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ORDINANCE NO. 18,735
AN ORDINANCE AUTHORIZING THE ACQUISITION AND
CONSTRUCTION OF BETTERMENTS AND IMPROVEMENTS
TO THE WASTE COLLECTION AND DISPOSAL SYSTEM OF
THE CITY OF LITTLE ROCK, ARKANSAS; AUTHORIZING
THE ISSUANCE AND SALE OF WASTE DISPOSAL
REFUNDING AND IMPROVEMENT REVENUE BONDS;
PROVIDING FOR THE PAYMENT OF THE PRINCIPAL OF
AND INTEREST ON THE BONDS; PRESCRIBING OTHER
MATTERS RELATING THERETO; AND DECLARING AN
EMERGENCY.
WHEREAS, the City of Little Rock, Arkansas (the "City ")
owns a waste collection and disposal system, which includes
landfill facilities (the "System "); and
WHEREAS, the Board of Directors of the City ( "the Board ")
has determined that betterments and improvements to the System (the
"improvements ") are necessary in order to make the services of the
System adequate for the needs of the City; and
WHEREAS, the improvements include particularly, without
limitation, the construction of cell four of the City's class I
landfill and related costs, the purchase of equipment, the
acquisition of land, the preparation of a rate study for solid
waste services and the closure of cell two of the landfill; and
WHEREAS, the Board has caused to be prepared by The
Mehlburger Firm, Inc. and Genesis Environmental Consulting, Inc. a
preliminary report, general plans and estimates of cost for the
improvements that have been examined and approved by the Board and
a copy of which general plans are on file in the office of the
Director of Public Works where they may be inspected by any
interested person; and
WHEREAS, in order to receive debt service savings, the
Board has determined that the City should refund its Waste Disposal
Revenue Bonds, Series 1993 (the 111993 Bonds ") authorized by
Ordinance No. 16,409 of the City, adopted May 18, 1993 (the "1993
Ordinance') and its Waste Disposal Revenue Bonds, Series 1995 (the
"1995 Bonds ") authorized by Ordinance No. 17,036 of the City,
adopted December 5, 1995 (the "1995 Ordinance "); and
WHEREAS, the City can refund the 1993 Bonds and the 1995
Bonds (collectively, the "Bonds Refunded ") and pay all or a portion
of the costs of the improvements by the issuance of Waste Disposal
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Refunding and Improvement Revenue Bonds, Series 2002, in the
principal amount of $27,330,000 (the "bonds "); and
WHEREAS, the City has made arrangements for the sale of
the bonds to Stephens Inc. (the "Purchaser "), at a price of
$28,505,097.95 (principal amount plus original issue premium of
$1,299,176.15 less underwriter's discount of $124,078.20) plus
accrued interest (the "Purchase Price "), on a negotiated basis
pursuant to a Bond Purchase Agreement (the "Purchase Agreement ")
which has been presented to and is before this meeting; and
WHEREAS, the Preliminary Official Statement, dated July
18, 2002, offering the bonds for sale (the "Preliminary Official
Statement ") has been presented to and is before this meeting; and
WHEREAS, the Continuing Disclosure Agreement between the
City and Metropolitan National Bank, Little Rock, Arkansas, as
Dissemination Agent (the "Continuing Disclosure Agreement "),
providing for the ongoing disclosure obligations of the City with
respect to the bonds has been presented to and is before this
meeting;
NOW, THEREFORE, BE IT ORDAINED by the Board of Directors
of the City of Little Rock, Arkansas:
Section 1. The improvements and the refunding of the
Bonds Refunded (the "refunding ") shall be accomplished. The Mayor
and City Clerk are hereby authorized to take, or cause to be taken,
all action necessary to accomplish the improvements and the
refunding and to execute all required contracts. The 1993 Bonds
shall be redeemed on October 1, 2002 at 1000. The 1995 Bonds
maturing after May 1, 2005 shall be redeemed on May 1, 2005 at
1000.
Section 2. The Board hereby finds and declares that the
period of usefulness of the improvements will be more than 20
years, which is longer than the term of the bonds.
Section 3. The offer of the Purchaser for the purchase
of the bonds from the City at the Purchase Price for bonds bearing
interest at the rates per annum, maturing and otherwise subject to
the terms and provisions hereafter in this Ordinance set forth in
detail be, and is hereby accepted, and the Purchase Agreement, in
substantially the form submitted to this meeting, is approved and
the bonds are hereby sold to the Purchaser. The Mayor is hereby
authorized and directed to execute and deliver the Purchase
Agreement on behalf of the City and to take all action required on
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the part of the City to fulfill its obligations under the Purchase
Agreement.
Section 4. The Preliminary Official Statement is hereby
approved and the previous use of the Preliminary Official Statement
by the Purchaser in connection with the sale of the bonds is hereby
in all respects authorized and approved, and the Mayor is hereby
authorized and directed, for and on behalf of the City, to execute
the Preliminary Official Statement and the final Official Statement
as set forth in the Purchase Agreement.
Section 5. The Continuing Disclosure Agreement, in
substantially the form submitted to this meeting, is approved, and
the Mayor is hereby authorized and directed to execute and deliver
the Continuing Disclosure Agreement on behalf of the City. The
Mayor is authorized and directed to take all action required on the
part of the City to fulfill the City's obligations under the
Continuing Disclosure Agreement.
Section 6. Under the authority of the Constitution and
laws of the State of Arkansas (the "State "), including particularly
Title 14, Chapter 232 of the Arkansas Code of 1987 Annotated, City
of Little Rock, Arkansas Waste Disposal Refunding and Improvement
Revenue Bonds, Series 2002, are hereby authorized and ordered
issued in the principal amount of $27,330,000 for the purpose of
financing all or a portion of the costs of the improvements and the
refunding, paying expenses of issuing the bonds and funding a debt
service reserve. The bonds shall bear interest at the rates and
shall mature on the dates and in the amounts as follows:
Year
Principal
Interest
(May 1)
Amount
Rate
2003
$2,270,000
3.00%
2004
1,965,000
3.00
2005
2,025,000
3.50
2006
2,090,000
4.00
2007
2,175,000
4.00
2008
2,260,000
4.00
2009
2,355,000
4.00
2010
2,450,000
4.50
2011
2,560,000
4.50
2012
2,670,000
5.00
2013
2,125,000
5.00
2016
2,385,000
5.00
The bonds shall be dated September 1, 2002 and shall be
issuable only as fully registered bonds without coupons in the
denomination of $5,000 or any integral multiple thereof. Unless
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the City shall otherwise direct, the bonds shall be numbered from 1
upward in order of issuance. Each bond shall have a CUSIP number.
