18646ORDINANCE NO. 19,646
AN ORDINANCE PROVIDING FOR THE ISSUANCE AND SALE OF A SERIES OF
LIBRARY IMPROVEMENT BONDS FOR THE PURPOSE OF FUNDING
CONSTRUCTION AND CAPITAL IMPROVEMENT PROJECTS; PLEDGING TAX
REVENUES SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THE
BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A
SUPPLEMENTAL TRUST INDENTURE; AUTHORIZING THE ACCOMPLISHMENT
OF THE PROJECTS; APPROVING AN OFFICIAL STATEMENT; PRESCRIBING
OTHER MATTERS RELATING THERETO; AND DECLARING AN EMERGENCY.
WHEREAS, at the general election held November 3, 1998, there was submitted to the voters of the
City of Little Rock (the "City") the question of issuing bonds of the City (the "Bonds ") in the maximum
principal amount of $19,500,000 to refund an outstanding issue of capital improvement bonds and to
finance the cost of acquiring, constructing and equipping additional capital improvements to the public
libraries operated by the City and the Central Arkansas Library System ( "CALS ") to be payable from a
continuing annual ad valorem property tax to be levied at a new rate of 1.0 mill on the dollar of the assessed
valuation of taxable real and personal property in the City; and
WHEREAS, the voters approved the issuance of the Bonds by a vote of 26,914 votes FOR and
15,844 votes AGAINST; and
WHEREAS, the City previously issued its $9,175,000 Library Improvement and Refunding Bonds,
Series 1999B, dated September 1, 1999 (the "Series 1999B Bonds" or the "Parity Bonds "); the proceeds of
which were used to fund the following projects:
(1) Renovation of the Main Library and Terry Library;
(2) Restoration of the Cox Building;
(3) Construction of a new library in southwest Little Rock;
(4) Prepayment of a lease with the Arkansas Aviation Historical Society;
(5) Landscaping improvements at three branches;
(6) Purchase of land in west Little Rock for future construction;
(7) Enhancing CALS collection of books, videos, etc.;
(8) Upgrading the computer system;
(9) Purchase of a new delivery van; and
(10) Accomplishing other projects which CALS' Board of Directors deems appropriate;
and to currently refund the City of Little Rock, Arkansas Residential Housing and Public Facilities Board
Capital Improvement Revenue Bonds (Central Arkansas Library System Project), Series 1997 which was in
the original principal amount of $800,000 (the "Series 1997 Bonds "); and
WHEREAS, the City intends to issue its $9,500,000 Library Improvement Bonds, Series 2002,
dated March 1, 2002 (the "Series 2002 Bonds ") to fund the following projects:
(1) Completion and renovation of the fifth floor of the Main library;
(2) Construction of a new library in Southwest Little Rock;
(3) Construction of a new library in West Little Rock;
309275 -v]
• •
(4) Enhancing CALS collection of books, videos, etc.; and
(5) Accomplishing other projects which CALS' Board of Directors deems appropriate
(collectively, the "2002 Project" or "2002 Projects ").
WHEREAS, the City levied in 1998 for collection in 1999 and has levied each year since 1998 an
ad valorem property tax at the rate of 1.0 mill on the dollar of the assessed valuation of taxable real and
personal property in the City (the "Library Tax ") to be used to pay debt service on the Bonds, and the City
covenants to levy the Library Tax every year until all bonds issued under the Master Trust Indenture,
including the Series 2002 and Series 1999B Bonds, are fully redeemed;
WHEREAS, the City will receive its allocable portion of the .5% statewide sales and use tax
implemented pursuant to Amendment No. 79 to the Arkansas Constitution ( "Amendment 79 ") which is
intended to offset any decrease in collections resulting from the homestead exemption also implemented
pursuant to Amendment 79 (the "Debt Service Supplement ");
WHEREAS, the City pledges the Debt Service Supplement to debt service on the Series 2002
Bonds and the Parity Bonds;
WHEREAS, the Series 2002 Bonds and the Series 1999B Bonds shall be on a parity of security
with one another (collectively, the Series 2002 and Series 1999B Bonds shall be referred to as the "Bonds ");
and
WHEREAS, in order to serve and fulfill the purposes for which it has been created and to provide
funds for the financing of the 2002 Projects, the City desires to adopt this Ordinance authorizing the
issuance and sale of the Series 2002 Bonds and other matters pertaining thereto.
NOW, THEREFORE, BE IT ORDAINED by the Board of Directors of the City of Little Rock,
Arkansas:
Section L The Projects shall be accomplished. The Mayor, City Clerk, and Director of Finance are
hereby authorized to take or cause to be taken all action necessary to accomplish the acquisition,
construction and equipping of the Projects and to execute all required documents.
Section 2. Under the authority of the Constitution and laws of the State of Arkansas, including
particularly Amendment No. 30 to the Constitution of the State of Arkansas, as amended by Amendment
No. 72 to the Arkansas Constitution, and Arkansas Code Annotated §§ 14- 142 -201 through 222 (Act 920 of
the Acts of Arkansas of 1993), the City of Little Rock, Arkansas Library Improvement Bonds, Series 2002,
are hereby authorized and ordered issued in the total aggregate principal amount of not to exceed
59,500,000, for a term not to exceed 30 years and at an average interest rate of all bonds issued of not to
exceed six percent (6.0 %). The Series 2002 Bonds shall not be general obligations of the City, but shall be
special obligations payable solely from the proceeds of the Library Tax and the Debt Service Supplement,
more specifically identified in the Master Trust Indenture dated as of September 1, 1999 between the City
and Metropolitan National Bank, as Trustee (the "Trustee), as supplemented and amended (the "Master
Trust Indenture "), and the Supplemental Trust Indenture (identified hereinafter). The City hereby pledges
the Library Tax and Debt Service Supplement to the Series 2002 and Series 1999B Bonds.
Section 3. The proceeds of the Series 2002 Bonds, together with investment earnings thereon, shall
be used (i) to finance the Projects; and (ii) to pay the costs of issuance of the Series 2002 Bonds. The Series
2002 Bonds will mature, bear interest and be subject to redemption in accordance with the provisions of the
Supplemental Trust Indenture (identified hereinafter). The Series 2002 Bonds will be issued on a parity of
309275-1
security with the Series 1999B Bonds, and with such additional bonds, if any, to be issued under the Master
Trust Indenture.
Section 4. All actions heretofore taken by the Mayor, City Clerk, and Director of Finance in
connection with the offering of the Series 2002 Bonds, including the preparation and distribution of the
Preliminary Official Statement, preparation of the Official Statement, and preparation of this Ordinance (the
"Authorizing Ordinance ") are hereby in all respects ratified and approved. The Official Statement is
deemed a final Official Statement for purposes of the Securities and Exchange Commission Rule 15(c) 2 -12.
The Official Statement of the City in the form presented at this meeting with such changes, omissions,
insertions and revisions as the Mayor, City Clerk, and Director of Finance shall deem advisable is hereby
authorized and approved, and the Director of Finance shall sign and deliver such final Official Statement to
the Underwriters for distribution to the owners of the bonds and other interested persons.
Section 5. To prescribe the terms and conditions upon which the Series 2002 Bonds are to be
executed, issued, accepted, held and secured, the Mayor is hereby authorized and directed to execute and
acknowledge a Supplemental Trust Indenture dated March 1, 2002 between the City and the Trustee (the
"Supplemental Trust Indenture "), and the City Clerk is hereby authorized and directed to execute and
acknowledge the Supplemental Trust Indenture and to affix the seal of the City thereto, and the Mayor and
City Clerk are hereby authorized and directed to cause the Supplemental Trust Indenture to be accepted,
executed and acknowledged by the Trustee. The Supplemental Trust Indenture is hereby approved in
substantially the form submitted to this meeting with such changes as shall be approved by such persons
executing the document, their execution to constitute conclusive evidence of such approval.
Section 6. The Mayor, the City Clerk, the Director of Finance, and CALS, for and on behalf of the
City, are authorized and directed to do any and all things necessary to effect the execution and delivery of
the Supplemental Trust Indenture; the performance of all obligations of the City under the Master Trust
Indenture and the Supplemental Trust Indenture; the issuance, execution, sale and delivery of the Bond
including the execution of a Bond Purchase Agreement between the City and the Underwriters; and the
performance of all acts of whatever nature necessary to effect and carry out the authority conferred by this
Ordinance. The Mayor, City Clerk, the Director of Finance, and CALS are further authorized and directed,
for and on behalf of the City, to execute all papers, documents, certificates and other instruments that may
be required for the carrying out of such authority or to evidence the exercise thereof. All actions of the
Mayor, City Clerk, Director of Finance or CALS which have previously been taken with respect to the
matters set forth in this Section are hereby ratified, approved and confirmed.
Section 7. The appointments of Wright, Lindsey & Jennings LLP as Bond Counsel and of Stephens
Inc. as Underwriters representatives, respectively, are hereby approved and ratified.
Section 8. It is hereby found and declared that an immediate need exists for the accomplishment of
the Projects in order to achieve the most cost effective financing for the City's public libraries. It is,
therefore, declared that an emergency exists. This Ordinance, being necessary for the immediate
preservation of the public peace, health and safety, shall take effect and be in force from and after its
passage.
309275 -v1
0
PASSED: February 19 , 2002
ATTEST:
NANCY VOOD, Cl CLERK
APPROVED AS TO FORM:
ul
THOMAS M. CARPENTERS —
CITY ATTORNEY
309275 -vl 4
•
APPROVED:
JIM ILEY, MAYOR
e
no
ry V_
V �
o .a
z�
s
o �
8
`o ^
�v
av
at
�n o
n iO
g c
T L�L
D lJ
O �
u
O}$
gT n
C �
D T
= o
O s
Q C
0 0
c 'c
oa
„AA
r �+
c ^
=g
� j L
o i
wog
E g c
g
"d=
ti U
Aeo
ice
r .E'a
=eo
y a "
o - c
y
d
A
=_ng
m � 3
ov
=V
�=o
n7 0
n €,13
W o
O —�
�o
9 L
- � 7
a =
9 r
PRELIMINAOOFFICIAL STATEMENT DATED FEBY*Y 1, 2002
Series 2002
(BOOK -ENTRY ONLY)
RATING: Standard and Poor's AA-
(See Bond Rating section herein)
In the opinion of Bond Counsel, under existing law and assuming compliance with certain covenants described herein,
(i) interest on the Series 2002 Bonds is excluded from gross income far federal income tax purposes, (ii) interest on the
Series 2002 Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on
individuals and corporations, (iii) with respect to certain corporations, interest on the Series 2002 Bonds will be taken
into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax
imposed on such corporations, (iv) interest on the Series 2002 Bonds is exempt from State of Arkansas income tax and
(v) the Series 2002 Bonds are not subject to property taxes in the State of Arkansas. (see LEGAL MATTERS, Legal
Opinion).
Dated: March 1, 2002
$9)5005000
CITY OF LITTLE ROCK, ARKANSAS
LIBRARY IMPROVEMENT BONDS
Series 2002
Due: March 1, as shown below
[Maturity Scheduled included on inside cover page)
The City of Little Rock, Arkansas Library Improvement Bonds, Series 2002 (the "Series 2002 Bonds" or the "Bonds ")
are limited obligations of the City of Little Rock, Arkansas (the "City") payable solely from the collections of the
Library Tax (as herein defined) and amounts on deposit in certain funds and accounts established under a Master Trust
Indenture, dated September 1, 1999, between the City and Metropolitan National Bank, as Trustee, and a Supplemental
Trust Indenture, between the City and Trustee, dated as of March 1, 2002 (collectively, the "Master Indenture ").
The Bonds are issuable as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as
nominee of The Depository Trust Company ( "DTC "), New York, New York, to which principal and interest payments
on the Bonds will be [Wade so long as Cede & Co. is the registered owner of the Bonds. Individual purchases of the
Bonds will be made only in book -entry form, in the denominations of $5,000 or any integral multiple thereof, Individual
purchasers of the Bonds ("Beneficial Owners ") will not receive physical delivery of bond certificates.
Interest is payable September 1, 2002 and semiannually thereafter on each September 1 and March 1. The Series 2002
Bonds are issuable only as fully registered bonds in the denomination of $5,000 or an integral multiple thereof.
Principal is payable at the corporate trust office of Metropolitan National Bank, Little Rock, Arkansas, the trustee, bond
registrar and paying agent (the "Trustee ").
Interest is payable by check or draft drawn on the paying agent and mailed to the registered owners as of the Record
Date (herein defined) on each interest payment date, or solely at the option of the Trustee, by wire fund transfer upon
the terms and conditions of the Trustee.
The Series 2002 Bonds are subject to mandatory and optional redemption prior to maturity as described herein.
The Bonds are offered when, as and if issued and received by the Underwriters, subject to the approval of legality by
Wright, Lindsey & Jennings LLP, Little Rock, Arkansas, Bond Counsel for the City, and to certain other conditions. It
is expected that the Bonds will be available for delivery in New York, New York, on or about March 28, 2002.
Dated: , 2002
313352 -v1
Stephens Inc.
httve9:t�tttt I3aak0S
0
Series 2002
0
Maturity
Principal Interest
arch 1
Amount Rate
2002
2003
$490,000
2004
505,000
2005
520,000
2006
535,000
2007
555,000
2008
575,000
2009
805,000
2010
1,350,000
2011
1,410,000
2012
1,475,000
2013
1,280,000
(Accrued interest from date of Bonds to be added)
ii
313352 -vi
[THIS PAGE INTENTIONALLY LEFT BLANK]
iii
313352 -v1
No dealer, broker, salesman otoer person has been authorized by the Cile the Underwriter to give any
information or to make any representations other than contained in this Official Statement, and, if given or
made, such other information or representations must not be relied upon as having been authorized by any
of the foregoing. This Official Statement does not constitute an offer to sell or a solicitation of an offer to
buy nor shall there be any offer, solicitation or sale of the Series 2002 Bonds by or to any person in any
jurisdiction in which it is unlawful to make such offer, solicitation or sale.
The information set forth herein under the captions "Description of the City of Little Rock - General," "Debt
Structure" and "Financial Information" has been furnished by the City, except where otherwise noted. All
other information set forth herein has been obtained from sources other than the City that are believed to be
reliable, but the adequacy, accuracy or completeness of such information is not guaranteed by, and it is not
to be construed as a representation by, the City or Bond Counsel. The information and expressions of
opinion herein are subject to change without notice. Neither the delivery of this Official Statement nor the
sale of any of the Bonds implies that there has been no change in the matters described herein since the date
hereof or that the information herein is correct as of any time subsequent to its date.
The Series 2002 Bonds have not been registered under the Securities Act of 1933, as amended, nor has the
Authorizing Ordinance described herein been qualified under the Trust Indenture Act of 1939, as amended,
in reliance upon certain exemptions in such laws from such registration and qualification.
IN CONNECTION WITH THE OFFERING OF THE SERIES 2002 BONDS, THE UNDERWRITER
MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE SERIES 2002 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET, SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
iv
313352 -v1
TABLE OF CONTENTS
PAGE
��]88v�����,1[�������U7��B��]P�X�������,..�—.—.`—.^^'�—'.�~'^�^�`�,~^�.�^�^�---^�--^.—'^�^'
9
General.... ......^~--~^,,^,,,~^~,.,`_^'^`_~^,_^^,`',.^^,`_^'_^'^^
Main Library Fifth Floor Completion (0icnwvatiom) ....................... ~^,~~~~''`--^`.'''
West Central Little Rock (New Building) ................. ..~'~`.'.`'—^^`.—^`.—^^',—^.,
West Little Rock (New Building) ................ `'^`.`^`',^~^--~..~'^.^^'.—^```-9
Jay Miller Aviation History Collection .......... .................... .^^^`—^^'~~~ ............
.......... r
Collection Development and Other Equipment ............................................... .^~~`.~~.,`/
DESCRIPTION OF CENTRAL ARKANSAS LIBRARY SYSTEM ........ ^~^—^~',~^.,—~''.v
General....................................... ~,^',^~,_^,,^'^^,_~~^`^'^,,~^`,'^`,,~
......... ./
Organization ,,~,^_,__^^^,_~^,`^~~`'^^^^,_^^,`'^^`,`^`,_^,_....`...'l0
Operations Budget _'~,,__,,`~~,`^~,,,^,^'^,,_~,^,^'_~^_...—....'l)
DESCRIPTION OF THE CITY OF LITTLE ROCK .............. .^~~~~.' ...................
. .............. ll
��emeral..........^^^^`~—~`~'^`~~'`—^^^—~~~~^^^`~~'^`^`~``'^`--
ll
Organization Governmental ~^'^,,'^,^,,'^`',^~'__~^,'^`,_^^^,..........'l2
Landm..,—...—...`^—~`~^^..~..---..~^`'—^.^—~^.,'^`.`.
l�
^
/ Income and ��etu0Sales —.......--~.~~^^..'.^.--..,~^^'—^^~—^~~.~~'^`.
l4
0xmo...—~^—~^`--^^^^'^^^`'^^``^^`~~~^^`^~^`'^^~`~^```'``—~'
l4
Commercial ^ - amd Residential Construction and Bunk Deposits ...............................................
.l5
0u^ pr ' ..--^^^`—~~'`~'^`—~'^`~`^`—^``~~~^^^'—`~—~`^--'
16
^
School Enrollment .—....'..,.'~`.—~,—^~'—^^`.~'^``~.,—^.``'.`--'
l6
��ioher]Kdmca1om—..^.—...—.^.—^~.^~,^^—`.^—^'—^^.~'.,~^`..'^'.--'
\?
)|B52-vt
• •
MedicalFacilities .............................. -- ................. ...............................................
..................... .... 17
CityEmployees .................................................................................................
.............................18
Portof Little Rock ............................................................................................
.............................18
LittleRock National Airport ...........................................................................
.............................19
DEBTSTRUCTURE ............. ...................... .... ................. . ..................... -- .................................
. ........ . .... 19
Authorized and Outstanding General Obligation Debt. ................. -- .....................
-- ............... 19
General Obligation Debt Service ..................................................................... .............................19
Defaults.............................. ............................... -- .........................................................................
21
Invalidityof Tourism Bonds ............................................................................ .............................21
OverlappingDebt ............................................................................................. .............................21
........ .. .... ....... 36
RevenueBonds .................... -- ....................................... -- ...........................................................
21
FINANCIALINFORMATION ................................................................................... .............................22
7
TheCity Budget ..........-- ................................................................................. .............................22
....37
Computation of Dollar Amount of Library Tax Levied ................................ .............................24
AssessedValuation ........................................................................................... .............................25
Collectionof Taxes.. ..................... ................................................................... ............................
25
Debt Service Schedule and Coverage.. ...............................................................
..................... ... 26
Coverage........................................................................................................... .............................26
Overlapping Ad Valorem Taxes ......................................... ................ -- .......................
............... 27
Assessment of Property and Collection of Property Taxes ............................ .............................27
Judicial Decisions and Constitutional Amendments Affecting
Assessments of Taxable Property and Ad Valorem Tax Rate ....................... .............................29
AmendmentNo. 59 ........... .................................................... ...........................
........... ........... - 29
AmendmentNo. 71 ................................................................................... ...............................
32
OmegaTube & Conduit Corp ................................................................. ...............................
32
AmendmentNo. 79 ................................................................................... ...............................
32
Miscellaneous................ ......................................................... ..................................
........... -. 32
LEGALMATTERS ...................................................................................................... .............................32
LegalOpinion .................................................................................................. ..............................3
2
Non - Litigation Certificate ............................................................................... .............................33
ENFORCEABILITYOF REMEDIES ........................................................................ .............................34
UNDERWRITING........................................................................................................ .............................34
BONDRATING ............................................................................................................ .............................35
CONTINUING DISCLOSURE CERTIFICATE ...................................................... .............................35
Purpose of the Continuing Disclosure Certificate ........................................ .............................35
Provision of Annual Financial Information and Operating Data ............... .............................35
Noticeof Material Events .............................. -- ...................................................................
....... 35
City to Disseminate Information and Notices ............................................... .............................36
Amendment; Waiver ..... ................................................................. -- .....................
........ .. .... ....... 36
AdditionalInformation .................................................................................. ..............................3
7
Noncompliance................................................................................................ ..............................3
7
MISCELLANEOUS............... -- ..................... .................. ..................... .... . .................... . .....................
....37
vi
313352 -v1
0 0
APPENDIX A — Legal Opinion
APPENDIX B — Summary of the Master Trust Indenture
APPENDIX C — Summary of the Series 2002 Supplemental Indenture
vii
313352 -v1
SUMMARY OF THE OFFICIAL STATEMENT
This summary is subject in all respects to the more complete information contained in this Official
Statement. The offering of the Series 2002 Bonds to potential investors is made only by means of the entire
Official Statement, including the Cover Page.
Purpose of Official Statement. This Official Statement is provided to furnish certain information in
connection with the issuance by the City of Little Rock, Arkansas (the "City") of its $9,500,000 Library
Improvement Bonds, Series 2002, dated March 1, 2002 (the "Series 2002 Bonds ").
The City. The City is a city of the first class duly established and existing under the Constitution and laws
of the State of Arkansas. See DESCRIPTION OF THE CITY OF LITTLE ROCK.
Purpose. The Series 2002 Bonds are being issued to finance the cost of acquiring, constructing and
equipping capital improvements to the public city libraries (the "Improvements ") operated by the City and
the Central Arkansas Library System ( "CALS "). See DESCRIPTION OF THE PROJECT.
Security and Source of Payment. The Series 2002 Bonds will be limited tax obligations of the City,
payable solely from a special tax levied upon all taxable real and personal property located within the City
(the "Library Tax ") and the pro rata portion of the proceeds of a Sales and Use Tax pursuant to Act 1492 of
1999 (the "Debt Service Supplement'). The City first levied the Library Tax at the rate of 1.0 mill (.001)
for collection in 1999 and continuously in each year thereafter, the collection of which will be available to
pay debt service on the Series 2002 Bonds. The City has covenanted that the Library Tax will be levied and
collected annually and that it and the Debt Service Supplement will be pledged as security for the Series
2002 Bonds and the Parity Bonds (defined hereinafter) until all of the outstanding Series 2002 Bonds and
any parity bonds together with interest thereon and related costs and fees have been paid in full. The City is
prohibited by statute from using or committing proceeds from the Library Tax and the Debt Service
Supplement for any purposes or uses other than payment of the Series 2002 Bonds, the Parity Bonds or
other library purposes. The Series 2002 Bonds are part of an authorized issue of not to exceed $19,500,000
approved by voters of the City at the November 3, 1998 general election. The City previously issued its
$8,175,000 Library Improvement and Refunding Bonds, Series 1999B, dated September 1, 1999 which are
on a parity of security with the Series 2002 Bonds (the "Parity Bonds ").
313352 -v1
0 0
SERIES 2002 BONDS BEING OFFERED
Generally. The Series 2002 Bonds are issuable in the form and denominations and are in the total principal
amount shown on the Cover Page, and will be dated, mature and bear interest as set out on the Cover Page.
Metropolitan National Bank, Little Rock, Arkansas, the trustee, bond registrar and paying agent ( "Trustee "),
will maintain books for the registration and transfer of ownership of the Series 2002 Bonds. Interest due on
a bond on each interest payment date will be paid to the person in whose name the bond was registered at
the end of the fifteenth day of the month (whether or not a business day) next preceding the interest payment
date (the "Record Date "), irrespective of any transfer of the bond subsequent to the Record Date and prior to
the interest payment date. Payment of interest shall be made by check or draft drawn on the Trustee and
mailed to such registered owner at the address shown on the registration books, or solely at the option of the
Trustee, by wire fund transfer upon the terms and conditions of the Trustee. The City has also arranged to
make the Series 2002 Bonds eligible for book -entry deposit with The Depository Trust Company ( "DTC "),
New York, New York. Deposit of the Series 2002 Bonds, or any portion thereof, with DTC shall be at the
option of the owner and at the expense of the owner or the participating securities dealer, as the case may be.
A bond may be transferred, in whole or in part (in integral multiples of $5,000), but only upon delivery of
the bond, together with a written instrument of transfer, to the Trustee. The transfer instrument must be
signed by the registered owner or the registered owner's attomey -in -fact or legal representative, and the
signature must be guaranteed by a member firm of the National Association of Securities Dealers, a
commercial bank or a trust company. The transfer instrument shall state the name, mailing address and
social security number or federal employer identification number of the transferee. Upon such transfer, the
Trustee shall enter the transfer of ownership in the registration books and authenticate and deliver in the
name or names of the new registered owner or owners a new fully registered bond or bonds of authorized
denominations of the same maturity and interest rate for the aggregate principal amount of the bond
transferred.
Authority. The Series 2002 Bonds are issued under the authority of the Constitution and laws of the State
of Arkansas, including particularly Amendment No. 30 to the Constitution of the State of Arkansas, as
amended by Amendment 72 to the Arkansas Constitution ( "Amendment 30" and "Amendment 72" are
collectively referred to herein as the "Constitution "), Arkansas Code Annotated § 14- 142 -201 through 222
(Act 920 of the Acts of Arkansas of 1993) (the "Act"), and Ordinance No. 18,085 duly adopted and
approved by the City on August 3, 1999, as amended and supplemented by Ordinance No. _ duly
adopted and approved by the City on , 2002 (the "Authorizing Ordinance ").
The Constitution allows electors of the City to approve an annual tax on real and personal property to be
levied for capital improvements to or construction of a public city library not to exceed three mills (.003) for
each dollar of assessed value. The Constitution further states that electors may authorize the governing
body of the City to issue bonds as prescribed by law for capital improvements to or construction of the .
library and to authorize the pledge of all, or any part of, the tax for the purpose of retiring the bonds.
The Act provides the procedures for the issuance of library bonds by municipalities and counties in
implementation of the Constitutional provisions. The Act authorizes Arkansas municipalities to issue bonds
for library capital improvements in amounts and for purposes approved by a majority of the qualified
electors of the city voting on the question at an election called for that purpose. Such bonds shall be made
payable from a special ad valorem tax on real and personal property in the city at the maximum rate
specified on the election ballot. The Series 2002 Bonds are part of an issue of bonds approved by the voters
of the City at the general election on November 3, 1998.
Purposes. The proceeds of the Series 2002 Bonds, together with investment earnings thereon, will be used
to finance the cost of acquiring, constructing and equipping capital improvements to the public city libraries
313352 -v1
• •
set forth below and to pay the costs of issuance. The City expects that the construction period will be
approximately three (3) years.
A portion of the proposed improvements to be made with the proceeds of the Series 2002 Bonds are as
follows:
Estimated
Improvement Cost
New Construction in west Little Rock $3,100,000
New Construction in west central Little Rock 2,300,000
Complete 5`s Floor of Main Library 3,000,000
Purchase books, periodicals, audio - visuals, CD -Roms, and other materials for 1,000,000
library collections
Purchase of Equipment for Various Branches 100,000
TOTAL $2 X40 004
(These improvements shall hereinafter be referred to either as the "Project" or the "Improvements"
Sources and Uses of Funds. The estimated sources and uses of funds for the above purposes are as
follows:
Bond Issue
Accrued Interest
Total
Issuance Expenses
Underwriter's Discount
Project Costs
Accrued Interest
Contingency
Total
Sources
Series 2002
$9,500,000.00
Uses
Security and Source of Payment. The Series 2002 Bonds are limited tax obligations of the City, payable
from and secured by a pledge of the Library Tax and the Debt Service Supplement. The City has pledged
the Library Tax and the Debt Service Supplement for the payment of the Series 2002 Bonds and the Parity
Bonds. The Library Tax will be a continuing annual levy until sufficient moneys have been paid to retire all
of the Series 2002 Bonds, the Parity Bonds and any additional parity bonds plus Trustee's fees and
expenses. The rate of the Library Tax cannot exceed the rate specified on the ballot for the November 1998
election at which the Series 2002 Bonds were approved. The maximum rate specified for the Series 2002
Bonds was one mill (.001) per dollar of assessed value of taxable property in the City. The City is
prohibited by statute from using or committing proceeds from the Library Tax and the Debt Service
Supplement for any purposes or uses other than payment of the Series 2002 Bonds, the Parity Bonds or
313352w1
0 0
other library purposes. For a discussion of the estimated amount of Library Tax and the Debt Service
Supplement to be collected in each year, see Computation of Dollar Amount of LibrarYTax Levied.
'Be electors adopted Constitutional Amendment No. 79 at the November 2000 General Election. This
Amendment, which was effective January 1, 2001, provides for an annual state credit against ad valorem
property tax on a homestead. As directed by the Amendment, the General Assembly has instituted a
statewide sales and use tax in the amount of .5% (previously defined as the "Debt Service Supplement ").
The purpose of the statewide sales and use tax is to assure that the tax or millage levied for bonded
indebtedness will provide a level of income sufficient to meet current debt service and other expenses
requirements. See FINANCIAL INFORMATION, Assessment of Properly and Collection of Property
Taxes.
Until retirement of the Series 2002 Bonds and the Parity Bonds, the proceeds of the Library Tax and the
Debt Service Supplement cannot be used for any purpose other than payment of debt service on the Series
2002 Bonds and the Parity Bonds. Upon retirement of the Series 2002 Bonds and the Parity Bonds, any
surplus tax collections which may have accumulated shall be transferred to the general fund of the City and
shall be used for maintenance and operation of the public library.
The Series 2002 Bonds are not secured by any lien on or security interest in any physical properties. The
Series 2002 Bonds are limited obligations of the city payable solely from revenues collected from the
Library Tax and the Debt Service Supplement.
Arkansas property taxes are collected by the county collector and remitted to the respective taxing
authorities. See FINANCIAL INFORMATION, Assessment of Property and Collection of Property Taxes.
All collections of the Library Tax voted for the Series 2002 Bonds together with the Debt Service
Supplement will be deposited as received into a special fund of the City held by the Trustee designated the
"Series 2002 Library Bond Retirement Fund" (the "Bond Fund "). All moneys held for credit of the Bond
Fund shall either be insured by the Federal Deposit Insurance Corporation or secured by direct or fully
guaranteed obligations of the United States of America, or otherwise invested in a manner consistent with
and authorized by the Master Indenture. Collections of the Library Tax and the Debt Service Supplement
shall be used solely for the payment of principal of and interest on the Series 2002 Bonds and the Parity
Bonds, fees of the Trustee, and costs of redemption either at maturity or at redemption prior to maturity.
The proceeds of the Series 2002 Bonds will be used first to pay accrued interest on the Series 2002 Bonds,
then the balance of the proceeds of the bond sale will be deposited in an account with the Trustee designated
"Series 2002 Library Construction and Improvement Fund" (the "Construction Fund "). The moneys in the
Construction Fund shall be disbursed for the payment of the cost of accomplishing the Improvements,
paying necessary expenses and making necessary expenditures incidental thereto, paying engineering fees,
paying legal fees, and paying the expenses of the authorization and issuance of the Series 2002 Bonds. For
each disbursement related to construction costs, there shall be prepared a requisition signed by the City's
Director of Finance and the Project Engineer or Architect. For disbursements related to purchases of
equipment, books, and other items, CALS shall submit a requisition signed by the City's Director of
Finance and the Director of CALS.
