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20186I ORDINANCE NO. 20,186 2 AN ORDINANCE TO AUTHORIZE THE CONSTRUCTION OF 3 BETTERMENTS AND IMPROVEMENTS TO THE SEWER SYSTEM OF 4 THE CITY OF LITTLE ROCK, ARKANSAS; AUTHORIZING THE 5 ISSUANCE AND SALE OF SEWER REVENUE BONDS; PROVIDE FOR 6 THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE 7 BONDS; AND PRESCRIBE OTHER MATTERS RELATING THERETO. 8 9 WHEREAS, the City of Little Rock, Arkansas (the "City ") owns a sewer system (the "System "), 10 which is operated by the Sanitary Sewer Committee of the City (the "Committee "); and 11 WHEREAS, the Committee has determined that certain betterments and improvements to the 12 System, including particularly, without limitation, the construction and equipping of the Fourche Creek 13 Wastewater Treatment Plant hydraulic upgrade project (collectively, the "Improvements"), are necessary 14 in order to make the services of the System adequate for the needs of the City and its inhabitants; and 15 WHEREAS, the Committee has caused to be prepared by the engineering staff of the Little Rock 16 Wastewater Utility a preliminary engineering report containing a general description and estimates of 17 costs for the Improvements which report has been examined and approved by the Committee and Board 18 of Directors and a copy of which report is on file in the office of the City Clerk and the Chief Executive 19 Officer of the System (the "CEO ") where it may be inspected by any interested person; and 20 WHEREAS, the City can pay the costs of one or more of the Improvements (or a portion thereof) 21 through the issuance of its Sewer Revenue Bonds, Series 2009B, in the principal amount of $6,655,000 22 (the "bonds "); and 23 WHEREAS, the City and the Committee have made arrangements for the sale of the bonds to 24 Morgan Keegan & Company, Inc. and Crews & Associates, Inc. (the "Purchasers "), at a price of 25 $6,492,515.15 (equal to the principal amount thereof less a net original issue discount of $104,253.60 and 26 less underwriter's discount of $58,231.25) plus accrued interest (the "Purchase Price "), pursuant to a 27 Bond Purchase Agreement between the City and the Purchasers (the "Agreement ") which has been 28 presented to and is before this meeting; and 29 WHEREAS, the Preliminary Official Statement dated October 23, 2009, offering the bonds for sale 30 (the "Preliminary Official Statement ") has been presented to and is before this meeting; and 31 WHEREAS, the Continuing Disclosure Agreement between the City and Regions Bank, Little Rock, 32 Arkansas, as Dissemination Agent (the "Disclosure Agreement "), providing for the ongoing disclosure 33 obligations of the City with respect to the bonds has been presented to and is before this meeting; and [PAGE 1 OF 251 I WHEREAS, the City has outstanding (a) its Sewer Revenue Bond, Series 1990 (the "Series 1990 2 Bond "), authorized by Ordinance No. 15,966, adopted November 20, 1990 (the "1990 Ordinance "); (b) its 3 Sewer Revenue Bond, Series 1991 (the "Series 1991 Bond "), authorized by Ordinance No. 16,030, 4 adopted April 2, 1991 (the "1991 Ordinance "); (c) its Sewer Revenue Bond, Series 1996 (the "Series 5 1996 Bond "), authorized by Ordinance No. 17,097, adopted January 16, 1996 (the "1996 Ordinance "); (d) 6 its Sewer Revenue Bond, Series 1999 (the "Series 1999 Bond "), authorized by Ordinance No. 18,067, 7 adopted July 20, 1999 (the "1999 Ordinance "); (e) its Sewer Refunding and Construction Revenue Bonds, 8 Series 2001 (the "Series 2001 Bonds "), authorized by Ordinance 18,557, adopted September 4, 2001 (the 9 "2001 Ordinance "); (f) its Sewer Revenue Bond, Series 2004A (the "Series 2004A Bond "), authorized by 10 Ordinance No. 19,006, adopted December 16,2003 (the "2004A Ordinance "); (g) its Sewer Revenue 11 Bond, Series 2004B (the "Series 2004B Bond "), authorized by Ordinance 19,007, adopted December 16, 12 2003 (the "2004B Ordinance "); (h) its Sewer Revenue Bond, Series 2004C (the "Series 2004C Bond "), 13 authorized by Ordinance No. 19,229, adopted November 1, 2004 (the "2004C Ordinance "); (1) its Sewer 14 Refunding and Construction Revenue Bonds, Series 2005 (the "Series 2005 Bonds "), authorized by 15 Ordinance 19,307, adopted April 19, 2005 (the "2005 Ordinance "); 0) its Sewer Construction Revenue 16 Bonds, Series 2007A (the "Series 2007A Bonds ") authorized by Ordinance No. 19,746, adopted May 15, 17 2007 (the 112007A Ordinance "); (k) its Sewer Revenue Bond, Series 2007B (the "Series 2007B Bond "), 18 authorized by Ordinance No. 19,769, adopted June 19, 2007 (the "2007B Ordinance "); (1) its Sewer 19 Construction Revenue Bonds, Series 2007C (the "Series 2007C Bonds "), authorized by Ordinance No. 20 19,814, adopted September 18, 2007 (the "2007C Ordinance "); (in) its Sewer Revenue Bonds, Series 21 2008 (the "Series 2008 Bonds "), authorized by Ordinance No. 20,046, adopted November 18, 2008 (the 22 "2008 Ordinance "); and (n) its Sewer Revenue Bond, Series 2009A (the "Series 2009A Bond "), 23 authorized by Ordinance No. 20,074, adopted March 10, 2009 (the "2009A Ordinance "); and 24 WHEREAS, the coverage tests in the 2001 Ordinance, 2005 Ordinance, the 2007A Ordinance, the 25 2007C Ordinance and the 2008 Ordinance for securing the bonds with a lien on the net revenues of the 26 System on a parity of security with the Series 2001 Bonds, the Series 2005 Bonds, the Series 2007A 27 Bonds, the 2007C Bonds and the Series 2008 Bonds (collectively, the "Parity Bonds ") have been or will 28 be satisfied; and 29 WHEREAS, the coverage tests in the 1990 Ordinance, the 1991 Ordinance, the 1996 Ordinance, the 30 1999 Ordinance, the 2004A Ordinance, the 2004B Ordinance, the 2004C Ordinance, the 2007B 31 Ordinance and the 2009A Ordinance for securing the bonds with a lien on the net revenues of the System 32 prior to the lien on System revenues in favor of the Series 1990 Bond, the Series 1991 Bond, the Series 33 1996 Bond, the Series 1999 Bond, the Series 2004A Bond, the Series 2004B Bond, the Series 2004C [PAGE 2 OF 251 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Bond, the Series 2007B Bond and the Series 2009A Bond (collectively, the "Subordinate Bonds ") have been or will be satisfied; NOW, THEREFORE, BE IT ORDAINED by the Board of Directors of the City of Little Rock, Arkansas, that: Section 1. The Improvements shall be accomplished. The accomplishment of the Improvements shall be under the control and supervision of, and all details in connection therewith shall be handled by, the Committee, and the Committee shall make all contracts and agreements necessary or incidental to the performance of its duties and the execution of its powers. The Committee shall let all construction contracts pursuant to and in accordance with existing laws and shall require such performance bonds and insurance from the contractors as, in the judgment of the Committee, will fully insure the completion of the Improvements in accordance with the plans and specifications therefor. Section 2. The Board of Directors hereby finds and declares that the period of usefulness of the Improvements will be more than thirty (30) years, which is longer than the term of the bonds. Section 3. The sale of the bonds to the Purchasers at the Purchase Price pursuant to the Agreement is hereby confirmed and approved. The Mayor's approval and execution of the Agreement on November 3, 2009 is hereby ratified, approved and confirmed, and the Mayor is hereby authorized to take all action required on the part of the City to fulfill its obligations under the Agreement. Section 4. The Preliminary Official Statement is hereby approved and the previous use of the Preliminary Official Statement by the Purchasers in connection with the offer and sale of the bonds is hereby in all respects authorized and approved, and the Mayor be, and he 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 Agreement. Section 5. The Disclosure Agreement, in substantially the form submitted to this meeting, is hereby approved, and the Mayor is hereby authorized and directed to execute and deliver the Disclosure Agreement on behalf of the City. The Mayor and the CEO are each authorized and directed to take all action required on the part of the City to fulfill the City's obligations under the Disclosure Agreement. Section 6. Under the authority of the Constitution and laws of the State of Arkansas (the "State "), including particularly Title 14, Chapter 164, Subchapter 4, and Title 14, Chapter 235, Subchapter 2 of the Arkansas Code of 1987 Annotated, City of Little Rock, Arkansas Sewer Revenue Bonds, Series 2009B, are hereby authorized and ordered issued in the principal amount of $6,655,000 for the purpose of financing all or a portion of the costs of the Improvements, costs incidental thereto, funding a debt service reserve, and paying expenses of issuing the bonds. The bonds shall bear interest at the rates and shall mature on December 1 in the years and in the amounts as follows: [PAGE 3 OF 25] I Principal Interest Principal Interest Year Amount Rate Year Amount Rate 2010 $125,000 2.000% 2021 $175,000 4.125% 2011 130,000 2.000 2022 185,000 4.250 2012 130,000 2.250 2023 190,000 4.250 2013 135,000 2.500 2024 200,000 4.350 2014 135,000 3.000 2025 205,000 4.400 2015 140,000 3.250 2026 215,000 4.500 2016 145,000 3.500 2027 225,000 4.500 2017 150,000 4.000 2028 235,000 4.625 2018 155,000 4.000 2029 245,000 4.625 2019 160,000 4.000 2034 1,420,000 4.750 2020 170,000 4.000 2039 1,785,000 4.750 2 3 The bonds shall be dated December 1, 2009 and shall be issuable only as fully registered bonds, 4 without coupons, in the denomination of $5,000 or any integral multiple thereof. Unless the City shall 5 otherwise direct, the bonds shall be numbered from R -1 upward in order of issuance. Each bond shall be 6 assigned a CUSIP number. 