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18714• ORDINANCE NO. 18,714 AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF CAPITAL IMPROVEMENT REVENUE BONDS, SERIES 2002, TO FINANCE A PERFORMANCE BASED CONTRACT, PREVIOUSLY APPROVED; PROVIDING FOR THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BONDS; PRESCRIBING OTHER MATTERS RELATING THERETO; AND DECLARING AN EMERGENCY. WHEREAS, the Board of Directors of the City of Little Rock, Arkansas (the "City ") has determined that it is in the economic interest of the City that there be acquired and installed certain fixtures, equipment and improvements, with related facilities, which will result in the conservation of energy and reductions in the cost of energy (the "Improvements "); and WHEREAS, the City can obtain the necessary funds to finance the Improvements by issuing Capital Improvement Junior Lien Revenue Bonds, Series 2002, as set forth herein (the "Series 2002 Bonds "); and WHEREAS, the City has made arrangements for the sale of the Bonds to Morgan Keegan & Company, Inc. (the "Purchaser "), at a price of 100°% of par plus accrued interest (the "Purchase Price "); and NOW, THEREFORE, BE IT ORDAINED by the Board of Directors of the City of Little Rock, Arkansas: Section 1. The offer of the Purchaser for the purchase of the Series 2002 Bonds from the City at the Purchase Price is hereby accepted. The Mayor is hereby authorized and directed to execute and deliver a bond purchase agreement on behalf of the City, embracing and implementing the terms of this Ordinance. Section 2. The Mayor is hereby authorized and directed, for and on behalf of the City, to execute a Preliminary Official Statement and a final Official Statement in the name of the City for use in connection with the sale of the Series 2002 Bonds. • Section 3. The Mayor is authorized to execute an agreement providing for continuing disclosure regarding the revenues pledged to secure the Series 2002 Bonds, in accordance with Rule 15c2 -12 of the Securities and Exchange Commission and the terms of this Ordinance. Section 4. As used in this Ordinance, the terms set forth below, in addition to those defined elsewhere herein, have the meanings assigned. "Accountant" means a certified public accountant, or firm, not in the regular employ of the City. "Act" means Title 14, Chapter 164, Subchapter 4 of the Arkansas Code of 1987 Annotated, as now or hereafter amended, and any successor legislation. "Additional Bonds" means Bonds issued under this Ordinance other than the Series 2002 Bonds. "Bonds" means the Series 2002 Bonds and Additional Bonds issued hereunder. "Bond Counsel" means Friday, Eldredge & Clark, LLP, or any other law firm of national reputation with respect to state and local obligations and the exemption from federal income tax with respect to interest thereon. "Bond Insurance Policy" means a policy of insurance insuring the payment of principal and interest on any of the Bonds, as due. "Bond Insurer" means the issuer of any Bond Issuance Policy. "Code" means the Internal Revenue Code of 1986, as amended. "Debt Service Reserve" means any account of that name established pursuant to the Implementing Resolution or with respect to any series of the Bonds. "Holder," "holder," "owner" and "bondholder" means the registered owner of any Bond; provided that the Trustee is authorized to recognize any other person as the owner of a Bond 0 i or Bonds upon such terms and conditions (including indemnity) as the Trustee may, in its discretion, require. "Improvements" means the capital improvements being financed by the Series 2002 Bonds. The costs of the Improvements being financed include direct costs, costs related thereto, costs of the financing and costs of establishing a Debt Service Reserve, if one shall be established. "Pledged Revenues" means all revenues received by the City from all franchise fees charged to public utilities for the privilege of using the City's streets, highways, alleys and other public ways and public places pursuant to the authority contained in Arkansas Code of 1987 Annotated Title 14, Chapter 200, Subchapter 1. "Prior Bonds" means the City's Capital Improvement Revenue Bonds (Infrastructure Improvements), Series 1998A, and any bonds issued as a parity therewith under the Prior Indenture. "Prior Indenture" means the Master Trust Indenture and all Supplemental Indentures (as defined in the Master Trust Indenture) securing the Prior Bonds. "Series 2002 Bonds" means the initial issue of Bonds under this Ordinance, being the City's Capital Improvement Junior Lien Revenue Bonds, Series 2002. "Surety Bond" means any surety bond or like draw instrument provided by a Bond Issuer and utilized in lien of or as a form of Debt Service Reserve. "Trustee" means the Trustee, Paying Agent and Registrar serving at any time under this Ordinance. Section 5. Under the authority of the Constitution and laws of the State of Arkansas (the "State ") , including particularly the Act, City of Little Rock, Arkansas Capital Improvement Junior Lien Revenue Bonds, Series 2002 are hereby authorized and ordered issued in the principal amount of $3,630,000 for the purpose of financing the costs of accomplishing the Improvements. 0 The details of the Series 2002 Bonds shall be presented to the Board of Directors in a Resolution (the "Implementing Resolution "), implementing the terms of this Ordinance, which details shall include the interest rates, maturities and identity of the Trustee. In this regard, no rate of interest shall exceed 5.00o per annum, and the Series 2002 Bonds shall mature (by stated maturity or mandatory redemption at par) over a period of not to exceed 18 years, with principal maturities arranged with the effect that aggregate annual principal and interest requirements are approximately equal. The payment of the principal of and interest on any of the Series 2002 Bonds, as due (by stated maturity or scheduled mandatory (sinking fund) redemption) may be insured by a Bond Insurer pursuant to a Bond Insurance Policy, provided that the net interest cost is reduced thereby (treating, for this purpose, the premium paid for the Bond Insurance Policy as interest). The Implementing Resolution may include provisions for the subrogation of the Bond Insurer to the rights of the owners of the Series 2002 Bonds and may grant to the Bond Insurer rights to enforce the Series 2002 Bonds, and the terms of this Ordinance, consistent with the terms of this Ordinance, provided that the Bond Insurance Policy is in effect. Further, the Implementing Resolution may contain provisions granting to the Bond Insurer rights and powers incidental to the execution and delivery by the Bond Insurer of a Surety Bond. The Series 2002 Bonds shall be issuable only as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof. Unless the City shall otherwise direct, the Bonds shall be numbered from 1 upward in order of issuance. Each Series 2002 Bond shall have a CUSIP number. Interest on the Series 2002 Bonds shall be payable on April 1, 2003, and semiannually thereafter on April 1 