Interest earned by the investments of the Construction Fund shall be retained in such Fund and used for the
same purposes as other moneys in such Fund are authorized to be used.
Redemption. The Series 2002 Bonds are subject to mandatory and optional redemption. The Series 1999B
Bonds, which are on a parity of security, shall be fully defeased before the Series 2002 Bonds may be
redeemed with surplus collections of the Library Tax and the Debt Service Supplement.
313352 -v1
0 0
Mandatory Redemption. The Series 2002 Bonds shall be subject to mandatory redemption prior to
maturity, in inverse order of maturity,
W on any interest payment date from proceeds of the Series 2002 Bonds not needed for the
Improvements, and
(ii) after the Series 1999B Bonds have been fully paid, on any interest payment date on or after
September 1, 2002, from surplus collections of the Library Tax and Debt Service
Supplement, being collections over and above (1) the amount necessary to pay the current
requirements of interest and principal on the Series 2002 Bonds and the Parity Bonds and
Trustee's fees, and (2) the interest due on the next interest payment date for the Series 2002
Bonds and the Panty Bonds,
in whole or in part, at a redemption price equal to the principal amount being redeemed plus accrued interest
to the redemption date. Moneys available for redemption shall be applied to the redemption of the Series
2002 Bonds, in inverse order of maturity (Series 2002 Bonds within a maturity to be selected by lot in such
manner as the Trustee shall determine to be fair and equitable). Series 2002 Bonds of denominations greater
than $5,000 may be redeemed partially in the amount of $5,000, or any integral multiple thereof.
Optional Redemption of Series 2002 Bonds. The Series 2002 Bonds are subject to optional redemption in
whole, but not in part, for the purpose of refunding from any moneys available therefor on or after March 1,
2008 if the Series 1999B Bonds have been fully paid, at a redemption price equal to the principal amount
being redeemed, together with accrued and unpaid interest to the date of redemption and payment.
Notice of Redemption. Notice of redemption identifying the Series 2002 Bonds or portions thereof to be
redeemed shall be given by the Trustee, not less than 30 nor more than 60 days prior to the date fixed for
redemption, by mailing a copy of the redemption notice by first-class mail, postage prepaid, to all registered
owners of the Series 2002 Bonds to be redeemed at the address shown on the registration books. Failure to
mail an appropriate notice or any such notice to one or more registered owners of the Series 2002 Bonds to
be redeemed shall not affect the validity of the proceedings for redemption of other Series 2002 Bonds as to
which notice of redemption is duly given and in proper and timely fashion. All such Series 2002 Bonds thus
called for redemption shall cease to bear interest on and after the date fixed for redemption, provided funds
for their redemption are on deposit with the Trustee at that time.
Trustee, Bond Registrar and Paying Agent. The Trustee, Metropolitan National Bank, Little Rock,
Arkansas, was designated by the City.
The Trustee will maintain books for the registration and transfer of ownership of the Series 2002 Bonds.
The principal of all Series 2002 Bonds, payable either at maturity or upon redemption prior to maturity,
shall be paid upon surrender of the bond at the corporate trust office of the Trustee or in accordance with
book -entry provisions acceptable to the Trustee. Interest shall be paid by check or draft drawn on the
Trustee and mailed to each registered owner at the address shown on the registration books, or solely at the
option of Trustee, by wire fund transfer upon the terms and conditions of the Trustee.
The Trustee may resign by giving not less than 60 days notice in writing to the City specifying the date
when such resignation shall take effect and mailing notice thereof to the owners of any and all Bond or
Bonds (the "Holders") outstanding. Such resignation shall be effective upon the appointment of a successor
Trustee by the City and acceptance of appointment by the successor.
The City may at any time, with or without cause, remove the Trustee and appoint a successor.
5
313352 -v1
E
s
Any successor Trustee shall have capital and surplus of at least $50,000,000.
Modification of Terms of Series 2002 Bonds. The terms of the Series 2002 Bonds, the Authorizing
Ordinance, the Master Indenture and Supplemental Indenture (the Master Indenture and Supplemental
Indenture shall collectively be referred to as the "Indentures ") will constitute a contract between the City
and the registered owners of the Series 2002 Bonds. The owners of not less than 60% in aggregate principal
amount of the Series 2002 Bonds then outstanding have the right, from time to time, to consent to the
adoption by the City of ordinances modifying any of the terms or provisions contained in the Series 2002
Bonds, the Parity Bonds, the Authorizing Ordinance or the Indentures; provided, however, there shall not be
permitted (a) extension of the fixed maturity of any Series 2002 Bond or Parity Bond, or reduction of the
Principal amount of Redemption Price thereof, or reduction of the rate or extension of the time of payment
of interest thereon, (b) reduction of the percentage of Bonds required for the affirmative vote or written
consent to an amendment or modification of the Master Indenture or (c) modification of any of the rights or
obligations of the Trustee.
Defeasance. When all of the Series 2002 Bonds shall have been paid or deemed paid, the pledge in favor of'
the Series 2002 Bonds (see Security and Source of Payment, supra) shall be discharged and satisfied. A
Bond shall be deemed paid when there shall have been deposited in trust with the Trustee, as escrow agent
under an escrow deposit agreement requiring the escrow agent to apply the proceeds of the deposit to pay
the principal of and interest on the Series 2002 Bond as due at maturity or upon redemption prior to
maturity, moneys or Government Obligations sufficient to pay when due the principal of, interest on and
trustee's fees associated with the Series 2002 Bond. If the principal of the Series 2002 Bond is to become
due by redemption prior to maturity, notice of such redemption must have been duly given or provided for.
"Government Obligations" shall mean direct or fully guaranteed obligations of the United States of
America, noncallable, maturing on or prior to the maturity or redemption date of the Bond. In determining
the sufficiency of a deposit there shall be considered the principal amount of such Government Obligations
and interest to be earned thereon until their maturity.
Defaults and Remedies. The Trustee shall immediately notify the City of each default in the payment of
principal of or interest on any Series 2002 Bond and of any other default under the Authorizing Ordinance
or the Indentures of which the Trustee has knowledge. Any default in the payment of the principal of or
interest on any Series 2002 Bond, and any default in the performance of any other covenant in the
Authorizing Ordinance or the Indentures which continues for 60 days after written notice thereof is given to
the City by the Trustee, shall constitute an event of default.
None of the owners of the Series 2002 Bonds shall have any right in any manner by their action to affect,
disturb or prejudice the security of the Authorizing Ordinance or the Indentures, or to enforce any right
thereunder except in the manner provided in the Authorizing Ordinance or the Indentures. All proceedings
at law or in equity shall be instituted, had and maintained in the manner provided in the Authorizing
Ordinance or the Indentures and for the benefit of all owners of outstanding Series 2002 Bonds. Any
individual rights of action are restricted by the Authorizing Ordinance or the Indentures to the rights and
remedies therein provided. Nothing shall, however, affect or impair the right of a Holder to enforce the
payment of the principal of and interest on any Series 2002 Bond at and after maturity thereof.
No delay or omission of any Holder of a Series 2002 Bond to exercise any right or power accrued upon any
default shall impair any such right or power or be construed to be a waiver of any such default or
acquiescence therein, and every power and remedy given to the Holders of the Series 2002 Bonds may be
exercised from time to time as often as may be deemed expedient.
The Holders of not less than 50% in principal amount of the Series 2002 Bonds then outstanding shall have
the right, during the continuance of an event of default, to direct the time, method and place of conducting
6
313352 -v1
• •
any proceedings for any remedy of the Holders, and may waive any default which shall have been remedied
before the entry of final judgment or decree in any suit, action or proceeding or before the completion of the
enforcement of any other remedy. No such waiver shall extend to or affect any other existing or subsequent
default or defaults or impair any rights or remedies consequent thereon.
Additional Bonds. No additional bonds may be issued with a prior pledge of the proceeds of the Library
Tax or Debt Service Supplement. Under certain circumstances, one or more series of additional bonds may,
be issued on a parity of security with the Series 2002 Bonds, but only if the proceeds thereof are used only
to refund all or a portion of the Parity Bonds or the Series 2002 Bonds.
Bonds designated as "Library Refunding Bonds" are authorized to be issued by the City under the Master
Indenture for the purpose of financing refundings; provided, the proceeds of the Library Tax and Debt
Service Supplement for all outstanding bonds to which the proceeds are pledged are being maintained at
120% of the average annual debt service on all of the other outstanding bonds and the additional bonds then
proposed to be issued. The maximum principal amount of the Bonds which may be issued thereunder is
limited to $19,500,000. Bonds may be issued in such Series as from time to time shall be established and
authorized by the City. The Bonds may be issued in one or more Series pursuant to one or more
Supplemental Indentures. See Appendix B "SUMMARY OF THE MASTER TRUST INDENTURE:
General Provisions for the Issuance of Bonds ". All additional bonds will be issued in compliance with the
Master Indenture.
Previously, the City issued its $825,000 Library Refunding Bonds, Series 1999A, and $8,175,000 Library
Improvement and Refunding Bonds, Series 1999B, each dated September 1, 1999. The Series 1999A
Bonds have matured, and $4,000,000 of the Series 1999B Bonds remain outstanding. The Series 1999B
Bonds are on a parity of security with the Series 2002 Bonds.
BOOK -ENTRY ONLY SYSTEM
The Depository Trust Company ( "DTC "), New York, New York, will act as securities depository for the
Series 2002 Bonds. The Series 2002 Bonds will be issued as fully registered securities registered in the
name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized
representative of DTC. One fully registered Bond certificate will be issued for each maturity, in the
aggregate principal amount of such maturity, and will be deposited with DTC.
DTC is a limited - purpose trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System,
a "clearing Corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of section 17A of the Securities Exchange Act of 1934. DTC
holds securities that its participants ( "Participants ") deposit with DTC. DTC also facilitates the settlement
among Participants of securities transactions, such as transfers and pledges, in deposited securities through
electronic computerized book -entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc.,
and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to
others, such as securities brokers and dealers, banks, and trust companies, that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants "). The
Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission.
Purchases of Series 2002 Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Series 2002 Bonds on DTC's records. The ownership interest of each
313352 -v1
0
actual purchaser of each Bond (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase,
but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or Indirect Participant through which the
Beneficial Owner entered into the transaction. Transfers of ownership interest in the Series 2002 Bonds are
to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership interest in Series 2002 Bonds,
except in the event that use of the book -entry system for the Series 2002 Bonds is discontinued.
To facilitate subsequent transfers, all Series 2002 Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested
by an authorized representative of DTC. The deposit of Series 2002 Bonds with DTC and their registration
in the name of Cede & Co., or such other nominee do not effect any change in beneficial ownership. DTC
has no knowledge of the actual Beneficial Owners of the Series 2002 Bonds; DTC records reflect only the
identity of the Direct Participants to whose accounts such Series 2002 Bonds are credited, which may or
may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices will be sent to DTC. If less than all of the Series 2002 Bonds of any maturity are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in
Series 2002 Bonds of such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to Series
2002 Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Series 2002 Bonds are credited on the record date (identified in a listing
attached to the Omnibus Proxy.)
Redemption proceeds, distributions, and dividend payments on the Series 2002 Bonds will be made to Cede
& Co., or such other nominee as any be requested by an authorized representative of DTC. DTC's practice
is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information
from Issuer or Issuer's Agent on payable date in accordance with their respective holdings shown on DTC's
records. Payments by Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of customers in bearer form or
registered in "street name ", and will be the responsibility of such Participant and not of DTC, Issuer's
Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of redemption proceeds, distributions, and dividends to Cede & Co. (or such other nominee as may
be requested by an authorized representative of DTC) is the responsibility of Issuer or Issuer's Agent,
disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursements
of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Series 2002 Bonds
at any time by giving reasonable notice to the Issuer or Issuer's Agent. Under such circumstances, in the
event that a successor securities depositor is not obtained, Bond certificates are required to be printed and
delivered.
8
313352 -v1
• i
Issuer may decide to discontinue use of the system of book -entry transfers through DTC (or a successor
securities depository). In that event, Bond certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book -entry system has been obtained from
sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof.
DESCRIPTION OF THE PROJECT
General. The Central Arkansas Library System ( "CALS ") expects to undertake the construction of a
branch library in west central Little Rock, the construction of a branch library in west Little Rock, and the
renovation and completion of the fifth floor of the Main library. Remaining funds will be expended for
purchases to enhance the system's collection and equipment. The following is a more detailed description
of the project.
Main Library Fifth Floor Completion (Renovation). Funds will be expended to renovate and complete
the fifth floor of the Main Library located at 100 Rock Street in downtown Little Rock. The Main Library
will be expanded by approximately 26,500 square feet to provide additional space for the library's book
collection and to expand its computer technology center.
West Central Little Rock (New Building). A new 10,000 square -foot full - service public library will be
built in west central Little Rock near Barrow Road. This will likely be the home library for the book
mobile.
West Little Rock (New Building). A new 14,000 square -foot full service public library will be built in west
Little Rock. The site is The Village at Rahling Road.
Jay Miller Aviation History Collection. The Jay Miller Aviation History Collection is currently on loan
from the Aviation Historical Society and is housed at the branch library located in the Aerospace Education
Museum. This collection is the largest of its kind which is privately owned. If this collection becomes
available for purchase and an acceptable price is negotiated, CALS anticipates adding it to the CALS
collection.
Collection Development and Other Equipment. Funds will be used to purchase books, videos,
magazines, CD- ROM's, electronic information systems, and other items to augment the system's collection.
In addition, funds will be used to upgrade the computer system which automates the card catalogue system.
The balance of the bond funds will be used to purchase retrospective materials to add depth to the collection
and other equipment to enhance CALS operations, such as vehicles or computers.
DESCRIPTION OF CENTRAL ARKANSAS LIBRARY SYSTEM
General. CALS, headquartered in Little Rock and serving a population of 300,000 persons, is the largest
public library in Arkansas. In 2000 there were over 1 million visits to CALS' eleven branches and users
checked out almost 1.25 million items. The system contains more than 600,000 volumes and is the largest
research collection in central Arkansas.
CALS was established in February 1975 pursuant to an Interlocal Cooperation Agreement between Pulaski
County, Perry County and the City of Little Rock. It now includes eleven branches located in Pulaski
County (Jacksonville, Sherwood and Maumelle), Perry County (Perryville), and the City of Little Rock
(main library and six branches). The purpose of the agreement is to create and continue a library system for
the central Arkansas area which provides library services to people in Pulaski and Perry County and the City
of Little Rock; to establish a cooperative collection of books throughout a wider area; to eliminate
9
313352 -v1
unnecessary duplication of functions, facilities and assets; to take advantage of bulk discounts and purchase
economies; and to provide for the addition of other participating units to the system.
The Interlocal Cooperation Agreement was revised in 1999. The parties include the Cities of Little Rock,
Jacksonville, Maumelle and Sherwood and the counties of Pulaski and Perry and allows CALS to take full
advantage of the revised Interlocal Cooperation Act (Ark, Code Ann. §25 -20 -201 through 207). In addition
to the purposes set forth in the original agreement, the revised agreement allows CALS to own property,
broadens the representation of the parties, gives CALS eminent domain power, and generally expands
CALS' authority.
Organization. CALS is governed by a thirteen member Board of Trustees. The Board is responsible for
fiscal and policy matters for the library system. Seven board members are residents of the City of Little
Rock and are appointed by the Board of Directors of the City of Little Rock. Two members are Pulaski
County residents appointed by the Pulaski County Quorum Court. One member is a Perry County resident
appointed by the Perry County Quorum Court. The governing boards of the cities of Jacksonville,
Sherwood and Maumelle appoint one resident each to the library board. Library trustees may serve two full
three -year terms. The present members of the Board of Trustees are as follows:
CITY APPOINTEES
TERM
OCCUPATION
Frances O. "Freddie" Nixon
01/01/92 to 12/31/02
Community Volunteer
David L. Rickard
01/01/99 to 12/31/02
Consultant
Judith Faust
01/01/99 to 12/31/03
University Instructor
Sherman Banks
01/01/99 to 12/31/02
Chamber of Commerce
Shirley Jo Pine
01/01/99 to 02/31/03
Retired University Professor
James M. McHaney, Jr.
01/01/99 to 12/31/04
Attorney
Jesse J. Lacey, Jr.
01/01/99 to 12/31/04
Public School Administrator
PULASKI COUNTY APPOINTEES
TERM
OCCUPATION
Annette Herrington
01 /01 /01 to 12/31/02
Community Volunteer
Fanye R. Porter
01/01/99 to 12/31/04
Community Volunteer
PERRY COUNTY APPOINTEE
B.M. "Buddy" Metcalf
01/01/99 to 12/31/02
Businessman
JACKSONVILLE APPOINTEE
Wally Nixon
01/01/99 to 12/31/04
Entergy Services Executive
SHERWOOD APPOINTEE
Cheryl "Nan" Gentry
01 /01 /01 to 12/31/03
City Government
MAUMELLE APPOINTEE
Joyce Wilson
04/25/01 to 01/01/03
Community Volunteer
CALS is managed by a Director who is directly responsible to the Board of Trustees. The Director is
responsible for implementing board policy and has operational control of the budget. Personnel decisions
are the responsibility of the Director or designee.
The Deputy Director supervises the main and branch librarians and oversees all public services. The
Associate Director for Operational Services supervises departments that provide system -wide library
services. The Associate Director for Institutional Services is responsible for human resources planning and
training. All three report to the Director, and the four serve as the senior management team.
10
313352 -v1
0
The principal executive officers of CALS are
P
Director
Dr. Bobby Roberts
Deputy Director
Linda Bly
Associate Director, Operational
Services
Larrie Thompson
Associate Director, Institutional
Services
Bob Razer
The Director is appointed
by the Board of Trustees and the Deputy/Assistant Directors
are employed
by the
Director.
CALS currently employs approximately
170 individuals
at its eleven branches, including
the main
branch in
Little Rock, Arkansas.
Operations Budget. Following
is a summary of Financial Information for CALS operations for the years
ended 1995 -2000.
1995
1996
1997 1998
1999
2000
Income:
Tax Collections
$3,935,672
$4,217,299
$4,692,745 $4,867,086
$5,024,762
$5,254,229
State Aid
255,999
275,000
285,000 288,989
361,608
440,037
City /County
9,136
- 429
6 6
0
0
Bond Funds
0
0
0 0
0
655,852
Other Income
239,950
142,889
402,702 268,749
420,645
206,887
Interest/Dividends
58,338
73,456
90,588 78,945
139,534
68,758
Other Transfers
6,000
0
45,000 25,000
0
0
Misc.
0
0
0 0
9,864
0
LSCA Grants
30.467
42,914
192,121 148.841
0
0
Total Income
4.535.56
$4.751.987
55 708 1 s6 $
41
2 7 }
Expenses:
Salaries/Benefits
$2,695,504
$2,942,364
$3,249,526 $3,444,618
$3,653,425
$3,958,395
Library Materials
708,743
680,721
752,518 722,418
480,827
1,032,290
Operations
761,587
1,007,203
1,066,414 1,231,220
1,292,605
1,865,102
Capital
83,677
84,126
28,877 50,514
20,675
86,604
LSCA /Grant
24,468
5,00
19.300 18.174
0
0
Total Expenses
11Z7
4 1 414
55.116.63 5.466,944
SS 72
56,942 2"
DESCRIPTION OF THE CITY OF LITTLE ROCK
General. The City is organized under the laws of the State of Arkansas as a city of the first class. It is the
State Capitol, the largest city in Arkansas and was chartered in 1835. The City is located in the central part
of the State, approximately 135 miles west of Memphis, Tennessee.
The City is the geographic, governmental, economic, cultural and financial center of the State of Arkansas.
It is nearly equidistant from the four comers of the State and is the county seat of Pulaski County, Arkansas.
Within a radius of 500 miles from the center of the City are located 24 metropolitan areas and substantial
portions of 17 states containing over a third of the nation's population. Major cities near the City include:
St. Louis, 360 miles northeast; Kansas City, 400 miles northwest; Atlanta, 520 miles east; New Orleans, 440
miles south; Oklahoma City, 350 miles northwest; Dallas, 310 miles southwest; and Memphis, 135 miles
northeast.
11
313352 -v1
0 •
The City is served by U.S. Interstates 30 and 40, U.S. Highways 65, 67, 70 and 167, and State Highways 10,
338, 365 and 367. Union Pacific Railroad Company and Amtrak provide railroad service to the City. The
Little Rock National Airport is owned and operated by the Little Rock Municipal Airport Commission, and
is served by American Airlines, ComAir, Continental Airlines, Delta Airlines, Northwest Airlines,
Southwest Airlines Company, Trans World Airlines and U.S. Airways Express.
Governmental Organization. The Issuer operates under the City Manager /City Board form of municipal
government. It has a ten member Board of Directors, with seven Directors elected by wards and three
Directors elected citywide. The Mayor's position is a citywide elected position and must be elected by at
least 40% of the votes cast. If no candidate receives 40% or more of the votes cast, the two mayoral
candidates receiving the most votes will face each other in a run -off election. All Directors and the Mayor
serve four -year terms.
The current members of the City of Little Rock Board of Directors are as follows:
Name
Jim Dailey, Mayor
Brad A. Cazort, Vice Mayor
B.J. (Brenda) Wyrick
Willie Hinton
Barbara Graves
D. Dean Kumpuris
Joan Adcock
Larry Lichty
Johnnie Pugh
Michael Keck
Genevieve Stewart
Term Expires Principal Occupation
December 31, 2002 Mayor, City of Little Rock
December 31, 2004 Attorney at Law
December 31, 2002 Area Manager Facility Assignment, Southwestern Bell
Telephone Company
December 31, 2002
Certified Vocational Teacher, Arkansas School for the Deaf
December 31, 2004
Retail store owner, Barbara Graves Ltd.
December 31, 2004
Physician, Kumpuris, Davis & Metrailer
December 31, 2004 Retired
December 31, 2002 Operator, LEL Enterprises
December 31, 2002 Retired
December 31, 2002 Director of Corporate Relations, St. Vincent Infirmary
Medical Center
December 31, 2002
The principal executive officers of the City include:
City Manager
Assistant City Manager
Director of Finance
City Attorney
Teacher, Butterfly Learning Center
Cy Carney, III
Bruce Moore
Robert K. Biles
Thomas M. Carpenter
The City Manager and the City Attorney are appointed by the Board of Directors. The Director of Finance
and Assistant City Manager are employed by the City Manager.
The City provides a broad range of municipal services under the auspices of the City Manager, including:
Police, Fire, Parks and Recreation, Finance, Personnel, City Clerk, Neighborhoods and Planning, Public
Works, General Services, and Information Technology. Boards and commissions have primary
responsibility for the operation of the Wastewater Utility, Airport, and Emergency Medical Service.
12
313352 -v1
0
Following are selected indices and financial information for the City of Little Rock:
Land Use/Population. Population of the City has grown this century as indicated below:
1900
38,165
1910
45,941
1920
65,142
1930
81,657
1940
88,039
1950
102,310
1960
107,813
1970
144,824
1980
159,024
1990
175,795
2000
183,133
In the late 1970s, Little Rock adopted land use policies designed to encourage the orderly growth and
development of the City. The City required that developing areas annex to the City or agree to annex
whenever the City desires in order to receive its water and sewer service. These policies contributed to the
growth of the City as shown below:
13
313352 -v1
Land Area
Year
(square miles)
Population
1980
88.43
159,024
1983 (Special Census)
89.62
167,331
1985 (Special Census)
102.84
178,134
1990
109.57
175,795
1992 (US Census Bureau Estimate)
110.59
176,870
1996 (Area Planning Commission Estimate)
- --
181,280
1998 (Area Planning Commission Estimate)
119.90
183,951
2000
116.81
183,133
Sources: U.S. Bureau of the Census (Population) Little Rock Department of Neighborhoods and
Planning; and City of Little Rock.
13
313352 -v1
Income and Retail Sales. Per capita income and retail sales figures for the Little Rock Metropolitan
Statistical Area (MSA) and Pulaski County are as follows:
Employment. The civilian labor force in the Little Rock MSA and the United States and its employment
have been as follows:
Civilian Labor Force
Personal
Year
Retail Sales ($000)0
Per Capita
Incomeol
Year
Little Rock/NLR Pulaski County
Pulaski County
Little Rock1NLR
1994
$4,599,157 $3,746,040
$23,483
$21,458
1995
5,214,928 3,949,967
24,975
22,601
1996
5,618,366 4,138,789
26,114
23,919
1997
5,789,370 4,060,797
27,336
24,975
1998
5,977,432 4,093,406
29,149
26,445
1999
6,284,308 4,227,620
30,124
27,571
2000
7,937,368 5,566,835
302
1,238
Source:
(1) Sales and Marketing Management, Survey of Buying Power;
(2) Arkansas Personal
1,148
Income Handbook (July 2001), University
of Arkansas at Little
Rock, Institute for
1,148
Economic Advancement.
139,368
291
Employment. The civilian labor force in the Little Rock MSA and the United States and its employment
have been as follows:
Civilian Labor Force
14
313352 -v1
(in thousands)
Year
LR MSA
AR
1990
271
1,126
1991
269
1,116
1992
279
1,154
1993
280
1,166
1994
290
1,208
1995
293
1,220
1996
298
1,231
1997
295
1,212
1998
296
1,215
1999
300
1,229
2000
302
1,238
14
313352 -v1
Number Employed
(in thousands)
US
LR
AR
US
125,840
256
1,048
118,793
126,346
252
1,033
117,718
128,105
262
1,070
118,492
129,199
266
1,093
120,259
131,056
278
1,143
123,060
132,304
283
1,160
124,900
133,944
286
1,164
126,708
136,297
283
1,148
129,558
137,673
284
1,148
131,463
139,368
291
1,174
133,488
140,863
291
1,183
135,208
14
313352 -v1
0
The annual average unemployment rates for the City and the State since 1988 are as follows:
Source: State of Arkansas Employment Security Department.
Commercial and Residential Construction and Bank Deposits. The following table shows construction
in the City, as reflected by building permits issued, and bank deposits at year end:
New Commercial Construction
Unemployment Rate
Year
LR MS A
AR
Us
1990
5.8
7.0
5.6
1991
6.1
7.4
6.8
1992
6.1
7.3
7.5
1993
4.9
6.2
6.9
1994
4.1
5.3
6.1
1995
3.6
4.9
5.6
1996
3.8
5.4
5.4
1997
3.9
5.3
4.9
1998
4.0
5.5
4.5
1999
3.2
4.9
4.2
2000
3.4
4.4
4.0
Source: State of Arkansas Employment Security Department.
Commercial and Residential Construction and Bank Deposits. The following table shows construction
in the City, as reflected by building permits issued, and bank deposits at year end:
New Commercial Construction
New Residential Construction
Number of
Number of
Bank Deposits
Year
Permits
Value
Permits
value
(in thousands)
1991
58
$32,766,266
460
$60,501,445
$3,033,830
1992
119
59,276,386
622
87,749,492
3,182,127
1993
52
30,507,705
750
120,014,496
4,788,712
1994
107
88,711,602
653
112,877,658
3,188,094
1995
84
48,845,453
486
77,814,299
4,446,373
1996
159
119,408,307
496
87,379,145
5,282,203
1997
94
90,761,244
458
115,561,179
3,864,181
1998
84
68,475,000
556
110,179,000
1,981,092
1999
138
100,030,893
555
101,877,483
3,916,946
2000
139
193,487,215
510
101,839,118
2,712,083
Source:
City of Little Rock
Neighborhoods and
Planning Department; Greater Little
Rock Chamber
of Commerce.
15
313352M
C]
•
Major Employers. The City's economy is comprised of a diverse mix of financial, commercial, industrial,
government, health and educational sectors. This diversity helps maintain a relatively stable employment
environment in the City. The principal industries, commercial entities and other major employers
(excluding governmental entities) within the boundaries of the City and Pulaski County as of December 31,
2000 are as follows:
Source: Greater Little Rock Chamber of Commerce.
School Enrollment. Public School enrollment in the Little Rock School District, whose boundaries are
generally co- extensive with the City limits, has been as follows:
School Year
Employer
1.
Local, State and Federal Government
2.
Baptist Health
3.
Alitel Corporation
4.
Southwestern Bell Telephone
5.
St. Vincent hrfirmary Medical Center
6.
Arkansas Children's Hospital
7.
Dillard Department Stores
8.
Union Pacific Railroad
9.
Arkansas Blue Cross & Blue Shield
10.
Regions Bank
Source: Greater Little Rock Chamber of Commerce.
School Enrollment. Public School enrollment in the Little Rock School District, whose boundaries are
generally co- extensive with the City limits, has been as follows:
School Year
Number of
Product/Service
Employees
Government
20,000+
Medical Services
5,000
Telecommunications
4,500
Utility (Telephone)
3,000
Medical Services
2,500
Medical Services
2,496
Department Stores
2,029
Transportation (Railroad)
2,000
Insurance
1,600
Finance (Bank)
1,112
Source: Greater Little Rock Chamber of Commerce.
School Enrollment. Public School enrollment in the Little Rock School District, whose boundaries are
generally co- extensive with the City limits, has been as follows:
School Year
Enrollment
1993
27,540
1994
27,135
1995
26,926
1996
27,001
1997
27,351
1998
27,371
1999
27,511
2000
27,400
Source: Little Rock School District.
16
313352 -v1
•
Higher Education. Little Rock offers educational institutions with instruction in undergraduate, graduate
and professional fields. During the Fall 2001 semester, Arkansas public college and universities offered 730
distance learning courses enrolling 8,915 students. The following is a list of colleges and universities
located within the Little Rock/North Little Rock MSA (or with relatively short commutes) with approximate
on- campus enrollments for the 2001 fall academic semester:
Fall 2001
Arkansas Baptist College
235
Philander Smith College
859
University of Arkansas at Little Rock
10,942
University of Arkansas Medical Sciences Campus
1,936
University of Arkansas Bowen School of Law
376
University of Central Arkansas (Conway)
8,486
Central Baptist College (Conway)
358
Hendrix College (Conway)
1,057
Source: Arkansas Department of Higher Education.
Medical Facilities. Little Rock hospitals serve patients from throughout Arkansas. Baptist Medical Center,
the area's largest hospital, has a 787 -bed capacity. A new Baptist Medical Center North campus has been
recently constructed which has a 165 bed capacity. St. Vincent Infirmary Medical Center is a 691 -bed
general hospital. The Arkansas Children's Hospital is a 280 -bed facility that administers acute pediatric
care to children up to age 21. Doctors Hospital and the adjoining Medical Tower Complex add 296 beds to
the total available in Little Rock. The John L. McClellan Memorial Veterans Administration Medical
Center, which opened in July 1984, is a 505 -bed, eight -story facility located on the campus of the University
of Arkansas Medical Center. The Arkansas Heart Hospital is an 84 -bed facility specializing in cardiac care.