7 The bonds shall be registered initially in the name of Cede & Co., as nominee for the Depository 8 Trust Company ( "DTC "), which shall be considered to be the registered owner of the bonds for all 9 purposes under this Ordinance, including, without limitation, payment by the City of the principal of, 10 redemption price, premium, if any, and interest on the bonds, and the receipt of notices and the exercise of 11 rights of registered owners. There shall be one certificated, typewritten bond for each stated maturity date 12 which shall be immobilized in the custody of DTC with the beneficial owners having no right to receive 13 the bonds in the form of physical securities or certificates. DTC and its participants shall be responsible 14 for maintenance of records of the ownership of beneficial interests in the bonds by book-entry on the 15 system maintained and operated by DTC and its participants, and transfers of ownership of beneficial 16 interests shall be made only by DTC and its participants, by book - entry, the City having no responsibility 17 therefor. DTC is expected to maintain records of the positions of participants in the bonds, and the 18 participants and persons acting through participants are expected to maintain records of the purchasers of 19 beneficial interests in the bonds. The bonds as such shall not be transferable or exchangeable, except for 20 transfer to another securities depository or to another nominee of a securities depository, without further 21 action by the City. 22 If any securities depository determines not to continue to act as a securities depository for the bonds 23 for use in a book -entry system, the City may establish a securities depository /book -entry system 24 relationship with another securities depository. If the City does not or is unable to do so, or upon request [PAGE 4 OF 25] I of the beneficial owners of all outstanding bonds, the City and the Trustee (hereinafter identified), after 2 the Trustee has made provision for notification of the beneficial owners by the then securities depository, 3 shall permit withdrawal of the bonds from the securities depository, and shall authenticate and deliver 4 bond certificates in fully registered form (in denominations of $5,000 or integral multiples thereof) to the 5 assigns of the securities depository or its nominee, all at the cost and expense (including costs of printing 6 definitive bonds) of the City, if the City fails to maintain a securities depository /book -entry system, or of 7 the beneficial owners, if they request termination of the system. 8 Prior to issuance of the bonds, the City shall have executed and delivered to DTC a written agreement 9 (the "Representation Letter ") setting forth (or incorporating therein by reference) certain undertakings and 10 responsibilities of the City with respect to the bonds so long as the bonds or any portion thereof are 11 registered in the name of Cede & Co. (or a substitute nominee) and held by DTC. Notwithstanding such 12 execution and delivery of the Representation Letter, the terms thereof shall not in any way limit the 13 provisions of this Section or in any other way impose upon the City any obligation whatsoever with 14 respect to persons having interests in the bonds other than the registered owners, as shown on the 15 registration books kept by the Trustee. The Trustee shall take all action necessary for all representations 16 of the City in the Representation Letter with respect to the Trustee to at all times be complied with. 17 The authorized officers of the Trustee and the City shall do or perform such acts and execute all such 18 certificates, documents and other instruments as they or any of them deem necessary or advisable to 19 facilitate the efficient use of a securities depository for all or any portion of the bonds; provided that 20 neither the Trustee nor the City may assume any obligations to such securities depository or beneficial 21 owners of the bonds that are inconsistent with their obligations to any registered owner under this 22 Ordinance. 23 Interest on the bonds shall be payable on June 1, 2010, and semiannually thereafter on June 1 and 24 December 1 of each year. Payment of each installment of interest shall be made to the person in whose 25 name the bond is registered on the registration books of the City maintained by Regions Bank, Little 26 Rock, Arkansas, as trustee and paying agent (the "Trustee "), at the close of business on the fifteenth day 27 of the month (whether or not a business day) next preceding each interest payment date (the "Record 28 Date "), irrespective of any transfer or exchange of any such bond subsequent to such Record Date and 29 prior to such interest payment date. 30 Each bond shall bear interest from the payment date next preceding the date on which it is 31 authenticated unless it is authenticated on an interest payment date, in which event it shall bear interest 32 from such date, or unless it is authenticated prior to the first interest payment date, in which event it shall 33 bear interest from December 1, 2009, or unless it is authenticated during the period from the Record Date 34 to the next interest payment date, in which case it shall bear interest from such interest payment date, or [PAGE 5 OF 251 I unless at the time of authentication thereof interest is in default thereon, in which event it shall bear 2 interest from the date to which interest has been paid. 3 Only such bonds as shall have endorsed thereon a Certificate of Authentication substantially in the 4 form set forth in Section 8 hereof (the "Certificate ") duly executed by the Trustee shall be entitled to any 5 right or benefit under this Ordinance. No bond shall be valid and obligatory for any purpose unless and 6 until the Certificate shall have been duly executed by the Trustee, and the Certificate upon any such bond 7 shall be conclusive evidence that such bond has been authenticated and delivered under this Ordinance. 8 The Certificate on any bond shall be deemed to have been executed if signed by an authorized officer of 9 the Trustee, but it shall not be necessary that the same officer sign the Certificate on all of the bonds. 10 In case any bond shall become mutilated or be destroyed or lost, the City shall, if not then prohibited 11 by law, cause to be executed and the Trustee may authenticate and deliver a new bond of like date, 12 number, maturity and tenor in exchange and substitution for and upon cancellation of such mutilated 13 bond, or in lieu of and in substitution for such bond destroyed or lost, upon the owner paying the 14 reasonable expenses and charges of the City and Trustee in connection therewith, and, in the case of a 15 bond destroyed or lost, his filing with the Trustee evidence satisfactory to it that such bond was destroyed 16 or lost, and of his ownership thereof, and furnishing the City and Trustee with indemnity satisfactory to 17 them. The Trustee is hereby authorized to authenticate any such new bond. In the event any such bond 18 shall have matured, instead of issuing a new bond, the City may pay the same without the surrender 19 thereof. Upon the issuance of a new bond under this Section, the City may require the payment of a sum 20 sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any 21 other expenses (including the fees and expenses of the Trustee) connected therewith. 22 The City shall maintain, or cause to be maintained, books for the registration and for the transfer of 23 the bonds, as provided herein and in the bonds. The Trustee shall act as the bond registrar. Each bond is 24 transferable by the registered owner thereof or by his attorney duly authorized in writing at the principal 25 office of the Trustee. Upon such transfer, a new fully registered bond or bonds of the same maturity, of 26 authorized denomination or denominations, for the same aggregate principal amount will be issued to the 27 transferee in exchange therefor. 