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, 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, 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 the 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
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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.
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.
Interest on the bonds shall be payable on November 1,
2002, and semiannually thereafter on May 1 and November 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 City maintained by Metropolitan National Bank, Little
Rock, Arkansas, as 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.
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 September 1, 2002, 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
in Section 8 hereof (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
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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 6, the City may require the payment of a sum sufficient to
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 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 on any bond shall be made only to or upon the
order of the registered owner thereof or his legal representative,
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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 7. 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 by
and are payable solely from the net revenues derived from the
System which are hereby pledged and mortgaged for the equal and
ratable payment of the bonds. The bonds and interest thereon shall
not constitute an indebtedness of the City within any
constitutional or statutory limitation.
Payment of the scheduled principal of and interest on the
bonds, as due (by stated maturity or by scheduled mandatory
redemption) is guaranteed by MBIA Insurance Corporation (the
"Insurer ") pursuant to a financial guaranty insurance policy (the
"Insurance Policy "), as set forth in the Insurance Policy.
Section 8. The bonds and the Certificate 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 Bond)
REGISTERED REGISTERED
UNITED STATES OF AMERICA
STATE OF ARKANSAS
COUNTY OF PULASKI
CITY OF LITTLE ROCK
WASTE DISPOSAL REFUNDING AND IMPROVEMENT
REVENUE BOND, SERIES 2002
Interest Rate: % Maturity Date: May 1,
Dated Date: September 1, 2002
Registered Owner: Cede & Co.
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Principal Amount:
CUSIP No.:
KNOW ALL MEN BY THESE PRESENTS:
That the City of Little Rock, 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 principal corporate office
of Metropolitan National Bank, Little Rock, Arkansas, 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 November 1, 2002 and semiannually
thereafter on the first days of May and November of each year,
until payment of such principal sum or, if this bond or a portion
thereof 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 bond. 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.
Unless this bond is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ( "DTC "), to the Trustee 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 required 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 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
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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.
This bond is one of an issue of City of Little Rock,
Arkansas Waste Disposal Refunding and Improvement Revenue Bonds,
Series 2002, aggregating Twenty Seven Million Three Hundred Thirty
Thousand Dollars ($27,330,000) in principal amount (the "bonds "),
and is issued for the purpose of refunding certain outstanding
bonds of the City, financing all or a portion of the costs of the
acquisition, construction and equipping by the City of betterments
and improvements to the City =s waste collection and disposal system
(the "System "), funding a debt service reserve and paying expenses
incidental thereto and to the authorization and issuance of the
bonds.
The 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 232 of the
Arkansas Code of 1987 Annotated, and pursuant to Ordinance No.
duly adopted on , 2002 (the "Authorizing
Ordinance "), and do 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 net revenues derived from the operation of
the System. An amount of net System revenues sufficient to pay the
principal of and interest on the bonds has been duly pledged and
set aside into the Bond Account within the Waste Disposal Revenue
Fund being maintained in accordance with the Authorizing Ordinance.
Reference is hereby made to the Authorizing Ordinance for a
detailed statement of the terms and conditions upon which the 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. The City has fixed and has
covenanted and agreed to maintain rates for the services of the
System which shall be sufficient at all times to provide for the
proper and reasonable expenses of operation and maintenance of the
System and for the payment of the principal of and interest on the
bonds, including Trustee =s fees, as the same become due and
payable, and to establish and maintain a debt service reserve.
The bonds shall be subject to optional and mandatory
sinking fund redemption as follows:
(1) The bonds are subject to redemption at the option of
the City, from funds from any source, on and after May 1, 2010, 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. If fewer than all of the
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bonds shall be called for redemption, the particular maturities of
the bonds to be redeemed shall be selected by the City in its
discretion. If fewer than all of the bonds of any one maturity
shall be called for redemption, the particular bonds or portion
thereof to be redeemed from such maturity shall be selected by lot
by the Trustee.
(2) To the extent not previously redeemed, the bonds
maturing on May 1, 2016 are subject to mandatory sinking fund
redemption by lot in such manner as the Trustee shall determine, on
May 1 in the years and in the amounts set forth below, at a
redemption price equal to the principal amount being redeemed plus
accrued interest to the date of redemption:
Bonds Maturing May 1, 2016
Year
2014
2015
2016 (maturity)
The provisions for
the bonds are subject to
Ordinance which permit the
previously redeemed or for
surrendered to the Trustee.
Principal Amount
$755,000
795,000
835,000
mandatory sinking fund redemption of
the provisions of the Authorizing
City to receive credit for bonds
bonds acquired by the City and
In case any outstanding bond is in a denomination greater
than $5,000, each $5,000 of face value of such bond shall be
treated as a separate bond of the denomination of $5,000.
Notice of redemption identifying the 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 redemption, by mailing a
copy of the redemption notice by first class mail, postage prepaid,
to all registered owners of bonds to be redeemed. Failure to mail
an appropriate notice or any such notice to one or more registered
owners of bonds to be redeemed shall not affect the validity of the
proceedings for redemption of other 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 and for the
retirement of which funds are duly provided in accordance with the
Authorizing Ordinance prior to the date fixed for redemption will
cease to bear interest on such redemption date.
This bond is transferable by the registered owner hereof
in person or by his attorney -in -fact duly authorized in writing at
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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 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 bonds do exist,
have happened and have been performed in due time, form and manner
as required by law; that the indebtedness represented by the 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 bonds as the same become due and
payable will be sufficient in amount for that purpose.
This 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.
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IN WITNE4HEREOF, the City of Littl ock, Arkansas has
caused this bond to e executed by its Mayor an City Clerk and its
corporate seal to be impressed or imprinted on this bond, all as of
the Dated Date shown above.
CITY OF LITTLE ROCK, ARKANSAS
ATTEST:
(SEAL)
M
City Clerk
(A Statement of Insurance provided by the
Insurer shall be placed on the bonds]
(Form of Trustee =s Certificate)
TRUSTEE =S CERTIFICATE OF AUTHENTICATION
This bond is one of the bonds designated Series 2002 in
and issued under the provisions of the within mentioned Authorizing
Ordinance.
Date of Authentication:
METROPOLITAN NATIONAL BANK
Little Rock, Arkansas
Trustee
By
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.