and October 1 of each year. Payment of each installment of interest shall be made to the person in whose name the Bond is registered on the registration books of the Trustee and Paying Agent (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 any such Bond subsequent to such Record Date and prior to such interest payment date. 4J Each Bond shall bear interest from the payment date next preceding the date on which it is authenticated unless it is authenticated on an interest payment date, in which event it shall bear interest from such date, or unless it is authenticated prior to the first interest payment date, in which event it shall bear interest from the Dated Date, or unless it is authenticated during the period from the Record Date to the next interest payment date, in which case it shall bear interest from such interest payment date, or unless at the time of authentication thereof interest is in default thereon, in which event it shall bear interest from the date to which interest has been paid. Only such Bonds as shall have endorsed thereon a Certificate of Authentication substantially in the form set forth below (the "Certificate ") duly executed by the Trustee shall be entitled to any right or benefit under this Ordinance. No Bond shall be valid and obligatory for any purpose unless and until the Certificate shall have been duly executed by the Trustee, and the Certificate upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Ordinance. The Certificate on any Bond shall be deemed to have been executed if signed by an authorized officer of the Trustee, but it shall not be necessary that the same officer sign the Certificate on all of the Bonds. In case any Bond shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and the Trustee may authenticate and deliver a new Bond of like date, number, maturity and tenor in exchange and substitution for and upon cancellation of such mutilated Bond, or in lieu of and in substitution for such Bond destroyed or lost, upon the owner paying the reasonable expenses and charges of the City and Trustee in connection therewith, and, in the case of a Bond destroyed or lost, his filing with the Trustee evidence satisfactory to it that such Bond was destroyed or lost, and of his ownership thereof, and furnishing the City and Trustee with indemnity satisfactory to them. The Trustee is hereby authorized to authenticate any such new Bond. In the event any such Bond shall have matured, instead of issuing a new Bond, the City may pay the same without the surrender thereof. Upon the issuance of a new Bond under this Section, the City may require the payment of a sum sufficient to k, a e cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. The City shall cause books for the registration and for the transfer of the Bonds as provided herein and in the Bonds. The Trustee shall act as the Bond registrar. Each Bond is transferable by the registered owner thereof or by his attorney duly authorized in writing at the principal office of the Trustee. Upon such transfer a new fully registered Bond or Bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount will be issued to the transferee in exchange therefor. No charge shall be made to any owner of any Bond for the privilege of transfer or exchange, but any owner of any Bond requesting any such transfer or exchange shall pay any tax or other governmental charge required to be paid with respect thereto. Except as otherwise provided in the immediately preceding sentence, the cost of preparing each new Bond upon each exchange or transfer and any other expenses of the City or the Trustee incurred in connection therewith shall be paid by the City. The City shall not be required to transfer or exchange any Bonds selected for redemption in whole or in part. The Bonds shall be registered initially in the name of Cede & Co., as nominee for The Depository Trust Company ( "DTC "), which shall be considered to be the registered owner of the Bonds for all purposes under this Ordinance, including, without limitation, payment by the City of principal of, redemption price, premium, if any, and interest on the Bonds, and receipt of notices and exercise of rights of registered owners. There shall be one certificated, typewritten Bond for each stated maturity date which shall be immobilized in the custody of DTC with the beneficial owners having no right to receive the Bonds in the form of physical securities or certificates. DTC and its participants shall be responsible for maintenance of records of the ownership of beneficial interests in the Bonds by book -entry on the system maintained and operated by DTC and its participants, and transfers of ownership of beneficial interests shall be made only by DTC and its participants, by book - entry, the City having no responsibility therefor. DTC is expected to maintain records of the positions of participants in the Bonds, C1 0 & and the participants and persons acting through participants are expected to maintain records of the purchasers of beneficial interests in the Bonds. The Bonds as such shall not be transferable or exchangeable, except for transfer to another securities depository or to another nominee of a securities depository, without further action by the City. If any securities depository determines not to continue to act as a securities depository for the Bonds for use in a book -entry system, the City may establish a securities depository /book -entry system relationship with another securities depository. If the City does not or is unable to do so, or upon request of the beneficial owners of all outstanding Bonds of any series, the City and the Trustee (hereinafter identified), after the Trustee has made provision for notification of the beneficial owners by the then securities depository, shall permit withdrawal of such Bonds from the securities depository, and authenticate and deliver Bond certificates in fully registered form (in denominations of $5,000 or integral multiples thereof) to the assigns of the securities depository or its nominee, all at the cost and expense (including costs of printing definitive Bonds) of the City, if the City fails to maintain a securities depository /book -entry system, or of the beneficial owners, if they request termination of the system. Prior to issuance of the Bonds, the City shall have executed and delivered to DTC a written agreement (the "Representation Letter ") setting forth (or incorporating therein by reference) certain undertakings and responsibilities of the City with respect to the Bonds so long as the Bonds or a portion thereof are registered in the name of Cede & Co. (or a substitute nominee) and held by DTC. Notwithstanding such execution and delivery of the Representation Letter, the terms thereof shall not in any way limit the provisions of this Section or in any other way impose upon the City any obligation whatsoever with respect to persons having interests in the Bonds other than the registered owners, as shown on the registration books kept by the Trustee. The Trustee shall take all action necessary for all representations of the City in the Representation Letter with respect to the Trustee to at all times be complied with. 7 The authorized officers of the Trustee and the City shall do or perform such acts and execute all such certificates, documents and other instruments as they or any of them deem necessary or advisable to facilitate the efficient use of a securities depository for all or any portion of the Bonds; provided that neither the Trustee nor the City may assume any obligations to such securities depository or beneficial owners of Bonds that are inconsistent with their obligations to any registered owner under this Ordinance. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal or premium, if any, or interest of any Bond shall be made only to or upon the order of the registered owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. In any case where the date of maturity of interest on or principal of the Bonds or the date fixed for redemption of any Bonds shall be a Saturday or Sunday or shall be in the State a legal holiday or a day on which banking institutions are authorized by law to close, then payment of interest or principal (and premium, if any) need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after the date of maturity or date fixed for redemption. Section 6. The Bonds shall be executed on behalf of the City by the manual or facsimile signatures of the Mayor and City Clerk and shall have impressed or imprinted thereon the seal of the City. The Bonds, together with interest thereon, are secured solely by the Pledged Revenues. The Pledged Revenues are hereby pledged and mortgaged for the equal and ratable payment of the Bonds. This pledge in favor of the Bonds is hereby irrevocably made according to the terms of this Ordinance, and the City and its officers and employees shall execute, perform and carry out the terms thereof in strict conformity with the provisions of this Ordinance. The pledge of r] Pledged Revenues is subject to pledges in favor of the Prior Bonds. The Pledged Revenues shall not be deemed to be general revenues of the City. The Bonds and interest thereon shall not constitute an indebtedness of the City within any constitutional or statutory limitation. The Bonds shall never give rise to a charge against the City's general credit or taxing power and no funds derived from the City's taxes are pledged to pay the Bonds. Nothing herein shall require the City to pay the principal of and interest on the Bonds from sources other than the Pledged Revenues, but nothing herein shall prohibit the City from doing so. Section 7. The Series 2002 Bonds shall be in substantially the following form and the Mayor and City Clerk are hereby expressly authorized and directed to make all recitals contained therein: (Form of Series 2002 Bond) UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF LITTLE ROCK CAPITAL IMPROVEMENT JUNIOR LIEN REVENUE BOND SERIES 2002 Interest Rate: °s Maturity Date: 1, Dated Date: 1, 2002 Registered Owner: Principal Amount: CUSIP No.: KNOW ALL MEN BY THESE PRESENTS: 7 Dollars That the City of Little Rock, in the County of Pulaski, State of Arkansas (the "City "), for value received, hereby promises to pay, but solely from the source as hereinafter provided and not otherwise, to the Registered Owner shown above upon the presentation and surrender hereof at the corporate trust office of in or its successor or successors, as Trustee and Paying Agent (the "Trustee "), on the Maturity Date shown above, the Principal Amount shown above, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts and to pay by check or draft interest thereon, but solely from the source as hereinafter provided and not otherwise, in like coin or currency from the interest commencement date specified below at the Interest Rate per annum shown above, payable April 1, 2003 and semiannually thereafter on the first days of April and October of each year, until payment of such principal sum or, if this Series 2002 Bond or a portion hereof shall be duly called for redemption, until the date fixed for redemption, and to pay interest on overdue principal and interest (to the extent legally enforceable) at the rate borne by this Series 2002 Bond. Payment of each installment of interest shall be made to the person in whose name this Series 2002 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 Series 2002 Bond subsequent to such Record Date and prior to such interest payment date. This Series 2002 Bond shall bear interest from the payment date next preceding the date on which it is authenticated unless it is authenticated on an interest payment date, in which event it shall bear interest from such date, or unless it is authenticated prior to the first interest payment date, in which event it shall bear interest from the Dated Date shown above, or unless it is authenticated during the period from the Record Date to the next interest payment date, in which case it shall bear interest from such interest payment date, or unless at the time of authentication hereof interest is in default hereon, in which event it shall bear interest from the date to which interest has been paid. 10 • Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ( "DTC ") to the City or its agent for registration of transfer, exchange, or payment and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. This Series 2002 Bond is one of Little Rock, Arkansas Capital Improvement Bonds, Series 2002, aggregating Mi Dollars ($ ) in principal amount Bonds "), and is issued for the purpose of conservation fixtures and equipment, with an issue of City of Junior Lien Revenue Llion Thousand (the "Series 2002 financing energy related facilities. The Series 2002 Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas (the "State "), including particularly Title 14, Chapter 164, Subchapter 4 of the Arkansas Code of 1987 Annotated, and pursuant to Ordinance No. of the City, duly adopted on 2002 (the "Authorizing Ordinance "), and do not constitute an indebtedness of the City within any constitutional or statutory limitation. The Series 2002 Bonds are not general obligations of the City but are special obligations secured solely by a pledge of revenues received by the City that are derived from the payment of franchise fees by public utilities for the privilege of using the streets, highways and other public places in the City (the "Pledged Revenues "). The pledge of Pledged Revenues is subject to the pledge in favor of certain Prior Bonds, heretofore or hereafter issued (identified in the Authorizing Ordinance) and is on a parity with that securing Additional Bonds, if issued in accordance with the terms of the Authorizing Ordinance. ( "Bonds" herein refers to the Series 2002 Bonds and any Additional Bonds.) The Pledged Revenues are deemed to be a special source for the payment of the Bonds. The Bonds shall never give rise to a charge against the City's general credit or taxing power and no funds derived from the City's taxes are pledged to pay the Bonds. An amount of Pledged 11 • Revenues sufficient to