28 No charge shall be made to any owner of any bond for the privilege of transfer or exchange, but any 29 owner of any bond requesting any such transfer or exchange shall pay any tax or other governmental 30 charge required to be paid with respect thereto. Except as otherwise provided in the immediately 31 preceding sentence, the cost of preparing each new bond upon each exchange or transfer and any other 32 expenses of the City or the Trustee incurred in connection therewith shall be paid by the City. The City 33 shall not be required to transfer or exchange any bonds selected for redemption in whole or in part. [PAGE 6 OF 251 I The person in whose name any bond shall be registered shall be deemed and regarded as the absolute 2 owner thereof for all purposes, and payment of or on account of the principal or premium, if any, or 3 interest on any bond shall be made only to or upon the order of the registered owner thereof or his legal 4 representative, but such registration may be changed as hereinabove provided. All such payments shall 5 be valid and effectual to satisfy and discharge the liability upon such bond to the extent of the sum or 6 sums so paid. 7 In any case where the date of maturity of interest on or principal of the bonds or the date fixed for 8 redemption of any bonds shall be a Saturday or Sunday or shall be in the State a legal holiday or a day on 9 which banking institutions are authorized by law to close, then payment of interest or principal (and 10 premium, if any) need not be made on such date but may be made on the next succeeding business day 11 with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no 12 interest shall accrue for the period after the date of maturity or date fixed for redemption. 13 Section 7. The bonds shall be executed on behalf of the City by the manual or facsimile signatures 14 of the Mayor and City Clerk, and shall have impressed or imprinted thereon the seal of the City. The 15 bonds, together with interest thereon, are secured by and are payable solely from the net revenues derived 16 from the System (the "Net Revenues ") which are hereby pledged and mortgaged for the equal and ratable 17 payment of the bonds. The pledge of Net Revenues in favor of the bonds shall be (i) on a parity with the 18 pledge in favor of the Parity Bonds, and (ii) prior to the pledge in favor of the Subordinate Bonds. The 19 bonds and the interest thereon shall not constitute an indebtedness of the City within the meaning of any 20 constitutional or statutory limitation. 21 Section 8. The bonds and the Certificate shall be in substantially the following form, and the 22 Mayor and City Clerk are hereby expressly authorized and directed to make all recitals contained 23 therein: 24 (Form of bond) 25 26 REGISTERED REGISTERED No. R -_ 27 28 UNITED STATES OF AMERICA 29 STATE OF ARKANSAS 30 COUNTY OF PULASKI 31 CITY OF LITTLE ROCK 32 SEWER REVENUE BOND 33 SERIES 2009B 34 [PAGE 7 OF 25] Maturity Date: December 1, 20_ Interest Rate: % Dated Date: December 1, 2009 CUSIP No.: 1 2 Registered Owner: CEDE & CO. 3 4 Principal Amount: DOLLARS 5 6 KNOW ALL MEN BY THESE PRESENTS: 7 8 That the City of Little Rock, County of Pulaski, State of Arkansas (the "City "), for value 9 received, hereby promises to pay, but solely from the source as hereinafter provided and not 10 otherwise, to the Registered Owner shown above upon the presentation and surrender hereof at 11 the principal corporate office of Regions Bank, Little Rock, Arkansas, or its successor or 12 successors, as trustee and paying agent (the "Trustee "), on the Maturity Date shown above, the 13 Principal Amount shown above, in such coin or currency of the United States of America as at 14 the time of payment shall be legal tender for the payment of public and private debts and to pay 15 by check or draft interest thereon, but solely from the source as hereinafter provided and not 16 otherwise, in like coin or currency from the interest commencement date specified below at the 17 Interest Rate per annum shown above, payable June 1, 2010 and semiannually thereafter on the 18 first days of June and December of each year, until payment of such principal sum or, if this 19 bond or a portion thereof shall be duly called for redemption, until the date fixed for redemption, 20 and to pay interest on overdue principal and interest (to the extent legally enforceable) at the rate 21 borne by this bond. Payment of each installment of interest shall be made to the person in whose 22 name this bond is registered on the registration books of the City maintained by the Trustee at 23 the close of business on the fifteenth day of the month (whether or not a business day) next 24 preceding each interest payment date (the "Record Date "), irrespective of any transfer or 25 exchange of this bond subsequent to such Record Date and prior to such interest payment date. 26 27 Unless this bond is presented by an authorized representative of The Depository Trust 28 Company, a New York corporation ( "DTC "), to the Trustee for registration of transfer, exchange 29 or payment, and any certificate issued is registered in the name of Cede & Co. or in such other 30 name as is requested by an authorized representative of DTC (and any payment is made to Cede 31 & Co. or to such other entity as is required by an authorized representative of DTC), any transfer, 32 pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the 33 registered owner hereof, Cede & Co., has an interest herein. 34 35 This bond shall bear interest from the payment date next preceding the date on which it is 36 authenticated unless it is authenticated on an interest payment date, in which event it shall bear 37 interest from such date, or unless it is authenticated prior to the first interest payment date, in 38 which event it shall bear interest from the Dated Date shown above, or unless it is authenticated 39 during the period from the Record Date to the next interest payment date, in which case it shall 40 bear interest from such interest payment date, or unless at the time of authentication hereof 41 interest is in default hereon, in which event it shall bear interest from the date to which interest 42 has been paid. 43 [PAGE 8 OF 25] I This bond is one of an issue of City of Little Rock, Arkansas Sewer Revenue Bonds, 2 Series 2009B, aggregating Six Million Six Hundred Fifty -Five Thousand Dollars ($6,655,000) in 3 principal amount (the "bonds "), and is issued for the purposes of financing all or a portion of the 4 costs of the acquisition, construction and equipping by the City of certain betterments and 5 improvements to the City's sewer system (the "System "), funding a debt service reserve and 6 paying expenses incidental thereto and to the authorization and issuance of the bonds. 7 8 The bonds are issued pursuant to and in full compliance with the Constitution and laws of 9 the State of Arkansas (the "State "), including particularly Title 14, Chapter 164, Subchapter 4 10 and Title 14, Chapter 235, Subchapter 2 of the Arkansas Code of 1987 Annotated, and pursuant 11 to Ordinance No. 20,186 duly adopted on November 3, 2009 (the "Authorizing Ordinance "), and 12 do not constitute an indebtedness of the City within the meaning of any constitutional or 13 statutory limitation. The bonds are not general obligations of the City, but are special obligations 14 payable solely from the net revenues derived from the operation of the System (the "Net 15 Revenues ") on a parity of security with the City's outstanding Sewer Refunding and 16 Construction Revenue Bonds, Series 2001 and Series 2005 and Sewer Construction Revenue 17 Bonds, Series 2007A, Series 2007C and Sewer Revenue Bonds, Series 2008, and prior to the 18 pledge of Net Revenues in favor of the City's Sewer Revenue Bonds, Series 1990, Series 1991, 19 Series 1996, Series 1999, Series 2004A, Series 2004B, Series 2004C, Series 2007B and Series 20 2009A. An amount of Net Revenues sufficient to pay the principal of and interest on the bonds 21 has been duly pledged and set aside into the 2009B Sewer Revenue Bond Fund created by the 22 Authorizing Ordinance. Reference is hereby made to the Authorizing Ordinance for a detailed 23 statement of the terms and conditions upon which the bonds are issued, of the nature and extent 24 of the security for the bonds, and the rights and obligations of the City, the Trustee and the 25 registered owners of the bonds. The City has fixed and has covenanted and agreed to maintain 26 rates for the services of the System which shall be sufficient at all times to provide for the proper 27 and reasonable expenses of operation and maintenance of the System and for the payment of the 28 principal of and interest on the bonds, including Trustee's fees, as the same become due and 29 payable, to establish and maintain a debt service reserve and to make the required deposit for the 30 depreciation of the System. 31 32 The bonds shall be subject to optional and mandatory sinking fund redemption as 33 follows: 34 (1) The bonds are subject to redemption prior to maturity, at the option of the City, 35 from funds from any source, on and after December 1, 2019, at par, in whole at any time or in 36 part on any interest payment date, at a redemption price equal to the principal amount of the 37 bonds being redeemed, plus accrued interest to the redemption date. If fewer than all of the 38 bonds shall be called for redemption, the particular maturities of the bonds to be redeemed shall 39 be selected by the City in its discretion. 