University Hospital has a 400 -bed capacity, and the State Psychiatric Hospital is a 345 -bed facility.
Southwest Hospital, which opened in 1988, is a 125 -bed acute -care general hospital.
Source: Arkansas Department of Health.
[Remainder of Page Intentionally Left Blank]
17
313352 -v1
• •
City Employees. The City bargains with three organized units: the American Federal, State, County and
Municipal Employees ( AFSCME); the International Association of Firefighters (IAFF); and the Fraternal
Order of Police (FOP). These organizations represent 77% of the full -time City governmental employees.
None of the employees of the City's boards and commissions are organized.
As of December 31, 2000, the City employment was as follows:
Seasonal and
City Government Total Full Time Part Time
AFSCME 478 478
IAFF 373 373
FOP 532 532
Non -union 962 733 229
Subtotal 2,345 2,116 229
Commissions
Water Works*
201
194
7
Wastewater Utility
191
190
2
Little Rock National Airport
133
125
8
Advertising and Promotion
263
128
135
Port Authority
8
8
0
Ambulance Authority
227
156
71
Central Arkansas Transit Authority
165
151
14
Museum of Science and History
43
23
20
Arkansas Arts Center
79
46
33
Central Arkansas Library System
164
107
57
Subtotal
1,474
1128
347
Total
11&1-2
1244
526
As of July 2001, the City and the City of North Little Rock entered into an interlocal cooperation
agreement and formed Central Arkansas Water ( "CAW "). All City employees which were assigned
to the Water Works' department became employees of CAW in July 2001.
Port of Little Rock. The development of the Arkansas River through the McClellan -Kerr Arkansas River
Navigation System has resulted in a 448 -mile navigation channel with 17 locks and dams from the
Mississippi River northwest to a point 15 miles east of Tulsa, Oklahoma. The ability to provide low -cost,
bulk transportation has created opportunities for industrial development in the area.
Little Rock is also the location of Foreign Trade Zone #14. The Zone is located in the Little Rock Port
industrial Park and allows imported goods to be stored or processed without payment of customs duty or
posting of bond until the goods are moved out of the Zone and into normal domestic commerce.
The facility includes an Industrial Harbor which is 4,500 feet long, 320 feet wide and 15 feet deep. The
Harbor is surrounded by 312 acres of new industrial sites and provides an additional two miles of water
frontage.
Source: City of Little Rock, Arkansas Port Authority
m
313352 -v1
•
0
Little Rock National Airport. The Little Rock National Airport is located within the City limits and is
three miles from downtown. It is served by nine airlines. It has three runways and twelve gates (ten with
jetways). In 2000, 2.6 million passengers traveled through this facility.
Source: Little Rock National Airport Commission.
DEBTSTRUCTURE
Authorized and Outstanding General Obligation Debt. The City has one general obligation bond issue
the Parity Bonds, and a street and drainage revenue bond outstanding:
1999 Library Improvements and Refunding Bonds (Series B)
1998A Street & Drainage Revenue Bonds
2001 Limited Tax General Obligation Refunding Bonds
Total General Obligation Bond Debt
Less Amount Available in Debt Service Fund
Total Amount of Debt Applicable to Debt Limitation
Legal Debt Margin
Legal Debt Limit (20% of current assessed valuation of
$2,275,961,928
Source: City of Little Rock Director of Finance
Amount Outstanding as of
Amount Issued December 31, 2001
$9,175,000 $4,500,000
19,000,000 17,745,000
20,635,000 20,635,000
$42,880,000
9.053.995
$
$421 366 381
$45192.386
General Obligation Debt Service. The scheduled consolidated annual debt service requirements for the
general obligation debt of the City is as follows:
Canital Imurovement Bonds
Fiscal Year Endin
December 31
Principal
Interest
Total
2002
6,360,000
1,699,281
8,059,281
2003
6,590,000
1,473,286
8,063,286
2004
6,840,000
1,215,503
8,055,503
2005
5,815,000
959,614
6,774,614
2006
1,380,000
81I,871
2,191,871
2007
1,445,000
748,740
2,193,740
2008
1,510,000
681,776
2,191,776
2009
1,375,000
615,842
1,990,842
2010
930,000
564,233
1,494,233
2011
975,000
521,918
1,496,918
2012
1,020,000
476,580
1,496,580
2013
1,065,000
428,640
1,493,640
2014
1,120,000
376,455
1,496,455
2015
1,175,000
321,575
1,496,575
2016
1,230,000
264,000
1,494,000
2017
1,295,000
202,500
1,497,500
2018
1,360,000
137,750
1,497,750
19
313352 -v1
0
Capital Improvement Bonds
Fiscal Year Ending
December 31 Principal Interest Total
2019 1,395,000 69,750 1,464,750
Ratio of Debt Service Payments for General Obligation Bonded Debt to Total General
Expenditures:
Year
Principal
1991
$850,00010
1992
1,040,000"
1993
990,00011
1994
1,135,000'1
1995
4,055,000'1
1996
5,990,000'1
1997
7,050,000'1
1998
6,420,000'1
1999
7,705,000P'
2000
4,015,000('1
Interest and
Fiscal Cha es
$2,409,077°
2,359,676("
2,297,331(')
2,532,15301
2,113,225111
3,090,68501
2,766,6071'1
2,258,545'1
3,004,142'1
2,240,514("
Total Debt
Service
$3,259,077
3,399,676
3,287,331
3,667,153
6,168,225
9,080,685
9,816,607
8,678,545
10,709, 149
6,255,574
(1) Excludes 9 -1 -1 Emergency Communications System revenue bonds issued in 1991.
NOTE: Total general governmental expenditures include expenditures of the general and street funds.
Ratio of General Net Obligation Bonded Debt to Assessed Value and Net bonded Debt Per Capita:
Year Population* Assessed Value
1991
Ratio of Debt Service
Total General
to Total General
Expenditures
Expenditures
$66,324,509
4.9%
72,194,696
4.7%
70,087,421
4.7%
72,034,164
5.1%
78,362,784
7.9%
86,867,214
10.5%
93,035,630
10.5%
94,678,526
9.2%
109,097,712
9.8%
102,317,127
6.1%
(1) Excludes 9 -1 -1 Emergency Communications System revenue bonds issued in 1991.
NOTE: Total general governmental expenditures include expenditures of the general and street funds.
Ratio of General Net Obligation Bonded Debt to Assessed Value and Net bonded Debt Per Capita:
Year Population* Assessed Value
1991
$175,818 "'
$1,461,233,780
1992
176,870(21
1,515,714,141
1993
176,870(21
1,563,675,108
1994
176,870"'
1,630,053,815
1995
176,8702)
1,756,141,255
1996
181,280( �1
2,004,304,678
1997
181,280 �1
2,036,030,934
1998
183,951("
2,097,545,721
1999
183,951 "'
2,178,840,160
2000
183,133(2)
2,275,013,986
Net Bonded
Debt
$24,071,19801
20,831,29801
17,486,06101
28,261,150"
52,701,42101
46,459,570("
38,888,60501
31,290,64401
48,596,43401
40,126,74301
Ratio of Bonded Debt
to Assessed Value
1.65%
1.37%
1.12%
1.73%
3.00%
2.32%
1.91%
1.49%
2.23%
1.76%
Net Bonded
Debt per Canita
(1) Excludes 9 -1 -1 Emergency Communications System revenue bonds issued in 1991.
(2) Estimated.
(3) Revised Census.
136.91
117.78
98.86
159.78
297.97
256.29
214.52
170.10
264.18
219.11
NOTE: Assessments shown above were made in the year preceding the tax collection year which is
indicated above. Net bonded debt excludes the 9 -1 -1 Revenue Bonds.
*Sources: 1990 and 1991 U.S. Bureau of the Census
1987, 1988 and 1989 Little Rock Department of Comprehensive Planning
estimates. City of Little Rock Finance Department and Pulaski County Tax
Assessor.
20
313352 -v1
0 0
Defaults. No general obligation or revenue securities of the City have been in default as to principal or
interest payments or in any other material respect at any time in the last 57 years.
Invalidity of Tourism Bonds. In the case of Purvis v. City of Little Rock, 282 Ark. 101, 669 S.W.2d 900
(1984), a divided Arkansas Supreme Court held invalid an issue of bonds by the City of Little Rock to
finance construction of a privately -owned motel on City property. Four of the seven justices concurred in
the result on the basis of that either (1) the Bonds were issued without a required election, or (2) the Bonds
were not issued for a proper public purpose. These Bonds were revenue bonds payable solely from lease
rentals paid by the user of the motel, and the City was not obligated to use any other funds for payment of
debt service. After the Supreme Court decision, the Lessee paid all Bondholders in full and took title to the
motel property. No other obligations of the City have been declared invalid or unenforceable in the last 25
years.
Overlapping Debt. Property within the City is also chargeable with a portion of the debt of the Little Rock
School District, shown as follows as of December 31, 2000:
Gross Debt Less Percentage Amount Chargeable
Funds Available for Applicable to to Property Within
Retirement the City City
Little Rock Public School District $184,750,589 100% $184,750,589
Revenue Bonds. The City and its Commissions have issued revenue bonds, which are not general
obligations of the City but which are repayable solely from the revenues of the commissions. The amount
of these bonds outstanding at December 31, 2001, was as follows:
1993 Waste Disposal Revenue Bonds
1995 Waste Disposal Revenue Bonds
1997 Capital Improvement Revenue Bonds
1998A Parks and Recreation Bonds
Sewer Revenue Bonds
National Airport Revenue Bonds
Advertising and Promotion Commission Bonds
Total
313352 -v1
21
$12,780,000
9,930,000
2,260,000
16,045,000
46,505,228
34,950,000
21,165,000
X143.635.228
0 0
The annual requirements to amortize the principal and interest of all bonded indebtedness as of
December 31, 2001, are as follows:
FINANCIAL INFORMATION
Upon request, the City will provide annual audited financial statements and other pertinent credit
information relevant to the City's Series 2002 Bonds, including the City's Comprehensive Annual Financial
Report, and will provide copies to one or more major information providers in the state and local
government securities market. Appropriate credit information necessary for maintaining the rating on the
Series 2002 Bonds will be provided by the City to the rating agency rating the Series 2002 Bonds.
The City Budget, The three principal sources of revenue for the City's operating budget are sales taxes,
utility franchise taxes and state tumback funds. The sales tax is levied by Pulaski County and distributed to
the governmental entities on a per capita basis. Tax proceeds have increased steadily since the tax was
approved by the voters in 1982, despite a successful lawsuit which required that the County discontinue
collection of the Use Tax portion of the Sales and Use Tax in 1986. The Use Tax was reinstated in 1987
and successfully defended against litigation before the Arkansas Supreme Court in 1990.
Utility franchise taxes are collected as a percentage of the gross revenues of the utilities doing business in
the City of Little Rock: Entergy, Reliant Energy, Central Arkansas Water and Southwestern Bell. State tax
tumback (intergovernmental revenues) consists of general revenue and gasoline tax revenues and is
distributed to Arkansas municipalities on a per capita basis.
[Remainder of Page Intentionally Left Blank.]
22
313352 -vt
Discretely
Second and
Presented
Waste
Main Street
Parks and
Component
General
Disposal
Project
Recreation
Total
Unit
Year Ending
Obligation
Revenue
Revenue
Projects
Primary
Revenue
December 31
Bonds
Bond
Bonds
Bonds
Government
Bonds
2001
6,189,424
$2,443,468
$238,450
$1,290,345
$10,161,697
$7,015,707
2002
8,059,281
2,439,850
238,200
1,294,113
12,031,444
8,907,850
2003
8,063,286
2,437,295
237,600
1,291,598
12,029,779
9,230,133
2004
8,055,503
2,435,218
241,650
1,292,800
12,025,171
9,216,800
2005
6,744,614
2,433,350
240,000
1,287,720
10,735,684
9,228,269
Thereafter
23.496,630
22,286,611
2,871,250
23.041,816
71,696,307
125.961,697
Total
$60- 638.748
$34 475.792
7 1
$29.498.392
$128 680 082
169.560.456
FINANCIAL INFORMATION
Upon request, the City will provide annual audited financial statements and other pertinent credit
information relevant to the City's Series 2002 Bonds, including the City's Comprehensive Annual Financial
Report, and will provide copies to one or more major information providers in the state and local
government securities market. Appropriate credit information necessary for maintaining the rating on the
Series 2002 Bonds will be provided by the City to the rating agency rating the Series 2002 Bonds.
The City Budget, The three principal sources of revenue for the City's operating budget are sales taxes,
utility franchise taxes and state tumback funds. The sales tax is levied by Pulaski County and distributed to
the governmental entities on a per capita basis. Tax proceeds have increased steadily since the tax was
approved by the voters in 1982, despite a successful lawsuit which required that the County discontinue
collection of the Use Tax portion of the Sales and Use Tax in 1986. The Use Tax was reinstated in 1987
and successfully defended against litigation before the Arkansas Supreme Court in 1990.
Utility franchise taxes are collected as a percentage of the gross revenues of the utilities doing business in
the City of Little Rock: Entergy, Reliant Energy, Central Arkansas Water and Southwestern Bell. State tax
tumback (intergovernmental revenues) consists of general revenue and gasoline tax revenues and is
distributed to Arkansas municipalities on a per capita basis.
[Remainder of Page Intentionally Left Blank.]
22
313352 -vt
0
•
The following table summarizes City revenues and expenditures for operating funds for the years indicated:
City of Little Rock, Arkansas
Financial Summary - Operating Funds
Actual
Actual
Actual
Actual
Actual
REVENUE
1996
1997
1998
1999
2000
General Property Taxes
$17,681,642
$19,884,342
$20,657,076
$23,871,010
$22,868,735
Sales Taxes
42,411,415
47,504,917
49,202,734
51,702,310
53,336,605
Licenses and Permits
5,920,580
5,721,198
5,763,625
6,181,976
7,431,080
Intergovernmental
22,591,046
17,099,128
21,798,234
17,220,874
14,598,419
Charges for Services
7,831,010
8,456,481
5,648,715
7,403,101
7,450,835
Fines
2,342,056
2,563,059
2,846,202
4,256,702
3,201,807
Utility Franchise Fees
17,247,978
19,107,881
18,683,481
18,559,057
19,069,532
Investment Income
5,541,312
3,774,025
2,822,367
2,987,259
4,960,856
Miscellaneous
6.986,068
4,045,438
3,355,561
5,160,408
7,496.166
Total
$128.553,107
$128,156,469
$133,777,995
$137,342,697
$140,414,035
EXPENDITURES
General Government
$ 37,738,539
$32,520,066
$31,149,130
$35,749,900
$30,803,396
Public Works
14,532,513
13,825,336
15,840,611
16,154,987
17,279,948
Parks and Recreation
12,904,351
14,169,317
6,663,8148
8,838,181
8,476,433
Fire Department
18,158,521
19,148,640
20,648,381
21,442,886
22,368,4952
Police Department
28,817,791
31,992,949
36,087,298
38,445,483
40,619,776
Housing
2,368,654
5,861,504
7,442,561
6,926,609
6,542,668
Education
687,928
473,128
560,919
1,293,843
2,098,839
Administrative and General
947,717
1,300,503
1,391,816
1,204,597
664,426
Capital Outlay
22,013,272
14,465,124
9,412,887
7,658,666
9,471,549
Debt Service: Principal
6,374,658
7,455,000
7,388,333
8,155,000
8,470,000
Debt Service: Interest and fees
3.250,378
2,896,694
2,813,048
3,079,009
3.094,784
Total
$147,794,322
$144,108,262
$140,398,798
$148,949,161
$149,890,314
Excess (Deficiency) of
$(19.241.215
$t15 951 792J
$(9.620.803
$(11.606.4641
$(9.476.2791
Revenues Over Expenditures
OTHER FINANCING
SOURCES:
Transfers In:
$17,378,781
$19,055,541
$26,172,913
$18,938,706
$18,037,988
Transfers Out:
$(17,378,781)
$(18,892,314)
$(27,117,740)
$(19,946,211)
$(20,510,939)
Proceeds from Bond Issue
18,527.618
9.944,151
Total other sources:
$o
$163,227
$17,582,791
$8,936,646
$(2,472,951)
Excess (Deficiency) of
revenues and other sources
$(19,241,215)
$(15,788,565)
$7,961,988
$(2,669,818)
$(11,949,230)
over expenditures
Fund Balances at Beginning
$93,715,231
$74,518,720
$60,046,622(3)
$68,008,610
$65,338,792
of Year
Increase (Decrease) in reserve
44,704
(18,483)
for inventory
Residual Equity Transfer
(88,554)
Fund Balances at End of Year
$74.518.720
X58 660.084(31
$68 008 610
U .U8.79
U 389.5
NOTES: (1) The amounts shown above were taken from the Combined Statement of Revenues,
Expenditures and Changes in Fund Balances - Budget
and Actual
in the City's
Comprehensive
Annual Financial Report for those years.
23
313352 -v1
i
•
(2) The amounts shown are in accordance with the City's budget basis of accounting,
which differs from generally accepted accounting principles (GAAP) basis. The
major differences are recognition of revenue when received as opposed to when
measurable (GAAP), recognition of payroll, employee benefits, and certain other
liabilities on a cash basis as opposed to accrual (GAAP), and recognition of certain
transfers between funds.
(3) Effective January 1, 1998, the City and certain component units adopted GASB
Statement No. 31, Accounting and Financial Reporting for Certain Investments and
for External Investment Pools, which established fair value standards for certain
investments. The effect of this adoption has been reflected as a cumulative
restatement to beginning fund equity.
Computation of Dollar Amount of Library Tax Levied. The county-wide reassessment of taxable
property required by the Arkansas Supreme Court was completed in Pulaski County in 1985. For purposes
of Amendment 59, the year in which the reassessment is completed is known as the "Base Year." For a
general discussion of the reassessment requirement and its effect on assessed value and the tax rate, see
FINANCIAL INFORMATION, Judicial Decision and Constitutional Amendments Affecting Assessments
of Taxable Property and Ad Valorem Tax Rate. A county-wide reassessment of taxable property is
currently under way. It is expected that the reassessment will be completed in 2002 and will impact taxes
levied in 2002 and collected in 2003.
In 1996, Pulaski County underwent a comprehensive, county-wide reappraisal of all real and personal
property subject to taxation. The conduct of the reappraisal process has been challenged in Pulaski County
Circuit Court. See LEGAL MATTERS; Litigation herein for a discussion of pending litigation.
The Library Tax is levied at the rate of 1.0 mill. For purposes of this computation it has been assumed that
revenues from the collection of the Library Tax will remain constant for so long as any of the Series 2002
Bonds or the Parity Bonds remain outstanding. In connection with this assumption, it is assumed that Debt
Service Supplement proceeds collected pursuant to Act 1492 of 1999 will equal the decrease in collections
resulting from the Homestead exemption. See Assessment of Property and Collection of Property Taxes,
infra. However, if the assessed valuation of the property in the City increases or decreases for any reason,
the dollar amount of the Library Tax actually levied will increase or decrease proportionately as will the pro
rata portion of the Debt Service Supplement.
For purposes of this computation, it has been assumed that the assessed value of all property in the City will
remain the same, without increase or decrease. Based on the actual tax charges with adjustments for the
increase in assessed value from 1996 to 1997 which is the subject of the above - referenced litigation, at a rate
of 1.0 mill, the Library Tax will produce approximately $2,122,348 taxes levied and approximately
$2,073,534 in net taxes collected annually, assuming a collection rate of 97.91%.
24
313352 -v1
• •
Assessed Valuation. The following table contains the assessed valuation of real, personal and utility
property within the City:
Year
Real Property
Personal Property
Utility Property
Total
1992
$1,065,007,710
$382,274,438
$68,431,993
$1,515,714,141
1993
1,080,121,753
408,820,984
74,732,371
1,563,675,108
1994
1,139,501,994
410,580,233
79,971,588
1,630,053,815
1995
1,226,462,449
446,947,082
82,731,724
1,756,141,255
1996
1,428,541,025
485,978,670
89,784,983
2,004,304,678
1997
1,456,295,246
481,789,958
97,945,730
2,036,030,934
1998
1,484,277,481
504,485,165
108,783,075
2,097,545,721
1999
1,525,806,492
558,481,620
94,552,048
2,178,840,160
2000
1,421,859,903
585,688,215
125,136,915
2,132,685,033
2001
1,564,188,838
585,688,215
225,246
2,150,102,299
Source: Pulaski County Tax Assessor.
Collection of Taxes. Tax collections of ad valorem taxes levied by the City are shown in the following
table:
Year Total Tax
Ended Levy
Collection of
Current Year's
Taxes During
Current Period
Percentage
of Levy
Collected
Prior Years'
Collections
Total
Collections
Percentage
of Total
Collections
to Tax Levy
1991 15,759,924
14,524,000
92.16%
883,547
15,407,547
97.76%
1992 16,355,181
15,233,931
93.14%
1,000,166
16,234,097
99.26%
1993 19,104,813
17,294,048
90.52%
1,131,509
18,425,557
96.44%
1994 22,631,799
20,853,606
92.14%
1,386,701
22,240,307
98.27%
1995 22,720,938
21,175,275
93.20%
1,321,567
22,496,841
99.01%
1996 24,475,526
22,461,215
91.77%
1,125,487
23,586,702
96.37%
1997 26,963,108
24,787,129
91.93%
1,534,932
26,322,061
97.62%
1998 27,797,124
25,538,110
91.87%
1,391,375
26,929,485
96.88%
1999 31,692,004
29,654,167
93.57%
1,671,246
31,325,413
98.84%
2000 33,115,417
30,731,289
92.80%
1,938,078
32,669,367
98.65%
Note: Property assessments are made, tax rates (rr
llages) are established, and taxes
are levied in one
year for payment
by the taxpayer and collection
by local governments the following
year. Data is not
available to show
the current level
by year of outstanding delinquent taxes.
Beginning in 1995, the County
Treasurer changed the method of reporting total
tax levies. The
reporting change
inflated the total tax levy approximately 3 %, causing a significant reduction in the collection percentages reflected
above.
Unaudited.
10 -year average rate of collections: 97.91%
Source: Pulaski County Tax Assessor and Collector.
25
313352 -vt
1]
•
Debt Service Schedule and Coverage. The projected annual principal and interest requirements for the
Series 2002 Bonds and the coverage afforded from the Library Tax and the Debt Service Supplement
specifically voted for the Series 2002 Bonds are estimated as follows:
Debt Service Schedule
Maturity
Principal Due
2003
$490,000
2004
505,000
2005
520,000
2006
535,000
2007
555,000
2008
575,000
2009
805,000
2010
1,350,000
2011
1,410,000
2012
1,475,000
2013
1,280,000
Coverage
Series 2002
Interest Due Total
Based on an estimated collection rate of 97.91 %, collection of the Library Tax levied on the taxable
property within the City as supplemented by the Debt Service Supplement will provide coverage in excess
of annual principal and interest requirements for the Bonds as shown below. (For information concerning
the historical rate of tax collection see Collection of Taxes, supra.)
Estimated Tax Revenue at 100% collection
Average Collection Rate
Estimated Available Tax Revenue
Maximum Annual Debt Service Year Ending 2010
Coverage Ratio
Average Annual Debt Service
Coverage Ratio
313352 -v1
$2,122,348.08
x 97.91%
$2,073,534.07
$1,611,890.00
1.28 x
$1,585,661.00
1.307 x
0 0
Overlapping Ad Valorem Taxes. The ad valorem taxing entities in the State of Arkansas are
municipalities, counties, school districts and community college districts. All taxable property located
within the boundaries of a taxing entity is subject to taxation by that entity. Thus, property within a
municipality is also subject to county ad valorem taxes. Property located within a school district and/or
within a community college district is also subject to taxation by that entity or entities. The present rate of
ad valorem taxation on taxable property within the City (not including the Library Tax) is 13.10 mills. The
ad valorem tax entities whose boundaries overlap the City and their ad valorem taxing rates are:
Names of Overlapping Entity* Mills
Pulaski County 10.1
Little Rock School District (LRSD) 46.40
Pulaski County Special School District ( PCSSD) 40.6
*Portions of the City are located in LRSD with remainder being part of the PCSSD
Assessment of Property and Collection of Property Taxes. Under Amendment No. 59 of the Arkansas
Constitution, all property is subject to taxation except for the following exempt categories: (i) public
property used exclusively for public purposes; (ii) churches used as such; (iii) cemeteries used exclusively
as such; (iv) school buildings and apparatus; (v) libraries and grounds used exclusively for school purposes;
(vi) buildings, grounds and materials used exclusively for public charity; and (vii) intangible personal
property to the extent the General Assembly has exempted it from taxation, provided that it be taxed at a
lower rate, or provided for its taxation on a basis other than ad valorem. Amendment No. 59 also authorizes
the General Assembly to exempt from taxation the first $20,000 of value of a homestead of a taxpayer 65
years of age or older. Intangible personal property is exempt from taxation under present law, but the
General Assembly has not yet exercised its homestead exemption authority pursuant to Amendment 59;
however, Amendment 79 does provide for a general homestead exemption.
Amendment No. 59 provides that, except as otherwise provided therein in connection with the transition
period following a county-wide reassessment (see Constitutional Amendment No. 59, infra), (1) residential
property used solely as the principal place of residence of the owner shall be assessed in accordance with its
value as a residence, (2) land (but not improvements thereon) used primarily for agricultural, pasture,
timber, residential and commercial purposes shall be assessed upon the basis of its value for such use, and
(3) all other real and tangible personal property subject to taxation shall be assessed according to its value
(the Arkansas Supreme Court has held that the unqualified word "value," as used in a prior, substantially
identical, constitutional provision, means "current market value ").
Property owned by public utilities and common carriers and "used or held for use in the operation of the
company..." is assessed for tax purposes by the Tax Division of the Arkansas Public Service Commission.
Ark. Code Ann. § 26 -26 -1605 (1997 Repl.) provides that the Tax Division "shall assess the property at its
true and full market or actual value" and that all utility property of a company, whether located within or
without the State of Arkansas, is to be valued as a unit. Annually, the company files a report with the Tax
Division. The Tax Division reviews these reports, along with other reports (such as reports to shareholders,
the Federal Communications Commission, the Federal Energy Regulatory Commission and the Interstate
Commerce Commission), to determine the value of the property. Valuation is currently made on the basis
of a formula, as set forth in Ark. Code Ann. § 26 -26 -1607 (1997 Rep1J, with consideration given to (i)
original cost less depreciation, replacement cost less depreciation or reconstruction cost less depreciation;
(ii) market value of all outstanding capital stock and funded debt; and (iii) capitalization of income. As
provided in Ark. Code Ann. § 26 -26 -1611 (1997 Repl.), once the value of a company's property as a unit is
determined, the Tax Division removes the value allocable to out -of -state property and assigns the remainder
27
313352 -vt
among Arkansas taxing units on the basis of value within each jurisdiction. The Tax Division certifies the
assessment to the county assessor who enters the assessment as certified on the county assessment roll.
County officials have no authority to change such assessment. See Judicial Decisions and Constitutional
Amendments Affecting Assessments of Taxable Property and Ad Valorem Tax Rate, infra.
All other property is assessed by the elected assessor of each Arkansas county. This includes both real and
tangible personal property.
Constitutional Amendment No. 79, effective January 1, 2001, provides for an annual state credit against ad
valorem property tax on a homestead in an amount not less than $300. The annual state credit applies
beginning for taxes due in calendar year 2001. The tax reduction will be reflected on the tax bill sent to the
property owner by the county collector. Amendment No. 79 provides that the credit shall be applied in a
manner that would not impair a bondholder's interest in ad valorem debt service revenue. -In addition,
Amendment No. 79 provides that the "General Assembly shall, by law, provide for procedures to be
followed with respect to adjusting ad valorem taxes or millage pledged for bonded indebtedness purposes, to
assure that the tax or millage levied for bonded indebtedness purposes will, at all times, provide a level of
income sufficient to meet the current requirements of all principal, interest, paying agent fees, reserves, and
other requirements of the bond indenture."
Pursuant to Act 1492 of 1999, the taxing units within the county are entitled to reimbursement of the
reduction from the annual state credit. On December 14, 2000, the Governor of the State called a special
legislative session to head off potential lawsuits challenging Act 1492. As a result, House Bill 1002 was
passed by both the House and Senate. It has been signed by the Governor. A lawsuit has been filed
challenging the emergency clause of House Bill 1002. Under Act 1492 and House Bill 1002, the state sales
tax would increase from 4.625% to 5.125 %. The purpose of the legislation is to raise revenue that the State
will send back to taxing entities to replace the money they would lose as a result of the state credit. These
revenues have been referred to herein as the Debt Service Supplement.
Amendment No. 79 to the Arkansas Constitution requires each county to appraise all market value real
estate normally assessed by the county assessor at its full and fair value at a minimum of once every five (5)
years. Act 1185 of 1999 provides that one -third (1/3) of the counties shall complete reappraisal in year
2002, one -third (1/3) in year 2003, and one -third (1/3) in year 2004.
Amendment No. 79 requires the county assessor (or other official or officials designated by law), after each
county-wide reappraisal, to compare the assessed value of each parcel of real property reappraised or
reassessed to the prior year's assessed value. If the assessed value of the parcel increased, then the assessed
value of that parcel must be adjusted as provided below.
If the parcel is not the homestead used as the principal place of residence of a taxpayer, then any increase in
the assessed value in the first year after reappraisal cannot be greater, than 10% (or 5% if the parcel is the
taxpayer's homestead) of the assessed value for the previous year. For each year thereafter, the assessed
value shall increase by an additional 10% (or 5% if the parcel is the taxpayer's homestead) of the assessed
value for the year preceding the first assessment resulting from reappraisal; however, the increase cannot
exceed the assessed value determined by the reappraisal prior to adjustment under Amendment No. 79. For
property owned by public utilities and common carriers, any annual increase in the assessed value cannot
exceed more than 10% of the assessed value for the previous year. The provisions limiting the annual
increases in assessed value of a homestead used as a principal place of residence resulting from a reappraisal
do not apply to newly discovered real property, new construction or substantial improvements to real
property.
W.
313352 -v1
0
If a homestead is purchased or constructed on or after January 1, 2001 by a disabled person or by a person
over age 65, then that parcel will be assessed based on the lower of the assessed value as of the date of
purchase (or construction) or a later assessed value. If a person is disabled or is at least 65 years of age and
owns a homestead on January 1, 2001, then the homestead will be assessed based on the lower of the
assessed value on January 1, 2001, or a later assessed value. When a person becomes disabled or reaches
age 65 on or after January 1, 2001, that person's homestead should thereafter be assessed based on the lower
of the assessed value on the person's 0' birthday, on the date the person becomes disabled or a later
assessed value. These provisions do not apply to substantial improvements to real property.