pay the principal of and interest on the Series 2002 Bonds has been duly pledged and set aside into the Junior Lien Capital Improvement Revenue Bond Fund identified in the Authorizing Ordinance. Reference is hereby made to the Authorizing Ordinance for a detailed statement of the terms and conditions upon which the Series 2002 Bonds are issued, of the nature and extent of the security for the Bonds, and the rights and obligations of the City, the Trustee and the registered owners of the Bonds. Nothing herein or in the Authorizing Ordinance shall require the City to pay the principal of and interest on this Series 2002 Bond except from the Pledged Revenues, but nothing herein or in the Authorizing Ordinance shall prevent the City from doing so. The Series 2002 Bonds shall be subject to optional and extraordinary redemption as follows: 1. The Series 2002 Bonds shall be redeemed from proceeds of the Bonds which are not needed for the purposes intended, in whole or in part, on any date, in inverse order of maturity (and by lot within a maturity in such manner as the Trustee shall determine), at a price equal to the principal amount being redeemed plus accrued interest to the redemption date. 2. The Series 2002 Bonds are also subject to redemption at the option of the City on and after 1, from funds from any source, in inverse order of maturity (Bonds within a maturity to be selected by lot in such manner as the Trustee may determine) in whole at any time or in part on any interest payment date, at a redemption price equal to the principal amount being redeemed plus accrued interest to the redemption date. In case any outstanding Series 2002 Bond is in a denomination greater than $5,000, each $5,000 of face value of such Bond shall be treated as a separate Series 2002 Bond of the denomination of $5,000. Notice of redemption identifying the Series 2002 Bonds or portions thereof (which shall be $5,000 or a multiple 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 12 redemption, by mailing a copy of the redemption notice by first class mail, postage prepaid, to all registered owners of Series 2002 Bonds to be redeemed. Failure to mail an appropriate notice or any such notice to one or more registered owners of 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 in proper and timely fashion. All such Bonds or portions thereof thus called for redemption will cease to bear interest on such redemption date. This Series 2002 Bond is transferable by the registered owner hereof in person or by his attorney -in -fact duly authorized in writing at the corporate trust office of the Trustee referred to above, but only in the manner, subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. This Bond is issued with the intent that the laws of the State shall govern its construction. The City and the Trustee may deem and treat the registered owner 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 shall be affected by any notice to the contrary. The Bonds are issuable only as fully registered Bonds in the denomination of $5,000, and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, fully registered Bonds may be exchanged for a like aggregate principal amount of fully registered Bonds of the same maturity of other authorized denominations. 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 the Series 2002 Bonds do exist, have happened and have been performed in due time, form and manner as required by law; that the indebtedness 13 • represented by the Series 2002 Bonds, together with all obligations of the City, does not exceed any constitutional or statutory limitation; and that the above referred to revenues pledged to the payment of the principal of and premium, if any, and interest on the Series 2002 Bonds as the same become due and payable will be sufficient in amount for that purpose. This Series 2002 Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Authorizing Ordinance until the Certificate of Authentication hereon shall have been signed by the Trustee. IN WITNESS WHEREOF, the City of Little Rock, Arkansas has caused this Bond to be executed by its Mayor and City Clerk, their manual or facsimile signatures thereunto duly authorized, and its corporate seal to be impressed or imprinted on this Bond, all as of the Dated Date shown above. ATTEST: y Cler (SEAL) 1 CITY OF LITT K, A NSAS By Y / ` JjCLMayor7 • 0 (Form of Trustee's Certificate) TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Bond is one of the Series 2002 Bonds issued under the provisions of the within mentioned Authorizing Ordinance. Date of Authentication: TRUSTEE M Authorized Signature (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, ( "Transferor "), hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. DATE: Transferor GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by a member of or participant in the Securities Transfer Agents Medallion Program (STAMP), or in another signature guaranty program recognized by the Trustee. 15 • • Section 8. (a) The City agrees to charge franchise fees to all public utilities occupying the streets, highways and other public places under Arkansas Code of 1987 Annotated " 14- 200 -101 through 112, or successor statutes, while the Bonds are outstanding. (b) The franchise fees currently charged to public utilities are hereby ratified, confirmed and continued and such fees shall never be reduced while the Bonds are outstanding unless the City receives an opinion of an Accountant to the effect that Pledged Revenues for the preceding fiscal year, assuming such reduction had been in effect for the entire year, would have equaled not less than 120% of the maximum annual debt service on the Bonds and the Prior Bonds outstanding. (c) The franchise fees currently collected from the public utilities are sufficient to pay the principal of and interest on the Bonds when due and the City agrees that the percentage rate of each franchise fee currently collected by the City from public utilities will not be increased solely for the purpose of providing funds to pay the principal of and interest on the Bonds when due. Section 9. The City Treasurer shall be the custodian of all Pledged Revenues. All Pledged Revenues shall at all times be accounted for and used and applied only as provided herein. Subject to compliance with the terms of the Prior Indenture, Pledged Revenues shall be deposited, as received, in a fund of the City created and designated the "Franchise Fee Fund" until the sums held therein, together with any amount then held in the Bond Fund, shall equal at least an amount equal to the principal and interest requirements for the outstanding Bonds for the then next twelve -month period, whereupon Pledged Revenues (subject to the terms of the Prior Indenture) shall be released and may be applied and used by the City for any lawful municipal purpose. The Franchise Fee Fund shall be held by the City in such depository or depositories for the City as may be lawfully designated by the City from time to time and which hold membership in the Federal Deposit Insurance Corporation or any successor entity ( "FDIC "); provided that any such moneys may be invested in Permitted Investments, as set forth hereinbelow. 