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Section 9. The City covenants that it will continuously
operate the System as a revenue producing undertaking. The City
covenants and agrees that while any of the bonds are outstanding it
will fix, charge and collect user fees and tipping fees sufficient
to produce gross System revenues in any fiscal year sufficient to
pay (i) operation and maintenance expenses of the System, (ii) each
year's required payments of principal, premium, if any, and
interest on the bonds and all other bonds or interest bearing
obligations secured by a pledge of System revenues ( "System
Bonds "), (iii) to restore the Debt Service Reserve Fund to the
Required Level, if necessary, and (iv) to make the required
deposits into the Rebate, Closure and Post - Closure Accounts
(hereinafter identified). If necessary, the rates will be
increased to produce Net Revenues (Net Revenues being defined as
gross System revenues less the expenses of operation and
maintenance of the System, including all expense items, except
depreciation and amortization expenses, properly attributable to
the operation and maintenance of the System, under generally
accepted accounting principles applicable to municipal utility
systems), which are at least equal to 1100 of the current year's
debt service on the outstanding System Bonds. For purposes of this
paragraph, the current year's debt service shall not include the
principal of temporary bonds or bond anticipation notes for which
refinancing plans exist.
Section 10. The Treasurer of the City shall be
custodian of the gross revenues derived from the operation of the
System and that officer shall give bond for the faithful discharge
of his duties as such custodian. All System revenues shall be
deposited by or on behalf of the City Treasurer into a special fund
heretofore created by the 1993 Ordinance and designated "Waste
Disposal Revenue Fund" (the "Revenue Fund "). Except as otherwise
specifically provided herein, the Revenue Fund and the other
special funds hereafter in this Ordinance provided for or referred
to shall be maintained in such depository or depositories for the
City as may be lawfully designated from time to time by the City;
subject, however, to the giving of security as now or hereafter may
be required by law, and provided that such depositories shall hold
membership in the Federal Deposit Insurance Corporation (the
"FDIC "). All deposits shall be in the name of the City and shall
be so designated as to indicate the particular fund or account to
which System revenues belong. Payments from the respective funds
or accounts held by the City shall be made by check or voucher,
signed by either the City Treasurer, the City Manager or the
Assistant City Manager, and drawn on the depository. Each check or
voucher shall be supported by appropriate documentation specifying
the purpose of the expenditure. Any deposit in excess of the
amount insured by the FDIC shall be secured by securities
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authorized by law to secure public funds, unless invested as herein
authorized.
Section 11. The accounts within the Revenue Fund are
hereby redesignated and reestablished as follows:
(a) Operation and Maintenance, Account;
(b) Bond Account;
(c) Closure Account;
(d) Post - Closure Account;
(e) Rebate Account;
(f) Capital Reserve Account; and
(g) Surplus Account.
Section 12. Revenues from the System in the Revenue
Fund shall be applied at the times, in the amounts, and in the
priority, as follows:
FIRST, the City shall deposit monthly into the Operation and
Maintenance Account revenues from the System in an amount
sufficient to pay all operating expenses and to make
reasonable provision for the repair and maintenance of the
System.
SECOND, the City shall deposit into the Bond Account revenues
from the System on the first business day of the month
following the issuance of the bonds and on the first business
day of each month thereafter into the Bond Account, until all
outstanding bonds, with interest thereon, have been paid in
full or provision made for such payment, a sum equal to 1/6
of the next installment of interest on the bonds plus a sum
equal to 1/12 of the next installment of principal of the
bonds; provided, however, the monthly payments into the Bond
Account through April 2003 shall be increased in order to
make the first principal and interest payments. The City
shall receive a credit against monthly payments to be made
into the Bond Account from System revenues (1) from bond
proceeds deposited therein, (2) interest earnings thereon and
(3) interest earnings deposited therein from the Debt Service
Reserve Fund (hereinafter identified).
THIRD, if at any time the amounts on deposit in the Debt
Service Reserve Fund are reduced to an amount less that the
Required Level (as defined in Section 13 hereof), the City
shall, from moneys in the Revenue Fund, immediately deposit
into the Debt Service Reserve Fund amounts required to
replenish the Debt Service Reserve Fund to the Required Level
in twelve (12) equal monthly installments.
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FOURTH, after payment of items FIRST through FOURTH above,
all remaining System revenues in the Revenue Fund shall be
used as set forth in Sections 13 to 18 hereof.
When the moneys held in the Bond Account and the Debt
Service Reserve Fund shall be and remain sufficient to pay the
principal of, premium, if any, and interest on all of the bonds
then outstanding plus Trustee =s and Paying Agent =s fees, the City
shall not be obligated to make any further payments into the Bond
Account.
It shall be the duty of the City to cause to be
withdrawn from the Bond Account no later than one business day
before the due date of any principal and /or interest on any bond,
at maturity or redemption prior to maturity, and deposited with the
Trustee an amount equal to the amount of such bond and interest due
thereon for the sole purpose of paying the same, together with the
Trustee's and Paying Agent =s fee. No withdrawal of funds from the
Bond Account shall be made for any other purpose except as
otherwise authorized in this Ordinance.
If System revenues are insufficient to make the required
payment on the first business day of the following month into the
Bond Account, the amount of any such deficiency in the payment made
shall be added to the amount otherwise required to be paid into the
Bond Account on the first business day of the next month.
The bonds shall be specifically secured by a pledge of
the net revenues of the System. This pledge in favor of the bonds
is hereby irrevocable 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.
Section 13. There is hereby created a fund designated
the "Debt Service Reserve Fund" which shall be maintained by the
Trustee in an amount equal to the maximum annual principal and
interest requirement on the bonds or 10% of the original principal
amount of the bonds, whichever is lesser ( "Required Level ") .
Should the Debt Service Reserve Fund become impaired or be reduced
below the Required Level, the City shall make additional monthly
payments from the Revenue Fund until the impairment or reduction is
corrected within a twelve month period. Monthly payments into the
Debt Service Reserve Fund, if necessary, shall be made from the
Revenue Fund on the first business day of each month after the
required deposits into the Operation and Maintenance Account and
the Bond Account have been made. Moneys held for the credit of the
Debt Service Reserve Fund which exceed the Required Level shall be
withdrawn by the Trustee from the Debt Service Reserve Fund and
paid to the City for deposit into the Bond Account.
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For all purposes of this Ordinance, the Required Level
may be satisfied by cash (which may be invested in Eligible
Investments) or by a Qualified Surety Bond or a combination of
either. In all provisions hereof whereby it is required that the
Debt Service Reserve Fund be maintained at or restored to the
Required Level, a Qualified Surety Bond held by the Trustee for the
Debt Service Reserve Fund shall be taken into account at par or
face amount thereof. As used herein, the term "Qualified Surety
Bond" means a surety bond or insurance policy issued by an
insurance company rated in the highest category by Standard &
Poor's Ratings Services ( "S &P ") and Moody's Investors Service
( "Moody's "), and if rated by A.M. Best & Company, also rated in the
highest rating category by A.M. Best & Company.