40 41 (2) To the extent not previously redeemed, the bonds maturing on December 1 in the 42 years 2034 and 2039 are subject to mandatory sinking fund redemption by lot in such manner as 43 the Trustee shall determine, on December 1 in the years and in the amounts set forth below, at a 44 redemption price equal to the principal amount being redeemed plus accrued interest to the date 45 of redemption: 46 [PAGE 9 OF 251 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Bonds Maturing December 1, 2034 Principal Years Amounts 2030 $260,000 2031 270,000 2032 285,000 2033 295,000 2034 (maturity) 310,000 Bonds Maturing December 1, 2039 Principal Years Amounts 2035 $325,000 2036 340,000 2037 355,000 2038 375,000 2039 (maturity) 390,000 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 thirty (30) nor more than sixty (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. 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 Net 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. [PAGE 10 OF 251 I This bond shall not be valid or become obligatory for any purpose or be entitled to any 2 security or benefit under the Authorizing Ordinance until the Certificate of Authentication 3 hereon shall have been signed by the Trustee. 4 5 IN WITNESS WHEREOF, the City of Little Rock, Arkansas has caused this bond to be 6 executed by its Mayor and City Clerk and its corporate seal to be impressed or imprinted on this 7 bond, all as of the Dated Date shown above. 8 CITY OF LITTLE ROCK, ARKANSAS By: Mayor ATTEST: City Clerk (SEAL) 9 10 11 (Form of Trustee's Certificate) 12 13 TRUSTEE'S CERTIFICATE OF AUTHENTICATION 14 15 This bond is one of the bonds designated Series 2009B in and issued under the provisions 16 of the within mentioned Authorizing Ordinance. 17 18 Date of Authentication: 19 REGIONS BANK Little Rock, Arkansas, Trustee M 20 Authorized Signature 21 [A Form of Assignment will be attached to the bonds.] 22 23 Section 9. The rates charged for services of the System heretofore fixed by ordinances of the City 24 and the conditions, rights and obligations pertaining thereto, as set out in those ordinances, are hereby 25 ratified, confirmed and continued. None of the facilities or services afforded by the System shall be 26 furnished without a charge being made therefor. In the event that the City or any department, agency or 27 instrumentality thereof shall avail itself of the facilities and services afforded by the System, the [PAGE 11 OF 25] I reasonable value of the services or facilities so afforded shall be charged against the City or such 2 department, agency or instrumentality and shall be paid for as the charges accrue. The revenues so 3 received shall be deemed to be revenues derived from the operation of the System and shall be used and 4 accounted for in the same manner as the other revenues derived from the operation of the System. 5 The City covenants and agrees that System rates shall never be reduced while any of the bonds are 6 outstanding unless there is obtained from an independent certified public accountant ( "Accountant ") a 7 certificate that the Net Revenues of the System ( "Net Revenues" being defined as gross revenues of the 8 System less the expenses of operation and maintenance of the System, including all expense items 9 properly attributable to the operation and maintenance of the System under generally accepted accounting 10 principles applicable to municipal sewer facilities, excluding depreciation, interest and amortization of 11 deferred bond discount expenses), with the reduced rates, will always be equal to the amount required to 12 be set aside for the Depreciation Fund (hereinafter identified), and leave a balance equal to at least 130% 13 of the average annual principal and interest requirements on all outstanding bonds payable from System 14 revenues ( "System Bonds "). The City further covenants and agrees that the rates shall, if and when 15 necessary, from time to time, be increased in such manner as will produce revenues at least sufficient to 16 pay the principal and interest on all System Bonds when due, to pay the operation and maintenance 17 expenses of the System, and to deposit the ainounts required to be paid into the Depreciation Fund and 18 any debt service reserves in accordance with this Ordinance. 19 The City covenants and agrees that the existing rates will produce total System revenues at least 20 sufficient to pay the operation and maintenance expenses of the System, to pay the principal of and 21 premium, if any, and interest on all outstanding System Bonds and trustee fees in connection therewith, 22 and to make the required deposits into the debt service reserves and the Depreciation Fund. 23 Section 10. The System shall be continuously operated as a revenue producing undertaking and all 24 System revenues shall be paid into a special fund heretofore created and designated "Sewer Fund" (the 25 "Revenue Fund "). The System revenues so deposited in the Revenue Fund are hereby pledged and shall 26 be applied to the payment of the reasonable and necessary expenses of operation, repair and maintenance 27 of the System, to the payment of the principal of and premium, if any, and interest on System Bonds, to 28 the establishment and maintenance of debt service reserves, and to the providing of a Depreciation Fund, 29 as hereinafter set forth. The Revenue Fund, and the other special funds hereinafter in this Ordinance 30 provided for or referred to, shall be maintained in such depositories of the City as shall from time to time 31 be designated by the Committee, with all such depositories to hold membership in the Federal Deposit 32 Insurance Corporation (the "FDIC "), to be located in Little Rock, Arkansas, and to have a capital and 33 surplus of not less than $15,000,000, and with all deposits in any depository in excess of the amount [PAGE 12 OF 2 5 ] I insured by the FDIC to be secured by bonds or other direct or fully guaranteed obligations of the United 2 States of America unless invested in accordance with Section 27 hereof. 3 Section 11. There shall be paid from the Revenue Fund into a fund heretofore created and 4 designated "Sewer Operation and Maintenance Fund" (the "Operation and Maintenance Fund ") on or 5 before the tenth day of each month while any bonds are outstanding, an amount sufficient to pay the 6 reasonable and necessary monthly expenses of operation, repair and maintenance of the System for such 7 month and from which disbursements shall be made only for those purposes. Fixed annual charges such 8 as insurance premiums and the cost of major repair and maintenance expenses may be computed and set 9 up on an annual basis, and one - twelfth (1/12) of the amount thereof may be paid into the Operation and 10 Maintenance Fund each month. 11 If in any month for any reason there shall be a failure to transfer and pay the required amount into 12 Operation and Maintenance Fund, the amount of any deficiency shall be added to the amount otherwise 13 required to be transferred and paid into such fund in the next succeeding month. If in any fiscal year a 14 surplus shall be accumulated in the Operation and Maintenance Fund over and above the amount which 15 shall be necessary to defray the reasonable and necessary costs of operation, repair and maintenance of 16 the System during the remainder of the then current fiscal year and the next ensuing fiscal year, such 17 surplus may be transferred and deposited in the Revenue Fund. 18 Section 12. After making the required monthly deposits into the Operation and Maintenance Fund, 19 there shall be paid from the Revenue Fund, pro rata, the required monthly deposits into the bond funds 20 (and debt service reserves therein) for the Parity Bonds and any additional bonds issued on a parity with 21 the bonds pursuant to Section 16 hereof (the "Parity Bond Funds ") and into a special fund in the name of 22 the City which is hereby created and designated the "2009B Sewer Revenue Bond Fund" (the "2009B 23 Bond Fund" and collectively with the Parity Bond Funds, the "Senior Bond Funds "). Payments into the 24 2009B Bond Fund shall be made on or before the fifteenth day of each month, commencing in January 25 2010, until all outstanding bonds, with interest thereon, have been paid in full or provision made for such 26 payment, a sum equal to 1/6 of the next installment of interest due on the bonds and 1/12 of the next 27 installment of principal on all outstanding bonds due at maturity or upon mandatory sinking fund 28 redemption; provided, however, that payments made into the 2009B Bond Fund with respect to interest 29 for the first five (5) months shall be increased to 1/5 of the next installment of interest due on the bonds 30 and payments made into the 2009B Bond Fund with respect to principal for the first eleven (11) months 31 shall be increased to 1 /11 of the next installment of principal on all outstanding bonds due at maturity. 