16 • Section 10. There shall be deposited from Pledged Revenues into an account held by the Trustee designated "Junior Lien Capital Improvement Revenue Bond Fund" (the "Bond Fund "), the sums in the amounts and at the times described below for the purpose of providing funds for the payment of the principal of and interest on the Bonds, as due. There shall be paid into the Bond Fund on or before the last business day prior to the date for each payment of interest or principal and interest on all outstanding Bonds. The City shall also pay into the Bond Fund such additional sums as necessary to provide for the Trustee's fees and expenses. Section 11. There may be established upon the issuance of any series of the Bonds, in the Bond Fund, an account designated the "Debt Service Reserve," to be maintained at a level equal to the maximum annual debt service requirements for ail Bonds which are secured by it (the "Required Level "). In the event of any deficiency in the Debt Service Reserve (by withdrawal or by reduction in market value), it shall be restored to the Required Level, by the deposit of Pledged Revenues, over a period of not fewer than six months. Any amount by which the Debt Service Reserve exceeds the Required Level shall be applied to the payment of principal or interest (or Trustee's fees) on the Bonds on the next date or dates for payment thereof. If for any reason there shall be a deficiency in the payments made into the Bond Fund so that there are unavailable sufficient moneys therein to pay the principal of and interest on any series of Bonds as the same become due, any sums then held in the Debt Service Reserve securing such series shall be used to the extent necessary to pay such principal and interest. Any Debt Service Reserve shall be used solely as herein described, but the moneys therein may be invested as hereinafter set forth. When the moneys held in the Bond Fund shall be and remain sufficient to pay the principal of and interest on the Bonds then outstanding, there shall be no further obligation to make further payments into the Bond Fund. All moneys in the 17 • Bond Fund shall be used solely for the purpose of paying the principal of and interest on the Bonds, and Trustee's fees, except as hereinafter set forth. It shall be the duty of the Trustee to withdraw from the Bond Fund before the due date for the principal and /or interest on any Bond, at maturity or redemption prior to maturity, the amount of such Bond and interest due thereon for the sole purpose of paying the same, together with the Trustee's fees. No withdrawal of funds from the Bond Fund shall be made for any other purpose except as otherwise authorized in this Ordinance. Section 12. (a) So long as any of the Bonds are outstanding, the City shall not issue or attempt to issue any Bonds or obligations claimed to be entitled to a priority of lien on the Pledged Revenues over the lien securing the Bonds, other than Prior Bonds issued under the Prior Indenture (as in effect on the date of issuance of the Series 2002 Bonds). (b) The City reserves the right to issue Additional Bonds to finance or pay the cost of constructing any additional capital improvements (within the meaning of the Act) or to refund Bonds issued for such purpose, but the City shall not authorize or issue any such Additional Bonds ranking on a parity with the outstanding Bonds unless there have been procured and filed with the City Clerk and the Trustee a statement by an Accountant reciting the opinion, based upon necessary investigation, that the Pledged Revenues for the fiscal year immediately preceding the fiscal year in which it is proposed to issue such Additional Bonds were equal to not less than 1200 of the maximum annual principal and interest requirements on all Bonds and Prior Bonds then outstanding and the Additional Bonds then proposed to be issued. In making the computation, the Accountant may treat any increase in franchise fees enacted subsequent to the first day of such preceding year as having been in effect throughout that year and may include in Pledged Revenues for such year the amount that would have been received, based on such opinion, had the increase been in effect throughout such year. (c) Nothing herein is intended to restrict the City in the issuance of Prior Bonds, provided that the City complies iE E 0 with the terms therefor set forth in the Prior Indenture as in effect on the date of issuance of the Series 2002 Bonds. (d) The Additional Bonds, the issuance of which is restricted and conditioned by this Section, shall be understood to mean Bonds secured by Pledged Revenues ranking on a parity of security with the Bonds and not obligations secured by Pledged Revenues subordinate in security to the Bonds. Section 13. The Bonds shall be subject to redemption prior to maturity in accordance with the terms set out in the Bond form. Section 14. The City shall cause proper books of accounts and records to be kept (separate from all other records and accounts) in which complete and correct entries shall be made of all transactions relating to the Pledged Revenues, and such books shall be available for inspection by the Trustee and /or any Bondholder at reasonable times and under reasonable circumstances. The City agrees to have its financial statements audited by an Accountant, and a copy of the audit shall be delivered to the Trustee and any Bondholder requesting the same in writing within 45 days after it is received by the City. Section 15. Any Bond shall be deemed to be paid within the meaning of this Ordinance when payment of the principal of and interest on such Bond (whether at maturity or upon redemption as provided herein, or otherwise), either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably depositing with the Trustee, in trust and irrevocably set aside exclusively for such payment, (1) cash or (2) direct obligations of or obligations guaranteed by the United States of America ( "Government Securities ") (provided that such deposit will not adversely affect the tax - exempt status of the interest on any of the Bonds or cause any of the Bonds to be classified as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code ")), maturing as to principal and interest in such amounts and at such times as will provide sufficient moneys to make such payment, and all necessary and proper fees, compensation and expenses of the Trustee pertaining to the Bond or Bonds with respect to which such deposit is made shall have 19 • been paid or the payment thereof provided for to the satisfaction of the Trustee. On the discharge of any Bonds within the meaning of this Ordinance, the Trustee shall hold in trust, for the benefit of the owners of such Bonds, all such moneys and /or Government Securities. When all the Bonds shall have been paid within the meaning of this Ordinance, and if the Trustee has been paid its fees and expenses, the Trustee shall take all appropriate