If for any reason at any time there shall be a
deficiency in the payments made into the Bond Account so that there
are unavailable sufficient moneys to pay the principal of and
interest on the bonds as the same become due, any sums then held in
the Debt Service Reserve Fund shall be used by the Trustee to the
extent necessary to pay the principal and interest, but the Debt
Service Reserve Fund shall be reimbursed in the manner described
above.
Section 14. After making the required payments into the
Operation and Maintenance Account, Bond Account and Debt Service
Reserve Fund, there shall be paid from System revenues for deposit
into the Closure Account annually on the last business day of each
year while any of the bonds are outstanding the amount required by
the Solid Waste Disposal Facility Criteria of the United States
Environmental Protection Agency, 40 C.F.R. Part 258, and any
regulations amendatory thereto. The moneys in the Closure Account
shall be used solely for the purpose of paying the cost of closing
the System landfills or federal or state mandated cleanup. The
Trustee shall have no lien on or security interest in the Closure
Account with respect to the payment of the principal of and
interest on the bonds or any fees, charges or expenses due to the
Trustee under this Ordinance.
In lieu of depositing moneys into the Closure Account,
the requirements of this Section may be satisfied by depositing
with the Trustee a surety bond, letter of credit or insurance in
the principal amount equal to the requirement, or portion, being
satisfied, as set forth in 40 C.F.R. Part 258, and any regulation
amendatory thereto.
Section 15. After making the required payments into the
Operation and Maintenance Account, Bond Account, Debt Service
Reserve Fund and Closure Account, there shall be paid from System
revenues for deposit into the Post - Closure Account, annually on the
last business day of each year while any of the bonds are
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outstanding the amounts required by the Solid Waste Disposal
Facility Criteria of the United States Environmental Protection
Agency, 40 C.F.R. Part 258, and any regulations amendatory thereto.
The moneys in the Post - Closure Account shall be used solely for
the purpose of paying the cost of post - closure care of the System
landfills or federal or state mandated cleanup. The Trustee shall
have no lien on or security interest in the Post - Closure Account
with respect to the payment of the principal of and interest on the
bonds or any fees, charges or expenses due to the Trustee under
this Ordinance.
In lieu of depositing moneys into the Post - Closure
Account, the requirements of this Section may be satisfied by
depositing with the Trustee a surety bond, letter of credit or
insurance as set forth in 40 C.F.R. Part 258, and any regulations
amendatory thereto.
Section 16. After making the required payments into the
Operation and Maintenance Account, Bond Account, Debt Service
Reserve Fund, Closure Account and Post- Closure Account, there shall
be paid from the System revenues for deposit into the Rebate
Account, on or before the date any arbitrage rebate is due with
respect to any System Bond under Section 148(f) of the Internal
Revenue Code of 1986, as amended (the "Code ") , the amount of the
rebate due. The moneys in the Rebate Account shall be used solely
for the purpose of paying the arbitrage rebate due. The Trustee
shall have no lien on or security interest in the Rebate Account
with respect to the payment of the principal of and interest on the
bonds or any fees, charges or expenses due to the Trustee under
this Ordinance.
Section 17. After making the required payments into the
Operation and Maintenance Account, Bond Account, Debt Service
Reserve Fund, Closure Account, Post - Closure Account, and Rebate
Account, the Treasurer may deposit moneys, into the Capital Reserve
Account. The moneys in the Capital Reserve Account shall be used
solely for the purposes of funding replacements of capital
equipment for the System, except that moneys in the Capital Reserve
Account shall be used to the extent necessary at any time to
prevent the default in the payment of the principal and interest on
the bonds and the Trustee =s and Paying Agent =s fees.
Section 18. Any System revenues remaining after making
all disbursements and providing for all accounts and funds
described above shall be deposited into the Surplus Account.
Moneys in the Surplus Account may be used, at the option of the
City, (i) for the redemption of System Bonds, as the City in its
discretion shall determine, prior to maturity in accordance with
their respective redemption provisions; (ii) for constructing
extensions, betterments and improvements to the System; (iii) to
cure any deficiency in the other accounts in the Revenue Fund; or
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(iv) for the transfer to the General Fund of the City for use for
any other lawful municipal purpose authorized by the City.
Section 19. (a) So long as any of the bonds are
outstanding, the City shall not issue or attempt to issue any bonds
claimed to be entitled to a priority of lien on revenues of the
System over the lien securing the bonds. The City reserves the
right to issue additional bonds to finance or pay the cost of
making any future extensions, betterments or improvements to the
System, or to refund outstanding System Bonds, but the City shall
not authorize or issue any such additional bonds ranking on a
parity with the bonds unless and until either: (1) there shall have
been procured and filed with the City Clerk and the Trustee a
statement by an independent certified public accountant
( "Accountant ") reciting the opinion, based upon necessary
investigation, that the net revenues of the System for the fiscal
year immediately preceding the fiscal year in which it is proposed
to issue such additional bonds shall equal not less than 110% of
the average annual principal and interest requirements on all the
then outstanding System Bonds and the additional bonds then
proposed to be issued; or (2) there shall 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 net revenues of the System for the next
ensuing fiscal year as reflected by a certificate of a duly
qualified consulting engineer or rate analyst not in the regular
employ of the City and approved by the Trustee, and taking into
consideration any rate increase, shall equal not less then 110% of
the average annual principal and interest requirements on all the
outstanding System Bonds and the additional bonds then proposed to
be issued. The term "net revenues" shall mean gross revenues of
the System less the expense of operation and maintenance of the
System, including all expenses items, except depreciation and
amortization expenses, properly attributable to the operation of
the System, under generally accepted accounting principles
applicable to municipality systems. In making the computation set
forth in (1) above, the City, and the Accountant on behalf of the
City, may treat any increase in rates for the System enacted
subsequent to the first day of the preceding fiscal year as having
been in effect throughout such fiscal year and may include in gross
revenues for such fiscal year the amount that would have been
received based on such opinion or report, had the increase been in
effect throughout such fiscal year.
(b) Prior to the issuance of additional bonds under
this Section, the City shall deliver to the Insurer a copy of the
disclosure document, if any, circulated with respect to such
additional bonds.