32 The City shall also pay into the 2009B Bond Fund such additional sums as necessary to provide for 33 the Trustee's fees and expenses and any arbitrage rebate due the United States Treasury under Section 34 148(f) of the Internal Revenue Code of 1986, as amended (the "Code "). The City shall realize a credit [PAGE 13 OF 25] I against monthly deposits into the 2009B Bond Fund from bond proceeds deposited therein, all interest 2 earnings on moneys in the 2009B Bond Fund and all transfers, if any, made from the debt service reserve 3 during the preceding month. 4 There is hereby created, as a part of the 2009B Bond Fund, a debt service reserve (the "Debt Service 5 Reserve ") which shall be maintained by the City in an amount equal to the maximum annual principal and 6 interest requirement on the bonds or 10% of the proceeds of the bonds (excluding accrued interest but 7 including underwriters' discount), whichever is lesser (the "Required Level "). The maintenance of the 8 Debt Service Reserve at the Required Level shall be initially satisfied through bond proceeds deposited in 9 the Debt Service Reserve concurrently with the issuance and delivery of the bonds. Should the Debt 10 Service Reserve become impaired or be reduced below the Required Level by reason of withdrawal or 11 valuation, the City shall make additional monthly payments from the Revenue Fund until the impairment 12 or reduction is corrected within a twenty -four month period. 13 If for any reason the City should fail at any time to make any of the required payments into the 2009B 14 Bond Fund, any sums then held in the Debt Service Reserve shall be used to the extent necessary for the 15 payment of principal of or interest on the bonds, but the Debt Service Reserve shall be reimbursed from 16 the Revenue Fund before any moneys in the Revenue Fund shall be used for any other purpose other than 17 the making of payments required to be made into the Operation and Maintenance Fund and the Senior 18 Bond Funds. The Debt Service Reserve shall be used solely as provided herein. 19 If Net Revenues are insufficient to make the required payment on the first business day of the 20 following month into the 2009B Bond Fund, the amount of any such deficiency in the payment made 21 shall be added to the amount otherwise required to be paid into the 2009B Bond Fund on the first business 22 day of the next month. 23 When the moneys held in the 2009B Bond Fund shall be and remain sufficient to pay the principal of 24 and interest on all of the bonds then outstanding plus Trustee's fees and any arbitrage rebate due as 25 provided above, the City shall not be obligated to make any further payments into the 2009B Bond Fund. 26 It shall be the duty of the City to cause to be withdrawn from the 2009B Bond Fund and deposited 27 with the Trustee at least one (1) business day before the due date of any principal and/or interest on any 28 bond, at maturity or redemption prior to maturity, and deposited with the Trustee an amount equal to the 29 amount of such bond and interest due thereon for the sole purpose of paying the same, together with the 30 Trustee's fee. There shall also be withdrawn and paid to the United States Treasury any arbitrage rebate 31 due at the times and in the amounts required by Section 148(f) of the Code. No withdrawal of funds from 32 the 2009B Bond Fund shall be made for any other purpose except as otherwise authorized in this 33 Ordinance. [PAGE 14 OF 25] I The bonds shall be specifically secured by a pledge of all Net Revenues remaining after the deposits 2 have been made to the Operation and Maintenance Fund. This pledge in favor of the bonds is hereby 3 irrevocably made according to the terms of this Ordinance, and the City and its officers and employees 4 shall execute, perform and carry out the terms thereof in strict conformity with the provisions of this 5 Ordinance. 6 Section 13. After making the deposits into the Operation and Maintenance Fund and the Senior 7 Bond Funds, there shall be transferred from the Revenue Fund into the bond funds for the Subordinate 8 Bonds (the "Subordinate Bond Funds "), the amounts required by the ordinances authorizing the 9 Subordinate Bonds, and the administration and servicing fees due in connection with the Subordinate 10 Bonds. 11 Section 14. After making the required payments into the Operation and Maintenance Fund, the 12 Senior Bond Funds and the Subordinate Bond Funds, there shall be paid from the Revenue Fund into a 13 fund heretofore created and designated the "Sewer Depreciation Fund" (the "Depreciation Fund ") on, or 14 before the 15th day of each month while any bonds are outstanding, three percent (3 %) of the System 15 revenues which remain after the required payment into the Operation and Maintenance Fund has been 16 made. The moneys in the Depreciation Fund shall be used solely for the purpose of paying the cost of 17 replacements made necessary by the depreciation of the System. If in any fiscal year a surplus shall be 18 accumulated in the Depreciation Fund over and above the amount necessary to defray the cost of the 19 probable replacements during the then current fiscal year and the next ensuing fiscal year, such surplus 20 may be transferred and paid into the Revenue Fund. 21 Section 15. Any surplus in the Revenue Fund, after making the required monthly deposits into all of 22 the funds as set forth above, may be used, at the option of the City, for any lawful purpose of the System, 23 as approved by the Committee. 24 Section 16. So long as any of the bonds are outstanding, the City shall not issue or attempt to issue 25 any bonds claimed to be entitled to a priority of lien on Net Revenues over the lien securing the bonds and 26 the Parity Bonds, except as hereinafter provided. The City reserves the right to issue additional bonds to 27 finance or pay the cost of making any future extensions, betterments or improvements to the System, or to 28 refund bonds issued for such purposes, but the City shall not authorize or issue any such additional bonds 29 ranking on a parity with the bonds and the Parity Bonds unless and until there have been procured and 30 filed with the City Clerk and the Trustee a statement by an Accountant reciting the opinion, based upon 31 necessary investigation, that the Net Revenues of the System for the fiscal year immediately preceding the 32 fiscal year in which it is proposed to issue such additional bonds shall equal not less than 120% of the 33 average annual principal and interest requirements on all the then outstanding System Bonds and the 34 additional bonds then proposed to be issued. The term "Net Revenues" means gross System revenues less [PAGE 15 OF 25] I operation and maintenance expenses other than depreciation, interest and amortization of deferred bond 2 discount expenses, determined in accordance with generally accepted accounting principles. In making 3 the computation set forth above, the City, and the Accountant on behalf of the City, may, based upon the 4 opinion or report of a registered professional engineer not in the regular employ of the City, treat any 5 increase in rates for the System enacted subsequent to the first day of such preceding fiscal year as having 6 been in effect during or throughout such fiscal year and may include in gross System revenues for such 7 fiscal year the amount that would have been received, based on such opinion or report, had the increase 8 been in effect during or throughout such fiscal year. 9 Section 17. The City covenants and agrees that it will maintain the System in good condition and 10 operate the same in an efficient manner and at reasonable cost. While any of the bonds are outstanding, 11 the City agrees that it will insure and at all times keep insured, in the amount of the full insurable value 12 thereof, in a responsible insurance company or companies selected by the Committee and authorized and 13 qualified under the laws of the State to assume the risk thereof, all aboveground structures of the System, 14 to the extent that such structures would be covered by insurance by private companies engaged in similar 15 types of businesses, against loss or damage thereto from fire, lightning, tornados, winds, riot, strike, civil 16 commotion, malicious damage, explosion and against any other loss or damage from any other causes 17 customarily insured against by private companies engaged in similar types of business. The insurance 18 policies are to carry a clause making them payable to the Committee and the Trustee as their interests may 19 appear, and satisfactory evidence of said insurance shall be filed with the Trustee. In the event of loss, the 20 proceeds of such insurance shall be applied solely toward the reconstruction, replacement or repair of the 21 System, and in such event the City will, with reasonable promptness, cause to be commenced and 22 completed the reconstruction, replacement and repair work. If such proceeds are more than sufficient for 23 such purposes, the balance remaining shall be deposited to the credit of the Revenue Fund, and if such 24 proceeds shall be insufficient for such purposes, the deficiency shall be supplied first from moneys in the 25 Depreciation Fund, second from moneys in the Operation and Maintenance Fund, and third from surplus 26 moneys in the Revenue Fund. Nothing shall be construed as requiring the City to expend any moneys for 27 operation and maintenance of the System or for premiums on its insurance which are derived from 28 sources other than the operation of the System, but nothing shall be construed as preventing the City from 29 doing so. 30 Section 18. The bonds shall be subject to redemption prior to maturity in accordance with the terms 31 set out in the bond form. 32 Section 19. The Committee will keep proper books of accounts and records (separate from all other 33 records and accounts of the City) in which complete and correct entries shall be made of all transactions 34 relating to the operation of the System, and such books shall be available for inspection by the Trustee [PAGE 16 OF 25] I and any registered owner of any of the bonds at reasonable times and under reasonable circumstances. 