action to cause (i) the pledge and lien of this Ordinance to be discharged and canceled, and (ii) all moneys held by it pursuant to this Ordinance and which are not required for the payment of such Bonds to be paid over or delivered to or at the direction of the City. In determining the sufficiency of the deposit of Government Securities there shall be considered the principal amount of such Government Securities and interest to be earned thereon until the maturity of such Government Securities. Section 16. If (a) there be any default in the payment of the principal of or interest on any of the Bonds or (b) the City defaults in any Bond Fund requirement or in the performance of any of the other covenants contained in this Ordinance or (c) there occurs an "Event of Default" under the Prior Indenture, the Trustee may, and upon the written request of the owners of not less than 10% in principal amount of the then outstanding Bonds, shall, by proper suit, compel the performance of the duties of the officials of the City under the laws of the State. No owner of any of the outstanding Bonds shall have any right to institute any suit, action, mandamus or other proceeding in equity or at law for the protection or enforcement of any power or right unless such owner previously shall have given to the Trustee written notice of the default on account of which such suit, action or proceeding is to be taken, and unless the registered owners of not less than 10% in principal amount of the Bonds then outstanding shall have made written request of the Trustee after the right to exercise such power or right of action, as the case may be, shall have accrued, and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers granted to the Trustee, or to institute 20 • such action, suit or proceeding in its name, and unless, also, there shall have been offered to the Trustee reasonable security and indemnity against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee shall have refused or neglected to comply with such request within a reasonable time. Such notification, request and offer of indemnity are, at the option of the Trustee, conditions precedent to the execution of any remedy. No one or more owners of the Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Ordinance, or to enforce any right thereunder except the manner herein described. All proceedings at law or in equity shall be instituted, had and maintained in the manner herein described and for the benefit of all owners of the outstanding Bonds. In the event of the occurrence of an "Event of Default" under the Prior Indenture with the result that maturity of the Prior Bonds, or any of them, should be accelerated, the Trustee shall declare the principal of all Bonds outstanding, with accrued interest, to be immediately due and payable. No remedy conferred upon or reserved to the Trustee or to the owners of the Bonds is intended to be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Ordinance or by law. The Trustee may, and upon the written request of the owners of not less than 50o in principal amount of the Bonds then outstanding shall, waive any default which shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted under the provisions of this Ordinance or before the completion of the enforcement of any other remedy, but no such waiver shall extend to or affect any other existing or any subsequent default or defaults or impair any rights or remedies consequent thereon. All rights of action under this Ordinance or under any of the Bonds, enforceable by the Trustee, may be enforced by it without the possession of any of the Bonds, and any such suit, action or proceeding instituted by the Trustee shall be brought in its name for the benefit of all the owners of such Bonds, subject to the provisions of this Ordinance and the Prior Indenture. 21 • No delay or omission of the Trustee or of any owners of the Bonds to exercise any right or power accrued upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Ordinance to the Trustee and to the registered owners of the Bonds, respectively, may be exercised from time to time and as often as may be deemed expedient. In any proceeding to enforce the provisions of this Ordinance, the Trustee and any plaintiff bondholder shall be entitled to recover from the City all costs of such proceeding, including reasonable attorneys' fees. Notwithstanding anything set forth above, provided that a Bond Insurer is not in default under its Bond Insurance Policy, the Insurer is subrogated to, and may enjoy and exercise, all rights and remedies of the owners of the Bonds and may direct the Trustee in the exercise of any remedies set forth above. Section 17. (a) The terms of this Ordinance shall constitute a contract between the City and the registered owners of the Bonds and no variation or change in the undertaking herein set forth shall be made while any of these Bonds are outstanding, except as hereinafter set forth in subsections (b) and (c). (b) The Trustee ma' change in this Ordinance that the material prejudice of the ambiguity, defect or omission hereto without the consent of Bonds. r consent to any variation or the Trustee determines is not to owners of the Bonds or to cure any in this Ordinance or any amendment the owners of the outstanding (c) The owners of not less than 75% in aggregate principal amount of the Bonds then outstanding shall have the right, from time to time, anything contained in this Ordinance to the contrary notwithstanding, to consent to and approve the adoption by the City of such ordinance supplemental hereto as shall be necessary or desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, 22 • any of the terms or provisions contained in this Ordinance or in any supplemental ordinance; provided, however, that nothing contained in this Section shall permit or be construed as permitting (a) an extension of the maturity of the principal of or the interest on any Bond, or (b) a reduction in the principal amount of any Bond or the rate of interest thereon, or (c) the creation of a lien or pledge superior to the lien and pledge created by this Ordinance, or (d) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (e) a reduction in the aggregate principal amount of the Bonds required for consent to such supplemental ordinance. Section 18. When the Series 2002 Bonds have been executed, they shall be authenticated by the Trustee and the Trustee shall deliver the Series 2002 Bonds to or at the direction of the Purchaser upon payment of the Purchase Price. The accrued interest shall be deposited into the Bond Fund. The expenses of issuing the Series 2002 Bonds as set forth in the delivery instructions to the Trustee signed by the Mayor and City Clerk shall be paid from the Purchase Price. The amount from the Purchase Price necessary to establish a Debt Service Reserve at the Required Level may be deposited in the Bond Fund as and to the extent set forth in the deliver instructions. The remainder of the Purchase Price shall be remitted to the City for deposit into a special account in the name