Section 20. The City covenants and agrees that it will
maintain the System in good condition and operate the same in an
ON
efficient manner and at reasonable cost. While any of the bonds
are outstanding, the City agrees that it will insure and at all
times keep insured, in the amount of the actual value thereof, in a
responsible insurance company or companies authorized and qualified
under the laws of the State to assume the risk thereof, properties
of the System, to the extent that such properties would be covered
by insurance by private companies engaged in similar types of
businesses, against loss or damage thereto from fire and other
causes covered by extended coverage insurance. Satisfactory
evidence of said insurance shall be filed with the Trustee. In the
event of loss, the proceeds of such insurance shall be applied
solely toward the reconstruction, replacement or repair of the
System, and in such event the City will, with reasonable
promptness, cause to be commenced and completed the reconstruction,
replacement and repair work. If such proceeds are more than
sufficient for such purposes, the balance remaining shall be
deposited to the credit of the Revenue Fund. Nothing shall be
construed as requiring the City to expend any moneys for operation
and maintenance of the System or for premiums on its insurance
which are derived from sources other than the operation of the
System, but nothing shall be construed as preventing the City from
doing so.
Section 21. The bonds shall be subject to redemption
prior to maturity in accordance with the terms set out in the bond
form.
Section 22. The City will keep proper books of accounts
and records (separate from all other records and accounts of the
City) in which complete and correct entries shall be made of all
transactions relating to the operation of the System, and such
books shall be available for inspection by the registered owner of
any of the bonds at reasonable times and under reasonable
circumstances. The City will have these records audited by an
Accountant at least once each year, and a copy of the audit shall
be delivered to the Trustee and made available to the registered
owners of the bonds. In the event that the City fails or refuse to
make the audit, the Trustee, or any registered owner of the bonds,
may have the audit made at the expense of the Revenue Fund.
Section 23. 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 sufficient to make such payment and /or (2) United
States Treasury Certificates, Notes and Bonds (including State and
Local Government Series) ( "Defeasance Securities ") (provided that
such deposit will not affect the tax exempt status of the interest
on any of the bonds or cause any of the bonds to be classified as
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"arbitrage bonds" within the meaning of Section 148 of 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 shall have been paid or the payment thereof provided for to
the satisfaction of the Trustee.
On the payment of any
this Ordinance, the Trustee shall
the owners of such bonds, all
Securities.
such bonds within the meaning of
hold in trust, for the benefit of
such moneys and /or Defeasance
When all the bonds shall have been paid within the
meaning of this Ordinance, if the Trustee has been paid its fees
and expenses and if any arbitrage rebate due the United States
Treasury has been paid or provided for to the satisfaction of the
Trustee, the Trustee shall take all appropriate action to cause (i)
the pledge and lien of this Ordinance to be discharged and
cancelled, 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 Defeasance
Securities there shall be considered the principal amount of such
Defeasance Securities and interest to be earned thereon until the
maturity of such Defeasance Securities.
Section 24. (a) Subject to the provisions of
subparagraph (h) below, (i) if there be any default in the payment
of the principal of, premium, if any, or interest on any of the
bonds, (ii) if the City declares bankruptcy, or (iii) if the City
defaults in the performance of any of the other covenants contained
in this Ordinance, the Trustee may, and upon the written request of
the registered 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 Arkansas. In the case of a default in the payment of the
principal of, premium, if any, and interest on any of the bonds,
the Trustee may and upon written request of the registered owners
of not less than 10% in principal amount of the then outstanding
bonds, shall apply in a proper action to a court of competent
jurisdiction for the appointment of a receiver to administer the
System on behalf of the City and the registered owners of the bonds
with power to charge and collect (or by mandatory injunction or
otherwise to cause to be charged and collected) rates sufficient to
provide for the payment of the expenses of operation, maintenance
and repair and to pay any bonds outstanding and to apply the System
revenues in conformity with the laws of Arkansas and with this
Ordinance. when defaults in such payments have been cured, the
custody and operation of the System shall revert to the City.
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(b) No registered 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 96 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 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 registered 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 registered owners of the outstanding bonds.
(c) No remedy conferred upon or reserved to the Trustee
or to the registered 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.
(d) The Trustee may, and upon the written request of
the registered owners of not less than 50% 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.
(e) 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 registered owners of such
bonds, subject to the provisions of this Ordinance.
(f) No delay or omission of the Trustee or of any
registered owners of the bonds to exercise any right or power
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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 holders and registered owners
of the bonds, respectively, may be exercised from time to time and
as often as may be deemed expedient.
(g) In any proceeding in which any plaintiff bondholder
prevails to enforce the provisions of this Ordinance, any plaintiff
bondholder shall be entitled to recover from the City all costs of
such proceeding, including reasonable attorneys= fees.
(h) Notwithstanding the above, the Insurer, acting
alone, shall have the right to direct all remedies in the event of
default and shall be deemed to be the registered owner of the bonds
insured by it for the purposes of exercising all rights and
privileges available to bondholders. The Insurer shall have the
right to institute any suit, action or proceeding at law or in
equity under the same terms as a bondholder in accordance with this
Ordinance. Any acceleration of principal payments shall be subject
to the Insurers prior written consent.
Section 25. (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, after giving notice to the Insurer,
may consent to any variation or change in this Ordinance without
the consent of the owners of the outstanding bonds (i) in order to
cure any ambiguity or correct any defect herein as the City may
deem necessary or desirable and not inconsistent herewith or (ii)
in order to make any other variation or change which the Trustee
determines shall not adversely affect the interests of the owners
of the bonds. Prior to giving such consent under this subparagraph
(b), the Trustee shall receive the written consent of the Insurer
unless the variation or change is to cure ambiguities, correct
formal defects or add to security for the bonds.
(c) The Insurer and 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, 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 (i) an
extension of the maturity of the principal of or the interest on
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any bond, or (ii) a reduction in the principal amount of any bond
or the rate of interest thereon, or (iii) the creation of a lien or
pledge superior to the lien and pledge created by this Ordinance,
or (iv) a privilege or priority of any bond or bonds over any other
bond or bonds, or (v) a reduction in the aggregate principal amount
of the bonds required for consent to such supplemental ordinance.
Copies of any amendments to this Ordinance authorized by this
subparagraph (c) shall be sent by the City to S &P and Moody's.