If, however, there was no county -wide reappraisal and resulting assessed value of property between January
1, 1986 and December 1, 2000, then real property in that county is adjusted differently. In that case, the
assessor (or other official or officials designated by law) compares the assessed value of each parcel to the
assessed value of the parcel for the previous year. If the assessed value of the parcel increases, then the
assessed value of the parcel for the year in which the parcel is reappraised or reassessed is adjusted by
adding one -third (1/3) of the increase to the assessed value for the year prior to appraisal or reassessment.
An additional one -third (1/3) of the increase is added in each of the next two (2) years. These provisions do
not apply to assessed property within the City.
The adjustment contemplated above does not apply to the property of public utilities or common carriers.
No adjustment will be made for newly discovered real property, new construction or substantial
improvements to real property.
Property is currently assessed in an amount equal to 20% of its value. The percentage could be increased or
decreased by the General Assembly.
The total of the millage levied by each taxing entity (municipalities, counties, school districts and
community college districts) in which the property is located is applied against the assessed value to
determine the tax owed. The assessed value of taxable property is revised as of January 1 of each year and
the total millage levied in that calendar year is applied against the assessed value as of January I of the
calendar year. Tangible personal property, including automobiles, initially acquired after January 1 and
before June 1 is required to be assessed in the year of acquisition. Otherwise, only property owned by a
taxpayer on January I is assessed for that calendar year.
The total taxes levied by all taxing authorities are collected together by the county collector of the county in
which the property is located in the calendar year immediately following the year in which levied. Taxes
are due and payable between the third Monday in February and October 10. Taxes not paid by October 10
are delinquent and subject to a 10% penalty. Real property as to which taxes are delinquent for two
successive years is certified to the State Land Commissioner who offers the property for sale. The proceeds
of such sale are distributed among the taxing authorities. If no bid is received for the delinquent real
property, it is forfeited to the State, in which event there are no proceeds derived by the taxing authorities.
Delinquent real property may be redeemed by the taxpayer within two years of the delinquency. Delinquent
personal property taxes may be collected by distraint and public sale of the taxpayer's property.
Judicial Decisions and Constitutional Amendments Affecting Assessments of Taxable Property and
Ad Valorem Tax Rate.
Amendment No. 59. Prior to the adoption of Amendment No. 59 to the Arkansas Constitution, the
Constitution mandated that:
"All property subject to taxation shall be taxed according to its value, that value to be
ascertained in such manner as the General Assembly shall direct, making the same equal
29
313352 -v1
0
0
and uniform throughout the State. No one species of property from which a tax may be
collected shall be taxed higher than other species of property of equal value...."
In the case of Arkansas Public Service Commission v Pulaski County Board of Equalization, 266 Ark. 64,
582 S.W.2d 942 (June 25, 1979), the Supreme Court of Arkansas held that the then current assessment
process, as prescribed by certain legislation and administrative regulations, was in violation of the
Constitutional mandate in that (1) it provided for the assessment of certain property on the basis of "use
value" as opposed to market value, (2) it did not provide for equal and uniform assessments throughout the
State and (3) it provided for assessments based on past, as opposed to current, market values. The Court
ordered a statewide reassessment to bring the assessments into conformity with the constitutional
requirements. It was provided that the reassessment would be completed over a five -year period, with 15 of
the 75 counties in the State to be reassessed each year. The reassessment was accomplished in calendar
years 1981 through 1985.
Legislative studies indicated that the effect of the Court- ordered reassessment would be to substantially
increase assessments in most or all counties of the State, with the result being, if tax rates remained the
same, to substantially increase property taxes. The Arkansas General Assembly submitted to the electors of
the State a proposed Constitutional amendment designed to prevent the substantial tax increase that would
otherwise result from the reassessment. The proposed Amendment was approved at the 1980 General
Election and is now Amendment No. 59 to the Arkansas Constitution.
Amendment No. 59 provides that whenever a county-wide reassessment results in an increase of assessed
value of 10% or more, the tax rate of each taxing unit on property located in that county is to be adjusted as
provided in the Amendment. The year in which the reassessment is completed is designated the 'Base
Year." The assessed valuation for the Base Year is based on the reassessment. The tax rate of each taxing
unit to be applied against the Base Year assessed value is computed separately for (1) property of public
utilities and regulated carriers, (2) other real property and (3) other personal property.
The tax rate applicable to other real property is computed by (1) deducting from the Base Year assessed
value of the real property the assessed value of newly - discovered real property and new construction and
improvements to real property to arrive at the reassessed value of previously assessed real property,
(2) determining the tax rate necessary to produce from the previously assessed real property (on the basis of
the Base Year assessment) the same amount of revenues produced from such property in the Base Year (on
the basis of the last previous assessed value and the tax rate applicable to collections in the Base Year), and
(3) either (a) fixing the tax rate determined in (2) as the tax rate for the real property, including newly
discovered real property and new construction and improvements to real property, or (b) if the tax rate so
fixed would produce less than 110% of the revenues from real property produced in the Base Year,
increasing the tax rate in an amount sufficient to produce such 110% of revenues.
The General Assembly, in Act No. 848 of 1981 (Ark. Code Ann. § 26- 26-401 through 410 (1997 Repl.)),
implemented the procedures of Amendment No. 59. Act 848 provides that the computation is to be made
separately for each tax source or millage levy, with the new tax rate for each millage levy to be rounded up
to the nearest 1 /10 mill. In the case of debt service millage, the tax rate as so adjusted will continue as the
continuing annual tax rate until retirement of the bonds to which pledged.
The computations described above are made with respect only to the real property (other than property of
public utilities and regulated tamers) and the tax rate so determined applies initially only to such real
property. In fact, the county-wide reassessments reassessed only such real property. The procedures for
assessing the property of public utilities and regulated carriers, and other personal property, remain the
same.
30
3(3352 -v1
Amendment No. 59 provides that the tax rate for personal property (other than personal property of public
utilities and regulated carriers) is to be adjusted so as to produce the same amount of revenues from personal
property in each year as was produced in the Base Year, with the tax rate to be reduced annually as the
assessed value of taxable personal property increases until the amount of revenues from personal property
taxes, computed on the basis of the then current tax rate applicable to real property, would produce an equal
or greater amount of revenues. Thereafter, the millage rate for personal property is the same as the millage
rate for real property.
For the first five years after the Base Year, the property of public utilities and regulated carriers is treated in
a manner similar to other personal property. For such period, the annual taxes paid by each public utility
and regulated carrier is required to be in an amount equal to the greater of the following:
(1) The taxes paid to the taxing unit in the Base Year, less adjustments for properties disposed
of or reductions in assessed value, or
(2) An amount equal to the taxes due in that year computed on the basis of the then current
assessed value of the property and the tax rate currently applicable to real property.
In each of the sixth through ninth years after the Base Year, each public utility and regulated carrier is
required to pay taxes as computed under (2) above plus, if the computation under (1) would result in a
greater tax liability, a percentage of the difference, as follows: In the sixth year, 80% of the difference; in
the seventh year, 60% of the difference; in the eighth year, 40% of the difference; in the ninth year, 20% of
the difference.
In and after the tenth year after the Base Year, or in and after such earlier year as the taxes of such utility or
carrier computed under (2) above equals or exceeds its taxes computed under (1) above, the tax rate for such
utility or carrier will be the same as the tax rate on real property.
The tax rates for personal property and the property of public utilities and regulated carriers were equalized
with the tax rate on real property in the City in 1991 for taxes levied in that year and to be collected in 1992.
In implementation of Amendment No. 59, Ark, Code Ann. §26- 26- 402(a)(6) (1997 repl.) provides that if the
provisions in the Amendment and the Act relating to the taxing of public utilities and regulated carriers, or
any class thereof, are held to be contrary to the Constitution or statutes of the United States or of the State of
Arkansas, all utilities and all classes of carriers shall receive the same treatment provided or required under
the Court Order for a particular type of carrier or utility "if deemed necessary to promote equity between
similar utilities or class of carriers." Certain regulated carriers (railroads) have successfully challenged
Amendment No. 59, as applied to them, as contrary to federal statutes. The effect of a successful challenge
by the railroads on utilities and on other classes of carriers cannot be predicted at this time.
Amendment No. 59 contains the following specific provision in regard to debt service millage
"The General Assembly shall, by law, provide for procedures to be followed with respect to
adjusting ad valorem taxes or millage pledged for bonded indebtedness purposes, to assure
that the adjusted or rolled -back rate of tax or millage levied for bonded indebtedness
purposes will, at all times, provide a level of income sufficient to meet the current
requirements of all principal, interest, Paying Agent's fees, reserves, and other requirements
of the bond indenture."
31
313352 -vi
• •
Ark. Code Ann. §26- 26- 402(b) (1997 Repl.) provides:
"If it is determined that the adjustment or rollback of millages as provided for [herein] will
render income from millages pledged to secure any bonded indebtedness insufficient to
meet the current requirements of all principal, interest, paying agents' fees, reserves, and
other requirements of a bond indenture, any such pledged millage shall be rolled back or
adjusted only to a level which will produce at least a level of income sufficient to meet the
current requirements of all principal, interest, paying agents' fees, reserves, and other
requirements of the bond indenture."
Amendment No. 71. In November 1992, Arkansas electors approved Amendment 71 to the Constitution of
the State of Arkansas which exempts items of household furniture and furnishings, clothing, appliances, and
other personal property used within the home, if not held for sale, rental, or other commercial or
professional use, from all ad valorem taxes levied by any city, county, school district, or other taxing unit in
the state.
Omega Tube & Conduit Corp. On April 5, 1993, the Arkansas Supreme Court in Omega Tube & Conduit
Corp v Ed Maples Pulaski County Tax Collector and B A Mchttosh Pulaski County Assessor, 312 Ark.
489, 850 S.W.2d 317 (1993), and in a supplemental opinion in the same case at 313 Ark. 499A, 850 S.W.2d
822, 1993 Ark. Lexis 300 (1993), decided that pursuant to Ark. Code Ann. §26 -26 -1102, raw materials
shipped to Arkansas for inclusion in tangible personal property manufactured, processed, or refined within
the state for shipment outside the state does not attain a tax situs in Arkansas and is thus not subject to ad
valorem taxation.
Amendment No. 79. At the 2000 general election, Constitutional Amendment No. 79 was adopted by a
majority of the voters and went into effect on January 1, 2001. Among other things, Amendment No. 79
allows for an annual state credit against ad valorem property tax on a homestead in the amount of not less
than $300. The annual state credit applies beginning for taxes due in calendar year 2001. The credit must
not be applied in a manner that would impair a bondholder's interest in ad valorem debt service revenues.
Amendment No. 79 provides that the tax rate for personal property and property of public utilities and
regulated carriers should be the same as that for real property. Personal property rates currently not equal to
real property rates should be reduced to the level of the real property rate unless a higher rate is "necessary
to provide a level of income sufficient to meet the current requirements of all principal, interest, paying
agent fees, reserves, and other requirements" of a bond issue.
Miscellaneous. If the assessed value of all classes of taxable property located in the City remains at the
same level, without increase or decrease, and the total tax rates applicable to all taxable property in the City
remain constant, the annual revenues derived from taxable property will be the same in each year. This
would be true of annual revenues available for debt service on the Bonds, as well as other annual revenues
of the City (subject in the case of such other revenues to adjustments in the tax rate).
In recent years, initiatives which would reduce or abolish property taxes collected pursuant to the Arkansas
Constitution have been approved for submission to the voters of Arkansas; however, to date, no initiatives
have been approved for submission to the voters at the next general election.
LEGAL MATTERS
Legal Opinion. Issuance of the Series 2002 Bonds is subject to the unqualified approving opinion of
Wright, Lindsey & Jennings LLP, Little Rock, Arkansas, Bond Counsel, in substantially the, form attached
hereto as Exhibit A.
32
313352 -v1
0 0
The Internal Revenue Code of 1986, as amended (the "Code "), imposes a number of requirements that must
be satisfied in order for interest on state or local obligations, such as the Series 2002 Bonds, to be excludable
from gross income for federal income tax purposes. These requirements include limitations on the use of
bond proceeds, limitations on the investment of bond proceeds prior to expenditure, a requirement that
excess earnings on the investment of bond proceeds be paid periodically to the United States of America and
a requirement that the City file an information report with the Internal Revenue Service.
The opinion of Bond Counsel will assume continuing compliance with the covenants of the City pertaining
to those sections of the Code which affect the exclusion from gross income of interest on the Series 2002
Bonds for federal income tax purposes and, in addition, will rely on representations by the City with respect
to matters solely within its knowledge which Bond counsel has not independently verified. If the City
should fail to comply with the covenants or if the foregoing representations should be determined to be
inaccurate or incomplete, interest on the Series 2002 Bonds could become taxable from the date of delivery
thereof, regardless of the date on which the event causing such taxability occurs.
The Code imposes a 20% alternative minimum tax on the "alternative minimum taxable income" of a
corporation (other than an "S" corporation, a regulated investment company, a REIT, or a REMIC), if the
amount of such alternative minimum tax is greater than the amount of the corporation's regular income tax.
The "Superfund Revenue Act of 1986" also imposes an additional .12% "environmental tax" on the
alternative minimum taxable income of a corporation in excess of $2,000,000. Generally, for taxable years
after 1989, a corporation's alternative minimum taxable income will include its "adjusted current earnings."
Because interest on obligations the interest on which is excludable from gross income for federal income tax
purposes, such as the Series 2002 Bonds, is included in a corporation's "adjusted current earnings,"
ownership of the Series 2002 Bonds could subject a corporation to alternative minimum tax consequences.
Except as stated in Exhibit A, Bond Counsel will express no opinion as to any federal, state or local tax
consequences resulting from the ownership of, receipt of interest on or disposition of the Series 2002 Bonds.
Prospective purchasers of the Series 2002 Bonds should be aware that (i) with respect to insurance
companies subject to the tax imposed by Section 831 of the Code, for taxable years beginning after
December 31, 1986, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15% of the sum of
certain items, including interest on the Series 2002 Bonds, (ii) for taxable years beginning after
December 31, 1986, interest on the Series 2002 Bonds earned by certain foreign corporations doing business
in the United States could be subject to a branch profits tax imposed by Section 884 of the Code,
(iii) passive investment income including interest on the Series 2002 Bonds, may be subject to federal
income taxation under Section 1375 of the Code for Subchapter S corporations that have Subchapter C
earnings and profits at the close of the taxable year if greater than 25% of the gross receipts of such
Subchapter S corporation is passive investment income and (iv) Section 86 of the Code requires recipients
of certain Social Security and certain Railroad Retirement benefits to take into account in determining gross
income, receipts or accruals of interest on the Series 2002 Bonds.
Non - Litigation Certificate. Upon delivery of the Series 2002 Bonds the City will furnish a certificate to
the effect that no litigation, except for that described in the Official Statement, is then pending which would
materially affect the validity of or security for the Series 2002 Bonds.
On December 28, 1998, an Order was entered in a case styled Nora Harris Individually v Pulaski County
Jul Floyd Villines, et al., Pulaski County Circuit Court No. CV 97 -8317, which could be interpreted as
having enjoined Pulaski County, Arkansas from assessing and collecting any property taxes based upon the
results of a countywide reappraisal conducted in 1996. The Order was subsequently stayed by a second
order entered January 11, 1999, pending an appeal of the case by the Defendants. In the second Order the
33
313352 -v1
0 0
Defendants were also directed to escrow the sum of $814.29, which represented the difference between the
amount of the plaintiffs 1997 and 1998 taxes and her 1996 taxes. The Petitioner also sought relief in the
form of certification as a class representative of all similarly affected taxpayers in Pulaski County and
damages based upon the defective reassessment. The County filed its Notice of Appeal to the Arkansas
Supreme Court on January 6, 1999 with respect to the injunction preventing the assessing or collecting of
any real property tax as a result of or based upon the 1996 county-wide reappraisal. The injunction was
reversed, and the case was remanded to the Circuit Court for further action. On January 3, 2002, the Court
entered its Order certifying Petitioner as a class representative and defined the class as persons who owned
property in 1996 who experienced an increase in assessed value in 1997 as a result of the 1996 appraisal.
No further action has occurred since the filing of the referenced order.
In a separate proceeding before the County Court of Pulaski County styled Herbert Harris and Nora Harris
v Pulaski County Board of Equalization, Case No. 4410140006000, a special county judge found that the
Defendant and the Pulaski County Judge failed to follow the proper statutory procedure for engaging
professional appraisers employed in connection with the 1996 county-wide reappraisal and that, as a result,
the Plaintiff s constitutional rights to due process had been violated. On March 19, 1999, the County Court
granted the Defendant's application seeking appeal to Pulaski County Circuit Court where the matter is now
pending as Pulaski County Circuit Court Case No. 99 -77.
Neither the City nor CALS is a party to either of the above described actions. Although the City and CALS
are unable to accurately predict the impact of an adverse ruling in this case, the City and CALS do not
believe that an adverse decision, if any, will materially adversely affect the availability of proceeds from the
Library Tax or Debt Service Supplement to meet the obligations on the Series 2002 Bonds.
ENFORCEABILITY OF REMEDIES
Rights of the registered owners of the Series 2002 Bonds and the enforceability of the remedies available
under the Authorizing Ordinance may depend on judicial action and may be subject to the valid exercise of
the constitutional powers of the United States of America and of the sovereign police powers of the State of
Arkansas or other governmental units having jurisdiction, and to the application of federal bankruptcy laws
or other debtor relief or moratorium laws in general. Therefore, enforcement of those remedies may be
delayed or limited, or the remedies may be modified or unavailable, subject to the exercise of judicial
discretion in accordance with general principles of equity. Bond counsel expresses no opinion as to any
effect upon any right, title, interest or relationship created by or arising under the Authorizing Ordinance
resulting from the application of state or federal bankruptcy, insolvency, reorganization, moratorium or
similar debtor relief laws affecting creditors' rights which are presently or may from time to time be in
effect.
UNDERWRITING
Under a Bond Purchase Agreement (the "Agreement ") entered into by and between the City and Stephens
Inc. as Underwriters (collectively the "Underwriter "), the Series 2002 Bonds are being purchased for
$_ (which represents the par amount of the Bonds less an Underwriter's discount of $ . The
Agreement provides that the Underwriter will purchase all of the Series 2002 Bonds if any are purchased.
The obligations of the Underwriter to accept delivery of the Series 2002 Bonds is subject to various
conditions contained in the Agreement, including the absence of pending or threatened litigation questioning
the validity of the Series 2002 Bonds or any proceedings in connection with the issuance thereof, and the
absence of material adverse changes in the financial or business condition of the City.
The Underwriter intends to offer the Series 2002 Bonds to the public initially at the offering prices set forth
on the cover page of this Official Statement, which prices may subsequently change without any
34
313352 -v1
0
requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters
in offering the Series 2002 Bonds to the public. The Underwriter may offer and sell Series 2002 Bonds to
certain dealers at prices lower than the public offering price.
BOND RATING
The Bonds are rated "AA-" by Standard and Poor's. Standard and Poor's has placed these Bonds and the
Parity Bonds on Credit Watch with negative implications. The rating agency states that it will act to resolve
the ratings on Credit Watch upon receipt of the City's audited financial statements for 2001. The rating
reflects only the view of the rating agency. Any explanation of the significance of the rating may be
obtained only from the rating agency. The City furnished to the rating agency certain information and
materials, some of which have been included in this Preliminary Official Statement, relating to the Series
2002 Bonds and the City. Generally, rating agencies base their ratings on such information and materials
and investigation, studies and assumptions by the rating agencies. There can be no assurance that a rating
when assigned will continue for any given period of time or that it will not be lowered or withdrawn entirely
by a rating agency if in its judgment circumstances so warrant. Any such downward change in or
withdrawal of the rating may have an adverse effect on the secondary market price of the Bonds.
CONTINUING DISCLOSURE CERTIFICATE
Purpose of the Continuing Disclosure Certificate. The Continuing Disclosure Certificate describes the
City's continuing obligation to provide certain financial and other information with respect to the Bonds,
and is for the benefit of the Beneficial Owners of the Bonds.
Provision of Annual Financial Information and Operating Data. The City has agreed to provide
within one hundred eighty (180) days after the end of the City's fiscal year, its Comprehensive Annual
Financial Report ( "CAFR "). The CAFR will include, among other things, the information contained under
DESCRIPTION OF THE CITY, Assessed Valuation, DEBT STRUCTURE and FINANCIAL
INFORMATION. The City will also provide its audit within sixty (60) days after the audit has been
completed and received by the City. The audit will be prepared in accordance with generally accepted
auditing standards. Additionally, the City will provide timely notice of the occurrence of material events
relating to the Bonds as hereinafter described. The City has agreed to provide this information in an effort
to comply with Rule 15c2 -12 of the Securities and Exchange Commission (the "Rule ").
Any or all of the foregoing information may be incorporated by reference from other documents, including
official statements of debt issues with respect to the City that have been filed with any Nationally
Recognized Municipal Securities Information Repository or the Securities and Exchange Commission, and
in the case of a final official statement, that is available from the Municipal Securities Rulemaking Board
( "MSRB ").
Notice of Material Events. The City agrees that it will furnish to the MSRB and each State Repository
( "SID "), if any, as promptly as practicable notice of any of the following events with respect to the Bonds:
(1) Any principal or interest payment delinquency;
(2) Any nonpayment related default under the Resolution;
(3) Any unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Any unscheduled draws on credit enhancements reflecting financial difficulties;
35
313352 -v1
9
0
(5) Any substitution of credit or liquidity providers, or their failure to perform;
(6) Any adverse tax opinion or event affecting the tax - exempt status of the Bonds;
(7) Any modifications to rights of the owners of the Bonds:
(8) Any call of the Bonds for redemption, in whole or in part;
(9) Any defeasance of the Bonds, in whole or in part;
(10) Any release, substitution, or sale of property securing repayment of the securities; and
(11) Any rating changes.
The City further agrees that it will furnish to the MSRB and also to the SID, if any, as promptly as
practicable, notice of any failure of the City to provide the annual financial information or operating data
required hereunder on or before the date specified,
City to Disseminate Information and Notices. The City agrees to disseminate the CAFR and the audit to
each NRMSIR and to the SID, if any, and to disseminate any notice of a material event specified above to
the SID, if any, and to the MSRB.
Amendment; Waiver. Notwithstanding any other provision of the Continuing Disclosure Certificate, the
City may amend the Continuing Disclosure Certificate, and any provision of the Continuing Disclosure
Certificate may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(A), 4, or 5(A) of the
Continuing Disclosure Certificate, it may only be made in connection with a change in circumstances that
arises from a change in the identify, nature or status of an obligated person with respect to the Bonds, or the
type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of
nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the
original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as
well as any change in circumstances; and
(c) The amendment or waiver either (i) is approved by the owners of the Bonds in the same
manner as provided in the Resolution for amendments to the Resolution with the consent of owners, or (ii)
does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the owners
or Beneficial Owners of the Bonds.
In the event of any amendment or waiver of a provision of the Continuing Disclosure Certificate, the City
shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative
explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change
of accounting principles, on the presentation) of financial information or operating data being presented by
the City. In addition, if the amendment relates to the accounting principles to be followed in preparing
financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under
Section 5(B), and (ii) the Annual Report for the year in which the change is made should be present a
comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as
prepared on the basis of the new accounting principles and those prepared on the basis of the former
accounting principles.
36
313352 -v1
0 0
Additional Information. Nothing in the Continuing Disclosure Certificate shall be deemed to prevent the
City from disseminating any other information, using the means of dissemination set forth in the Continuing
Disclosure Certificate or any other means of communication, or including any other information in any
report or notice made hereunder, in addition to that which is required by the Continuing Disclosure
Certificate. If the City chooses to include any information in any report or notice made hereunder in
addition to that which is specifically required by the Continuing Disclosure Certificate, the City shall have
no obligation under the Continuing Disclosure Certificate to update such information or include it in any
future report or notice.
Noncompliance. In the event of a failure of the City to comply with any provision of the Continuing
Disclosure Certificate, any owner may take such actions as may be necessary and appropriate, including
seeking mandamus or specific performance by court order, to cause the City to comply with its obligations
under the continuing Disclosure Certificate. Noncompliance with the Continuing Disclosure Certificate
shall not be deemed an Event of Default under the Resolution, and the sole remedy under the Disclosure
Agreement in the event of any failure of the City to comply with the Continuing Disclosure Certificate shall
be an action to compel performance.
MISCELLANEOUS
Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not
so expressly stated, are set forth as such and not as representations of fact, and no representation is made that
any of the estimates will be realized. This Official Statement is not to be construed as a contract or
agreement between the City and the purchasers or owners of any of the Series 2002 Bonds.
The execution of this Official Statement has been duly authorized by the City.
CITY OF LITTLE ROCK, ARKANSAS
By: /s/ Robert Bites
Robert Biles, Director of Finance
Dated: As of the Cover Page hereof.
37
313352 -v1
9 0
APPENDIX "A"
Form of Bond Counsel's Opinion
Re: $9,500,000 City of Little Rock, Arkansas Library Improvement Bonds, Series 2002
Ladies and Gentlemen:
We have acted as Bond Counsel in connection with the issuance by the City of Little Rock, Arkansas (the
"City") of $9,500,000 City of Little Rock, Arkansas Library Improvement Bonds, Series 2002, dated March
1, 2002 (the "Series 2002 Bonds "). The Series 2002 Bonds are being issued to finance the cost of acquiring,
constructing and equipping capital improvements to the public city library operated by the City and the
Central Arkansas Library System ( "Improvements "). The Series 2002 Bonds, in an amount not to exceed
$19,500,000, were authorized by the electors of the City at the general election held on November 3, 1998.
We have examined the law and such certified proceedings and other papers as we deem necessary to render
this opinion, including, particularly a certified copy of Ordinance No. 18,085 of the City adopted and
approved on August 3, 1999 as supplemented and amended by Ordinance No. _ adopted and approved
on , 2002, authorizing the issuance of the Series 2002 Bonds (the "Authorizing Ordinance ").
As to questions of fact material to our opinion we have relied upon the certified proceedings and other
certifications of public officials furnished to us without undertaking to verify such facts by independent
investigation.
Based on our examination, we are of the opinion, as of the date hereof and under existing law, as follows:
1. The Series 2002 Bonds have been lawfully authorized and issued under the Constitution
and laws of the State of Arkansas now in force, including particularly Amendment No. 30, as amended by
Amendment No. 72 to the Constitution of the State of Arkansas and Arkansas Code Annotated § 14 -142-
201, et seq. (Act 920 of the Acts of Arkansas of 1993), and are valid and binding limited obligations of the
City enforceable in accordance with their terms.
2. The Series 2002 Bonds are payable from a tax of 1.0 mill for each dollar of the assessed
valuation of the taxable real and personal property in the City (the "Library Ta)C) which was approved by
the electors of the City at the general election on November 3, 1998, The City first levied the Library Tax at
the rate of 1.0 mill (.001) for collection in 1999 and continuously in each year thereafter, the collection of
which will be available to pay debt service on the Series 2002 Bonds. The City has covenanted that the
Library Tax will be levied and collected annually and that it and the Debt Service Supplement will be
pledged as security for the Series 2002 Bonds and the Parity Bonds until all of the outstanding Series 2002
Bonds and any parity bonds together with interest thereon and related costs and fees have been paid in full.
The Series 2002 Bonds will be limited tax obligations of the City, payable solely from proceeds of the
Library Tax and the pro rata portion of the proceeds of a statewide .5% Sales and Use Tax implemented
pursuant to Act 1492 of 1999 (the `Debt Service Supplement ").
3. The interest on the Series 2002 Bonds (a) is excluded from gross income for federal income
tax purposes, (b) is not an item of tax preference for purposes of the federal alternative minimum tax
imposed on individuals and corporations; however, it should be noted that with respect to corporations (as
defined for federal income tax purposes), such interest is taken into account in determining adjusted current
earnings for the purpose of computing the alternative minimum tax imposed on such corporations. The
opinion set forth in clause (a) above is subject to the condition that the Issuer comply with all requirements
of the Internal Revenue Code of 1986, as amended (the "Code "), that must be satisfied subsequent to the
313352 -v1
• •
issuance of the Series 2002 Bonds in order that interest thereon be (or continue to be) excluded from gross
income for federal income tax purposes. Failure to comply with certain of such requirements could cause
the interest on the Series 2002 Bonds to be so included in gross income retroactive to the date of issuance of
the Series 2002 Bonds. The City has covenanted in the Authorizing Ordinance to comply with all such
requirements. We express no opinion regarding other federal tax consequences arising with respect to the
Series 2002 Bonds except as set forth in paragraph 4 below.
4. Interest on the Series 2002 Bonds is exempt from State of Arkansas income taxes and the
Series 2002 Bonds are not subject to property taxes in the State of Arkansas.
It is understood that the rights of the registered owners of the Series 2002 Bonds and the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors heretofore or hereafter enacted and that their enforcement may be subject to the exercise
of judicial discretion in accordance with general principles of equity.
Certain requirements and procedures contained or referred to in the Authorizing Ordinance and other
relevant documents may be changed and certain actions may be taken or omitted under the circumstances
and subject to the terms and conditions set forth in such documents, upon the advice or with an approving
opinion of nationally recognized bond counsel. No opinion is expressed herein as to any Bond or the
interest thereon on or after such change that occurs or action that is taken or omitted upon the advice or
approval of counsel other than ourselves.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court
decisions. Such opinions may be affected by actions taken or events occurring after the date hereof. We
have not undertaken to determine, or to inform any person, whether any such actions or events are taken or
occur.
Sincerely,
WRIGHT, LINDSEY & JENNINGS LLP
2
313352 -v1
0 •
APPENDIX "B"
Summary of the Master Indenture
The following, in addition to certain other information contained under the caption "The Bonds"
herein, summarizes certain provisions of the Master Indenture, to which document in its entirety reference is
made for the detailed provisions thereof. Capitalized terms not defined herein shall have the definition set
forth in the Master Indenture.
General Provisions for the Issuance of Bonds
Whenever the City shall determine to issue any Series of Bonds or Bond Anticipation Notes, the
City shall approve and execute a Supplemental Indenture that shall specify, among other things, the
following:
(1) The purpose for which such Series of Bonds or Bond Anticipation Notes is to be
issued, which shall be, in the case of Bonds, for the purpose of (a) paying all or a portion of the Cost
of Construction of a Project, Principal, Redemption Price, and interest on Bond Anticipation Notes,
or any combination thereof; or (b) refunding of all or a part of the Bonds outstanding of one or more
Series or all or part of any other borrowing of the City payable in whole or in part from the Library
Tax, including in each case the payment of all expenses in connection with such refunding; and in
the case of Bond Anticipation Notes, for the purpose of paying or providing for the payment of all
or a portion of the Cost of Construction of a Project, the refunding of Bond Anticipation Notes, or a
combination of such purposes.
