplicable to any person or circumstance, such holding shall not affect the validity or applicability of the remainder hereof. Section 7. This Resolution shall be in effect upon its adoption. ADOPTED this 16th day of July, 2002. APPROVED: - By - -- Mayor City Jerk (SEAL) ,•�� 1.IYT�'% R= 0 0 CERTIFICATE The undersigned, City Clerk of the City of Little Rock, Arkansas (the "City ") , hereby certifies that the foregoing pages are a true and correct copy of Resolution No. 113_4, adopted at a session of the Board of Directors of the City, held at the refular meeting place of the Board of Directors at G:oO , p.m., on July _a 2002. 2002. (SEAL) GIVEN under my hand and seal this ast�day of July, UITrl Ik • ��`` G(/ ity Clerk caG\�y CLEq /r �Ty `r —OF —Y cal 11 0 0 BOND PURCHASE AGREEMENT $3,630,000 City of Little Rock, Arkansas Capital Improvement Junior Lien Revenue Bonds, Series 2002 City of Little Rock, Arkansas Gentlemen: July 10, 2002 The undersigned, Morgan Keegan & Company, Inc. (the "Underwriter ") , hereby offers to enter into this Bond Purchase Agreement ( "Agreement ") with you, the City of Little Rock, Arkansas (the "Issuer ") , for the purchase by the Underwriter and the sale by the Issuer of the Bonds of the Issuer more particularly described below. Upon acceptance and approval by you this Agreement shall be in full force and effect in accordance with its terms and shall be binding upon both the Issuer and the Underwriter. The further terms of this Agreement are: 1. Upon the terms and conditions and upon the basis of the representations herein set forth, the Underwriter hereby agrees to purchase from the Issuer and the Issuer hereby agrees to sell to the Underwriter the entire principal amount of an issue of bonds designated "City of Little Rock, Arkansas Capital Improvement Junior Lien Revenue Bonds, Series 2002" (the "Bonds ") to be issued under and secured by Ordinance No. of the Issuer (the "Basic Ordinance ") in the form heretofore delivered to us, with only such changes therein as shall be mutually agreed upon between the Issuer and the Underwriter, as implemented by a Resolution of substantially the form and content of Exhibit A hereto (the "Implementing Resolution. "). The Basic Ordinance and the Implementing Resolution are referred to herein, collectively, as the "Authorizing Ordinance." The Bonds shall be subject to extraordinary and optional redemption prior to maturity as set forth in the Authorizing Ordinance. 2. The Bonds are being issued for the purpose of financing certain fixtures, equipment and improvements, with related facilities, for the conservation of energy (the "Improvements "). The Bonds will secure a pledge of the "Pledged Revenues," as defined in the Authorizing Ordinance, which pledge is subject to the pledges in favor of the "Prior Bonds," as defined in the Authorizing Ordinance. 3. The Bonds shall be dated August 1, 2002. Interest on the Bonds shall be payable on April 1 and October 1 of each year, commencing April 1, 2003. The Bonds shall be authorized in the principal amount of $3,630,000 bearing interest at the rates per annum and maturing on October 1 in each of the years and in the amounts as set forth in the schedule attached hereto, Exhibit B. 0 0 Metropolitan National Bank, Little Rock, Arkansas, shall be trustee for the Bondholders and paying agent (the "Trustee "). 4. The parties hereto intend that the Bonds be issued pursuant to the Internal Revenue Code of 1986, as amended (the "Code "), so that the interest on the Bonds will not be includable in the gross income of the recipients for federal income tax purposes and that the Bonds will be exempt from registration under the Securities Act of 1933, as amended. 5. The Underwriter hereby agrees to purchase all of the Bonds from the Issuer and the Issuer hereby agrees to sell all of the Bonds to the Underwriter at a price of 100.904% of the principal amount of the Bonds, plus interest accrued thereon from the date of the Bonds to the date of Closing as hereinafter defined. The sale and purchase of the Bonds shall take place at a closing (the "Closing ") at 10:00 a.m., prevailing local time, on August 6, 2002, or at such other time or on such earlier or later date as is mutually agreed upon, and at the offices of Friday, Eldredge & Clark, LLP, Little Rock, Arkansas or at such other place as is mutually agreed upon. The Issuer will cause the Trustee to authenticate and deliver one Bond certificate per maturity registered in the name of Cede & Co. with a CUSIP number to The Depository Trust Company, New York, New York ( "DTC "), with instructions to place the Bonds in safekeeping and await further instructions from the Trustee. The Bonds shall be received by DTC not later than 1:15 P.M. Eastern Time on the last business day preceding the date of Closing. At the Closing, and subject to satisfaction (or proper waiver by the Underwriter) of the conditions to its obligations to purchase the Bonds, the Underwriter will pay the purchase price of the Bonds in federal reserve funds payable to the order of