of the City designated "Capital Improvement Fund, Series 2002" (the "Improvement Fund ") in a depository or depositories designated by the City that are members of FDIC. The moneys in the Improvement Fund shall be disbursed solely in payment of the costs of accomplishing the Improvements, paying necessary expenses incidental thereto and paying expenses of issuing the Series 2002 Bonds. Disbursements shall be on the basis of checks which shall contain at least the following information: the person to whom payment is being made; the amount of the payment; and the purpose by general classification of the payment. The City shall be required to keep accurate records of all payments made on the basis of checks. When the Improvements have been completed and all required expenses paid and expenditures made from the Improvement Fund for and in connection with the accomplishment of the Improvements and the financing thereof, this fact shall, if moneys remain in the Improvement Fund, be evidenced by a 23 0 certificate signed by the Mayor, which certificate shall state, among other things, the date of the completion and that all obligations payable from the Improvement Fund have been discharged. A copy of the certificate shall be filed with the depository or depositories of the Improvement Fund, and a copy with the Trustee, and upon receipt thereof the depository of the Improvement Fund shall transfer any remaining balance to the Bond Fund for the purpose of redeeming Series 2002 Bonds. Section 19. (a) Moneys held for the credit of the Bond Fund shall be invested and reinvested by the City, in Permitted Investments (as hereinafter defined), all of which (except for moneys in any Debt Service Reserve) shall mature, or which shall be subject to redemption by the holder thereof, at the option of such holder, not later than the payment date for interest or principal and interest in the case of other Bond Fund moneys. (b) Moneys held for the credit of the Improvement Fund and (if any) the Franchise Fee Fund shall be invested and reinvested by the City in such investments as may, from time to time, be permitted by law, which shall mature, or which shall be subject to redemption by the holder thereof, at the option of such holder, not later than the date or dates when the moneys held for the credit of the particular fund will be required for purposes intended. (c) Obligations so purchased as an investment of moneys in any fund shall be deemed at all times to be a part of such fund and the interest accruing thereon and any profit realized from such investments shall be credited to such fund, and any loss resulting from such investment shall be charged to such fund. (d) "Permitted Investments" are defined as (i) Government Securities or (ii) time deposits or certificates of deposit of banks which are insured by the FDIC, or, if in excess of insurance coverage, collateralized by Government Securities or (iii) money market funds composed of Government Securities (and cash) which are registered with the Securities and Exchange Commission and meet the requirements of Rule 2a -7 of the Investment Company Act of 1940 or (iv) Surety Bonds or (v) any investment authorized pursuant to the City's investment policy, 24 • 0 as currently in effect or (vi) any other investment which is acceptable to the Bond Insurer. (e) Permitted Investments held in any Debt Service Reserve shall be valued by the Trustee not less frequently than annually, at fair market value, by any method utilized by the Trustee in its discretion. A report of such valuation shall be presented to the City. (f) The City recognizes that the exclusion of interest paid on the Series 2002 Bonds from gross income for purposes of regular federal income taxation is dependent upon compliance with the provisions of Section 148 of the Code. The City shall, unless and until the City delivers to the Trustee an opinion of Bond Counsel as described below in this paragraph, make the determinations and take the actions hereinafter by this paragraph required and make such further or different determinations and take such further or different actions as are necessary, in the opinion of Bond Counsel, to comply with the requirements of Section 148 (f) of the Code and regulations issued or otherwise effective thereunder (the "Regulations "), and the Trustee, but only from funds provided by the City and on the basis of each Rebate Certificate (defined below), shall rebate to the United States, not later than sixty (60) days after the end of each Fifth Bond Year with respect to the Series 2002 Bonds, an amount which ensures that at least ninety percent (90 %) of the Rebate Amount (as hereinafter defined) will, at the time of required payment, be paid to the United States, and within sixty (60) days after the payment or redemption of all principal of the Series 2002 Bonds, shall rebate an amount sufficient to pay the remaining unpaid balance of the Rebate Amount, all in the manner and as required by Section 148 of the Code. As used herein, (a) "Rebate Amount" means the amount described in Section 148 (f) (2) of the Code, computed in accordance with the provisions of Section 148 (f) (2) and the Regulations, (b) "Bond Year" means the twelve -month period (or, in the case of the initial Bond Year, a shorter period) ending on the date set forth in the Implementing Resolution, (c) "Fifth Bond Year" means the Bond Year ending on the date next preceding (but not later then) five years after issuance of the Series 25 0 • 2002 Bonds and each Bond Year ending on that date which is five years after the end of the preceding Bond Year. The City shall determine the Rebate Amount within 55 days after the end of each Fifth Bond Year and upon the discharge of the Series 2002 Bonds shall furnish to the Trustee written verification of such Rebate Amount, with any supporting documentation required to calculate such Rebate Amount (the "Rebate Certificate "). The City shall furnish to the Trustee, within 55 days after the end of each Bond Year, (a) a written verification of the Rebate Amount or (b) a written opinion of the Accountant to the effect that the Rebate Amount accrued to the end of such Bond Year, if any, is not material under generally accepted auditing standards (the "Annual Opinion "). The Trustee and the City shall retain copies of each Rebate Certificate and Annual Opinion until six years after final discharge of all Series 2002 Bonds. The provisions of this paragraph shall remain in full force and effect notwithstanding the payment or defeasance of Series 2002 Bonds hereunder. Notwithstanding the foregoing, in the event that the Trustee is furnished with an opinion of Bond Counsel acceptable to the Trustee to the effect that it is not necessary under then existing laws, regulations, rulings and decisions or any then pending federal legislation to pay any portion of earnings on investments held hereunder or otherwise to the United States in order to assure the exclusion from gross income for regular federal income tax purposes of interest on any of the Series 2002 Bonds, the