(2) Any Debt Service Reserve Requirement for such Series of Bonds and the amount,
if any, to be deposited from the proceeds of such Series of Bonds into any Series Subaccount in the
Debt Service Reserve Account established for such Series of Bonds.
Special Provisions for the Issuance of Construction Bonds
One or more Series of Construction Bonds may be issued in such Principal amount as may be
determined by the City for the purpose of paying all or a portion of the Cost of Construction of a Project,
Principal, Redemption Price, and interest on Bond Anticipation Notes, or any combination of these
purposes. Each Series shall be in such Principal amount which, when taken together with other funds legally
available for such Project, will provide the City with sufficient funds to pay the estimated Cost of
Construction of such Project.
Each Supplemental Indenture authorizing the issuance of a Series of Construction Bonds:
(1) Shall specify the Project for which the proceeds of such Series of Construction
Bonds will be applied; and
(2) May require the City to deposit, or cause CALS to deposit, a specified amount of
money from the proceeds of the sale of such Series of Construction Bonds or from other legally
available sources into the applicable Project Account capitalized interest to the Estimated
Completion Date plus up to one Year thereafter.
Each Series of Construction Bonds and any Bond Anticipation Notes shall be authenticated and
delivered by the Trustee only upon receipt by the Trustee of a written certificate of the City setting forth
the Estimated Completion Date and estimated cost of construction, a certificate of the City that there is no
default under the Master Indenture, and one of the following:
313352 -v1
(a) An Accountant's Certificate (i) setting forth for any Year within the 24 calendar
months next preceding the authentication and delivery of such Series of Bonds, the proceeds of the
Library Tax for such period, and (ii) showing that such proceeds of the Library Tax for such Year,
together with any Other Available Funds, would not be less than the Rate Covenant Requirement
(for each Fiscal Year to and including the Fiscal Year in which occurs the latest maturity of such
Series of Construction Bonds) with respect to all Bonds to be Outstanding at any time during the
Year next following the issuance of the proposed Series of Bonds and to the Repayment Obligations
to be outstanding at any time during the Year next following the issuance of the proposed Series of
Bonds; or
(b)(1) A Library Consultant's Certificate setting forth the estimated proceeds of the
Library Tax (assuming the completion of the Project on its then Estimated Completion Date) for
whichever of the following periods shall extend until the latest date:
(A) If the Supplemental Indenture authorizing the Series of Bonds being issued
requires that interest on the Series of Bonds be capitalized until a certain date, for each of
the three Fiscal Years succeeding such date, or
(B) If the Supplemental Indenture authorizing the Series of Bonds being issued
does not require that interest on the Series of Bonds be capitalized, for the then current
Fiscal Year and each succeeding Fiscal Year to and including the fifth Fiscal Year
succeeding the date of issuance of such Series of Bonds; and
(2) A Written Certificate of the City showing the Aggregate Debt Service for each of
the Fiscal Years set forth in the Library Consultant's Certificate delivered pursuant to (b)(1) above
and showing that the proceeds of the Library Tax as shown in such Library Consultant's Certificate
for each of such Fiscal Years, together with any Other Available Funds, are not less than the Rate
Covenant Requirement for each of such Fiscal Years with respect to all Series of Bonds to be
outstanding after the issuance of the proposed Series of Construction Bonds and to the Repayment
Obligations to be outstanding after the issuance of the proposed Series of Construction Bonds.
Notwithstanding any other provision of the Master Indenture, the provisions described above shall
not apply:
(1) to any Series of Construction Bonds all of the proceeds of which are to be applied
to pay the Cost of Construction of a Project necessary, as expressed in a Library Consultant's
Certificate delivered to the Trustee, to comply with requirements of any governmental agency
having jurisdiction over the Library;
(2) to any Series of Bonds, the aggregate Principal amount of which, together with the
aggregate Principal amount of all other Outstanding Bonds issued pursuant to this paragraph (2)
during any Fiscal Year, does not exceed 10% of the Library Tax proceeds for the most recent Fiscal
Year prior to the issuance of such Series of Bonds for which audited financial statements are
available, as expressed in writing by the City; provided that the Trustee shall have received a
Written Certificate of the City showing that the estimated Library Tax proceeds for the next
succeeding Fiscal Year, together with any Other Available Funds, are not less than the Rate
Covenant Requirement for such Fiscal Year with respect to all Series of Bonds to be Outstanding at
any time during such Fiscal Year and to the Repayment Obligations to be outstanding at any time
during such Fiscal Year; or
2
313352 -v1
0 •
(3) to any Series of Bonds issued to pay the Cost of Construction necessary to
complete any Project for which Construction Bonds have previously been issued, provided that the
Trustee shall have received:
(a) A Written Certificate of the City stating that the nature and purpose of
such Project has not materially changed; and
(b) A Written Certificate of the City to the effect that (i) all of the proceeds
(including investment earnings) of Construction Bonds (or Bond Anticipation Obligations)
previously issued to finance such Project have been or will be used to pay Costs of
Construction of the Project, (ii) the then estimated Costs of Construction of the Project as
contained in the Written Certificate of the City delivered pursuant to the Master Indenture
exceeds the sum of the Costs of Construction already paid plus moneys available in the
Project Account established for the Project (including unspent proceeds of Bonds
previously issued for such purpose) plus other legally available moneys in the Revenue
Fund, (iii) the issuance of such Series of Bonds is necessary to provide funds to pay Costs
of Construction necessary for the Project, and (iv) the Principal amount of such Series of
Bonds does not exceed 10% of the Principal amount of all Construction Bonds previously
issued to finance such Project.
Special Provisions for the Issuance of Refunding Bonds
One or more Series of Refunding Bonds may be issued to accomplish the refunding of all or a part
of the Outstanding Bonds of one or more Series or all or part of any other borrowing of the City payable in
whole or in part from the proceeds of the Library Tax, including in each case the payment of all expenses in
connection with such refunding. As used herein, the term "Refunded Debt" shall refer to such Bonds or
other debt to be so refunded.
Each Supplemental Indenture authorizing the issuance of a Series of Refunding Bonds shall specify
the "Refunded Debt."
Each Series of Refunding Bonds shall be authenticated and delivered by the Trustee only upon receipt
by the Trustee of a certificate of the City stating that the issuance complies with the Master Indenture and
one of the following:
(a) A Written Certificate of the City setting forth the Aggregate Debt Service for each
Fiscal Year to and including the Fiscal Year in which occurs the latest maturity of the Refunded
Debt to be refunded or such Series of Refunding Bonds, whichever is later, (i) with respect to the
Refunded Debt to be refunded and (ii) with respect to the Series of Refunding Bonds to be
authenticated and delivered, and stating that the maximum amount of Aggregate Debt Service for
any Fiscal Year set forth pursuant to clause (ii) of this paragraph (a) is no greater than the maximum
amount of Aggregate Debt Service for any Fiscal Year set forth pursuant to clause (i) of this
paragraph (a); or
(b) An Accountant's Certificate (i) setting forth for any Year within the 24 calendar
months next preceding the authentication and delivery of such Series of Bonds, the proceeds of the
Library Tax for such period, and (ii) showing that such proceeds of the Library Tax for such Year,
together with Other Available Funds, would not be less than the Rate Covenant Requirement (for
each Fiscal Year to and including the Fiscal Year in which occurs the latest maturity of such Series
of Refunding Bonds) with respect to all Bonds to be Outstanding at any time during the Year next
following the issuance of the proposed Series of Bonds and to the Repayment Obligations to be
313352 -v1
outstanding at any time during the Year next following the issuance of the proposed Series of
Bonds.
Conditions for Issuance of Bond Anticipation Notes
One or more Series of Bond Anticipation Notes, payable on a parity with all Outstanding Bonds
(except as described in the paragraph below), may be issued in such Principal amount as may be determined
by the City for the purpose of paying or providing for the payment of all or a portion of the Cost of
Construction of a Project, or the refunding of Bond Anticipation Notes, or a combination of such purposes.
Each such Series shall be in such Principal amount which, when taken together with funds previously used
or to be provided by the City or CALS for such Project, will provide the City with sufficient funds to pay
the estimated Cost of Construction of such Project. In the Master Indenture the City covenants to apply so
much of the proceeds of the Bonds in anticipation of which such Bond Anticipation Notes have been issued
as shall be necessary to provide for the payment of all Principal Installments on such Bond Anticipation
Notes.
If so provided in the Supplemental Indenture providing for the issuance of any Series of Bond
Anticipation Notes, the payment of the Principal Installments on such Bond Anticipation Notes shall be
subject to the prior lien and charge created in the Master Indenture for the payment of the Bonds out of the
Principal and Interest Fund.
No Bond Anticipation Notes shall mature later than five years from its date, including all refundings
thereof by Bond Anticipation Notes.
As of the date of issuance of any Series of Bond Anticipation Notes, the aggregate Principal amount
of all outstanding Bond Anticipation Notes (including such Series) shall never exceed the Principal amount
of a hypothetical Series of Bonds which could be issued by the City on such date in compliance with the
provisions of the Master Indenture relating to required Library Tax Proceeds or estimated Library Tax
Proceeds for the issuance of a Series of Construction Bonds (see the caption "Summary of the Master
Indenture — Special Provisions for the Issuance of Construction Bonds" herein), having an assumed final
maturity of 30 years, bearing an assumed rate of interest equal to the highest rate then borne by any
Outstanding Bond Anticipation Notes, and having Debt Service due in each Fiscal Year in approximately
equal amounts; provided that if no Series of Bond Anticipation Notes are then Outstanding under the Master
Indenture, the interest rate used for purposes of this calculation shall be the interest rate bome by the Series
of Bond Anticipation Notes to be issued.
Provisions Regarding Bonds Secured by a Security Instrument
The City may include such provisions in a Supplemental Indenture authorizing the issuance of a
Series of Bonds secured by a Security Instrument as the City deems appropriate, including:
(1) So long as the Security Instrument is in full force and effect and payment on the
Security Instrument is not in default, (a) the Security Instrument Issuer shall be deemed to be the
Holder of the Outstanding Bonds of such Series when the approval, consent, or action of the
Bondholders for such Series of Bonds is required or may be exercised under the Master Indenture
and following an Event of Default and (b) the Master Indenture may not be amended in any manner
which affects the rights of such Security Instrument Issuer without its prior written consent.
(2) In the event that the Principal and Redemption Price, if applicable, and interest due
on any Series of Bonds Outstanding shall be paid under the provisions of a Security Instrument, all
covenants, agreements, and other obligations of the City to the Bondholders of such Series of Bonds
shall continue to exist and such Security Instrument Issuer shall be subrogated to the rights of such
Bondholders in accordance with the terms of such Security Instrument.
313352 -v1
In addition, such Supplemental Indenture may establish such provisions as are necessary to
provide relevant information to the Security Instrument Issuer and to provide a mechanism for paying
Principal Installments and interest on such Series of Bonds from the Security Instrument.
Registration and Exchange
Transfer of Bonds. Unless otherwise provided in a Supplemental Indenture authorizing a Series of
Bonds,
Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept
pursuant to the provisions of the Master Indenture, by the person in whose name it is registered, in person or
by a duly authorized attorney, upon surrender of such Bond for cancellation or, if applicable, notation of the
new Holder together with the signature of the Trustee or any applicable Transfer Agent on the back of such
Bond or on a form of record attached to such Bond for such purpose, accompanied by delivery of a written
instrument of transfer in a form approved by the Trustee, duly executed.
Whenever any Bond shall be surrendered for transfer, the Trustee or any Transfer Agent shall
authenticate and deliver a new fully registered Bond or Bonds duly executed by the City or, if applicable,
shall deliver the same Bond, duly annotated with the new Holder and signed by the Trustee or any applicable
Transfer Agent on the back of such Bond or on a form of record attached to such Bond for such purpose, for
like aggregate principal amount. The Trustee or any Transfer Agent shall require the payment by the
Bondholder requesting such transfer of any tax or other governmental charge required to be paid with respect
to such transfer.
The City, the Trustee, and any Transfer Agent shall not be required (a) to issue, register the transfer
of, or exchange any Bond during a period beginning at the opening of business 15 days before the date of the
mailing of a notice of redemption of Bonds selected for redemption under the Master Indenture and ending at
the close of business on the day of such mailing, or (b) to register the transfer of or exchange any Bond so
selected for redemption in whole or in part, except the unredeemed portion of Bonds being redeemed in part.
Exchange of Bonds. Fully registered Bonds may be exchanged at the principal corporate trust office
of the Trustee or of any Transfer Agent for a like aggregate Principal amount of fully registered Bonds of the
same Series and maturity of authorized denominations. The Trustee or any Transfer Agent shall require the
payment by the Bondholder requesting such exchange of any tax or other governmental charge required to be
paid with respect to such exchange. Except as otherwise provided in a Supplemental Indenture authorizing a
Series of Bonds, no such exchange shall be required to be made subsequent to the Record Date.
Bond Registration Books. The Trustee will keep or cause to be kept, at its principal corporate trust
office, sufficient books for the registration and transfer of Bonds, which shall at all times be open to
inspection by the City; and, upon presentation for such purpose, the Trustee shall, under such reasonable
regulations as it may prescribe, register or transfer bonds on said books.
Selection of Bonds for Redemption
Except as otherwise provided in a Supplemental Indenture:
If less than all of the Bonds of any Series are called for redemption and if the Bonds of such Series
shall mature on more than one date, the Bonds of such Series shall be redeemed from the Outstanding Bonds
of such Series in inverse order of maturities.
If less than all of the Bonds of any Series maturing on any single date are called for redemption, the
Trustee shall select the Bonds to be redeemed, from the Outstanding Bonds of such Series maturing on that
date not previously called for redemption, in such manner as in the Trustee's sole discretion it shall deem
313352 -v1
appropriate and fair; provided, however, that subject to other applicable provisions of the Master Indenture or
of any Supplemental Indenture, the portion of any Bond to be redeemed shall be in a Principal amount equal
to a denomination in which Bonds of such Series are authorized to be issued. In selecting Bonds for
redemption the Trustee shall treat each Bond as representing the number of Bonds which is obtained by
dividing the Principal amount of each Bond by the minimum denomination in which such Series of Bonds is
authorized to be issued. If part but not all of a Bond shall be selected for redemption, the Holder thereof or the
Holder's attorney or legal representative shall present and surrender such Bond to the Trustee for payment of
the Principal amount thereof so called for redemption and the redemption premium, if any, on such Principal
amount. The City shall execute and the Trustee or any Transfer Agent shall authenticate and deliver to or
upon the order of such Holder or the Holder's legal representative, without charge therefor, a Bond or Bonds
of the same maturity and bearing interest at the same rate as the Bond so surrendered for the unredeemed
portion of the surrendered Bond.
Notice and Effect of Redemption
Notice of Redemption. Except as otherwise provided in a Supplemental Indenture authorizing a
Series of Bonds, notice of redemption shall be given by first class mail, postage prepaid, not less than 30 nor
more than 60 days prior to the redemption date, to the registered owner of such Bond, at the owner's address
as it appears on the bond registration books of the Trustee or at such address as the owner may have filed
with the Trustee for that purpose, but neither failure to mail any such notice nor any defect in any notice so
mailed shall affect the sufficiency of the proceedings for the redemption of any of the Bonds. Each notice of
redemption shall state the redemption date, the place of redemption, the source of the funds to be used for
such redemption, the Principal amount, and, if less than all of the Bonds of any like Series and maturity are to
be redeemed, the distinctive numbers of the Bonds to be redeemed, and shall also state that the interest on the
Bonds or portions thereof in such notice designated for redemption shall cease to accrue from and after such
redemption date and that on said date there will become due and payable on each of said Bonds the
Redemption Price thereof and interest accrued thereon to the redemption date.
Deposit of Redemption Price. Except as otherwise provided in a Supplemental Indenture
authorizing a Series of Bonds, the City shall deposit with the Trustee the money required for payment of the
Redemption Price of and the accrued interest to the redemption date on all Bonds then to be called for
redemption at least one day before the date fixed for such redemption.
Partial Redemption of Bonds; Disposition of Redeemed Bonds. Except as otherwise provided in
a Supplemental Indenture authorizing a Series of Bonds, upon surrender of any Bond redeemed in part only,
the City shall duly execute and the Trustee or any Transfer Agent shall authenticate and deliver to the
registered owner thereof, at the expense of the City, a new Bond or Bonds of the same Series and maturity
and of authorized denominations equal in aggregate Principal amount to the unredeemed portion of the
Bond surrendered.
Effect of Redemption. Except as otherwise provided in a Supplemental Indenture authorizing a
Series of Bonds, if notice of redemption has been duly given as described above, and moneys for payment of
the Redemption Price, together with interest to the redemption date on the Bonds so called for redemption,
are held by the Trustee, then such Bonds shall, on the redemption date designated in such notice, become due
and payable at the Redemption Price specified in such notice and interest accrued thereon to the redemption
date; and from and after the date so designated, interest on the Bonds so called for redemption shall cease to
accrue.
3)3352 -v1
Construction Fund
The Master Indenture creates and establishes a Construction Fund, to be held by the Trustee, in
which the Trustee shall establish a Project Account for each Project. The Trustee may establish one or more
subaccounts in each Project Account.
There shall be paid into the Construction Fund the amounts required to be so paid by the provisions
of the Master Indenture or any Supplemental Indenture.
The proceeds of insurance maintained in connection with a Project during the period of construction
of such Project against physical loss of or damage to properties of the Library, or of contractors'
performance bonds with respect thereto, pertaining to the period of construction thereof, shall be paid into
the appropriate Project Account in the Construction Fund.
Amounts in each Project Account established for a Project shall be applied to pay the Cost of
Construction of the Project.
Unless otherwise provided in a Supplemental Indenture authorizing a Series of Construction Bonds,
all net income earned on any moneys or investments in the Project Account established in the Construction
Fund for a Project shall be held in such Project Account and applied to pay Cost of Construction of the
Project.
The substantial completion of construction of each Project shall be evidenced by a Written
Certificate of the City. Upon the filing of such Certificate, the balance in the applicable Project Account in
the Construction Fund in excess of the amount, if any, stated in such Certificate as being required for
payment of any remaining part of the Cost of Construction of such Project shall be used to purchase Bonds
(see the caption "Summary of the Master Indenture— Purchase of Bonds" herein), (b) deposited into the
Debt Service Reserve Account to fund any amounts required to be deposited therein, (c) deposited into the
Bond Account, (d) transferred into another Project Account to pay Cost of Construction of a Project, or (e)
used for any other purpose for which proceeds of Bonds may be used under applicable law and covenants
regarding the use of proceeds of Bonds.
Proceeds of Library Tax; Revenue Fund
All Library Tax proceeds and Other Available Funds as permitted by law shall be promptly
deposited by the City, and CALS on behalf of the City, to the credit of the Revenue Fund.
There shall be retained in the Revenue Fund, to the extent such amounts are not otherwise
required to be transferred from the Revenue Fund pursuant to the provisions of the Master Indenture
described in the caption "Summary of the Master Indenture —Flow of Funds," "— Principal and Interest
Account —Bond Account," and "— Principal and Interest Account —Debt Service Reserve Account"
herein:
(1) the amount required to be deposited into the Principal and Interest Fund in the next
succeeding month, and
(2) any amounts designated as Other Available Funds for the current or any future
Fiscal Year.
Moneys in the Revenue Fund in excess of the amounts in (I)and (2) above must be transferred to the
Redemption Account of the Bond Fund.
313352 -v1
Flow of Funds
On or before the last Business Day of each month, the City shall transfer and deposit from the
Revenue Fund into the Principal and Interest Fund the amounts set forth below and in the following order:
FIRST: for credit to the Bond Account, the amount, if any, required so that the balance in
each of the Series Subaccounts in the Bond Account shall equal the Accrued Debt Service on the
Series of Bonds and, to the extent required by a Supplemental Indenture, on any Security
Instrument Obligations for which such Series Subaccount was established; provided that, if there
are not sufficient moneys to satisfy the requirements of this paragraph with respect to all Series
Subaccounts in the Bond Account, all moneys available for distribution among such Series
Subaccounts shall be deposited into the Bond Account and distributed on a pro rata basis to the
deficient Series Subaccounts in the Bond Account, such distribution to be determined by
multiplying the amount available for distribution by the proportion that the deficiency for each
Series Subaccount bears to the total deficiency for all Series Subaccounts; and provided further, that
in the event and to the extent moneys have been deposited in any Project Account as capitalized
interest, such moneys shall be transferred from the appropriate Project Account and deposited into
the appropriate Series Subaccount in the Bond Account in an amount sufficient to cause the balance
in such Series Subaccount to equal the interest component of Accrued Debt Service on the Series of
Bonds; and
SECOND: for credit to each Series Subaccount established within the Debt Service
Reserve Account, the amount, if any, required to be deposited therein pursuant to a Supplemental
Indenture; provided that, if there are not sufficient moneys to satisfy the requirements of this
paragraph with respect to all Series Subaccounts in the Debt Service Reserve Account, all moneys
available for distribution among such Series Subaccounts shall be deposited into the Debt Service
Reserve Account and distributed on a pro rata basis to the deficient Series Subaccounts in the Debt
Service Reserve Account, such distribution to be determined by multiplying the excess amount in
the Revenue Fund by the proportion that the deficiency for each Series Subaccount bears to the total
deficiency for all Series Subaccounts;
provided, however, that so long as there shall be held in the Principal and Interest Fund, excluding any
Reserve Instrument Coverage, an amount sufficient to pay in full all Outstanding Bonds and all Repayment
Obligations in accordance with their terms (including Principal or applicable sinking fund Redemption Price
and interest thereon), no deposits shall be required to be made into the Principal and Interest Fund.
Principal and Interest Fund
The Master Indenture creates and establishes a Principal and Interest Fund, to be held by the
Trustee, consisting of (i) a Bond Account, in which the Trustee shall establish a separate Series Subaccount
for each Series of Bonds, and (ii) a Debt Service Reserve Account, in which the Trustee may establish a
separate Series Subaccount for each Series of Bonds.
Bond Account. Each Supplemental Indenture providing for the issuance of a Series of Bonds shall
establish a separate Series Subaccount in the Bond Account for each related Series of Bonds. There shall be
deposited into each Series Subaccount, the amounts required to be so deposited pursuant to the Master
Indenture (see the caption "Summary of the Master Indenture —Flow of Funds— FIRST" herein). Any
payments made by a Security Instrument Issuer with respect to a Series of Bonds shall be deposited into the
Series Subaccount in the Bond Account relating to such Series of Bonds, subject to the provisions of the
Supplemental Indenture authorizing the issuance of such Series of Bonds.
313352 -v1
The Trustee shall pay out of the appropriate Series Subaccount in the Bond Account to the
respective Paying Agent (1) on or before each interest payment date for each Series of Bonds, the amount
required for the interest payable on such date; (2) on or before each Principal Installment due date, the
amount required for the Principal Installment payable on such due date; and (3) on or before any redemption
date for each Series of Bonds, the amount required for the payment of the Redemption Price of and accrued
interest on such Bonds then to be redeemed.
The Trustee shall pay out of the appropriate Series Subaccount in the Bond Account to the
Security Instrument Issuer, if any, that has issued a Security Instrument with respect to such Series of
Bonds an amount equal to any Security Instrument Repayment Obligation then due and payable to such
Security Instrument Issuer. If payment is so made on Pledged Bonds held for the benefit of the Security
Instrument Issuer, a corresponding payment on the Security Instrument Repayment Obligation shall be
deemed to have been made (without requiring an additional payment by the City) and the Trustee shall
keep its records accordingly.
Except as otherwise provided in a Supplemental Indenture authorizing a Series of Bonds, amounts
accumulated in any Series Subaccount in the Bond Account with respect to any Sinking Fund Installment
(together with amounts accumulated therein with respect to interest on the Bonds for which such Sinking
Fund Installment was established) shall, if so directed by the City in a Written Request not less than 30 days
before the due date of such Sinking Fund Installment, be applied by the Trustee to (1) the purchase of Bonds
of the Series and maturity for which such Sinking Fund Installment was established, (2) the redemption at
the applicable sinking fund Redemption Price of such Bonds, if then redeemable by their terms, or (3) any
combination of (1) and (2). All purchases of any Bonds as described in this paragraph shall be made at
prices not exceeding the applicable sinking fund Redemption Price of such Bonds plus accrued interest. As
soon as practicable after the 60" day preceding the due date of any such Sinking Fund Installment, the
Trustee shall proceed to call for redemption on such due date, by giving notice as required by the Master
Indenture, Bonds of the Series and maturity for which such Sinking Fund Installment was established
(except in the case of Bonds maturing on a Sinking Fund Installment date) in such amount as shall be
necessary to complete the retirement of the unsatisfied balance of such Sinking Fund Installment.
Debt Service Reserve Account. Each Supplemental Indenture providing for the issuance of a
Series of Bonds shall establish in the Debt Service Reserve Account a separate Series Subaccount for such
Series of Bonds. The Supplemental Indenture shall specify any Debt Service Reserve Requirement, the
manner in which the Debt Service Reserve Account may be funded, and the manner in which any deficiency
in the Debt Service Reserve Account may be replenished; provided that, the time for replenishing any
deficiency in full shall not exceed 12 months.
Subject to any limitations contained in a Supplemental Indenture, the City may satisfy any Debt
Service Reserve Requirement by means of a Reserve Instrument (or may substitute one Reserve
Instrument for another) if the City has provided to the Trustee written evidence satisfactory to the Trustee
from each rating agency then having a rating in effect for any Series of Bonds then Outstanding to the
effect that the rating agency has reviewed the proposed Reserve Instrument and that the use of such
Reserve Instrument (or the substitution of one Reserve Instrument for another, as appropriate) will not, by
itself, result in a reduction or withdrawal of such Rating Agency's rating of such Series of Bonds.
If on the final Business Day of any month, after the deposit of moneys required by the Master
Indenture (see the caption "Summary of the Master Indenture —Flow of Funds — SECOND" herein), the
amount in any Series Subaccount in the Bond Account shall be less than the amount required to be in such
Series Subaccount, the Trustee shall apply amounts from the corresponding Series Subaccount, if any, in the
Debt Service Reserve Account to the extent necessary to make good the deficiency; and to the extent those
moneys and investments are not sufficient to eliminate the deficiency in the Series Subaccount in the Bond
Account and Reserve Instruments are in effect for the corresponding Series of Bonds, immediately make a
313352 -v1
demand for payment on all such Reserve Instruments in the amount necessary to make up such deficiency,
and immediately deposit such payment upon receipt thereof in the appropriate Series Subaccount in the
Bond Account.
Whenever the moneys on deposit in a Series Subaccount in the Debt Service Reserve Account for a
Series of Bonds, including investment earnings and Reserve Instrument Coverage with respect thereto, shall
exceed the Debt Service Reserve Requirement for all Outstanding Bonds of such Series and related
Repayment Obligations, such excess shall be transferred by the Trustee and deposited into the Revenue
Fund.
Whenever the amount in a Series Subaccount in the Debt Service Reserve Account, excluding any
Reserve Instrument Coverage, together with the amount in the corresponding Series Subaccount in the Bond
Account for a Series of Bonds, is sufficient to pay in full all Outstanding Bonds of such Series and related
Repayment Obligations in accordance with their terms (including Principal or applicable sinking fund
Redemption Price and interest thereon), the funds on deposit in such Series Subaccount in the Debt Service
Reserve Account shall be transferred to the corresponding Series Subaccount in the Bond Account and no
deposits shall be required to be made into such Series Subaccount in the Debt Service Reserve Account.
Unless otherwise provided in a Supplemental Indenture authorizing a Series of Bonds, in
calculating the amount on deposit in a Series Subaccount in the Debt Service Reserve Account, the amount
of the Reserve Instrument Coverage for the corresponding Series of Bonds will be treated as an amount on
deposit in such Series Subaccount in the Debt Service Reserve Account. So long as any Series of Bonds
rated by a Rating Agency is Outstanding, the City may not invest moneys held in a Series Subaccount in the
Debt Service Reserve Account in a Reserve Instrument without obtaining the prior consent of the Trustee
and providing notice of such investment to such Rating Agency.
Unless otherwise specified in the Supplemental Indenture authorizing a Series of Bonds, no Reserve
Instrument for such Series of Bonds shall be allowed to expire unless and until cash has been deposited into
the appropriate Series Subaccount in the Debt Service Reserve Account, or a new Reserve Instrument has
been issued in place of the expiring Reserve Instrument, in an amount or to provide coverage at least equal
to the Debt Service Reserve Requirement for the corresponding Series of Bonds.
Purchase of Bonds
The City may purchase Bonds of any Series from any available funds at public or private sale, as and
when and at such prices as the City may in its discretion determine, but at a price not exceeding the
Principal amount thereof plus accrued interest thereon, or in the case of Bonds which by their terms are
subject to redemption prior to maturity, at the then current or first applicable Redemption Price (plus
accrued interest), as the case may be. In the case of the purchase of Bonds of a Series and maturity for which
Sinking Fund Installments shall have been established, the City shall elect the manner in which the Principal
amount of such Bonds shall be credited toward Sinking Fund Installments (see the caption "Summary of the
Master Indenture — Principal and Interest Fund —Bond Account" herein).
Covenants of the City
Punctual Payment of Bonds, The City will punctually pay or cause to be paid the Principal,
Redemption Price of and interest on the Bonds and any Repayment Obligations in strict conformity with the
terms of the Bonds, any Security Instrument Agreement, any Reserve Instrument Agreement, and the
Master Indenture, and the City will punctually pay or cause to be paid all Sinking Fund Installments which
may be established for any Series of Bonds. The City's obligations under the Master Indenture are limited to
the proceeds of the Library Tax and any other funds or assets which constitute part of the Trust Estate.
10
313352 -v1
Construction of Projects. If the City undertakes the acquisition or construction of a Project, the
City shall cause the acquisition or construction to be accomplished in a sound and economic manner and as
expeditiously as is practicable except:
(1) the City may delay, postpone, or cancel the acquisition of the Project if it files with
the Trustee a Library Consultant's Certificate to the effect that delaying, postponing, or canceling
the Project will not likely cause Library Tax proceeds to be less than the Rate Covenant
Requirement or
(2) following damage or destruction of a useful portion of the Library, to the extent
permitted by the Master Indenture (see the caption "Summary of the Master Indenture —
Reconstruction of Library; Application of Insurance Proceeds" herein).
Against Encumbrances. The City will not create, and will use its good faith efforts to prevent the
creation of, any mortgage or lien upon the Public Libraries or any property essential to the proper operation
of the Public Libraries. The City will not create, or permit the creation of, any pledge, lien, charge, or
encumbrance upon the Library Tax proceeds except only as provided in or permitted by the Master
Indenture.