the Trustee for the account of the Issuer. Upon receipt of the purchase price the Trustee shall authorize DTC to release the Bonds to the Underwriter. If the Issuer fails to cause the Trustee to deliver the Bonds to DTC as provided herein, or if at the Closing any of the conditions specified in paragraph 8 hereof shall not have been fulfilled to the satisfaction of the Underwriter, the Underwriter may elect to be relieved of any further obligations under this Agreement without thereby waiving any other rights the Underwriter may have by reason of such failure or nonfulfillment. The Underwriter and the Issuer understand that in any of such events the actual respective expenses, costs or damages of such parties may be unequal, and any such amounts incurred by any party may be greater or may be less than those amounts incurred by any other. Accordingly, and subject to paragraph 12 hereof, such parties hereby waive any right to claim that their actual expenses, costs or damages are or will be greater than the actual expenses, costs or damages incurred or suffered by any such party, and no such party shall be entitled to claim any damages from the other. Pa 0 0 6. The Issuer will sell the Bonds to the Underwriter and the Underwriter will make a public offering thereof in reliance upon representations and agreements herein set forth solely pursuant to the Official Statement hereinafter described at the initial offering price or yields set forth in the Official Statement, reserving, however, the right to change such initial offering prices as the Underwriter shall deem necessary in connection with the marketing of the Bonds. The Issuer shall deliver or cause to be delivered to the Underwriter, within seven business days after acceptance of this Agreement, copies of the Official Statement in such number as the Underwriter shall reasonably request, substantially in the form of the Preliminary Official Statement, heretofore presented to the Underwriter, relating to the Bonds (the "Preliminary Official Statement ") with only such changes therein as shall be accepted by us (such Official Statement with such subsequent modifications and changes, if any, and including the cover page and all appendices, exhibits, reports and statements included therein or attached thereto being herein called the "Official Statement "), signed on behalf of the Issuer by its Mayor. The Issuer authorizes the use of copies of the Official Statement and Authorizing Ordinance in connection with the public offering and sale of the Bonds. The Issuer ratifies the lawful use by the Underwriter prior to the date hereof of the Preliminary Official Statement. The obligations of the Issuer and the Underwriter hereunder are subject to adoption of the Implementing Resolution on or before July 16, 2002. 7. In order to induce the Underwriter to enter into this Agreement and to make an offering of the Bonds, the Issuer represents to and agrees with the Underwriter that: A. The Issuer is and will be at the Closing a duly organized and existing municipality under the Constitution and laws of the State of Arkansas (the "State ") and has, and at the date of Closing will have, full legal right, power and authority (i) to enter into this Agreement and the Disclosure Agreement (identified below) , (ii) to adopt the Authorizing Ordinance, (iii) to issue, sell and deliver the Bonds to the Underwriter as provided herein, (iv) to acquire, construct and equip the Improvements, and (v) to carry out and consummate the transactions contemplated by this Agreement, the Disclosure Agreement (defined below), the Authorizing Ordinance and the Official Statement; B. The Bonds will be issued pursuant to and in full compliance with the Constitution and laws of the State; C. Both on the date hereof and at the Closing, the statements and information contained in the Official Statement will be true, correct and complete in all material respects and shall not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; D. The execution and delivery of this Agreement and the compliance with the provisions hereof under the circumstances contemplated hereby, will not in any respect conflict with, or constitute on the part of the Issuer a breach or default under any agreement or other instrument to which the Issuer is a party, or any existing law, administrative regulation, court order or consent decree to which the Issuer is subject; E. The Issuer will not take or omit to take any action, which action or omission will in any way cause the proceeds from the sale of the Bonds to be applied in a manner other than as provided in the Authorizing Ordinance; F. When delivered to and paid for by the Underwriter, the Bonds will have been duly authorized, executed, authenticated, issued and delivered, and will constitute valid and legally binding special obligations of the character referred to in the statutes under which issued; G. The Issuer will immediately notify the Underwriter of any adverse change of a material nature in the financial condition of the System; H. Between the date