Section 26. When the bonds have been executed and
sealed as herein provided, they shall be authenticated by the
Trustee, and the Trustee shall deliver the bonds to the Purchaser
upon payment of the Purchase Price. The accrued interest shall be
remitted to the City for deposit into the Bond Account. The
expenses of issuing the bonds and accomplishing the refunding as
set forth in the delivery instructions to the Trustee signed by the
Mayor and City Clerk shall also be paid from the Purchase Price
(the "Delivery Instructions "). The amount necessary to fund the
Debt Service Reserve Fund shall be deposited into that fund. The
amount necessary from the Purchase Price to refund the 1993 Bonds
as set forth in the Delivery Instructions shall be deposited into
an escrow account (the 111993 Escrow Account ") established with the
trustee for the owners of the 1993 Bonds. The amount necessary
from the Purchase Price to refund the 1995 Bonds shall be deposited
into an escrow account (the 111995 Escrow Account ") established with
the trustee for the owners of the 1995 Bonds. The remainder of the
Purchase Price shall be remitted to the City for deposit into an
account of the City hereby created and designated "Waste Disposal
Revenue Bond Construction Fund, Series 2002" ( "Construction Fund ") .
The moneys deposited into the Construction Fund, including
earnings thereon, shall be disbursed in payment of the costs of
accomplishing the improvements or other extensions, betterments or
improvements to the System subsequently approved by the Board,
paying necessary expenses incidental thereto and paying expenses of
issuing the bonds.
Section 27. In the event the office of Mayor, City
Clerk, City Treasurer, City Manager, Assistant City Manager or
Board shall be abolished, or any two or more of such offices shall
be merged or consolidated, or in the event the duties of a
particular office shall be transferred to another office or
officer, or in the event of a vacancy in any such office by reason
of death, resignation, removal from office or otherwise, or in the
event any such officer shall become incapable of performing the
duties of his office by reason of sickness, absence from the City
or otherwise, all powers conferred and all obligations and duties
imposed upon such office or officer shall be performed by the
office or officer succeeding to the principal functions thereof, or
by the office or officer upon whom such powers, obligations and
duties shall be imposed by law.
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Section 28. (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
revenues of the System 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 shall assure that (i) not in excess of 10%
of the Net Proceeds of the bonds is used for Private Business Use
if, in addition, the payment of more than 10% of the principal or
10% of the interest due on the bonds during the term thereof is,
under the terms of the bonds or any underlying arrangement,
directly or indirectly secured by any interest in property used or
to be used for a Private Business Use or in payments in respect of
property used or to be used for a Private Business Use or is to be
derived from payments, whether or not to the City, in respect of
property or borrowed moneys used or to be used for a Private
Business Use; and (ii) that, in the event that both (A) in excess
of 5% of the Net Proceeds of the bonds are used for a Private
Business Use, and (B) an amount in excess of 5% of the principal or
5% of the interest due on the bonds during the term thereof is,
under the terms of the bonds or any underlying arrangement,
directly or indirectly, secured by any interest in property used or
to be used for said Private Business Use or in payments in respect
of property used or to be used for said Private Business Use or is
to be derived from payments, whether or not to the City, in respect
of property or borrowed money used or to be used for said Private
Business Use, then said excess over said 5% of Net Proceeds of the
bonds used for a Private Business Use shall be used for a Private
Business Use related to the governmental use of the improvements or
the facilities financed or refinanced by the Bonds Refunded.
The City shall assure that not in excess of 5% of the
Net Proceeds of the bonds are used, directly or indirectly, to make
or finance a loan to persons other than state or local governmental
units.
As used in this subsection (b), the following terms
shall have the following meanings:
"Net Proceeds" means the face amount of the bonds, plus
accrued interest and premium, if any, less original issue discount,
if any, less any amounts deposited into the Debt Service Reserve
from bond proceeds.
"Private Business Use" means use directly or indirectly
in a trade or business carried on by a natural person or in any
activity carried on by a person other than a natural person,
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excluding, however, use by a state or local governmental unit and
use as a member of the general public.
(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.
(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 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 bonds for costs paid prior to the date
the bonds are issued except in compliance with United States
Treasury Regulation No. 1.150 -2.
(f) The City covenants that it will, in compliance with
the requirements of Section 148(f) of the Code, pay with moneys in
the Rebate Account to the United States Government in accordance
with the requirements of Section 148(f) of the Code, from time to
time, an amount equal to the sum of (1) the excess of (A) the
amount earned on all Non - purpose Investments (as therein defined)
attributable to the bonds, other than investments attributable to
such excess over (B) the amount which would have been earned if
such Non - purpose Investments attributable to the bonds were
invested at a rate equal to the Yield (as defined in the Code) on
the bonds, plus (2) any income attributable to the excess described
in (1), subject to the exceptions set forth in Section 148 of the
Code. The City further covenants that in order to assure
compliance with its covenants herein, it will employ a qualified
consultant to advise the City in making the determination required
to comply with this subsection (f). Anything herein to the
contrary notwithstanding this provision may be modified or
rescinded it in the opinion of Bond Counsel such modification or
rescission will not affect the tax - exempt status of the bonds for
federal income tax purposes.
Section 29. 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 10% 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 60 days= notice
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in writing to the City Clerk, the Insurer and to the registered
owners of the bonds, and the City, so long as the City is not in
default under this Ordinance, or the majority in value of the
registered 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
City shall appoint a new Trustee, such appointment to be evidenced
by a written instrument or instruments filed with the City Clerk
and the Insurer. 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. 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 Trustee shall have
all the powers herein granted to the original Trustee. The
Trustee =s resignation shall become effective upon the acceptance of
the trusts by the successor Trustee.
Section 30. (a) Moneys held for the credit of the Debt
Service Reserve Fund shall be invested and reinvested at the
direction of the City Treasurer in (i) direct obligations of the
United States of America (including obligations issued or held in
book -entry form on the books of the Department of the Treasury, and
CATS and TIGRS) or obligations the principal of and interest on
which are unconditionally guaranteed by the United States of
America ( "Government Securities "), (ii) certificates of deposit of
banks which are members of the FDIC or (iii) other investments as
may, from time to time, be permitted under Arkansas law and under
the City's investment policy (currently established by Resolution
No. 10,609) (collectively, the "Eligible Investments), all of which
shall mature, or which shall be subject to redemption by the holder
thereof, at the option of such holder, not later than five (5)
years after the date of investment.
(b) Moneys held for the credit of the Construction Fund
or any other fund or account shall be continuously invested and
reinvested pursuant to the direction of the City Treasurer in
Eligible Investments, 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 or account, and any loss
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resulting from such investment shall be charged to such fund or
account, except that interest earnings and profits on investments
of moneys in the Debt Service Reserve Fund which increase the
amount thereof above the Required Level shall to the extent of any
such excess be transferred from the Debt Service Reserve Fund into
the Bond Account.
(d) Moneys so invested in certificates of deposit of
banks or other bank deposits shall be continuously secured by
Government Securities or other securities authorized by Arkansas
law to secure public funds to the extent that the deposits are not
insured by the FDIC.