Limitation on Sale or Other Disposition of Property. The City will not sell or otherwise dispose
of all or a substantial part of the Public Libraries except:
(1) The City may sell or otherwise dispose of any facilities, or an interest in facilities,
constituting a part of the Public Libraries which have ceased to be necessary for the efficient
operations of the Public Libraries.
(2) The City may sell or otherwise dispose of any facilities, or an interest in facilities,
constituting a part of the Public Libraries if the City files with the Trustee a Library Consultant's
Certificate demonstrating that, following such sale or disposition and after giving effect both to the
proposed sale or disposition of the facilities and the application of the proceeds of such sale, the
estimated Library Tax proceeds will be not less than the Rate Covenant Requirement.
The City will not enter into any lease or other agreement which impairs or impedes the operation
of the Public Libraries or which impairs or impedes the rights of the Bondholders with respect to the
Library Tax proceeds.
The proceeds of any sale or other disposition described above shall be deposited into the Revenue
Fund.
Operation and Maintenance. The City will operate the Public Libraries continuously in an
efficient and economical manner, to the extent practicable under then existing conditions. The City will at
all times maintain, preserve, and keep the Public Libraries in good repair, working order, and condition so
that the operating efficiency thereof will be of high character. The City will cause all necessary and proper
repairs and replacements to be made so that the business carried on in connection with the Public Libraries
may be properly and advantageously conducted at all times in a manner consistent with prudent
management, and that the rights and security of the Holders of the Bonds, Security Instrument Issuers, and
Reserve Instrument Issuers may be fully protected and preserved.
Maintenance of Library Tax Proceeds. The City will not sell, convey, mortgage, encumber, or
otherwise dispose of any part of the Library Tax Proceeds, except as otherwise permitted by the Master
Indenture.
313352 -vl
Insurance. Subject in each case to the condition that insurance is obtainable at reasonable rates and
upon reasonable terms and conditions:
(1) the City will procure and maintain insurance on the Public Libraries and public
liability insurance in such amounts and against such risks as are usually insurable in connection
with similar libraries and are usually carried by municipalities operating similar libraries;
(2) the City will procure and maintain adequate fidelity insurance or bonds on the
positions of City Manager, City Treasurer, Library Director, and on any other person or persons
handling or responsible for funds of the City related to the Public Libraries; and
(3) the City will place on file with the Trustee annually, within 120 days after the
beginning of each Fiscal Year, a Written Statement of the City or a certificate from the insurer
containing a summary of all insurance policies then in effect with respect to the Public Libraries.
Accounts and Reports. The City will at all times keep proper books of record and accounts,
separately identified from all other records and accounts of the City, in which complete and accurate entries
shall be made of all transactions relating to the Public Libraries and the Library Tax proceeds. Such books
of record and accounts shall at all times during business hours be subject to the inspection of the Trustee, the
Holders of not less than five percent of the Bonds then Outstanding, any party specified by a Supplemental
Indenture, or their representatives authorized in writing.
So long as any Bonds are outstanding, the City will place on file with the Trustee and with any
party specified by a Supplemental Indenture semiannually, within 60 days after the first days of January and
July of each Year, an unaudited financial statement in reasonable detail for the preceding six months and the
preceding 12 months, respectively, showing the Library Tax proceeds and all expenditures from the Library
Tax proceeds applicable to the Public Libraries and the resulting Library Tax proceeds available for Debt
Service for such periods.
The City will place on file with the Trustee and with any party specified by a Supplemental
Indenture annually within 120 days after the close of each Fiscal Year a financial statement in reasonable
detail for the preceding Fiscal Year showing the Library Tax proceeds, and all expenditures from the
Library Tax proceeds applicable to the Public Libraries and the resulting Library Tax proceeds available for
Debt Service, and a balance sheet in reasonable detail reflecting the financial condition of the City,
including the balances of all Funds relating to the Public Libraries at the end of the Fiscal Year for which
such balance sheet has been prepared. Such financial statement and balance sheet shall each be accompanied
by an Accountant's Certificate.
The reports, statements, and other documents required to be furnished to the Trustee pursuant to any
provisions of the Master Indenture shall be available for the inspection of Bondholders, Security Instrument
Issuers, and Reserve Instrument Issuers at the principal corporate trust office of the Trustee and shall be
mailed to each Bondholder, Security Instrument City, Reserve Instrument City, investment banker,
security dealer, or other person interested in the Bonds who shall file a written request therefor with the
City.
Library Tax Collections
In order to assure full and continuous performance of the covenants contained in the Master
Indenture relating to the punctual payment of Bonds and the collection of Library Tax proceeds, with a
margin for contingencies and temporary unanticipated reduction in Library Tax proceeds, the City
covenants and agrees to collect Library Tax proceeds, together with other income, which are reasonably
expected to yield available revenues at least equal to the Rate Covenant Requirement for the forthcoming
Fiscal Year. The term "Rate Covenant Requirement" shall mean:
12
313352 -v1
(1) Library Tax proceeds at least equal to the sum of 100% of the Aggregate Debt
Service excluding amounts payable on Repayment Obligations for the Fiscal Year, plus 100% of
the Repayment Obligations, if any, which will be due and payable during the forthcoming Fiscal
Year, plus 100% of the amounts, if any, required by the Master Indenture to be deposited into the
Debt Service Reserve Account during the forthcoming Fiscal Year, and
(2) Library Tax proceeds which together with Other Available Funds, are (a) 120% of
Aggregate Debt Service excluding amounts payable on Repayment Obligations for the Fiscal Year,
(b) 100% of the Repayment Obligations, if any, which will be due and payable during the
forthcoming Fiscal Year, and (c) 100% of the amounts, if any, required by the Master Indenture to
be deposited into the Debt Service Reserve Account during the forthcoming Fiscal Year. In the
event that there are no Other Available Funds for purposes of this paragraph (2), Library Tax
proceeds must equal 120% of items (a), (b), and (c).
If the annual financial statements relating to Library Tax proceeds disclose that the Library Tax
proceeds were not at least equal to the Rate Covenant Requirement, the City shall not be in default under the
provisions of the Master Indenture described above if,
(1) within 60 days after the date of such financial statement the City obtains
recommendations from an Library Consultant as to the revision of the procedures for collection
necessary to produce Library Tax proceeds at least equal to the Rate Covenant Requirement and
(2) on the basis of such recommendations, the City revises the procedures for
collection insofar as is practicable so as to produce Library Tax proceeds at least equal to the Rate
Covenant Requirement.
Eminent Domain
If all or any part of the Public Libraries shall be taken by eminent domain proceedings or
conveyance in lieu thereof, the net proceeds realized by the City therefrom shall be deposited with the
Trustee in a special fund in trust and shall be applied and disbursed by the Trustee subject to the following
conditions:
(1) If such funds are sufficient to provide for the payment of the entire amount of
Principal due or to become due upon all of the Outstanding Bonds and outstanding Repayment
Obligations, together with all of the interest due or to become due thereon and any redemption
premiums thereon, so as to enable the City to retire all of the Bonds then Outstanding, either by call
and redemption at the then current Redemption Prices or by payment at maturity or partly by
redemption prior to maturity and partly by payment at maturity, and to pay all Repayment
Obligations, the Trustee shall apply such moneys to such retirement or payment, as appropriate, and
to the payment of such interest. Pending the application of such proceeds for such purpose, such
moneys shall be invested by the Trustee in Government Obligations. The balance of such moneys,
if any, shall be transferred to the City.
(2) If such proceeds are insufficient to provide the moneys required for the purposes
set forth in paragraph (1) above, the City shall request the Trustee to apply such proceeds for one of
the following purposes:
(a) To the purchase, redemption, or retirement of Bonds then Outstanding and
Repayment Obligations then outstanding. If more than one Series of Bonds is then
Outstanding, such proceeds shall be applied pro rata among each such Series to the
purchase, redemption, or retirement of the Bonds of each such Series and the payment of
Repayment Obligations in the proportion which the Principal amount of Bonds of each
13
313352 -v1
such Series then Outstanding and Repayment Obligations then outstanding bears to the
aggregate Principal amount of all Bonds then Outstanding and Repayment Obligations then
outstanding. Pending the application of such proceeds for such purpose, such moneys shall
be invested by the Trustee in Government Obligations.
(b) To deliver such proceeds to the City to apply to the cost of additions,
improvements, or extensions to the Public Libraries. The City shall also file with the
Trustee a Library Consultant's Certificate showing the loss in annual Library Tax proceeds,
if any, suffered or to be suffered by the City by reason of such eminent domain
proceedings, together with a general description of the additions, improvements, or
extensions to the Public Libraries then proposed to be acquired or constructed by the City
from such proceeds. The City shall hold such proceeds in trust and apply them to the
acquisition or construction of the additions, improvements, or extensions substantially in
accordance with such Library Consultant's Certificate. The City shall acquire or construct
such additions or improvements in a sound and economic manner and as expeditiously as is
practicable. Any balance of such proceeds not required by the City for such additions,
improvements, or extensions shall be deposited into the Revenue Fund,
(c) To deposit such proceeds into the Revenue Fund upon the basis that such
eminent domain proceedings have had no effect, or at the most a relatively immaterial
effect, upon the security of the Bonds. The City shall file with the Trustee a Library
Consultant's Certificate stating that such eminent domain proceedings have not
substantially impaired or affected the operation of the Library or the ability of the City to
collect Library Tax proceeds at least equal to the Rate Covenant Requirement. The Trustee
shall deposit such proceeds into the Revenue Fund.
Reconstruction of Libraries; Application of Insurance Proceeds
If any useful portion of a Library shall be damaged or destroyed, the City shall, as expeditiously as
is practicable, continuously and diligently prosecute or cause to be prosecuted the reconstruction or
replacement thereof, unless the City shall file with the Trustee a Library Consultant's Certificate to the
effect that such reconstruction or replacement is not in the interests of the City and the Bondholders. The
proceeds of any insurance paid on account of such damage or destruction, other than business interruption
loss insurance or public liability insurance, shall, if the appropriate Project Account in the Construction
Fund has not been closed, be paid into the Construction Fund, or if the Construction Fund has been closed,
shall be held by the Trustee in a special account and made available for, and to the extent necessary applied
to, the cost of such reconstruction or replacement, if any. Pending such application, such proceeds may be
invested by the City in Investment Securities which mature not later than such times as shall be necessary to
provide moneys when needed to pay such cost of reconstruction or replacement. Any balance of such
proceeds of insurance not needed to pay such cost of reconstruction or replacement shall be deposited into
the Revenue Fund.
Operation by CALS
The City recognizes that CALS is the instrumentality of the City designated by ordinances of the
City to operate and manage the Public Libraries and their related properties and facilities, with full and
complete authority to manage, operate, improve, extend, and maintain the Public Libraries and their related
properties and facilities. Such authority and responsibility of CALS is confirmed and continued, and CALS
is further designated and appointed as the agency and instrumentality of the City to act for and on behalf of
the City in connection with the discharge of the duties of the City, and the realization of all rights of the
City, under and pursuant to the Master Indenture. The City covenants with the Trustee and the Holders of
the Bonds that such authorization and authority will not be rescinded so long as any Bonds are Outstanding.
14
313352 -v1
The Trustee
The City has appointed Metropolitan National Bank, Little Rock, Arkansas, as Trustee for the
Holders of the Bonds, to act as the legal depository of the City for the purpose of receiving all moneys
which the City is required to pay to the Trustee under the Master Indenture and to hold, allocate, use, and
apply the same as provided in the Master Indenture. The Trustee shall also act as registrar and Transfer
Agent for the Bonds, with the duties provided in the Master Indenture. In acting as registrar and Transfer
Agent, the Trustee shall be the agent of the City.
Resignation of the Trustee. The Trustee may at any time resign or be discharged of its duties and
obligations created by the Master Indenture by giving not less than 60 days' written notice to the City,
specifying the date when such resignation shall take effect, and mailing notice thereof to the Holders of all
Bonds then Outstanding, and such resignation shall take effect on the day specified in such notice unless
previously a successor shall have been appointed in the manner described below and as provided in the
Master Indenture, in which event such resignation shall take effect immediately upon the appointment of
such successor; provided, however, that such resignation of the Trustee shall in no event take effect until
such successor shall have been appointed and accepted the duties of Trustee.
Removal of the Trustee. The City may at any time remove the Trustee initially appointed or any
successor thereto by the adoption by CALS of a resolution providing for such removal, for the appointment
of a successor, and for the effective date of the change of Trustee; provided, however, that such removal of
the Trustee shall in no event take effect until such successor shall have been appointed and accepted the
duties of Trustee.
Appointment of Successor Trustee. Notice of the resignation or removal of the Trustee and the
appointment of a successor shall be mailed by first class mail to the registered Holders of all Bonds then
Outstanding (and by publication in a Financial Newspaper or Journal if any Bonds then Outstanding are not
in fully registered form) and to each Security Instrument Issuer and Reserve Instrument Issuer then having a
Security Instrument or Reserve Instrument outstanding, within 30 days after adoption by CALS of the
resolution providing for such appointment. Any successor Trustee appointed by resolution adopted
subsequent to the issuance of the first Series of Bonds issued under the Master Indenture shall be a bank or
trust company with a capital stock, undivided profits, and surplus of not less than $50,000,000 (or in the
case of a corporation or trust company included in a bank holding company system, the related bank holding
company system shall have a capital stock, undivided profits, and surplus of not less than $50,000,000).
Terms and Conditions of the Trusts. The Trustee shall perform the trusts contained in the Master
Indenture as a corporate trustee ordinarily would perform said trusts under a corporate indenture, only upon
and subject to the express terms and conditions of the Master Indenture, including without limitation the
following:
(1) The Trustee shall not be required to take notice or be deemed to have notice of any
default under the Master Indenture except (a) failure by the City to cause to be made any of the
payments to the Trustee required to be made pursuant to Article V of the Master Indenture; (b)
failure of the City to file with the Trustee any document required by the Master Indenture to be so
filed prior to or subsequent to the issuance of the Bonds; or (c) any default with respect to a Security
Instrument Agreement or Reserve Instrument Agreement as to which any of the parties thereto has
notified the Trustee in writing; provided that, the Trustee shall be required to take notice or be
deemed to have notice of any default under the Master Indenture if specifically notified in writing
of such default by the Holders of not less than 10% in aggregate Principal amount of Bonds then
Outstanding, by any Security Instrument Issuer, or by any Reserve Instrument Issuer, and all notices
or other instruments required by the Master Indenture to be delivered to the Trustee must, in order
15
313352 -vt
to be effective, be delivered at the principal corporate trust office of the Trustee and in the absence
of such notice, the Trustee may conclusively assume there is not default except as aforesaid;
(2) The Trustee shall be under no obligation to exercise any of the trusts or powers
vested in it by the Master Indenture at the request, order, or direction of any of the Bondholders,
Security Instrument Issuers, or Reserve Instrument Issuers, pursuant to the provisions of the Master
Indenture, unless such Bondholders, Security Instrument Issuers, or Reserve Instrument Issuers,
shall have offered to the Trustee reasonable security or indemnity against the costs, expenses, and
liabilities which might be incurred therein or thereby.
(3) The Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, ordinance, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, Bond, or other paper or document, unless requested in
writing to do so by (1) the Holders of not less than 25% in aggregate Principal amount of the Bonds
then Outstanding, (2) any Security Instrument Issuer of a Security Instrument then in full force and
effect and not in default on a payment obligation, or (3) any Reserve Instrument Issuer of a Reserve
Instrument then in full force and effect and not in default on a payment obligation; provided that if
the timely payment to the Trustee of the costs, expenses, or liabilities likely to be incurred in the
making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee
by the security afforded to it by the terms of the Master Indenture, the Trustee may require
reasonable indemnity against such expenses or liabilities as a condition to so proceeding. The
reasonable expense of every such inquiry or examination shall be paid by the City or, if paid by the
Trustee, shall be repaid by the City.
Intervention by the Trustee. In any judicial proceeding to which the City is a party and which in
the opinion of the Trustee has a substantial bearing on the interests of Holders of the Bonds, the Trustee
may intervene on behalf of Bondholders and shall do so if requested in writing by the Holders of a
majority of the aggregate Principal amount of Bonds then Outstanding or any Security Instrument Issuer of
a Security Instrument then in full force and effect and not in default on a payment obligation. The rights and
obligations of the Trustee described in this paragraph are subject to the approval of a court of competent
jurisdiction.
Successor Trustee. Any corporation or association into which the Trustee may be converted or
merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business
or assets as a whole or substantially as a whole, or any corporation or association resulting from any such
conversion, sale, merger, consolidation, or transfer to which it is a party, shall be and become a successor
Trustee under the Master Indenture and vested with all the trusts, powers, discretion, immunities, privileges,
and all other matters as was its predecessor, without the execution or filing of any instrument or any further
act, deed, or conveyance on the part of the Trustee or the City.
Compensation of the Trustee and its Lien. The City covenants and agrees to pay to the Trustee
from time to time, and the Trustee shall be entitled to, reasonable compensation and, except as otherwise
expressly provided, the City covenants and agrees to pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements, and advances incurred or made by the Trustee in accordance with any
of the provisions of the Master Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ including but not limited to any
Paying Agent, Transfer Agent, or Depository) except any such expense, disbursement, or advance as may
arise from its negligence or bad faith. The City also covenants to indemnify the Trustee for, and to hold it
harmless against, any loss, liability, or expense incurred without negligence or bad faith on the part of the
Trustee, arising out of or in connection with the acceptance or administration of the trust evidenced by the
Master Indenture, including the costs and expenses of defending itself against any claim of liability in the
premises. The obligations of the City to compensate and indemnify the Trustee and to pay or reimburse the
16
313352 -v1
0 0
Trustee for expenses, disbursements, and advances shall constitute additional indebtedness under the Master
Indenture, shall be subject to the same limitations with respect to sources of payment as all other
indebtedness of the City thereunder, and shall survive the satisfaction and discharge of the Master Indenture.
Such additional indebtedness shall be secured by a lien prior to that of the Bonds upon all property and
funds held or collected by the Trustee as such, except funds held in any Rebate Fund and funds held in trust
for the benefit of the Holders of particular Bonds.
Modification or Amendment of the Master Indenture and Supplemental Indentures
Amendments Permitted. The Master Indenture or any Supplemental Indenture and the rights and
obligations of the City and of the Holders of the Bonds may be modified or amended at any time by a
Supplemental Indenture and pursuant to the affirmative vote at a meeting of Bondholders, or with the
written consent without a meeting, (1) of the Holders of at least 60% in Principal amount of the Bonds then
Outstanding, (2) in case less than all of the several Series of Bonds then Outstanding are affected by the
modification or amendment, of the Holders of at least 60% in Principal amount of the Bonds of each Series
so affected and then Outstanding, and (3) in case the modification or amendment changes the terms of any
Sinking Fund Installment, of the Holders of at least 60% in Principal amount of the Bonds of the particular
Series and maturity entitled to such Sinking Fund Installment and then Outstanding; provided, however, that
if such modification or amendment will not, by its terms, take effect so long as any Bonds of any specified
Series remain Outstanding, the consent of the Holders of Bonds of such Series shall not be required and
Bonds of such Series shall not be deemed to be Outstanding for the purpose of any calculation of
Outstanding Bonds described in this paragraph.
The Master indenture or any Supplemental Indenture and the rights and obligations of the Issuer,
the Holders of the Bonds, the Security Instrument Issuers, and the Reserve Instrument Issuers may also be
modified or amended at any time by a Supplemental Indenture, without the consent of any Bondholders, for
any of the following purposes:
(1) to add to the covenants and agreements of the City contained in the Master
Indenture, to add other covenants and agreements thereafter to be observed, or to surrender any
right or power therein reserved to or conferred upon the City;
(2) to make such provisions for the purpose of curing any ambiguity, or of curing or
correcting any defective provision contained in the Master Indenture or in regard to questions
arising under the Master Indenture, as the City may deem necessary or desirable, and which shall
not adversely affect the interests of the Holders of the Bonds;
(3) to provide for the issuance of a Series of Bonds in accordance with the provisions
of the Master Indenture (see the caption "Summary of the Master Indenture --- General Provisions
for the Issuance of Bonds" herein);
(4) to provide for the issuance of the Bonds pursuant to a book -entry system;
(5) to make any change which in the judgment of the Trustee shall not materially
adversely affect the rights or interests of the Holders of any Outstanding Bonds requested by a
Rating Agency in order to obtain or maintain any rating on the Bonds or by a Security Instrument
Issuer or Reserve Instrument Issuer in order to insure or provide other security for any Bonds;
(6) to make any change necessary (a) to establish or maintain the exemption from
federal income taxation of interest on any Series of Bonds as a result of any modifications or
amendments to section 148 of the Code (or any successor provision of law) or interpretations
thereof by the Internal Revenue Service, or (b) to comply with the provisions of section 148(f) of
the Code (or any successor provision of law), including provisions for the payment of all or a
17
313352 -v1
i
portion of the investment earnings of any of the Funds established under the Master Indenture to the
United States of America;
(7) if the Bonds affected by such change are rated by a Rating Agency, to make any
change which does not result in a reduction of the rating applicable to any of the Bonds so affected,
provided that if any of the Bonds so affected are secured by a Security Instrument, such change
must be approved in writing by the related Security Instrument Issuer;
(8) if the Bonds affected by such change are secured by a Security Instrument, to make
any change approved in writing by the related Security Instrument Issuer, provided that if any of the
Bonds so affected are rated by a Rating Agency, such change shall not result in a reduction of the
rating applicable to any of the Bonds so affected; and
(9) to the extent permitted by a Supplemental Indenture authorizing a Series of
Construction Bonds (or Bond Anticipation Notes), the designation of additions, improvements, and
extensions to the Public Libraries as a Project by such Supplemental Indenture may be modified or
amended if the City delivers to the Trustee a Library Consultant's Certificate to the effect that such
modification or amendment will not adversely effect the City's ability to perform the covenants
contained in the Master Indenture relating to the collection of Library Tax proceeds.
No modification or amendment shall be permitted pursuant to paragraph (7), (8), or (9) unless the
City delivers to the Trustee an Opinion of Counsel, with nationally recognized standing in the field of law
relating to municipal bonds, to the effect that such modification or amendment will not adversely affect the
tax- exempt status or validity of any Bonds affected by such modification or amendment.
No modification or amendment permitted as described above shall (1) extend the fixed maturity of
any Bond, or reduce the Principal amount or Redemption Price thereof, or reduce the rate or extend the time
of payment of interest thereon, without the consent of the Holder of each Bond so affected, (2) reduce the
aforesaid percentage of Bonds required for the affirmative vote or written consent to an amendment or
modification of the Master Indenture, without the consent of the Holders of all of the Bonds then
Outstanding, or (3) without its written consent thereto, modify any of the rights or obligations of the Trustee.
Each Supplemental Indenture authorized as described above shall become effective as of the date of
its adoption or such later date as shall be specified in such Supplemental Indenture.
No amendment, as described above, shall be permitted which shall affect (1) the rights or duties of
a Security Instrument Issuer or Reserve Instrument Issuer of a Security Instrument or a Reserve
Instrument, as the case may be, then in full force and effect and not in default on a payment obligation, or
(2) the Series of Bonds for which a Security Instrument Issuer or Reserve Instrument Issuer provides
security, without the consent of such Security Instrument Issuer or Reserve Instrument Issuer, as the case
may be.
Bondholders' Meetings. The Trustee may, and upon the Written Request of the City shall, at any
time, call a meeting of the Holders of Bonds, to be held at such place as may be selected by the Trustee and
specified in the notice calling such meeting. Written notice of such meeting, stating the time and place of the
meeting and in general terms the business to be submitted, shall be mailed by the Trustee, postage prepaid,
not less than 30 nor more than 60 days before such meeting to any Security Instrument Issuer or Reserve
Instrument Issuer that is in full force and effect with respect to any Series of Bonds Outstanding and to each
registered owner of Bonds then Outstanding at the owner's address, if any, appearing upon the Bond register
of the City. The cost and expense of the giving of such notice shall be home by the City, and the Trustee
shall be reimbursed by the City for any expense incurred by it.
lu
313352 -v1
0 0
Prior to calling any meeting of the Holders of Bonds, the Trustee shall adopt regulations for the
holding and conduct of such meeting, and copies of such regulations shall be filed at the principal corporate
trust office of the Trustee and at the office of the City and shall be open to the inspection of all Bondholders.
The regulations shall include such provisions as the Trustee may deem advisable for evidencing the
ownership of Bonds, for voting in person or by proxy, for the selection of temporary and permanent officers
to conduct the meeting and inspectors to tabulate and canvass the votes cast at the meeting, the adjournment
of any meeting, and the records to be kept of the proceedings of such meeting, including rules of order for
the conduct of such meeting and such other regulations as, in the opinion of the Trustee, may be necessary
or desirable.
No resolution adopted by such meeting of Bondholders shall be binding unless and until a valid
Supplemental Indenture has been passed containing the modifications or amendments authorized by the
resolution adopted at such meeting. Such Supplemental Indenture shall become effective upon the filing
with the Trustee of the resolution adopted at such meeting and such Supplemental Indenture.
Amendment by Written Consent. The City may at any time adopt a valid Supplemental Indenture
amending the provisions of the Bonds or of the Master Indenture or any Supplemental Indenture, to the
extent that such an amendment is permitted by the Master Indenture, to become effective when and as
approved by written consent of the Bondholders, and any necessary Security Instrument Issuers and Reserve
Instrument Issuers, and as provided in the Master Indenture. Such Supplemental Indenture shall not be
effective unless there shall have been filed with the City or the Trustee the written consents of the necessary
number of Holders of the Bonds then Outstanding and the consents of any necessary Security Instrument
Issuers and Reserve Instrument Issuers and a notice shall have been published as described below. It shall
not be necessary for any consent to approve the particular form of any proposed Supplemental Indenture,
but it shall be sufficient if such consent shall approve the substance thereof. Each consent of a Bondholder
shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given.
Any such consent shall be binding upon the Holder of the Bonds giving such consent and on any subsequent
Holder thereof (whether or not such subsequent Holder has notice thereof) unless such consent is revoked in
writing by the Holder of the Bonds giving such consent or a subsequent Holder thereof by filing such
revocation with the City prior to the date when the notice described below has been mailed. Notice of the
fact of the adoption of such Supplemental Indenture shall be mailed by the City to Bondholders (but failure
to mail copies of such notice shall not affect the validity of the Supplemental Indenture when assented to by
the requisite percentage of the Holders of the Bonds as aforesaid) and to each Security Instrument Issuer and
Reserve Instrument Issuer of a Security Instrument or a Reserve Instrument, as the case may be, then in full
force and effect and not in default in a payment obligation.
Disqualified Bonds. Bonds owned or held by or for the account of the City shall not be deemed
Outstanding for the propose of any vote, consent, or other action or any calculation of Outstanding Bonds
for the purpose of approving Supplemental Indentures, and neither the City nor any owner or Holder of such
Bonds shall be entitled to vote or consent to, or to take, any other such action. Any Pledged Bonds shall be
deemed Outstanding and, for the purposes of any vote, shall be considered to be owned by the appropriate
Security Instrument Issuer.
Events of Default and Remedies
Events of Default. The occurrence of one or more of the following events shall constitute an
"Event of Default":
(1) failure by the City to make the due and punctual payment of the Principal or
Redemption Price of any Bond when and as the same shall become due and payable, whether at
maturity as therein expressed, by proceedings for redemption, by declaration, or otherwise;
W
313352 -v1
(2) failure by the City to make the due and punctual payment of any installment of
interest on any Bond or any Sinking Fund Installment when and as such interest installment or
Sinking Fund Installment shall become due and payable;
(3) failure by the City to observe any of the covenants, agreements, or conditions on its
part contained in the Master Indenture or the Bonds, and failure to remedy the same for a period of
60 days after written notice thereof, specifying such failure and requiring the same to be remedied,
shall have been given to the City by the Trustee, or to the City and the Trustee by the Holders of not
less than 25% in aggregate principal amount of the Bonds at the time Outstanding;
(4) bankruptcy, reorganization, arrangement, insolvency, or liquidation proceedings,
including without limitation proceedings under Chapter 9 of Title 11, United States Code (as the
same may from time to time be hereafter amended), or other proceedings for relief under any
federal or state bankruptcy law or similar law for the relief of debtors are instituted by or against the
City and, if instituted against the City, said proceedings are consented to or are not dismissed within
30 days after such institution; or
(5) any event specified in a Supplemental Indenture as constituting an Event of Default
under the Master hndenture;
provided that any failure by the City to make payment as described in subparagraph (1) or (2) above shall
not constitute an Event of Default with respect to any Bond if the Supplemental Indenture authorizing the
issuance of such Bond provides that due and punctual payment by a Security Instrument Issuer or a
Reserve Instrument Issuer shall not give rise to an Event of Default and such payment is, in fact, duly and
punctually made.
The Trustee shall give notice to any Security Instrument Issuer or Reserve Instrument Issuer of any
Event of Default known to the Trustee within 30 days after it has knowledge thereof.
Acceleration. Upon the occurrence of an Event of Default, unless the principal of all the Bonds
shall have already become due and payable:
(1) the Trustee may, or
(2) upon receipt of the written request of (a) the Holders of not less than 25% of the
aggregate Principal amount of the Bonds at the time Outstanding (subject to any limitations
specified in a Supplemental Indenture authorizing a Series of Bonds with respect to the rights of the
Holders of such Bonds), (b) Security Instrument Issuers at the time providing Security Instruments
which are in full force and effect and not in default on any payment obligation and which secure not
less than 25% in aggregate Principal amount of the Bonds at the time Outstanding, or (c) any
combination of Bondholders and Security Instrument Issuers described in clauses (a) and (b)
representing not less than 25% in aggregate Principal amount of the Bonds at the time Outstanding,
the Trustee shall, or
(3) the Trustee shall, if an Event of Default specified to be such in a Supplemental
hndenture and the Supplemental Indenture specifying such Event of Default requires acceleration
upon occurrence of such Event of Default (provided that if the Supplemental Indenture specifies
that any conditions relating to such Event of Default to be satisfied prior to acceleration, such
conditions are satisfied),
declare upon notice in writing to the City the Principal of all of the Bonds then Outstanding, and the interest
accrued thereon, to be due and payable immediately. Upon such declaration such Principal and interest shall
be immediately due and payable, notwithstanding anything to the contrary contained in the Master Indenture
20
313352 -v1
or in the Bonds; provided that with respect an Event of Default described in (1) or (2) relative to any
Series of Bonds Outstanding secured by a Security Instrument which is in full force and effect and not in
default on any payment obligation thereunder, no acceleration of such Series of Bonds shall occur without
the written consent of the Security Instrument Issuer that provided such Security Instrument, which
consent shall not be unreasonably withheld.