of this Agreement and the Closing, the Issuer will not, without the prior written consent of the Underwriter, issue any bonds, notes, or other obligations for borrowed money and secured by or payable from Pledged Revenues; I. The Issuer shall enter into a Continuing Disclosure Agreement (the "Disclosure Agreement ") with the Trustee as required by the Securities and Exchange Commission Rule 15c2 -12 and as described in the Official Statement; J. Except as may be disclosed in the Official Statement, there is no action, suit, proceeding, or investigation which has not been disclosed in the Official Statement involving the Issuer before or by any court, public board, or body pending or, to the knowledge of the Issuer, threatened wherein an unfavorable decision, ruling, or finding would: (i) affect the existence or powers of the Issuer or the titles of its officers to their respective offices, (ii) enjoin or restrain the issuance, sale, and delivery of the Bonds or the collection of any Pledged Revenues or the pledge thereof, (iii) in any way question or affect any of the rights, powers, duties, or obligations of the Issuer E 0 0 with respect to the moneys and assets pledged or to be pledged to pay the principal of and premium, if any, and interest on the Bonds, (iv) in any way question or affect any authority for the issuance of the Bonds or the validity or enforceability of the Bonds, or (v) in any way question or affect this Agreement or the transactions contemplated hereby or by the Official Statement, the documents referred to in the Official Statement, or any other agreement or instrument to which the Issuer is a party and relating to the Bonds, the Improvements or the System; and K. The Issuer will furnish such information, execute such instruments, and take such other action in cooperation with the Underwriter, as the Underwriter may reasonably request, to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate, and the Issuer will assist, if necessary therefor, in the continuance of such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the Issuer shall not be required to qualify as a foreign corporation or to file any general consent to service of process under the laws of any state. S. The Underwriter has entered into this Agreement in reliance upon the representations and agreements of the Issuer herein and the performance by the Issuer of its obligations hereunder, both as of the date hereof and as of the Closing. The Underwriter's obligations under this Agreement are and shall be subject to the following further conditions: A. At the Closing, the Authorizing Ordinance shall be in full force and effect, and the Authorizing Ordinance and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to by the Underwriter, and the Issuer shall have duly adopted and there shall be in full force and effect such other ordinances and resolutions as, in the opinion of Friday, Eldredge & Clark, LLP, Little Rock, Arkansas (the "Bond Counsel ") shall be necessary in connection with the transactions contemplated hereby; B. At the Closing the Underwriter shall receive the approving opinion, dated as of the Closing, of Bond Counsel, in customary form and content satisfactory to the Underwriter, plus all other documents, opinions and certificates reasonably required by Bond Counsel or the Underwriter to evidence (i) compliance by the Issuer with legal requirements, (ii) the truth and accuracy, as of the date of Closing, of the representations of the Issuer contained herein, (iii) the due performance or satisfaction by the Issuer at or prior to the Closing of all agreements to be performed and all conditions to be satisfied by the Issuer, (iv) the validity M 0 0 of the Bonds and this Agreement, and (v) the tax - exempt status of the interest on the Bonds under the Code; C. At the Closing, the Disclosure Agreement shall have been executed by the Issuer and the Trustee, with only such amendments as may have been agreed to by the Underwriter; D. At the Closing, the Underwriter shall receive a certificate, dated the date of the Closing, signed by the Issuer's Mayor and Finance Director, in form and substance satisfactory to the Underwriter, to the effect that (1) Each of the representations and warranties of the Issuer set forth herein is true and correct in all material respects as of the Closing and the Issuer has complied with each of its covenants and agreements required in this Agreement to be complied with at or prior to the Closing; (2) There has been no material adverse change in the business, property or financial condition of the Issuer as described in the official Statement and, except as provided for or contemplated or described in the Official Statement, the Issuer has not incurred any material liabilities other than in the normal course of business; and (3) They have examined the Official Statement and, in their opinion, with respect to the Pledged Revenues and the Issuer, the Official Statement, as of the date of Closing, does not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; E. At or prior to the closing, the Underwriter shall receive evidence that payment of debt services on the Bonds, as due, has been insured by Ambac Assurance Corporation; and F. At or prior to the Closing, the Underwriter shall receive evidence that the Bonds have received a rating of "AA" from Standard & Poor's Ratings Services. 