(e) All investments and deposits shall have a par value
(or market value when less than par), exclusive of accrued interest
at all times at least equal to the amount of money credited to such
funds and shall be made in such a manner that the money required to
be expended from any fund will be available at the proper time or
times.
(f) Investments of moneys in all funds shall be valued
in terms of current market value as of the last day of each year,
except that direct obligations of the United States (State and
Local Government Series) in book -entry form shall be continuously
valued at par or face principal amount.
(g) The City covenants that it will make all arbitrage
rebate payments to the United States in accordance with Section
148(f) of the Code.
(h) Notwithstanding that Eligible Investments include
investments from time to time permitted under Arkansas law and
under the City's investment policy, Eligible Investments for the
Bond Account, the Construction Fund and the Debt Service Reserve
Fund shall be limited to the following:
(1) Government Securities;
(2) bonds, debentures, notes or other evidences of
indebtedness issued or guaranteed by any of the following
federal agencies and provided such obligations are backed by
the full faith and credit of the United States of America
(stripped securities are only permitted if they have been
stripped by the agency itself):
a. U.S. Export - Import Bank (Eximbank)
Direct obligations or fully guaranteed
certificates of beneficial ownership
b. Farmers Home Administration (FmHA)
Certificates of beneficial ownership
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C. Federal Financing Bank
d. Federal Housing_ Administration Debentures
(FHA)
e. General Services Administration
Participation certificates
f. Government National Mortgage Association
(GNMA or "Ginnie Mae ")
GNMA - guaranteed mortgage- backed bonds
GNMA - guaranteed pass- through obligations
g. U.S. Maritime Administration
Guaranteed Title XI financing
h. U.S. Department of Housing and Urban
Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government
guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S.
government guaranteed public housing notes
and bonds;
(3) bonds, debentures, notes or other evidences of
indebtedness issued or guaranteed by any of the following
non -full faith and credit U.S. government agencies (stripped
securities are only permitted if they have been stripped by
the agency itself):
a. Federal Home Loan Bank System
Senior debt obligations
b. Federal Home Loan Mortgage Corporation (FHLMC
or "Freddie Mae ")
Participation certificates and senior debt
obligations
C. Federal National Mortgage Association (FNMA
or "Fannie Mae ")
Mortgage- backed securities and senior debt
obligations
d. Student Loan Marketing Association (SLMA or
"Sallie Mae ")
Senior debt obligations
e. Resolution Funding Corp. (REFCORP)
obligations
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f. Farm Credit System
Consolidated systemwide bonds and notes;
(4) money market funds registered under the Federal
Investment Company Act of 1940, whose shares are registered
under the Federal Securities Act of 1933, and having a rating
by S &P of AAAm -G, AAA -M, or AA -m, and if rated by Moody's,
rated Aaa, Aal or Aa2;
(5) certificates of deposit secured at all times by
Government Securities or other collateral described in (2)
above. Such certificates must be issued by commercial banks,
savings and loan associations or mutual savings banks. The
collateral must be held by a third party and the bondholders
must have a perfected first security interest in the
collateral;
(6) certificates of deposit, savings accounts, deposit
accounts or money market deposits which are fully insured by
FDIC, including FIG and SAIF;
(7) investment agreements, including guaranteed
investment contracts, forward purchase agreements and reserve
fund put agreements acceptable to the Insurer;
(8) commercial paper rated, at the time of purchase,
"Prime -1" by Moody's and "A -1" or better by S &P;
(9) bonds or notes issued by any state or municipality
which are rated by Moody's and S &P in one of the two highest
rating categories assigned by such agencies;
(10) federal funds or bankers acceptances with a maximum
term of one year of any bank which has an unsecured,
uninsured and unguaranteed obligation rating of "Prime -1" or
11A3" or better by Moody's and "A -1" or "A" or better by S &P;
and
(11) repurchase agreements for 30 days or less must
follow the following criteria. Repurchase agreements which
exceed 30 days must be acceptable to the Insurer.
(i) Repurchase agreements ( "repo ") provide for the
transfer of securities from a dealer bank or securities firm
(seller /borrower) to the City (buyer /lender), and the transfer of
cash from the City to the dealer bank or securities firm with an
agreement that the dealer bank or securities firm will repay the
cash plus a yield to the City in exchange for the securities at a
specified date.
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1. Repos must be between the City and a dealer bank or
securities firm
a. Primary dealers on the Federal Reserve
reporting dealer list which are rated A or
better by S &P and Moody's; or
b. Banks rated "A" or above by S &P and Moody's.
2. The written repo contract must include the
following:
a. Securities which are acceptable for transfer
are:
(1) Direct United States governments; or
(2) Federal agencies backed by the full
faith and credit of the United States
government (and FNMA & FHLMC).
b. The term of repo may be up to 30 days
C. The collateral must be delivered to the City,
the Trustee (if the Trustee is not supplying
the collateral) or third party acting as
agent for the Trustee (if the Trustee is
supplying the collateral) before or
simultaneous with payment (perfection by
possession of certificated securities).
d. Valuation of Collateral
(1) The securities must be valued weekly,
marked -to- market at current market price
plus accrued interest
(a) The value of collateral must be
equal to 104% of the amount of cash
transferred by the City to the
dealer bank or security firm under
the repo plus accrued interest. If
the value of securities held as
collateral slips below 104°% of the
value of the cash transferred by
the City, then additional cash
and /or acceptable securities must
be transferred. If, however, the
securities used as collateral are
FNMA or FHLMC, then the value of
collateral must equal 105 %.
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3. Legal opinion which must be delivered to the City:
a. Repo meets guidelines under State law for
legal investment of public funds.
Section 31. As long as the Insurance Policy shall be in
full force and effect, the City and the Trustee agree to comply
with the following provisions:
(a) In the event that, on the second business day, and
again on the business day, prior to the payment date on the bonds,
the Trustee has not received sufficient moneys to pay all principal
of and interest on the bonds due on the second following or
following, as the case may be, business day, the Trustee shall
immediately notify the Insurer or its designee on the same business
day by telephone or telegraph, confirmed in writing by registered
or certified mail, of the amount of the deficiency. If the
deficiency is made up in whole or in part prior to or on the
payment date, the Trustee shall so notify the Insurer or its
designee.
(b) If the Trustee has notice that any bondholder has
been required to disgorge payments of principal or interest on the
bond to a trustee in bankruptcy or creditors or others pursuant to
a final judgment by a court of competent jurisdiction that such
payment constitutes an avoidable preference to such bondholder
within the meaning of any applicable bankruptcy laws, then the
Trustee shall notify the Insurer or its designee of such fact by
telephone or telegraphic notice, confirmed in writing by registered
or certified mail.