The right of the Trustee, or of the parties described in paragraph (2) above, to request the Trustee to
make any such declaration as aforesaid, however, is subject to the conditions that:
(1) If, at any time after such declaration, any overdue installments of interest upon the
Bonds, together with the reasonable and proper charges, expenses, and liabilities of the Trustee, and
all other sums then payable by the City under the Master Indenture (except the Principal of and
interest accrued since the next preceding interest payment date on the Bonds due and payable solely
by virtue of such declaration) shall either be paid by the City or provision satisfactory to the Trustee
shall be made for such payment, and all defaults under the Bonds or under the Master Indenture
(other than the payment of Principal and interest due and payable solely by reason of such
declaration) shall be made good or be secured to the satisfaction of the Trustee or provision deemed
by the Trustee to be adequate shall be made therefor; and
(2) If, at any time after such declaration, no event of default, however defined in any
Security Instrument Agreement, has occurred and is continuing under such Security Instrument
Agreement;
(3) If the amount available to be drawn by the Trustee under each Reserve Instrument
is then equal to the Reserve Instrument Limit; and
(4) If any other requirement specified in a Supplemental Indenture shall have been
satisfied;
then and in every such case (a) the Holders of a majority in aggregate Principal amount of the Bonds at the
time Outstanding (subject to any limitations specified in a Supplemental Indenture authorizing a Series of
Bonds with respect to the rights of the Holders of such Bonds), (b) Security Instrument Issuers at the time
providing Security Instruments which are in full force and effect and not in default on any payment
obligation and which secure a majority in aggregate Principal amount of the Bonds then Outstanding, or
(c) any combination of Bondholders and Security Instrument Issuers described in clauses (a) and (b)
representing a majority in aggregate Principal amount of the Bonds at the time Outstanding, by written
notice to the City and to the Trustee, may rescind such declaration and annul such default in its entirety or, if
the Trustee shall have acted without a direction from the Holders or Security Instrument Issuers representing
not less than 25% in aggregate Principal amount of the Bonds at the time Outstanding at the time of such
request, and if there shall not have been theretofore delivered to the Trustee written request to the contrary
by (i) the Holders of a majority in aggregate Principal amount of the Bonds then Outstanding (subject to any
limitations specified in a Supplemental Indenture authorizing a Series of Bonds with respect to the rights of
the Holders of such Bonds), (ii) Security Instrument Issuers at the time providing Security Instruments
which are in full force and effect and not in default on any payment obligation and which secure a
majority in aggregate Principal amount of the Bonds then Outstanding, or (iii) any combination of
Bondholders and Security Instrument Issuers described under clauses (i) and (ii) representing a majority
in aggregate Principal amount of the Bonds at the time Outstanding, then any such declaration shall ipso
facto be deemed to be rescinded and any such default and its consequences shall ipso facto be deemed to be
annulled, but no such rescission and annulment shall extend to or affect any subsequent default or impair or
exhaust any right or power consequent thereon.
21
313352 -v1
Accounting and Examination of Records After Default. The City covenants that if an Event of
Default shall have happened and shall not have been remedied, the books of record and accounts of the City
and CALS and all other records of the City relating to the Public Libraries shall at all times be subject to the
inspection and use of the Trustee and of its agents and attorneys. The City covenants that if an Event of
Default shall happen and shall not have been remedied, the City, upon demand of the Trustee, will account,
as if it were the trustee of an express trust, for all Library Tax proceeds and other moneys, securities, and
funds pledged or held under the Master Indenture for such period as shall be stated in such demand.
Application of Library Tax Proceeds and Other Moneys After Default. During the continuance
of an Event of Default, the Trustee shall apply Library Tax proceeds and such moneys, securities, and funds
and the income therefrom as follows and in the following order, provided that moneys held in any Series
Subaccount in the Bond Account or in the Debt Service Reserve Account or received under any Security
Instrument shall not be used for purposes other than payment of the interest and Principal or Redemption
Price then due on the Series of Bonds corresponding to such Series Subaccount or such Security Instrument
in accordance with paragraph (3) below:
(1) to the payment of the reasonable and proper charges and expenses of the Trustee
and the reasonable fees and disbursements of its counsel;
(2) to the payment of the interest and Principal or Redemption Price then due on the
Bonds and Security Instrument Repayment Obligation, as follows:
(a) unless the Principal of all of the Bonds shall have become or have been
declared due and payable,
FIRST: To the payment to the persons entitled thereto of all installments of interest
then due on the Bonds and security Instrument Repayment Obligations in the order of the
maturity of such installments and, if the amount available shall not be sufficient to pay in
full any installment or installments maturing on the same date, then to the payment thereof
ratably, according to the amounts due thereon, to the persons entitled thereto, without any
discrimination or preference; and
SECOND: To the payment to the persons entitled thereto of the unpaid Principal or
Redemption Price of any Bonds and Security Instrument Repayment Obligations which
shall have become due, whether at maturity or by call for redemption, in the order of their
due dates and, if the amount available shall not be sufficient to pay in full all the Bonds and
Security Instrument Repayment Obligations due on any date, then to the payment thereof
ratably, according to the amounts of Principal or Redemption Price due on such date, to the
persons entitled thereto, without any discrimination or preference.
(b) if the Principal of all of the Bonds shall have become or have been
declared due and payable, to the payment of the Principal and interest then due and unpaid
upon the Bonds and Security Instrument Repayment Obligations without preference or
priority of Principal over interest or of interest over Principal, or of any installment of
interest over any other installment of interest, or of any Bond or Security Instrument
Repayment Obligations over any other Bond or Security Instrument Repayment
Obligations, ratably, according to the amounts due respectively for Principal and interest, to
the persons entitled thereto without any discrimination or preference.
(3) to the payment of all obligations owed to all Reserve Instrument Issuers, ratably,
according to the amounts due without any discrimination or preference.
22
313352 -vi
If and whenever all overdue payments on all Bonds and Repayment Obligations, together with the
reasonable and proper charges and expenses of the Trustee, shall be paid, or provision satisfactory to the
Trustee shall be made for such payment, and all defaults under the Master Indenture or the Bonds shall be
made good or secured to the satisfaction of the Trustee and the Repayment Obligations shall be made good
or secured to the satisfaction of the Security Instrument Issuers and the Reserve Instrument Issuers, as
appropriate, or provision deemed to be adequate shall be made therefor, the Trustee shall pay over to the
City all Library Tax proceeds then remaining unexpended in the hands of the Trustee (except Library Tax
proceeds deposited or pledged with the Trustee). The City and the Trustee shall be restored to their former
positions and rights under the Master Indenture, and all Library Tax proceeds shall thereafter be applied as
provided in the Master Indenture. No such payment over to the City by the Trustee or resumption of the
application of Library Tax proceeds as provided in the Master Indenture shall extend to or affect any
subsequent default under the Master Indenture or impair any right consequent thereon.
Rights and Remedies of Bondholders. No Holder of any Bond, any Security Instrument Issuer, or
any Reserve Instrument Issuer shall have any right to institute any proceeding, judicial or otherwise, with
respect to the Master Indenture, or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless
(1) such Holder, any Security Instrument Issuer, or any Reserve Instrument Issuer has
previously given written notice to the Trustee of a continuing Event of Default;
(2) either (a) the Holders of not less than 25% in aggregate Principal amount of the
Outstanding Bonds, (b) Security Instrument Issuers at the time providing Security Instruments
which are in full force and effect and not in default on any payment obligation and which secure
25% in aggregate Principal amount of the Bonds at the time Outstanding, or (c) any combination of
Bondholders and Security Instrument Issuers described in clauses (a) and (b) representing not less
than 25% in aggregate Principal amount of the Bonds at the time Outstanding, shall have made
written request to the Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee under the Master Indenture;
(3) such Holders or Security Instrument Issuer have offered to the Trustee reasonable
indemnity against the costs, expenses, and liabilities to be incurred in compliance with such request;
(4) the Trustee has failed to institute any such proceedings for 60 days after its receipt
of such notice, request, and offer of indemnity; and
(5) no direction inconsistent with such written request has been given to the Trustee
during such 60 day period by (a) the Holders of a majority in Principal amount of the Outstanding
Bonds, (b) Security Instrument Issuers at the time providing Security Instruments which are in full
force and effect and not in default on any payment obligation and which secure a majority in
aggregate Principal amount of the Bonds then Outstanding, or (c) any combination of Bondholders
and Security Instrument Issuers described in clauses (a) and (b) representing a majority in aggregate
Principal amount of the Bonds at the time Outstanding;
it being understood and intended that no one or more Holders of Bonds, Security Instrument Issuers, or
Reserve Instrument Issuers shall have any right in any manner whatever by virtue of, or by availing of, any
provision of the Master Indenture to affect, disturb, or prejudice the rights of any other such parties, or to
obtain or to seek to obtain priority or preference over any other such parties or to enforce any right under the
Master Indenture, except in the manner therein provided and for the equal and ratable benefit of all such
parties in accordance with the provisions of the Master Indenture.
23
313352 -v1
0 0
Notwithstanding any other provision in the Master Indenture, the Holder of any Bond shall have the
right which is absolute and unconditional to receive payment of the Principal and Redemption Price of and
interest on such Bond on the respective stated maturities expressed in such Bond (or, in the case of
redemption, on the redemption date of such Bond) and to institute suit for the enforcement of any such
payment, subject only to any conditions of any Security Instrument Issuer providing a Security Instrument
securing such Bond. Such right to receive payment shall not be impaired without the consent of such
Holder.
The (1) Holders of a majority of the Principal amount of the Outstanding Bonds, (2) Security
Instrument Issuers at the time providing Security Instruments which are in full force and effect and not in
default on any payment obligation and which secure a majority in aggregate Principal amount of the Bonds
then Outstanding, or (3) any combination of Bondholders and Security Instrument Issuers described under
clauses (1) and (2) representing a majority in aggregate Principal amount of the Bonds at the time
Outstanding, shall have the right to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that:
such direction shall not be in conflict with any rule of law or the Master Indenture, the Trustee shall not
determine that the action so directed would be unjustly prejudicial to the Holders and Security Instrument
Issuers not taking part in such direction, and the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Appointment of Receiver. Upon the occurrence of an Event of Default, and upon the filing of a
suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the
Bondholders, the Security Instrument Issuers, and the Reserve Instrument Issuers, the Trustee shall be
entitled, as a matter of right, to the appointment of a receiver or receivers of the trust estate created by the
Master Indenture, including, without limitation, the proceeds of the sale of the Bonds, the Library Tax
proceeds, and the Funds, including the investments, if any, thereof, pending such proceedings, with such
powers as a court making such appointments shall confer.
Investment of Funds
Moneys held in any Fund or account shall be invested and reinvested by the City or the Trustee to the
fullest extent practicable in Investment Securities which mature not later than such times as shall be necessary
to provide moneys when needed for payments to be made from such Fund or account, subject to the
following:
(1) the Trustee shall make such investments only in accordance with instructions
received from an Authorized Officer of the City;
(2) any Supplemental Indenture authorizing a Series of Bonds may impose additional
restrictions on moneys held in any Fund or account; and
(3) any Supplemental Indenture authorizing a Series of Bonds may authorize the
investment of moneys to be held in any Project Account, Series Subaccount in the Bond Account, or
Series Subaccount in the Debt Service Reserve Account created by such Supplemental Indenture and
relating to such Series of Bonds in such other investments as may be specified by the Supplemental
Indenture.
Subject to any required rebate of earnings on investments in any Fund or account to the United States
of America pursuant to section 148(f) of the Code and except as otherwise provided in a Supplemental
Indenture establishing a Series Subaccount: (1) all moneys earned as an investment of moneys in the
Construction Fund shall be retained therein; (2) net income earned on any moneys or investments in the
Revenue Fund and the Bond Account shall be transferred to the Revenue Fund; and (3) whenever a Series
24
313352 -v1
o
Subaccount in the Debt Service Reserve Account is in its full required amount, net income earned on any
moneys or investments in such Series Subaccount shall be transferred to the Revenue Fund as provided in the
Master Indenture (see the caption "Summary of the Master Indenture — Principal and Interest Fund —Debt
Service Reserve Account" herein), otherwise, to be retained therein.
Defeasance
Discharge of Indebtedness. If the City shall pay, or there shall otherwise be paid to the Holder of
all Bonds the Principal or Redemption Price, if applicable, and interest due or to become due thereon, at the
times and in the manner stipulated therein, and if all Repayment Obligations owed to Security Instrument
Issuers and Reserve Instrument Issuers shall have been paid in full, then the pledge of any Library Tax
proceeds and other moneys, securities, and Funds pledged under the Master Indenture and all covenants,
agreements, and other obligations of the City to the Bondholders, Security Instrument Issuers, and Reserve
Instrument Issuers shall thereupon cease, terminate, and become void and be discharged and satisfied. Such
Bonds shall cease to be entitled to any lien, benefit, or security under the Master Indenture, and all
covenants, agreements, and obligations of the City to the Holders of such Bonds shall thereupon cease,
terminate, and become void and be discharged and satisfied.
Bonds or interest installments for the payment or redemption of which moneys shall have been set
aside and shall be held in trust by the Fiduciaries (through deposit by the City of funds for such payment or
redemption or otherwise) at the maturity or redemption date thereof shall be deemed to have been paid
within the meaning and with the effect expressed in the paragraph above. All Outstanding Bonds of any
Series shall be, prior to the maturity or redemption date thereof, deemed to have been paid within the
meaning and with the effect expressed in the paragraph above if (1) in case any of said Bonds are to be
redeemed on any date prior to their maturity, the City shall have given to the Trustee in form satisfactory to
it irrevocable instructions to mail notice of redemption of such Bonds on said date, (2) there shall have been
deposited with the Trustee either moneys in an amount which shall be sufficient, or Government Obligations
(including any Government Obligations issued or held in book -entry form on the books of the Department
of the Treasury of the United States of America) the principal of and the interest on which when due will
provide moneys which, together with the moneys, if any, deposited with the Trustee at the same time, shall
be sufficient, to pay when due the Principal or Redemption Price, if applicable, of and interest due and to
become due on said Bonds on and prior to the redemption date or maturity date thereof, as the case may be,
and (3) in the event said Bonds are not by their terms subject to redemption within the next succeeding 60
days, the City shall have given the Trustee in form satisfactory to it irrevocable instructions to mail, first
class postage prepaid, a notice to the Holders of such Bonds that the deposit required by (2) above has been
made with the Trustee and that said Bonds are deemed to have been paid in accordance with the Master
Indenture and stating such maturity or redemption date upon which moneys are to be available for the
payment of the Principal or Redemption Price, if applicable, of said Bonds. Neither Government
Obligations nor moneys deposited with the Trustee nor principal or interest payments on any such
Government Obligations shall be withdrawn or used for any purpose other than, and shall be held in trust
for, the payment of the Principal or Redemption Price, if applicable, and interest on said Bonds; provided
that any cash received from such principal or interest payments on such Government Obligations deposited
with the Trustee, if not then needed for such purpose, shall be, to the extent practicable, reinvested in
Government Obligations maturing at times and in amounts sufficient to pay when due the Principal or
Redemption Price, if applicable, and interest to become due on said Bonds on and prior to such redemption
date or maturity date thereof, as the case may be, and interest earned from such reinvestments shall be paid
over to the City, as received by the Trustee, free and clear of any trust, lien, or pledge.
Unclaimed Moneys. Any moneys held by a Fiduciary in trust for the payment and discharge of any
of the Bonds which remain unclaimed for five years after the date when such Bonds have become due and
payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the
Fiduciary at such date, or for five years after the date of deposit of such moneys if deposited with the
25
313352 -v1
Fiduciary after the said date when such Bonds become due and payable, shall be repaid by the Fiduciary to
the City, as its absolute property and free from trust, and the Fiduciary thereupon shall be released and
discharged with respect thereto and the Bondholders shall look only to the City for the payment of such
Bonds. Before being required to make any such payment to the City, the Fiduciary shall, at the expense of the
City, cause to be published at least twice in a Financial Newspaper or Journal of general circulation in New
York, New York, at an interval of not less than seven days between publications, a notice that said moneys
remain unclaimed and that, after a date named in said notice, which date shall be not less than 30 days after
the date of the first publication of such notice, the balance of such moneys then unclaimed will be returned to
the City.
Pill
313352 -v1
0 0
APPENDIX C
SUMMARY OF THE SUPPLEMENTAL INDENTURE
In addition to certain other information contained under the caption "The Series 2002 Bonds"
herein, the following summarizes certain provisions of the Supplemental Indenture, to which documents in
their entirety reference is made for the detailed provisions thereof.
Establishment of Subaccounts
The Supplemental Indenture establishes the Series 2002 Project Account in the Construction Fund
and the Series 2002 Subaccount in the Bond Account and Debt Service Reserve Account in the Principal
and Interest Fund.
Series 2002 Debt Service Reserve Subaccount
There is no debt service reserve requirement for the 2002 Bonds.
Application of Proceeds of Series 2002B Bonds
From the proceeds of the Series 2002B Bonds there shall be paid:
To the Trustee for deposit as follows:
(a) Into the Series 2002 Bond Subaccount, the amount of interest accrued from March 1, 2002
to the date of delivery of the Series 2002 Bonds;
(b) Into the Series 2002 Cost of Issuance Subaccount, the amount set forth in the delivery
instructions; and
(c) Into the Series 2002 Project Account in the Construction Fund, the balance of the proceeds
of the Series 2002 Bonds.
313352 -v1
10RELIMINARY DRAFT
Dated: 2/11/02
FOR DISCUSSION PURPOSES ONLY
CITY OF LITTLE ROCK, ARKANSAS
as Issuer
TO
METROPOLITAN NATIONAL BANK
as Trustee
SUPPLEMENTAL TRUST INDENTURE
Dated as of March 1, 2002
Providing For:
City of Little Rock, Arkansas
Library Improvement Bonds
Series 2002
This instrument constitutes a Security Agreement
under the Arkansas Uniform Commercial Code.
This instrument prepared by:
WRIGHT, LINDSEY & JENNINGS LLP
200 West Capitol Avenue, Suite 2200
Little Rock, Arkansas 72201 -3699
(501) 371 -0808
309272 -v1
a PRELIMINARY DRAFT
Dated: 2/11/02
FOR DISCUSSION PURPOSES ONLY
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND AUTHORITY
Section101. De finitions ...................................................................................... ..............................2
Section 102. Authority for Supplemental indenture ........................................... ..............................3
Section 103. Aggregate Amount oflssuable Bonds ............................................ ..............................3
ARTICLE H AUTHORIZATION, TERMS AND ISSUANCE OF SERIES 2002
BONDS
Section 201. Authorization of Bonds, Principal Amount, Designation and Series ..........................3
Section 202. Finding and Purpose; Series 2002 Project .................................... ..............................4
Section203. Series 2002 Bonds. ... . .................................................................. ................................ 4
Section 204. Registered Bonds; Denomination and Numbers ............................ ..............................4
Section205. Paying Agent .................................................................................. ..............................4
Section 206. Optional Redemption and Mandatory Redemption.
Section 207. Sale of Series 2002 Bonds .............................................................. ..............................6
Section 208. Execution of Series 2002 Bonds..... .............................................................................. 6
Section 209. Delivery of Series 2002 Bonds ........................................................ ..............................6
ARTICLE HI ESTABLISHMENT OF ACCOUNTS AND APPLICATION OF
SERIES 2002 BOND PROCEEDS
Section 301. Series 2002 Project Account ........................................................... ..............................7
Section 302. Series 2002 Bond Subaccount ........................................................ ..............................7
Section 303. Series 2002 Debt Service Reserve Subaccount .............................. ..............................7
Section 304. Cost oflssuance Account ............................................................... ..............................7
Section 305. Application of Proceeds of Series 2002 Bonds ............................... ..............................7
ARTICLE IV COMPLIANCE WITH REBATE AND OTHER REQUIREMENTS OF
THE CODE
Section 401. Authorization and Covenants ......................................................... ..............................7
Section 402. Creation of Series 2002 Rebate Fund ............................................ ..............................8
Section403. Additional Payments ....................................................................... ..............................8
Section 404. Investments to Be LegaL ................................................................ ..............................9
Section 405. Opinion of Bond Counsel; Amendments ....................................... ..............................9
Section 406. Additional Covenants; Agreements ................................................ ..............................9
Section 407. Agreement to Pay Rebate Amount, Penalty And Interest .............. ..............................9
ARTICLE V FORM OF SERIES 2002 BONDS
Section 501. Form of Series 2002 Bonds . ........................................................... ..............................9
309272 -v1
ARTICLE VI MISCELLANEOUS
Section 601. Article and Section Headings . ..... ........................................... .................................. 18
Section602. Partial Invalidity . ......... ...................... ....................................................................... 18
Section603. Effective Date . ................................................................................ ........................... 18
Section 604. Limitation on Issuance of Additional Bonds .......... ... - ... — .................................. 18
Section 605. Additional Conditions for Defeasance . ..... ................................................................ 18
CONSENT AND AGREEMENT TO SERIES SUPPLEMENTAL INDENTURE . .............................20
ii
309272
PRELIMINARY DRAFT
Dated: 2/11/02
FOR DISCUSSION PURPOSES ONLY
SUPPLEMENTAL TRUST INDENTURE
This SUPPLEMENTAL TRUST INDENTURE dated as of the first day of March, 2002, by and between
the CITY OF LITTLE ROCK, ARKANSAS, a city of the first class under the laws of the State of Arkansas
( "City"), and Metropolitan National Bank, an institution organized under and existing by virtue of the laws
of the United States of America, with its principal office in Little Rock, Arkansas ( "Trustee ").
WITNESSETH:
WHEREAS, the City, Pulaski County, Arkansas and Perry County, Arkansas entered into an Interlocal
Cooperation Agreement in February of 1975 which established the Central Arkansas Library System
( "CALS ") which currently operates ten branches located in the cities of Little Rock (main library and five
branches), Sherwood, Jacksonville, Maumelle and Perryville;
WHEREAS, pursuant to Ark. Code Ann. § §25 -20 -201 through 207, the City, Pulaski County, Perry County
and the cities of Sherwood, Jacksonville and Maumelle entered into a new interlocal agreement in 1999
whereby CALS has expanded authority;
WHEREAS, the City is authorized and empowered under the laws of the State of Arkansas, including
particularly Amendment 30 to the Arkansas Constitution Ark. Code Ann. §§14-142-201 through 222 (Act
920 of the Acts of Arkansas of 1993) (the "Act "), and Ordinance No. 18,085 duly adopted and approved by
the City on August 3, 1999, as amended and supplemented by Ordinance No. _ duly adopted and
approved by the City on ' 2002, to issue bonds for the purpose of financing improvements
to public libraries and to refund outstanding library bonds;
WHEREAS, CALS, on behalf of the City, has determined that certain improvements to the public libraries
operated by CALS should be accomplished;
WHEREAS, the City and CALS intend to fund the following projects with the proceeds of the Series 2002
Bonds:
(1) Complete 5b floor of the Main Library;
(2) Purchase equipment for various branches;
(3) Construction of a new library in southwest Little Rock;
(4) Purchase of land in west Little Rock for new construction;
(5) Enhancing CALS collection of books, videos, etc.; and
(6) Accomplishing other projects which CALS' Board of Directors deems appropriate;
(collectively, the "Project" or "Projects "); and
WHEREAS, the costs of the Project and the costs of issuance are to be provided by the proceeds of the
Series 2002 Bonds;
WHEREAS, the series of Bonds issued under this Supplemental Indenture will be designated "City of Little
Rock, Arkansas Library Improvement Bonds, Series 2002"; and
WHEREAS, all things necessary to make the Series 2002 Bonds, when authenticated by the Trustee and
issued as provided in this Supplemental Indenture, the valid, binding and legal obligations of the City
according to the import thereof, and to constitute this Supplement Indenture a valid pledge of the proceeds
of the Library Tax and the Debt Service Supplement to the payment of the principal of, premium, if any, and
309272 -v1
interest on the Series 2002 Bonds, in accordance with the provisions hereof, have or will have been done
and performed, and the creation, execution and delivery of this Supplemental Indenture and the creation,
execution and delivery of the Series 2002 Bonds, subject to the terms hereof, have in all respects been duly
authorized;
NOW, THEREFORE, know all men by these presents, this Supplemental Indenture witnesseth:
ARTICLE I
DEFINITIONS AND AUTHORITY
Section 101. Definitions.
(a) Except as provided in Section 101(b), all defined terms contained in the Master Indenture
shall have the same meanings when used in this Series 2002 Supplemental Indenture as set forth in the
Master Indenture.
(b) As used in this Series 2002 Supplemental Indenture, the following terms shall have the
following meanings, unless the context otherwise requires:
"Bond Counsel" means Wright, Lindsey & Jennings LLP, Little Rock, Arkansas, or other counsel
of nationally recognized standing in matters pertaining to the tax-exempt status of interest on obligations
issued by states and their political subdivisions, duly admitted to the practice of law before the highest court
of any state of the United States.
"Closing Date" means the date of the delivery of the Series 2002 Bonds to the Underwriters.
"Debt Service Supplement" means receipts of a .5% statewide sales and use tax implemented
pursuant to Amendment No. 79 to the Arkansas Constitution.
"Issue Date" means March 1, 2002, as designated in Section 203(a) hereof.
"Master Indenture" means the Master Trust Indenture between the City and the Trustee dated as of
September 1, 1999, providing for the issuance of Library Improvement Bonds, as amended and
supplemented from time to time by Supplemental Indentures.
"Maximum Annual Debt Service" means the maximum amount of Debt Service due in any Year
with respect to the Series 2002 Bonds Outstanding.
"Ordinance" means Ordinance No. 18,085 duly adopted and approved by the City on August 3,
1999, as amended and supplemented by Ordinance No. duly adopted and approved by the City on
2002.
"Parity Bonds" means the City of Little Rock, Arkansas Library Improvement and Refunding
Bonds, Series 1999B issued pursuant to the Master Indenture and a Supplemental Trust Indenture dated
September 1, 1999 between the City and the Trustee.
"Project or "Projects" means:
(1) Complete 5b floor of the Main Library;
(2) Purchase equipment for various branches;
(3) Construction of a new library in southwest Little Rock;
(4) Purchase of land in west Little Rock for new construction;
309272
0
(5) Enhancing CALS collection of books, videos, etc.; and
(6) Accomplishing other projects which CALS' Board of Directors deems appropriate;
"Record Date" means the fifteenth day of the month next preceding any interest payment date.
"Series 2002 Bonds" means the City's Library Improvement Bonds, Series 2002, authorized by the
Supplemental Indenture.
"Series 2002 Bond Subaccount" means the Series Subaccount in the Bond Account established in
Section 303.
"Series 2002 Project" means and includes the costs associated with the accomplishment of the
Projects, and the costs related to the issuance of the Series 2002 Bonds.
"Series 2002 Project Account" means the Series 2002 Project Account in the Construction Fund
established in Section 302.
"Supplemental Indenture" means this Supplemental Trust Indenture executed by the City and
effective as of March 1, 2002, authorizing the issuance and sale of the Series 2002 Bonds.
"Tax Regulatory Agreement" means (a) the Tax Regulatory Agreement, dated the Closing Date,
between the City and the Trustee, (b) the Project Certificate of the City addressed to Bond Counsel and
dated the Closing Date, and (c) any other agreement or certificate of the City executed and delivered in
connection with the Series 2002 Bonds in order to assure the tax- exempt status of interest received on the
Series 2002 Bonds.
"Trustee" means Metropolitan National Bank, and its successors and permitted assigns under the
Master Indenture.
"Underwriters" means Stephens Inc.
The terms "hereby ", "hereof', "hereto ", "herein ", "hereunder ", and any similar terms as used in this
Supplemental Indenture refer to this Supplemental Indenture.
Section 102. Authority for Supplemental Indenture. This Series 2002 Supplemental Indenture is adopted
pursuant to the provisions of the Act, the Master Indenture and the Ordinance.
Section 103. Aggregate Amount of Issuable Bonds. The Series 2002 are a part of the $19,500,000 of
Bonds authorized to be issued by the Master Indenture. The Series 2002 Bonds shall be issued on a parity
of security with any other bonds issued pursuant to the Master Indenture.
ARTICLE II
AUTHORIZATION, TERMS AND ISSUANCE OF SERIES 2002 BONDS
Section 201. Authorization of Bonds, Principal Amount, Designation and Series. In order to provide
sufficient funds to complete the Series 2002 Project and in accordance with and subject to the terms,
conditions and limitations established in the Master Indenture, including this Supplemental Indenture, a
Series of Library Improvement Bonds is hereby authorized to be issued in the aggregate principal amount of
not to exceed $9,500,000. Such Series of Bonds shall be designated "Library Improvement Bonds, Series
2002."
309272
0
Section 202. Finding and Purpose; Series 2002 Project.
(a) The City hereby finds, determines and declares that the requirements of Sections 2.02 and
2.04 of the Master Indenture will have been complied with upon the delivery of the Series 2002 Bonds.
(b) The Series 2002 Bonds are hereby authorized to be issued for the purpose of paying a
portion of the costs to accomplish the Projects and to pay all expenses properly incident thereto and to the
issuance of the Series 2002 Bonds. There are no other outstanding bonds, notes or other obligations payable
from and secured by a pledge of the Library Tax or the Debt Service Supplement, other than the City of
Little Rock, Arkansas Library Improvement Bonds, Series 1999B dated September 1, 1999, and issued on a
parity of security therewith (the "Parity Bonds "). The Master Indenture grants the City the authority to issue
additional Series of bonds on a parity of security with the Series 2002 Bonds. However, the maximum
aggregate principal amount of bonds which may be issued under the Master Indenture is $19,500,000, which
will be completely issued after issuance of the Series 2002 Bonds.
Section 203. Series 2002 Bonds.
(a) The Series 2002 Bonds shall be dated as of March 1, 2002, which is hereby designated as
the Issue Date. The Series 2002 Bonds shall constitute Current Interest Bonds under the Master Indenture,
shall bear interest from March 1, 2002, payable September 1, 2002, and semi - annually thereafter on March
1 and September 1 in each year at the rates shown below, and shall mature on the dates and in the principal
amounts shown below:
March 1 Amount
of the Year Maturine
2003
$490,000.00
2004
505,000.00
2005
520,000.00
2006
535,000.00
2007
555,000.00
2008
575,000.00
2009
805,000.00
2010
1,350,000.00
2011
1,410,000.00
2012
1,475,000.00
2013
1,280,000.00
Interest
Rate
(b) Each Series 2002 Bond shall bear interest from the interest payment date next preceding the
date of registration and authentication thereof unless it is registered as of an interest payment date, in which
event it shall bear interest from the date thereof, or unless it is registered prior to the first interest payment
date, in which event it shall bear interest from its date, or unless, as shown by the records of the Trustee,
interest on the Series 2002 Bonds shall be in default, in which event it shall bear interest from the date to
which interest has been paid in full.