9. The Underwriter shall have the right to cancel and terminate its obligations under this Agreement at any time before 11 0 0 Closing, in which even the Issuer shall be relieved of its obligations hereunder, if any of the following occurs: (a) Legislation shall have been enacted by the Congress of the United States, or adopted by or introduced in either House or any committee thereof, or a decision shall have been rendered by a court of the United States or the Tax Court of the United States, or a ruling shall have been made or regulations shall have been proposed or made by the Treasury Department of the United States, the Internal Revenue Service or any other governmental agency with respect to federal taxation upon revenues or other income of the general character to be derived by the Issuer or by any similar body, or upon interest received on obligations of the general character of the Bonds which, in the opinion of the Underwriter, materially adversely affects the market price of the Bonds or the market price generally of obligations of the general character of the Bonds; or (b) Any legislation, ordinance, rule or regulation shall be enacted or be actively considered for enactment by any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction within the State shall be rendered which, in the opinion of the Underwriter, materially adversely affects the market price of the Bonds; or (c) A stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission shall be issued or made to the effect that the issuance, offering or sale of the Bonds, or of obligations of the general character of the Bonds, as contemplated hereby, is in violation of any provisions of the Securities Act of 1933, or the Trust Indenture Act of 1939; or (d) (i) Any restriction on, or general suspension of, trading in securities on the New York Stock Exchange or any banking moratorium, or the establishment by the New York Stock Exchange, by the Securities and Exchange Commission, by any Federal or state agency, or by the decision of any court, of any limitation on prices for such trading or (ii) any new outbreak of hostilities or other national or international calamity or crisis, the effect of which on the financial markets of the United States shall be such as to make it impracticable, in the reasonable judgment of the Underwriter, for the Underwriter to enforce contracts for the sale of the Bonds; or (e) Any event or condition which, in the judgment of the Underwriter, renders untrue or incorrect, in any material respect as of the time the same purports to speak, the information, including the financial statements, contained in the Official Statement, or which requires that information not reflected in the 7 0 0 Official Statement should be reflected therein in order to make the statements and information contained therein not misleading in any material respect as of such time; provided the Issuer and the Underwriter will use its best efforts to amend or supplement the Official Statement to reflect, to the satisfaction of the Underwriter, such changes in or additions to the information contained in the Official Statement; or (f) The Board of Directors of the Issuer shall fail to adopt the Implementing Resolution on or before July 16, 2002. 10. All notices, demands and formal actions hereunder will be in writing mailed, telegraphed or delivered to: The Issuer: City of Little Rock, Arkansas 500 West Markham, Room 208 Little Rock, Arkansas 72201 Attention: Finance Director The Underwriter: Morgan Keegan & Company, Inc. 100 Morgan Keegan Drive, Suite 400 Little Rock, Arkansas 72202 Attention: James Fowler 11. All representations, warranties and covenants of the Issuer contained herein shall remain operative and in full force and shall survive (a) the execution and delivery of this Agreement, (b) any investigation made by or on behalf of the Underwriter, (c) the purchase of the Bonds hereunder, and (d) any disposition of or payment for the Bonds. 12. The Underwriter shall be under no obligation to pay and the Issuer shall pay any expenses incident to the performance of its obligations hereunder including, but not limited to: (i) the cost of the preparation and distribution of this Agreement and the Authorizing Ordinance, the cost of the preparation, printing and delivery of the Bonds, and the cost of printing of the Official Statement (in such reasonable quantities as may be requested by the Underwriter); (ii) the fees and disbursements of Bond Counsel and any counsel to the Issuer; (iii) the fees and disbursements of any accountants and any other experts or consultants retained by the Issuer; (iv) the charges for obtaining CUSIP numbers for the Bonds; (v) legal publication costs; (vi) the Trustee's authentication fee and expenses; (vii) the Underwriter's fees payable to DTC relating to the underwriting of the Bonds; and (viii) rating agency fees. The Underwriter shall pay: (i) the cost of the preparation and printing of any amendment or supplement to the Official Statement resulting from a determination by the Underwriter to change the initial offering prices or yields set 0 0 0 forth in the Official Statement; (ii) all advertising expenses in connection with the public offering of the Bonds; (iii) the cost of preparation of Blue Sky and Legal Investment Memoranda; and (iv) all other expenses incurred by us in connection with our public offering and distribution of the Bonds except as described above. 