requirements set forth in the preceding portion of this Section (with respect to the portion of such earnings specified in such opinion) need not be complied with an shall nc longer be effective and all amounts at the time held by the Trustee for the purposes set forth in this Section (to the extent covered by such opinion) shall be transferred as specified in such opinion. All references to sections of the Code and to Regulations thereunder include references to any successor section or sections which set forth substantive provisions supplanting or superseding those of the sections referred to. 26 • 0 The Trustee will agree to modification or rescission of any provision of this Section in the event that there is delivered to the Trustee an opinion of Bond Counsel, acceptable to the Trustee, to the effect that such modification or rescission (a) is necessary to preserve the exemption of interest on any of the Series 2002 Bonds from regular federal income tax or (b) will not adversely affect such regular federal income tax exemption. Any Rebate Amount payable under this Section shall be payable from the Bond Fund or the Improvement Fund. Section 21. (a) The City covenants that it shall not take any action or suffer or permit any action to be taken or conditions to exist which causes or may cause the interest payable on the Bonds to be included in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the City covenants that the proceeds of the sale of the Bonds and the Pledged Revenues will not be used directly or indirectly in such manner as to cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Code. (b) The City represents that it has not used or permitted the use of, and covenants that it will not use or permit the use of the Improvements or the proceeds of the Bonds in such manner as to cause any of the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code. In this regard, the City covenants that (i) it will not use (directly or indirectly) the proceeds of the Bonds to make or finance loans to any person, and (ii) that while the Bonds are outstanding the Improvements will only be used by state or local governmental entities or persons on a basis as members of the general public, unless the City receives an opinion from Bond Counsel, acceptable to the Trustee, to the effect that the proposed use will not adversely affect the tax - exempt status of interest on the Bonds for federal income tax purposes. (c) The City covenants that it will take no action which would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. Nothing in this Section shall prohibit investments in bonds issued by the United States Treasury. 27 • (d) The City covenants that it will submit to the Secretary of the Treasury of the United States, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Series 2002 Bonds are issued, a statement required by Section 149(e) of the Code. (e) The City covenants that it will not reimburse itself from proceeds of the Series 2002 Bonds for costs paid prior to the date the Bonds are issued except in compliance with United States Treasury Regulation No. 1.150 -2. Section 22. (a) The Trustee shall only be responsible for the exercise of good faith and reasonable prudence in the execution of its trust. The recitals in this Ordinance and in the face of the Bonds are the recitals of the City and not of the Trustee. The Trustee shall not be required to take any action as Trustee unless it shall have been requested to do so in writing by the owners of not less than loo in principal amount of the Bonds then outstanding and shall have been offered reasonable security and indemnity against the costs, expenses and liabilities to be incurred therein or thereby. The Trustee may resign at any time by giving 60 days' notice in writing to the City Clerk and to the registered owners of the Bonds, and the majority in principal amount of the owners of the outstanding Bonds at any time, with or without cause, may remove the Trustee. In the event of a vacancy in the office of Trustee, either by resignation or by removal, the majority in principal amount of the owners of the outstanding Bonds may appoint a new Trustee, such appointment to be evidenced by a written instrument or instruments filed with the City Clerk. If the majority in principal amount of the owners of the outstanding Bonds shall fail to fill a vacancy within 45 days after the same shall occur, then the City shall forthwith designate a new Trustee by a written instrument filed in the office of the City Clerk. The original Trustee and any successor Trustee shall file a written acceptance and agreement to execute the trust imposed upon it or them by this Ordinance, but only upon the terms and conditions set forth in this Ordinance and subject to the provisions of this Ordinance, to all of which the respective owners of the Bonds agree. Such written acceptance shall be filed with the City Clerk and a copy thereof shall be placed in the bond transcript. Any successor DTs] • • Trustee shall have all the powers herein granted to the original Trustee. (b) Every successor Trustee appointed pursuant to this Section shall be a trust company or bank in good standing, duly authorized to exercise trust powers and subject to examination by federal or state authority, having a reported capital and surplus, or the obligations of which are guaranteed by an institution having a reported capital and surplus, of not less than $30,000,000. (c) Any resignation by the Trustee shall not be effective until the appointment of a successor Trustee under this Section. Section 23. The provisions of this Ordinance are hereby declared to be severable and if any provision shall for any reason be held illegal or invalid, such holding shall not affect the validity of the remainder of this Ordinance. Section 24. All ordinances and resolutions or parts thereof, in conflict herewith are hereby repealed to the extent of such conflict. Section 25. It is hereby ascertained and declared that the Improvements are immediately needed for the realization of the savings to be effected thereby. The Improvements cannot be accomplished without the issuance of the Series 2002 Bonds, which cannot be sold at the interest rates currently available unless this Ordinance is immediately effective. Therefore, it is declared that an emergency exists and this Ordinance being necessary for the preservation of the public peace, health and safety, shall be in force and take effect immediately upon and after its passage. PASSED: JULY 2 2002. ATTEST: Ci y Clerk 29 • (SEAL) w • • CERTIFICATE The undersigned, City Clerk of the City of Little Rock, Arkansas (the "City "), hereby certifies that the foregoing pages are a true and correct copy of Ordinance No. Igo, adopted at a yZ .,.(nx session of the Board of Directors of the City, held at the regular meeting place of the Board of Directors at _19_ p.m., on the --al—lla day of , 2002, and that said Ordinance is of record in Ordinance Re rd Book No. of the City, now in my possession. GIVEN under my hand and seal this day of 2002. City Clerk (SEAL) 31