Section 204. Registered Bonds; Denomination and Numbers. The Series 2002 Bonds shall be issued
solely as fully registered Bonds, without coupons, in the denomination of $5,000 or any integral multiple
thereof, provided that no individual Series 2002 Bond shall represent more than one maturity of Series 2002
Bonds. The Series 2002 Bonds shall be numbered from one (1) consecutively upwards with the prefix "R"
preceding each number.
Section 205. Paying Agent The Trustee is hereby appointed the Paying Agent for the Series 2002 Bonds,
pursuant and subject to Section 7.02 of the Master Indenture. Principal and Redemption Price on the Series
309272
2002 Bonds when due shall be payable at the principal corporate trust office of the Trustee, or of its
successor as Paying Agent. Payment of interest on the Series 2002 Bonds shall be made to the registered
Holder thereof and shall be paid (1) by check or draft mailed to the person who is the registered Holder of
record as of the close of business on the Record Date at the address as it appears on the registration books of
the Trustee or at such other address as is furnished in writing by such registered Holder to the Trustee prior
to the Record Date or (2) solely at the option of Trustee, by wire transfer to the registered Holder thereof
upon written notice by such Holder to the Trustee given not later than the Record Date prior to an interest
payment date.
Section 206. Optional Redemption and Mandatory Redemption.
(a) The Series 2002 Bonds maturing on or after March 1, 2008 are subject to optional
redemption on or after Match 1, 2008 and after the Parity Bonds have been fully paid, at the election of the
City, in whole, but not in part, on any date, upon notice as provided in Section 4.03 of the Master Indenture
and Section 206(c) hereof, and at a price equal to the par amount plus accrued interest to the redemption
date.
At least one day before the date fixed for such redemption, the City shall deposit with, or otherwise make
available to, the Trustee for deposit into the Series 2002 Bond Subaccount moneys sufficient to pay the
principal of, and premium, if any, and interest on, the Series 2002 Bonds to be redeemed on the redemption
date.
With respect to any notice of optional redemption of Series 2002 Bonds, unless upon the giving of such
notice such Series 2002 Bonds shall be deemed to have been paid within the meaning of Article XI of the
Master Indenture, such notice may state that such redemption shall be conditioned upon the receipt by the
Trustee on or prior to the date fixed for such redemption of money sufficient to pay the Redemption Price of
and interest on the Series 2002 Bonds to be redeemed, and that if such money shall not have been so
received said notice shall be of no force and effect, and the City shall not be required to redeem such Series
2002 Bonds. In the event that such notice of redemption contains such a condition and such money is not so
received, the redemption shall not be made and the Trustee shall within a reasonable time thereafter give
notice, in the manner in which the notice of redemption was given, that such money was not so received and
that such redemption was not made.
(b) The Series 2002 Bonds shall be subject to mandatory redemption prior to maturity, in
inverse order of maturity, (i) on any interest payment date from proceeds of the Series 2002 Bonds not
needed for the Series 2002 Project, and (ii) on any interest payment date on or after September 1, 2002 and
after the Parity Bonds have been paid in full, from surplus collections of the Library Tax and Debt Service
Supplement, being collections over and above the amount necessary to pay the current requirements of
interest and principal, and Trustee's fees, and the interest and principal due and Sinking Fund Installments to
be paid on the next interest payment date, in whole or in part, at a redemption price equal to the principal
amount being redeemed plus accrued interest to the redemption date.
If less than all of the Series 2002 Bonds shall be called for mandatory redemption, the Series 2002 Bonds
shall be redeemed in inverse order of maturity. If fewer than all of the Series 2002 Bonds of any one
maturity (so called for mandatory redemption) shall be called for mandatory redemption, the Trustee shall
select the particular Bonds or portions of Bonds to be redeemed from such maturity by lot or in such other
manner as the Trustee in its discretion may deem proper.
The portion of any Series 2002 Bonds to be redeemed shall be in the principal amount of $5,000 or an
integral multiple thereof, provided that, in selecting Series 2002 Bonds for redemption, the Trustee shall
treat each Series 2002 Bond as representing that number of Series 2002 Bonds which is obtained by
dividing the principal amount of such Bond by $5,000.
309272
• 4 0 i
(c) In addition to the notice described in Section 4.03 of the Master Indenture, further notice of
any redemption of the Series 2002 Bonds shall be given by the Trustee as set out below, but no defect in
such further notice nor any failure to give all or any portion of such further notice shall in any manner defeat
the effectiveness of a call for redemption if notice thereof is given as described in Section 4.03 of the Master
Indenture.
(1) Each further notice of redemption given hereunder shall contain (i) the CUSIP
numbers of all Series 2002 Bonds being redeemed; (ii) the date of issue of the Series 2002 Bonds as
originally issued; (iii) the rate of interest born by each Series 2002-Bond being redeemed; (iv) the
maturity date of each Series 2002 Bond being redeemed; and (v) any other descriptive information
needed to identify accurately the Series 2002 Bonds being redeemed.
(2) Each further notice of redemption shall be sent at least 30 days before the
redemption date by registered or certified mail or overnight delivery service to: (i) the following
registered securities depositories (if at the time of such notice such depositaries are then in the
business of holding substantial amounts of obligations of types comprising the Series 2002 Bonds):
Depository Trust Company of New York, New York, (ii) Moody's Municipal and Government and
Standard and Poor's Called Bond Record; and (iii) any other such depositaries or national
information services that disseminate notices of redemption of obligations such as the Series 2002
Bonds, designated by the City to receive such notice.
(3) Upon the payment of the redemption price of the Series 2002 Bonds being
redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP
number identifying, by issue and maturity, the Series 2002 Bonds being redeemed with the
proceeds of such check or other transfer.
Section 207. Sale of Series 2002 Bonds.
(a) The Series 2002 Bonds authorized to be issued herein are hereby sold to the Underwriters
at an aggregate price of $ plus accrued interest on the Series 2002 Bonds from March 1,
2002 to the date of delivery of and payment for the Series 2002 Bonds, on the terms and conditions set forth
in the Purchase Contract and upon the basis of the representations therein set forth.
(b) The City agrees that it will not issue any bonds, refunding bonds or other obligations
payable from the proceeds of the Library Tax or Debt Service Supplement within a period of at least 31 days
after the date of delivery of the Series 2002 Bonds to the Underwriters.
(c) The City agrees that it will not issue any bonds, refunding bonds or other obligations
payable from the proceeds of the Library Tax and Debt Service Supplement unless the Library Tax and
Debt Service Supplement proceeds for the preceding twelve consecutive months are in excess of 120% of
the average annual debt service requirements for the Series 2002 Bonds and any bonds issued on a panty of
security therewith.
Section 208. Execution of Series 2002 Bonds. The Series 2002 Bonds shall be executed on behalf of the
City by the Mayor by his manual or facsimile signature, and attested and countersigned by the City Clerk by
her manual or facsimile signature, and the City's seal (or a facsimile thereof) shall be imprinted upon the
Series 2002 Bonds. The Series 2002 Bonds shall then be delivered to the Trustee and manually
authenticated by it.
Section 209. Delivery of Series 2002 Bonds. The Series 2002 Bonds shall be delivered to the
Underwriters, upon compliance with the provisions of Section 3.02 of the Master Indenture and the
provisions of the Supplement Indenture.
0
309272
ARTICLE III
ESTABLISHMENT OF ACCOUNTS AND APPLICATION OF SERIES 2002 BOND PROCEEDS
Section 301. Series 2002 Project Account. There is hereby established a Project Account in the
Construction Fund designated as the "Series 2002 Project Account', moneys in which shall be used for the
purpose and as authorized by Section 5.03 of the Master Indenture to pay the costs necessary to complete
the Series 2002 Project as provided in Section 202(b) hereof. Upon receipt by the Trustee of the Written
Certificate of the City specifying amounts to be paid to accomplish the Projects and pay the costs associated
therewith, the Trustee shall transfer the funds in the Series 2002 Project Account to the entities and in the
amounts set forth in such Certificate. Any remaining balance in the Series 2002 Project Account, not set
forth in a Certificate of the City, shall be deposited into the Series 2002 Bond Subaccount for use in
accordance with Section 302.
Section 302. Series 2002 Bond Subaccount. Pursuant to Section 5.07(a) of the Master Indenture, there is
hereby established a subaccount in the Bond Account in the Principal and Interest Fund designated as the
"Series 2002 Bond Subaccount". Moneys shall be deposited into and paid from the Series 2002 Bond
Subaccount in accordance with Section 5.07 of the Master Indenture to pay Debt Service on the Series 2002
Bonds.
Section 303. Series 2002 Debt Service Reserve Subaccount. A Debt Service Reserve Account shall not be
established for the Series 2002 Bonds.
Section 304. Cost of Issuance Account. There is hereby established a Series 2002 Cost of Issuance
Account in the Construction Fund. Upon receipt of a requisition from the City, the Trustee shall transfer
funds in the Series 2002 Cost of Issuance Account to the entities in the amount set forth on the requisition
for the purpose of paying the costs of issuing the Series 2002 Bonds. Any remaining balance in the Series
2002 Cost of Issuance Account shall be deposited into the Series 2002 Bond Subaccount for use in
accordance with Section 302.
Section 305. Application of Proceeds of Series 2002 Braids. From the proceeds of the Series 2002 Bonds
there shall be paid:
To the Trustee for deposit as follows:
(a) Into the Series 2002 Bond Subaccount, the amount of interest accrued from March 1, 2002
to the date of delivery of the Series 2002 Bonds;
(b) Into the Series 2002 Cost of Issuance Subaccount, the amount set forth in the delivery
instructions; and
(c) Into the Series 2002 Project Account in the Construction Fund, the balance of the proceeds
of the Series 2002 Bonds.
ARTICLE IV
COMPLIANCE WITH REBATE AND OTHER REQUIREMENTS OF THE CODE
Section 401. Authorization and Covenants.
(a) The City covenants and certifies to and for the benefit of the purchasers of the Series 2002
Bonds that:
(i) it will at all times comply with the provisions of any Tax Regulatory Agreement;
7
309272
(ii) it will at all times comply with the rebate requirements contained in Section 148(f)
of the Code (or successor provision) including, without limitation, establishing any necessary
separate funds or accounts, entering into any necessary rebate calculation agreement to provide for
the calculations of amounts required to be rebated to the United States, the keeping of records
necessary to enable such calculations to be made and the timely payment to the United States of all
amounts, including any applicable penalties and interest, required to be rebated;
(iii) no use will be made of the proceeds of the issue and sale of the Series 2002 Bonds,
or any funds or accounts of the City which may be deemed to be proceeds of the Series 2002
Bonds, pursuant to Section 148 of the Code (or successor provision) and applicable regulations
(proposed or promulgated) which use, if it had been reasonably expected on the date of issuance of
the Series 2002 Bonds, would have caused the Series 2002 Bonds to be classified as "arbitrage
bonds" within the meaning of Section 148 of the Code (or successor provision);
(iv) it will not take any action that would cause interest on the Series 2002 Bonds to be
or to become ineligible for the exclusion from gross income of the owners of the Series 2002 Bonds
as provided in Section 103 of the Code (or successor provision), nor will it omit to take or cause to
be taken, in timely manner, any action, which omission would cause interest on the Series 2002
Bonds to be or to become ineligible for the exclusion from gross income of the owners of the Series
2002 Bonds as provided in Section 103 of the Code (or successor provision).
(b) Notwithstanding anything in the Master Indenture to the contrary and in accordance with
the City's covenants in this Article, all moneys and investments held in the Funds and Accounts established
and administered under the Master Indenture shall be subject to the requirements of the Tax Regulatory
Agreement relating to the rebate of certain excess amounts computed in accordance with Section 148(f) of
the Code (or successor provision) held therein to the United States at the times and in the amounts
determined in accordance with the applicable provisions of the Tax Regulatory Agreement to maintain the
excludability of interest on the Series 2002 Bonds from gross income of the owners thereof for federal
income tax purposes.
(c) Pursuant to the foregoing covenants, the City obligates itself to comply throughout the term
of the issue of the Series 2002 Bonds with the requirements of Section 103 of the Code (or successor
provision) and the regulations proposed or promulgated thereunder.
Section 402. Creation of Series 2002 Rebate Fund. Pursuant to Section 2.02(a)(14) of the Master
Indenture, there is hereby created by the City and ordered established with the Trustee an irrevocable trust
fund, to be kept separate and apart from all other funds and accounts established by this Series 2002
Supplemental Indenture, the Master Indenture, or any other indenture created pursuant to the Master
Indenture and designated "Series 2002 Rebate Fund," which shall be administered in accordance with the
Tax Regulatory Agreement and the requirements of the Code. The Trustee shall make deposits to and
disbursements from the Series 2002 Rebate Fund from time to time in accordance with the Tax Regulatory
Agreement and shall invest moneys on deposit in the Series 2002 Rebate Fund in accordance with the Tax
Regulatory Agreement.
Section 403. Additional Payments. The City hereby agrees to deposit into the Series 2002 Rebate Fund or
pay to the United States from the Library Tax and Debt Service Supplement proceeds (whether or not such
moneys are on deposit in any fund or account related to the Series 2002 Bonds) any amount which is
required to be deposited into the Series 2002 Rebate Fund or paid to the United States, but which is not
available in a fund or account related to the Series 2002 Bonds for transfer to the Series 2002 Rebate Fund
or payment to the United States. This obligation shall not be construed as constituting a debt or liability of
the City within the meaning of any constitutional or statutory provision or limitation.
309272
•
Section 404. Investments to Be Legal. All investments subject to rebate shall be made to the extent
permitted by law and shall comply with the investment provisions contained in the Tax Regulatory
Agreement.
Section 405. Opinion of Bond Counsel; Amendments. The provisions of this Article N and the
provisions of any Tax Regulatory Agreement need not be observed and the provisions of this Article IV and
any Tax Regulatory Agreement may be amended or supplemented at any time by the City if the Trustee
receives an opinion of Bond Counsel to the effect that the failure to comply with such provisions, and the
terms of such amendment or supplement, will not adversely affect the exemption from federal income
taxation of interest on the Series 2002 Bonds.
Section 406. Additional Covenants; Agreements. The City hereby covenants to make, execute and enter
into (and to take such actions, if any, as may be necessary to enable it to do so) any Supplemental Indenture
or Tax Regulatory Agreement necessary to comply with any changes in law or regulations in order to
preserve the exemption from federal income taxation of interest on the Series 2002 Bonds to the extent that
the City may lawfully do so. The City further covenants to (a) impose such limitations on the investment or
use of moneys or investments related to the Series 2002 Bonds, (b) make such payments to the United States
Treasury, (c) maintain such records, (d) perform such calculations and (e) perform such other acts as may be
necessary to preserve the exemption from federal income taxation of interest on the Series 2002 Bonds and
which the City may lawfully do.
Section 407. Agreement to Pay Rebate Amount, Penalty And Interest. Except as otherwise provided in
Section 405 hereof, the City covenants to pay when due to the United States from Library Tax proceeds an
amount equal to the payment due, following receipt of a notice from the Secretary of the Treasury of the
United States of nonpayment or underpayment of any amount due to the United States pursuant to any
provision of the Code requiring that a payment be made to the United States Treasury to preserve the tax -
exempt status of interest on the Series 2002 Bonds. This obligation shall not be construed as constituting a
debt or liability of the City within the meaning of any constitutional or statutory provision or limitation.
ARTICLE V
FORM OF SERIES 2002 BONDS
Section 501. Form of Series 2002 Bonds. Subject to the provisions of the Master Indenture, each Series
2002 Bond shall be in substantially the following form, with such insertions or variations as to any
redemption or amortization provisions and such other insertions or omissions, endorsements and variations
as may be required or permitted by the Master Indenture:
[Series 2002 Bond Form follows on next page]
309272
REGISTERED
No. R-
Interest Commencement Date:
Maturity Date:
Principal Amount:
Registered Owner: _
(Face of Bond)
STATE OF ARKANSAS
COUNTY OF PULASKI
CITY OF LITTLE ROCK
LIBRARY IMPROVEMENT BOND
SERIES 2002
DATED MARCH 1, 2002
Interest Rate:
CUSIP:
REGISTERED
For value received, the City of Little Rock, Arkansas (the "City "), promises to pay to the registered owner
shown above, or registered assigns, the principal amount shown above on the Maturity Date identified
above and to pay interest (computed on the basis of a 360 -day year of twelve 30 -day months) on such
principal amount from the Interest Commencement Date specified above until paid at the Interest Rate per
annum set forth above. Interest is payable semiannually on March 1 and September 1 of each year,
commencing on March 1, 2002.
Principal of this Bond is payable to the Registered Owner, in lawful money of the United States of America,
upon presentation when due at the corporate trust office of Metropolitan National Bank (the "Trustee ") in
Little Rock, Arkansas. Payment of each installment of interest shall be made to the person in whose name
this Bond is registered on the registration books of the City maintained by the Trustee at the close of
business on the fifteenth day of the month (whether or not a business day) next preceding each interest
payment date (the "Record Date "), irrespective of any transfer or exchange of this Bond subsequent to such
Record Date and prior to such interest payment date. Such interest payments shall be by check or draft
drawn on the Trustee, and mailed to such registered owner at the address appearing on such registration
books, or solely at the option of the Trustee, by wire fund transfer to an account identified by the registered
owner.
The Bonds are issued on a parity of security with the City of Little Rock, Arkansas Library Improvement
and Refunding Bonds, Series 1999B, dated September 1, 1999 (the "Parity Bonds ").
This Bond is one of an issue of City of Little Rock, Arkansas Library Improvement Bonds, Series 2002,
aggregating Nine Million, Five Hundred Thousand Dollars ($9,500,000) in principal amount (the "Bonds "),
issued for the purpose(s) of (1) Completion of the Fifth Floor of the Main Library; (2) Purchasing equipment
for various branches; (3) Construction of a new library in southwest Little Rock; (4) Purchasing land in west
Little Rock for new construction; (5) Enhancing CALS collection of books, videos, etc.; and (6)
Accomplishing other projects which CALS' Board of Directors deems appropriate and paying the costs and
expenses incidental thereto, authorized pursuant to Emergency Ordinance No. 18,085 of the City adopted on
August 3, 1999, as supplemented and amended by Ordinance No. _ dated 2002 (the
"Authorizing Ordinance "). The Series 2002 Bonds are issuable as fully registered bonds in denominations
of $5,000 or any integral multiple thereof.
10
309272
THIS BOND IS ISSUED PURSUANT TO AND IN FULL COMPLIANCE WITH THE CONSTITUTION
AND LAWS OF THE STATE OF ARKANSAS, INCLUDING PARTICULARLY ACT NO. 920 OF THE
ACTS OF ARKANSAS OF 1993 (CODIFIED AT ARK. CODE ANN. § §14- 142 -201 THROUGH 222)
(THE "ACT "), AND PURSUANT TO A MASTER TRUST INDENTURE DATED AS OF SEPTEMBER
1, 1999, AS SUPPLEMENTED BY A SUPPLEMENTAL TRUST INDENTURE DATED AS OF
MARCH 1, 2002 (COLLECTIVELY, THE "MASTER INDENTURE ") DULY EXECUTED AND
DELIVERED BY THE CITY TO THE TRUSTEE, AND DOES NOT CONSTITUTE AN
INDEBTEDNESS OF THE CITY WITHIN ANY CONSTITUTIONAL OR STATUTORY LIMITATION.
THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY, BUT ARE SPECIAL
OBLIGATIONS PAYABLE SOLELY FROM THE PROCEEDS OF THE LIBRARY TAX AND FROM
FUNDS AND MONEYS PLEDGED TO THE PAYMENT OF THE BONDS UNDER THE MASTER
INDENTURE.
(SEE REVERSE SIDE FOR ADDITIONAL PROVISIONS AND DEFINITIONS WHICH HAVE THE
SAME EFFECT AS IF FULLY SET FORTH IN THIS PLACE.)
IN WITNESS WHEREOF, the City has caused this bond to be executed by its Mayor and City Clerk by
their facsimile signatures and a facsimile of its corporate seal to be reproduced hereon.
CITY OF LITTLE ROCK, ARKANSAS
By; (facsimile signature)
Mayor
By; (facsimile signature)
City Clerk
(FACSIMILE SEAL)
11
309272
0 0
CERTIFICATE OF AUTHENTICATION
This bond is one of the Series 2002 Bonds described in the within mentioned Master Indenture and
Ordinance and is one of the Library Improvement Bonds, Series 2002, dated March 1, 2002, of the City of
Little Rock, Arkansas.
Registration Date:
By:
309272
Metropolitan National Bank, Little Rock, Arkansas,
Trustee
Authorized Officer
12
(Back of Bond)
CITY OF LITTLE ROCK, ARKANSAS
LIBRARY IMPROVEMENT BOND
SERIES 2002
ADDITIONAL PROVISIONS
Reference is made to the Master Indenture for a detailed statement of the terms and conditions upon which
the Bonds are issued, of the terms and conditions for the issuance of additional bonds payable from the
Library Tax and Debt Service Supplement proceeds, of the nature and extent of the security for the Bonds,
and of the rights and obligations of the City, the Trustee and the registered owners of the Bonds. The City
has covenanted to levy the Library Tax annually which with the Debt Service Supplement shall be sufficient
at all times to provide for the payment of the principal of and interest on the Bonds and any additional bonds
issued pursuant to the Master Indenture, and the payment of Trustee's fees, as the same become due and
payable.
This Bond is transferable by the Holder hereof in person or by such Holder's attorney duly authorized in
writing at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations
and upon payment of the charges provided in the Master Indenture, and upon surrender and cancellation of
this Bond. Upon such transfer a new fully registered Bond or Bonds of the same Series and the same
maturity, of authorized denomination or denominations, for the same aggregate principal amount, will be
issued to the transferee in exchange therefor.
The City and the Trustee may deem and treat the registered Holder hereof as the absolute owner hereof for
the purpose of receiving payment of or on account of principal hereof and premium, if any, hereon and
interest due hereon and for all other purposes, and neither the City nor the Trustee nor any paying agent
shall be affected by any notice to the contrary.
This Bond may, upon surrender at the office of the Trustee, be exchanged for fully registered Bonds for the
same maturity in like aggregate principal amount of any authorized denominations, upon the terms and
conditions specified in the Master Indenture.
The Series 2002 Bonds maturing on or after March 1, 2008 are subject to optional redemption on or after
March 1, 2008 and after redemption of all Parity Bonds, at the election of the City, in whole, but not in part,
on any date, upon notice as provided in Section 4.03 of the Master Indenture and Section 206(c) of the 2002
Supplemental Indenture, and at a price equal to the par amount plus accrued interest to the redemption date.
The Series 2002 Bonds shall be subject to mandatory redemption prior to maturity, in inverse order of
maturity, (i) on any interest payment date from proceeds of the Series 2002 Bonds not needed for the Series
2002 Project, and (ii) on any interest payment date on or after September 1, 2002 and after redemption of all
Parity Bonds, from surplus collections of the Library Tax and the Debt Service Supplement. Surplus
collections shall mean collections over and above the amount necessary to pay the current requirements of
interest and principal, and Trustee's fees, and the interest and principal due and Sinking Fund Installments to
be paid on the next interest payment date, in whole or in part, at a redemption price equal to the principal
amount being redeemed plus accrued interest to the redemption date.
At least one day before the date fixed for such redemption, the City shall deposit with, or otherwise make
available to, the Trustee for deposit into the Series 2002 Bond Subaccount moneys sufficient to pay the
principal of, and premium, if any, and interest on, the Series 2002 Bonds to be redeemed on the redemption
date.
13
309272
0 &
With respect to any notice of optional or mandatory redemption of Series 2002 Bonds, unless upon the
giving of such notice such Series 2002 Bonds shall be deemed to have been paid within the meaning of
Article XI of the Master Indenture, such notice may state that such redemption shall be conditioned upon the
receipt by the Trustee on or prior to the date fixed for such redemption of money sufficient to pay the
Redemption Price of and interest on the Series 2002 Bonds to be redeemed, and that if such money shall not
have been so received said notice shall be of no force and effect, and the City shall not be required to
redeem such Series 2002 Bonds. In the event that such notice of redemption contains such a condition and
such money is not so received, the redemption shall not be made and the Trustee shall within a reasonable
time thereafter give notice, in the manner in which the notice of redemption was given, that such money was
not so received and that such redemption was not made.
In addition to the notice described in Section 4.03 of the Master Indenture, further notice of any redemption
of the Series 2002 Bonds shall be given by the Trustee as set out below, but no defect in such further notice
nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness
of a call for redemption if notice thereof is given as described in Section 4.03 of the Master Indenture.
(1) Each further notice of redemption given hereunder shall contain (i) the CUSIP
numbers of all Series 2002 Bonds being redeemed; (ii) the date of issue of the Series 2002 Bonds as
originally issued; (iii) the rate of interest born by each Series 2002 Bond being redeemed; (iv) the
maturity date of each Series 2002 Bond being redeemed; and (v) any other descriptive information
needed to identify accurately the Series 2002 Bonds being redeemed.
(2) Each further notice of redemption shall be sent at least 30 days before the
redemption date by registered or certified mail or overnight delivery service to: (i) the following
registered securities depositories (if at the time of such notice such depositaries are then in the
business of holding substantial amounts of obligations of types comprising the Series 2002 Bonds):
Depository Trust Company of New York, New York, (ii) Moody's Municipal and Government and
Standard and Poor's Called Bond Record; and (iii) any other such depositaries or national
information services that disseminate notices of redemption of obligations such as the Series 2002
Bonds, designated by the City to receive such notice.
(3) Upon the payment of the redemption price of the Series 2002 Bonds being
redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP
number identifying, by issue and maturity, the Series 2002 Bonds being redeemed with the
proceeds of such check or other transfer.
If less than all of the Series 2002 Bonds shall be called for mandatory redemption, the Series 2002 Bonds
shall be redeemed in inverse order of maturity. If fewer than all of the Series 2002 Bonds of any one
maturity (so called for extraordinary redemption) shall be called for extraordinary redemption, the Trustee
shall select the particular Bonds or portions of Bonds to be redeemed from such maturity by lot or in such
other manner as the Trustee in its discretion may deem proper.
The portion of any Series 2002 Bonds to be redeemed shall be in the principal amount of $5,000 or an
integral multiple thereof; provided that, in selecting Series 2002 Bonds for redemption, the Trustee shall
treat each Series 2002 Bond as representing that number of Series 2002 Bonds which is obtained by
dividing the principal amount of such Bond by $5,000.
This Bond shall not be valid until it shall have been authenticated by the certificate hereon duly signed by
the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to
exist, happen and be performed precedent to and in the issuance of this Series 2002 Bond have existed, have
14
309272
• &
happened and have been performed in due time, form and manner, as required by law; that the indebtedness
represented by this Series 2002 Bond and the issue of which it forms a part does not exceed any
constitutional or statutory limitation; and that all of the proceeds of the Library Tax have been pledged to the
payment of the principal of premium, if any, and interest on the Series 2002 Bonds.
15
309272
0
ABBREVIATIONS
0
The following abbreviations, when used in the inscription on the face of the within Bond, shall be construed
as though they were written out in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship not as tenants in common
UNIF GIFT MIN ACT - Custodian
(Cost) (Minor)
under Uniform Gifts to Minors
Act
(State)
Additional abbreviations may also be used though not in the list above.
309272
16
FOR VALUE RECEIVED,
transfer unto
TRANSFER
"name and address of transferee"
(Social Security or Federal Employer Identification No.
( "Transferor") hereby sells, assigns and
the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
( "Transferee ") as attorney to transfer the within Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
(Transferor)
Transferor
NOTICE: No transfer will be issued in the name of the Transferee, unless the signature to this
assignment corresponds with the name appearing upon the face of the within Bond in every particular,
without alteration or enlargement or any change whatever and the Social Security or Federal Employer
Identification Number of the Transferee is supplied.
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by a member firm of or a participant in the Securities Transfer
Agent Medallion Program ( "STAMP "), or another signature guaranty program recognized by the Trustee.
17
309272
0 0
ARTICLE VI
MISCELLANEOUS
Section 601. Article and Section Headings. The headings or titles of the several articles and sections
hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and
shall not affect the meaning, construction or effect of this Supplemental Indenture.
Section 602. Partial Invalidity. If any one of more of the covenants or agreements, or portions thereof,
provided in this Supplemental Indenture to be performed shall be contrary to law (other than the provisions
of the Master Indenture limiting the liability of the City to make payments on the Bonds solely from Library
Tax proceeds and other amounts pledged therefor by the Master Indenture), then such covenant or
covenants, such agreement or agreements, or such portions thereof, shall be null and void and shall be
deemed separable from the remaining covenants and agreements or portions thereof and shall in no way
affect the validity of this Supplemental Indenture or of the Series 2002 Bonds; but the holders of the Series
2002 Bonds shall retain all the rights and benefits accorded to them under the Act or any other applicable
provisions of law.
Section 603. Effective Date. This Supplemental Indenture shall take effect immediately.
Section 604. Limitation on Issuance of Additional Bonds. No additional Bonds may be issued pursuant to
or under the terms of this Supplemental Indenture.
Section 605. Additional Conditions for Defeasance. Series 2002 Bonds shall, prior to the maturity or
redemption date thereof, be deemed to have been paid within the meaning and effect of Section 11.01(a) of
the Master Indenture upon satisfaction of the conditions specified in Section 11.01(b) of the Master
Indenture provided that (a) the Government Obligations deposited with the Trustee pursuant to Section
11.01(b) of the Master Indenture are direct non - callable obligations of the United States of America or other
Government Obligations, and (b) the Trustee shall have received a verification report from an independent
nationally recognized public accountant experienced in the preparation of such reports to the effect that
funds from such Government Obligations and other available cash deposited with the Trustee will be
available in sufficient amounts to satisfy the requirements of Section 11.01 of the Master Indenture.
[Signature Page Follows]
W.
309272
0
Executed this I" day of March, 2002.
ATTEST:
Robbie Hancock, City Clerk
[SEAL]
M
ATTEST:
309272
0
CITY OF LITTLE ROCK, ARKANSAS
Jim Dailey, Mayor
METROPOLITAN NATIONAL BANK, TRUSTEE
19
0.
CONSENT AND AGREEMENT TO
SERIES 2002 SUPPLEMENTAL INDENTURE
The Central Arkansas Library System hereby consents to the execution and delivery of the
foregoing Supplemental Trust Indenture, and agrees that it shall have and undertake the right and
responsibility to perform all covenants and obligations of the City of Little Rock, Arkansas under and in
accordance with the provisions of the Master Indenture and the Supplemental Indenture to the extent CALS
is authorized by law to do so.
CENTRAL ARKANSAS LIBRARY SYSTEM
Dr. Bobby Roberts, Director
ATTEST:
Lame Thompson, Associate Director of Operations
pill
309272