13. The Issuer covenants and agrees with the Underwriter that: (a) It will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement or any part thereof. If between the date of this Agreement and ninety (90) days after the end of the underwriting period an event occurs which is materially adverse to the purpose for which the Official Statement is to be used and is not disclosed in the Official Statement, or if there shall exist any event which in the reasonable judgment of the Underwriter makes untrue or incorrect in any material respect any statement or information contained in the Official Statement, or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information contained therein not misleading in any material respect, the Issuer will supplement or amend the Official Statement in a form and in a manner approved by the Underwriter, the expense of which shall be paid by the Issuer. The "end of the underwriting period" shall mean the later of (i) the Closing date, or (ii) the date the Underwriter no longer retains (directly or as a syndicate member) an unsold balance of the securities for sale to the public. The Underwriter agrees to notify the Issuer in writing when the underwriting period has ended and if no such notification is given within ninety (90) days after the Closing date, the Issuer may assume that the underwriting period ended on the Closing date; (b) It will indemnify and hold harmless the Underwriter and each person, if any, who controls (as such term is defined in Section 15 of the Securities Act of 1933, as amended) the Underwriter against any and all losses, claims, damages and liabilities of any kind, including the expenses of defense thereof, (i) arising out of any statement or information contained in the Official Statement relating to the Issuer, the Authorizing Ordinance, the Bonds, the Pledged Revenues and use of Bond proceeds that is untrue or incorrect in any material respect or the omission from the Official Statement of any statement or information relating to the Issuer, the Bonds, the Pledged Revenues, use of Bond proceeds and the Authorizing Ordinance, which is necessary to make the statements therein not misleading in any material respect, and (ii) to the extent of the aggregate amount paid in settlement of any litigation commenced or threatened arising from a claim based upon any such untrue statement or omission if such settlement is effected with the written consent of the Issuer (which consent shall not be unreasonably withheld). In case any claim shall be 0 0 0 made or action brought against the Underwriter or any controlling person (as aforesaid) based upon the Official Statement, in respect of which indemnity may be sought against the Issuer, the Underwriter shall promptly notify the Issuer in writing, setting forth the particulars of such claim or action, and the Issuer shall assume the defense thereof, including the retaining of counsel and the payment of all expenses. The Underwriter or any such controlling person shall have the right to retain separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the Underwriter's expense or the expense of such controlling person unless the retaining of such counsel has been specifically authorized by the Issuer. The obligations of the Issuer hereunder are limited to Pledged Revenues. 14. This Agreement may be executed in any number of counterparts with each executed counterpart constituting an original but all of which together shall constitute one and the same instrument. 15. This Agreement will inure to the benefit of and be binding upon the parties thereto and their successors and will not confer any rights upon any other person. This Agreement shall be governed by and construed in accordance with the laws of the State. MORGAN KEEGGAANN(& /COMPANY, INC. By Authorized Signature APPROVED AND RECOMMENDED to the City this day of July, 2002. ACCEPTED this day of July, 2002. CITY OF LITTLE K, ARKAN S By Title �/(ef 10 0 0 10.093:I&M-11 Implementing Resolution 11 Ll EXHIBIT B Ll Year (October 1) Principal Amount Interest Rate 2003 $140,000 3.50 2004 180,000 3.50 2005 185,000 3.50 2006 190,000 3.50 2007 195,000 3.50 2008 200,000 3.50 2009 210,000 4.00 2010 215,000 4.00 2011 225,000 4.00 2012 235,000 4.00 2013 245,000 4.15 2014 255,000 4.25 2015 270,000 4.35 2016 280,000 4.45 2017 295,000 4.55 2018 310,000 4.65 12