2 The City and the Committee agree to have these records audited by an Accountant at least once each year, 3 and a copy of the audit shall be delivered to the Trustee and made available to interested registered 4 owners requesting the same in writing. In the event that the City or the Committee fail or refuse to make 5 the audit, the Trustee, or any registered owner of the bonds, may have the audit made, and the cost thereof 6 shall be charged against the Operation and Maintenance Fund. 7 Section 20. Any bond shall be deemed to be paid within the meaning of this Ordinance when 8 payment of the principal of and interest on such bond (whether at maturity or upon redemption as 9 provided herein, or otherwise), either (i) shall have been made or caused to be made in accordance with 10 the terms thereof, or (ii) shall have been provided for by irrevocably depositing with the Trustee, in trust 11 and irrevocably set aside exclusively for such payment (1) cash sufficient to make such payment and/or 12 (2) direct obligations of (including obligations issued or held in book entry form on the books of) the 13 Department of the Treasury of the United States of America ( "Government Securities ") (provided that 14 such deposit will not affect the tax exempt status of the interest on any of the bonds or cause any of the 15 bonds to be classified as "arbitrage bonds" within the meaning of Section 148 of the Code), maturing as 16 to principal and interest in such amounts and at such times as will provide sufficient moneys to make such 17 payment, and all necessary and proper fees, compensation and expenses of the Trustee pertaining to the 18 bonds with respect to which such deposit is made shall have been paid or the payment thereof provided 19 for to the satisfaction of the Trustee. 20 On the payment of any such bonds within the meaning of this Ordinance, the Trustee shall hold in 21 trust, for the benefit of the owners of such bonds, all such moneys and /or Government Securities. 22 When all the bonds shall have been paid within the meaning of this Ordinance, if the Trustee has been 23 paid its fees and expenses and if any arbitrage rebate due the United States Treasury has been paid or 24 provided for to the satisfaction of the Trustee, the Trustee shall take all appropriate action to cause (1) the 25 pledge and lien of this Ordinance to be discharged and cancelled, and (ii) all moneys held by it pursuant 26 to this Ordinance and which are not required for the payment of such bonds to be paid over or delivered to 27 or at the direction of the City. In determining the sufficiency of the deposit of Government Securities, 28 there shall be considered the principal amount of such Government Securities and interest to be earned 29 thereon until the maturity of such Government Securities. 30 Section 21. If there be any default in the payment of the principal of or interest on any of the bonds, 31 or if the City defaults in any 2009B Bond Fund requirement or in the performance of any of the other 32 covenants contained in this Ordinance and such failure continues unremedied for thirty (30) days, the 33 Trustee may, and upon the written request of the registered owners of not less than 10% in principal 34 amount of the then outstanding bonds, shall, by proper suit, compel the performance of the duties of the [PAGE 17 OF 25] I officials of the City under the laws of Arkansas. And in the case of a default in the payment of the 2 principal of and interest on any of the bonds, the Trustee may and upon written request of the registered 3 owners of not less than 10% in principal amount of the then outstanding bonds, shall apply in a proper 4 action to a court of competent jurisdiction for the appointment of a receiver to administer the System on 5 behalf of the City and the registered owners of the bonds with power to charge and collect (or by 6 mandatory injunction or otherwise to cause to be charged and collected) rates sufficient to provide for the 7 payment of the expenses of operation, maintenance and repair and to pay any bonds and interest 8 outstanding and to apply the System revenues in conformity with the laws of Arkansas and with this 9 Ordinance. When all defaults in principal and interest payments have been cured, the custody and 10 operation of the System shall revert to the City. 11 No registered owner of any of the outstanding bonds shall have any right to institute any suit, action, 12 mandamus or other proceeding in equity or at law for the protection or enforcement of any power or right 13 unless such owner previously shall have given to the Trustee written notice of the default on account of 14 which such suit, action or proceeding is to be taken, and unless the registered owners of not less than 10% 15 in principal amount of the bonds then outstanding shall have made written request of the Trustee after the 16 right to exercise such power or right of action, as the case may be, shall have accrued, and shall have 17 afforded the Trustee a reasonable opportunity either to proceed to exercise the powers granted to the 18 Trustee, or to institute such action, suit or proceeding in its name, and unless, also, there shall have been 19 offered to the Trustee reasonable security and indemnity against the costs, expenses and liabilities to be 20 incurred therein or thereby and the Trustee shall have refused or neglected to comply with such request 21 within a reasonable time. Such notification, request and offer of indemnity are, at the option of the 22 Trustee, conditions precedent to the execution of any remedy. No one or more registered owners of the 23 bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the 24 security of this Ordinance, or to enforce any right hereunder except in the manner herein described. All 25 proceedings at law or in equity shall be instituted, had and maintained in the manner herein described and 26 for the benefit of all registered owners of the outstanding bonds. 27 No remedy conferred upon or reserved to the Trustee or to the registered owners of the bonds is 28 intended to be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and 29 shall be in addition to every other remedy given under this Ordinance or by law. 30 The Trustee may, and upon the written request of the registered owners of not less than 50% in 31 principal amount of the bonds then outstanding shall, waive any default which shall have been remedied 32 before the entry of final judgment or decree in any suit, action or proceeding instituted under the 33 provisions of this Ordinance or before the completion of the enforcement of any other remedy, but no [PAGE 18 OF 25] I such waiver shall extend to or affect any other existing or any subsequent default or defaults or impair any 2 rights or remedies consequent thereon. 3 All rights of action under this Ordinance or under any of the bonds, enforceable by the Trustee, may 4 be enforced by it without the possession of any of the bonds, and any such suit, action or proceeding 5 instituted by the Trustee shall be brought in its name for the benefit of all the registered owners of such 6 bonds, subject to the provisions of this Ordinance. 7 No delay or omission of the Trustee or of any registered owners of the bonds to exercise any right or 8 power accrued upon any default shall impair any such right or power or shall be construed to be a waiver 9 of any such default or an acquiescence therein; and every power and remedy given by this ordinance to 10 the Trustee and to the registered owners of the bonds, respectively, may be exercised from time to time 11 and as often as may be deemed expedient. 