(c) The Trustee is hereby irrevocably designated,
appointed, directed and authorized to act as attorney -in -fact for
holders of the bonds as follows:
1. If and to the extent there is a deficiency in the
amounts required to pay interest on the bonds, the Trustee
shall (a) execute and deliver to State Street Bank and Trust
Company, N.A., or its successors under the Insurance Policy
(the "Insurance Paying Agent "), in form satisfactory to the
Insurance Paying Agent, an instrument appointing the Insurer
as agent for such holders in any legal proceeding related to
the payment of such interest and an assignment to the Insurer
of the claims for interest to which such deficiency relates
and which are paid by the Insurer, (b) receive as designee of
the respective holders (and not as Trustee) in accordance
with the tenor of the Insurance Policy payment from the
Insurance Paying Agent with respect to the claims for
interest so assigned, and (c) disburse the same to such
respective holders; and
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2. If and to the extent of a deficiency in amounts
required to pay principal of the bonds, the Trustee shall (a)
execute and deliver to the Insurance Paying Agent in form
satisfactory to the Insurance Paying Agent an instrument
appointing the Insurer as agent for such holder in any legal
proceeding relating to the payment of such principal and an
assignment to the Insurer of any of the bonds surrendered to
the Insurance Paying Agent of so much of the principal amount
thereof as has not previously been paid or for which moneys
are not held by the Trustee and available for such payment
(but such assignment shall be delivered only if payment from
the Insurance Paying Agent is received), (b) receive as
designee of the respective holders (and not as Trustee) in
accordance with the tenor of the Insurance Policy payment
therefor from the Insurance Paying Agent, and (c) disburse
the same to such holders.
(d) Payments with respect to claims for interest on and
principal of bonds disbursed by the Trustee from proceeds of the
Insurance Policy shall not be considered to discharge the
obligation of the City with respect to such bonds, and the Insurer
shall become the owner of such unpaid bond and claims for the
interest in accordance with the tenor of the assignment made to it
under the provisions of this subsection or otherwise.
(e) Irrespective of whether any such assignment is
executed and delivered, the City and the Trustee hereby agree for
the benefit of the Insurer that:
1. They recognize that to the extent the Insurer makes
payments, directly or indirectly (as by paying through the
Trustee) , on account of principal of or interest on the
bonds, the Insurer will be subrogated to the rights of such
holders to receive the amount of such principal and interest
from the City, with interest thereon as provided and solely
from the sources stated in this Ordinance and the bonds; and
2. They will accordingly pay to the Insurer the amount
of such principal and interest (including principal and
interest recovered under subparagraph (ii) of the first
paragraph of the Insurance Policy, which principal and
interest shall be deemed past due and not to have been paid),
with interest thereon as provided in this Ordinance and the
bond, but only from the sources and in the manner provided
herein for the payment of principal of and interest on the
bonds to holders, and will otherwise treat the Insurer as the
owner of such rights to the amount of such principal and
interest.
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(f) The Insurer shall receive (i) copies of all notices
required to be delivered to bondholders, (ii) on an annual basis,
copies of the City's audited financial statements and annual budget
and (iii) any notice that is required to be given to a holder of
the bond or to the Trustee pursuant to this Ordinance. All notices
required to be given to the Insurer under this Ordinance shall be
in writing and shall be sent by registered or certified mail
addressed to MBIA Insurance Corporation, 113 King Street, Armonk,
New York 10504, Attention: Surveillance.
(g) The City agrees to reimburse the Insurer
immediately and unconditionally upon demand, to the extent
permitted by law, for all reasonable expenses, including attorneys'
fees and expenses, incurred by the Insurer in connection with (i)
the enforcement by the Insurer of the City's obligations, or the
preservation or defense of any rights of the Insurer, under this
Ordinance and any other document executed in connection with the
issuance of the bonds, and (ii) any consent, amendment, waiver or
other action with respect to this Ordinance or any related
document, whether or not granted or approved, together with
interest on all such expenses from and including the date incurred
to the date of payment at Citibank's Prime Rate plus 3% or 6.25 %,
whichever is less. In addition, the Insurer reserves the right to
charge a fee in connection with its review of any such consent,
amendment or waiver, whether or not granted or approved.
Section 32. (a) All moneys being held in (i) the
Interest Account and Principal Account in connection with the 1993
Bonds and (ii) the 1993 Debt Service Reserve Fund established
pursuant to the 1993 Ordinance are hereby appropriated to refund
the 1993 Bonds and shall be deposited into the 1993 Escrow Account.
(b) All moneys being held in (i) the Interest Account
and Principal Account in connection with the 1995 Bonds and (ii)
the 1995 Debt Service Reserve Fund established pursuant to the 1995
Ordinance are hereby appropriated to refund the 1995 Bonds and
shall be deposited into the 1995 Escrow Account.
Section 33. It is covenanted and agreed by the City
with the registered owners of the bonds, or any of them, that the
City will faithfully and punctually perform all duties with
reference to the System required by the Constitution and laws of
the State, including the charging and collecting of reasonable and
sufficient rates lawfully established for services rendered by the
System, the segregating of System revenues as herein required, and
the applying of System revenues to the respective funds or accounts
herein created or referred to.
Section 34. The City covenants that it will not sell or
lease the System, or any substantial portion thereof; provided,
however, that nothing herein shall be construed to prohibit the
Ric]
City from making such dispositions of properties of the System and
such replacements and substitutions for properties of the System as
shall be necessary or incidental to the efficient operation of the
System as a revenue - producing undertaking. All revenues derived
from such dispositions shall be deposited into the Revenue Fund.
Section 35. The requirements of Ordinance No. 15,249,
as they may relate to the sale of the bonds, are hereby waived.
Section 36. The provisions of this Ordinance are hereby
declared to be separable 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 37. All ordinances and resolutions or parts
thereof, in conflict herewith are hereby repealed to the extent of
such conflict.
Section 38. It is hereby ascertained and declared that
the improvements must be accomplished as soon as possible in order
to make the System adequate for the needs of the City and its
inhabitants, without which the life, health, safety and welfare
thereof are jeopardized, and that the issuance of the bonds and the
taking of the other action authorized by this Ordinance is
necessary for the accomplishment thereof. It is, therefore,
declared that an emergency exists and 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.
PASSED: AUGUST 20
s
Nancy Wood, City Clerk
Approv as to form: _
Tom Carp(,�,Ctity F t�orney
9M
2002.
LL �G
Jim D ' ey, Mayor