12 In any proceeding in which any plaintiff bondholder prevails to enforce the provisions of this 13 Ordinance, such plaintiff bondholder shall be entitled to recover from the City all costs of such 14 proceeding, including reasonable attorneys' fees. 15 Section 22. (a) The terms of this Ordinance shall constitute a contract between the City and the 16 registered owners of the bonds and no variation or change in the undertaking herein set forth shall be 17 made while any of the bonds are outstanding, except as hereinafter set forth in subsections (b) and (c). 18 (b) The Trustee may consent to any variation or change in this Ordinance without the consent of the 19 owners of the outstanding bonds (a) in connection with the issuance of additional parity bonds under this 20 Ordinance, (b) in order to cure any ambiguity, defect or omission herein or to correct or supplement any 21 defective or inconsistent provisions contained herein as the City may deem necessary or desirable and not 22 inconsistent herewith, or (c) in order to make any other variation or change which the Trustee determines 23 shall not adversely affect the interests of the owners of the bonds. 24 (c) The owners of not less than 75% in aggregate principal amount of the bonds then outstanding 25 shall have the right, from time to time, anything contained in this Ordinance to the contrary 26 notwithstanding, to consent to and approve the adoption by the City of such ordinance supplemental 27 hereto as shall be necessary or desirable for the purpose of modifying, altering, amending, adding to or 28 rescinding, in any particular, any of the terms or provisions contained in this Ordinance or in any 29 supplemental ordinance; provided, however, that nothing contained in this Section shall permit or be 30 construed as permitting (a) an extension of the maturity of the principal of or the interest on any bond, or 31 (b) a reduction in the principal amount of any bond or the rate of interest thereon, or (c) the creation of a 32 lien or pledge superior to the lien and pledge created by this Ordinance, or (d) a privilege or priority of 33 any bond or bonds over any other bond or bonds, or (e) a reduction in the aggregate principal amount of 34 the bonds required for consent to such supplemental ordinance. [PAGE 19 OF 25] I Section 23. When the bonds have been executed and sealed as herein provided, they shall be 2 authenticated by the Trustee, and the Trustee shall deliver the bonds to or at the direction of the 3 Purchasers upon payment in cash of the Purchase Price. The accrued interest shall be remitted to the City 4 for deposit into the 2009B Bond Fund. A deposit into the Debt Service Reserve, along with the expenses 5 of issuing the bonds, as set forth in the delivery instructions to the Trustee signed by the Mayor and City 6 Clerk, shall also be paid from the Purchase Price. The remainder of the Purchase Price shall be remitted 7 to the City for deposit into an account of the City heretofore created and designated "Little Rock 8 Wastewater Construction Fund" ( "Construction Fund "). The moneys deposited into the Construction 9 Fund, including earnings thereon, shall be disbursed in payment of the costs of accomplishing the 10 Improvements, paying necessary expenses incidental thereto, paying interest on the bonds, and paying 11 expenses of issuing the bonds. Disbursements shall be on the basis of checks which shall contain at least 12 the following information: the person to whom payment is being made; the amount of the payment; and 13 the purpose by general classification of the payment. Each check must be signed by the CEO or Finance 14 Director of Little Rock Wastewater. The Committee shall be required to keep accurate records of all 15 payments from the Construction Fund. 16 Section 24. In the event any of the offices of Mayor, City Clerk, Chief Executive Officer, 17 Committee or Board of Directors shall be abolished, or any two or more of such offices shall be merged 18 or consolidated, or in the event the duties of a particular office shall be transferred to another office or 19 officer, or in the event of a vacancy in any such office by reason of death, resignation, removal from 20 office or otherwise, or in the event any such officer shall become incapable of performing the duties of his 21 office by reason of sickness, absence from the City or otherwise, all powers conferred and all obligations 22 and duties imposed upon such office or officer shall be performed by the office or officer succeeding to 23 the principal functions thereof, or by the office or officer upon whom such powers, obligations and duties 24 shall be imposed by law. 25 So long as the System is under the control of the Committee, performance by the Committee of any 26 obligation of the City hereunder shall be deemed performance by the City. The Committee presently 27 consists of Marilyn Perryman, Cindy Miller and Ken Griffey. There are currently two vacancies on the 28 Committee. 29 Section 25. (a) The City covenants that it shall not take any action or suffer or permit any action to 30 be taken or conditions to exist which causes or may cause the interest payable on the bonds to be included 31 in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the 32 City covenants that the proceeds of the sale of the bonds and System revenues will not be used directly or 33 indirectly in such manner as to cause the bonds to be treated as "arbitrage bonds" within the meaning of 34 Section 148 of the Code. [PAGE 20 OF 25] I (b) The City shall assure that (i) not in excess of 10% of the Net Proceeds of the bonds is used for 2 Private Business Use if, in addition, the payment of more than 10% of the principal or 10% of the interest 3 due on the bonds during the term thereof is, under the terms of the bonds or any underlying arrangement, 4 directly or indirectly secured by any interest in property used or to be used for a Private Business Use or 5 in payments in respect of, property used or to be used for a Private Business Use or is to be derived from 6 payments, whether or not to the City, in respect of property or borrowed moneys used or to be used for a 7 Private Business Use; and (ii) that, in the event that both (A) in excess of 5% of the Net Proceeds of the 8 bonds are used for a Private Business Use, and (B) an amount in excess of 5% of the principal or 5% of 9 the interest due on the bonds during the term thereof is, under the terms of the bonds or any underlying 10 arrangement, directly or indirectly, secured by any interest in property used or to be used for said Private 11 Business Use or in payments in respect of property used or to be used for said Private Business Use or is 12 to be derived from payments, whether or not to the City, in respect of property or borrowed money used 13 or to be used for said Private Business Use, then said excess over said 5% of Net Proceeds of the bonds 14 used for a Private Business Use shall be used for a Private Business Use related to the governmental use 15 of the Improvements. 16 The City shall assure that not in excess of 5% of the Net Proceeds of the bonds are used, directly or 17 indirectly, to make or finance a loan to persons other than state or local governmental units. 18 As used in this subsection (b), the following terms shall have the following meanings: 19 "Net Proceeds" means the face amount of the bonds, plus accrued interest and premium, if any, less 20 original issue discount, if any, less any amounts deposited into the Debt Service Reserve from bond 21 proceeds. 22 "Private Business Use" means use directly or indirectly in a trade or business carried on by a natural 23 person or in any activity carried on by a person other than a natural person, excluding, however, use by a 24 state or local governmental unit and use as a member of the general public. 25 (c) The City covenants that it will take no action which would cause the bonds to be "federally 26 guaranteed" within the meaning of Section 149(b) of the Code. Nothing in this Section shall prohibit 27 investments in bonds issued by the United States Treasury. 28 (d) The City covenants that it will submit to the Secretary of the Treasury of the United States, not 29 later than the 15th day of the second calendar month after the close of the calendar quarter in which the 30 bonds are issued, the statement required by Section 149(e) of the Code. 31 (e) The City covenants that it will not reimburse itself from proceeds of the bonds for costs paid 32 prior to the date the bonds are issued except in compliance with United States Treasury Regulation 33 Section 1.150 -2 (the "Regulation "). This Ordinance shall constitute an "official intent" for the purpose of 34 the Regulation. [PAGE 21 OF 25] I (f) The City covenants that it will, in compliance with the requirements of Section 148(f) of the 2 Code, pay with moneys in the 2009B Bond Fund to the United States Government in accordance with the 3 requirements of Section 148(f) of the Code, from time to time, an amount equal to the sum of (1) the 4 excess of (A) the amount earned on all Non - purpose Investments (as therein defined) attributable to the 5 bonds, other than investments attributable to such excess, over (B) the amount which would have been 6 earned if such Non - purpose Investments attributable to the bonds were invested at a rate equal to the 7 Yield (as defined in the Code) on the bonds, plus (2) any income attributable to the excess described in 8 (1), subject to the exceptions set forth in Section 148 of the Code. The City further covenants that in 9 order to assure compliance with its covenants herein, it will employ a qualified consultant to advise the 10 City in making the determination required to comply with this subsection (f). Anything herein to the 11 contrary notwithstanding, this provision may be modified or rescinded if in the opinion of Bond Counsel 12 such modification or rescission will not affect the tax - exempt status of the bonds for federal income tax 13 purposes. 14 Section 26. The Trustee shall only be responsible for the exercise of good faith and reasonable 15 prudence in the execution of its trust. The recitals in this Ordinance and on the face of the bonds are the 16 recitals of the City and not of the Trustee. The Trustee shall not be required to take any action as Trustee 17 unless it shall have been requested to do so in writing by the owners of not less than 10% in principal 18 amount of the bonds then outstanding and shall have been offered reasonable security and indemnity 19 against the costs, expenses and liabilities to be incurred therein or thereby. The Trustee may resign at any 20 time by giving sixty (60) days' notice in writing to the City Clerk and to the registered owners of the 21 bonds and the majority in value of the registered owners of the outstanding bonds or the City, if it is not 22 in default under this Ordinance, at any time, with or without cause, may remove the Trustee. In the event 23 of a vacancy in the office of Trustee, either by resignation or by removal, the City shall appoint a new 24 Trustee, such appointment to be evidenced by a written instrument or instruments filed with the City 25 Clerk. Every successor Trustee appointed pursuant to this Section shall be a trust company or bank in 26 good standing, duly authorized to exercise trust powers and subject to examination by federal or state 27 authority. The original Trustee and any successor Trustee shall file a written acceptance and agreement to 28 execute the trust imposed upon it or them by this Ordinance, but only upon the terms and conditions set 29 forth in this Ordinance and subject to the provisions of this Ordinance, to all of which the respective 30 owners of the bonds agree. Such written acceptance shall be filed with the City Clerk and a copy thereof 31 shall be placed in the bond transcript. Any successor Trustee shall have all the powers herein granted to 32 the original Trustee. The Trustee's resignation shall become effective upon the acceptance of the trusts 33 by the successor Trustee. [PAGE 22 OF 25] I Section 27. (a) Moneys held for the credit of the 2009B Bond Fund shall be continuously invested 2 and reinvested pursuant to the direction of the Committee in Eligible Investments, all of which shall 3 mature, or which shall be subject to redemption by the holder thereof, at the option of such holder, not 4 later than the payment date for interest or principal and interest on the bonds. 5 (b) Moneys held for the credit of the Debt Service Reserve shall be invested and reinvested at the 6 direction of the Committee in Eligible Investments which shall mature, or which shall be subject to 7 redemption by the holder thereof, at the option of such holder, not later than seven (7) years after the date 8 of investment or the final maturity date of the bonds, whichever is earlier. 9 (c) Moneys held for the credit of any other fund shall be continuously invested and reinvested 10 pursuant to the direction of the Committee in Eligible Investments, which shall mature, or which shall be 11 subject to redemption by the holder thereof, at the option of such holder, not later than the date or dates 12 when the moneys held for the credit of the particular fund will be required for purposes intended. 13 (d) `Eligible Investments" means any of the securities that are at the time legal for investment of 14 City funds pursuant to Resolution No. 10,609 of the City, and Arkansas Code Annotated (2009 Supp.) § 15 14 -58 -309, as each may be amended from time to time. At November 3, 2009, "Eligible Investments" 16 include: 17 (1) U.S. government obligations, U.S. government agency obligations, and U.S. 18 government instrumentality obligations, which have a liquid market with a readily determinable 19 market value; 20 (2) Certificates of deposit and other evidences of deposit at financial institutions, and 21 commercial paper, rated in the highest tier (e.g., A -1, P -1, F -1, D -1, or higher) by a nationally 22 recognized rating agency; 23 (3) Investment -grade obligations of state, provincial, and local governments and public 24 authorities; and 25 (4) Money market mutual funds regulated by the Securities and Exchange Commission and 26 whose portfolios consist only of dollar - denominated securities. 27 Not more than 20% of the City's funds may be invested in uninsured certificates of deposit or other 28 evidences of deposit at financial institutions; commercial paper, state, provincial, and local government 29 obligations that do not constitute general obligations; and money market funds with a portfolio not limited 30 to U.S. government obligations. 31 The City's investment policy prohibits investments in derivative products, common stocks, and 32 long -term bonds and for speculation. 33 (e) Obligations so purchased as an investment of moneys in any fund shall be deemed at all times to 34 be a part of such fund and the interest accruing thereon and any profit realized from such investments [PAGE 23 OF 25] I shall be credited to such fund, and any loss resulting from such investment shall be charged to such fund, 2 except that interest earnings and profits on investments of moneys in the Debt Service Reserve which 3 increase the amount thereof above the Required Level shall to the extent of any such excess be transferred 4 from time to time into the 2009B Bond Fund. 5 (f) Moneys so invested in Government Securities or in certificates of deposit of banks to the extent 6 insured by FDIC, need not be secured by the depository bank or banks. 7 (g) All investments and deposits shall have a par value (or market value when less than par), 8 exclusive of accrued interest, at all times at least equal to the amount of money credited to such funds and 9 shall be made in such a manner that the money required to be expended from any fund will be available at 10 the proper time or times. 11 (h) Investments of moneys in all funds shall be valued in terms of current market value as of the last 12 day of each year, except that direct obligations of the United States (State and Local Government Series) 13 in book -entry form shall be continuously valued at par or face principal amount. 14 (i) The City covenants that it will make all arbitrage rebate payments to the United States in 15 accordance with Section 148(f) of the Code. 16 Section 28. It is covenanted and agreed by the City with the registered owners of the bonds, or any 17 of them, that the City and the Committee will faithfully and punctually perform all duties with reference 18 to the System required by the Constitution and laws of the State, including the charging and collecting of 19 reasonable and sufficient rates lawfully established for services rendered by the System, the segregating 20 of System revenues as herein required, and the applying of System revenues to the respective funds herein 21 created or referred to. 22 Section 29. The City covenants that it will not sell or lease the System, or any substantial portion 23 thereof, provided, however, that nothing herein shall be construed to prohibit the City from making such 24 dispositions of properties of the System and such replacements and substitutions for properties of the 25 System as shall be necessary or incidental to the efficient operation of the System as a revenue - producing 26 undertaking. All revenues derived from such dispositions shall be deposited into the Revenue Fund. 27 Section 30. The requirements of Ordinance No. 15,249, as they may relate to the authorization and 28 sale of the Bonds, are hereby waived. 29 Section 31. The provisions of this Ordinance are hereby declared to be separable and if any 30 provision shall for any reason be held illegal or invalid, such holding shall not affect the validity of the 31 remainder of this Ordinance. 32 Section 32. All ordinances and resolutions or parts thereof, in conflict herewith are hereby repealed 33 to the extent of such conflict. 34 PASSED: November 3, 2009 [PAGE 24 OF 25] I ATTEST: APPROVED: 2 3 / 4 QS�usau 41L� le , cting City Clerk Mark Stodola, 5 APPROVED AS TO LEGAL FORM: 6 8 Thomas M. Carpenter, Ci At orney 9 // 10 // 11 // 12 // 13 14 // 15 // 16 // 17 // 18 // 19 // 20 // 21 22 23 24 25 // 26 // 27 // 28 29 // 30 // 31 // 32 // 33 // 34 // [PAGE 25 OF 251